Page last updated at 00:13 GMT, Wednesday, 25 March 2009

IMF announces new lending reforms

IMF Managing Director Dominique Strauss-Kahn, file photo, October 2008
Mr Strauss-Kahn said the reforms would help member states

The International Monetary Fund has announced major reforms of its lending procedures to member states.

The reforms aim to provide flexible credit terms for countries with strong economic policies which could be at risk in the current economic climate.

They will help countries to weather the crisis and return to sustainable growth, the IMF says.

The IMF says the new reforms would streamline loan conditions, simplify costs and increase access to resources.

Countries that qualify will be able to borrow larger amounts and will not be subject to the controversial conditions that the IMF usually requires of borrowers.

"These reforms represent a significant change in the way the Fund can help its member countries - which is especially needed at this time of global crisis," said IMF managing director Dominique Strauss-Kahn.

Precautionary loans

The new system replaces a facility that was created last October for the same purpose that has not been used, says the BBC's economics correspondent Andrew Walker.

The IMF says the new arrangement is likely to be seen by member countries as more useful.

Countries will be able to borrow larger amounts, and the repayment period is longer - a maximum of five years.

Loans will also be available on a precautionary basis to prevent financial crises, as well as to clear up afterwards.

Few low income nations are likely to qualify for these loans, as most of those meeting the eligibility criteria are rich or middle income countries.

But for poorer nations the IMF says it is working to strengthen its capacity to provide emergency support.

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