The International Monetary Fund has expanded and enhanced its lending instruments to help contain future financial crises.
The IMF executive board approved an increase in duration and credit available under the existing Flexible Credit Line. FCL was established last year to cater to nations with “very strong fundamentals, policies, and track records of policy implementation,” allowing them to either draw on the credit line or treat it as a precautionary instrument. Colombia, Mexico and Poland applied for FCL but did not use the available loans, according to The Washington Post.
The Washington-based lender will also establish a new Precautionary Credit Line for member stations with sound policies but do not meet the requirements of FCL.
IMF did not specify whether nations are expected to immediately access the new program nor did it indicate how many of its 187 member states might qualify for it, The Washington Post reports.
“These decisions expand and reinforce the IMF’s crisis-prevention toolkit and mark an important step in our ongoing work with our membership to strengthen the global financial safety net. The enhanced Flexible Credit Line and new precautionary credit line will enable the Fund to help its members protect themselves against excessive market volatility,” said IMF Managing Director Dominique Strauss-Kahn.
IMF loans are traditionally extended to nations already caught in significant economic trouble, The Washington Post reports.
