The International Monetary Fund (IMF) said on Thursday that the resources member countries committed are welcomed and would be safeguarded, and the IMF would strive to meet the timeline of the 2010 quota and governance reform.
The pledges of member countries to join the resources increase demonstrated "broad commitment" of the membership to ensure the IMF has the resources it needs to carry out its mandate and to help preserve global financial stability, IMF spokesman Gerry Rice said in a news briefing on Thursday.
As a major breakthrough of the group of 20 summit in Mexico resort Los Cabos last week, countries formalized their funding pledges of 456 billion U.S. dollars to the IMF, helping to almost double its financial firepower to shield the world economy from Europe's deepening crisis, up from the 430 billion dollars the Washington-based global lender secured at the April Spring meetings.
So far, a total of 37 IMF member countries, representing about three-fifths of total quota of the Fund, have joined the collective effort. Among them, China committed 43 billion dollars, with Brazil, Russia, India and Mexico committing 10 billion dollars each.
Chritine Lagarde, managing director of the Fund, said then the "sense of convergence" would facilitate the comprehensive and coordinated approach to global economic and financial challenges advocated by the IMF.
Rice reiterated that the IMF is committed to assuring the members' interests and resources are safeguarded. He stressed that additional resources would be used to build a global firewall and be made available to all member countries in need.
Rice highlighted that the resources would be drawn only if they are needed as a second line of defense after resources already available from quota and the existing New Arrangements to Borrow ( NAB) are substantially used.
While quota subscriptions of member countries are the IMF's main source of financing, the Fund can supplement its quota resources through borrowing if it believes they might fall short of members' needs. Through the NAB, the IMF's main backstop for quota resources, member countries could lend additional resources to the IMF.
The Fund approved the modalities for bilateral borrowing earlier in June, which will allow the Fund to significantly boost its resources. Member countries could make additional resources available to the Fund through bilateral loans or note purchasing.
Moreover, Rice added if the additional resources are drawn, they will be repaid with interests.
In late 2011, the IMF executive board adopted a new rule for setting the basic rate of charge levied by the IMF on lending. The basic rate of charge is composed of the interest rate on the Special Drawing Right (SDR) plus a margin.
He also said the IMF management will push for "as much progress as possible" to meet the timeline of the 2010 quota and governance reform package, which includes doubling the IMF's quotas and shifting over 6 percent of the Fund quota to emerging or under- represented countries.
The IMF has been striving to make the 2010 reform package effective before its annual meetings scheduled for this October. Rice noted that it would continue to be their determination to push for that progress.