Wednesday, March 25, 2009

What the IMF is up to

My old friend Olivier Blanchard, now chief economist at the IMF, sends me an email:
In the last few months, it has become clear to us (the IMF) that we needed to be ready for a major slowdown of capital inflows in many emerging countries, as banks deleverage by repatriating funds, foreign direct investment is dropping, bond issuances and syndicated loans are dwindling. We decided to focus on creating anew lending window which could help, and on raising the funds we may need. Our board has just adopted this new window, called the FCL (for flexible credit line).It is very different from anything the Fund has offered in the past. It works on prequalification, with no conditionality. It allows qualified countries to draw a large amount if and when needed, and to repay within 3 to 5 years. I think it is a very important step, for the fund, but also probably for the world, and will help avoid major economic catastrophes in a number of emerging countries. What I am hoping for is that you help us advertise this new window, by talking about it in your (very influential) blog.
Okay, I just did. Click here to learn more.