Explaining the IMF's financial resources and liquidity position

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How much does the IMF have available to lend? The IMF recently introduced a more transparent measure of its capacity to make new loans. The FCC, or one-year-forward commitment capacity, gives a concrete figure of the resources that the IMF has available for lending in the coming year. The IMF computes the FCC from the total resources in its balance sheet as follows (see table).

The total resources of the IMF comprise holdings of its members' currencies; SDRs; gold; "other assets," such as buildings and receivables; and unused amounts under lines of credit (when activated) that the IMF has with a number of its members--the General Arrangements to Borrow (GAB) and the New Arrangements to Borrow (NAB). Some of these resources are not usable for lending. For example, the use of gold is severely restricted by the IMF's Articles of Agreement. In addition, the currencies of members that have outstanding IMF loans or relatively weak external positions are not usable because these members are not in a position to make foreign exchange assets available in exchange for their currencies.

"Other assets" are also nonusable. When nonusable resources are subtracted from total resources, what remain are the usable resources from which the IMF can finance its operations and transactions.

The usable resources consist of the currencies of financially strong members (as determined by the IMF's Executive Board), SDR holdings, and unused amounts under activated lines of credit.

The IMF's capacity to commit new loans a year ahead is smaller than its base of usable resources because some of the usable resources have already...