## pr214-signed-italy-2020-borrowing-agreements ## Source details **Canonical URL:** [pr214-signed-italy-2020-borrowing-agreements](https://www.imf.org/-/media/files/news/press-release/2021/pr214/pr214-signed-italy-2020-borrowing-agreements.pdf) ## Other formats - [Markdown version](/-/media/files/news/press-release/2021/pr214/pr214-signed-italy-2020-borrowing-agreements.pdf.md) - [Structured JSON version](/-/media/files/news/press-release/2021/pr214/pr214-signed-italy-2020-borrowing-agreements.pdf.json) --- ### Purposes and Amounts - Purpose of the agreement: To enhance the resources available on a temporary basis to the International Monetary Fund (the “Fund”) for crisis prevention and resolution through bilateral borrowing. - Loan Amount: - The Bank of Italy agrees to lend to the Fund an SDR-denominated amount up to the equivalent of EUR 23,480 million (the “Loan Amount”). - Upon the effectiveness of the increase in Italy’s credit arrangement under the Fund’s New Arrangements to Borrow (the “NAB”) as part of the reform of the NAB approved by the Fund under Decision No. 16645-(20/5), adopted January 16, 2020 (the “NAB Reform”), the Loan Amount will be automatically reduced to an SDR-denominated amount up to the equivalent of EUR 10,115 million (the “Rolled Back Loan Amount”). - Legal and policy basis: - Agreement based on Article VII, Section 1(i) of the Fund’s Articles of Agreement (authorizing the Fund to borrow to replenish its holdings of any member’s currency in the General Resources Account (“GRA”)). - Must be considered in light of the Guidelines for Borrowing by the Fund (quota subscriptions are the basic source; borrowing is a temporary supplement). - Nomenclature: - This and other bilateral borrowing agreements entered into or amended pursuant to the borrowing framework approved by the Fund in March 2020 are each a “2020 Borrowing Agreement” and collectively the “2020 Borrowing Agreements.” - Bilateral borrowing agreements pursuant to the borrowing framework approved in August 2016 are each a “2016 Borrowing Agreement” and collectively the “2016 Borrowing Agreements.” - The 2020 Borrowing Agreements and the 2016 Borrowing Agreements are collectively the “Bilateral Borrowing Agreements.” ### Term of the Agreement and Use - Term and extension: - The term of this agreement shall end on December 31, 2023. - The Fund may extend the term for one further year through December 31, 2024 by a decision of the Executive Board, taking into account the Fund’s overall liquidity situation and actual and prospective borrowing requirements, and with the consent of the Bank of Italy. - Activation conditions (activation threshold and procedures): - The 2020 Borrowing Agreements may be activated only after the Managing Director has notified the Executive Board that the Forward Commitment Capacity of the Fund as defined in Decision No. 14906-(11/38), adopted April 20, 2011, taking into account all available uncommitted resources under the New Arrangements to Borrow (the “modified FCC”), is below SDR 100 billion (the “activation threshold”). - The Managing Director shall not provide such notification unless: - (i) the NAB is activated as of the time of the notification, or there are no available uncommitted resources under the NAB as of that time, and - (ii) the activation of the 2020 Borrowing Agreements has been approved by creditors representing at least 85 percent of the total credit amount committed under the 2020 Borrowing Agreements by creditors eligible to vote on such activation. - For conducting a poll, the Managing Director shall propose in writing the activation and request creditors’ vote. - A creditor is not eligible to vote on activation if, at the time of the vote, its 2020 Borrowing Agreement is not effective, or the relevant member is not included in the Fund’s Financial Transactions Plan for transfers of its currency. - The Managing Director may approach creditors before the modified FCC is below the activation threshold if extraordinary circumstances warrant. - Deactivation rules: - If activated pursuant to paragraph 2(b), the 2020 Borrowing Agreements shall be automatically deactivated whenever the NAB is no longer activated, unless there are no available uncommitted resources under the NAB at that time. - Separately, the 2020 Borrowing Agreements shall be deactivated if the Managing Director has notified the Executive Board that the modified FCC (excluding amounts available under the Bilateral Borrowing Agreements) has risen above the activation threshold and: - (i) the Executive Board determines that activation is no longer necessary; or - (ii) six months have elapsed since the Managing Director’s notification and, within that period, the modified FCC (excluding Bilateral Borrowing Agreement amounts) has not fallen below the activation threshold. - If after deactivation the modified FCC falls below the activation threshold, paragraph 2(b) provisions will apply. - Permitted uses when activated: - During any period after activation and while the 2020 Borrowing Agreements remain activated: - (i) The Fund may use resources under this agreement to fund any outright purchases made from the GRA during the term of this agreement. - (ii) The Fund may approve, during the term, commitments of GRA resources under Fund arrangements whose purchases could be funded by drawings under this agreement at any time during the period of such commitments, including after expiration of the term or during any period when the agreement is no longer activated; provided commitments covered under clause (ii) also include any commitment whose approval caused the activation threshold to be reached. - Following an activation, resources under this agreement may also be used to fund early repayment of claims under other 2020 Borrowing Agreements if relevant creditors request early repayment as specified in paragraph 8. Drawings may be made to fund such early repayment for as long as claims under the 2020 Borrowing Agreements remain outstanding, including after the expiration of the term or during any period the agreement is no longer activated. - Drawing balance objective: - Drawings under this agreement shall be made with the goal of achieving