## ppea2020025 ## Source details **Canonical URL:** [ppea2020025](https://www.imf.org/-/media/files/publications/pp/2020/english/ppea2020025.pdf) ## Other formats - [Markdown version](/-/media/files/publications/pp/2020/english/ppea2020025.pdf.md) - [Structured JSON version](/-/media/files/publications/pp/2020/english/ppea2020025.pdf.json) --- ### Introduction and Rationale - The COVID-19 pandemic has created severe disruption in the global financial system, with many emerging market and developing countries (EMDCs) facing liquidity shortages and sizable demands for U.S. dollar liquidity. - Staff revisited the 2017 blueprint for a Short-term Liquidity Swap (SLS) and proposes a Short-term Liquidity Line (SLL) as a special facility in the General Resources Account (GRA), based on the key features of the 2017 blueprint. - The SLL will provide predictable liquidity support to members with very strong policies to address potential short-term moderate balance of payments (BoP) needs, reflecting capital account pressures arising from external developments. ### Key Features and Design - Objective: Provide “swap-like” liquidity support to very strong members for special BoP needs. - BoP need targeted: Potential moderate short-term BoP difficulties reflected in pressure on the capital account and the member’s reserves resulting from volatility in international capital markets. - Qualification: Based on an assessment of: - Very strong fundamentals and institutional policy frameworks - Very strong policies: in the past, currently, and commitment to maintaining them - Repurchase period: 12 months - Access: - Up to 145 percent of quota; revolving access - Revolving access of up to 145 percent of quota is likely to provide cover against most repeated moderate shocks. - Duration of arrangement: 12 months - Charges and fees: - Nonrefundable commitment fee (8bps) - Service charge (21 bps) - Normal rate of charge - Normal schedule for level-based surcharges - SLL does not count towards time-based surcharges - Activation: - Board approves the “extension of an offer,” and the arrangement enters into effect upon the Fund confirming receipt of the signed written communication from the member, including the acceptance of the “offer” and policy commitments; no prior informal Board meeting required. - Signatory: Given the more limited anticipated adjustment (if needed), sole central bank signatory of the written communication possible in certain cases. - Ex-post conditionality: None - Reviews: None - Successor arrangements: No restrictions, upon Board assessment of continued qualification and existence of special potential BoP need; exit expected as global risk declines. ### Comparison with the Flexible Credit Line (FCL) — Selected Contrasts - FCL objective: Allow very strong members to deal with any type of BoP needs. - FCL repurchase period: 3¼–5 years - FCL access: No access limit - FCL duration of arrangement: 1 or 2 years - FCL charges and fees (normal under credit tranches): - Normal schedule for commitment fees that are refundable on drawings (15 bps up to 115 percent of quota, 30 bps from 115 to 575, and 60 bps above 575) - Normal service charge (50 bps) - Normal rate of charge - Normal surcharge schedule - FCL activation: Upon Board approval of the request for the arrangement; prior informal Board meeting required - FCL signatory: Both the central bank and the government generally sign the written communication - FCL reviews: Annual review to assess qualification for two-year arrangements ### SLL Process (Operational Steps) - Initial confidential consultation: Staff discusses interest and likelihood of meeting qualification criteria; expression of interest can be informal and confidential. - Assessment of qualification: Staff conducts preliminary assessment and estimates potential access; management assesses appropriateness of access and makes clear the Board is final decision-maker on qualification and access. - Preparation of the Board paper: Staff report includes assessment of qualification, potential BoP need, appropriateness of access, and repayment capacity. - Formal Board meeting to consider conditional approval: Board approves extension of an “offer” with specified access level; offer is contingent on the member’s written acceptance within a specified period. - Extension of an “offer”: The Board’s conditional approval is communicated no later than the end of the business day following the Board meeting; authorities required to respond within two weeks from the date of the conditional approval. - Entry into effect: Arrangement becomes effective once the Fund confirms receipt of the member’s signed written communication accepting the offer and policy commitments. Staff will issue the communication to the Board for information. - Press release and publication: Press release published on date arrangement enters into effect; staff report, including authorities’ written communication, published shortly afterwards. - Purchases: One or multiple purchases allowed during the period subject to approved access; drawings must be commensurate with actual BoP need at time of purchase. - Transition between FCL and SLL: Requires cancelling the existing arrangement and requesting a new arrangement; process not automatic though qualification criteria are aligned and transition could be expedited. - Confidentiality: Process is strictly confidential; qualification assessment made public only for countries