## ppea2020006 ## Source details **Canonical URL:** [ppea2020006](https://www.imf.org/-/media/files/publications/pp/2020/english/ppea2020006.pdf) ## Other formats - [Markdown version](/-/media/files/publications/pp/2020/english/ppea2020006.pdf.md) - [Structured JSON version](/-/media/files/publications/pp/2020/english/ppea2020006.pdf.json) --- ### Executive summary — background and purpose - IMFC members and non-IMFC G20 ministers (October 18, 2019) called on the Executive Board to complete work on a package of IMF resources and governance reforms, supported maintaining the IMF's current resource envelope, and looked forward to consideration of a doubling of the New Arrangements to Borrow (NAB) and a further round of temporary Bilateral Borrowing Agreements (BBAs) beyond 2020. - This paper presents a proposal to reform the NAB with a doubling of the aggregate size of NAB credit arrangements and amendments to the NAB Decision. ### Key elements of the NAB reform proposal - Doubling the aggregate size of NAB credit arrangements through a proportional doubling of all current NAB credit arrangements. - Establish a new NAB period from January 1, 2021 through end-2025. - Update the NAB Decision to remove or revise obsolete or outdated provisions. - Insert new provisions limiting activation of bilateral borrowing during the new NAB period unless specified conditions are met (paragraphs 21(a) and 21(b)). - Recommendation that all elements be adopted as a package in a single Board decision; amendments and changes in credit arrangements become effective only if effectiveness conditions for both are met. - Include a safeguard to address potential delays in effectiveness due to one or a few participants' inability to provide consent. ### Increase in size, mechanics, and timing - Aggregate NAB size increase: - Current NAB aggregate size: SDR 182.371 billion - Proposed expanded NAB aggregate size: SDR 364.742 billion - Mechanics: - Achieved through a proportional doubling of all current NAB credit arrangements, preserving relative shares and participants' voting power. - Minimum NAB credit arrangement: current SDR 340 million; proposed SDR 680 million - Timing: - Targeted NAB effectiveness start: January 1, 2021 - New NAB period end: end-2025 - If effectiveness conditions are not met by January 1, 2021, the effective date could be later. ### Safeguard for delayed consents - If a participant is unable to consent by December 31, 2020 (or a later date set by the Executive Board), the proposed increase for that participant would be treated as automatically withdrawn provided other participants representing 85 percent of total credit arrangements have consented. - With that increase withdrawn, the consent of the relevant participant would no longer be required and the NAB reform could become effective. - Post-effect procedures: - Executive Board expected to reapprove the change in credit arrangement after effectiveness. - Reapproval and final doubling for the participant would then become effective with agreement of NAB participants representing at least 85 percent of total NAB credit arrangements. - Notes from consultations: - A higher threshold (e.g., 90 percent) was discussed; broad support emerged for an 85 percent minimum consent threshold. - If a participant currently with the minimum credit arrangement amount (SDR 340 million) could not consent by the deadline and its proposed doubling is withdrawn, the NAB’s minimum credit arrangement amount would remain unchanged. ### Interaction with Bilateral Borrowing Agreements (BBAs) and limits on activation - Complementing the NAB doubling, a new round of BBAs (2020 BBAs) for about half of the size of the 2016 BBAs, when combined with the NAB doubling, would maintain the size of the Fund. - Proposed paragraph 21(a) (activation constraint): - BBAs in effect during the new NAB period could only be activated if: - (i) the Managing Director notifies the Executive Board that the Forward Commitment Capacity (taking into account all available uncommitted NAB resources — the “modified” FCC) is below SDR 100 billion; and - (ii) the NAB was activated as of the time of the notification, or there are no available uncommitted resources under the NAB as of that time. - FCC activation threshold in proposed paragraph 21(a): SDR 100 billion - Proposed paragraph 21(b) (exception/waiver): - Managing Director may approach creditors in “extraordinary circumstances” to forestall or cope with an impairment of the international monetary system; activation permitted even if FCC/NAB activation conditions are not met provided NAB participants representing 85 percent of total NAB credit arrangements agree by poll. - Implication: - Adding the FCC/NAB activation condition to the NAB changes approval requirements for accessing bilateral borrowing that does not meet those conditions and reduces the Fund’s flexibility to access such bilateral borrowing over the five-year period if the FCC/NAB activation conditions are not met. ### Legal consistency and rationale - Legal basis: authority of the Fund to borrow under Article VII of the Articles of Agreement. - Amendment applies only to bilateral borrowing and does not affect: - Borrowing with more than one creditor (e.g., borrowing with two or three members or official institutions). - Borrowing under more broad-based multilateral modalities similar to the NAB or the earlier GAB. - Rationale for inclusion: - Protects NAB participants’ financial interests in relation to bilateral borrowing by providing partial protection in tail-risk hypothetical scenarios where extensive borrowing beyond the NAB could reduce recovery for NAB participants. ### Procedural proposals and timelines - Package approach: - Pack NAB credit arrangement increases and NAB Decision amendments into a single Board decision, with joint effectiveness conditions. - Effectiveness conditions: - Amendments to the NAB Decision and changes in credit arrangements become effective only when: - (a) participants representing 85 percent of total credit arrangements have concurred with the amendments to the NAB Decision; and - (b) participants representing 85 percent of total credit arrangements have agreed to the changes in credit arrangements, including each participant whose credit arrangement is being changed. - Provided that if a participant has not agreed to the proposed changes in credit arrangements by December 31, 2020, or at any later date as determined by the Executive Board, the proposed change to the credit arrangement of such participant will be deemed to have been withdrawn, and the credit arrangement of such participant will remain unchanged. - Proposed 6-month extension: - Proposed extension of the Borrowing Guidelines review deadline: to end-June 2020 - Rationale: allow the review to incorporate outcome of discussions on a new round of BBAs in early 2020. ### Proposed Executive Board decisions (summary) - Decision 1: The NAB Reform — Amendments to the NAB Decision and Changes to NAB Credit Arrangements: - Amend the NAB Decision as set out in Attachment I to EBS/19/106, 12/3/19. - Change credit arrangements as set out in Annex 1 of Attachment I, except where an individual participant’s proposed change is withdrawn in accordance with the safeguard mechanism. - Decision 2: Extension of deadline to review the Guidelines for Borrowing by the Fund: - Paragraph 8 of the Guidelines for Borrowing by the Fund amended to read: “8. The Executive Board shall review these guidelines by June 30, 2020.” ### Draft Revised NAB Decision — selected provisions and mechanics - Purpose: enable the Fund to fulfill more effectively its role in the international monetary system by specifying terms and conditions under which countries with financial capacity provide resources to the Fund. - Legal basis: Article VII, Section 1(i) of the Fund’s Articles of Agreement. - Key definitions preserved verbatim: “amount of a credit arrangement”, “available commitment”, “borrowed currency”, “call”, “credit arrangement”, and related terms. - Activation period (Paragraph 5): - Managing Director may propose activation period not exceeding 6 months; acceptance requires an 85 percent poll of eligible participants and Executive Board approval. - Resource mobilization plans and calls (Paragraph 6 and Paragraph 7): - Plans normally quarterly; allocation aims for equal-proportion available commitments relative to credit arrangements. - Nature and evidence of indebtedness (Paragraph 8) and General Terms and Conditions (Annex II): - Participant’s claim arising from calls is a loan; Fund to issue Notes at participant request subject to the GTC. - Notes issued in book entry form; registered Note form set out in Appendix. - Interest (Paragraph 9 / GTC Paragraph 3): - Interest rate: equal to the combined market interest rate computed by the Fund for determining the rate it pays on holdings of special drawing rights, or any higher rate agreed between the Fund and participants representing 85 percent of the total credit arrangements. - Interest accrues daily and paid as soon as possible after each July 31, October 31, January 31, and April 30. - Repayment by the Fund (Paragraph 11): - Standard repayment: ten years after a transfer in response to a call; earlier repayments subject to procedures and consultation with participants. - Paragraph 11(e): participant may request early repayment on balance of payments grounds; Fund gives overwhelming benefit of doubt to participant’s representation. ### Transitional arrangements and relationship with other borrowing (Paragraph 23 and Paragraphs 21–22) - Paragraph 23 transitional arrangement: - Participants may request calls under credit arrangements to fund repayment of claims under bilateral borrowing agreements entered into prior to effectiveness of specified amendments where activations occurred prior to that date; maturity date of resulting claims under credit arrangements shall match maturity of the bilateral borrowing agreement claim. - Paragraph 21(a) and 21(b) summarize bilateral borrowing activation constraints and exceptions (see "Interaction with Bilateral Borrowing Agreements" above). - Paragraph 22 clarifies nothing precludes the Fund from entering into other types of borrowing arrangements. ### Annex I — current and prospective participants and credit arrangement amounts (preserved exactly) - Current Participants and Amounts of Credit Arrangements (In Millions of