over time broadly balanced positions among creditors under all Bilateral Borrowing Agreements relative to their commitments under these agreements. ### Estimates, Notices, and Limits on Drawings - Estimates and inclusion in periodic plans: - Prior to each plan period for use of bilateral borrowed resources, the Fund shall provide the Bank of Italy with its best estimates of amounts it expects to draw under this agreement during the forthcoming period, and shall provide revised estimates during each period where warranted. - The Bank of Italy shall not be included in the periodic plan, and no drawings shall be made under this agreement, if Italy is not included and is not being proposed by the Managing Director to be included in the Financial Transactions Plan for transfers of its currency. - No drawings shall be made if the Bank of Italy was included in the periodic plan but, at the time of drawing, Italy’s currency is not being used in transfers under the Financial Transactions Plan because of Italy’s balance of payments and reserve position. - If Italy was not included in the Financial Transactions Plan at the time of the vote on activation and is subsequently included, drawings may be made to fund purchases made and commitments approved during the activation period unless the Bank of Italy notifies the Fund it does not wish to be drawn upon. - Notice periods and exceptional circumstances: - The Fund shall give the Bank of Italy at least five business days’ (Rome) notice of its intention to draw. - The Fund shall provide payment instructions at least two business days (Fund) prior to the value date by rapid authenticated means (e.g., SWIFT). - In exceptional circumstances where five business days’ (Rome) notice is not possible, notification of intent to draw shall be at least three business days (Rome) in advance of the value date, and the Bank of Italy would make best efforts to meet such a call. ### Evidence of Indebtedness - Publication and instruments: - Outstanding drawings under this agreement will be included in the statements of Italy’s position in the Fund that are published monthly by the Fund. - At the request of the Bank of Italy, the Fund shall issue non-negotiable instruments evidencing the Fund’s indebtedness under this agreement. - Upon repayment of the amount of any instrument and all accrued interest, the instrument shall be returned to the Fund for cancellation. - If less than the amount of such instrument is repaid, the instrument shall be returned and a new instrument for the remainder shall be substituted with the same maturity date as the old instrument. ### Maturity - Standard maturity and extensions: - Except as otherwise provided in paragraph 5 and paragraph 8, each drawing shall have a maturity date of three months from the drawing date. - The Fund may elect to extend the maturity date of any drawing or any portion by additional periods of three months after the initial maturity date. - The Fund shall be automatically deemed to have elected such extensions for all drawings then outstanding unless, at least five business days (Fund) before a maturity date, the Fund notifies the Bank of Italy by rapid authenticated means (e.g., SWIFT) that it does not elect to extend the maturity date of a particular drawing or portion thereof. - Limits on extension and special maturity rules: - The maturity date of any drawing to fund purchases from the GRA shall not be extended to a date later than the tenth anniversary of the date of such drawing. - The maturity date for any drawings to fund early repayments of other creditors’ claims in accordance with paragraph 2(e) shall be a single common maturity date that is the longest remaining maximum maturity of any claim for which such early repayment has been requested or the tenth anniversary of the date of the relevant drawing to fund early repayment, whichever is earlier. - Following an Executive Board determination that exceptional circumstances exist as a result of a shortage of Fund resources in relation to Fund obligations falling due, the Fund, with the agreement of the Bank of Italy, may extend the maximum maturity for drawings under this agreement up to an additional five years. - Repayment and early repayment: - The Fund shall repay the principal amount of each drawing or relevant part on the applicable maturity date pursuant to subparagraph (a). - After consultation with the Bank of Italy, the Fund may make an early repayment in part or in full of the principal amount of any drawing prior to its maturity date, provided the Fund notifies the Bank of Italy at least five business days (Fund) before any such repayment by rapid authenticated means. - Repayments restore pro tanto the amount that can be drawn under this agreement. - The extension of the maturity of a drawing or part thereof does not reduce the amount that can be drawn under this agreement. - Business-day rule: - If a maturity date is not a business day in the place where payment is to be made, the payment date will be the next business day in that place; interest will accrue up to the payment date. ### Rate of Interest - Interest benchmark and adjustment provision: - Each drawing shall bear interest at the SDR interest rate established by the Fund pursuant to Article XX, Section 3 of the Fund’s Articles of Agreement. - If the Fund pays an interest rate higher than the SDR interest rate on outstanding balances from any other borrowing on comparable terms effected pursuant to Article VII, Section 1(i) of the Fund’s Articles of Agreement, and for as long as that higher rate remains in effect, the interest rate payable on drawings under this agreement shall be equivalent to the interest rate paid by the Fund on such other comparable borrowing. - Calculation and payment schedule: - The amount of interest payable on each drawing shall be calculated on the basis of the outstanding amount of the drawing. - Interest shall accrue daily and shall be paid promptly by the Fund after each July 31, October 31, January 31, and April 30. ### Denomination, Media and Modalities of Drawings and Payments - Denomination: - The amount of each drawing and corresponding repayment under this agreement shall be denominated