## POVERTY REDUCTION AND GROWTH TRUST—2018 BORROWING AGREEMENT WITH THE BANQUE DE FRANCE

## Source details

**Canonical URL:** [POVERTY REDUCTION AND GROWTH TRUST—2018 BORROWING AGREEMENT WITH THE BANQUE DE FRANCE](https://www.imf.org/-/media/files/publications/pp/2018/pp021218france-2018-prgt-borrowing-agreement.pdf)

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### Summary
- The Fund, as Trustee of the Poverty Reduction and Growth Trust (PRGT), entered into a new borrowing agreement with the Banque de France effective on February 1, 2018.
- The Agreement provides new resources to the Extended Credit Facility Loan Account of the PRGT in the total amount of up to SDR 2 billion.
- This is France’s sixth borrowing agreement with the Fund as Trustee of the PRGT.
- The Agreement was presented to the Executive Board for information; the staff report was completed on February 12, 2018.

### Context and fundraising outcome
- The Managing Director launched a fund-raising campaign in November 2015 with a target of raising SDR 11 billion in new bilateral loan resources.
- Including this Agreement, the Fund has concluded fifteen new PRGT loan agreements providing total resources of SDR 11.4 billion.
- The PRGT cumulative borrowing limit was increased on January 8, 2018 to accommodate the better-than-expected outcome.

### Principal elements of the borrowing agreement
- Account designation:
  - Resources are for the benefit of the Extended Credit Facility Loan Account of the PRGT to finance disbursements under that facility.
- Amount:
  - The amount of the loan shall be the equivalent of up to SDR 2 billion.
- Drawings on commitments:
  - Drawings can be made through December 31, 2024.
  - The Trustee must give the Bank at least five business days (Paris) notice of its intention to draw (paragraph 2(a)).
  - Unless otherwise agreed, the minimum amount for each drawing shall be SDR 1 million.
  - The amount of drawings during any calendar year shall not exceed SDR 400 million.
  - The Trustee shall provide payment instructions at least two Fund business days prior to the value date of the transaction by SWIFT.
- Use of proceeds:
  - Drawings may finance (i) loan disbursements by the Trustee under the Extended Credit Facility Loan Account and (ii) early repayment pursuant to Section III, paragraph 4(b) of the PRGT Instrument of the Trustee’s outstanding indebtedness under other borrowing agreements to any of the Loan Accounts of the Trust.

### Denomination, payments, and interest
- Denomination and media:
  - Loan commitments and operations are denominated in SDRs.
  - Unless otherwise agreed, disbursements are to be made by transfer of SDRs to an account specified by the Trustee (paragraph 4(a)).
  - Upon request, the Trustee shall issue a non-negotiable certificate evidencing its claim on the Trust.
- Payments of principal and interest:
  - Payments shall be made in SDRs or in a freely usable currency as may be agreed between the Trustee and the Bank.
  - Payments in SDRs shall be made by crediting France’s holdings account in the Special Drawing Rights Department.
  - Payments in currencies shall be made to an account as agreed between the Trustee and the Bank.
- Interest:
  - Each drawing bears interest at the SDR interest rate established by the Fund pursuant to Article XX, Section 3 of the Fund’s Articles of Agreement (paragraph 6(a)).
  - Interest shall be calculated on an actual day basis and paid promptly after July 31, October 31, January 31, and April 30 of each year (paragraph 6(b)).

### Maturity, repayment, and early encashment
- Maturity:
  - Each drawing shall have a maturity date that is one year from its issue date (paragraph 5(a)).
  - The Trustee may elect to extend the maturity date by additional periods of up to one year; the Trustee is automatically deemed to have elected extensions unless it notifies the Bank at least five business days (Washington) before a maturity date that it does not elect to extend.
  - In no event shall the maturity date of any drawing be extended to a date later than the maturity dates for the loan disbursement under the facility of the Trust for which it was drawn.
  - Drawings made in connection with early repayment of other Trust borrowing shall have the maximum maturity dates associated with such other borrowing.
  - At the time of each drawing, the Trustee shall provide information on the specific repayment schedule for the amount drawn.
- Early repayment and encashment:
  - By agreement, any drawing or part thereof may be repaid by the Trustee at any time in advance of maturity with at least five business days (Paris) notice unless otherwise agreed.
  - The Bank shall have the right to seek early repayment of all or part of the principal amount of its outstanding claims on the Trust pursuant to Section III, paragraph 4(b) of the PRGT Instrument if it represents that the balance of payments and reserve position of France justify early repayment and the Trustee agrees; early repayment is subject to availability of resources under borrowing agreements that authorize drawings for such early repayments (paragraph 9).
  - Provision is made for the voluntary transfer of claims on the Trust to a limited group of official-sector entities and for temporary suspension of disbursements at any time prior to June 30, 2024, in the event of a liquidity need by France (paragraphs 8 and 10).

### Suspension and exchange rate provisions
- Suspension of drawings in event of nonpayment:
  - If any installment of principal or interest is not paid within ten days after its due date, the Trustee shall not make further drawings pending consultations with the Bank; the Trustee may resume drawings once arrears are discharged (paragraph 2(b)).
- Exchange rates and SDR basket changes:
  - Unless otherwise agreed, transfers, exchanges, and payments in currencies shall be made at the exchange rates for the relevant currencies in terms of the SDR established by the Fund for the second business day of the Fund before the value date.
  - If the Fund changes the currency composition or currency weights of the SDR basket, transfers, exchanges, and payments 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 SDR basket.

### Key statistics and timelines (preserved exactly)
- SDR 2 billion (amount of loan).
- Effective date of Agreement: February 1, 2018.
- Staff report completion date: February 12, 2018.
- Press Release No. 18/62 date: February 21, 2018.
- Drawings period: through December 31, 2024.
- Notification period to draw: five business days (Paris).
- Payment instruction lead time: at least two Fund business days prior to value date by SWIFT.
- Minimum drawing amount: SDR 1 million.
- Maximum drawings per calendar year: SDR 400 million.
- Interest payment dates: promptly after July 31, October 31, January 31, and April 30 of each year.
- Suspension for nonpayment period: ten days after due date.
- Temporary suspension window for calls on commitment: at any time prior to June 30, 2024.
- Fifteen new PRGT loan agreements to date totaling SDR 11.4 billion.
- Original fund-raising target: SDR 11 billion.

### Conclusion and significance
- The Agreement constitutes France’s sixth loan contribution to the PRGT and places France among the largest contributors to have provided new PRGT loan resources under the current fund-raising campaign.
- The Agreement incorporates extensions of the commitments and drawdown period for PRGT loans to end-2020 and end-2024, respectively, consistent with the Fund’s framework for concessional lending to low-income countries.
- The Agreement is one of the two largest PRGT loan agreements under the current fund-raising campaign.

### Execution
- Signed for the Banque de France: François Villeroy de Galhau, Governor — January 5, 2018.
- Signed for the International Monetary Fund as Trustee of the Poverty Reduction and Growth Trust: Christine Lagarde, Managing Director — February 1, 2018.

*International Monetary Fund — Poverty Reduction and Growth Trust—2018 Borrowing Agreement with the Banque de France*

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_Source: https://www.imf.org/-/media/files/publications/pp/2018/pp021218france-2018-prgt-borrowing-agreement.pdf_