By Krishna Guha in Washington
Published: July 2 2009 03:00 | Last updated: July 2 2009 03:00
The International Monetary Fund approved plans yesterday to issue its own debt to strengthen its capacity to fund bail-outs, writes Krishna Guha in Washington.
Meanwhile, the World Bank said it had committed a record $59bn (£36bn) in loans and guarantees to developing countries in the year to June 30.
The decision by the IMF to issue interest-bearing notes, with a maturity of up to five years, opens the way for China, Brazil and Russia to lend the institution large sums of money on an extended temporary basis.
China is expected to lend the IMF $50bn by buying these notes, while Brazil and Russia are expected to lend $10bn each. Policymakers hope that by lining up ample IMF funds in advance, they can reassure private markets and reduce the likelihood of national crises.
The World Bank has boosted support for crisis-hit developing states.
The main increase was in lending to middle-income nations, with approvals more than doubling over the previous year to $32.9bn. Commitments of low-cost loans and grants to the poorest countries under the bank's IDA scheme rose 25 per cent to $14bn.
Some $20.7bn went to infrastructure projects in a move to help provide jobs and boost productivity.