that meet the criteria and decide to avail themselves of the arrangement. ### Directors’ Views, Liquidity, and Governance Considerations - Directors considered that revolving access of up to 145 percent of quota should provide cover against most repeated moderate shocks that the SLL is designed to address. - Directors noted that availability of successor arrangements, subject to continued qualification and the presence of the special BoP need, would ensure that the SLL is a reliable backstop. - Directors noted alignment of the SLL qualification bar with the FCL would facilitate transition from the FCL to the relatively lower access of the SLL, allowing more efficient allocation of Fund resources. - A few Directors would have preferred a lower qualification bar and/or higher access. - Directors generally supported innovative features designed to minimize perceived stigma, including Board approval of an arrangement conditional on the member availing itself of the arrangement. - Directors recognized the possibility of a Central Bank sole signatory, provided certain requirements are met, consistent with Fund standards for the signatory of letters of intent or written communications. - A few Directors noted that signatures from both the Ministry of Finance and the Central Bank would increase the credibility of the policy commitment. - Directors emphasized the need for careful communication in cases where a member ceases to qualify for an SLL arrangement. ### Resource Implications and Risks - Staff’s assessment: SLL usage is likely to have a limited impact on the Fund’s liquidity position. - Directors’ concerns: - Pointed to second-round effects should countries draw on the SLL and no longer participate in the Financial Transactions Plan and/or the New Arrangements to Borrow (NAB). - A few Directors noted the possibility that the SLL could tie up Fund resources for an extended period. - Recognized that potential demand for the SLL combined with other Covid-19 related demand for Fund resources could quickly reduce Fund liquidity to levels that would warrant an activation of the NAB. - Given uncertainty, Directors called for closely monitoring the Fund’s liquidity position. - Directors took note of empirical evidence in Figure 1 showing large portfolio outflows: for Iceland, the largest 3-month outflow was 1,176 percent of quota and the 5th percentile was 529 percent of quota. ### Duration, Review, and Next Steps - Directors supported creation of the SLL for a period of 7 years, with an expectation that, by end-2025, the Executive Board will decide whether to extend the facility beyond the 7-year period. - The compromise approach aims to balance concerns about the innovative nature of the SLL and potential impact on Fund resources. - Directors looked forward to reviewing initial experience with the SLL as part of the next review of the Fund’s FCL and Precautionary and Liquidity Line in 2022. - If adopted, the proposed decision would establish the SLL and make necessary changes to ancillary Fund policies to implement the proposed features. *Prepared by the Finance, Legal, and Strategy, Policy and Review Departments; team led by Petya Koeva Brooks, Thomas Krueger, and Yan Liu.* ### Review schedule and governance - The SLL will be reviewed in 2022 as part of the regular review of the FCL and PLL; the review will assess the experience under the SLL, including its purpose, fit within the toolkit, design, and impact on Fund resources. - A Board decision, adopted by a majority of votes cast, would be required to complete the 2022 review. - Staff proposes an additional Executive Board review after five years from establishment; continuation of the facility at that review would require an 85% majority of total voting power. - If the Board decides not to keep the facility at the 5-year review, staff proposes the facility will expire 7 years from establishment. - The Executive Board may abolish the SLL at any time by a simple majority of votes cast. ### Signature of Letters of Intent (LOI) and written communications - Fund standard: any LOI or written communication must meet two requirements: - Must be signed by the agency with domestic legal authority to enter into financial obligations on behalf of the member. - Must be signed by those agencies responsible for implementing the policy commitments set forth in the LOI or written communication. - In practice, signatories are generally the Ministry of Finance and the Central Bank. - A Central Bank may sign on behalf of the member for an SLL arrangement if: - The Central Bank has domestic legal authority to bind the member to the financial obligations to the Fund, including payment of the commitment fee. - The Central Bank has exclusive responsibility for implementing all actions necessary to address the BoP need of the moderate nature the SLL is designed to address (i.e., adjustment of a monetary and exchange rate nature). - The Central Bank can communicate, on behalf of the government, its commitment to maintaining very strong policies that fall outside the Central Bank’s remit (including fiscal policies). - If these conditions are not satisfied, a representative of the government (i.e., the Ministry of Finance) must also sign. - Regardless of signatory, the member (not an individual agency) is the counterpart obliged to repay the Fund; financial transactions are made through the designated fiscal agent. - LOIs under other Fund arrangements are