in SDRs. - Payment of drawings: - Unless otherwise agreed, the Bank of Italy shall pay the amount of each drawing on the value date specified by the Fund by transfer of the SDR equivalent amount of euro to the account of the Fund at the designated depository of Italy. - For drawings in accordance with paragraph 2(e), the Bank of Italy shall ensure that balances drawn by the Fund that are not balances of a freely usable currency can be exchanged for a freely usable currency of its choice. - With respect to balances drawn that are balances of a freely usable currency, the Bank of Italy shall collaborate with the Fund and other members to enable such balances to be exchanged for another freely usable currency. - Repayment modalities: - Except as provided in paragraph 8, repayment of principal shall be made, as determined by the Fund, in the currency borrowed whenever feasible, in euro, in special drawing rights (provided it does not increase Italy’s holdings of special drawing rights above the limit under Article XIX, Section 4 of the Fund’s Articles of Agreements unless Italy agrees), in freely usable currencies, or with the agreement of the Bank of Italy in other currencies included in the Fund’s Financial Transactions Plan for transfers. - Interest payment modalities: - Payments by the Fund of interest shall normally be made in SDRs; the Fund and the Bank of Italy may agree that interest payments will be made in euro. - Accounts for payments: - All payments made by the Fund in euro shall be made to an account specified by the Bank of Italy. - Payments in SDRs shall be made by crediting Italy’s account in the Special Drawing Rights Department. - Payments in any other currency shall be made to an account specified by the Bank of Italy. ### Early Repayment at Request of the Bank of Italy - Conditions for Bank of Italy-requested early repayment: - At the request of the Bank of Italy, the Bank of Italy shall obtain early repayment at face value of all or a portion of the drawings outstanding if: - (i) the Bank of Italy represents that Italy’s balance of payments and reserve position justifies such repayment, and - (ii) the Fund, having given this representation the overwhelming benefit of any doubt, determines that there is a need for the early repayment as requested in light of Italy’s balance of payments and reserve position. - Currencies for such repayments: - After consultation with the Bank of Italy, the Fund may make repayments pursuant to this paragraph 8 in SDRs or a freely usable currency as determined by the Fund or, with the agreement of the Bank of Italy, in the currencies of other members that are included in the Fund’s Financial Transactions Plan for transfers. ### Transferability - General non-transferability rule: - Except as provided in subparagraphs (b) through (h), the Bank of Italy may not transfer its obligations under this agreement or any claims on the Fund resulting from outstanding drawings, except with the prior consent of the Fund and on terms the Fund may approve. - Permitted transfers: - The Bank of Italy may at any time transfer all or part of any claim on the Fund resulting from outstanding drawings to: - any member of the Fund, - the central bank or other fiscal agency designated by any member for purposes of Article V, Section 1 of the Fund’s Articles of Agreement (“other fiscal agency”), - or any official entity prescribed as a holder of SDRs pursuant to Article XVII, Section 3 of the Fund’s Articles of Agreement. - Conditions on transferees: - Transferees shall assume the liability of the Bank of Italy pursuant to paragraph 5(a) regarding extension of maturity of the transferred drawings and regarding extension of maximum maturity in exceptional circumstances. - Transferred claims shall be held by the transferee on the same terms and conditions as previously, except: - (i) The transferee acquires the right to request early repayment under paragraph 8 only if it is a member, or the central bank or other fiscal agency of a member, and at the time of transfer the member’s balance of payments and reserve position is considered sufficiently strong by the Fund that its currency is used in transfers under the Financial Transactions Plan. - (ii) If the transferee is a member, or its central bank or fiscal agency, the reference to euro in paragraph 7 shall be deemed to refer to the currency of that member; otherwise it shall refer to a freely usable currency determined by the Fund. - (iii) Payments related to the transferred claim shall be made to an account specified by the transferee. - (iv) References to business days (Rome) shall be deemed to refer to business days in the place where the transferee is situated. - Price, notification, and effectiveness: - The price of a claim transferred pursuant to subparagraph (b) shall be as agreed between the Bank of Italy and the transferee. - The Bank of Italy shall notify the Fund promptly of: the claim being transferred, the name of the transferee, the amount of the claim transferred, the agreed price, and the value date of the transfer. - A transfer so notified shall be reflected in the Fund’s records if in accordance with the terms and conditions of paragraph 9 and shall be effective as of the value date agreed between the Bank of Italy and the transferee. - Interest payment on transferred claims: - If all or part of a claim is transferred during a quarterly period as described in paragraph 6(b), the Fund shall pay interest to the transferee on the amount of the claim transferred for the whole of that period. - Assistance in arranging transfers: - If requested, the Fund shall assist in seeking to arrange transfers. ### Effective Exchange Rate - Exchange rate determination: - Unless otherwise agreed, all drawings, exchanges, and payments of principal and interest under this agreement shall be made at the exchange rates for the relevant currencies in terms of the SDR established pursuant to Article XIX, Section 7(a) of the Fund’s Articles of Agreement and the rules and regulations of the Fund thereunder for the second business day of the Fund before the value date of the transfer, exchange or payment. - If this exchange rate determination date is not a