Adequacy of Fund Resources – Preliminary Considerations

This paper provides background for initial considerations on the appropriate size of the Fund’s overall lending capacity over the medium term.
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Volume/Issue: Volume 2021 Issue 006
Publication date: March 2021
ISBN: 9781513571171
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Topics covered in this book

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Finance , Economics- Macroeconomics , Money and Monetary Policy , PP , Fund resource , lending capacity , fund financing , financing needs , quota resource , IMF financing increase , borrowed resource , Systemic crises , Global financial crisis of 2008-2009 , Credit , Emerging and frontier financial markets , Global

Summary

This paper provides background for initial considerations on the appropriate size of the Fund’s overall lending capacity over the medium term. The paper reviews developments in the demand for Fund resources during the global crisis. The paper also argues that the global economy is changing in fundamental ways, with implications for the size of the Fund. Against this background, the analysis suggests that the current overall lending capacity of the Fund should be seen as a minimum. Additional resources would be needed if the Fund were to introduce changes to its lending framework. While the financing structure of the Fund should be largely quota-based, staff sees a strong case for continuing to backstop quota resources with a standing borrowing facility. Maintaining the Fund’s current overall lending capacity would require swift action by the membership.