SDRs) — Total 361,145.16 - Australia 4,440.90 - Austria 3,636.98 - Banco Central de Chile 1,381.94 - Banco de Portugal 1,567.00 - Bangko Sentral ng Pilipinas 680.00 - Bank of Israel 680.00 - Belgium 7,988.66 - Brazil 8,881.82 - Canada 7,747.42 - China 31,720.76 - Cyprus 680.00 - Danmarks Nationalbank 3,259.52 - Deutsche Bundesbank 25,780.04 - Finland 2,267.76 - France 18,958.32 - Hong Kong Monetary Authority 680.00 - India 8,881.82 - Italy 13,797.04 - Japan 67,017.00 - Korea 6,689.64 - Kuwait 682.58 - Luxembourg 986.24 - Malaysia 680.00 - Mexico 5,075.32 - National Bank of Poland 2,570.80 - Netherlands 9,189.60 - New Zealand 680.00 - Norway 3,933.38 - Russian Federation 8,881.82 - Saudi Arabia 11,305.48 - Singapore 1,297.10 - South Africa 680.00 - Spain 6,810.28 - Sveriges Riksbank 4,511.36 - Swiss National Bank 11,081.32 - Thailand 680.00 - United Kingdom 18,958.32 - United States 56,404.94 - Prospective Participants and Totals (preserved exactly) - Prospective participants 3,597.14 - Greece 1,681.20 - Ireland 1,915.94 - Total after adherence of prospective participants 364,742.30 - Note: Current credit arrangements are subject to a minimum of SDR 680 million. ### Annex II — General Terms and Conditions for Notes (selected highlights preserved exactly) - Scope: Applies to promissory notes issued by the Fund in accordance with paragraphs 8 and 13(k) of Executive Board Decision No. 11428-(97/6). - Issuance and denomination: Notes issued at participant request; Notes shall be denominated in the special drawing right. - Form, delivery and custody: Notes issued in book entry form; registered Notes may be issued in form set out in Appendix. - Interest (Paragraph 3 / GTC Paragraph 3): - Rate equal to the combined market interest rate computed by the Fund for SDR holdings or any higher rate agreed by Fund and participants representing 85 percent of total credit arrangements. - Interest accrues daily and paid as soon as possible after each July 31, October 31, January 31, and April 30. - Maturity and repayment (Paragraph 4 / GTC Paragraph 4): - Notes shall have a maturity of ten years, except Notes issued in exchange for loan claims shall have the maturity of the loan claim. - Repayment in accordance with paragraph 11 of the NAB Decision. - Transferability (Paragraph 6 / GTC Paragraph 6): - Transfers permitted only in accordance with specified paragraph or with prior Fund consent; allowed transferees enumerated. - Derivative transactions and transfers of participation interests in any Note are prohibited. - Interpretation and amendments: - Questions of interpretation settled to mutual satisfaction of Fund, holder raising the question, and all participants. - Amendments to GTC apply to all outstanding Notes when adopted in accordance with paragraph 8(a) of the NAB Decision. ### Implications, participant views, and trade-offs - Two key implications identified for Fund borrowing: - Scope expansion to any bilateral borrowing during the new NAB period (not only borrowing under 2020 BBAs). - Inclusion of the FCC/NAB activation condition in the NAB changes approval requirements for accessing bilateral borrowing that does not meet the FCC/NAB activation conditions. - Effect on approval and Fund flexibility: - Current situation: a Board decision (majority of votes cast) and agreement of relevant bilateral creditor(s) sufficient to enable access to bilateral borrowing where FCC/NAB activation conditions are not met. - Proposed situation: the agreement of NAB participants (subject to an 85 percent majority of total credit arrangements) would also be needed, in addition to Board action and bilateral creditors’ agreement, reducing the Fund’s flexibility in such hypothetical scenarios. - Consultations and participant views: - Some participants expressed misgivings about reduced flexibility and appropriateness of giving NAB participants ability to block bilateral borrowing where bilateral creditors are willing to lend. - Staff understands participants are willing on balance to support inclusion given the wish to reach closure on the NAB reform. *International Monetary Fund — ppea2020006 Executive Summary (December 3, 2019)* ### EXECUTIVE SUMMARY ### EXECUTIVE SUMMARY ### Background and purpose - IMFC members and non-IMFC G20 ministers at their October 18, 2019 meeting called on the Executive Board to complete work on a package of IMF resources and governance reforms, supported maintaining the IMF's current resource envelope, and looked forward to consideration of a doubling of the New Arrangements to Borrow (NAB) and a further round of temporary Bilateral Borrowing Agreements (BBAs) beyond 2020. - This paper presents a proposal to reform the NAB with a doubling of the aggregate size of NAB credit arrangements and amendments to the NAB Decision. ### Key elements of the NAB reform proposal - Doubling the aggregate size of NAB credit arrangements, through a doubling of all current NAB credit arrangements. - Establishing a new NAB period, extending from January 1, 2021 through end-2025. - Updating the NAB Decision to remove or revise obsolete or outdated provisions. - Including a new provision in the NAB Decision limiting the activation of bilateral borrowing during the new NAB period unless specified conditions are met. - Recommendation that all elements be adopted as a package in a single Board decision; amendments and changes in credit arrangements become effective only if effectiveness conditions for both are met. - Inclusion of a safeguard to address potential delays in effectiveness due to one or a few participants' inability to provide consent. ### Increase in size, mechanics, and timing - A doubling of the NAB would increase aggregate size from SDR 182.371 billion to SDR 364.742 billion. - The NAB increase would be achieved through a proportional doubling of all current NAB credit arrangements, preserving relative shares and participants' voting power. - The minimum NAB credit arrangement would be doubled from SDR 340 million to SDR 680 million. - Targeted effectiveness date for the expanded NAB and amended Decision is January 1, 2021; the new NAB period would run through end-2025. - If effectiveness conditions are not met by January 1, 2021, the effective date could be later. ### Safeguard for delayed consents - If a participant is unable to consent to the increase in credit arrangements by December 31, 2020 (or a later date set by the Executive Board), the proposed increase for that participant would be treated as automatically withdrawn provided other participants representing 85 percent of total credit arrangements have consented. With that increase withdrawn, the consent of the relevant participant would no longer be required and the NAB reform could become effective. ### Interaction with Bilateral Borrowing Agreements (BBAs) - Complementing the NAB doubling, a new round of BBAs (2020 BBAs) for about half of the size of the 2016 BBAs, when combined with the NAB doubling, would maintain the size of the Fund. - A new provision proposed at the initiative of three NAB participants (paragraph 21(a)) would limit activation of BBAs in the new NAB period: BBAs in effect during the new NAB period could only be activated (i) after the Managing Director notifies the Executive Board that the Forward Commitment Capacity (FCC), taking into account all available uncommitted resources under the NAB (the “modified” FCC), is below SDR 100 billion; and (ii) if the NAB was activated as of the time of the notification, or if there are no available uncommitted resources under the NAB as of that time (the “FCC/NAB activation conditions”). - Paragraph 21(b) would allow the Managing Director to approach creditors in “extraordinary circumstances” to forestall or cope with an impairment of the international monetary system, and would permit activation of bilateral borrowing even if the FCC/NAB activation conditions are not met provided NAB participants representing 85 percent of total NAB credit arrangements agree by poll — effectively allowing NAB participants to waive the limitation in paragraph 21(a) without amending the NAB Decision. ### Amendments to the NAB Decision (summary) - Replace references to the "Fifteenth General Review of Quotas" with the "Sixteenth General Review of Quotas" in paragraph 19(a). - Delete paragraph 21's provision addressing the relationship between the NAB and the General Arrangements to Borrow (GAB) because the GAB lapsed on December 25, 2018. - Amend paragraph 23 to retain the option for participants to transfer to their expanded NAB credit arrangements any claims arising under the 2016 BBAs, and potentially certain claims under the 2020 BBAs related to activations prior to the NAB reform effectiveness; fold-in provisions clarified for claims arising from drawings or future commitments approved during BBA activations prior to effectiveness. - Delete paragraph 24's “Delay in Drawings” provision introduced in 2010 that required adherence thresholds for new participants, as that provision became redundant after thresholds were met in 2011. - Insert new paragraph 21(a) and 21(b) provisions governing limits on bilateral borrowing activation and exceptions/waivers as described above. ### Procedural proposals and related timelines - Proposed packaging of NAB credit arrangement increases and NAB Decision amendments into a single Board decision, with joint effectiveness conditions. - Proposed 6-month extension of the deadline for the review of the Guidelines for Borrowing by the Fund to end-June 2020 to allow incorporation of discussions on a new round of BBAs in early 2020. ### Key figures (selected, preserved exactly) - Current NAB aggregate size: SDR 182.371 billion - Proposed expanded NAB aggregate size: SDR 364.742 billion - Minimum NAB credit arrangement: current SDR 340 million; proposed SDR 680 million - Targeted NAB effectiveness start: January 1, 2021 - New NAB period end: end-2025 - FCC activation threshold in proposed paragraph 21(a): SDR 100 billion - Safeguard consent threshold for withdrawing non-consenting participant increases: 85 percent - Deadline for participant consent (safeguard reference): December 31, 2020 (or a later date set by the Executive Board) - Proposed extension of the Borrowing Guidelines review deadline: to end-June 2020 _International Monetary Fund — ppea2020006 Executive Summary (December 3, 2019)_ ### 14. The proposed provision would have two key implications for Fund