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IMF to Subsidize Loans for Natural Disasters |
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| USA: January 28, 2005 | ||
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WASHINGTON - The shareholder governments of the International Monetary Fund on Thursday agreed to a plan to subsidize assistance for countries hit by natural disasters by providing loans at below-market interest rates.
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The decision follows the devastating Asian tsunami in which the global lender pledged $1 billion in loans to help countries hard-hit by the Dec. 26 disaster. Sri Lanka has already indicated it will apply for lending under the fund's disaster facility to help its economy cope with the damage from the tidal wave. The global lender estimated it will require about $68 million to $98 million in new bilateral contributions from shareholders over the next five years to support the move. In a statement, the IMF's board said France immediately indicated a firm commitment to contribute funding, while other countries "stated readiness of their authorities to consider providing subsidy contributions." Before the change, the global lender provided loans for natural disaster relief at a market-based rate of charge of 3-1/4-5 years from the date of purchase. It already provides subsidized lending for countries affected by conflict and the move extends that to cover natural disasters. IMF disaster assistance is usually limited to 25 percent of a countries IMF quota, with larger amounts available in only exceptional cases. Requests for such assistance requires a statement of economies policies from a country that shows governments intend to address balance of payments difficulties triggered by the natural disaster.
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REUTERS NEWS SERVICE
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