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Wednesday, 22 August 2012
Page: 9646


Mr BRADBURY (LindsayAssistant Treasurer and Minister Assisting for Deregulation) (18:14): I thank all of those honourable members who have contributed to what, I think, has proved to be a very spirited debate on the International Monetary Agreements Amendment (Loans) Bill 2012. The purpose of this bill is to amend the International Monetary Agreements Act 1947 to reflect two amendments to the International Monetary Fund's, IMF, new arrangements to borrow, NAB, adopted by the IMF executive board on 16 November 2011 and 21 December 2011. These changes will give effect to commitments made as part of the 2010 IMF quota and governance reforms by reducing the NAB by an amount corresponding to the 2010 IMF quota increase.

The quota increase and corresponding NAB rollback will maintain the IMF as a quota based institution by reducing its reliance on voluntary borrowed resources. The NAB acts as a backstop to the normal quota based resources of the IMF by providing the IMF with recourse to borrow from its members when supplementary resources are needed to forestall or cope with an impairment to the international monetary system or to deal with a crisis that threatens the stability of the system.

The amended NAB will reduce the IMF's capacity to borrow from NAB participants by an amount corresponding to the increase in quota resources under the 2010 IMF quota and governance reforms. When the 2010 quota increases come into effect, credit lines under the NAB will be reduced to 182 billion special drawing rights, which is around $260 billion, from the current 370 billion special drawing rights, which is around $530 billion. Australia's maximum contributions under the NAB will fall to 2.2 billion special drawing rights, which is around $3.2 billion, from their current level of 4.4 billion special drawing rights, which is around $6.3 billion.

In addition to reducing the size of the NAB this bill will also reflect agreed amendments to the NAB to facilitate the NAB rollback while avoiding the risk of a temporary negative impact on IMF liquidity. Australia as a small, open economy relies on strong and stable global growth for its continued prosperity. Continued financial and economic uncertainty in Europe and elsewhere and a weakened economic outlook globally makes the role of the IMF in supporting global economic and financial stability much more vital.

Passage of this bill will both maintain and strengthen the IMF's available resource base by reducing the IMF's reliance on voluntary borrowed resources. This will benefit every country, including Australia. I commend the bill to the House.

Question agreed to.

Bill read a second time.