IMF to keep interest-free loans for poorest nations

WASHINGTON—IMF chief Christine Lagarde said Wednesday that the Fund would maintain its zero-percent loan program for poorest countries for another year after it expires at the end of 2011.

Lagarde said the International Monetary Fund hoped to keep open a lending window for low-income countries that has been expanded to $17 billion, offering lending rates close to zero.

That rate plan expires at the end of 2011 “and (we) are on track to keep rates at or near zero next year,” she said.

“An important lesson that the IMF has learned in recent years is that for our financial support to be effective, it must reach our members quickly and with fewer strings attached,” she said.

The facility is open to around 30 of the poorest countries to help address medium-term balance of payments difficulties.

While holding out the prospect of access to cheap lending, Lagarde also prodded poor countries to steel themselves against contagion from the turmoil in the economies of the richest countries.

“Downside risks to global growth have increased markedly – at a time when the capacity of many low-income countries to absorb further shocks has yet to be re-built from the last two crises,” she said.

“In the face of a more uncertain global environment, policymakers in low-income countries – as in many others – should be prepared to adapt policies as needed.”