While the implementation of the 14th quota review on 26 January 2016 secures the IMF's resources, doubling its permanent quota resources, it does not significantly increase the Fund's overall resources because the members agreed in 2011 to reduce borrowing resources (New Arrangements to Borrow – NAB, see below) in the same amount. The IMF's total resources thus went from 880 billion to 940 billion SDR – i.e. USD 1,310 billion – (with a rise in quotas from 238b SDR to 477b SDR, a drop in NAB from 370b SDR to 182b SDR, and bilateral loans stabilised around 270b SDR).
France's commitments to the IMF in March 2016 amounted to 57 billion SDR (€77 billion), most of which comes from our €31.4 billion bilateral loan of 2012.
To finance its lending operations, the IMF has resources taken from its members' quotas, which consist of assets in SDR and in “usable” national currencies of the member countries considered to have a sufficiently solid external position for these assets to be used to finance the IMF's lending1.
If the IMF considers that the resources it gains from the quotas might not be sufficient to meet the needs of its member states, in case of severe financial crisis for example, it may with the agreement of its creditors take advantage of two permanent multilateral borrowing mechanisms whose total capacity in March 2016 was 199 billion SDR (around $277 billion):
In 2012, against the background of a deteriorating economic and financial situation in the euro area, countries committed to increasing the IMF's resources in the form of bilateral loan agreements with a maturity of two years, renewable twice for one year. Thirty-three agreements are in effect in March 2016 for a total of 280 billion SDR (USD 390 billion). They constitute a third line of defence for financial resources, after the quotas and the NAB, and will only be activated if the Forward Commitment Capacity drops below a threshold of 100 billion SDR and the NAB are activated, or there are no more uncommitted resources available through the NAB. The IMF Executive Board of 13 July 2015 approved the second one-year extension. This extension was granted by France for the bilateral loan signed in 2012 in the amount of €31.4 billion.
In its report on the sufficiency of the Fund's resources (SM/16/65, 11 March 2016), the IMF pointed out that medium-term forecasts are characterised by exceptionally high levels of uncertainty, market volatility and vulnerabilities, in both the advanced and emerging economies. As a result, the potential use of the Fund's resources may be marked by increased demand for financing from countries with larger GDPs and advanced economies, broader programmes over longer periods, and a larger share of precautionary credit lines.
The IMF grants zero-interest loans3 to low-income countries as part of the Poverty Reduction and Growth Trust (PRGT), which is legally and financially separate from the IMFs general resources. It is made up of a General Loan Account that provides most of the loans of funds to low-income countries, and a General Subsidy Account that finances the difference between the market rates paid to funders and the concessional rates requested of borrowers; loan and subsidy accounts by facility were created for donors who prefer to allocate their contributions to specific facilities rather than making them available to all PRGT facilities. The funds needed to finance the PRGT's loans come from bilateral borrowing arrangement at market interest rates. Additional resources, in particular donations and a portion of the profit from gold sales, are also dedicated to subsidising PRGT loan interest rates. In 2012 the Fund adopted a strategy to create an average annual long-term lending capacity of 1.25 billion SDR.
 The Financial Transactions Plan (FTP) is adopted each quarter by the Executive Board based on the current list of countries considered to have a solid external payments position; the FTP organises the distribution of loans while maintaining equity between these countries, because the loans are limited to 9.38% of their quota.
 To make the broader NAB a more effective crisis prevention and management tool, the loan-by-loan activation of the initial arrangements to borrow was replaced in 2010 by the introduction of periods of general activation of maximum six months.
 The IMF reviews the interest rates of all the PRGT concessional facilities every two years; the latest revision took place at end-2014. With the global economic crisis, the Executive Board approved the temporary suspension of interest for concessional loans at the end of December 2014.
Updated on: 12/01/2016 12:04