expected to continue to be signed generally by both the Ministry of Finance and the Central Bank. ### Preliminary resource estimates and qualification assumptions - Staff’s preliminary estimate: potential commitments under the SLL could amount to about SDR 40 billion. - For resource-needs assessment staff: - Used a tentative list of potential qualifiers based on the June 2017 qualification framework. - Assumed members that opt in receive maximum access under the facility of 145 percent of quota. - Assumed arrangements are fully scored against the Fund’s forward commitment capacity (FCC). - In practice, access under individual SLL arrangements will be tailored to potential BoP needs. ### Scenario findings and key statistics (Table 2 summary) - Scenario A: - SLL: 38 (Billions of SDR) - FCL: 52 (Billions of SDR) - Total: 90 (Billions of SDR) - Net impact on FCC: -38 (Billions of SDR) - Maximum second round effects: -16 (Billions of SDR) - Commitments: -9 (Billions of SDR) - Scenario B: - SLL: 54 (Billions of SDR) - FCL: 0 (Billions of SDR) - Total: 54 (Billions of SDR) - Net impact on FCC: -1 (Billions of SDR) - Maximum second round effects: -25 (Billions of SDR) - Commitments: 0 (Billions of SDR) - Note: Scenarios assume maximum commitment of 145 percent and that all members with an SLL are participating in the FTP; maximum second-round effects assume all members with an SLL or an FCL draw simultaneously. ### Liquidity, FCC, and NAB implications - The Fund’s FCC currently stands at SDR 198 billion (or USD 277 billion). - FCC currently includes quota resources of FTP members only (NAB and bilateral borrowings are not activated). - Staff estimates near-term potential demand for GRA resources from emergency financing under the Rapid Financing Instrument (RFI) and comparable augmentations could increase to up to a total of some SDR 60 billion (some USD 82 billion). - Example supply effect: under a near-term potential RFI-related demand scenario of SDR 60 billion, the supply effect alone would reduce the FCC by up to SDR 27 billion and reduce the FCC, ceteris paribus, to some SDR 110 billion. - Activation of current NAB resources would increase the Fund’s FCC by up to SDR 134 billion, taking into account the prudential buffer and that SDR 9 billion of credit outstanding was financed by earlier NAB drawings, and assuming all participants are available for calls on NAB resources. - Staff will closely monitor Fund liquidity and keep the Board updated; may propose NAB activation if demand for Fund resources likely requires it. ### Risks and risk mitigation - Credit risk mitigants: - High qualification standards under the SLL. - Low access and limited duration of the arrangement. - Short repurchase period. - Fund’s broader risk management policies. - Surveillance mitigant: retention of a 12-month Article IV consultation cycle for relevant countries. - Renewal clause mitigates strategic and reputational risks of undermining the facility from the outset or surprising users with an abrupt exit. - Fees (surcharges, service charges, commitment fees) designed to manage risks to Fund income. - Change management risks (skills, application, review) acknowledged; similar risks have been managed by the Fund previously. - Residual risks are considered significantly outweighed by risks of not filling the toolkit gap; however: - Deterioration in a member’s fundamentals or policies during an arrangement would raise enterprise risks including credit risk. - Failure to re-qualify at renewal could present reputational and strategic risks. - The possibility of renewal for as long as members continue to qualify raises the possibility that Fund resources are tied up for an extended period, posing risks to the revolving nature of Fund resources. - The relatively low access of the SLL, its role as a vehicle for exiting de facto high-access FCL, and strategic benefits could offset these risks and lead to more efficient allocation of Fund resources. - The absence of an outstanding-commitments-triggered review clause tied to SDR 150 billion is unlikely to increase risks given increased Board monitoring and the scheduled 2022 precautionary toolkit review. ### Proposed Decision: Overview and Voting Thresholds - Adoption threshold: an eighty-five percent majority of the total voting power is required because the Proposed Decision: (i) establishes a special repurchase period for the SLL (12 months); and (ii) causes SLL purchases to be excluded from the reserve tranche definition (members maintain a reserve tranche position despite making SLL purchases) (Article V, Section 7(d) and Article XXX(c)(iii)). - The Proposed Decision consolidates all policy changes necessary to establish the SLL into a single decision; where different voting majorities would otherwise apply, the highest voting majority applies. - Proposed establishment period: SLL to be established for a period of seven years; by end-2025 the Executive Board is expected to decide whether to extend the facility beyond the seven-year period. An extension would require an eighty-five percent majority of the total voting power. - Review: a review of the SLL, alongside the FCL and PLL, is proposed within two years. ### Proposed Decision: Section Highlights (A–G) - Section A — Establishment of the SLL: - Purpose: short-term potential BoP difficulties from capital account pressure and international capital market volatility; limited in scale and requiring at most