IMF's Executive Board has completed a review of its surcharge and lending policies, resulting in a reduction in borrowing costs.

In a statement, IMF Managing Director Kristalina Georgieva highlighted that, amidst the current global economic challenges and rising interest rates, member countries have agreed on a comprehensive plan to significantly lower borrowing costs.

This initiative aims to maintain the IMF’s ability to assist countries in need while offering relief to borrowers by reducing financial pressures.

She said: “The approved measures will lower IMF borrowing costs for members by 36 percent, or about US$1.2 billion annually,” explaining: “The expected number of countries subject to surcharges in fiscal year 2026 will fall from 20 to 13.”

“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,” Ms Georgieva noted.

The approved package will take effect on November 1, 2024.

“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 pointed out.

She said: “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,” explained the MD.

“This reform helps ensure that the IMF can continue serving our members in a changing world," she mentioned.