business day in Rome, such date shall be the last preceding business day of the Fund that is also a business day in Rome. - Euro value fixation for drawing limits: - For applying the limit on drawings specified in paragraphs 1(a), 14(c) and 14(e), the euro value of each SDR-denominated drawing shall be determined and permanently fixed on the value date of the drawing based on the euro/SDR exchange rate established pursuant to Article XIX, Section 7(a) of the Fund’s Articles of Agreement and the rules and regulations of the Fund thereunder for the second business day of the Fund before the value date of the drawing. - If this exchange rate determination date is not a business day in Rome, such date shall be the last preceding business day of the Fund that is also a business day in Rome. ### Changes in Method of Valuation of SDR; Transitional Arrangements; Final Provisions; Signatures - Changes in valuation: - If the Fund changes the method of valuing the SDR, all transfers, exchanges and payments of principal and interest made two or more business days of the Fund after the effective date of the change shall be made on the basis of the new method of valuation. - Non-subordination: - The Fund agrees that it will not take any action that would have the effect of making the Bank of Italy’s claims on the Fund resulting from outstanding drawings under this agreement subordinate in any way to claims on the Fund resulting from any other borrowing effected pursuant to Article VII, Section 1(i) of the Fund’s Articles of Agreement. - Settlement of questions: - Any question arising under this agreement shall be settled by mutual agreement between the Bank of Italy and the Fund. - Transitional arrangements (summary of key provisions): - (a)(i) Regardless of activation, the Fund shall, subject to paragraph 14(b), make drawings under this agreement to repay any outstanding claims under the Bank of Italy’s 2016 Borrowing Agreement. - (a)(ii) The Fund may make drawings under this agreement to fund purchases under commitments approved by the Fund during an activation of the 2016 Borrowing Agreements or to fund early repayment of claims under other 2016 Borrowing Agreements in case the creditor represents a balance of payments need; subject to residual maximum maturity rules and other specified conditions. - (b) To the extent claims under the 2016 Agreement or this agreement are outstanding when the increase in Italy’s NAB credit arrangement becomes effective, the Bank of Italy shall be deemed to request calls under Italy’s NAB credit arrangement up to the maximum available amount to fund repayment of such claims; if the increase and this agreement enter into effect at the same time, repayment of the 2016 Agreement claims shall be funded first with calls under Italy’s NAB credit arrangement before drawings under this agreement pursuant to paragraph 14(a). - (c) If after repayment the Bank of Italy’s outstanding claims remain in excess of the Rolled Back Loan Amount as calculated pursuant to paragraph 10(b), the Fund shall repay any outstanding claims in excess of the Rolled Back Loan Amount; claims with shorter remaining maximum maturities shall be repaid before those with longer remaining maximum maturities. - (d) After entry into force of this agreement, the Fund may make no further drawing under the Bank of Italy’s 2016 Borrowing Agreement. - (e) No drawing under this agreement shall be made that would cause total outstanding drawings under both this agreement and the 2016 Borrowing Agreement to: - (i) exceed the Loan Amount prior to the effectiveness of the increase in Italy’s NAB credit arrangement, or - (ii) exceed the Rolled Back Loan Amount upon and after the effectiveness of the increase in Italy’s NAB credit arrangement, as calculated pursuant to paragraph 10(b); - provided that drawings beyond the Rolled Back Loan Amount under (ii) are authorized if within the same day any resulting claim that would exceed the Rolled Back Loan Amount is repaid with a special call under Italy’s NAB credit arrangement, and the Bank of Italy requests the Managing Director to make such calls. - Final provisions: - (a) Agreement may be executed in duplicate counterparts, each deemed an original. - (b) Agreement shall become effective on the date last signed below or the date on which Italy provides the concurrence required under Article VII, Section 1(i) for Fund borrowing of euro from the Bank of Italy, or on January 1, 2021, whichever is later. - Signatures / Dates (as presented): - Managing Director (International Monetary Fund): Kristalina Georgieva — Date December 31, 2020 - For the Bank of Italy: Ignazio Visco — (signature block shown) - For the International Monetary Fund: Kristalina Georgieva — (signature block shown) — Date 12/31/2020 *pr214-signed-italy-2020-borrowing-agreements - Source: https://www.imf.org/-/media/files/news/press-release/2021/pr214/pr214-signed-italy-2020-borrowing-agreements.pdf* ### 1. Purposes and Amounts. ### 1. Purposes and Amounts. ### Purpose of the agreement - To enhance the resources available on a temporary basis to the International Monetary Fund (the “Fund”) for crisis prevention and resolution through bilateral borrowing. ### Loan amounts and automatic reduction - The Bank of Italy agrees to lend to the Fund an SDR-denominated amount up to the equivalent of EUR 23,480 million (the “Loan Amount”). - Upon the effectiveness of the increase in Italy’s credit arrangement under the Fund’s New Arrangements to Borrow (the “NAB”) as part of the reform of the NAB approved by the Fund under Decision No. 16645-(20/5), adopted January 16, 2020 (the “NAB Reform”), the Loan Amount will be automatically reduced to an SDR-denominated amount up to the equivalent of EUR 10,115 million (the “Rolled Back Loan Amount”). ### Legal and policy basis - This agreement is based on Article VII, Section 1(i) of the Fund’s Articles of Agreement, authorizing the Fund to borrow to replenish its holdings of any member’s currency in the General Resources Account (“GRA”). - The agreement must be considered in light of the Guidelines for Borrowing by the Fund, which state that quota subscriptions are the basic source of Fund financing and borrowing is a temporary supplement to quota resources. ### Nomenclature of agreements - This agreement and other bilateral borrowing agreements entered into or amended pursuant to the borrowing framework approved by the Fund in March 2020 are each a “2020 Borrowing Agreement” and collectively the “2020 Borrowing Agreements.” - Bilateral borrowing agreements entered into pursuant to the borrowing framework approved in August 2016 are each a “2016 Borrowing Agreement” and collectively the “2016 Borrowing Agreements.” - The 2020 Borrowing Agreements and the 2016 Borrowing Agreements are collectively the “Bilateral Borrowing Agreements.” ### Source *pr214-signed-italy-2020-borrowing-agreements - 1. Purposes and Amounts.