As liabilities to the international financial institutions now account for a large share of some debtors’ foreign borrowing, conflicts of interest between the borrowers, IMF shareholders and private creditors could put the IMF financing mechanism at risk. Ultimately, the entire concept of IMF lending may end up in danger of being undermined.
The Bundesbank therefore welcomes a return to a lending policy more in line with the catalytic role of IMF financing, a policy which the IMF generally endorsed last year. Establishing credible ex-ante clarity about financial assistance is crucial in this respect.