WASHINGTON, April 10 (Reuters) - The International Monetary Fund said on Friday its executive board has agreed to retain the current floor for precautionary balances, which consist of general and special reserves, at 20 billion Special Drawing Rights, or nearly $29 billion.
Precautionary balances provide a buffer to protect the Fund against potential losses from credit, income, and other financial risks.
IMF directors welcomed a continued increase in precautionary balances since they agreed on a medium-term
target of SDR 25 billion, or nearly $36 billion, at the end of fiscal year 2024, the IMF said in a statement.
As of October, the IMF held over SDR 26 billion, or $37 billion, in precautionary balances, according to the Center for Global Development, a Washington think tank.
Directors agreed the overall balance of risks to the Fund remains broadly unchanged, although their composition has evolved, with credit risks having edged up.
Most directors supported retaining the current medium-term target, while a few directors favored raising the target.
During their discussion, directors cautioned the Fund’s income and precautionary balances projections are subject to heightened uncertainty including from "financial market volatility and intensifying downside risks to global growth stemming in particular from geopolitical developments in the Middle East."
They stressed this environment called for continued vigilance and close monitoring of income developments and the adequacy of precautionary balances to ensure the Fund remains financially strong.
(Reporting by Andrea Shalal in Washington and Chris Thomas in Mexico City; Editing by Chris Reese)
