The Rudd Government today announces that Australia will join with other countries to ensure that the International Monetary Fund (IMF) and the Asian Development Bank (ADB) have resources available to maintain stability and support recovery in the global economy.
Australia's economic recovery – and countless thousands of Australian jobs - will rely heavily on a return to growth in the global economy. That's why it is vital we do our share to foster recovery in the global economy.
These commitments are in line with the outcomes of the G‑20 Leaders' Summit in London at which Australia joined the world's largest economies in agreeing to treble the resources available to the IMF, from US$250 billion to US$750 billion in order to tackle the global recession.
Australia's contribution will be by way of a US$7.0 billion (A$10.2 billion) contingent loan to the IMF under the expanded New Arrangements to Borrow (NAB). Australia has made a line of credit available to the IMF under its existing NAB since 1998.
The funds would only be drawn upon if needed — the NAB is a backstop arrangement where the IMF's usual quota processes are insufficient to meet the needs of borrowing member countries. In the event of a drawing, the funds would be repaid to Australia in full, with interest, as they were on the only previous occasion on which they were required in 1998.
Australia's contribution is consistent with our global economic weight in the world and similar commitments made by Australia in the late 1990s totalling nearly US$6 billion in today's terms.
Loan commitments announced so far by other countries to supplement IMF resources include: US$100 billion from the United States; US$100 billion from the European Union; US$100 billion from Japan; US$10 billion from Switzerland; US$10 billion from Canada; US$10 billion from South Korea and US$4.5 billion from Norway. Decisions to participate are also expected from other countries in coming weeks.
Australia will also participate in the general capital increase for the Asian Development Bank along with at least 64 of its other members.
The additional capital resources will ensure that the ADB can deliver support to countries in the Asia‑Pacific region during the global recession and meet the region's ongoing development needs.
Australia's contribution to the capital increase for the ADB follows the G‑20 Leaders' commitment to ensure that multilateral development banks have the appropriate capital to help tackle the global recession.
It is in Australia's national interest to support economic recovery and stability in our region.
That's why Australia will do its bit through a paid in capital contribution of US$197.6 million (A$287.5 million) over 10 years.
In line with other countries, Australia will also increase its uncalled capital subscription by US$5.6 billion (A$8.1 billion), which would only be drawn down in the highly unlikely event that the ADB is unable to meet it financial obligations. Founded in 1966, the ADB has never drawn on its uncalled capital subscriptions.
12 May 2009