Global Policy Forum

By Andrei Sitov

The International Monetary Fund (IMF) has announced new, tighter conditions of issuing its loans. The novelty is meant to increase prices of long-term loans and stimulate early debt repayment.

The reasoning of the IMF is that the new rules make more flexible and attractive the mechanism of preventive loans which has been set up during the coping with the recent financial crisis. These loans are not in demand so far because of their relative expensiveness and unwillingness of world countries to leave an impression that their finances face serious shocks. The IMF's plan to revise the lending programs was announced in September, and the adoption of the new rules caused no visible response of the fund's clients. Anyway, the IMF's major debtors, including Russia, have no cause for concern, as the latest decisions are not retroactive.

The reforming IMF also wants a higher responsibility of private investors for their risky decisions. However, international banking quarters, especially private bankers, are seriously opposed to such an approach. The US Federal Reserve has published a new report on this issue. The bankers warned that the demand of "fair distribution of the common burden" of risks would deter investors from emerging markets.

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