## STREAMLINING PROCEDURES FOR BOARD CONSIDERATION OF THE FUND’S EMERGENCY FINANCING DURING EXCEPTIONAL CIRCUMSTANCES INVOLVING A PANDEMIC ## Source details **Canonical URL:** [STREAMLINING PROCEDURES FOR BOARD CONSIDERATION OF THE FUND’S EMERGENCY FINANCING DURING EXCEPTIONAL CIRCUMSTANCES INVOLVING A PANDEMIC](https://www.imf.org/-/media/files/publications/pp/2020/english/ppea2020019.pdf) ## Other formats - [Markdown version](/-/media/files/publications/pp/2020/english/ppea2020019.pdf.md) - [Structured JSON version](/-/media/files/publications/pp/2020/english/ppea2020019.pdf.json) --- ### Executive summary and context - The COVID-19 pandemic has inflicted an unprecedented shock on the global economy and created an enormous demand for Fund resources. - Around 80 emerging markets and developing countries are expected to request significant amounts of Fund assistance in multiples of what has been disbursed under the Fund’s emergency facilities, the Rapid Credit Facility (RCF) and Rapid Financing Instrument (RFI), during a normal period. - On average, the lag between a shock affecting a member and a related Fund disbursement under the RCF and RFI is between three and four months, with the fastest disbursement (Mozambique 2019) taking over three weeks. - Purpose: create “pandemic emergency procedures” to streamline Board consideration and approval of certain new emergency financing requests, program reviews and changes in access in existing arrangements, and requests for assistance under the Catastrophe Containment and Relief Trust (CCRT), by shortening the circulation period for Board documents and streamlining internal and external processing. ### Proposed Board circulation and decision procedures - Shortened minimum circulation period: - Adopt a four business-day review period after document circulation to the Executive Board for: - RCF and RFI requests; - Stand-alone requests for assistance under the CCRT; - Requests for completion of program reviews and changes in access (used only when completion and financing are key to external support to contain the pandemic). - Planned Board date for consideration to be announced at least 6 business days ahead of time. - Longer circulation periods would be provided where internal review identifies complications and additional evaluation time is required. - For other financing requests, current rules continue to apply—including option for Directors representing the country to request a waiver of the minimum circulation period for UFR cases. - Chair’s summing up and gray statements: - Chair’s summing up will be relatively short and focused on a few key issues. - Gray statements are expected to be considerably shorter. - Clustered or synchronized Board consideration: - Management will explore synchronized or clustered Board consideration of broadly similar financing requests to exploit synergies, efficiency gains, and minimize first-mover stigma concerns. - Each country’s financing request would continue to be accompanied by a staff assessment and individual Board decision. ### Article IV consultations under the pandemic procedures - A four business-day circulation period proposed for Article IV consultations associated with FCL and Precautionary and Liquidity Line (PLL) requests or reviews to integrate the Board’s most recent assessment of the member’s policies into FCL/PLL qualification and review decisions. - The Managing Director has proposed temporarily postponing most bilateral surveillance under Article IV during the present pandemic, but some cases will require Article IV conclusions for FCL/PLL matters. ### Ring-fencing, activation, and sunset provisions - Ring-fencing the procedures: - The Board would establish standing “pandemic emergency procedures” to be activated by the Board when the Managing Director, informed by the World Health Organization’s assessment, determines that a life-threatening global pandemic is inflicting severe economic disruption across the Fund’s membership. - The framework would limit application of these exceptional procedures to a three-month period from the Board’s decision to implement the procedures. - At the end of the three-month period, the Board may renew or discontinue the procedures. - The Executive Board may terminate the procedures before the end of the three-month period if global conditions no longer warrant their application, provided discontinuation will not apply to Board consideration of requests already issued under these procedures. - Immediate activation: - In light of the COVID-19 pandemic, the Managing Director proposes that the Board immediately activate the Pandemic Emergency Procedures concurrently with approval of the framework. - Staff will keep the Board apprised of upcoming requests under the pandemic emergency procedure. ### Management and staff streamlining measures (internal procedures) - Shorter documentation and templates: - Policy notes (PNs) and staff reports for emergency financing requests have been considerably shortened. - Staff may use a shortened PN or, in lieu of a PN, a draft staff report and letter of intent (LOI) with a one-page cover note. - Documents will be modified at the staff report stage to reflect discussions with the authorities and recent developments. - Staff are developing templates for standard elements in the PN, staff report and LOI, and optional use of a single central “top-down” shock scenario, which can be tailored to country circumstances. - Reduced internal review timelines: - Normal 3-day departmental review period for PNs and staff reports shortened to 2 days. - Management review of PNs reduced from 3 days to 12 hours and conducted on a lapse of time basis, unless complications