IMF announces new measures to reduce borrowing costs for member countries by 36%

Cairo – October 13, 2024: The International Monetary Fund (IMF) announced new measures to reduce borrowing costs for member countries by about 36%, sharing new changes in its charges and surcharge policies that are expected to lower the number of countries facing surcharges from 20 to 13 by fiscal year 2026.

These measures, approved by the IMF's Executive Board, are estimated to save member countries an estimated $1.2 billion annually.

In a statement released by Managing Director Kristalina Georgieva, the IMF confirmed that these changes are set to take effect on November 1, and are designed to alleviate the financial burdens faced by countries in a challenging global economic landscape characterized by high interest rates.

The IMF statement wrote “This is achieved by reducing the margin over the SDR interest rate, raising the threshold for level-based surcharges, lowering the rate for time-based surcharges, and increasing the thresholds for commitment fees”.

Georgieva emphasized that while the reforms substantially lower costs, the remaining charges and surcharges play a crucial role in the IMF's lending framework.

“While substantially lowered, charges and surcharges remain an essential part of the IMF’s cooperative lending and risk management framework, where all members contribute and all can benefit from support when needed,” she explained.

Together, charges and surcharges cover lending intermediation expenses, help accumulate reserves to protect against financial risks, and provide incentives for prudent borrowing. This provides a strong financial foundation that allows the IMF to extend vital balance of payments support on affordable terms to member countries when they need it most, she added.

These changes will particularly benefit countries that have struggled with high borrowing costs, including Ukraine, Argentina, and several others.

Among the countries set to benefit from these changes, Argentina, currently the IMF's largest debtor, stands to save over $3 billion.