fine-tuning of monetary and exchange rate policies. - Qualification criteria: same as FCL (very strong fundamentals, sustained track record of very strong policies, commitment to maintain them) with detailed relevant criteria listed verbatim in the source. - Conditional approval and monitoring: approved upon informal expression of interest; no performance criteria or ex-post program monitoring; member must submit written communication no later than two weeks after conditional approval; audit and financial statement access requirements specified. - Access and revolving nature: approved access up to 145 percent of quota (cumulative); no phasing; purchases up to approved access; Fund shall not challenge a member’s representation of need for a purchase. - Term and repurchase obligation: arrangements approved for 12 months; repurchases due no later than 12 months after date of purchase; arrangement expires on earlier of expiration or cancellation. - Emergency Financing Mechanism procedures (BUFF/95/102, 9/21/1995) do not apply. - Waiver: Fund prepared to grant waiver of 200 percent of quota limitation in Article V, Section 3(b)(iii) when necessary to permit purchases under this Decision. - Section B — Access Policy: - SLL access carved out from overall GRA access limits; defined as a limit on stock of Fund credit committed or outstanding (up to 145 percent of quota). - Outstanding SLL amounts count towards access limits when member requests access under another facility. - Section C — Article IV Consultation Cycle: - Members with an SLL arrangement must remain or be placed on the 12-month Article IV consultation cycle. - Specific timing and grace-period rules apply; default 12-month cycle for FCL, PLL, or SLL. - Section D — Transparency Policy: - Publication timing and consent adapted: conditional Board approval unique; arrangement becomes effective only when member provides written communication consenting to publication at that time. - Staff report and authorities’ written communication expected to be published by the Fund no later than fourteen calendar days after the member’s SLL arrangement becomes effective. - Section E — Allocation of Repurchases: - Repurchases under the SLL applied first to the longest outstanding purchase (first out, first in). - Section F — Surcharges: - Level-based surcharge policy amended to include outstanding purchases under the SLL. - Fund holdings over 187.5 percent of quota resulting from purchases in the credit tranches, under the SLL and the EFF, subject to surcharge of 200 basis points per annum above basic rate of charge. - Staff view: purchases under the SLL should not be subject to the time-based surcharge because of their short-term repurchase obligation. - Section G — Service Charge and Commitment Fee: - Service charge for purchases under the SLL: 21 basis points (Rule I-1). - Commitment fee for the SLL: 8 basis points on a non-refundable basis (Rule I-8). - Commitment fee mechanics: charged at beginning of each SLL arrangement and not refunded if member makes purchases; pro-rata refund if member cancels before expiry. ### Amendments to Publication and Press Release Procedures - Paragraph 11 amended to require a Press Release containing a Chairman’s statement after an SLL arrangement becomes effective, consistent with other Fund resource decisions. - Executive Director for the member may review Chairman’s statement and propose minor revisions immediately after the Board meeting or, for SLL, immediately after arrangement becomes effective. - New paragraph 13.b.(iii): if, after twenty-eight calendar days from the effective date of an SLL arrangement, the staff report has not been published, a brief factual statement will be issued stating the fact of the effectiveness of an SLL arrangement and clarifying the authorities’ publication intention with respect to the staff report. ### Rules, Charges, and Procedure Amendments (selected exact provisions) - Service charge (Rule I-1): - “The service charge payable by a member buying, in exchange for its own currency, the currency of another member or SDRs from the General Resources Account shall be 0.5 percent for purchases in the credit tranches and under the Extended Fund Facility and 0.21 percent for purchases under the Short-term Liquidity Line. No service charge shall be payable in respect of any purchase to the extent that it is a reserve tranche purchase. The service charge shall be paid at the time the transaction is consummated.” - Rule I-8 (charges on GRA arrangements): - Provisions (a)–(f) apply to GRA arrangements except SLL; provision (g) applies to SLL arrangements. - New I-8(g): “With respect to SLL arrangements, a charge of 8/100 of 1 percent per annum on the total amount of access approved by the Fund for a member under a SLL arrangement shall be payable at the beginning of the arrangement. This charge shall not be refundable against purchases made during the course of the arrangement. If the member notifies the Fund that it wishes to cancel an SLL arrangement, the Fund shall repay to the member a portion of the charge. The portion repaid shall represent the prorated amount of the charge that corresponds to the period remaining unexpired at the date of cancellation. Such repayment shall be made in the media selected by the Fund.” - Access limits and exceptional access criteria (verbatim): - Overall access: Subject to (i) an annual limit of 145 percent of quota; and (ii) a cumulative