The International Monetary Fund (IMF) has been discussing a new type of preemptive precautionary financing mechanism against crises in emerging market countries, Director of the IMF Institute Leslie Lipschitz said at a press briefing in Singapore Tuesday.

The design of the instrument is expected to be announced later this year after the IMF-World Bank annual meetings to be held in September in Singapore, according to Mark Allen, Director of IMF's Policy Development and Review Department.

The press conference was held at the end of a two-day seminar on crisis prevention in emerging market economies, which was jointly organized by the IMF and the Singapore government.

Speaking at the seminar, IMF's Deputy Managing Director Takatoshi Kato said that the new instrument will provide a high- access line of credit to emerging markets that have strong macroeconomic policies but remain vulnerable to crises.

"First, this arrangement would provide a more assured access as an added level of protection against crises. Second, the presence of such financing would also allow emerging market countries to hold less in the way of low-yielding precautionary reserves where this is the primary motivation for reserve accumulation," Kato said.

An event in the run-up to the IMF-World Bank annual meetings, this high-level seminar gathered a group of policy makers and economists from around the world to discuss how to reduce the probability of crises in emerging market countries.

Source: Xinhua