Abstract
From a member state’s perspective, providing financial assistance is probably considered the core responsibility of the IMF and a key advantage of membership. Art. V IMF Articles of Agreement authorises the Fund to perform financial assistance and to develop suitable policies for its lending activities in order to remedy actual or potential balance of payment problems of member states. Yet unlike banks, development organizations or private creditors the IMF does not offer financial support for specific projects nor for balancing out purely fiscal disequilibria. In short, the IMF deals with issues of illiquidity, not of insolvency.
This is a preview of subscription content, log in via an institution.
Buying options
Tax calculation will be finalised at checkout
Purchases are for personal use only
Learn about institutional subscriptionsNotes
- 1.
IMF factsheet, IMF lending, https://www.imf.org/external/np/exr/facts/howlend.htm.
- 2.
Lastra (2015, p. 440); this chapter draws heavily on Lastra’s excellent and much more comprehensive analysis of IMF lending.
- 3.
- 4.
Lastra (2015, p. 441).
- 5.
IMF (2014, p. 107).
- 6.
See for example Art. 30 sec. 5 ESCB Statute.
- 7.
Lastra (2015, p. 442).
- 8.
Lastra (2015, p. 438).
- 9.
IMF (2001, p. 66).
- 10.
- 11.
Lastra (2015, p. 484). For a statistical overview of the IMF resources see http://www.imf.org/external/np/tre/liquid/2015/0615.htm.
- 12.
The IMF “refers collectively to the various policies on the use of the Funds resources as facilities” despite the terminology being slightly imprecise, IMF review of Fund facilities—preliminary considerations, p. 3, https://www.imf.org/external/np/pdr/fac/2000/faciliti.pdf.
- 13.
Lastra (2015, p. 483).
- 14.
IMF (2001, p. 5).
- 15.
The purchase means that the IMF acquires a repurchase claim on the borrowing member, which is displayed on the asset side of the IMF balance sheet. The other member (creditor member) that provided the reserve assets for the exchange in turn acquires a claim on the IMF, called a reserve tranche position and displayed on the liability side of the balance sheet; see Lastra (2015, p. 483).
- 16.
Lastra (2015, p. 463); the term credit tranche is a logical consequence of the fact that IMF lending only starts once the reserve tranche has been used to the effect that the quota subscription consists fully of the member’s currency.
- 17.
Lastra (2015, p. 463).
- 18.
Executive Board, Decision No. 12864-(02/102), 9/25/2002, as amended by Decision No. 13814-(06/98), 11/15/2006, para. 9.
- 19.
Executive Board, Decision No. 12865-(02/102), 9/25/02, https://www.imf.org/External/np/pdr/cond/2002/eng/guid/092302.pdf.
- 20.
Lastra (2015, p. 484).
- 21.
A list of available facilities under concessional lending can be found here: http://www.imf.org/external/np/exr/facts/concesslending.htm. For a graphic overview of the IMF lending landscape see http://www.imf.org/external/np/exr/map/lending/index.htm.
- 22.
Lastra (2015, p. 468).
- 23.
Executive Board, Decision No. 12865-(02/102), 9/25/02, https://www.imf.org/External/np/pdr/cond/2002/eng/guid/092302.pdf.
- 24.
- 25.
Executive Board, Decision No. 12864-(02/102), 9/25/02, as amended, para. 7 (c), https://www.imf.org/External/np/pdr/cond/2002/eng/guid/092302.pdf.
- 26.
Lastra (2015, pp. 464 and 481).
- 27.
Ex-ante means a rigorous pre-qualification process, which, once passed, allows for prompt and relatively unconditional financing. The Flexible Credit Line (FCL) is an example of ex-ante conditionality. See Lastra (2015, p. 475).
- 28.
Keynes and White disagreed significantly on the issue. The former strongly advocated free access to liquidity while the latter clearly favored conditional access. See Lastra (2015, p. 469).
- 29.
Gold (1979, p. 2).
