The IMF has been making a lot of noise recently, but their biggest move almost managed to slip through completely unnoticed.
The Executive Board of the International Monetary Fund (IMF) today approved a ten-fold expansion of the Fund’s New Arrangements to Borrow (NAB) and the transformation of the Fund’s premier standing credit arrangement into a more flexible and effective tool of crisis management. The NAB will be increased by SDR 333.5 billion (about US$500 billion) to SDR 367.5 billion (about US$550 billion), representing a major increase in the resources available for the Fund’s lending to its members.
This IMF program didn’t even exist until a year ago, when the IMF began issuing SDRs for the first time since the 1970’s. The IMF has only sold SDRs in times of global financial stress.
It makes a person wonder “Why now?” Why is the IMF suddenly tripling its lending facilities? What do they know that we don’t?
To answer that, let’s look at the announcements of the past few weeks.