borrowing. First, ### 14. The proposed provision would have two key implications for Fund borrowing. First, ### Implications for Fund borrowing - The proposed provision is broader than provisions currently in the Borrowing Guidelines and the 2016 BBAs because it "covers any bilateral borrowing during the new NAB period (not only borrowing under the 2020 BBAs that would replace the 2016 BBAs)"; it would thus make the NAB a second line of defense in respect of all bilateral borrowing. - Two key implications are identified: - First, scope expansion to any bilateral borrowing during the new NAB period. - Second, inclusion of the FCC/NAB activation condition in the NAB itself changes approval requirements for accessing bilateral borrowing that does not meet FCC/NAB activation conditions. ### Effect on approval and Fund flexibility - Current situation (when FCC/NAB activation conditions are only in BBAs and Borrowing Guidelines): - A Board decision (by a majority of the votes cast) and the agreement of the relevant bilateral creditor(s) would be sufficient to enable access by the Fund to bilateral borrowing where FCC/NAB activation conditions are not met. - Proposed situation (when the condition is added to the NAB): - The agreement of NAB participants (subject to an 85 percent majority of total credit arrangements) would also be needed, in addition to action by the Board and the relevant BBA creditors, before the Fund could access bilateral borrowing that does not meet FCC/NAB activation conditions. - This reduces the Fund’s flexibility to access bilateral borrowing in a hypothetical situation where the FCC/NAB activation conditions are not met. - The proposed amendment would reduce the Fund’s flexibility to activate BBAs for a five-year period in a hypothetical situation where the FCC/NAB activation conditions are not met, as NAB participants’ approval would be needed in that case (through the waiver procedure proposed under paragraph 21(b)). ### Legal consistency and scope - The proposed provision is consistent with the Fund’s legal framework, in particular the authority of the Fund to borrow under Article VII of the Articles of Agreement. - The amendment only applies to bilateral borrowing and does not affect: - Any borrowing arrangement entered by the Fund with more than one creditor (for example, borrowing with two or three members or official institutions). - Borrowing arrangements under more broad-based multilateral modalities similar to the NAB itself or the earlier GAB. - The Fund would retain unfettered ability to borrow on a non-bilateral basis; therefore the new provision does not raise issues of inconsistency with Article VII. ### Rationale: protecting NAB participants’ financial interests - The purpose of protecting the financial interests of NAB participants in relation to bilateral borrowing is reasonably related to the purposes of the NAB and provides a basis for inclusion of the proposed provision in the NAB Decision. - NAB participants have an interest, in principle, in the total amount of Fund borrowing because in a hypothetical scenario involving arrears on borrowed resources, the Fund would need to resort to the same pool of reserves and quota resources to repay all creditors. - If there is a significant use of borrowed resources beyond the NAB, NAB participants could receive less than the total of their claims in a tail risk hypothetical scenario (assuming that the NAB has been drawn upon and that NAB obligations remain outstanding), which provides a basis for the inclusion of the proposed provision in the NAB Decision. - The proposed provision would provide partial protection of the NAB participants’ interest as the Fund may continue to access non-bilateral borrowing. ### Consultations and participant views - In consultations, some participants expressed misgivings: - Concerns about reduction in the Fund’s flexibility to access bilateral borrowing in a crisis. - Concerns about the appropriateness of giving NAB participants the ability to block bilateral borrowing where FCC/NAB activation conditions are not met but bilateral creditors are nonetheless willing to lend. - Staff understands participants are willing on balance to support inclusion given the wish to reach closure on the NAB reform. ### Entry into effect — General considerations - Proposal: link effectiveness of amendments to the NAB Decision (including the new NAB period) and proposed changes in NAB credit arrangements through a single Executive Board decision, adopted by a majority of the votes cast. - Conditions for effectiveness: - Both the conditions for effectiveness of amendments to the NAB Decision and the conditions for effectiveness of changes in credit arrangements would need to be met in order for either to become effective. - Specifically, participants representing 85 percent of total NAB credit arrangements, including each participant whose credit arrangement is changed, would need to consent to the NAB reform package. - Under the proposal set out in this paper the credit arrangements of all participants would be changed; the NAB reform can only become effective when all participants have consented (see section B regarding safeguards to address delayed consents). - Targeted date of effectiveness: January 1, 2021. - To meet the targeted effectiveness date, the required consents of NAB participants would need to be secured on or before December 31, 2020. - Otherwise the NAB reform would become effective later once the required consents have been received. ### Safeguard in case of delayed consents - Risk: consent from one or more NAB participants may be delayed, blocking effectiveness even if participants representing 85 percent of total credit arrangements have consented. - Proposed safeguard: - Executive Board decision approving the NAB reform would set an ex ante deadline of December 31, 2020 for receipt of participants’ consents (the deadline could be extended by the Executive Board). - After that deadline, the proposed change to the amount of a credit arrangement of a participant that had not yet provided its consent would be treated as automatically withdrawn, if, at that time, other participants representing at least 85 percent of (current) total NAB credit arrangements had already consented to the amendments and the changes in credit arrangements. - With the proposed change in a participant’s credit arrangement withdrawn, the consent of that participant would no longer be necessary, and the NAB reform could become effective. - Post-effect procedures: - If a participant’s proposed change was automatically withdrawn, the Executive Board would be expected to reapprove the change in credit arrangement after effectiveness of the NAB reform. - For any participant not in a position to consent by the deadline, it is expected the Executive Board would reapprove the doubling following entry into force of the NAB reform. - Following the Executive Board’s approval, the doubling of the participant’s NAB credit arrangement would then become effective with the agreement of NAB participants (including the requesting participant) that represent at least 85 percent of the total NAB credit arrangements. - Notes from consultations: - A higher threshold (e.g., 90 percent) was discussed; broad support emerged for an 85 percent minimum consent threshold before the safeguard clause can apply. - If a participant currently with the minimum credit arrangement amount (SDR 340 million) could not consent by the deadline and the proposal to double that participant’s credit arrangement is automatically withdrawn, then the NAB’s minimum credit arrangement amount would remain unchanged. ### Extension of the deadline to review the Borrowing Guidelines - Background: - Borrowing Guidelines are subject to regular reviews by the Executive Board. - Borrowing Guidelines were last reviewed and amended in August 2016 in conjunction with approval of the framework for the 2016 BBAs. - At the time, the Board decided the next review would take place by end-2019. - Staff proposal: - A 6-month extension of the deadline for the review of the Borrowing Guidelines, moving the deadline to end-June 2020. - Rationale: allow the review to incorporate the outcome of discussions on a new round of BBAs envisaged to take place in early 2020. - Implementation note: - Following Board approval of the proposed NAB reform, staff will reach out to bilateral creditors in early 2020 to discuss a new round of BBAs (2020 BBAs) to replace the 2016 BBAs. - Based on these discussions, the modalities for the 2020 BBAs and the review of the Borrowing Guidelines would be proposed for the Board’s consideration. - Staff expects that the governance framework for the 2020 BBAs will closely follow that for the 2016 BBAs. ### Proposed Decisions (summary) - Decisions proposed for adoption by the Executive Board (each may be adopted by a majority of the votes cast), including: - Decision 1: The NAB Reform — Amendments to the NAB Decision and Changes to NAB Credit Arrangements: - Decision No. 11428-(97/6), adopted January 27, 1997 on the New Arrangements to Borrow, as amended (the "NAB Decision"), shall be further amended to read as set out in Attachment I to EBS/19/106, 12/3/19 ("Attachment I"). - The credit arrangements of NAB participants shall be changed as set out in Annex 1 of Attachment I, except that for the credit arrangement of any participant to which the proposed change is withdrawn in accordance with paragraph 3 of this decision, the participant’s credit arrangement will remain at the same size as set out in Table 1 of EBS/19/106, 12/3/19 under the “Current Credit Arrangements” column. *Source: ppea2020006 - excerpt.