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IMF To Reduce Borrowing Costs for Member Countries by USD 1.2B

IMF To Reduce Borrowing Costs for Member Countries by USD 1.2B
  • The IMF has approved measures to reduce member borrowing costs by 36%, saving around $1.2 billion annually, effective from November 1.
  • The reforms will lower surcharges applied to loans, with the number of countries subject to these surcharges expected to drop from 20 to 13 by 2026.
  • The five countries currently paying the highest surcharges are Ukraine, Egypt, Argentina, Ecuador, and Pakistan, according to Boston University’s Global Development Policy Center.

The International Monetary Fund (IMF) has approved new measures that will reduce borrowing costs for its member countries by approximately $1.2 billion annually, according to Managing Director Kristalina Georgieva.

The reforms are set to cut borrowing costs by 36%, significantly lowering the financial burden on IMF members, Reuters reported.

In a statement, Georgieva highlighted that these changes will also decrease the number of countries subject to surcharges from 20 to 13 by the fiscal year 2026. This marks the first review of the IMF’s surcharge policy since 2016, driven by rising global interest rates that have increased the cost of borrowing for many countries.

The IMF typically charges both regular interest and additional surcharges for loans that exceed certain thresholds or durations, alongside commitment fees for precautionary arrangements. As part of the new measures, the fund will reduce the surcharge applied over its base interest rate, while raising the thresholds for both loan amounts and durations that trigger additional fees.

“Although we are substantially lowering these charges, surcharges remain an important component of the IMF’s cooperative lending and risk management framework, ensuring all members contribute while benefiting from support when necessary,” Georgieva said.

These changes are set to take effect on November 1. The countries currently paying the highest surcharges include Ukraine, Egypt, Argentina, Ecuador, and Pakistan, according to research from Boston University’s Global Development Policy Center.

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