IMF announces unprecedented increase in financial support to low-income countries

In addition, the IMF’s Executive Board recently backed the Managing Director's proposal for a new general SDR allocation of $250 billion, of which more than $18 billion will help bolster the foreign exchange reserves of low-income countries. If approved by the IMF's Board of Governors, the proposed SDR allocation would take place at the end of August.

In order for the IMF to meet the new financing commitments, additional loan resources of SDR 9 billion will need to be mobilized from bilateral contributions. In addition, new subsidy resources of SDR 1.5 billion will need to be mobilized from the IMF’s internal resources—including from the use of revenue from the envisaged gold sales, and through bilateral contributions—to help cover the cost of concessional interest rates.



Mr. Strauss-Kahn said that “All this represents a historic effort by the Fund to help the world’s poor.” He added that there would be greater emphasis in Fund-supported programs on poverty reduction and growth objectives across all its new lending instruments, including targets to safeguard social and other priority spending.

The IMF already announced this year a more flexible approach to conditionality in the programs it supports: structural reform conditions have been streamlined for all Fund-supported programs. Structural conditionality in medium-term, low-income country programs will become more flexible and focused on core goals tailored to each country. IMF-supported programs have also accommodated larger fiscal deficits during the crisis in most low-income countries.

“Since the crisis hit, we have been listening and responding to our member countries,” said Mr. Strauss-Kahn. “The scaling up of the IMF’s support not only will help these low-income countries weather a crisis that is not of their making. Once the crisis has passed, it also will pave the way for progress in the battle against poverty.”

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(This is a press release of IMF)

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