* --- ### 2. Term of the Agreement and Use. ### Term and extension - The term of this agreement shall end on December 31, 2023. - The Fund may extend the term for one further year through December 31, 2024 by a decision of the Executive Board, taking into account the Fund’s overall liquidity situation and actual and prospective borrowing requirements, and with the consent of the Bank of Italy. ### Activation conditions (activation threshold and procedures) - The 2020 Borrowing Agreements may be activated only after the Managing Director has notified the Executive Board that the Forward Commitment Capacity of the Fund as defined in Decision No. 14906-(11/38), adopted April 20, 2011, taking into account all available uncommitted resources under the New Arrangements to Borrow (the “modified FCC”), is below SDR 100 billion (the “activation threshold”). - The Managing Director shall not provide such notification unless: - (i) the NAB is activated as of the time of the notification, or there are no available uncommitted resources under the NAB as of that time, and - (ii) the activation of the 2020 Borrowing Agreements has been approved by creditors representing at least 85 percent of the total credit amount committed under the 2020 Borrowing Agreements by creditors eligible to vote on such activation. - For conducting a poll, the Managing Director shall propose in writing the activation and request creditors’ vote. - A creditor is not eligible to vote on activation if, at the time of the vote, its 2020 Borrowing Agreement is not effective, or the relevant member is not included in the Fund’s Financial Transactions Plan for transfers of its currency. - The Managing Director may approach creditors before the modified FCC is below the activation threshold if extraordinary circumstances warrant. ### Deactivation rules - If activated pursuant to paragraph 2(b), the 2020 Borrowing Agreements shall be automatically deactivated whenever the NAB is no longer activated, unless there are no available uncommitted resources under the NAB at that time. - Separately, the 2020 Borrowing Agreements shall be deactivated if the Managing Director has notified the Executive Board that the modified FCC (excluding amounts available under the Bilateral Borrowing Agreements) has risen above the activation threshold and: - (i) the Executive Board determines that activation is no longer necessary; or - (ii) six months have elapsed since the Managing Director’s notification and, within that period, the modified FCC (excluding Bilateral Borrowing Agreement amounts) has not fallen below the activation threshold. - If after deactivation the modified FCC falls below the activation threshold, paragraph 2(b) provisions will apply. ### Permitted uses when activated - During any period after activation and while the 2020 Borrowing Agreements remain activated: - (i) The Fund may use resources under this agreement to fund any outright purchases made from the GRA during the term of this agreement. - (ii) The Fund may approve, during the term, commitments of GRA resources under Fund arrangements whose purchases could be funded by drawings under this agreement at any time during the period of such commitments, including after expiration of the term or during any period when the agreement is no longer activated; provided commitments covered under clause (ii) also include any commitment whose approval caused the activation threshold to be reached. - Following an activation, resources under this agreement may also be used to fund early repayment of claims under other 2020 Borrowing Agreements if relevant creditors request early repayment as specified in paragraph 8. Drawings may be made to fund such early repayment for as long as claims under the 2020 Borrowing Agreements remain outstanding, including after the expiration of the term or during any period the agreement is no longer activated. ### Drawing balance objective - Drawing under this agreement shall be made with the goal of achieving over time broadly balanced positions among creditors under all Bilateral Borrowing Agreements relative to their commitments under these agreements. ### Source *pr214-signed-italy-2020-borrowing-agreements - 1. Purposes and Amounts.* --- ### 3. Estimates, Notices, and Limits on Drawings. ### Estimates and inclusion in periodic plans - Prior to each plan period for use of bilateral borrowed resources, the Fund shall provide the Bank of Italy with its best estimates of amounts it expects to draw under this agreement during the forthcoming period, and shall provide revised estimates during each period where warranted. - The Bank of Italy shall not be included in the periodic plan, and no drawings shall be made under this agreement, if Italy is not included and is not being proposed by the Managing Director to be included in the Financial Transactions Plan for transfers of its currency. - No drawings shall be made if the Bank of Italy was included in the periodic plan but, at the time of drawing, Italy’s currency is not being used in transfers under the Financial Transactions Plan because of Italy’s balance of payments and reserve position. - If Italy was not included in the Financial Transactions Plan at the time of the vote on activation and is subsequently included, drawings may be made to fund purchases made and commitments approved during the activation period unless the Bank of Italy notifies the Fund it does not wish to be drawn upon. ### Notice periods and exceptional circumstances - The Fund shall give the Bank of Italy at least five business days’ (Rome) notice of its intention to draw. - The Fund shall provide payment instructions at least two business days (Fund) prior to the value date by rapid authenticated means (e.g., SWIFT). - In exceptional circumstances where five business days’ (Rome) notice is not possible, notification of intent to draw shall be at least three business days (Rome) in advance of the value date, and the Bank of Italy would make best efforts to meet such a call. ### Source *pr214-signed-italy-2020-borrowing-agreements - 1. Purposes and Amounts.