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A Factsheet - February 2009

IMF Borrowing Arrangements

The GAB and NAB are credit arrangements between the IMF and a group of members and institutions to provide supplementary resources of up to SDR 34 billion (about US$50 billion) to the IMF to forestall or cope with an impairment of the international monetary system or to deal with an exceptional situation that poses a threat to the stability of that system. Separately, Japan has agreed to lend the Fund up to US$100 billion (about SDR 68 billion) as a measure to help overcome the current global economic and financial crisis.

The General Arrangements to Borrow

The GAB enables the IMF to borrow specified amounts of currencies from 11 industrial countries (or their central banks), under certain circumstances, at market-related rates of interest. The potential amount of credit available to the IMF under the GAB totals SDR 17 billion (about $25 billion), with an additional SDR 1.5 billion available under an associated arrangement with Saudi Arabia.

The GAB, established in 1962, has been renewed ten times, most recently in November 2007 for a five year period from December 2008. In response to the growing pressures on the IMF's resources caused by the emergence of the debt crisis in Latin America in 1982, a broad review was undertaken in 1983. It resulted in a substantial increase in the credit lines, from about SDR 6 billion to SDR 17 billion. Other major amendments to earlier GAB provisions permit the IMF to use it to finance lending to nonparticipants in the GAB, if the IMF faces a situation where it has inadequate resources of its own. The earlier GAB carried a rate of interest below market rates; this rate was raised at the time of the GAB enlargement and made equal to the SDR interest rate.

The New Arrangements to Borrow

Following the Mexican financial crisis in 1994, concern that substantially more resources might be needed to respond to future financial crises prompted participants in the 1995 G-7 Halifax Summit to call on the G-10 and other financially strong countries to develop financing arrangements that would double the amount available to the IMF under the GAB. The IMF's Executive Board adopted a decision establishing the NAB, with effect from November 1998.

The NAB is a set of credit arrangements between the IMF and 26 members and institutions. These arrangements have been renewed twice, most recently in November 2007 for a further period of five years from November 2008.

The NAB specifies that it is to be the facility of first and principal recourse vis-à-vis the GAB except in limited circumstances (involving Fund credit to a member that is a participant of both the GAB and NAB, or where a proposal for calls under the NAB is not accepted). The maximum amount of resources available to the IMF under the NAB and GAB is SDR 34 billion (about $50 billion).

Commitments from individual participants are based predominantly on relative economic strength, as measured by IMF quotas. An IMF member or institution that is not currently a participant in the NAB may be accepted as a participant at the time of a renewal of the decision, if the IMF and participants representing 80 percent of the total credit arrangements agree. Chile's participation in the NAB was approved in 2002 at the time of its first renewal. New participants may also be accepted at other times under certain circumstances.

When have the GAB and NAB been activated?

A proposal for calls on the GAB or the NAB by the IMF's Managing Director can become effective only if it is accepted by their participants, and the proposal is then approved by the IMF's Executive Board. The NAB has been activated once-to finance a Stand-by Arrangement for Brazil in December 1998, when the IMF called on funding of SDR 9.1 billion, of which SDR 2.9 billion was used. The GAB has been activated ten times. The last time was in July 1998 for an amount of SDR 6.3 billion in connection with the financing of an Extended Arrangement for Russia. Of that amount, SDR 1.4 billion was used. Both activations were terminated in March 1999, when the Fund repaid the outstanding amounts following payments of quota increases under the Eleventh General Review of Quotas and the improvement in the Fund's liquidity position.

Borrowing Agreement with Japan

On February 13, 2009, the IMF and the Government of Japan concluded a bilateral borrowing agreement under which Japan committed to lend up to US$100 billion (about SDR 68 billion) to the IMF. This agreement makes a substantial contribution to the multilateral effort to ensure the adequacy of the IMF’s financial resources. Supplementary resources available under this loan will help ensure that the Fund can continue to provide timely and effective balance of payments assistance to its members in the current global financial turbulence.

The initial period of the commitment under the agreement with Japan is for one year, and may be extended by the Fund for up to a total of five years if warranted by the Fund's liquidity situation and its actual and prospective borrowing needs. Each drawing will carry interest at the SDR interest rate.