WASHINGTON- Emerging economies that qualify for a proposed new liquidity fund at the International Monetary Fund could be eligible for an unusually high level of funding, officials familiar with the plan said on Friday.
Although the details of the package are still not finalized, the plan, which may offer countries up to five times their IMF quota, could be approved as soon as next week.
It would allow certain emerging market economies to exchange local currencies for U.S. dollars to ease short-term credit strains, officials said.
Other officials said it may also provide straight short-term financing to certain countries but with fewer conditions than would normally apply to IMF loans.
The plan is being driven by Latin American directors on the IMF board, who have long pushed for a new lending program designed specifically for the needs of emerging economies.
"The proposal is still under discussion," one official told Reuters. "Nothing is finalized but it could be up to 500 percent of a country's quota."
Under normal IMF lending programs, countries can draw up to three times their quota.
Each IMF member country is assigned a quota based on its size in the world economy. The quota determines its financial commitment to the IMF and its voting power, and has a bearing on how much it can lend from the IMF.
"I think it's good that the IMF is doing some creative thinking and trying to figure out how it can potentially add tools to its toolbox during a financial crisis," Clay Lowery, assistant U.S. Treasury secretary for international affairs, told Reuters.
"They're trying to make sure they do this effectively and constructively and very efficiently so I would imagine that, from a timing perspective, people are going to be having to think about this happening fairly soon," he added.