Ivan Camilleri, Brussels
Malta pledges €108.6m to IMF
G20 providing $250 billion
Malta may be small but it will still be lending the International Monetary Fund $160 million (€108.6 million) by the end of this year to enable it to help struggling economies severely hit by the global economic crisis.
Malta's decision to lend the sum through the Central Bank forms part of an EU-wide burden sharing agreement to commit $100 billion of fresh reserves to the IMF.
A government spokesman confirmed that Malta agreed to share the burden: "Malta has already committed itself to provide about $160 million, this being its estimated share in the EU's original commitment."
"This contribution is expected to take the form of a bilateral loan between the Central Bank of Malta and the IMF and will not affect the size of the CBM balance sheet."
Each IMF nation is assigned a quota based on its size in the world economy and which is used as the basis of how much member states must contribute and how big of a say they have. Malta's share is estimated to be $160 million.
Malta's contribution will change the composition of the asset side of the CBM balance sheet because payment of the funds lent by the CBM to the IMF will be offset by the acquisition of a claim on the IMF by the CBM.
The specific terms of the agreement between Malta and the IMF are still subject to negotiations, which are likely to be wrapped up by the end of the year, according to the government spokesman.
Asked whether Malta would be willing to further increase its commitment in the coming years in view of the worsening effects of the worldwide economy, the spokesman said Malta had not committed itself to make any further contributions.
As part of the international response to the financial and economic crisis, the G20 countries last April committed themselves to provide immediate bilateral financing to the tune of $250 billion to the IMF.
They also pledged to incorporate the immediate financing from members into an expanded and more flexible new-arrangements-to-borrow (Nab) facility, which will include other G20 countries, to be increased by up to $500 billion.
At the time, the EU declared its readiness to provide fast temporary support for a total of €75 billion (about $100 billion). During a meeting of EU finance ministers last July, member states expressed their readiness "to take their share of further financing needs, as they arise over the medium-term, in line with their economic weight as reflected by their quota shares in the IMF".
This was through the Nab facility, in the context of "fair burden sharing at the global level recognising the necessary link between contribution and representation".
The revised commitment of the EU corresponds to its appropriate share in the enlarged contribution ($500 billion), taking into account the EU's role in the global economy.
The IMF has repeatedly warned that its resources, and therefore its ability to lend to countries in difficulty, could shrink if the economic crisis endured.
It has already signed an agreement for Japan to borrow up to $100 billion, although other reserve rich countries have not yet followed Tokyo's example.
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Mark Cushcieri
Oct 9th 2009, 23:40
@John Caruana
thanks for the reply ..i recently saw news regarding this issue and about sex tourism in brazil's poor areas where kids are being exploited by tourists. I am glad Brazil will help its poor and managed to find oil which will get those people out of its poverty (which forces them into prostitution crime etc) and potray itself as an attractive economy etc with the world cup and olympics.
I would also like to congratulate you for your prestigous work if you are helping the poor in brazil.
mark
A. Muscat
Oct 9th 2009, 18:07
We need a new deal for a new world.
I sincerely hope that with the leadership of President Obama, the United States of America (main responsible for the global collapse of economy thanks to the cataclysmic politics of former president who spent Trillions of $$$$ for useless wars) will join forces with Europe to drive this new deal.
If we inject money (tax payer’s money) and subsidize every industry, deficits will soar and old jobs and products will remain – for a while. But we need to maintain change and progress in the economy. And that can only come from killing the toxic assets that caused the problem. To condense, the whole system MUST change otherwise we are wasting time.
John Caruana
Oct 9th 2009, 17:29
Dear Mark Borg. Your reaction is understandable - that is, more than understandable.We can discuss for a long time on the cost of "sports" today. , Re-reading your contribution you missed saying that Brazil is hosting too the Olympics.....and that costs money.
The present government has done much of what could be done for the poor. I said much not all.
But the economy of the country is very strong and Brazil will be able to organize the two competions - World Cup 2014 and Olympics 2016 without asking for extra sacrifices from the people and without forgetting its commitment with the working class and the poor and without causing the inflation that normally accompanies such happenings especially in third world countries.
Recently Brazil has made a great discovery of Oil seven thousand meters below sea level - called Pre-Sal. President Lula sent a project to congress so that profits from this discovery will be dedicated for (1) education; (2) fight against poverty and( 3) research.
Mark, fortunately, Brazil at long last got its priorities right! The future of Brazil has finally arrived!
Personally, today, I tolerate the organization of the two competions.
Fr.John Caruana
J Brincat
Oct 9th 2009, 17:11
Our economy is at the moment at a very low ebb in fact is is detracting and so why not invest the money locally?
And what support are we getting from EU as regards burden sharing regarding our migrant problem?
Charity begins at home!
Mark Cushcieri
Oct 9th 2009, 16:08
@Fr.John Caruana
I'm perplexed...aren't Brazil going to spend billions upon billions for the world cup soon instead of feeding their poor? I stand to be corrected.
GEORGE J. CUTAJAR
Oct 9th 2009, 14:54
A government spokesman confirmed that Malta agreed to share the burden
This is great. How about other countries sharing our illegal migrants??????????????
John Caruana
Oct 9th 2009, 14:22
Malta, Brazil and IMF
Brazil, until recently depended heavily on emergency funds from the IMF. Wiith President Lula this phase passed and for some time now Brazil doesn´t need any IMF "help" - its reserves from 15 billion dollars in 2003 rose to the unbelievable figure of 215 (two hundred and fifeteen) billion dollars! As result of this Brazil is today pledging the
participation of 10 billion dollars as IMF creditor!
Further up I put the word "help" in inverted commas. Because the conditions that normally IMF
autorities impose on third world countries are considered unbearable. In this context, I suggest the maltese financial authorities to heed to third world countries complaints vis-avis IMF conditions. We are all hoping that now practically the G-8 is rapidly becoming G-20, this dialogue between richer and poorer countries will be more productive.
Fr.John Caruana
carjohn@teracom.com.br
Gujara-Mirim - Rondonia
Brazil
Simon Borg
Oct 9th 2009, 12:07
Since we're already spending at a deficit, why are we borrowing money to lend it to someone else? Wouldn't it make more sense for the IMF to borrow the money directly from whoever we're borrowing it from?
H Dempster
Oct 9th 2009, 10:44
I just wonder where is the money coming from? JUST THINK.