* ### 3. The amendments to the NAB Decision, as provided in paragraph 1 of this decision, and the ### ppea2020006 - 3. The amendments to the NAB Decision, as provided in paragraph 1 of this decision, and the ### Effectiveness conditions for the amendments and changes in credit arrangements - The amendments to the NAB Decision (paragraph 1) and changes in credit arrangements (paragraph 2) shall become effective when the following conditions are met, but not earlier than January 1, 2021: - (a) participants representing 85 percent of total credit arrangements have concurred with the amendments to the NAB Decision; and - (b) participants representing 85 percent of total credit arrangements have agreed to the changes in credit arrangements, including each participant whose credit arrangement is being changed; - provided that if a participant has not agreed to the proposed changes in credit arrangements by December 31, 2020, or at any later date as determined by the Executive Board, the proposed change to the credit arrangement of such participant will be deemed to have been withdrawn, and the credit arrangement of such participant will remain unchanged. ### Decision 2 — Extension of deadline to review the Guidelines for Borrowing by the Fund - Paragraph 8 of the Guidelines for Borrowing by the Fund (Decision No. 16042-(16/77), adopted on August 29, 2016) is amended to read: - “8. The Executive Board shall review these guidelines by June 30, 2020.” ### Draft Revised NAB Decision — Preamble and purpose - Purpose: enable the Fund to fulfill more effectively its role in the international monetary system by specifying terms and conditions under which countries with financial capacity provide resources to the Fund. - Legal basis: adopted under Article VII, Section 1(i) of the Fund’s Articles of Agreement. ### Key definitions (Paragraph 1) - Definitions preserved verbatim for terms including: - “amount of a credit arrangement”: maximum amount expressed in special drawing rights a participant undertakes to make available under a credit arrangement; - “available commitment”: participant’s credit arrangement less any drawn and outstanding balances; - “borrowed currency” / “currency borrowed”: currency transferred to the Fund’s account under a credit arrangement; - “call”: notice by the Fund to a participant to make a transfer under its credit arrangement; and other terms including “credit arrangement”, “currency actually convertible”, “drawer”, “indebtedness of the Fund”, “member”, “participant”, “participating institution”, and “participating member”. - Special provisions for the Monetary Authority of Hong Kong (the “HKMA”) including: - (i) loans and payments shall be made in the currency of the United States of America unless otherwise agreed; - (ii) references to balance of payments and reserve position in specified paragraphs refer to Hong Kong; and - (iii) HKMA rights re early repayment under paragraph 13(c) if the balance of payments position of Hong Kong is sufficiently strong. ### Credit arrangements and amounts (Paragraph 2 and Paragraph 4) - Paragraph 2(a): A member or institution that adheres undertakes to provide resources up to the amount in special drawing rights set forth in Annex I; Annex I may be amended to account for changes resulting from specific paragraphs. - Paragraph 2(b): Resources are to be made in the currency of the participant except as agreed. - Paragraph 3(b) and Paragraph 4(a): - New participants may adhere with agreement of participants representing 85 percent of total credit arrangements. - Total amount of credit arrangements may be increased with agreement of participants representing 85 percent of total credit arrangements; increase shall not exceed amount of the new participant’s credit arrangement. - Paragraph 4(b): Individual credit arrangements may be changed with agreement of the Fund and participants representing 85 percent of total credit arrangements, including each participant whose credit arrangement is changed. Provision may be amended only with consent of all participants. ### Adherence and admission of new participants (Paragraph 3) - Any new participant specified in Annex I adheres per paragraph 3(c). - Members/institutions not in Annex I may apply; amount offered must not be less than the credit arrangement of the participant with the smallest credit arrangement. - Admission of a new participant leads to proportional reduction in credit arrangements of existing participants above the smallest arrangement, subject to minimums in Annex I. - Adherence is effected by deposit of an instrument; participant status begins on date of deposit. ### Activation period (Paragraph 5) - Managing Director may propose an activation period when quota resources need supplementation to forestall or cope with impairment of the international monetary system. - An activation period shall not exceed 6 months. - Proposal must include: overall size of possible Fund arrangements, balance between drawn and precautionary arrangements, additional financing needs, and mix of quota and NAB resources; information updated quarterly during activation. - If participants are not unanimous, decision reached by poll requiring an 85 percent majority of total credit arrangements of participants eligible to vote. - Participants are ineligible to vote if, based on present and prospective balance of payments and reserve position, the member is not included in the financial transactions plan for transfers of its currency at the time of the decision. - An activation period becomes effective only if accepted by participants pursuant to paragraph 5(b) and approved by the Executive Board. ### Resource mobilization plans and calls (Paragraph 6) and special calls (Paragraph 7) - Resource mobilization plans (normally quarterly) specify for each participant the maximum amount for which calls may be made; Executive Board may amend plans at any time. - Allocation normally aims to result in available commitments of participants being of equal proportion relative to their credit arrangements. - Participants may be excluded from resource mobilization plan based on balance of payments/reserve position not being included in financial transactions plan. - Calls during a resource mobilization plan are made by the Managing Director with regard to equal-proportion objective; no call on participant if its currency not used in transfers under the financial transactions plan because of balance of payments/reserve position. - Calls pursuant to paragraph 11(e) and paragraph 23 may be made at any time and are not subject to procedures in paragraphs 5 or 6; same equal-proportion objective applies where relevant. - Participants shall promptly make transfers in accordance with calls. ### Nature and evidence of indebtedness (Paragraph 8) - Participant’s claim arising from calls is in the form of a loan; upon participant request the Fund shall issue Notes up to the amount of any call, subject to the General Terms and Conditions for NAB Notes (the “GTC”). - GTC may be amended with agreement of participants representing 85 percent of total credit arrangements; amended GTC applies upon effectiveness to all outstanding Notes. - Loans and Notes shall be evidenced by instruments agreed between the Fund and participant; repayment and substitution procedures specified. - Notes to be issued in book entry form; registered Note form set out in Appendix to the GTC. ### Interest (Paragraph 9) - Interest rate: equal to the combined market interest rate computed by the Fund for determining the rate it pays on holdings of special drawing rights, or any such higher rate agreed between the Fund and participants representing 85 percent of the total credit arrangements. - Interest accrues daily and shall be paid as soon as possible after each July 31, October 31, January 31, and April 30. - Interest payment currency determined by Fund in consultation with participant: special drawing rights, participant’s currency, currency borrowed, freely usable currencies, or, with agreement, other currencies actually convertible. ### Use of borrowed currency (Paragraph 10) - Fund’s policies and practices under Article V, Sections 3 and 7 apply to purchases of currency borrowed; access to Fund resources by members determined by Fund policies and practices, not by NAB borrowing status. ### Repayment by the Fund (Paragraph 11) - (a) Ten years after a transfer in response to a call, the Fund shall repay an amount equivalent to the transfer (calculated per paragraph 12). If a drawer repurchases earlier than ten years, the Fund shall repay participants during the quarterly period in which repurchase is made per paragraph 11(d). Repayment currencies: currency borrowed whenever feasible, participant’s currency, special drawing rights (subject to Article XIX, Section 4 limits unless participant agrees), freely usable currencies, or other actually convertible currencies with participant agreement. - (b) Before the ten-year date, Fund may make repayment in part or in full after consultation with participants; repayment options mirror (a). - (c) When a reduction in Fund holdings of a drawer’s currency is attributed to a purchase of currency borrowed, the Fund shall promptly repay an equivalent amount to participants; if used to finance a reserve tranche purchase and holdings not subject to repurchase are reduced by net sales during a quarterly period, Fund shall repay at beginning of next quarterly period up to amount of reserve tranche purchase; allocations per paragraph 11(d). - (d) Repayments under specified subparagraphs allocated with due regard to equal-proportion objective in paragraph 6(a). Repayments applied first to longest outstanding claim under participant’s credit arrangement. Repayment to transferee where claim transferred. - (e) Before ten-year date, a participant may give notice that there is a balance of payments need for repayment; Fund to give overwhelming benefit of any doubt to participant’s representation; repayment in freely usable currencies or special drawing rights, or other actually convertible currencies with agreement. If Fund’s holdings inadequate, Managing Director shall make calls on individual participants subject to available commitments; procedural collaboration/exchange assurances at request of participant seeking early repayment. - (f) When repayment is made on a claim arising from a call, the callable amount under the credit arrangement is restored pro tanto. - (g) For participating institutions, Fund deemed to discharge obligations by transferring equivalent amount in special drawing rights to the member in which the institution is established, unless otherwise agreed. ### Rates of exchange (Paragraph 12) - Value of any transfer calculated as of date of dispatch of instructions for the transfer, in terms of the special drawing right in accordance with Article XIX, Section 7(a) of the Articles. - Value of a currency in terms of the special drawing right calculated by the Fund in accordance with Rule O-2 of the Fund’s Rules and Regulations. ### Transferability of claims (Paragraph 13) - Transfers permitted only in accordance with paragraph 13 or with prior consent of