limit of 435 percent of quota, net of scheduled repurchases; provided that these limits will not apply in cases where a member requests a Flexible Credit Line arrangement in the credit tranches or where a member requests a Short-term Liquidity Line arrangement, although outstanding holdings of a member’s currency arising under such arrangements will be taken into account when applying these limits in cases involving requests for access under other Fund facilities. - Exceptional access approval requires meeting four substantive criteria: (a)–(d) (text retained verbatim in source). ### Article IV Consultation Cycle and Transparency Provisions (selected operational points) - General rule: Article IV consultations in principle will take place annually; standard twelve-month cycle subject to a grace period of 3 months and expected to be completed within 15 months. - Specific placement rules: - Whenever an FCL, or a PLL, or SLL arrangement is approved for a member, that member will automatically be placed on a 12-month consultation cycle. - If, prior to approval, the member was on an extended cycle, the next Article IV consultation is expected to be completed by the later of (i) 6 months after approval, and (ii) 12 months plus a grace period of 3 months after completion of the previous Article IV consultation. - Publication timing: - “Prompt publication” defined as expected publication no later than (a) fourteen calendar days after the Executive Board has considered the document, or (b) twenty-eight calendar days after the document has been issued to the Executive Board, whichever is later. - For SLL: staff report and authorities’ written communication expected to be published by the Fund no later than fourteen calendar days after the member’s SLL arrangement becomes effective; fallback brief factual statement after twenty-eight calendar days if staff report not published. *Source: IMF document ppea2020025 (excerpt).* ### 2017. They considered that the revolving access of up to 145 percent of quota should provide ### A NEW SHORT-TERM LIQUIDITY LINE ### Introduction and Rationale - The COVID-19 pandemic has created severe disruption in the global financial system, with many emerging market and developing countries (EMDCs) facing liquidity shortages and sizable demands for U.S. dollar liquidity. - Staff revisited the 2017 blueprint for a Short-term Liquidity Swap (SLS) and proposes a Short-term Liquidity Line (SLL) as a special facility in the General Resources Account (GRA), based on the key features of the 2017 blueprint. - The SLL will provide predictable liquidity support to members with very strong policies to address potential short-term moderate balance of payments (BoP) needs, reflecting capital account pressures arising from external developments. ### Key Features and Design - Objective: Provide “swap-like” liquidity support to very strong members for special BoP needs. - BoP need targeted: Potential moderate short-term BoP difficulties reflected in pressure on the capital account and the member’s reserves resulting from volatility in international capital markets. - Qualification: Based on an assessment of: - Very strong fundamentals and institutional policy frameworks - Very strong policies: in the past, currently, and commitment to maintaining them - Repurchase period: 12 months - Access: - Up to 145 percent of quota; revolving access - Revolving access of up to 145 percent of quota is likely to provide cover against most repeated moderate shocks. - Duration of arrangement: 12 months - Charges and fees: - Nonrefundable commitment fee (8bps) - Service charge (21 bps) - Normal rate of charge - Normal schedule for level-based surcharges - SLL does not count towards time-based surcharges - Activation: Board approves the “extension of an offer,” and the arrangement enters into effect upon the Fund confirming receipt of the signed written communication from the member, including the acceptance of the “offer” and policy commitments; no prior informal Board meeting required. - Signatory: Given the more limited anticipated adjustment (if needed), sole central bank signatory of the written communication possible in certain cases. - Ex-post conditionality: None - Reviews: None - Successor arrangements: No restrictions, upon Board assessment of continued qualification and existence of special potential BoP need; exit expected as global risk declines. ### Comparison with the Flexible Credit Line (FCL) — Selected Contrasts - FCL objective: Allow very strong members to deal with any type of BoP needs. - FCL repurchase period: 3¼–5 years - FCL access: No access limit - FCL duration of arrangement: 1 or 2 years - FCL charges and fees (normal under credit tranches): - Normal schedule for commitment fees that are refundable on drawings (15 bps up to 115 percent of quota, 30 bps from 115 to 575, and 60 bps above 575) - Normal service charge (50 bps) - Normal rate of charge - Normal surcharge schedule - FCL activation: Upon Board approval of the request for the arrangement; prior informal Board meeting required - FCL signatory: Both the central bank and the government generally sign the written communication - FCL reviews: Annual review to assess qualification for two-year arrangements ### SLL Process (Operational Steps) - Initial confidential consultation: Staff discusses interest and likelihood of meeting qualification criteria; expression of interest can be informal and confidential. - Assessment