## Annex 9. Positions and Transactions with the IMF (Update to Annex 7.1, BPM6) — Section 1 ## Source details **Canonical URL:** [Annex 9. Positions and Transactions with the IMF (Update to Annex 7.1, BPM6) — Section 1](https://www.imf.org/-/media/files/data/statistics/bmp7/draft-chapters/draft-bpm7-annex-9-v7-positions-and-transactions-with-the-imfgc.pdf) ## Other formats - [Markdown version](/-/media/files/data/statistics/bmp7/draft-chapters/draft-bpm7-annex-9-v7-positions-and-transactions-with-the-imfgc.pdf.md) - [Structured JSON version](/-/media/files/data/statistics/bmp7/draft-chapters/draft-bpm7-annex-9-v7-positions-and-transactions-with-the-imfgc.pdf.json) --- ### A. Introduction — IMF lending framework and channels - Core responsibility: make financing available to members experiencing actual, potential, or prospective balance of payments problems. - Three channels of IMF lending: - General Resources Account (GRA): provides non-concessional lending available to all Fund members. - Poverty Reduction and Growth Trust (PRGT): provides concessional lending to low-income countries. - In October 2024, a new interest rate mechanism was introduced; 31 LICs at the time of drafting the Manual continue to benefit from interest-free lending under the PRGT, while other LICs are charged a modest, and still concessional, interest rate. - PRGT loans often have a grant element that is below 35 percent. - Resilience and Sustainability Trust (RST): provides lending to low-income and vulnerable middle-income countries, as well as small states; uses a tiered interest structure differentiating financing terms across country groups. - Purpose: facilitate proper understanding of how to record IMF arrangements in external accounts. ### A.1 Non-Concessional (GRA) lending — facilities and IMF resources - Non-concessional lending facilities: - Stand-By Arrangement (SBA) - Extended Fund Facility (EFF) - Flexible Credit Line (FCL) - Precautionary and Liquidity Line (PLL) - Rapid Financing Instrument (RFI) - Short-term Liquidity Line (SLL) - IMF resources and borrowing: - Quota subscriptions are the primary source of IMF financing. - The IMF can supplement quota resources through borrowing under New Arrangements to Borrow (NAB) and Bilateral Borrowing Agreements (BBAs). ### A.2 Concessional (PRGT) lending — facilities and resources - Concessional lending facilities for low-income countries: - Extended Credit Facility (ECF) - Standby Credit Facility (SCF) - Rapid Credit Facility (RCF) - Resources for PRGT operations are provided through contributions by a broad segment of the membership and by the IMF. ### A.3 Debt relief assistance and trusts - Debt relief administered under: - Trust for Special Poverty and Growth Operations for Heavily Indebted Poor Countries and Interim ECF Subsidy Operations (PRG-HIPC Trust) - Catastrophe Containment and Relief Trust (CCRT) - The IMF acts as trustee and is responsible for mobilizing and managing resources for these trusts. ### A.4 RST Lending - The RST was established in 2022 to help low-income, small states, and vulnerable middle-income countries tackle long-term structural challenges including climate change and pandemic preparedness. - RST resources are mobilized from voluntary contributions by IMF members with strong external positions, including members wishing to channel SDRs for the benefit of eligible members. ### A.5 Fiscal agency and depository arrangements - The IMF conducts financial dealings with a member through its designated fiscal agency and designated depository. - Fiscal agency may be: treasury (ministry of finance), central bank, official monetary agency, stabilization fund, or similar. - Each member must designate its central bank as depository for IMF holdings of the member’s currency, or, if no central bank exists, a monetary agency or a commercial bank acceptable to the IMF. - Institutional arrangements for holdings/allocations of SDRs and recording liabilities to the IMF may vary across members; domestic accounting treatments may differ, especially where the fiscal agency (e.g., Ministry of Finance) undertakes IMF transactions without direct central bank involvement. ### B. Recording of Positions and Transactions with the IMF — key rules and treatments #### 1. Quotas - Quota subscription components and recording: - Foreign exchange component: - Member pays 25 percent of its quota in SDRs or foreign currencies acceptable to the IMF. - This 25 percent is a component of reserve assets. - In the balance of payments, subscribing this portion is shown as a transaction involving a reduction in other reserve assets (credit) offset by an increase in the reserve tranche position in the IMF (debit). - Domestic currency component: - Remaining 75 percent of the quota is payable in the member’s own currency at a designated depository and held on behalf of the IMF. - Payment is made in domestic currency (IMF No. 1 and No. 2 Accounts) or by issuance of a promissory note (IMF Securities Account). - IMF No. 1 Account: used for IMF operational transactions (e.g., purchases and repurchases). - IMF No. 2 Account: used for payment of local administrative expenses incurred by the IMF in the member’s currency. - Promissory notes are nonnegotiable, encashable by the IMF on demand. - No interest is payable on the IMF No. 1 or No. 2 Accounts or on the promissory note. - Recording consequences: - The domestic portion of the quota payment is not recorded in the member’s balance of payments or in the IIP, except for the balance in the IMF No. 2 account. - Periodic reviews of quota size are recorded the same way as initial quota payment. #### 2. Reserve position in the IMF - Definition and composition: - A member’s reserve position in the IMF equals the sum of the reserve tranche plus any indebtedness of the IMF in the GRA that is readily available to the member. - The reserve tranche represents the member’s unconditional drawing right on the IMF and is created by the foreign exchange portion of the quota subscription. - The reserve tranche increases (decreases) through the IMF’s sale (repurchase) of the member’s currency to meet other members’ demand for IMF resources. - The reserve tranche constitutes part of reserve assets in the IIP. - Using the reserve tranche: - A member may purchase foreign exchange from the IMF with its own currency if it has a balance of payments need. - Domestic currency equal to the value of foreign exchange is paid into the IMF No. 1 Account or via a promissory note recorded in the IMF Securities Account. - The transaction is recorded in the balance of payments as a reduction in the member’s reserve tranche in the IMF offset by an increase in other reserve assets. #### 3. Credit and loans from the IMF (GRA and PRGT) - Scope and classification: - Covers IMF credit through non-concessional GRA arrangements (e.g., SBA, EFF, RFI) and concessional PRGT loans (e.g., ECF/SCF/RCF). - Both IMF (GRA) credit and PRGT loans are classified as loans under other investment. - Economic outcome: - Both provide access to foreign exchange in return for agreeing to conditions. - Differences in execution and recording: - PRGT loan: - Member borrows foreign exchange with a commitment to repay. - PRGT loans do not affect the IMF No. 1 Account. - IMF (GRA) credit: - Member “purchases” foreign exchange from the IMF in return for domestic currency. - Use of IMF credit is shown as the member’s liability denominated in SDRs in the balance of payments and IIP. - The domestic currency provided to the IMF (IMF No. 1 Account or promissory note in the IMF Securities Account) is not shown as a balance of payments transaction or in the IIP. - Liabilities under IMF credit arrangements are extinguished when the member uses foreign exchange to “repurchase” its domestic currency. - Currency valuation adjustments / maintenance of value payments: - For IMF credit, if the member’s domestic currency value changes relative to the SDR, “maintenance of value paymentscurrency valuation adjustments” are made at least once a year in the IMF No. 1 Account or IMF Securities Account denominated and settled in domestic currency to maintain a constant liability in SDRs. - Because the liability is denominated in SDRs, such valuation adjustments are not entered as transactions in the balance of payments. - Members may extend credit/loans to the IMF that are not part of the reserve position when the claim is not immediately encashable at a time of balance of payments need. #### 4. Debt relief through IMF-administered trusts - Grants from IMF-administered trusts (e.g., CCRT) used to repay eligible IMF debt: - Classified as other capital transfers under the relevant sector (central bank or general government depending on the country situation). - If the grant finances a balance of payments need in the recipient country, it should be recorded under memorandum items—exceptional financing (within the balance of payments standard presentation) under capital transfers. - Example recording (recording of the debt service relief for the principal payment (SDR 100), interest (SDR 4) and charges (SDR 1) falling due in the specified period): - Current account: - Credit/revenue 5 - Services: 1 - Financial services: 1 - Investment income: Other investment: Interest 4 (debit/expenditure 4) - Capital account: - Capital transfers 105 - General government: Other capital transfers 105 - Financial account: - Net acquisition of financial assets / Net incurrence of liabilities: Financial account -100 - Other investment: Loans: General government: Credit and loans with the IMF -100 - Note: sector classification may vary (e.g., central bank vs financial corporations/government) depending on GRA applicability. #### 5. Lending to IMF and IMF-managed trust accounts - Treatment based on encashability: - If a member lends to the IMF via NAB participation or bilateral loans/note purchase agreements and the claim is eligible for immediate early repayment to meet a balance of payments need, the claim qualifies as a reserve asset and is included in the member’s reserve position in the IMF. - If a member’s claim on the IMF is not immediately encashable at a time of balance of payments need, such lending is not part of the reserve position and should be recorded as other investment assets/loans. - Lending to IMF-administered trusts: - If readily available to meet a balance of payments financing need, such claims should be included in official reserve assets (recorded as other financial claims/other reserve assets and not as reserve position in the IMF). - If not readily available, they do not qualify as official reserve assets and should be recorded under the appropriate functional category (most frequently, other investment). #### 6. Remuneration - The IMF pays members “remuneration” quarterly on the basis of their reserve tranche position (except for a small portion related to prior quota payments in gold that are interest-free resources to the IMF). - Remuneration is classified on an accrual basis as investment income–reserve assets–interest (credit), offset by an increase in reserve assets (debit). #### 7. IMF No. 2 Account - The IMF No. 2 Account is used for IMF administrative payments and, unlike the IMF No. 1 Account, is reflected in the member’s balance of payments as a liability. - Transactions: - Transfers from IMF No. 1 to IMF No. 2: member’s balance of payments shows an increase in its reserve tranche (debit), offset by an increase in other investment liabilities relating to currency and deposits (credit). - When IMF uses funds from IMF No. 2 to pay for goods and services: member’s balance of payments shows a reduction in this liability (debit) and an offset (credit) under government goods and services n.i.e. #### 8. Special Drawing Rights (SDRs) - SDRs and SDR Department: - Created by the IMF in 1969 as an international reserve asset and administered by the SDR Department, which keeps its accounts strictly separate from the GRA. - The SDR is not a claim on the IMF; membership of the SDR Department incurs the asset or liability position. - Recording in external accounts: - SDRs are instruments as defined in paragraphs 5.34–5.35. - SDR allocations received by a country are reported as liabilities under other investment and reserve-related liabilities. - SDR allocations are not included in short-term foreign currency drains; net international reserves (NIR) increase with a new SDR allocation. - SDR holdings are classified as reserve assets. - SDR-related interest is recorded on a gross basis: members earn interest on SDR holdings (income on reserve assets) and pay interest on cumulative allocation at the SDR interest rate (income under other investment liabilities). - Recording for decentralized or centralized currency unions is the same as for other countries. ### Table A9.2 — Summary Recording of Positions and Transactions with the IMF - Purpose: summary recording of different lending/borrowing arrangements in the balance of payments/IIP of the member economy. - Representative mappings: - Loans (readily available to meet a balance of payments financing need) to the IMF under NAB and BBAs - Reserve position in the IMF - Loans (not readily available to meet a balance of payments financing need) to the IMF under NAB and BBAs - Other investment assets/loans - Lending to IMF administered trusts (readily available to meet balance of payments financing needs) - Other reserve assets/ Other financial claims - Lending to IMF administered trusts (not readily available to meet balance of payments financing needs) - Other investment assets/loans - Credit and loans with the IMF - Other investment liabilities/loans - Cash grants from IMF trusts (e.g., CCRT) for repaying debt - Capital transfers/Other capital transfers - SDR allocations - Interest on cumulative SDR allocations: Other investment liabilities - SDR holdings - Interest on SDR holdings: Reserve assets; Investment income/reserve assets/interest *Source: IMF — Annex 9. Positions and Transactions with the IMF (Update to Annex 7.1, BPM6), Section 1.