WASHINGTON, Sept 17 (Reuters): Emerging market countries are repaying more than they are borrowing from the International Monetary Fund after years of large bailouts, according to the lender's 2005 annual report yesterday.
News that demand for IMF loans has fallen sharply comes at a time when the fund is rethinking its role as the world's economic firefighter. It is set to release its own strategic review of operations next week.
With economic growth booming in many emerging market nations and Asia accumulating vast international reserves, the report said IMF outstanding credit dropped to $73.18 billion last year from a record $91.2 billion in the 2004 fiscal year.
As of a week ago the figure had dipped further to $61 billion as repayments increased, according to a fund official.
"Outstanding IMF credit declined from last year's all-time high, as a favorable external financing environment for emerging market countries contributed to a sharp reduction in the demand for IMF credit," the fund said.
New IMF loans approved last year were small compared to the large billions of dollars the IMF dished out to Argentina and Brazil in the 2004 fiscal year, it said, adding that the largest commitment last year was to the Dominican Republic for $657 million.
Total repayments to the IMF last year reached $20.38 billion, reflecting large payments from Argentina, Brazil, Russia and Turkey, the report said.
Russia and Lithuania paid off their loans to the fund, while Uruguay also made some advance repayments, it added.
Increased repayments have also meant the IMF is flush with liquidity again after the large loan packages of the 1990s for crisis-hit South Korea, Thailand, Indonesia, Mexico, Turkey, Argentina and Brazil that drained its resources.
IMF liquidity rose to $138.2 billion by the end of April 2005 from $85.20 billion a year earlier.
Evidence that lending by the IMF has declined and borrowers are paying down their debt comes as Managing Director Rodrigo Rato prepares to release the IMF's long-awaited strategic review Monday.
The review has stirred much debate in recent months about how the IMF should be reformed to better fulfill its original mandate to oversee global macroeconomic stability.
There is less need for IMF money also because of its waning influence over Asian countries, which borrowed from the IMF during the crises of the late 1990s and are reluctant to ever return because of the strict conditions attached to loans.
Rato has denied that Asia is moving away from the IMF, but he has acknowledged that the institution's quota system, which determines who gets the biggest say in decision making, needs to be revamped to take into account the booming economies of countries such as China.