December 2, 2022

IMF bailouts hit record as global economic outlook worsens

IMF crisis lending has hit a record high as developing economies face compounding crises of rising import bills, higher interest rates and unsustainable debt loads, the FT’s Jonathan Wheatley reports. So far the overlapping crises have forced five countries to default with nearly twenty at risk of following suit. 

IMF data shows that disbursement has risen to $140 billion in 44 programs, reaching $268 billion in total lending when including outstanding loans. The Fund is negotiating programs with Zambia, Sri Lanka, Lebanon, Russia and Suriname. Ghana, Egypt and Tunisia are in early talks for similar support. 

With the prospect of further tightening by global central banks, observers are concerned that rising borrowing costs might stretch the IMF’s lending capacity. A report from Boston University found that 55 developing economies face $436 billion of debt repayments between 2022 and 2028. Meanwhile, the IMF has only around $370 billion in remaining lending capacity, assuming each programme stays below its quota, which does not always happen. 

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