the Fund. - Claims may be transferred to participants or non-participants that are (i) a member, (ii) central bank or other fiscal agency designated by a member, or (iii) an official entity prescribed as a holder of special drawing rights. - Transferred claims held by transferee on same terms as originating claims, with specified exceptions concerning right to request early repayment, currency references for non-participants, and treatment for available commitments and drawn balances. - Transfer price as agreed between transferee and transferor. - Transferor must inform the Fund promptly of transfer details; Fund registers transfer and transfer effective as of agreed value date. - Notice and registration provisions specified for non-participant transferees and fiscal agencies. - Interest paid to transferee for whole period if claim transferred during a quarterly period as described in paragraph 9(b). - Fund deemed to discharge obligations to certain transferees by transferring equivalent SDRs to member account. - Fund shall assist in arranging transfers if requested. - Transferees may request exchange between loan and Note forms on same substantive terms subject to GTC. - Derivative transactions in respect of any claim and transfer of participation interests in any claim are prohibited. ### Notices (Paragraph 14) - Notices by or to participating members/institutions shall be in writing or by rapid means of communication and given to the fiscal agency designated under Article V, Section 1 and Rule G-1, or to the participating institution itself. ### Amendment, withdrawal, and withdrawal from membership (Paragraphs 15–17) - Paragraph 15(a): Amendments during the period prescribed in paragraph 19(a) and any subsequent renewal periods may be made only by a decision of the Fund with concurrence of participants representing 85 percent of total credit arrangements, except as provided in paragraphs 4(b), 15(b), and 16. - Paragraph 15(b): A participant that voted against a materially affecting amendment has right to withdraw adherence by giving notice within 90 days from adoption. This provision may be amended only with consent of all participants. - Paragraph 16: Participant may withdraw adherence in accordance with paragraph 19(b) but may not withdraw within period prescribed in paragraph 19(a) except with agreement of Fund and all participants; provision may be amended only with consent of all participants. - Paragraph 17: If a participating member withdraws from membership, participant’s credit arrangement ceases when withdrawal takes effect; Fund’s indebtedness treated as amount due from Fund for Article XXVI, Section 3 and Schedule J purposes. ### Suspension of exchange transactions and liquidation (Paragraph 18) - (a) Right to make calls under paragraphs 6, 11(e), and 23 and obligation to make repayments under paragraph 11 suspended during any suspension of exchange transactions under Article XXVII. - (b) In event of liquidation, credit arrangements cease and Fund’s indebtedness constitutes liabilities under Schedule K. Currency payability order for Schedule K purposes: currency borrowed first, then participant’s currency, finally currency of the drawer for whose purchases transfers were made in connection with calls under paragraph 6. ### Period, renewal, and transitional application (Paragraph 19 and Paragraph 23) - Paragraph 19(a): Decision continues in existence until December 31, 2025. When considering renewal for any period following that date, Fund and participants shall review functioning, particularly activation procedures and impact of the Sixteenth General Review of Quotas on overall size of quotas, and consult on possible modifications. - Paragraph 19(b): Decision may be renewed for such periods and with such modifications as Fund may decide, subject to paragraphs 4(b), 15(b), and 16. Fund shall adopt decision on renewal and modification, if any, not later than twelve months before end of period in paragraph 19(a). Any participant may advise Fund not less than six months before end of period that it will withdraw adherence to decision as renewed; absent such notice participant deemed to continue adherence. Withdrawal under paragraph 19(b) does not preclude subsequent adherence under paragraph 3(b). - Paragraph 19(c): If terminated or not renewed, paragraphs 8–14, 17 and 18(b) continue to apply to any indebtedness under credit arrangements until repayment is completed. Similar continuity for participants who withdraw under specified paragraphs. - Paragraph 23 (Transitional arrangements): At request of participant holding claims under bilateral borrowing agreements entered into prior to effectiveness of amendments in Decision No. 16645-(20/5), January 16, 2020, and related to an activation prior to that date, the Managing Director shall make calls under the participant’s credit arrangement to fund repayment of such claims; maturity date of claims under credit arrangements arising from such calls shall be the maturity date of the bilateral borrowing agreement claim for whose repayment the call was made. ### Relationship with bilateral borrowing and other borrowing (Paragraphs 21–22) - Paragraph 21(a): Bilateral borrowing agreements in effect from January 1, 2021 through December 31, 2025 may be activated only after Managing Director has notified Executive Board that the Forward Commitment Capacity (modified FCC) is below SDR 100 billion (the “activation threshold”); provided the Managing Director shall not provide such notification unless the New Arrangements to Borrow are activated at that time, or there are no available uncommitted resources under the New Arrangements to Borrow as of that time. - Paragraph 21(b): Managing Director may approach creditors before modified FCC below activation threshold in extraordinary circumstances to forestall or cope with impairment; activation may also proceed if participants representing 85 percent of total credit arrangements agree via poll. - Paragraph 22: Nothing precludes the Fund from entering into other types of borrowing arrangements. ### Interpretation (Paragraph 20) - Questions of interpretation not falling under Article XXIX shall be settled to mutual satisfaction of the Fund, the participant or transferee raising the question, and all other participants. Former participants to which paragraphs 8–14, 17, and 18(b) continue to apply are deemed participants for purposes of interpretation when affected. *Source: ppea2020006 - Draft Revised NAB Decision (clean version) as provided in the supplied content.* ### Annex I ### Annex I ### Current Participants and Amounts of Credit Arrangements (In Millions of SDRs) - Australia 4,440.90 - Austria 3,636.98 - Banco Central de Chile 1,381.94 - Banco de Portugal 1,567.00 - Bangko Sentral ng Pilipinas 680.00 - Bank of Israel 680.00 - Belgium 7,988.66 - Brazil 8,881.82 - Canada 7,747.42 - China 31,720.76 - Cyprus 680.00 - Danmarks Nationalbank 3,259.52 - Deutsche Bundesbank 25,780.04 - Finland 2,267.76 - France 18,958.32 - Hong Kong Monetary Authority 680.00 - India 8,881.82 - Italy 13,797.04 - Japan 67,017.00 - Korea 6,689.64 - Kuwait 682.58 - Luxembourg 986.24 - Malaysia 680.00 - Mexico 5,075.32 - National Bank of Poland 2,570.80 - Netherlands 9,189.60 - New Zealand 680.00 - Norway 3,933.38 - Russian Federation 8,881.82 - Saudi Arabia 11,305.48 - Singapore 1,297.10 - South Africa 680.00 - Spain 6,810.28 - Sveriges Riksbank 4,511.36 - Swiss National Bank 11,081.32 - Thailand 680.00 - United Kingdom 18,958.32 - United States 56,404.94 - Total 361,145.16 ### Prospective Participants and Totals - Prospective participants 3,597.14 - Greece 1,681.20 - Ireland 1,915.94 - Total after adherence of prospective participants 364,742.30 - Note: Current credit arrangements are subject to a minimum of SDR 680 million. --- ### Annex II — General Terms and Conditions for Notes Issued by the International Monetary Fund under the New Arrangements to Borrow (the “NAB”) ### Scope and Definitions - General Terms and Conditions apply to promissory notes (the “Notes”) issued by the International Monetary Fund (the “Fund”) in accordance with paragraphs 8 and 13(k) of Executive Board Decision No. 11428-(97/6), January 27, 1997, on the New Arrangements to Borrow (the “NAB Decision”), as amended. - Terms not defined in these General Terms and Conditions have the meaning ascribed in the NAB Decision. ### Paragraph 1 — Issuance of Notes to Participants and Other Holders - (a) At the request of a participant pursuant to paragraph 8(a) of the NAB Decision the Fund will issue to the participant, and the participant shall purchase, Notes in the amount requested, up to the amount of the Fund’s call on the participant under its credit arrangement. At the request of the transferee of a loan claim, the Fund will issue Notes to the transferee in exchange for the loan claim pursuant to paragraph 13(k) of the NAB Decision. - (b) Notes shall be denominated in the special drawing right. ### Paragraph 2 — Form, Delivery and Custody of Notes - (a) Notes will be issued in book entry form. The Fund will establish and maintain in its records a book entry account in the name of each holder recording pertinent details of all Notes issued, including the number, issue date, principal amount, and maturity date. As of the value date of each purchase, or of each exchange or transfer of a Note in accordance with paragraph 13 of the NAB Decision, the Fund will make an appropriate entry in its records regarding details of the Note purchased or transferred. The making of such an entry in the records of the Fund shall constitute a taking of delivery of the Note by the purchaser or transferee, and the person so listed with respect to such Note shall be the holder thereof for all purposes. - (b) Upon the request of a holder, the Fund will issue to the holder a registered Note substantially in the form set out in the Appendix to these General Terms and Conditions, including without limitation the legend regarding restrictions on transfer of Notes. Each such registered Note will bear as its issue date the value date of the purchase of the Note or the value date of the loan claim for which it was exchanged pursuant to paragraph 13(k) of the NAB Decision and shall be issued in the name of the relevant holder. Unless otherwise agreed between a holder and the Fund, the Fund will keep such registered Notes in custody for the holder, and acceptance of custody by