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IMF Survey Vol.30, September 2001
Article

Liquidity position: IMF’s financial position remains strong

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
January 2001
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The IMF’s financial position, which strengthened considerably following the 1999 increase in quotas, remained strong in financial year 2001.

The IMF’s financing and other transactions are financed primarily from the quota subscriptions paid in by its member countries, although only a portion of these funds are available for financial assistance to members. Its currently usable resources consist of its holdings of the currencies of financially strong members included in the financial transactions plan (see box, page 25) and SDRs.

IMF liquidity ratio

(Percent; as of April 30)

Data: IMF, Annual Report 2001

The IMF does not use the currencies of members that are using IMF resources or those the IMF does not consider to be financially strong enough. Moreover, some of these usable resources will have been committed under existing arrangements and must be held for working balances. Thus, the IMF’s net uncommitted usable resources represent the funds available for new financing and for fulfilling members’ requests for their liquid claims on the IMF to be cashed. As of April 30, 2001, the IMF’s net uncommitted usable resources amounted to SDR 78.8 billion, about 37 percent of total quotas, compared with SDR 74.8 billion a year earlier and almost four times higher than the low point that preceded the quota increase.

As of April 30, 2001, the IMF’s “liquidity ratio”—defined as the ratio of the IMF’s net uncommitted usable resources to its liquid liabilities–was 168.4 percent, which was more than five times higher than the low point before the 1999 increase in IMF quotas.

During financial year 2001, a number of Stand-By and Extended Fund Facility Arrangements with large undrawn balances expired–including those with Korea, Mexico, and Russia–which made about SDR 7.0 billion in funds available for new financing. In addition, the financial positions of three other countries (Korea, Oman, and Qatar) were judged to be strong enough to be added to the list of those supporting the IMF’s financial operations. (Korea was included because it was considered strong enough to make early repayment of outstanding credit.) An increase in China’s quota provided additional usable funds.

The IMF can supplement its quota-based funds by up to SDR 34 billion through two existing borrowing arrangements: the New Arrangements to Borrow (NAB) and the General Arrangements to Borrow (GAB) (see box, page 18). No borrowing occurred during the year, and the credit lines under these arrangements are fully available.

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