"The SCF carries concessional terms and is suitable for countries with sustainable macroeconomic positions that are facing short-term financing need," said John Lipsky, First Deputy Managing Director (DMD) of the IMF. [break]
Strained by adverse macro-economic indicators, the government of Nepal in January had knocked on the doors of the IMF, seeking its support for assessing the gravity of the situation. It had also formally expressed eagerness to join the IMF loans program so that the country could access financial assistance in case of need.
Anoop Singh, IMF Director looking after South Asia, told myrepublica.com that the government and IMF were still to expedite dialogue in this connection. But he expressed hope of talks gaining momentum, mainly as the new governor at Nepal Rastra Bank assumed office this week.
IMF officials also announced that the Fund has increased its assistance level for needy low-income countries like Nepal.
According to Lipsky, IMF was more than doubling the total resources available to low-income countries through 2014 to US$ 17 billion. In 2009, it had committed US$ 3.8 billion to them in concessional resources, up from US$ 1.5 billion in 2008 and only US$ 276 million in 2007.
"The terms of our lending too have been made more attractive: zero interest on concessional lending through the end of 2011. Even beyond this, the interest rates will be merely a quarter of what was charged before," he said.
Lipsky was speaking during a conference at which finance ministers and top central bank officials from 16 low-income countries of Asia and the Pacific participated this week.
Lipsky also highlighted features of the IMF´s new Rapid Credit Facility, an emergency support that can be used to deal with shocks from a variety of sources, quite apart from its Extended Credit Facility.
Senior IMF officials also noted that the Fund was reflecting to address in a fair way the concerns of all its members. As a part of that change, Lipsky said IMF has moved toward less intrusive conditionalities, focusing only on core policy measures that are critical for stability, growth and poverty reduction.
"And our loans no longer include binding conditions on structural measures, but instead provide greater flexibility to our member countries with regard to how they meet their structural goals," he said.
During the conference, IMF and senior World Bank officials also laid emphasis on instituting and strengthening social safety nets like targeted subsidy and programs for poor and vulnerable communities in low-income countries -- something which was not visible in the past.
In his address to the conference, Finance Minister Surendra Pandey informed participants about recent cracks seen in the Nepali economy, but expressed hope of the situation improving in a few months. He highlighted steps he took to cool down the realty market and bridge export-import gaps that caused the current account deficit to soar.
milan@myrepublica.com
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