Malta to lend another €260m to IMF

Malta has committed itself to lend another €260 million to the International Monetary Fund (IMF) at commercial rates, to be put into a pot that will be used in case of further eurozone difficulties.

Fresh funds totalling €150 billion are to be made available to the IMF for the purpose but the EU is still €50 billion short of what it pledged to fork out at a summit earlier this month.

According to the summit’s conclusions, agreed by 26 of the 27 member states (the UK excluded), the EU must provide the IMF with €200 billion to be used as a safety net in case a Eurozone member state finds it difficult to raise funds on the international markets.

However, following a three-hour teleconference organised on Monday night for EU Finance Ministers, only 13 eurozone member states, including Malta, pledged to contribute.

Four non-Euro area members – the Czech Republic, Poland, Denmark and Sweden – said they were also ready to do so but would first need parliamentary approval.

Malta’s readiness to participate in the latest IMF-sponsored eurozone rescue mechanism had been announced by the Prime Minister following the December 9 summit. According to the government’s initial calculations then, Malta had to pledge between €150 and €200 million in new bilateral loans as part of the €200 billion deal.

However, Malta’s pledge, which will come out of the reserves of the Central Bank, has now been revised upwards to €260 million, according to the latest calculations based on quota shares of each member state in the IMF.

Malta’s pledge will come out of the reserves of the Central Bank

Three eurozone member states, Greece, Portugal and Ireland, which are already being given assistance by the EU and the IMF, will not be contributing any funds. Outside the eurozone, Hungary, Romania, Latvia, Bulgaria and Lithuania won’t be participating either, while the UK won’t be contributing any funds to this special purpose vehicle but will be making further contributions to the general funding facilities of the IMF.

Malta will be making the smallest contribution to the new IMF fund while Germany and France will fork out the bulk of the loans, amounting to €41.5 billion and €31.4 billion respectively.

Since the start of the eurozone crisis, Malta has already had to fork out some €700 million in bilateral loans and guarantees to Greece and to the European Financial Stability Facility (EFSF) – a temporary eurozone rescue fund.