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Switzerland's credit line to the IMF

Bern, 08.04.2009 - Today in its Special Session, the Federal Council took the decision to guarantee a fixed-term credit line to the International Monetary Fund (IMF). It has instructed the Federal Department of Finance (FDF) to draw up a corresponding, additional dispatch. Switzerland is ready to contribute to increasing the IMF's resources with up to USD 10 billion and with this, Switzerland is making a significant contribution in strengthening the international financial system. This is subject to parliamentary approval. In the medium term, an increased guarantee for the IMF will be transferred to the expanded New Agreements of Borrow. Switzerland's contribution will also be based on the contributions of the other countries.

While the tasks of the IMF in years of strong economic growth concentrated primarily on the surveillance of the economic and financial policies of its member states, the focus now is on its role in terms of financing and coordinating measures for crisis response. Due to the extent of the global economic and financial crisis, steps are required to ensure that the IMF will have sufficient resources to support its member states. The deterioration of the situation in the developing countries and emerging economies calls for an increase in resources. Discussions to this end began at the IMF several months ago.

Conscious of this need, the G-20 countries provided support for an immediate increase in the resources of the IMF of approximately USD 250 billion at the summit conference in London on 2 April. These resources will be made available by bilateral credit lines. In the medium-term, these contributions will be folded into expanded New Agreements to Borrow of the IMF. 

The Federal Council welcomes this move. As an open economy, Switzerland is most interested in a rapid end to the crisis, and in a re-established stability of the international financial system. With its contribution to increasing the IMF's resources, Switzerland is assuming its international responsibility. At the same time, this underscores its importance as a systemically important financial centre, and its position as a reliable partner in the international financial system.

The Federal Council thus took the decision, subject to parliamentary approval, to guarantee a fixed-term credit line to the IMF of up to USD 10 billion. It will in the coming weeks request parliament to increase the existing credit limit under the Monetary Assistance Act of currently CHF 2.5 billion. The FDF was instructed to draw up the corresponding additional dispatch. The credit line will be granted by the Swiss National Bank and guaranteed by the federal government. It will only be activated in the case of shortages in IMF resources. Any resources loaned to the IMF would be remunerated with a market interest rate. In addition, they would be treated as official reserves, since they would be available to the SNB should a need arise.

In the medium term, increased guarantees for the IMF will be transferred to the New Arrangements to Borrow. Switzerland's contribution has yet to be determined, also depending on the contributions of other countries. With this in mind, the Federal Council will in due course submit a separate dispatch to parliament, as soon as the negotiations on expanding the NAB have been concluded.

Address for enquiries:

Paul Inderbinen, Head of the International Monetary Fund and International Finance Division, tel. 031 322 61 66

Publisher:

Federal Department of Finance
Internet: http://www.efd.admin.ch
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