IMF Approves Measures to Reduce Borrowing Costs

By Rodrigo Campos and David Lawder

(Reuters) – The International Monetary Fund on Friday approved measures that will reduce its members' borrowing costs by about $1.2 billion annually, according to Managing Director Kristalina Georgieva.

"The approved measures will lower IMF borrowing costs for members by 36%, or about $1.2 billion annually," Georgieva stated. "The expected number of countries subject to surcharges in fiscal year 2026 will fall from 20 to 13."

This year, the IMF decided to review its policy on charges and surcharges for the first time since 2016, as higher global interest rates have increased borrowing costs.

The fund charges regular interest alongside surcharges for loans exceeding specific thresholds or durations, as well as commitment fees for precautionary arrangements.

The IMF announced that the charge exceeding the fund's interest rate will be lowered, while both the amount and duration thresholds will increase, as will the commitment fees threshold.

"While substantially lowered, charges and surcharges remain an essential part of the IMF's cooperative lending and risk management framework, where all members contribute and all can benefit from support when needed," Georgieva noted.

These changes will take effect on November 1.

According to research from Boston University's Global Development Policy Center, the five countries paying the highest surcharges are Ukraine, Egypt, Argentina, Ecuador, and Pakistan.

Argentina, currently the IMF's largest debtor, is expected to save over $3 billion due to the changes, according to Finance Secretary Pablo Quirno.

However, Friday's announcement does not meet the demands of academics, non-profit groups, and economists who have called for a complete cancellation of IMF surcharges, arguing that they impose additional burdens on countries facing severe economic challenges and undermine the effectiveness of IMF lending.