the Fund shall constitute delivery of such registered Notes to the holder. ### Paragraph 3 — Interest - (a) The Fund shall pay interest on Notes at a rate equal to the combined market interest rate computed by the Fund from time to time for the purpose of determining the rate at which it pays interest on holdings of special drawing rights or any such higher rate as may be agreed between the Fund and participants representing 85 percent of the total credit arrangements under the NAB Decision. - (b) Interest shall accrue daily and shall be paid as soon as possible after each July 31, October 31, January 31, and April 30. - (c) Interest due to a holder shall be paid, as determined by the Fund in consultation with the holder, in special drawing rights, in the holder’s currency if the holder is a member, in the currency borrowed, in freely usable currencies, or, with the agreement of the holder, in other currencies that are actually convertible. ### Paragraph 4 — Maturity; Repayment by the Fund - (a) Notes shall have a maturity of ten years, provided that a Note issued pursuant to paragraph 13(k) of the NAB Decision shall have the maturity of the loan claim for which it was exchanged. Repayment of the Note principal to a holder is made in accordance with paragraph 11 of the NAB Decision. - (b) Unless otherwise agreed between the Fund and a holder that is either a participating institution or the central bank or other fiscal agency designated by a member for purposes of Article V, Section 1 of the Articles, the Fund shall be deemed to have discharged its obligations to such holder to make repayment in special drawing rights in accordance with paragraph 11 of the NAB Decision or to pay interest in special drawing rights in accordance with paragraph 3 of these General Terms and Conditions, if the Fund transfers an equivalent amount in special drawing rights to the account of the member in which the institution is established. - (c) The Fund will cancel a Note (i) upon payment of the principal amount of the Note and all accrued interest, (ii) if a Note is transferred in accordance with paragraph 6 of these General Terms and Conditions, or (iii) if a Note is exchanged for a loan claim in accordance with paragraph 13(k) of the NAB Decision. If the Fund makes early payment of less than the principal amount of a Note, the Fund will cancel the Note and issue a new Note for the remainder of the amount. - (d) Any registered Note to be cancelled by the Fund that is not already in the custody of the Fund shall be surrendered by the holder to the Fund for cancellation. ### Paragraph 5 — Rates of Exchange - For all of the purposes of these General Terms and Conditions, the value of a currency in terms of the special drawing right shall be calculated by the Fund in accordance with Rule O-2 of the Fund’s Rules and Regulations. ### Paragraph 6 — Transferability of Notes - (a) A holder may not transfer all or any part of its Notes except (i) in accordance with this paragraph 6 or (ii) with the prior consent of the Fund and on such terms and conditions as the Fund may approve. Any other purported transfer by a participant or other holder shall be of no force or effect. - (b) All or part of any Note may be transferred at any time to a participant or to a non-participant that is either (i) a member of the Fund, (ii) the central bank or other fiscal agency designated by any member for purposes of Article V, Section 1 of the Articles (“other fiscal agency”), or (iii) an official entity that has been prescribed as a holder of special drawing rights pursuant to Article XVII, Section 3 of the Articles. - (c) As from the value date of the transfer, the Note shall be held by the transferee on the same terms and conditions as Notes originating under its credit arrangement (in the case of transferees that are participants in the NAB), or as the Note was held by the transferor (in the case of transferees that are non-participants in the NAB), except that (i) the transferee shall have the right to request early repayment of the transferred Note on balance of payments grounds pursuant to paragraph 11(e) of the NAB Decision only if the transferee is a member, or the institution of a member, whose balance of payment and reserve position, at the time of the transfer, is considered sufficiently strong for its currency to be usable in transfers under the Fund's financial transactions plan, or, in the case of the HKMA, the balance of payments position of Hong Kong at the time of the transfer is, in the opinion of the Fund, sufficiently strong to justify such a right; (ii) if the transferee is a non-participant, references in paragraph 11 of the NAB Decision to the participant’s currency shall be deemed to refer (A) if the transferee is a member, to the transferee’s currency, (B) if the transferee is an institution of a member, to the currency of that member, and (C) in other cases, to a freely usable currency as determined by the Fund; and (iii) Notes transferred in accordance with this paragraph 6 shall be considered drawn balances of the first transferor participant for purposes of determining the available commitment under its credit arrangement, and Notes obtained by a transferee participant shall not be considered drawn balances of such participant for purposes of determining the available commitment under its credit arrangement. - (d) The price for the Note transferred shall be as agreed between the transferee and the transferor. - (e) The transferor of a Note shall inform the Fund promptly of the Note that is being transferred, the name of the transferee, the amount of the Note that is being transferred, the agreed price for transfer of the Note, and the value date of the transfer. - (f) The transfer shall be registered by the Fund and the transferee shall become the holder of the Note only if such transfer is in accordance with the terms and conditions of the NAB Decision and these General Terms and Conditions. Subject to the foregoing, upon registration, the transfer shall be effective as of the value date agreed between the transferee and the transferor. - (g) The transferee of a Note may request at the time of transfer that the Note be exchanged by the Fund for a loan claim pursuant to paragraph 13(k) of the NAB Decision to be held by the transferee on the same substantive terms as the transferred Note. - (h) Notice to or by a transferee that is a non-participant shall be in writing or by rapid means of communication and shall be given to or by the fiscal agency designated by the transferee in accordance with Article V, Section 1 of the Articles and Rule G-1 of the Rules and Regulations of the Fund if the transferee is a member, or to or by the transferee itself if the transferee is not a member. - (i) If all or part of a Note is transferred during a quarterly period as described in paragraph 3(b) of these General Terms and Conditions, the Fund shall pay interest to the transferee holder on the relevant interest payment date on the amount of the Note transferred for the whole of that period. - (j) If requested, the Fund shall assist in seeking to arrange transfers. - (k) For all transfers under this paragraph 6, the Fund will cancel the Note that has been transferred in whole or in part and, if the Note is a registered Note, the transferor shall, as a condition for the transfer, surrender for cancellation any such registered Note that is not already in the custody of the Fund. Upon cancellation of the relevant Note, the Fund will issue a new Note in the name of the transferee for the principal amount transferred and, where appropriate, a new Note in the name of the transferor for any part of the principal amount retained by it. The issue date of each new Note will be the issue date of the cancelled Note, and the new Note will have the same maturity date (including any maturity date resulting from extensions of a previous maturity date) that is applicable to the cancelled Note. The form and delivery of each new Note will be as specified in paragraph 2 of these General Terms and Conditions. - (l) Derivative transactions in respect of any Note, and transfers of participation interests in any Note, are prohibited. ### Paragraph 7 — Notices - Notice to or by a holder who is a participating member shall be in writing or by rapid means of communication and shall be given to or by the fiscal agency of the participating member designated in accordance with Article V, Section 1 of the Articles and Rule G-1 of the Rules and Regulations of the Fund. Notice to or by a holder who is a participating institution shall be in writing or by rapid means of communication and shall be given to or by the participating institution. ### Paragraph 8 — Interpretation - Any question of interpretation raised in connection with any Note which does not fall within the purview of Article XXIX of the Articles shall be settled to the mutual satisfaction of the Fund, the holder raising the question, and all participants in the NAB. For the purpose of this paragraph 8, holder shall be deemed to include those former participants in the NAB to which paragraphs 8 through 14, 17 and 18(b) of the NAB Decision continue to apply pursuant to paragraph 19(c) of the NAB Decision to the extent that any such former participant is affected by a question of interpretation that is raised. ### Paragraph 9 — NAB Decision and Changes in the GTC - Notes subject to these General Terms and Conditions, and any claims thereunder or with respect thereto, are subject to the terms and conditions of the NAB Decision as in effect from time to time. Any amendments to these General Terms and Conditions adopted in accordance with paragraph 8(a) of the NAB Decision shall apply to all outstanding Notes issued under the NAB Decision. *International Monetary Fund — ppea2020006 - Annex I* ### Annex II. Appendix ### ppea2020006 - Annex II. Appendix ### Form of Registered NAB Note - Note issued by the INTERNATIONAL MONETARY FUND promising to pay an amount equivalent to specified Special Drawing Rights (SDR) on the maturity date and to pay interest as set forth. - Note issued in accordance with the New Arrangements to Borrow (the “NAB”) and the General Terms and Conditions for Notes Issued by the International Monetary Fund under the New Arrangements to Borrow (the “General Terms and Conditions”). - Transfer and use restrictions: - No sale, assignment, disposal, or transfer to any entity that