of qualification: Staff conducts preliminary assessment and estimates potential access; management assesses appropriateness of access and makes clear the Board is final decision-maker on qualification and access. - Preparation of the Board paper: Staff report includes assessment of qualification, potential BoP need, appropriateness of access, and repayment capacity. - Formal Board meeting to consider conditional approval: Board approves extension of an “offer” with specified access level; offer is contingent on the member’s written acceptance within a specified period. - Extension of an “offer”: The Board’s conditional approval is communicated no later than the end of the business day following the Board meeting; authorities required to respond within two weeks from the date of the conditional approval. - Entry into effect: Arrangement becomes effective once the Fund confirms receipt of the member’s signed written communication accepting the offer and policy commitments. Staff will issue the communication to the Board for information. - Press release and publication: Press release published on date arrangement enters into effect; staff report, including authorities’ written communication, published shortly afterwards. - Purchases: One or multiple purchases allowed during the period subject to approved access; drawings must be commensurate with actual BoP need at time of purchase. - Transition between FCL and SLL: Requires cancelling the existing arrangement and requesting a new arrangement; process not automatic though qualification criteria are aligned and transition could be expedited. - Confidentiality: Process is strictly confidential; qualification assessment made public only for countries that meet the criteria and decide to avail themselves of the arrangement. ### Directors’ Views, Liquidity, and Governance Considerations - Directors considered that revolving access of up to 145 percent of quota should provide cover against most repeated moderate shocks that the SLL is designed to address. - Directors noted that availability of successor arrangements, subject to continued qualification and the presence of the special BoP need, would ensure that the SLL is a reliable backstop. - Directors noted alignment of the SLL qualification bar with the FCL would facilitate transition from the FCL to the relatively lower access of the SLL, allowing more efficient allocation of Fund resources. - A few Directors would have preferred a lower qualification bar and/or higher access. - Directors generally supported innovative features designed to minimize perceived stigma, including Board approval of an arrangement conditional on the member availing itself of the arrangement. - Directors recognized the possibility of a Central Bank sole signatory, provided certain requirements are met, consistent with Fund standards for the signatory of letters of intent or written communications. - A few Directors noted that signatures from both the Ministry of Finance and the Central Bank would increase the credibility of the policy commitment. - Directors emphasized the need for careful communication in cases where a member ceases to qualify for an SLL arrangement. ### Resource Implications and Risks - Staff’s assessment: SLL usage is likely to have a limited impact on the Fund’s liquidity position. - Directors’ concerns: - Pointed to second-round effects should countries draw on the SLL and no longer participate in the Financial Transactions Plan and/or the New Arrangements to Borrow (NAB). - A few Directors noted the possibility that the SLL could tie up Fund resources for an extended period. - Recognized that potential demand for the SLL combined with other Covid-19 related demand for Fund resources could quickly reduce Fund liquidity to levels that would warrant an activation of the NAB. - Given uncertainty, Directors called for closely monitoring the Fund’s liquidity position. - Directors took note of empirical evidence in Figure 1 showing large portfolio outflows: for Iceland, the largest 3-month outflow was 1,176 percent of quota and the 5th percentile was 529 percent of quota. ### Duration, Review, and Next Steps - Directors supported creation of the SLL for a period of 7 years, with an expectation that, by end-2025, the Executive Board will decide whether to extend the facility beyond the 7-year period. - The compromise approach aims to balance concerns about the innovative nature of the SLL and potential impact on Fund resources. - Directors looked forward to reviewing initial experience with the SLL as part of the next review of the Fund’s FCL and Precautionary and Liquidity Line in 2022. - If adopted, the proposed decision would establish the SLL and make necessary changes to ancillary Fund policies to implement the proposed features. *Prepared by the Finance, Legal, and Strategy, Policy and Review Departments; team led by Petya Koeva Brooks, Thomas Krueger, and Yan Liu.