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Fund appropriateness – preliminary considerations
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Summary:
This paper provides the background for an initial reflection on the medium-term reasonable size of the Fund’s total lending capacity. The paper deals with the development of the demand for funds during the global crisis. The paper also argues that the world economy is changing fundamentally, which is having an impact on the size of the fund. In light of this, the analysis suggests that the current total lending capacity of the Fund should be viewed as a minimum. If the fund were to change its credit line, additional resources would be required. Although the funding structure of the Fund should be largely based on quotas, the staff see strong reasons for continuing to underpin quota resources with a standing credit facility. Members would need to act quickly to maintain the Fund’s current overall lending capacity.
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