is not one of: (I) a MEMBER OF THE FUND, (II) THE CENTRAL BANK OR OTHER FISCAL AGENCY DESIGNATED BY A MEMBER FOR PURPOSES OF ARTICLE V, SECTION 1 OF THE FUND’S ARTICLES OF AGREEMENT, (III) AN OFFICIAL ENTITY PRESCRIBED AS A HOLDER OF SPECIAL DRAWING RIGHTS PURSUANT TO ARTICLE XVII, SECTION 3 OF THE FUND’S ARTICLES OF AGREEMENT, or (IV) AN ENTITY FOR WHICH THE FUND HAS WRITTEN CONSENT PURSUANT TO PARAGRAPH 6(A) OF THE GENERAL TERMS AND CONDITIONS. - ANY DERIVATIVE TRANSACTIONS IN RESPECT OF THIS NOTE, AND TRANSFERS OF PARTICIPATION INTERESTS IN THIS NOTE, ARE PROHIBITED. - Interest rate: equal to the combined market interest rate computed by the Fund for determining interest on holdings of special drawing rights or any higher rate agreed between the Fund and participants representing 85 percent of total credit arrangements under the NAB. - Interest accrues daily and is paid as soon as possible after each July 31, October 31, January 31, and April 30. - Interest payable in special drawing rights, the holder’s currency if the holder is a member, the currency borrowed, or other currencies that are actually convertible, as determined in consultation with the holder. ### Definitions and Structure of Credit Arrangements (Paragraphs 1–4, 8) - Key defined terms include: “amount of a credit arrangement,” “available commitment,” “borrowed currency,” “call,” “credit arrangement,” “currency actually convertible,” “drawer,” “indebtedness of the Fund,” “member,” “participant,” “participating institution,” and “participating member.” - Special treatment for the Monetary Authority of Hong Kong (HKMA) with specific conditions in paragraph 1(b)(i)–(iii). - Credit arrangements: - Participants undertake to provide resources up to amounts in Annex I, expressed in special drawing rights. - Resources are made in the currency of the participant except as otherwise agreed. - Notes and loans: - A participant’s claim arising from calls is in the form of a loan; at participant request, the Fund shall issue Notes subject to the General Terms and Conditions for NAB Notes (the “GTC”). - Notes issued in book entry form; registered Notes may be issued substantially in the form set out in the Appendix to the GTC. ### Activation Period, Resource Mobilization Plans, and Calls (Paragraphs 5–7, 21–24) - Activation period: - Managing Director may propose establishment when Fund resources need supplementing to forestall or cope with impairment of the international monetary system. - Activation period shall not exceed 6 months. - Proposal shall include: overall size of possible Fund arrangements; balance between drawn and precautionary arrangements; additional financing needs; mix of quota and NAB resources. - Information updated quarterly during an activation period. - Acceptance of proposal by participants requires an 85 percent majority of total credit arrangements of participants eligible to vote; then approval by the Executive Board is required. - Resource mobilization plans and calls: - Executive Board approves resource mobilization plans, normally quarterly for activated periods and up to six months when not activated. - Plans specify for each participant the maximum amount for which calls may be made during the applicable period. - Allocation normally aims to result in available commitments being of equal proportion relative to credit arrangements. - Participants not included when their currency is not in the financial transactions plan for transfers. - Calls made with due regard to achieving available commitments of equal proportion relative to credit arrangements. - Special calls: - Calls under paragraph 11(e) or paragraph 23 may be made at any time and are not subject to procedures in paragraphs 5 or 6. - Bilateral borrowing activation constraint (Paragraph 21(a)): - Bilateral borrowing agreements in effect from January 1, 2021 through December 31, 2025 may be activated only after the Managing Director notifies the Executive Board that the modified FCC is below SDR 100 billion, and only if the NAB is activated or there are no available uncommitted NAB resources. - Exception: Managing Director may approach creditors earlier if extraordinary circumstances warrant; poll of participants representing 85 percent of total credit arrangements may also permit activation before threshold is reached. - Transitional and threshold provisions: - Outstanding drawings and available commitments under NAB and General Arrangements to Borrow shall not exceed SDR 180,572.58 million, or such other amount in effect. - No drawings until participants representing at least 70 percent of the total credit arrangements of new participants listed in Annex I have adhered. ### Interest, Repayment, Rates of Exchange (Paragraphs 9–12) - Interest: - Rate: combined market interest rate computed by the Fund for SDR holdings or higher if agreed by Fund and participants representing 85 percent of total credit arrangements. - Interest accrues daily; paid as soon as possible after each July 31, October 31, January 31, and April 30. - Payments may be in SDRs, participant’s currency, currency borrowed, freely usable currencies, or other actually convertible currencies with agreement. - Repayment by the Fund (Paragraph 11): - Standard repayment: ten years after a transfer in response to a call, the Fund shall repay the participant an amount equivalent to the transfer calculated under paragraph 12. - Early repurchases by drawer: Fund shall repay participants an equivalent amount during the quarterly period in which the repurchase is made. - Repayment modalities: in currency borrowed whenever feasible, participant’s currency, in SDRs (subject to Article XIX, Section 4 limits unless participant agrees), in freely usable currencies, or other actually convertible currencies with agreement. - Fund may make repayments in part or full before ten years after consultation with participants; allocations shall aim for available commitments of equal proportion relative to credit arrangements. - Paragraph 11(e): a participant may request early repayment on balance of payments grounds; Fund gives the overwhelming benefit of doubt to participant’s representation and shall make repayment promptly after consultation, in freely usable currencies or SDRs, or other actually convertible currencies with agreement. - When repayments are made on claims arising from calls, the callable amount under the relevant credit arrangement is restored pro tanto. - Rates of exchange: - Value of any transfer calculated as of date of dispatch of instructions for transfer; calculated in SDRs in accordance with Article XIX, Section 7(a) and Rule O-2 of the Fund’s Rules and Regulations. ### Transferability, Transfers, and Prohibitions (Paragraphs 13, 14) - Transfers of claims: - Transfers permitted only (i) in accordance with Paragraph 13 or (ii) with prior Fund consent on terms approved by the Fund. - Transferees may be participants or non-participants that are (i) a member, (ii) the central bank or other fiscal agency designated by any member for Article V, Section 1, or (iii) an official entity prescribed as an SDR holder pursuant to Article XVII, Section 3. - Transferred claims are held by transferee on the same terms and conditions as claims under its credit arrangement (if transferee is participant) or as held by transferor (if transferee is non-participant), with specified exceptions regarding early repayment rights and currency references. - Price for transfer agreed between transferor and transferee; transferor must inform the Fund promptly of transfer details; Fund registers transfer; transfer effective as of agreed value date. - Derivative transactions in respect of any claim, and transfer of participation interests in any claim, are prohibited. - Notices: - Notices to or by participating members or institutions by writing or rapid means to the fiscal agency designated under Article V, Section 1 and Rule G-1. ### Amendments, Withdrawal, Period, Renewal, and Interpretation (Paragraphs 15–20) - Amendments: - Decision may be amended during the period prescribed in paragraph 19(a) and subsequent renewal periods only by decision of the Fund with concurrence of participants representing 85 percent of total credit arrangements, except as provided in paragraphs 4(b), 15(b), and 16. - Participant that voted against an amendment materially affecting its interest may withdraw within 90 days from adoption. - Withdrawal: - Participant may withdraw adherence in accordance with paragraph 19(b) but may not withdraw within period in paragraph 19(a) except with agreement of Fund and all participants. - Period and renewal: - Decision shall continue in existence until November 16, 2022 December 31, 2025. - Renewal considerations to review activation procedures and impact of the Fifteenth Sixteenth General Review of Quotas on overall size of quotas; Fund to adopt decision on renewal and modification not later than twelve months before end of period prescribed in paragraph 19(a). - Any participant may advise withdrawal not less than six months before end of the period; absent such notice participant deemed to continue adhesion. - If terminated or not renewed, paragraphs 8 through 14, 17 and 18(b) continue to apply to indebtedness until repayment completed. - Interpretation: - Questions of interpretation not within Article XXIX settled to mutual satisfaction of Fund, participant or transferee raising the question, and all other participants. ### Other Provisions - Use of borrowed currency: - Fund’s policies and practices under Article V, Sections 3 and 7 apply to use of borrowed currency; access to Fund resources determined by Fund policies and not dependent on NAB borrowing. - Relationship with General Arrangements to Borrow and bilateral borrowing: - New Arrangements to Borrower shall be facility of first and principal recourse when considering activation of NAB or General Arrangements to Borrow. - Available commitments under NAB reduced pro tanto by outstanding drawings/commitments under General Arrangements to Borrow and vice versa as specified. - Transitional arrangements (Paragraph 23): Managing Director shall make calls under credit arrangements to fund repayment of claims under certain bilateral borrowing agreements as requested by participants holding such claims; maturity date of such claims shall match maturity of the bilateral borrowing agreement claim. - No drawings until participants representing at least 70 percent of total credit arrangements of new participants in Annex I have adhered. *International Monetary Fund — Annex II. Appendix (Form of Registered NAB Note; Draft Revised NAB Decision, redlined).