Review of the Adequacy of the Fund's Precautionary Balances

Prepared by the Finance Department

Approved by Andrew Tweedie

August 24, 2010

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Executive Summary

  1. Introduction
  2. Stocktaking and Recent Developments
  3. A New Framework For Assessing Reserve Adequacy
  4. Assessment of the Adequacy of Precautionary Balances
  5. Conclusions and Issues for Discussion


  1. Financial Risk Mitigation in the Fund
  2. Current vs. 2008 Review
  3. Precautionary Balances in the GRA, 2002-2010
  4. IMF and Other IFIs: Reserve Ratios
  5. Considerations Bearing on the Fund's Need for Precautionary Balances
  6. Target for Precautionary Balances with a Built-In Floor
  7. Illustrative Scenarios: Implications for Burden Sharing and Precautionary Balances


  1. Total Commitments, Credit Outstanding, and Credit Concentration
  2. Precautionary Balance Ratios, FY 2000-10
  3. IMF Relative to Other IFIs: Reserve Adequacy and Concentration
  4. Alternative Credit Measures, FY 2002-2010
  5. Target Range for Precautionary Balances with a Built-In Floor
  6. The Fund's Precautionary Balances, FY 1993-2016
  7. Precautionary Balances to Credit, FY09-15


  1. The Composition of the Fund's Precautionary Balances
  2. Precautionary Balances Help Safeguard the Fund's Financing Mechanism
  3. Experience with Drawings under Precautionary Arrangements


  1. Overview of other IFIs' Capital Adequacy Policies and Practices
  2. Illustration of Applying the Basel II Framework to the Fund
  3. Stress Testing the Impact of Charges in Arrears