* ### Section 1 ### Annex 9. Positions and Transactions with the IMF (Update to Annex 7.1, BPM6) — Section 1 ### A. Introduction — IMF lending framework and channels - The IMF’s core responsibility is to make financing available to members experiencing actual, potential, or prospective balance of payments problems. - Three channels of IMF lending: - General Resources Account (GRA): provides non-concessional lending available to all Fund members. - Poverty Reduction and Growth Trust (PRGT): provides concessional lending to low-income countries. In October 2024, a new interest rate mechanism was introduced; 31 LICs at the time of drafting the Manual continue to benefit from interest-free lending under the PRGT, while other LICs are charged a modest, and still concessional, interest rate. PRGT loans often have a grant element that is below 35 percent. - Resilience and Sustainability Trust (RST): provides lending to low-income and vulnerable middle-income countries, as well as small states; uses a tiered interest structure differentiating financing terms across country groups. - Overview purpose: facilitate proper understanding of how to record IMF arrangements in external accounts. ### A.1 Non-Concessional (GRA) lending — facilities and IMF resources - Non-concessional lending channels listed: - Stand-By Arrangement (SBA) - Extended Fund Facility (EFF) - Flexible Credit Line (FCL) - Precautionary and Liquidity Line (PLL) - Rapid Financing Instrument (RFI) - Short-term Liquidity Line (SLL) - IMF resources and borrowing: - Quota subscriptions are the primary source of IMF financing. - The IMF can supplement quota resources through borrowing under New Arrangements to Borrow (NAB) and Bilateral Borrowing Agreements (BBAs). ### A.2 Concessional (PRGT) lending — facilities and resources - Concessional lending facilities for low-income countries: - Extended Credit Facility (ECF) - Standby Credit Facility (SCF) - Rapid Credit Facility (RCF) - Resources for PRGT operations are provided through contributions by a broad segment of the membership and by the IMF. ### A.3 Debt relief assistance and trusts - Debt relief is administered under: - Trust for Special Poverty and Growth Operations for Heavily Indebted Poor Countries and Interim ECF Subsidy Operations (PRG-HIPC Trust) - Catastrophe Containment and Relief Trust (CCRT) - The IMF acts as trustee and is responsible for mobilizing and managing resources for these trusts. ### A.4 RST Lending - The RST was established in 2022 to help low-income, small states, and vulnerable middle-income countries tackle long-term structural challenges including climate change and pandemic preparedness. - RST resources are mobilized from voluntary contributions by IMF members with strong external positions, including members wishing to channel SDRs for the benefit of eligible members. ### A.5 Fiscal agency and depository arrangements - The IMF conducts financial dealings with a member through its designated fiscal agency and designated depository. - Fiscal agency may be: treasury (ministry of finance), central bank, official monetary agency, stabilization fund, or similar. - Each member must designate its central bank as depository for IMF holdings of the member’s currency, or, if no central bank exists, a monetary agency or a commercial bank acceptable to the IMF. - Institutional arrangements for holdings/allocations of SDRs and recording liabilities to the IMF may vary across members; domestic accounting treatments may differ, especially where the fiscal agency (e.g., Ministry of Finance) undertakes IMF transactions without direct central bank involvement. ### B. Recording of Positions and Transactions with the IMF — key rules and treatments #### 1. Quotas - Quota subscription components: - Foreign exchange component: member pays 25 percent of its quota in SDRs or foreign currencies acceptable to the IMF; this 25 percent is a component of reserve assets. In the balance of payments, subscribing this portion is shown as a transaction involving a reduction in other reserve assets (credit) offset by an increase in the reserve tranche position in the IMF (debit). - Domestic currency component: remaining 75 percent of the quota is payable in the member’s own currency at a designated depository and held on behalf of the IMF. Payment is made in domestic currency (IMF No. 1 and No. 2 Accounts) or by issuance of a promissory