* --- ### 4. Evidence of Indebtedness. ### Publication and instruments - Outstanding drawings under this agreement will be included in the statements of Italy’s position in the Fund that are published monthly by the Fund. - At the request of the Bank of Italy, the Fund shall issue non-negotiable instruments evidencing the Fund’s indebtedness under this agreement. - Upon repayment of the amount of any instrument and all accrued interest, the instrument shall be returned to the Fund for cancellation. - If less than the amount of such instrument is repaid, the instrument shall be returned and a new instrument for the remainder shall be substituted with the same maturity date as the old instrument. ### Source *pr214-signed-italy-2020-borrowing-agreements - 1. Purposes and Amounts.* --- ### 5. Maturity. ### Standard maturity and extensions - Except as otherwise provided in paragraph 5 and paragraph 8, each drawing shall have a maturity date of three months from the drawing date. - The Fund may elect to extend the maturity date of any drawing or any portion by additional periods of three months after the initial maturity date. - The Fund shall be automatically deemed to have elected such extensions for all drawings then outstanding unless, at least five business days (Fund) before a maturity date, the Fund notifies the Bank of Italy by rapid authenticated means (e.g., SWIFT) that it does not elect to extend the maturity date of a particular drawing or portion thereof. ### Limits on extension and special maturity rules - The maturity date of any drawing to fund purchases from the GRA shall not be extended to a date later than the tenth anniversary of the date of such drawing. - The maturity date for any drawings to fund early repayments of other creditors’ claims in accordance with paragraph 2(e) shall be a single common maturity date that is the longest remaining maximum maturity of any claim for which such early repayment has been requested or the tenth anniversary of the date of the relevant drawing to fund early repayment, whichever is earlier. - Following an Executive Board determination that exceptional circumstances exist as a result of a shortage of Fund resources in relation to Fund obligations falling due, the Fund, with the agreement of the Bank of Italy, may extend the maximum maturity for drawings under this agreement up to an additional five years. ### Repayment and early repayment - The Fund shall repay the principal amount of each drawing or relevant part on the applicable maturity date pursuant to subparagraph (a). - After consultation with the Bank of Italy, the Fund may make an early repayment in part or in full of the principal amount of any drawing prior to its maturity date, provided the Fund notifies the Bank of Italy at least five business days (Fund) before any such repayment by rapid authenticated means. - Repayments restore pro tanto the amount that can be drawn under this agreement. - The extension of the maturity of a drawing or part thereof does not reduce the amount that can be drawn under this agreement. ### Business-day rule for non-business maturity dates - If a maturity date is not a business day in the place where payment is to be made, the payment date will be the next business day in that place; interest will accrue up to the payment date. ### Source *pr214-signed-italy-2020-borrowing-agreements - 1. Purposes and Amounts.* --- ### 6. Rate of Interest. ### Interest benchmark and adjustment provision - Each drawing shall bear interest at the SDR interest rate established by the Fund pursuant to Article XX, Section 3 of the Fund’s Articles of Agreement. - If the Fund pays an interest rate higher than the SDR interest rate on outstanding balances from any other borrowing on comparable terms effected pursuant to Article VII, Section 1(i) of the Fund’s Articles of Agreement, and for as long as that higher rate remains in effect, the interest rate payable on drawings under this agreement shall be equivalent to the interest rate paid by the Fund on such other comparable borrowing. ### Calculation and payment schedule - The amount of interest payable on each drawing shall be calculated on the basis of the outstanding amount of the drawing. - Interest shall accrue daily and shall be paid promptly by the Fund after each July 31, October 31, January 31, and April 30. ### Source *pr214-signed-italy-2020-borrowing-agreements - 1. Purposes and Amounts.* --- ### 7. Denomination, Media and Modalities of Drawings and Payments. ### Denomination - The amount of each drawing and corresponding repayment under this agreement shall be denominated in SDRs. ### Payment of drawings - Unless otherwise agreed, the Bank of Italy shall pay the amount of each drawing on the value date specified by the Fund by transfer of the SDR equivalent amount of euro to the account of the Fund at the designated depository of Italy. - For drawings in accordance with paragraph 2(e), the Bank of Italy shall ensure that balances drawn by the Fund that are not balances of a freely usable currency can be exchanged for a freely usable currency of its choice. - With respect to balances drawn that are balances of a freely usable currency, the Bank of Italy shall collaborate with the Fund and other members to enable such balances to be exchanged for another freely usable currency. ### Repayment modalities - Except as provided in paragraph 8, repayment of principal shall be made, as determined by the Fund, in the currency borrowed whenever feasible, in euro, in special drawing rights (provided it does not increase Italy’s holdings of special drawing rights above the limit under Article XIX, Section 4 of the Fund’s Articles of Agreements unless Italy agrees), in freely usable currencies, or with the agreement of the Bank of Italy in other currencies included in the Fund’s Financial Transactions Plan for transfers. ### Interest payment modalities - Payments by the Fund of interest shall normally be made in SDRs; the Fund and the Bank of Italy may agree that interest payments will be made in euro. ### Accounts for payments - All payments made by the Fund in euro shall be made to an account specified by the Bank of Italy. - Payments in SDRs shall be made by crediting Italy’s account in the Special Drawing Rights Department. - Payments in any other currency shall be made to an account specified by the Bank of Italy. ### Source *pr214-signed-italy-2020-borrowing-agreements - 1. Purposes and Amounts.