Editors' blog

It is difficult to work out what the big figures mean. For example, a big figure of $750 billion is mentioned as additional resources for the IMF. This appears to be broken down into additional resources available "through immediate financing from members of $250 billion, and which will be "subsequently incorporated into ... New Arrangements to Borrow, increased by up to $500 billion." It is also mentioned that market borrowing will be considered "if necesssary." What is one to make of this? First, it appears that the figure of immediate interest is the $250 billion. In the absence of details as to which countries have made firm pledges -- and whether the pledges are new pledges or merely recycled amounts promised in the past -- the figure is unreliable. Second, the additional $500 billion is vague and looks quite rubbery. Third, none of this addresses a major problem with IMF activities across the developing world in recent years, which is the reluctance of developing countries to use IMF money because of the unreasonable conditions attached to the funds. If this uncertain amount of new lending is to be subject to all of the old IMF conditionalities, then developing countries will only turn to the Fund when they are desperate. Almost all other aspects of the big figures mentioned are vague as well. For example, a proposed increase in lending of at least $100 billion by the Multilateral Development Banks -- that is, World Bank, and regional MDBs such as the Asian Development Bank -- receives "support." Well, this is pretty much what the MDBs would have committed to spend in the normal course of business during the next three or four years anyway. Further, a fair part of these funds will be disbursed on projects stretching out over six or seven years. There won't be much money spent very soon. In short, when you scratch the surface, the amounts committed are vague. It seems that the sherpas who have worked so hard in the background have all done their jobs well. They have managed to ensure that their respective leaders have escaped from the G20 conference room with maximum room to manoeuvre and with minimum commitments.

Posted by Peter McCawley on April 03, 2009 at 11:05 PM BST #