note (IMF Securities Account). - IMF No. 1 Account: used for IMF operational transactions (e.g., purchases and repurchases). - IMF No. 2 Account: used for payment of local administrative expenses incurred by the IMF in the member’s currency. - Promissory notes are nonnegotiable, encashable by the IMF on demand. - No interest is payable on the IMF No. 1 or No. 2 Accounts or on the promissory note. - Recording consequences: - The domestic portion of the quota payment is not recorded in the member’s balance of payments or in the IIP, except for the balance in the IMF No. 2 account. - Periodic reviews of quota size are recorded the same way as initial quota payment. #### 2. Reserve position in the IMF - A member’s reserve position in the IMF equals the sum of the reserve tranche plus any indebtedness of the IMF in the GRA that is readily available to the member. - The reserve tranche: - Represents the member’s unconditional drawing right on the IMF. - Is created by the foreign exchange portion of the quota subscription. - Increases (decreases) through the IMF’s sale (repurchase) of the member’s currency to meet other members’ demand for IMF resources. - Constitutes part of reserve assets in the IIP. - Using the reserve tranche: - A member may purchase foreign exchange from the IMF with its own currency if it has a balance of payments need. - Domestic currency equal to the value of foreign exchange is paid into the IMF No. 1 Account or via a promissory note recorded in the IMF Securities Account. - The transaction is recorded in the balance of payments as a reduction in the member’s reserve tranche in the IMF offset by an increase in other reserve assets. #### 3. Credit and loans from the IMF (GRA and PRGT) - Scope: covers IMF credit through non-concessional GRA arrangements (e.g., SBA, EFF, RFI) and concessional PRGT loans (e.g., ECF/SCF/RCF). - Economic outcome: both IMF (GRA) credit and PRGT loans provide access to foreign exchange in return for agreeing to conditions. - Classification: both IMF (GRA) credit and PRGT loans are classified as loans under other investment. - Differences in execution and recording: - PRGT loan: - Member borrows foreign exchange with a commitment to repay. - PRGT loans do not affect the IMF No. 1 Account. - IMF (GRA) credit: - Member “purchases” foreign exchange from the IMF in return for domestic currency. - Use of IMF credit is shown as the member’s liability denominated in SDRs in the balance of payments and IIP. - The domestic currency provided to the IMF (IMF No. 1 Account or promissory note in the IMF Securities Account) is not shown as a balance of payments transaction or in the IIP. - Liabilities under IMF credit arrangements are extinguished when the member uses foreign exchange to “repurchase” its domestic currency. - Currency valuation adjustments / maintenance of value payments: - For IMF credit, if the member’s domestic currency value changes relative to the SDR, “maintenance of value paymentscurrency valuation adjustments” are made at least once a year in the IMF No. 1 Account or IMF Securities Account denominated and settled in domestic currency to maintain a constant liability in SDRs. - Because the liability is denominated in SDRs, such valuation adjustments are not entered as transactions in the balance of payments. - Members may extend credit/loans to the IMF that are not part of the reserve position when the claim is not immediately encashable at a time of balance of payments need. #### 4. Debt relief through IMF-administered trusts - Grants from IMF-administered trusts (e.g., CCRT) used to repay eligible IMF debt: - Classified as other capital transfers under the relevant sector (central bank or general government depending on the country situation). - If the grant finances a balance of payments need in the recipient country, it should be recorded under memorandum items—exceptional financing (within the balance of payments standard presentation) under capital transfers. - Example recording (recording of the debt service relief for the principal payment (SDR 100), interest (SDR 4) and charges (SDR 1) falling due in the specified period): - Current account: Credit/revenue 5; Services: 1; Financial services: 1; Investment income: Other investment: Interest 4 (debit/expenditure 4) - Capital account: Capital transfers 105; General government: Other capital transfers 105 - Financial account: Net acquisition of financial assets / Net incurrence of liabilities: Financial account -100; Other investment: Loans: General government: Credit and loans with the IMF -100 - Notes clarify that due to the GRA (if