- 30.
Gianviti (1999, p. 56).
- 31.
Executive Board, Decision No. 284-4, 3/10/1948, and Decision No. 102-(52/11). 2/13/1952.
- 32.
Executive Board, Decision No. 2603-(68/132), 9/20/1968.
- 33.
Important milestones were the Executive Board Decisions of 1979 (No. 6056-(79/38)); 2002 (No. 12864-(02/102)) and consistently updated ‘Operational Guidelines’ issued to IMF staff since 2003, see for the latest (2014) https://www.imf.org/external/np/pp/eng/2014/072314.pdf.
- 34.
Lastra (2015, p. 472).
- 35.
See Lastra (2015, p. 472 s).
- 36.
For a detailed overview of the critique directed at conditionality see Lastra (2015, p. 474 ss).
- 37.
Uniform treatment does not mean equal treatment regardless of the circumstances but rather equal treatment of similar cases.
- 38.
Lastra (2015, p. 479).
- 39.
Lastra (2015, p. 477).
- 40.
Lastra (2015, p. 478 s).
- 41.
- 42.
For a detailed analysis of the subject see Lastra (2015, p. 524 ss).
- 43.
- 44.
Lastra (2015, p. 534). The assessment is not necessarily true today since financing patterns shifted from loans (commercial banks) to bonds (private citizens).
- 45.
Lastra (2015, p. 536 s).
- 46.
On the lender of last resort function of central banks see Lastra (2015, p. 45 ss).
- 47.
See Lastra (2015, p. 542 s).
- 48.
CUTEG (2004), para. 1.
- 49.
See also Proctor (2005, p. 624 s).
- 50.
Proctor (2012, p. 672 ss).
- 51.
Smits (1997, p. 442 ss).
- 52.
- 53.
- 54.
IMF, 2015 Article IV Consultation with the Euro Area Concluding Statement of IMF Mission http://www.imf.org/external/np/ms/2015/061815.htm.
- 55.
IMF, Press Release No. 98/64, 12/22/1998, https://www.imf.org/external/np/sec/pr/1998/pr9864.htm.
References
CUTEG (2004) Definition of currency union. https://www.imf.org/external/np/sta/bop/pdf/cuteg1.pdf
Gianviti F (1999) Decision making in the IMF. Current developments in monetary and financial law, vol 1. IMF, Washington, pp 31–67
Gold J (1979) Conditionality. IMF Pamphlet series No. 31. IMF, Washington
IMF (2001) Financial organization and operations of the IMF, Pamphlet series No. 45, 6th edition 2001, IMF, Washington https://www.imf.org/external/pubs/ft/pam/pam45/pdf/pam45.pdf
IMF (2014) IMF financial operations 2014. http://www.imf.org/external/pubs/ft/finop/2014/index.htm
Lastra R (2015) International financial and monetary law, 2nd edn. Oxford University Press, Oxford
Proctor C (2005) Mann on the legal aspects of money, 6th edn. Oxford University Press, Oxford
Proctor C (2012) Mann on the legal aspects of money, 7th edn. Oxford University Press, Oxford
Smits R (1997) The European Central Bank, institutional aspects, 1st edn. Kluwer Law International, The Hague
Zilioli C, Selmayer M (2001) The law of the European Central Bank, 1st edn. Hart Publishing, Oxford
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
Copyright information
© 2017 The Author(s)
About this chapter
Cite this chapter
Herrmann, C., Dornacher, C. (2017). IMF Lending (Financial Assistance). In: International and European Monetary Law. SpringerBriefs in Law. Springer, Cham. https://doi.org/10.1007/978-3-319-57642-8_6
Download citation
DOI: https://doi.org/10.1007/978-3-319-57642-8_6
Published:
Publisher Name: Springer, Cham
Print ISBN: 978-3-319-57641-1
Online ISBN: 978-3-319-57642-8
eBook Packages: Law and CriminologyLaw and Criminology (R0)