(Recasts throughout with outcome of board meeting)
By Lesley Wroughton
WASHINGTON, July 1 (Reuters) - The International Monetary Fund on Wednesday set the terms for its long-awaited plan to issue debt, a program it hopes will boost its own resources and bring emerging economic powers more into its fold.
Under a framework agreed by the IMF board on Wednesday, the notes will have a maximum maturity of five years and once purchased by member countries, can be traded among central banks.
China has already committed to purchase $50 billion in the notes, and Russia and Brazil up to $10 billion each, part of an agreement among Group of 20 member countries to increase IMF resources by $500 billion.
“Under the framework, members may sign agreements to purchase IMF notes up to a limit set by the member,” the IMF said in a statement.
An IMF official said the board did not set a cap on the amount of debt the fund could issue. Earlier, sources said staff had recommended the IMF issue no more than $150 billion in debt.
It is the first time that the Washington-based institution has agreed to issue debt. A similar idea was proposed in the 1980s but failed to win enough support among member countries.
It is also the first time that emerging market countries have contributed to increasing funds for IMF lending in addition to their IMF subscriptions, or quotas, which generate most of the Fund’s resources.
“We do not see this as a permanent solution to raising resources for the IMF. That should be done through a more equitable distribution of quotas,” a source from a major emerging market country told Reuters.
Emerging market countries are pushing for more voting power in the IMF through an increase in their quotas. (Reporting by Lesley Wroughton; Editing by Diane Craft and Dan Grebler)