As World Economy Weakens, IMF Bailouts Hit Record Highs

The International Monetary Fund's (IMF) lending to economically troubled countries has hit a record high of $140 billion at the end of August.

The amount of loans disbursed by the IMF by August-end in 44 separate programmes is already higher than the amount of credit outstanding at the end of 2020 and 2021, when levels reached record annual highs.

Russia’s invasion of Ukraine, the Covid-19 pandemic and a sharp rise in global interest rates have forced dozens of countries to seek assistance from the world's lender.

The simultaneous crises have pushed at least five countries into default, with more expected to follow.

IMF's lending figure is expected to grow further in the coming months as borrowing costs is set to increase around the world with more sharp rate rises by major market central banks likely to come.

The IMF’s total commitments, including loans agreed but not yet disbursed,

The global lender has a roughly $940 billion total lending capacity, out of which around $370 billion is available for low and middle income countries.

Earlier in August, the IMF cleared $1.1 billion bailout for Pakistan. Meanwhile, Argentina is set to receive $3.9 billion in the next few weeks as part of its $41 billion programme.

The lender's commitments are likely to increase further as it is in talks with several countries, including Zambia and Sri Lanka both of which defaulted in the pandemic, about support as part of efforts to restructure their debts.

Ghana, Egypt and Tunisia are also in early talks with the Fund for similar support.

With the weakening of the world economy, the IMF’s lending capacity could soon be stretched to its limits, according to analysts cited in the FT report.

However, Bikash Joshi, division chief in the IMF's strategy, policy and review department, downplayed the concerns, saying the Fund's total commitments are “still a fraction of the [almost] $1trillion that could be available”.