IMF Fund Offerings May Grow

WASHINGTON -- The International Monetary Fund is considering opening up its coffers to larger loans in a move that may free up tens of billions of dollars for developing nations and the former Soviet bloc, international monetary sources said. "We're looking at ways of expanding the access of those countries to fund resources," said one source who declined to be identified. Under a proposal put forward by IMF management but yet to be considered by the organization's board, the Fund would substantially increase the maximum size of individual IMF credits by raising so-called access limits on its loans. The move seems aimed mainly at putting extra money in the hands of Russia and other cash-strapped former Soviet states, although it would apply to all member nations of the Fund. Russia has already borrowed $3 billion from the Systemic Transformation Fund. That facility was set up last year specifically to help former communist countries turn capitalist. Under the Fund's proposal, Russia could borrow about an additional $2 billion from that facility. The $4.1 billion that Russia qualifies for according to an IMF standby agreement would also increase.Current IMF regulations limit the amount of money member nations can borrow under standby credits to 68 percent of their individual shareholdings in the fund. Sources said the IMF is considering increasing the ceiling to 85 percent. For a country like Brazil, which is discussing a standby credit with the Fund, that would mean a potential increase in the size of the loan by about half a billion dollars. Standby credits form the bulk of IMF lending and are used to support economic reforms in Fund member nations. Monetary sources said the IMF is also considering increasing the loan ceiling on credits extended under the STF. The STF loan ceiling currently stands at 50 percent of a member nation's shareholding in the IMF, or quota. The IMF wants to raise the access limit on STF credits to 85 percent. The IMF's board is expected to discuss the question of access to its resources at a meeting on June 17 to consider the financing needs of the former Soviet republics, sources said. Those needs have proven to be larger than expected. With rich countries such as the United States and Germany strapped for cash because of big budget deficits, it will largely be up to the IMF and World Bank to try to fill the gap, sources said. At next week's meeting, the board is also expected to discuss establishment of "co-financing trust accounts" to help meet the financing needs of former Soviet states. Such accounts would allow rich countries to lend money to the former Soviet states in conjunction with the IMF. So far, however, there is little sign that any are very eager to do so. The access limits on Fund loans determine the maximum amount that a country can borrow from the IMF under standby or STF credits. The Fund is not obligated to lend that much. Sources said the United States is believed to be pressing the IMF for a commitment that it will increase the actual amount of money it lends out in loans, not just the ceiling on its credits. Some other industrial nations, including Japan and Germany, are apparently opposed to that, however. The issue might not be settled until early next month, when leaders of major industrial nations are slated to hold their annual economic summit, in Naples.