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Where the IMF Gets its Money


									                       Where the IMF Gets its Money
          Most resources for IMF loans are provided by member countries, primarily
          through their payment of quotas. Multilateral and bilateral borrowing
          arrangements provide a further backstop to IMF resources. In March 2011, the
          expanded and more flexible New Arrangements to Borrow (NAB) came into
          effect and was activated shortly thereafter. In addition, the Fund has signed a
          number of bilateral loan and note purchase agreements, which can be used to
          finance IMF-supported programs approved prior to the NAB activation. In the
          context of continued global financial instability, the Fund and creditor members
          are currently negotiating a 2012 round of bilateral loan and note purchase
          agreements to backstop quota and expanded NAB resources. Concessional
          lending and debt relief for low-income countries are financed through separate
          contribution-based trust funds.

   The quota system
   Each member of the IMF is assigned a quota, based broadly on its relative size in the world
   economy, which determines its maximum contribution to the IMF’s financial resources. Upon
   joining the IMF, a country normally pays up to one-quarter of its quota in the form of widely
   accepted foreign currencies (such as the U.S. dollar, euro, yen, or pound sterling) or Special
   Drawing Rights (SDRs). The remaining three-quarters are paid in the country’s own

   Quotas are reviewed at least every five years. Ad hoc quota increases of 1.8 percent were
   agreed in 2006 as the first step in a two-year program of quota and voice reforms. Further
   ad hoc quota increases were approved by the Board of Governors in April 2008, resulting in
   an overall increase of 11.5 percent. The 2008 reform came into effect in March 2011
   following ratification of the amendment to the IMF’s Articles by 117 member countries,
   representing 85 percent of the IMF’s voting power.

   The Fourteenth General Review of Quotas was completed two years ahead of the original
   schedule in December 2010, with a decision to double the IMF’s quota resources to
   SDR 476.8 billion. Members have committed to using best efforts to making quotas under
   the Fourteenth Review effective in October 2012.

   Earlier reviews concluded in January 2003 and January 2008 resulted in no change in

   Gold holdings
   The IMF’s gold holdings amount to about 90.5 million troy ounces (2,814.1 metric tons),
   making the IMF the third largest official holder of gold in the world. However, the IMF’s
   Articles of Agreement strictly limit its use. If approved by an 85 percent majority of voting
   power of member countries, the IMF may sell gold or may accept gold as payment by
   member countries but it is prohibited from buying gold or engaging in other gold

External Relations Department  Washington, D.C. 20431  Telephone 202-623-7300  Fax 202-623-6278
                    Factsheet URL:

In December 2010, the IMF concluded the limited sales program covering 403.3 metric tons
of gold, accounting for about one-eighth of its holdings, as approved by the Executive Board
in September 2009. Sales totaling 222 tons were made to official holders, including the
Reserve Bank of India (200 tons), the Bank of Mauritius (2 tons), the Central Bank of
Sri Lanka (10 tons), and the Bangladesh Bank (10 tons). The gold sale program was
conducted under strong safeguards to avoid market disruption and all gold sales were at
market prices, including direct sales to official holders.

Profits on the sale will fund an endowment as part of the IMF’s new income model, agreed
to put the institution’s finances on a sustainable footing. The Executive Board also agreed
that SDR 0.5–0.6 billion (end-2008 net present value terms) in resources linked to gold
sales would be used to subsidize financing for low-income countries and boost the IMF’s
concessional lending. In February 2012, the Executive Board approved the distribution of
SDR 700 million attributed to part of the windfall profits from the recent gold sales from the
IMF’s General Reserve to the membership. The distribution will be made to all member
countries in proportion to their quotas on the date of the distribution, and will be effected
only when member countries provide satisfactory assurances that they would make new
PRGT subsidy contributions equivalent to at least 90 percent of the amount distributed
(SDR 630 million).

The IMF’s lending capacity
The IMF can use its quota-funded holdings of currencies of financially strong economies to
finance lending. The Executive Board selects these currencies every three months. Most are
issued by industrial countries, but the list also has included currencies of lower income
countries such as Botswana, China, and India. The IMF’s holdings of these currencies,
together with its own SDR holdings, make up its own usable resources. If needed, the IMF
can temporarily supplement these resources by borrowing (see below).

The amount the IMF has readily available for new (non-concessional) lending is indicated by
its forward commitment capacity. This is determined by its usable resources (including
unused amounts under loan and note purchase agreements and amounts available under
the IMF’s two standing multilateral borrowing arrangements (see below)), plus projected
loan repayments over the subsequent twelve months, less the resources that have already
been committed under existing lending arrangements, less a prudential balance.

Borrowing arrangements
The IMF maintains two standing multilateral borrowing arrangements—the expanded NAB
and the General Arrangements to Borrow (GAB)— with a borrowing capacity of
SDR 370.0 billion (about $570 billion). If the IMF believes that its forward commitment
capacity might fall short of its member countries’ needs—for example, in the event of a
major financial crisis—it can activate these arrangements.

