Abstract
This chapter discusses the rationale for multilateral lending. It describes three types of multilateral lending including countercyclical provision of liquidity to meet temporary current account imbalances, lending to countries facing capital account crises in order to bail out private creditors, and development finance. It explains that the rationale for countercyclical lending has become stronger in light of the increased instability of the international economic environment, the procyclical behavior of international financial markets and greater vulnerability of developing countries to external shocks.
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