A new round of bilateral borrowing has been approved by the board of the International Monetary Fund (IMF) from January 1, 2021, to succeed the current bilateral borrowing agreements (BBAs) currently in place through end-December 2020 on Tuesday.
The new round will adopt the same framework as that agreed in 2016 for the current BBAs. The new BBAs will have an initial term of three years through end-2023, which is extendable by one more year through end-2024, a press release from the organization revealed.
The move is designed to help the IMF maintain a lending capacity of US$1 trillion for the next few years, ensuring its ability to respond to members’ needs.
“The BBAs are the IMF’s third line of defense after quotas and the New Arrangements to Borrow (NAB). Today’s Executive Board decision is part of a broader package on IMF resources and governance reform endorsed by the IMF membership during the 2019 Annual Meetings, and builds on the Board’s January 2020 approval of a doubling of the NAB and guidance on quota reforms,” the press release reads.
The new BBAs and the doubling of the NAB are expected to take effect on January 1, 2021, subject to timely approvals by creditor member countries and their institutions. IMF said that this move is critical at this point as the world faces a pandemic that has caused disturbances in economic activities in most nations.