IMF Offers to Deepen Third World Debt

The Cheap High is Never as Good the Second Time!

IMF offers new loans to low-income countries

31. July 2009. | 07:12

Source: EMportal, Washington File

The International Monetary Fund (IMF) announced a package of measures aimed at providing loans of up to $17 billion over five years to low-income countries that have been hit hardest by the global economic crisis.

The International Monetary Fund (IMF) announced a package of measures aimed at providing loans of up to $17 billion over five years to low-income countries that have been hit hardest by the global economic crisis.

“This is an unprecedented scaling up of IMF support for the poorest countries, in sub-Saharan Africa and all over the world,” IMF Managing-Director Dominique Strauss-Kahn said July 29 in Washington. The Group of 20 (G20) nations asked the IMF to respond to the global financial crisis, he added, and this is part of that effort.

The resources — which include funds generated by the planned sale of IMF gold — are expected to increase IMF lending up to $17 billion through 2014, including up to $8 billion over the next two years, the fund said.

The IMF said there would be no interest payments through the end of 2011 for loans to low-income members and lower interest rates on a permanent basis after that. “A new set of lending instruments will underpin this increased support,” the fund said.

While the current economic crisis began in the advanced Western economies, its most visible impact has been on emerging-market countries, the fund said. A third wave of the crisis has threatened the economic achievements of the last decade for many low-income countries.

As part of its response, the IMF more than doubled its financial assistance to low-income countries. New lending to low-income countries through mid-July reached $2.9 billion compared with $1.5 billion for all of 2008. Supporting this effort further, the IMF will double average loan-access limits for the poorest nations.

“All this represents a historic effort by the fund to help the world’s poor,” Strauss-Kahn said. And there will be greater emphasis in IMF-supported programs on poverty reduction and growth objectives, which will include targets to safeguard social and other priority spending, he added.

“We are responding with a historic set of actions in terms of support for the world’s poor. The new resources and new means of delivering them should help prevent millions of people from falling into poverty,” Strauss-Kahn said.

The G20, composed of advanced and emerging economies, met in London in early April, and will meet again in Pittsburgh on September 24–25.

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