The main contributors to this paper were Heikki Hatanpää, Sergio Rodriguez, and A. Dabney (all staff from FIN).
The paper describes the developments and the outlook for the General Resources Account (GRA) only. For a review of the financing of the Fund’s concessional assistance, see Update on the Financing of the Fund’s Concessional Assistance and Debt Relief to Low-Income Member Countries [forthcoming].
The previous review extended to September 10, 2010. More recent data on the Fund’s finances can be found at http://www.imf.org/external/fin.htm.
According to the Guidelines for Borrowing by the Fund, Fund borrowing shall remain subject to a process of continuous monitoring by the Executive Board. For this purpose the Executive Board will regularly review the Fund’s liquidity and financial position, taking into account all relevant factors of a quantitative and qualitative nature. See IMF Executive Board Discusses Operational Issues Related to Borrowing by the Fund and Reviews the Fund’s Borrowing Guidelines (PIN No. 09/83, 7/15/09), and Borrowing by the Fund—Operational Issues (6/17/09).
The IMFC agreed in April 2009 that there should be an increase in the resources available to the Fund through immediate financing from members of $250 billion, subsequently incorporated into an expanded and more flexible New Arrangements to Borrow (NAB), increased by up to $500 billion. See IMFC Communiqué (4/25/09).
For more information on the NAB, see Factsheet IMF Standing Borrowing Arrangements, available at http://www.imf.org/external/np/exr/facts/gabnab.htm.
No disbursements were made under Emergency Assistance during the period under review.
In addition, the EFF arrangement approved for Seychelles coincided with the cancellation of an SBA under which only part of the total commitments were drawn.
The Hungarian authorities have indicated their intention to not make further drawings under the SBA that was non-precautionary on approval.
The bilateral loan agreements that became effective during the review period were: Deutsche Bundesbank (EUR 15 billion), De Nederlandsche Bank (EUR 5.31 billion), Danmarks Nationalbank (EUR 1.95 billion), Banco de Portugal (EUR 1.06 billion), France (EUR 11.06 billion), National Bank of Belgium (EUR 4.74 billion), the Central Bank of Malta (EUR 0.12 billion), the Slovak Republic (EUR 0.44 billion), and the Czech Nationalbank (EUR 1.03 billion), together with note purchase agreements with Brazil (US$10 billion) and the Reserve Bank of India (US$10 billion).
In addition, changes in exchange rates, in particular the strengthening of the U.S. dollar vis-à-vis the SDR, increased the SDR equivalent amount available under borrowing agreements that were effective at the beginning of the period under review by some SDR 3 billion.
Under the baseline scenario for further disbursements prior to the next semiannual liquidity review (see Section III.B), outstanding borrowing under all bilateral loan and note purchase agreements would remain well below the SDR 15 billion limit for immediate encashment.
If the limit on the immediate encashment of bilateral loans and notes is increased, Directors agreed that, with respect to any loan agreements and note purchase agreements that had incorporated a lower encashment limit, it would be appropriate for the Board to agree upon the request of the lender, to make the necessary changes to such agreements, so as to enable the lender to benefit from the higher limit (see PIN No. 09/83, 7/15/09). Under the proposed decision to modify the NAB, participants would have the option to fold into the NAB their claims under the bilateral loan and note purchase agreements, and the proposed modified NAB decision provides for the full and immediate encashability of participants’ claims under their credit arrangements in case of balance of payments need.
The placement of proceeds from gold sales in the GRA also contributed to the increase in the FCC during the period. However, the majority of the increase in liquidity arising from gold sales is temporary as the profits from the sales are to be transferred to the Investment Account, with only the book value to be retained in GRA.
Effectiveness of the ad hoc quota increases requires the 2008 Voice and Participation amendment to come into effect. So far, 68 members (of the required 112) have ratified the amendment, accounting for almost 71.5 percent of the voting power from a total of 85 percent needed.
Includes agreements with the Swiss National Bank, Spain, Banca d’Italia, the Oesterreichische Nationalbank, Ireland, the Bank of Finland, and the Swedish Riksbank.
See World Economic Outlook, April 2010, available at http://www.imf.org/external/pubs/ft/weo/2010/01/index.htm, and Global Financial Stability Report, April 2010, available at http://www.imf.org/external/pubs/ft/gfsr/2010/01/index.htm.
18 PIN No. 09/83, 7/15/09.