The International Monetary Fund (IMF) has revealed its plans to temporarily increase funding limits for member nations to help them overcome current economic challenges.
In a statement released by IMF, the annual limit under the Fund’s General Resources Account will be raised to 200% of quota for a period of 12 months from the current 145%, adding that: “Access to cumulative limits has been revised to 600% from 435% now.”
The changes, as stated by IMF, will provide member countries – particularly emerging markets and developing economies facing vulnerabilities access to funds without triggering the so-called exceptional access framework that entails tougher conditions. The measure follows IMF’s last month permission to five development lenders to use its reserves to help poor nations.
According to IMF’s statement, the fund’s staff will re-engage the Executive Board before the end of the 12 month period on a proposal to maintain the higher limits for longer, should the circumstances warrant it.
The statement further noted that there has been discussions amongst IMF’s Board concerning possible changes in access limits under the Poverty Reduction and Growth Trust (PRGT) – the lender’s concessional financing arm.
Demand for PRGT, whose access limits were last raised by 45% in 2021, has increased sharply, with the expectation to grow further given successive shocks.
The limits, as reported by IMF’s statement, will be reviewed once the fund has sufficient additional resources.
China Backs Sri Lanka Debt Plan – Paving Way For IMF Loan, Ghana In Expectancy of Same Results
China has given assurances that it will support Sri Lanka’s debt restructuring, clearing the biggest hurdle for the South Asian nation to secure a $2.9 billion bailout from the International Monetary Fund.
Sri Lanka’s largest bilateral creditor gave written support for the debt restructuring via the Export-Import Bank of China on 6th March, 2023.
Just like Sri Lanka, Ghana is also hoping that China will support its external debt restructuring programme in a bid to secure a $3bn IMF bailout by the end of March as the country seeks to restructure its $1.9 billion indebtedness to China.
Ghana is seeking several reliefs from China, including an extension of the moratorium on debt servicing, an extension of maturities, and lower interest rates.
According to a statement by Ghana’s Minister of Finance – Mr. Ken Ofori-Atta, discussions between Ghana and China have been highly cordial and fruitful, with the two governments exchanging data on the parameters of an effective debt treatment.
China’s backing completes the support Sri Lanka needs from creditor nations to allow the IMF board to approve the loan that was agreed upon by the Fund staff in September.
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