Michael McCormack (Riverina, National Party, Minister for Small Business) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

Today, I introduce a bill to amend the International Monetary Agreements Act 1947 to bring into force in Australia a renewal of the bilateral Loan Agreement between Australia and the International Monetary Fund signed in October 2012.

The amendments to the International Monetary Agreements Act will ensure that the standing appropriation that allows the government to make payments to the IMF under the current bilateral loan agreement continue for the renewed bilateral loan agreement.

The renewal of Australia's bilateral loan agreement forms part of a broader global effort to maintain the current level of IMF resourcing to ensure that it has sufficient financial resources available to effectively fulfil its global role in economic crisis prevention and resolution.

As a successful open trading economy, Australia's prosperity relies on strong and stable growth in the world economy.

Importantly, ensuring that the IMF has sufficient lending resources in place provides confidence to markets and other economic actors that the IMF has the resources it needs to continue to play its role effectively, which is an important factor that underpins ongoing confidence to trade and invest.

Further, the experience of the global financial crisis indicates that it is important that the IMF has financial resources in place before they are needed, rather than hurriedly having to seek new funding commitments in the midst of the crisis response.

The bilateral loan agreement, signed by Australia in 2012, provides a line of credit to the IMF of around A$8 billion. It is one of 35 agreements the IMF signed with member countries and institutions between 2012 and 2016 to provide a third component to the IMF's lending resources, after quota resources and resources available to the IMF through the New Arrangements to Borrow. To date, these agreements have not been called upon.

On 19 December 2016, Australia signed a new agreement with the IMF to extend Australia's $8 billion funding commitment to 31 December 2019, with the possibility of a one-year extension to 31 December 2020 with Australia's consent. This agreement remains subject to the completion of domestic processes.

The IMF is seeking to renew all 35 agreements with member countries or institutions and undertake new agreements where possible. The broad terms and conditions of these agreements remain largely unchanged, with the addition of a new multilateral voting requirement for the activation of the agreements. This amendment will improve the governance and oversight of these agreements by participating countries.

Full details of the measure are contained in the explanatory memorandum.

Debate adjourned.