* ### 6. The SLL will be reviewed in 2022 as part of the regular review of the FCL and PLL. The ### ppea2020025 - 6. The SLL will be reviewed in 2022 as part of the regular review of the FCL and PLL. The ### Review schedule and governance - The SLL will be reviewed in 2022 as part of the regular review of the FCL and PLL; the review will assess the experience under the SLL, including its purpose, fit within the toolkit, design, and impact on Fund resources. - A Board decision, adopted by a majority of votes cast, would be required to complete the 2022 review. - Staff proposes an additional Executive Board review after five years from establishment; continuation of the facility at that review would require an 85% majority of total voting power. - If the Board decides not to keep the facility at the 5-year review, staff proposes the facility will expire 7 years from establishment. - The Executive Board may abolish the SLL at any time by a simple majority of votes cast. ### Signature of Letters of Intent (LOI) and written communications - Fund standard: any LOI or written communication must meet two requirements: - Must be signed by the agency with domestic legal authority to enter into financial obligations on behalf of the member. - Must be signed by those agencies responsible for implementing the policy commitments set forth in the LOI or written communication. - In practice, signatories are generally the Ministry of Finance and the Central Bank. - A Central Bank may sign on behalf of the member for an SLL arrangement if: - The Central Bank has domestic legal authority to bind the member to the financial obligations to the Fund, including payment of the commitment fee. - The Central Bank has exclusive responsibility for implementing all actions necessary to address the BoP need of the moderate nature the SLL is designed to address (i.e., adjustment of a monetary and exchange rate nature). - The Central Bank can communicate, on behalf of the government, its commitment to maintaining very strong policies that fall outside the Central Bank’s remit (including fiscal policies). - If these conditions are not satisfied, a representative of the government (i.e., the Ministry of Finance) must also sign. - Regardless of signatory, the member (not an individual agency) is the counterpart obliged to repay the Fund; financial transactions are made through the designated fiscal agent. - LOIs under other Fund arrangements are expected to continue to be signed generally by both the Ministry of Finance and the Central Bank. ### Preliminary resource estimates and qualification assumptions - Staff’s preliminary estimate: potential commitments under the SLL could amount to about SDR 40 billion. - For resource-needs assessment staff: - Used a tentative list of potential qualifiers based on the June 2017 qualification framework. - Assumed members that opt in receive maximum access under the facility of 145 percent of quota. - Assumed arrangements are fully scored against the Fund’s forward commitment capacity (FCC). - In practice, access under individual SLL arrangements will be tailored to potential BoP needs. ### Scenario findings and key statistics (Table 2 summary) - Scenario A: - SLL: 38 (Billions of SDR) - FCL: 52 (Billions of SDR) - Total: 90 (Billions of SDR) - Net impact on FCC: -38 (Billions of SDR) - Maximum second round effects: -16 (Billions of SDR) - Commitments: -9 (Billions of SDR) - Scenario B: - SLL: 54 (Billions of SDR) - FCL: 0 (Billions of SDR) - Total: 54 (Billions of SDR) - Net impact on FCC: -1 (Billions of SDR) - Maximum second round effects: -25 (Billions of SDR) - Commitments: 0 (Billions of SDR) - Note: Scenarios assume maximum commitment of 145 percent and that all members with an SLL are participating in the FTP; maximum second-round effects assume all members with an SLL or an FCL draw simultaneously. ### Liquidity, FCC, and NAB implications - The Fund’s FCC currently stands at SDR 198 billion (or USD 277 billion). - FCC currently includes quota resources of FTP members only (NAB and bilateral borrowings are not activated). - Staff estimates near-term potential demand for GRA resources from emergency financing under the Rapid Financing Instrument (RFI) and comparable augmentations could increase to up to a total of some SDR 60 billion (some USD 82 billion). - Example supply effect: under a near-term potential RFI-related demand scenario of SDR 60 billion, the supply effect alone would reduce the FCC by up to SDR 27 billion and reduce the FCC, ceteris paribus, to some SDR 110 billion. - Activation of current NAB resources would increase the Fund’s FCC by up to SDR 134 billion, taking into account the prudential buffer and that SDR 9 billion of credit outstanding was financed by earlier NAB drawings, and assuming all participants are available for calls on NAB resources. - Staff will closely monitor Fund liquidity and keep the Board updated; may propose NAB activation if demand for Fund resources likely requires it. ### Risks and risk mitigation - Credit risk mitigants: - High qualification standards under the SLL. - Low access and limited duration of the arrangement. - Short repurchase period. - Fund’s broader risk management policies. - Surveillance mitigant: retention of a 12-month Article IV consultation cycle for relevant countries. - Renewal clause mitigates strategic and reputational risks of undermining the facility from the outset or surprising users with an abrupt exit. - Fees (surcharges, service charges, commitment fees) designed to manage risks to Fund income. - Change management risks (skills, application, review) acknowledged; similar risks have been managed by the Fund previously. - Residual risks are considered significantly outweighed by risks of not filling the toolkit gap; however: - Deterioration in a member’s fundamentals or policies during an arrangement would raise enterprise risks including credit risk. - Failure to re-qualify at renewal could present reputational and strategic risks. - The possibility of renewal for as long as members continue to qualify raises the possibility that Fund resources are tied up for an extended period, posing risks to the revolving nature of Fund resources. - The relatively low access of the SLL, its role as a vehicle for exiting de facto high-access FCL, and strategic benefits could offset these risks and lead to more efficient allocation of Fund resources. - The absence of an outstanding-commitments-triggered review clause tied to SDR 150 billion is unlikely to increase risks given increased Board monitoring and the scheduled 2022 precautionary toolkit review. *Source: IMF document ppea2020025 (excerpt).