The Executive Board of the International Monetary Fund (IMF) has approved to lower the IMF’s borrowing costs for members by 36 per cent, or about 1.2 billion dollars annually.
A statement, issued by the IMF Press Centre, said this was the outcome of the fund’s Board Review of Charges and the Surcharge Policy on Friday.
It said following the outcome of the meeting, Ms Kristalina Georgieva, Managing Director of the IMF, issued the following statement.
“In a challenging global environment and at a time of high interest rates, our membership has reached consensus on a comprehensive package.
“This package substantially reduces the cost of borrowing, while safeguarding the IMF’s financial capacity to support countries in need.
“The approved measures will lower IMF borrowing costs for members by 36 per cent, or about 1.2 billion dollars annually.
“The expected number of countries subject to surcharges in fiscal year 2026 will fall from 20 to 13.
“This is achieved by reducing the margin over the Special Drawing Rights (SDR) interest rate, raising the threshold for level-based surcharges, lowering the rate for time-based surcharges, and increasing the thresholds for commitment fees.”
Georgieva said the approved package would take effect on Nov. 1, 2024.
“While substantially lowered, charges and surcharges remain an essential part of the IMF’s cooperative lending and risk management framework, where all members contribute and all can benefit from support when needed.
“ Together, charges and surcharges cover lending intermediation expenses, help accumulate reserves to protect against financial risks, and provide incentives for prudent borrowing.
“This provides a strong financial foundation that allows the IMF to extend vital balance of payments support on affordable terms to member countries when they need it most.”
The IMF boss said the reforms would help ensure that the IMF would continue serving its members in a changing world.
The statement said charges and surcharges did not apply to borrowing from the IMF’s Poverty Reduction and Growth Trust, under which low-income members receive financial support on concessional terms.(NAN)