* --- ### 8. Early Repayment at Request of the Bank of Italy. ### Conditions for Bank of Italy-requested early repayment - At the request of the Bank of Italy, the Bank of Italy shall obtain early repayment at face value of all or a portion of the drawings outstanding if: - (i) the Bank of Italy represents that Italy’s balance of payments and reserve position justifies such repayment, and - (ii) the Fund, having given this representation the overwhelming benefit of any doubt, determines that there is a need for the early repayment as requested in light of Italy’s balance of payments and reserve position. ### Currencies for such repayments - After consultation with the Bank of Italy, the Fund may make repayments pursuant to this paragraph 8 in SDRs or a freely usable currency as determined by the Fund or, with the agreement of the Bank of Italy, in the currencies of other members that are included in the Fund’s Financial Transactions Plan for transfers. ### Source *pr214-signed-italy-2020-borrowing-agreements - 1. Purposes and Amounts.* --- ### 9. Transferability. ### General non-transferability rule - Except as provided in subparagraphs (b) through (h), the Bank of Italy may not transfer its obligations under this agreement or any claims on the Fund resulting from outstanding drawings, except with the prior consent of the Fund and on terms the Fund may approve. ### Permitted transfers (subparagraph b) - The Bank of Italy may at any time transfer all or part of any claim on the Fund resulting from outstanding drawings to: - any member of the Fund, - the central bank or other fiscal agency designated by any member for purposes of Article V, Section 1 of the Fund’s Articles of Agreement (“other fiscal agency”), - or any official entity prescribed as a holder of SDRs pursuant to Article XVII, Section 3 of the Fund’s Articles of Agreement. ### Conditions on transferees (subparagraph c) - As condition of transfer, the transferee shall assume the liability of the Bank of Italy pursuant to paragraph 5(a) regarding the extension of maturity of the transferred drawings and regarding extension of maximum maturity in exceptional circumstances. - Transferred claims shall be held by the transferee on the same terms and conditions as previously, except: - (i) The transferee acquires the right to request early repayment under paragraph 8 only if it is a member, or the central bank or other fiscal agency of a member, and at the time of transfer the member’s balance of payments and reserve position is considered sufficiently strong by the Fund that its currency is used in transfers under the Financial Transactions Plan. - (ii) If the transferee is a member, or its central bank or fiscal agency, the reference to euro in paragraph 7 shall be deemed to refer to the currency of that member; otherwise it shall refer to a freely usable currency determined by the Fund. - (iii) Payments related to the transferred claim shall be made to an account specified by the transferee. - (iv) References to business days (Rome) shall be deemed to refer to business days in the place where the transferee is situated. ### Price, notification, and effectiveness of transfer - The price of a claim transferred pursuant to subparagraph (b) shall be as agreed between the Bank of Italy and the transferee. - The Bank of Italy shall notify the Fund promptly of: - the claim being transferred, - the name of the transferee, - the amount of the claim transferred, - the agreed price, and - the value date of the transfer. - A transfer so notified shall be reflected in the Fund’s records if in accordance with the terms and conditions of paragraph 9 and shall be effective as of the value date agreed between the Bank of Italy and the transferee. ### Interest payment on transferred claims - If all or part of a claim is transferred during a quarterly period as described in paragraph 6(b), the Fund shall pay interest to the transferee on the amount of the claim transferred for the whole of that period. ### Assistance in arranging transfers - If requested, the Fund shall assist in seeking to arrange transfers. ### Source *pr214-signed-italy-2020-borrowing-agreements - 1. Purposes and Amounts.* --- ### 10. Effective Exchange Rate. ### Exchange rate determination for transactions - Unless otherwise agreed, all drawings, exchanges, and payments of principal and interest under this agreement shall be made at the exchange rates for the relevant currencies in terms of the SDR established pursuant to Article XIX, Section 7(a) of the Fund’s Articles of Agreement and the rules and regulations of the Fund thereunder for the second business day of the Fund before the value date of the transfer, exchange or payment. - If this exchange rate determination date is not a business day in Rome, such date shall be the last preceding business day of the Fund that is also a business day in Rome. ### Euro value fixation for drawing limits - For applying the limit on drawings specified in paragraphs 1(a), 14(c) and 14(e), the euro value of each SDR-denominated drawing shall be determined and permanently fixed on the value date of the drawing based on the euro/SDR exchange rate established pursuant to Article XIX, Section 7(a) of the Fund’s Articles of Agreement and the rules and regulations of the Fund thereunder for the second business day of the Fund before the value date of the drawing. - If this exchange rate determination date is not a business day in Rome, such date shall be the last preceding business day of the Fund that is also a business day in Rome. ### Source *pr214-signed-italy-2020-borrowing-agreements - 1. Purposes and Amounts.