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IMF approves first financial safety loan

The International Monetary Fund approved a two-year contingent credit line to the Republic of Macedonia in the first use of newly launched insurance program guided by the Group of 20 last year.

The former Yugoslavian republic became the IMF’s first recipient of the Precautionary Credit Line, securing 476 million euros ($642 million) for this year and next.

The measure is part of the international lenders’ strengthened credit line system, which was created last year at the request of Korea, the G20 chair of 2010.

The G20 agenda has included forging a stronger global financial safety net to pull global and regional funds together to safeguard countries from risky outflows of capital.

On Aug. 30, the IMF Executive Board extended its insurance program to a broader set of countries by launching the PCL, an insurance program for countries with weaker fundamentals. The program, welcomed by G20 leaders, provides a large amount of up-front access to as much as 500 percent of a nation’s IMF quota for the first year.

Macedonia said the facility will help lower borrowing costs. It is planning to sell Eurobonds.

“The fact that the IMF has confidence in Macedonia’s perspective is a strong signal to investors that the country is pursuing solid economic policies and can handle potential risks that could hit European or the global economy,” Zoran Stavreski, deputy prime minister in charge of finance, was quoted as saying.

By Cynthia J. Kim (