agreed, as well as an increase in its financial size. first, the fund ’ s lending framework has been reformed radically. in particular : ( a ) conditionality has been simplified and tailored to the varying strengths of countries ’ policies and fundamentals ; the imf will rely more on pre - set qualification criteria ( ex - ante conditionality ) and less on traditional ( ex post ) conditionality as the basis for access to its resources ; ( b ) a new flexible credit line ( fcl ) has been introduced, for countries with very strong fundamentals, policies, and track records of policy implementation. countries eligible to the fcl are granted large and upfront access to fund resources, within limits to be assessed on a case - by - case basis and with no ongoing ( ex post ) conditions ; ( c ) the traditional stand - by lending arrangements have been made more flexible, to enable high access on a precautionary basis for members that do not qualify for the fcl ; ( d ) non - concessional loan access limits for countries have been doubled ( to 200 and 600 per cent of quota on an annual and cumulative basis, respectively ), in order to bolster countries ’ confidence that adequate resources would be available to meet their financing needs. second, and perhaps more important, the fund ’ s lending capacity has been trebled from the pre - crisis level, from $ 250 billion to $ 750 billion. a number of advanced and emerging countries have volunteered to lend new resources for more than $ 500 billion, through bilateral loans and imf notes purchase agreements. on the whole, the imf ’ s lending toolkit has been re - oriented from crisis resolution to crisis prevention, and the substantial increase in financial capacity has enhanced its credibility as a multilateral insurance mechanism. the fcl plays a special role in this new framework. its success so far ( as in the cases of mexico, poland and colombia ) bears witness of a radical shift in the sentiment of the potential beneficiaries. third, a decision has been taken to allocate new special drawing rights ( sdrs ) equivalent to $ 250 billion, two fifths of which to emerging and developing countries. sdrs are a means for imf members to obtain freely usable currencies from other members, and they therefore help to increase countries ’ international reserves. one purpose of these reforms is to convince emerging countries to abandon the quest for self - insurance through the massive accumulation of official reserves against potential crises and

is a step in the right direction, although the share of the anti - crisis stimulus package allocated to overall social welfare programs is small indeed compared to that going to infrastructure and other public investments ( 0. 5 and 11 per cent of gdp respectively ). the service sector would benefit greatly from financial system reforms to stimulate credit to small and medium - sized enterprises, which until now have been severely constrained. this could prompt the emergence of a large middle class and lead to a better distribution of income, thereby increasing the overall propensity to consume. 3. 3 reforms to boost growth in the advanced economies the chinese case, and that of the emerging countries in asia generally, differs from other countries running an external surplus or a small deficit. for japan and some european countries, such as germany and italy, where the scope for fiscal manoeuvre is limited, structural reforms should be directed at the sectors where heavy regulation limits competition, hindering innovation and productivity growth. the deregulation of the telecommunications market in the 1980s and 1990s helped to spark the formation of new companies and the introduction of new products, thereby raising demand. something similar could be done for professional services and retail trade, which are still characterised by relatively pervasive regulation. these are reforms that would not be difficult to implement and would entail potentially very large gains in potential output. we are probably going to experience what many commentators are already calling a “ jobless recovery ”. in fact, unemployment is rising all over the advanced world : in the united states the rate is expected to hit double digits within the next few months and to stay there throughout much of 2010. the fiscal and monetary stimulus have saved a lot of jobs, but it is widely recognized that extra effort is needed to help employment to recover quickly. what is particularly disturbing in the current juncture is that jobless workers tend to remain unemployed for longer than in the past, to the detriment of their human capital. this tendency must be countered by a proper reform effort : the evolution of potential output depends on the level of a society ’ s human capital. as the g - 20 said, “ each of our countries will need, through its own national policies, to strengthen the ability of our workers to adapt to changing market demands and to benefit from innovation and investment in new technologies, clean energy, environment, health, and infrastructures ”. active labour market policies may help workers acquire the skills that will be needed as the economy revives. this has implications not only