The Group of Twenty (G-20) advanced and emerging market economies, along with the broader IMF membership, agreed on pledges to boost the institution’s lending capacity by more than $430 billion.
IMF Managing Director Christine Lagarde told a news conference at the start of the 2012 Spring Meeting of the organization, that the new commitments would almost double the IMF’s lending power.
The International Monetary Fund has been advocating the need to build a stronger global firewall of additional resources to contain any further financial crises.
Lagarde had earlier said that the global economy has entered a “timid” recovery and still faces high risks, adding that the IMF needs to participate in the international recovery effort by building additional firepower to promote global economic stability.
Since the start of the global economic crisis in 2007, the IMF has committed more than $300 billion in loans to its member countries.
In response to the crisis, the IMF also reformed its policies toward low-income countries and quadrupled its concessional lending.
After an April 20 meeting during the IMF-World Bank Spring Meetings in Washington, a joint statement issued by the G-20 and the IMF’s policy-setting International Monetary and Financial Committee (IMFC) said there are firm commitments to increase resources available to the IMF by more than $430 billion.
The statement added that these resources will be available for the whole membership of the IMF and not earmarked for any particular region.
“This effort, together with the national and regional structural, fiscal, and monetary actions that have been put in place in the past months, shows the commitment of the international community to safeguard global financial stability and put the global economic recovery on a sounder footing,” the statement said.
Lagarde said in a statement that the G-20 pledges signal “the strong resolve of the international community to secure global financial stability and put the world economic recovery on a sounder footing.
“These resources are being made available for crisis prevention and resolution and to meet the potential financing needs of all IMF members,” Lagarde stated. “They will be drawn only if they are needed, and if drawn, will be refunded with interest.”