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Business

Germany to bolster IMF with €15 billion loan

Text by NEWS WIRES

Latest update : 2009-09-23

Germany's central bank will lend 15 billion euros to the International Monetary Fund, beefing-up the Washington-based institution's capacity to assist poor countries in the current global economic crisis.

AFP - Germany's central bank will provide the International Monetary Fund with a 15-billion-euro (22-billion-dollar) loan to bolster the fund's lending capacity amid the global economic crisis, the IMF said late Tuesday.

The IMF and the Deutsche Bundesbank signed an agreement "to provide the fund with up to the equivalent of 15 billion euros," the Washington-based institution said.

The IMF said the agreement was part of a commitment made by the European Union in March 2009 to contribute up to 75 billion euros, which at the time were equivalent to about 100 billion dollars, to support its lending capacity.

The EU has since committed an additional 50 million euros (about 74 billion dollars) to the fund's expanded New Arrangements to Borrow (NAB), it said.

"The signing of the agreement with the Deutsche Bundesbank means the fund can now add these resources to those already available through borrowing agreements signed with other members," the IMF said.

The beefed-up financing is aimed at providing "timely and effective" balance of payments assistance to the fund's members in the current crisis.

The 186-nation fund said those agreements contribute toward an increase in fund resources that was requested by leaders of the Group of 20 developed and developing countries at a London summit in April and by the International Monetary and Financial Committee, the fund's board of governors.

The announcement came ahead of the two-day G20 summit that opens Thursday in the US city of Pittsburgh, Pennsylvania.

In a speech Thursday, IMF managing director Dominique Strauss-Kahn called for stepped-up aid to poor countries to help them recover from the global economic crisis.

"Low-income countries need about 55 billion dollars in additional external financing for this year and next," the IMF managing director said according to the text of a speech delivered at the Center for Global Development, a Washington think tank.

On Friday, the IMF announced its executive board had approved the sale of 403 tonnes of the fund's gold, worth an estimated 13 billion dollars, to boost its lending capacity to poor countries.

 

Date created : 2009-09-23

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