IMF borrowing: GAB and NAB

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The quota subscriptions of the IMF's member countries are the primary source of financial resources for the IMF. Some members, however, have committed to lend the IMF supplementary funds when needed to avert or cope with damage to the international monetary system. Two sources of supplementary financing exist: the General Arrangements to Borrow (GAB) and the New Arrangements to Borrow (NAB). Total resources available to the IMF under the GAB and the NAB combined are up to SDR 34 billion (nearly $45 billion).

General Arrangements to Borrow

Under the GAB, 11 participants (industrial countries or their central banks) have agreed to lend specific amounts of currencies to the IMF in certain circumstances at market-related interest rates. The GAB have been activated 10 times, most recently in 1998 (the first time in 20 years) to finance an augmentation of the Extended Fund Facility Arrangement for Russia. The IMF repaid these drawings in early 1999 after receiving the bulk of quota payments under the Eleventh General Review. Established in 1962, the GAB have been renewed every four or five years, most recently in 1997.

New Arrangements to Borrow

Following the Mexican financial crisis in December 1994, it became clear that substantially more resources might be needed to respond to future financial crises. Participants at a June 1995 meeting of the Group of Seven called on financially strong countries to develop financing arrangements that would double the amount available to the IMF under the GAB. The...