warrant further consultations. - Staff reports and LOIs will be cleared by management within 24 hours. ### Creditor-support and financial-transaction facilitation measures - Advance notification and flexibility under Financial Transactions Plan (FTP), PRGT agreements and VTAs: - Temporarily adjust advance notification to participants under the FTP, and the PRGT borrowing/note purchase agreements from the current five-seven business days to no later than five business days ahead of the value date. - It is possible that advance notice could be reduced to three business days in the event of delay of issuance of a Board paper for Board approval. - Seek maximum flexibility from participants in the Voluntary Trading Arrangements (VTAs) to meet members’ COVID-19-related emergency requests. - Rebalancing of creditor positions: - Give lower priority to maintaining balanced positions and burden sharing across creditor members during immediate emergency financing, using existing flexibility to simplify financing of individual transactions and facilitate rapid financing. - Staff will monitor developments and explore balancing positions over time through repurchases and successive disbursements where feasible without causing delays. - Multiple purchases and bundled transfers: - Disbursing multiple transactions on the same day may be necessary; this could be facilitated by simplifying individual transactions and seeking creditor support for “bundled purchases” to allocate transfers to as few participants as possible and ask creditors to transfer funds to multiple borrowing members on the same day. - Ensuring adequate resources: - Staff plans to propose an augmentation and possible extension of the current FTP in the very short term. - If necessary, staff would propose activation of the NAB, issue a Resource Mobilization Plan (RMP) and revised FTP with an accelerated timeline, and invoke emergency provisions for reduced advance notification for draws. - For PRGT loan resources, staff plans to continue drawing down old PRGT agreements to the extent possible, and if needed use flexibility in the PRGT Trust to begin drawing down newer agreements. ### Existing expedited mechanisms (contextual reference) - Emergency Financing Mechanism (EFM): - Enables Board consideration within 48-72 hours once the staff report has been circulated; used in past crises. - EFM includes additional safeguards and is intended for circumstances representing or threatening a crisis in a member’s external accounts requiring immediate Fund response. - FCL expedited procedures: - EFM procedures do not apply to FCL requests. The FCL Decision sets out FCL-specific expedited procedures for qualification and access determination when a crisis is imminent or to avoid protracted uncertainty when fragile financial conditions exist. ### Board timing for consideration of emergency requests - A formal Board meeting could consider the member’s request within 48 to 72 hours following the circulation of the staff reports to the Board (FCL decision, paragraph 6(a)(v)). - The Emergency Financing Mechanism carries expectations of use of prior actions and an understanding that the member would make early repurchase if it overcame its crisis quickly. ### Proposed decisions — overview - The draft decisions may be adopted by a majority of the votes cast. - Two decisions are proposed for adoption by the Executive Board: - Decision A: Pandemic Emergency Procedures - Decision B: Activation ### Decision A: Pandemic Emergency Procedures — operational features - Activation trigger: - The Managing Director, informed by the World Health Organization’s assessment, determines that a life-threatening global pandemic is inflicting severe economic disruption across the Fund’s membership. - Scope and expedited treatment: - For a period of three months from the Executive Board’s approval, the Executive Board will generally be prepared to consider, in cases of urgent actual balance of payments need, requests for approval of purchases or disbursements under the Rapid Financing Instrument and/or the Rapid Credit Facility, respectively, program reviews and requests for changes in access in existing arrangements, and requests for assistance under the Catastrophe Containment and Relief Trust (CCRT) within 4 business days after the circulation of the relevant documentation to the Executive Board. - The same circulation period will apply for Article IV consultations where the use of Fund resources under a Flexible Credit Line arrangement or Precautionary and Liquidity Line arrangement is under discussion or anticipated. - Administrative flexibility: - In such cases, the standard minimum circulation periods for such documentation shall not apply. - Renewal and termination: - Renewal: Prior to the end of the three-month period from the date of the Executive Board’s activation decision pursuant to paragraph 1 above, the Executive Board shall determine whether to renew their application for an additional period of up to three months or to discontinue them, provided that any discontinuation will not apply to the Board’s consideration of requests issued to the Executive Board pursuant to these procedures prior to such discontinuation. - Early termination: At any time, the Executive Board may decide that conditions no longer warrant the use of these procedures and terminate their application, provided that any termination will not apply to the Board’s consideration of requests issued to the Executive Board pursuant to these procedures prior to such discontinuation. ### Decision B: Activation (COVID-19 specific) - The Executive Board decides, in light of the COVID-19 pandemic, to activate the Pandemic Emergency Procedures