Consultation on the 2018 Review of the IMF's Facilities for Low-Income Countries

November 2017

Every 5 years, the IMF conducts a review of its facilities for low-income countries. The 2018 Review will take stock of recent experience and establish whether there is a case for introducing changes. It will outline possible options for innovations and refinements consistent with maintaining the self-sustained lending capacity of the Poverty Reduction and Growth Trust (PRGT).

The IMF will prepare in the first half of 2018 a policy paper for Board discussion, drawing on an analysis of usage patterns of the LIC facilities and on stakeholder’s perspectives. This will inform concrete proposals for reform to be put forward for Board consideration in the second half of 2018.

The review takes place against the backdrop of evolving challenges facing LICs in recent years: debt sustainability concerns have resurfaced in several cases; and depressed commodity prices have created significant adjustment challenges for many commodity-exporting LICs.

The online consultation process will be open until December 8, 2017. We would welcome input by e-mail to IMFCONSULTATION@imf.org.

Question for consultations

The IMF is seeking your views on the scope of its 2018 Review of its facilities for low-income countries (LICs). The results of this consultation will serve as valuable inputs in assessing our facilities for low-income countries and potential updates.

While we welcome feedback on any aspect of the IMF’s facilities for low income countries, we are specifically interested in receiving feedback on the following:

  • Are the facilities available to LICs well suited to countries’ needs or do they have specific shortcomings, taking into account the IMF’s mandate and intended catalytic role?

  • Do the IMF’s policies on access to its concessional resources and the financing terms (including blending policies) appropriately balance the objective of meeting the balance-of-payments financing needs of individual LICs while making effective use of scarce concessional resources?

  • Do the facilities for LICs remain adequate to meeting the precautionary financing and policy support needs of PRGT-eligible countries?

  • Do the current set of financing facilities provide appropriately targeted support to countries vulnerable to natural disasters or in fragile situations?

  • To what extent are the differences in the features of the IMF’s concessional (PRGT) and non-concessional (General Resource Account) facilities, including rules for exceptional access, appropriate?

How to participate

Interested stakeholders are encouraged to email their responses to the questions above and/or any other comments to IMFCONSULTATION@imf.org by December 8, 2017.

Please include the following information when responding via email so that the comments can be registered. Senders may request for their responses and comments to be private.

  • Name of the sender
  • Organization you represent (if any)
  • Country (headquarters)
  • Phone number
  • E-mail address

A summary of the responses will be posted on our website by the IMF’s Communications Department (COM) and included in the final board paper.

Background

The IMF lends on concessional terms to low-income countries (LICs) to help them meet their balance-of-payments (BoP) needs. This complements financial support, including for development purposes, from other multilateral institutions. The set of facilities available exclusively to LICs comprises three concessional facilities and a non-lending instrument:

  • the Extended Credit Facility (ECF), used when there are deep-rooted BoP problems;

  • the Standby Credit Facility (SCF), used for actual or potential short-term BoP needs, including for usage on a precautionary basis;

  • the Rapid Credit Facility (RCF), used for emergency lending purposes; and

  • the Policy Support Instrument (PSI), which does not involve any direct IMF lending. for policy advice and signaling.

Demand for IMF support through its LIC facilities remains high but volatile. Currently some 32 PRGT-eligible countries are in program or near-program status.

Access to IMF resources for LICs has since been expanded:

  • In early 2015, the Post-Catastrophe Debt Relief Trust was transformed to create the Catastrophe Containment and Relief (CCR) Trust, broadening the range of situations where the IMF could provide grants for debt relief purposes to include fast-spreading epidemics.

  • In July 2015, to expand its support countries pursuing the 2030 Sustainable Development Goals, the IMF expanded the amounts that countries access from the concessional facilities. Access norms and limits were raised by 50 percent in nominal (SDR) terms; the mix of PRGT and GRA resources in “blended” arrangements was adjusted; and the interest rate on loans extended under the RCF was set to zero.

  • In 2016, guidance on LICs’ access to GRA resources, blending rules, and access norms was clarified and sharpened; and the lending terms on PRGT resources were revised to better reflect the environment of low global interest rates. All PRGT facilities will continue to apply zero interest rates until at least the end of 2018.

  • In 2017, the annual access limit under the RCF was increased for countries hit by large natural disasters.

1/ Eligibility for access to the IMF’s concessional facilities is limited to countries that have low incomes and limited access to international capital markets: currently, 70 of the IMF’s 189 members meet the eligibility criteria. For an explanation of these criteria and how they are applied, see IMF, Eligibility to Use the Fund’s Facilities for Concessional Financing, 2017, available via: https://www.imf.org/en/Publications/Policy-Papers/Issues/2017/05/23/pp052317-eligibility-to-use-the-fund-facilities-for-concessional-financing-for-2017

An accompanying background note provides more information on the IMF’s concessional facilities. Further information is also available on the IMF’s website at: http://www.imf.org/external/np/exr/facts/concesslending.htm and http://www.imf.org/en/About/Factsheets/IMF-Support-for-Low-Income-Countries

2/ The 2012 and 2013 Board papers are available at: http://www.imf.org/en/news/articles/2015/09/28/04/53/pn12108; and http://www.imf.org/en/news/articles/2015/09/28/04/53/pn1345

3/ All IMF member countries, including those eligible to access concessional facilities, are eligible to access the IMF’s general lending facilities (which make use of the IMF’s General Resources Account).