In 2012-13 the International Financial Institutions (IFIs) focused on assisting members to adjust to the changing nature of the global economy by identifying systemic risks and designing strong policies, and agreed on new Strategic Goals to end extreme poverty and promote shared prosperity.
Support for the global economy
The IFIs continued efforts to assist members to adjust to the changing nature of the global economy by providing financial and technical assistance and policy advice to its members, and by the strengthening of resources. In addition, the International Monetary Fund (IMF) continued its reform of surveillance activities as well as closely monitored and encouraged the implementation of the 2010 IMF Quota and Governance Reform package.
The IMF continued to provide considerable support to member countries to address balance of payments needs throughout 2012-13, with new lending commitments totalling Special Drawing Rights (SDR) 75.1 billion, and further strengthened its resources. The IMF continued to encourage the completion of an agreement to double quotas, from SDR 238.4 billion to SDR 476.8 billion, which also includes a corresponding roll-back of credit arrangements under the New Arrangements to Borrow (NAB). In addition, to help strengthen the global financial safety net, IMF members made additional pledges to boost the IMF’s borrowed resources through bilateral loan and note purchase agreements, bringing the total to more than US$461 billion.
As part of this, Australia entered into a bilateral loan agreement with the IMF on 13 October 2012 to lend SDR 4.61 billion. The loan has a term of two years and may be extended for an additional one year by the IMF notifying Australia of an extension and by a further additional year with the consent of Australia.
Support for developing countries
In 2012-13 the World Bank Group announced new Strategic Goals. These are to end extreme poverty: reducing the percentage of people living with less than $1.25 a day to no more than 3 per cent globally by 2030; and promote shared prosperity: fostering income growth of the bottom 40 per cent of the population in every country.
The International Bank for Reconstruction and Development (IBRD) is the arm of the World Bank Group which lends to middle-income countries and creditworthy low-income countries. In 2012-13, the IBRD committed US$15.2 billion to eligible countries, a decrease from $20.6 billion committed in 2011-12.
The World Bank Group’s concessional lending arm, the International Development Association (IDA), committed US$16.3 billion in grants and highly concessional loans to the world’s poorest countries, an increase from US$14.8 billion in 2011-12.
Negotiations for the seventeenth replenishment of IDA (IDA17) commenced in March 2013 and negotiations will be finalised in December 2013. IDA faces a number of challenges to its financial sustainability over the medium term due to falling internally generated income and anticipated graduations of low-income but credit-worthy countries.
In September 2012, the IMF Executive Board endorsed the use of further windfall profits from gold sales to bolster its capacity to provide concessional lending for low-income countries (LICs) through the IMF’s Poverty Reduction and Growth Trust (PRGT). Australia has agreed to this second decision and will return its share in the second distribution to support concessional lending for LICs. Further, in April 2013, Australia returned its entire share from the first distribution of windfall profits from gold sales to the PRGT.