pursuant to Decision A, for three months from the date of this decision. *International Monetary Fund. April 9, 2020. Source: ppea2020019 - Section 2* ### Section 1 ### STREAMLINING PROCEDURES FOR BOARD CONSIDERATION OF THE FUND’S EMERGENCY FINANCING DURING EXCEPTIONAL CIRCUMSTANCES INVOLVING A PANDEMIC ### Executive summary and context - The COVID-19 pandemic has inflicted an unprecedented shock on the global economy and created an enormous demand for Fund resources. - Around 80 emerging markets and developing countries are expected to request significant amounts of Fund assistance in multiples of what has been disbursed under the Fund’s emergency facilities, the Rapid Credit Facility (RCF) and Rapid Financing Instrument (RFI), during a normal period. - On average, the lag between a shock affecting a member and a related Fund disbursement under the RCF and RFI is between three and four months, with the fastest disbursement (Mozambique 2019) taking over three weeks. - Purpose: create “pandemic emergency procedures” to streamline Board consideration and approval of certain new emergency financing requests, program reviews and changes in access in existing arrangements, and requests for assistance under the Catastrophe Containment and Relief Trust (CCRT), by shortening the circulation period for Board documents and streamlining internal and external processing. ### Proposed Board circulation and decision procedures - Shortened minimum circulation period: - Adopt a four business-day review period after document circulation to the Executive Board for: - RCF and RFI requests; - Stand-alone requests for assistance under the CCRT; - Requests for completion of program reviews and changes in access (used only when completion and financing are key to external support to contain the pandemic). - Planned Board date for consideration to be announced at least 6 business days ahead of time. - Longer circulation periods would be provided where internal review identifies complications and additional evaluation time is required. - For other financing requests, current rules continue to apply—including option for Directors representing the country to request a waiver of the minimum circulation period for UFR cases. - Chair’s summing up and gray statements: - Chair’s summing up will be relatively short and focused on a few key issues. - Gray statements are expected to be considerably shorter. - Clustered or synchronized Board consideration: - Management will explore synchronized or clustered Board consideration of broadly similar financing requests to exploit synergies, efficiency gains, and minimize first-mover stigma concerns. - Each country’s financing request would continue to be accompanied by a staff assessment and individual Board decision. ### Article IV consultations under the pandemic procedures - A four business-day circulation period proposed for Article IV consultations associated with FCL and Precautionary and Liquidity Line (PLL) requests or reviews to integrate the Board’s most recent assessment of the member’s policies into FCL/PLL qualification and review decisions. - The Managing Director has proposed temporarily postponing most bilateral surveillance under Article IV during the present pandemic, but some cases will require Article IV conclusions for FCL/PLL matters. ### Ring-fencing, activation, and sunset provisions - Ring-fencing the procedures: - The Board would establish standing “pandemic emergency procedures” to be activated by the Board when the Managing Director, informed by the World Health Organization’s assessment, determines that a life-threatening global pandemic is inflicting severe economic disruption across the Fund’s membership. - The framework would limit application of these exceptional procedures to a three-month period from the Board’s decision to implement the procedures. - At the end of the three-month period, the Board may renew or discontinue the procedures. - The Executive Board may terminate the procedures before the end of the three-month period if global conditions no longer warrant their application, provided discontinuation will not apply to Board consideration of requests already issued under these procedures. - Immediate activation: - In light of the COVID-19 pandemic, the Managing Director proposes that the Board immediately activate the Pandemic Emergency Procedures concurrently with approval of the framework. - Staff will keep the Board apprised of upcoming requests under the pandemic emergency procedure. ### Management and staff streamlining measures (internal procedures) - Shorter documentation and templates: - Policy notes (PNs) and staff reports for emergency financing requests have been considerably shortened. - Staff may use a shortened PN or, in lieu of a PN, a draft staff report and letter of intent (LOI) with a one-page cover note. - Documents will be modified at the staff report stage to reflect discussions with the authorities and recent developments. - Staff are developing templates for standard elements in the PN, staff report and LOI, and optional use of a single central “top-down” shock scenario, which can be tailored to country circumstances. - Reduced internal review timelines: - Normal 3-day departmental review period for PNs and staff reports shortened to 2 days. - Management review of PNs reduced from 3 days to 12 hours and conducted on a lapse of time basis, unless complications warrant further consultations. - Staff reports and LOIs will be cleared by management within 24 hours. ### Creditor-support and financial-transaction facilitation measures - Advance notification and flexibility under Financial Transactions Plan (FTP), PRGT agreements and VTAs: - Temporarily