IMF Borrowing Arrangements:
GAB and NAB
A Factsheet
March 2003

The quota subscriptions of member countries are the principal source of financing for the IMF. In addition, a number of member countries stand ready to lend supplementary funds to the IMF if these were to be needed to forestall or cope with an impairment of the international monetary system, or deal with an exceptional situation that threatens the system's stability. The first such supplementary source of financing, the General Arrangements to Borrow (GAB), was established in 1962. The New Arrangements to Borrow (NAB) were established in 1998.

What are the General Arrangements to Borrow (GAB)?

The GAB enable the IMF to borrow specified amounts of currencies from 11 industrial countries (or their central banks), under certain circumstances, at market-related rates of interest. The potential amount of credit available to the IMF under the GAB totals SDR 17 billion (about $23 billion), with an additional SDR 1.5 billion available under an associated arrangement with Saudi Arabia.

The GAB have been renewed nine times, most recently in November 2002 when the IMF Executive Board approved its renewal for a further period of five years from December 2003. In response to the growing pressures on the IMF's resources caused by the emergence of the debt crisis in Latin America in 1982, a broad review was undertaken in 1983. It resulted in a substantial increase in the credit lines made available under the GAB from about SDR 6 billion to SDR 17 billion, plus an additional SDR 1.5 billion under an associated arrangement with Saudi Arabia. Other major amendments to earlier GAB provisions permit the IMF to use the GAB to finance lending to nonparticipants in the GAB, if the IMF faces a situation where it has inadequate resources of its own. The earlier GAB carried a rate of interest below market rates; this rate was raised at the time of the GAB enlargement to 100 percent of the SDR interest rate.

GAB Participants and Credit Amounts (After December 26, 1983) Participant   Amount (in millions of SDRs) United States     4,250.0          Deutsche Bundesbank     2,380.0          Japan     2,125.0          France     1,700.0          United Kingdom     1,700.0          Italy     1,105.0          Swiss National Bank     1,020.0          Canada     892.5          Netherlands     850.0          Belgium     595.0          Sveriges Riksbank     382.5          Total     17,000.0          Credit arrangement with Saudi Arabia       in association with the GAB     1,500.0

What are the New Arrangements to Borrow (NAB)?

Following the Mexican financial crisis in 1994, concern that substantially more resources might be needed to respond to future financial crises prompted participants in the 1995 G-7 Halifax Summit to call on the G-10 and other financially strong countries to develop financing arrangements that would double the amount available to the IMF under the GAB. The IMF's Executive Board adopted a decision establishing the NAB that became effective in November 1998. The NAB are a set of credit arrangements between the IMF and 26 members and institutions to provide supplementary resources to the IMF to forestall or cope with an impairment of the international monetary system or to deal with an exceptional threat to the stability of that system.

Commitments from individual participants are based on relative economic strength, as measured by actual IMF quotas, as a predominant criterion. An IMF member or institution that is not currently a participant in the NAB may be accepted as a participant at the time of a renewal of the decision, if the IMF and participants representing 80 percent of the total credit arrangements agree to the request. New participants may also be accepted at other times, by way of an amendment to the NAB adopted by the IMF's Executive Board, and with the concurrence of participants representing 85 percent of total credit arrangements.

In November 2002, the NAB decision was renewed for a further period of five years from November 2003. Also, the Banco Central de Chile (as an official institution of Chile) became a new participant with a credit arrangement of SDR 340 million, effective February 2003.²

How do GAB and NAB relate to each other?

The NAB do not replace the existing GAB, which remain in force. However, the NAB would typically be the first and principal recourse in the event of a need to provide supplementary resources to the IMF. The maximum amount of resources available to the IMF under its borrowing arrangements is SDR 34 billion (about $45 billion), double the amount available under the GAB alone.

When have they been activated?

A proposal for calls on the GAB or the NAB by the IMF's Managing Director can become effective only if it is accepted by the GAB or NAB participants, and the proposal is then approved by the Executive Board. The NAB have been activated once-to finance a Stand-By Arrangement for Brazil in December 1998, when the IMF called on funding of SDR 9.1 billion, of which SDR 2.9 billion was used. The GAB have been activated ten times. The last time was in July 1998 for an amount of SDR 6.3 billion in connection with the financing of an Extended Arrangement for Russia. Of that amount, only SDR 1.4 billion was used. The activations for both Russia and Brazil were canceled in March 1999, when the Fund repaid the outstanding amount following the entry into effect of the Eleventh General Review of Quotas and payment of the bulk of the quota increases.

NAB Participants and Credit Amounts   Amount (millions of SDRs) Participant Australia   801         Austria   408         Banco Central de Chile   340         Belgium   957         Canada   1,381         Denmark   367         Deutsche Bundesbank   3,519         Finland   340         France   2,549         Hong Kong Monetary Authority   340         Italy   1,753         Japan   3,519         Korea   340         Kuwait   341        Luxembourg   340         Malaysia   340         Netherlands   1,302         Norway   379         Saudi Arabia   1,761         Singapore   340         Spain   665         Sveriges Riksbank   850         Swiss National Bank   1,540         Thailand   340         United Kingdom   2,549         United States   6,640             Total1   34,000

1/ Total may not equal sum of components due to rounding.
2/ The total amount of NAB credit arrangements remained at SDR 34 billion, with Chile's contribution offset by proportionate reductions in the contributions of existing participants with credit arrangements above the SDR 340 million minimum.

Excerpted from the Official IMF Website. Please visit www.imf.org for more information.