General Arrangements To Borrow
General Arrangements To Borrow is one of two supplementary borrowing arragements by which the International Monetary Fund (IMF) can get financing in addition to the quota subscriptions of its member countries. The other supplementary borrowing arrangement is the New Arrangements to Borrow (NAB).
Through the GAB and NAB, a number of member countries and institutions stand ready to lend additional funds to the IMF.At its inception, amounts pledged under the GAB totaled $6 billion, of which the United States accounted for one-third. As of 1997, the GAB had a sum of about $27 billion.
Some feel the formation of the GAB represented something of a victory for the European members, who after recovering from postwar devistation were anxious to assert themselves in international monetry affairs.
GAB needs the collective agreement of its members to be activated. A proposal for calls on the GAB by the IMF’s managing director can become effective only if it is accepted by the GAB participants, and the proposal is then approved by the board.
As of 1997, the GAB had been activitated nine times since its establishment in 1962. Activations included 1977, when the Fund borrowed for lending to the United Kingdom and Italy under stand-by credits, and in 1978 to finance a reserve tranch purchase by the United States.