adjust advance notification to participants under the FTP, and the PRGT borrowing/note purchase agreements from the current five-seven business days to no later than five business days ahead of the value date. - It is possible that advance notice could be reduced to three business days in the event of delay of issuance of a Board paper for Board approval. - Seek maximum flexibility from participants in the Voluntary Trading Arrangements (VTAs) to meet members’ COVID-19-related emergency requests. - Rebalancing of creditor positions: - Give lower priority to maintaining balanced positions and burden sharing across creditor members during immediate emergency financing, using existing flexibility to simplify financing of individual transactions and facilitate rapid financing. - Staff will monitor developments and explore balancing positions over time through repurchases and successive disbursements where feasible without causing delays. - Multiple purchases and bundled transfers: - Disbursing multiple transactions on the same day may be necessary; this could be facilitated by simplifying individual transactions and seeking creditor support for “bundled purchases” to allocate transfers to as few participants as possible and ask creditors to transfer funds to multiple borrowing members on the same day. - Ensuring adequate resources: - Staff plans to propose an augmentation and possible extension of the current FTP in the very short term. - If necessary, staff would propose activation of the NAB, issue a Resource Mobilization Plan (RMP) and revised FTP with an accelerated timeline, and invoke emergency provisions for reduced advance notification for draws. - For PRGT loan resources, staff plans to continue drawing down old PRGT agreements to the extent possible, and if needed use flexibility in the PRGT Trust to begin drawing down newer agreements. ### Existing expedited mechanisms (contextual reference) - Emergency Financing Mechanism (EFM): - Enables Board consideration within 48-72 hours once the staff report has been circulated; used in past crises. - EFM includes additional safeguards and is intended for circumstances representing or threatening a crisis in a member’s external accounts requiring immediate Fund response. - FCL expedited procedures: - EFM procedures do not apply to FCL requests. The FCL Decision sets out FCL-specific expedited procedures for qualification and access determination when a crisis is imminent or to avoid protracted uncertainty when fragile financial conditions exist. *International Monetary Fund. April 9, 2020.* ### Section 2 ### ppea2020019 - Section 2 ### Board timing for consideration of emergency requests - A formal Board meeting could consider the member’s request within 48 to 72 hours following the circulation of the staff reports to the Board (FCL decision, paragraph 6(a)(v)). - The Emergency Financing Mechanism carries expectations of use of prior actions and an understanding that the member would make early repurchase if it overcame its crisis quickly. ### Proposed decisions — overview - The draft decisions may be adopted by a majority of the votes cast. - Two decisions are proposed for adoption by the Executive Board: - Decision A: Pandemic Emergency Procedures - Decision B: Activation ### Decision A: Pandemic Emergency Procedures — operational features - Activation trigger: - The Managing Director, informed by the World Health Organization’s assessment, determines that a life-threatening global pandemic is inflicting severe economic disruption across the Fund’s membership. - Scope and expedited treatment: - For a period of three months from the Executive Board’s approval, the Executive Board will generally be prepared to consider, in cases of urgent actual balance of payments need, requests for approval of purchases or disbursements under the Rapid Financing Instrument and/or the Rapid Credit Facility, respectively, program reviews and requests for changes in access in existing arrangements, and requests for assistance under the Catastrophe Containment and Relief Trust (CCRT) within 4 business days after the circulation of the relevant documentation to the Executive Board. - The same circulation period will apply for Article IV consultations where the use of Fund resources under a Flexible Credit Line arrangement or Precautionary and Liquidity Line arrangement is under discussion or anticipated. - Administrative flexibility: - In such cases, the standard minimum circulation periods for such documentation shall not apply. - Renewal and termination: - Renewal: Prior to the end of the three-month period from the date of the Executive Board’s activation decision pursuant to paragraph 1 above, the Executive Board shall determine whether to renew their application for an additional period of up to three months or to discontinue them, provided that any discontinuation will not apply to the Board’s consideration of requests issued to the Executive Board pursuant to these procedures prior to such discontinuation. - Early termination: At any time, the Executive Board may decide that conditions no longer warrant the use of these procedures and terminate their application, provided that any termination will not apply to the Board’s consideration of requests issued to the Executive Board pursuant to these procedures prior to such discontinuation. ### Decision B: Activation (COVID-19 specific) - The Executive Board decides, in light of the COVID-19 pandemic, to activate the Pandemic Emergency Procedures pursuant to Decision A, for three months from the date of this decision. *Source: ppea2020019 - Section 2* --- _Source: https://www.imf.org/-/media/files/publications/pp/2020/english/ppea2020019.pdf_