New Zealand has pledged $1.26 billion as a stand-by loan facility to the International Monetary Fund.
Finance Minister Bill English said the commitment, alongside other countries, was made so the IMF had the capacity to deal with any significant disruption to the global economy.
The extra commitment, agreed by Cabinet yesterday, will be called on if needed. New Zealand will not provide any funds immediately.
The IMF will repay New Zealand any amount it draws down, with interest. The extra resources will be available for all IMF members and will not be earmarked for any particular region.
"New Zealand is one of the most indebted developed countries in the world and has a significant proportion of its economy involved in trade, so it's important that we support institutions like the IMF," English said.
"As a small, open economy, we benefit significantly from a stable and prosperous global economy.
"Many countries including the United Kingdom, Australia, Japan, Singapore and Eurozone countries have already announced extended commitments to the IMF, and there are likely to be more contributions announced around this week's G20 meeting.
"It's our expectation that Europe will continue to find solutions to its own problems, but the IMF has a role in underpinning global certainty."
In April, a number of G20 countries announced additional commitments to support the IMF in making bilateral loans if required. New Zealand was formally approached last week to confirm it would also support this programme.
The new loan facility will be recorded as a contingent liability in the Government's financial statements for the year to June 30, 2012. However, it will have no impact on the Government's track to surplus.
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