applicable), sector classification may vary (e.g., central bank vs financial corporations/government). #### 5. Lending to IMF and IMF-managed trust accounts - If a member lends to the IMF via NAB participation or bilateral loans/note purchase agreements and the claim is eligible for immediate early repayment to meet a balance of payments need, the claim qualifies as a reserve asset and is included in the member’s reserve position in the IMF. - If a member’s claim on the IMF is not immediately encashable at a time of balance of payments need, such lending is not part of the reserve position and should be recorded as other investment assets/loans. - Lending to IMF-administered trusts: - If readily available to meet a balance of payments financing need, such claims should be included in official reserve assets (recorded as other financial claims/other reserve assets and not as reserve position in the IMF). - If not readily available, they do not qualify as official reserve assets and should be recorded under the appropriate functional category (most frequently, other investment). #### 6. Remuneration - The IMF pays members “remuneration” quarterly on the basis of their reserve tranche position (except for a small portion related to prior quota payments in gold that are interest-free resources to the IMF). - Remuneration is classified on an accrual basis as investment income–reserve assets–interest (credit), offset by an increase in reserve assets (debit). #### 7. IMF No. 2 Account - The IMF No. 2 Account is used for IMF administrative payments and, unlike the IMF No. 1 Account, is reflected in the member’s balance of payments as a liability. - Transactions: - Transfers from IMF No. 1 to IMF No. 2: member’s balance of payments shows an increase in its reserve tranche (debit), offset by an increase in other investment liabilities relating to currency and deposits (credit). - When IMF uses funds from IMF No. 2 to pay for goods and services: member’s balance of payments shows a reduction in this liability (debit) and an offset (credit) under government goods and services n.i.e. #### 8. Special Drawing Rights (SDRs) - SDRs: - Created by the IMF in 1969 as an international reserve asset and administered by the SDR Department, which keeps its accounts strictly separate from the GRA. - The SDR is not a claim on the IMF; membership of the SDR Department incurs the asset or liability position. - Recording in external accounts: - SDRs are instruments as defined in paragraphs 5.34–5.35. - SDR allocations received by a country are reported as liabilities under other investment and reserve-related liabilities. - SDR allocations are not included in short-term foreign currency drains; net international reserves (NIR) increase with a new SDR allocation. - SDR holdings are classified as reserve assets. - SDR-related interest is recorded on a gross basis: members earn interest on SDR holdings (income on reserve assets) and pay interest on cumulative allocation at the SDR interest rate (income under other investment liabilities). - Recording for decentralized or centralized currency unions is the same as for other countries. *Source: IMF — Annex 9. Positions and Transactions with the IMF (Update to Annex 7.1, BPM6), Section 1.* ### Section 2 ### Table A9.2 Summary Recording of Positions and Transactions with the IMF ### Purpose - Provides a summary recording of different lending/borrowing arrangements in the balance of payments/IIP of the member economy. ### Recording in the balance of payments/IIP of the member economy - Loans (readily available to meet a balance of payments financing need) to the IMF under NAB and BBAs - Reserve position in the IMF - Loans (not readily available to meet a balance of payments financing need) to the IMF under NAB and BBAs - Other investment assets/loans - Lending to IMF administered trusts (readily available to meet balance of payments financing needs) - Other reserve assets/ Other financial claims - Lending to IMF administered trusts (not readily available to meet balance of payments financing needs) - Other investment assets/loans - Credit and loans with the IMF - Other investment liabilities/loans - Cash grants from IMF trusts (e.g., CCRT) for repaying debt - Capital transfers/Other capital transfers - SDR allocations - Interest on cumulative SDR allocations - Other investment liabilities - SDR holdings - Interest on SDR holdings - Reserve assets - Investment income/reserve assets/interest --- _Source: https://www.imf.org/-/media/files/data/statistics/bmp7/draft-chapters/draft-bpm7-annex-9-v7-positions-and-transactions-with-the-imfgc.pdf_