* ### Annex I ### Annex I ### Participants and Amounts of Credit Arrangements (In Millions of SDRs) - Current Participants — Amount (two columns as presented) - Australia 2,220.45 4,440.90 - Austria 1,818.49 3,636.98 - Banco Central de Chile 690.97 1,381.94 - Banco de Portugal 783.50 1,567.00 - Bangko Sentral ng Pilipinas 340.00 680.00 - Bank of Israel 340.00 680.00 - Belgium 3,994.33 7,988.66 - Brazil 4,440.91 8,881.82 - Canada 3,873.71 7,747.42 - China 15,860.38 31,720.76 - Cyprus 340.00 680.00 - Danmarks Nationalbank 1,629.76 3,259.52 - Deutsche Bundesbank 12,890.02 25,780.04 - Finland 1,133.88 2,267.76 - France 9,479.16 18,958.32 - Hong Kong Monetary Authority 340.00 680.00 - India 4,440.91 8,881.82 - Italy 6,898.52 13,797.04 - Japan 33,508.50 67,017.00 - Korea 3,344.82 6,689.64 - Kuwait 341.29 682.58 - Luxembourg 493.12 986.24 - Malaysia 340.00 680.00 - Mexico 2,537.66 5,075.32 - National Bank of Poland 1,285.40 2,570.80 - Netherlands 4,594.80 9,189.60 - New Zealand 340.00 680.00 - Norway 1,966.69 3,933.38 - Russian Federation 4,440.91 8,881.82 - Saudi Arabia 5,652.74 11,305.48 - Singapore 648.55 1,297.10 - South Africa 340.00 680.00 - Spain 3,405.14 6,810.28 - Sveriges Riksbank 2,255.68 4,511.36 - Swiss National Bank 5,540.66 11,081.32 - Thailand 340.00 680.00 - United Kingdom 9,479.16 18,958.32 - United States 28,202.47 56,404.94 - Total — 180,572.58 361,145.16 ### Prospective Adherence and Totals - New Prospective participants - Greece 840.60 1,681.20 - Ireland 957.97 1,915.94 - Total after adherence of prospective participants — 182,371.15 364,742.30 ### Minimum and Footnote - Current credit arrangements are subject to a minimum of SDR 340 680 million. *Source: ppea2020006 - Annex I* --- ### Annex II — General Terms and Conditions for Notes Issued by the International Monetary Fund under the New Arrangements to Borrow (the “NAB”) ### Scope and Definitions - General Terms and Conditions apply to promissory notes (the “Notes”) issued by the Fund pursuant to paragraphs 8 and 13(k) of Executive Board Decision No. 11428-(97/6), January 27, 1997 (the “NAB Decision”), as amended. - Terms not defined in these General Terms and Conditions have the meaning ascribed in the NAB Decision. ### Paragraph 1 — Issuance of Notes to Participants and Other Holders - At participant request under paragraph 8(a) of the NAB Decision, the Fund will issue Notes to the participant, and the participant shall purchase Notes up to the amount of the Fund’s call on the participant under its credit arrangement. - At the request of the transferee of a loan claim, the Fund will issue Notes to the transferee in exchange for the loan claim pursuant to paragraph 13(k) of the NAB Decision. - Notes shall be denominated in the special drawing right. ### Paragraph 2 — Form, Delivery and Custody of Notes - Notes will be issued in book entry form; the Fund will maintain a book entry account recording number, issue date, principal amount, and maturity date. - An entry in the Fund’s records as of the value date of purchase, exchange, or transfer constitutes delivery and establishes the holder. - Upon holder request, the Fund will issue a registered Note in substantially the form set out in the Appendix; registered Notes bear the issue date equal to the value date of purchase or exchange and will be issued in the name of the holder. - Unless otherwise agreed, the Fund will keep registered Notes in custody for the holder; acceptance of custody by the Fund constitutes delivery. ### Paragraph 3 — Interest - The Fund shall pay interest on Notes at a rate equal to the combined market interest rate computed by the Fund from time to time for determining the rate at which it pays interest on holdings of special drawing rights or any such higher rate as may be agreed between the Fund and participants representing 85 percent of the total credit arrangements under the NAB Decision. - Interest shall accrue daily and shall be paid as soon as possible after each July 31, October 31, January 31, and April 30. - Interest due to a holder shall be paid, as determined by the Fund in consultation with the holder, in special drawing rights, in the holder’s currency if the holder is a member, in the currency borrowed, in freely usable currencies, or, with the agreement of the holder, in other currencies that are actually convertible. ### Paragraph 4 — Maturity; Repayment by the Fund - Notes shall have a maturity of ten years, provided that a Note issued pursuant to paragraph 13(k) of the NAB Decision shall have the maturity of the loan claim for which it was exchanged. - Repayment of the Note principal to a holder is made in accordance with paragraph 11 of the NAB Decision. - The Fund shall be deemed to have discharged its repayment or interest obligations in SDRs if it transfers an equivalent amount in SDRs to the account of the member in which the institution is established, unless otherwise agreed with specified holders. - The Fund will cancel a Note (i) upon payment of the principal amount and all accrued interest, (ii) if transferred under paragraph 6, or (iii) if exchanged for a loan claim pursuant to paragraph 13(k) of the NAB Decision. If early payment is made for less than principal, the Fund will cancel and reissue a Note for the remainder. - Registered Notes to be cancelled and not in the Fund’s custody shall be surrendered by the holder for cancellation. ### Paragraph 5 — Rates of Exchange - The value of a currency in terms of the special drawing right shall be calculated by the Fund in accordance with Rule O-2 of the Fund’s Rules and Regulations. ### Paragraph 6 — Transferability of Notes - A holder may not transfer Notes except (i) in accordance with paragraph 6 or (ii) with prior consent of the Fund on approved terms; any other purported transfer is of no force or effect. - Notes may be transferred at any time to a participant or to a non-participant that is either (i) a member of the Fund, (ii) the central bank or other fiscal agency designated by any member for Article V, Section 1 purposes (“other fiscal agency”), or (iii) an official entity prescribed as a holder of SDRs pursuant to Article XVII, Section 3. - As from the value date of transfer, the Note shall be held by the transferee on the same terms as Notes originating under its credit arrangement (for transferee participants) or as held by the transferor (for transferee non-participants), except: - (i) transferee’s right to request early repayment on balance of payments grounds pursuant to paragraph 11(e) of the NAB Decision applies only if the transferee is a member (or institution of a member) whose balance of payments and reserve position is sufficiently strong for its currency to be usable under the Fund's financial transactions plan, or, in the case of the HKMA, if the Fund judges Hong Kong’s balance of payments position sufficiently strong; - (ii) for transferees that are non-participants, references in paragraph 11 to the participant’s currency shall refer to (A) the transferee’s currency if the transferee is a member, (B) the member’s currency if the transferee is an institution of a member, or (C) a freely usable currency as determined by the Fund in other cases; - (iii) Notes transferred shall be considered drawn balances of the first transferor participant for purposes of determining the available commitment under its credit arrangement; Notes obtained by a transferee participant shall not be considered drawn balances of such participant for determining its available commitment. - The price for a transferred Note shall be as agreed between transferee and transferor. - The transferor must inform the Fund promptly of the Note transferred, name of transferee, amount transferred, agreed price, and value date. - Transfers must be registered by the Fund; upon registration the transfer is effective as of the agreed value date. - The transferee may request exchange of the Note for a loan claim pursuant to paragraph 13(k) of the NAB Decision at time of transfer. - Notice to or by a non-participant transferee shall be given to or by the fiscal agency designated by the transferee if the transferee is a member, or to or by the transferee itself if not a member. - If transfer occurs during a quarterly interest period, the Fund shall pay interest to the transferee on the relevant interest payment date on the amount transferred for the whole of that period. - The Fund shall assist in seeking to arrange transfers if requested. - For transfers, the Fund will cancel the transferred Note and, if registered, the transferor must surrender for cancellation any such registered Note not already in the Fund’s custody; the Fund will issue a new Note in the name of the transferee for the principal amount transferred and, where appropriate, a new Note to the transferor for any retained principal. Issue date and maturity date of new Notes match the cancelled Note. - Derivative transactions in respect of any Note, and transfers of participation interests in any Note, are prohibited. ### Paragraph 7 — Notices - Notice to or by a holder who is a participating member shall be in writing or by rapid means to the fiscal agency designated under Article V, Section 1 and Rule G-1. - Notice to or by a holder who is a participating institution shall be in writing or by rapid means to the participating institution. ### Paragraph 8 — Interpretation - Any question of interpretation not within Article XXIX shall be settled to the mutual satisfaction of the Fund, the holder raising the question, and all participants in the NAB. - For this paragraph, “holder” includes former participants to which specified NAB Decision paragraphs continue to apply pursuant to paragraph 19(c) of the NAB Decision insofar as they are affected. ### Paragraph 9 — NAB Decision and Changes in the General Terms and Conditions - Notes and claims thereunder are subject to the NAB Decision as in effect from time to time. - Amendments to these General Terms and Conditions adopted in accordance with paragraph 8(a) of the NAB Decision shall apply to all outstanding Notes issued under the NAB Decision. *Source: ppea2020006 - Annex I* --- _Source: https://www.imf.org/-/media/files/publications/pp/2020/english/ppea2020006.pdf_