Press Release No. 12/505

Press Release: IMF Executive Board Approves Extension of Temporary Interest Waiver for Low-Income Countries

December 21, 2012

The Executive Board of the International Monetary Fund (IMF) today approved the extension of the exceptional interest waiver on concessional loans by two years to end-December 2014 in view of the global economic crisis. The Board also approved a one-year postponement of the next review of Poverty Reduction and Growth Trust (PRGT) interest rates to end-2014. The Executive Board’s decision was taken on a lapse of time basis¹.

“The Executive Board decision to keep interest rates at zero for all concessional loans for a further two years is testament to the Fund’s continued support for Low-Income Countries (LICs) since the global economic crisis hit in 2009.” said IMF Managing Director Christine Lagarde.

The Board had endorsed temporary relief of interest payments on all outstanding concessional loans for PRGT-eligible members in 2009, waiving all interest payments on PRGT loans through December 2011. At the occasion of the first bi-annual review under the Poverty Reduction and Growth Trust (PRGT) interest rate mechanism, Executive Directors agreed to extend the exceptional interest rate waiver to December 2012 in view of downside risks to the global economic outlook.

The Executive Board’s decision comes on the heels of recent steps to ensure the long-term sustainability of the PRGT. In February 2012, the Board approved the distribution SDR 700 million (about US$1.1 billion) in reserves attributed to windfall gold sales profits to its members in order to boost the IMF’s concessional lending capacity for low-income countries (See Press Release No. 12/56). In September 2012, the Board decided that the remaining gold sales windfall profits of SDR 1,750 million (about US$ 2.7 billion) could also be distributed as part of a strategy to ensure the longer-term sustainability of the PRGT (See Press Release No. 12/368).

¹ The Executive Board takes decisions under its lapse of time procedure when it is agreed by the Board that a proposal can be considered without convening formal discussions.