In April 2010, the Executive Board adopted a proposal on an expanded and more flexible
NAB, by which the NAB was expanded to SDR 367.5 billion (about $560 billion), with the
addition of 13 new participating countries, including a number of emerging market countries
with significant contributions to this large expansion. The expanded NAB came into effect on
March 11, 2011 and was activated shortly after for a period of six months in the amount of
SDR 211 billion (about $320 billion) The NAB was most recently activated for the maximum
period of six months commencing on April 1, 2012. A further six-month, full activation is

expected to be recommended for the period of October 1, 2012 through March 31, 2013. On
November 15, 2011, the National Bank of Poland joined the NAB, bringing its total size to
SDR 370.0 billion (about $570 billion) (see factsheet on IMF Standing Borrowing

Since 2009, the IMF has signed a number of bilateral loan agreements. Currently, the IMF
has sixteen bilateral loan agreements worth about $200 billion. The Executive Board
approved in July 2009 a framework for issuing notes to the official sector. Issuance of the
notes allows member countries to invest in a safe instrument and helps ensure that the IMF
can continue to provide timely and effective balance of payments assistance to its member
countries. The IMF currently has two bilateral note purchase agreements for about
$60 billion. A list of bilateral loan and note purchase agreements is available here. For NAB
participants with bilateral credit lines, these credit lines do not add to the total resources
available to the IMF under their NAB credit arrangements. Following the establishment of an
activation period under the NAB, bilateral credit lines of NAB participants will be used only to
finance commitments under IMF-supported arrangements that were approved prior to the
first NAB activation.

In April 2012, member countries announced additional pledges to increase the IMF’s
resources by over $430 billion. These 2012 bilateral loan and note purchase agreements
are under negotiations with members and are being made available for crisis prevention and
resolution and to meet the potential financing needs of IMF members. They are intended as
a final backstop, and will be drawn only if they are needed to augment existing quota and
expanded NAB resources.

IMF concessional lending and debt relief
The IMF provides two primary types of financial assistance to low-income countries: low-
interest loans under the Poverty Reduction and Growth Trust (PRGT), and debt relief under
the Heavily Indebted Poor Countries (HIPC) Initiative, the Multilateral Debt Relief Initiative
(MDRI), and Post-Catastrophe Debt Relief (PCDR). These resources come from member
contributions and the IMF itself, rather than from the quota subscriptions. They are
administered under the PRGT, the PRG-HIPC, MDRI-I and MDRI-II Trusts, and the PCDR
Trust, for which the IMF acts as Trustee.

The predecessor of the PRGT was established to provide lending to eligible low-income
countries in support of the related arrangements and to subsidize the market rate of interest
down to 0.5 percent per year. Loan resources of about $42 billion (SDR 25.8 billion) have
been committed by 23 contributors to the PRGT and its predecessors, while a larger number
of member countries have made subsidy contributions.

In July 2009, the Executive Board approved far-reaching reforms of the concessional
facilities, in which the PRGT replaced the PRGF-ESF Trust. As part of the reform package,
the Board also agreed to provide exceptional interest relief on its concessional loans to all
low-income countries, with zero interest payments through end-2011 and subsequently
extended to end-2012, to help them cope with the crisis. These reforms became effective in
January 2010, when all lenders and bilateral subsidy contributors to the PRGF-ESF Trust
consented to the reforms.

It is expected that these reforms will boost the resources available to low-income countries
to $17 billion during 2009-2014. To meet the new financing commitments, additional loan

resources of SDR 10.8 billion ($16 billion) and new subsidy resources of SDR 1.5 billion
($2.3 billion, end-2008 net present value terms) will need to be mobilized. It is envisaged
that, as in the past, the required additional loan resources will be mobilized through bilateral
contributions. Most of the needed subsidy resources will, however, come from the IMF’s
internal resources—including use of resources linked to the recently concluded gold sales—
with additional bilateral contributions of about SDR 0.2-0.4 billion ($0.3-0.6 billion) being
sought to complete the financing package.

On debt relief, the PRG-HIPC Trust was established to provide debt relief under the HIPC
Initiative and to subsidize PRGT lending. The resources available to the Trust consist of
grants and deposits pledged from 93 member countries and contributions from the IMF
itself. The bulk of the IMF’s contribution comes from off-market gold transactions made
during 1999–2000.

The MDRI-I and MDRI-II Trusts were established in early 2006 to provide debt relief under
the MDRI. Financed from the IMF’s own resources of SDR 1.5 billion in the Special
Disbursement Account (SDA), the MDRI-I Trust is to provide debt relief to countries (both
HIPCs and non-HIPCs) with per capita incomes at or below $380 a year (on the basis of
2004 gross national income). The MDRI-II Trust is to provide debt relief to HIPCs with per
capita incomes above $380 a year, with financing from bilateral resources of
SDR 1.12 billion transferred from the PRGT.

The PCDR Trust was established in June 2010 to provide post-catastrophe debt relief. The
Trust was initially financed by SDR 280 million (equivalent to around $422 million) of the
IMF’s own resources, and is expected to be replenished through future donor contributions,
as necessary.

In addition to the above, there is a separate administered account financed by a group of
member countries for interest subsidies on IMF emergency assistance to PRGT-eligible
countries in post-conflict or natural disaster situations.

                                      Quick Links on IMF Resources
                                           IMF Financial Activities
                                               IMF Finances
                                           Member Financial Data
                                     IMF's Financial Resources and Liquidity


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