The International Monetary Fund (IMF) executive board approved key reforms on Friday that will lower borrowing costs for its member countries by 36%, a move that will relieve eight heavily indebted nations from additional borrowing charges.
According to the IMF, the reforms, which will take effect on November 1, 2024, include adjustments to the surcharges imposed on countries with significant debt levels. The changes will raise the debt threshold at which the surcharges apply, removing countries like Benin, Ivory Coast, Gabon, Georgia, Moldova, Senegal, Sri Lanka, and Suriname from this requirement.
Kristalina Georgieva, IMF Managing Director, stated, “In a challenging global environment and at a time of high interest rates, our membership has reached consensus on a comprehensive package that substantially reduces the cost of borrowing, while safeguarding the IMF’s financial capacity to support countries in need.”
The changes are expected to reduce borrowing costs by an estimated $1.2 billion annually. The IMF now estimates that only 11 countries will meet the requirement to pay the surcharge under the new policy.
The reforms aim to support countries facing economic hardships amid rising global interest rates and inflation pressures, particularly for nations like Ukraine and Argentina, which have high levels of debt.
