IMF to activate $583-bn crisis lending fund
26 March 2011
Washington: The International Monetary Fund is working on activating its crisis lending pool, a move that may materialise as early as next week. The $583 billion fund will allow the IMF to show it has enough liquidity to help bail out countries that are in need and stabilize the global economy, IMF officials have said.
Under discussion are arrangements as to how much of the credit line's $583 billion should be made available and for what duration. Discussions are underway between nations that will be contributing to the pool, including new members China and India.
The fund now has 13 new members.
The activation of the new fund, the so-called New Arrangement to Borrow (NAB), would impart enough financial muscle to the IMF to help out more European countries should they need help.
The talks to activate the fund are taking place even as Europe's debt crisis deepens. The resignation of Portugal's prime minister, Jose Socrates, has raised concerns that the government may be close to seeking a bailout.
IMF managing director Dominique Strauss-Kahn requested activation of the fund about two weeks ago, officials said, immediately after expansion of the pool was ratified. The original size of the fund, a mere $58 billion, has now expanded in size ten times, to $583 billion in accordance made in April 2009 by the G-20 to help boost IMF resources.
According to officials, the activation may take place as early as next week, well in time for the lending organisations spring meetings 16-17 April.
An IMF spokesman said activation was just a ''natural consequence of ratification.''