* ### 11. Changes in Method of Valuation of SDR. ### 11. Changes in Method of Valuation of SDR. ### Changes in Method of Valuation of SDR - If the Fund changes the method of valuing the SDR, all transfers, exchanges and payments of principal and interest made two or more business days of the Fund after the effective date of the change shall be made on the basis of the new method of valuation. ### Non-Subordination of Claims - The Fund agrees that it will not take any action that would have the effect of making the Bank of Italy’s claims on the Fund resulting from outstanding drawings under this agreement subordinate in any way to claims on the Fund resulting from any other borrowing effected pursuant to Article VII, Section 1(i) of the Fund’s Articles of Agreement. ### Settlement of Questions - Any question arising under this agreement shall be settled by mutual agreement between the Bank of Italy and the Fund. ### Transitional Arrangements - (a) Regardless of whether this agreement is activated or not, the Fund: - (i) subject to paragraph 14(b) below, shall make drawings under this agreement to repay any outstanding claims under the Bank of Italy’s 2016 Borrowing Agreement, and - (ii) may make drawings under this agreement to fund purchases under commitments approved by the Fund during an activation of the 2016 Borrowing Agreements or to fund early repayment of claims under other 2016 Borrowing Agreements in case the creditor represents a balance of payments need; - provided that notwithstanding paragraph 5(a) of this agreement the maximum maturity date of the claim from the repayment herein shall be the residual maximum maturity date of the claim that is repaid with drawings under this agreement; - and provided further that any claims under this agreement that result from the repayment herein shall be considered claims under the 2016 Borrowing Agreements for purposes of funding the early repayment of these claims in case of balance of payments need in accordance with the 2016 Borrowing Agreements, and for purposes of special calls under paragraph 23 of the Fund’s Decision No. 16645-(20/5), adopted January 16, 2020. - (b) To the extent that claims under the Bank of Italy’s 2016 Borrowing Agreement or this agreement are outstanding when the increase in Italy’s NAB credit arrangement becomes effective, the Bank of Italy, on behalf of Italy, shall be deemed to request, in accordance with paragraph 23 of the Fund’s Decision No. 11428-(97/6), adopted January 27, 1997 on the NAB, as amended, that the Managing Director make calls under Italy’s NAB credit arrangement up to the maximum available amount, taking into account the Fund’s need for maintaining prudential balances, to fund the repayment of such claims; - provided that if the increase in Italy’s NAB credit arrangement and this agreement enter into effect at the same time, the repayment of the Bank of Italy’s outstanding claims under the Bank of Italy’s 2016 Borrowing Agreement shall be funded first with calls under Italy’s NAB credit arrangement before drawings are made under this agreement pursuant to paragraph 14(a) above. - (c) If following the repayment of outstanding claims under the Bank of Italy’s 2016 Borrowing Agreement and this agreement as provided in paragraph 14(b) above, the Bank of Italy’s outstanding claims under these agreements remain in excess of the Rolled Back Loan Amount as calculated pursuant to paragraph 10(b), the Fund shall repay any outstanding claims under the Bank of Italy’s 2016 Borrowing Agreement and this agreement in excess of the Rolled Back Loan Amount; - provided that claims with shorter remaining maximum maturities shall be repaid before those with longer remaining maximum maturities. - (d) After the entry into force of this agreement, the Fund may make no further drawing under the Bank of Italy’s 2016 Borrowing Agreement. - (e) No drawing under this agreement shall be made that would cause the total outstanding drawings under both this agreement and the 2016 Borrowing Agreement between the Bank of Italy and the Fund, at the time of such drawing, to: - (i) exceed the Loan Amount prior to the effectiveness of the increase in Italy’s NAB credit arrangement, or - (ii) exceed the Rolled Back Loan Amount upon and after the effectiveness of the increase in Italy’s NAB credit arrangement, as calculated pursuant to paragraph 10(b); - provided that drawings beyond the Rolled Back Loan Amount under (ii) herein are authorized, if within the same day of these drawings any resulting claim that would exceed the Rolled Back Loan Amount is repaid with a special call under Italy’s NAB credit arrangement, and the Bank of Italy, on behalf of Italy, hereby requests the Managing Director to make such calls to fund the repayment in accordance with paragraph 23 of the Fund’s Decision No. 11428-(97/6), adopted January 27, 1997 on the NAB, as amended. ### Final Provisions - (a) This agreement may be executed in duplicate counterparts, each of which shall be deemed an original and both of which together shall constitute but one and the same instrument. - (b) This agreement shall become effective on the date last signed below or, the date on which Italy provides the concurrence that is required under Article VII, Section 1(i) of the Fund’s Articles of Agreement for Fund borrowing of euro from the Bank of Italy, or on January 1, 2021, whichever is later. ### Signatures / Dates (as presented) - Managing Director (International Monetary Fund): Kristalina Georgieva — Date December 31, 2020 - For the Bank of Italy: Ignazio Visco — (signature block shown) - For the International Monetary Fund: Kristalina Georgieva — (signature block shown) — Date 12/31/2020 *Source: https://www.imf.org/-/media/files/news/press-release/2021/pr214/pr214-signed-italy-2020-borrowing-agreements.pdf* --- _Source: https://www.imf.org/-/media/files/news/press-release/2021/pr214/pr214-signed-italy-2020-borrowing-agreements.pdf_