Federal Department of Finance FDF
Federal Department of Finance FDF
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Switzerland provides contribution to funds for IMF emergency credit
08. mar 2002 - The Federal Council today took the decision to provide a contribution of CHF 1.8 million to a special IMF fund. The aim of this fund is to reduce interest rates for so called emergency credits. These credits benefit those countries whose administrative and institutional capacities have been weakened by armed conflict to such an extent that they are initially not in a position to implement a regular IMF supported economic adjustment and reform programme. By granting emergency credits the IMF is able to provide desperately needed assistance to these countries in the first phase of reconstruction by restoring macro-economic stability. Two countries in the Swiss voting group of the IMF and World Bank, namely Tajikistan and Yugoslavia, have already benefited from such IMF emergency credits.
The emergency credits of the IMF do not originate from its regular resources and are therefore subject to market levels of interest. The majority of potential recipients of such funds, however, are basically not deemed creditworthy by the international financial institutions. Furthermore, many of the poorest conflict riven countries are highly indebted. The Management of the IMF is therefore pursuing the possibility of granting emergency credit to conflict riven countries at a reduced interest rate of 0.5 per cent, which it also applies to Poverty Reduction and Growth Facilities (PRGF). The interest rate reduction for emergency credit, as with PGRF, would be financed by funds supplied by a donor country, which would be administered on a trust basis by the IMF.
The Management of the International Monetary Fund estimates that US$12-18 million are needed to finance interest reductions for emergency credit over the next several years. With its contribution of US$ 1 million, Switzerland's share amounts to between 5.5 and 8.3 per cent.
Further details: Giorgio Dhima, Fed. Finance Administration, Tel. +41 31 322 60 48
8 March 2002
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