International Monetary Fund has on Tuesday said its board approved a new, three-year framework for bilateral borrowing agreements, ensuring that its full $1 trillion lending capacity will be maintained as member countries battle pressures from the coronavirus outbreak.

The new framewor is broadly the same as that enacted in 2016 for agreements that allow wealthier IMF member countries to lend directly to countries in need, the IMF said.

It extends the Fund’s bilateral borrowing arrangements from December 2020 through the end of 2023, with a one-year extension possible through the end of 2024.

The bilateral borrowing agreements are the IMF’s third line of defense after its main lending operations from quota resources - about $650 billion - and its multilateral crisis lending fund, the New Arrangements to Borrow (NAB).

The NAB currently has about $250 billion available, but IMF member countries agreed last year to double this amount to $500 billion. Bilateral borrowing agreements would make up the remainder of the IMF’s $100 trillion in lending capacity.

The IMF said that both the new bilateral framework and the expansion of the NAB would take effect on Jan. 1, 2021.“These are critical steps to ensure that the IMF can support its membership through the global pandemic now unfolding and beyond,” the IMF said.

Reuters