The Executive Board of the International Monetary Fund (IMF) has approved to lower the Fund’s borrowing costs for members by 36 per cent or about $1.2 billion annually.
The IMF Managing Director, Kristalina Georgieva, made this known in a statement issued on Friday, October 11, 2024
Georgieva said this was the outcome of the Fund’s Board Review of Charges and the Surcharge Policy on Friday,
She stated: “In a challenging global environment and at a time of high interest rates, our membership has reached a consensus on a comprehensive package.
“This package substantially reduces the cost of borrowing, while safeguarding the IMF’s financial capacity to support countries in need.
“The approved measures will lower IMF borrowing costs for members by 36 per cent, or about $1.2 billion annually.
“The expected number of countries subject to surcharges in fiscal year 2026 will fall from 20 to 13.
IMF: Inflation’ll drop in 2024
“This is achieved by reducing the margin over the Special Drawing Rights (SDR) interest rate, raising the threshold for level-based surcharges, lowering the rate for time-based surcharges, and increasing the thresholds for commitment fees.”
Georgieva said the approved package would take effect on November 1, 2024.
The IMF boss added: “While substantially lowered, charges and surcharges remain an essential part of the IMF’s cooperative lending and risk management framework, where all members contribute and all can benefit from support when needed.
“Together, charges and surcharges cover lending intermediation expenses, help accumulate reserves to protect against financial risks, and provide incentives for prudent borrowing.
“This provides a strong financial foundation that allows the IMF to extend vital balance of payments support on affordable terms to member countries when they need it most.”
Georgieva said the reforms would help to ensure that the IMF continues serving its members in a changing world.
She added charges and surcharges did not apply to borrowing from the IMF’s Poverty Reduction and Growth Trust, under which low-income members receive financial support on concessional terms.
- Brazil shuts 2,000 betting sites - October 12, 2024
- Kano anti-graft agency probes N1.5bn foreign scholarship fraud - October 12, 2024
- Investors gain N74bn at stock market - October 12, 2024