* ### 18. This section explains the details of the attached Proposed Decision. The Proposed ### Proposed Decision: Establishment of the Short-term Liquidity Line (SLL) — Detailed Explanation ### Overview - Adoption threshold: an eighty-five percent majority of the total voting power is required because the Proposed Decision: (i) establishes a special repurchase period for the SLL (12 months); and (ii) causes SLL purchases to be excluded from the reserve tranche definition (members maintain a reserve tranche position despite making SLL purchases) (Article V, Section 7(d) and Article XXX(c)(iii)). - The Proposed Decision consolidates all policy changes necessary to establish the SLL into a single decision; where different voting majorities would otherwise apply, the highest voting majority applies. - Proposed establishment period: SLL to be established for a period of seven years; by end-2025 the Executive Board is expected to decide whether to extend the facility beyond the seven-year period. An extension would require an eighty-five percent majority of the total voting power. - Review: a review of the SLL, alongside the FCL and PLL, is proposed within two years. ### A. Establishment of the SLL (Section A) - Purpose and qualifying need: - For members facing short-term balance of payments difficulties that: (i) are only of a potential nature, reflected in pressure on the capital account and the member’s reserves; (ii) result from volatility in international capital markets; and (iii) are reasonably expected to be limited in scale and to require, at most, fine-tuning of monetary and exchange rate policies. - Qualification criteria (same as FCL): - Members must have very strong economic fundamentals and institutional policy frameworks; be implementing—and have a sustained track record of implementing—very strong policies; and remain committed to maintaining such policies. - Relevant criteria include: (i) a sustainable external position; (ii) a capital account position dominated by private flows; (iii) a track record of steady sovereign access to international capital markets at favorable terms; (iv) a reserve position that is relatively comfortable; (v) sound public finances, including a sustainable public debt position; (vi) low and stable inflation, in the context of a sound monetary and exchange rate policy framework; (vii) a sound financial system and the absence of solvency problems that may threaten systemic stability; (viii) effective financial sector supervision; and (ix) data transparency and integrity. - Conditional approval and monitoring: - SLL arrangements shall be approved upon a member’s informal expression of potential interest and, given the qualification criteria, SLL arrangements shall not be subject to performance criteria or other forms of ex-post program monitoring, including reviews. - Approval process includes confidential preliminary assessment by staff, circulation of documents to the Board, minimum circulation periods (with Board generally prepared to consider a request within 48 to 72 hours after circulation in exceptional circumstances), and conditional Board approval communicated within one business day. - Member must submit a satisfactory written communication no later than two weeks after conditional approval, confirming wish to avail itself of the SLL, outlining commitment to maintain very strong policies and consent to publication; arrangement becomes effective on Fund confirmation of receipt. - A member submitting such written communication is not subject to safeguards assessments for Fund arrangements but must authorize staff access to the most recently completed annual independent audit of its central bank financial statements and provide annual audited financial statements and management letters while Fund credit is outstanding. - Access and revolving nature: - Approved access up to 145 percent of quota (cumulative for total credit outstanding under the SLL). - No phasing under SLL arrangements. - Purchases may be made up to the approved access amount at any time during the arrangement, with outstanding purchases reducing available headroom; repurchases reconstitute access up to the approved access amount. - Fund shall not challenge a member’s representation of need for a purchase requested under an SLL arrangement. - Term and repurchase obligation: - SLL arrangements are approved for a period of 12 months. - Repurchase obligation: any amounts purchased must be repurchased no later than 12 months after the date of purchase. - An SLL arrangement expires on the earlier of (i) expiration of the approved period, or (ii) cancellation by the member. Fund may approve additional SLL arrangements upon expiration. - Emergency Financing Mechanism procedures (BUFF/95/102, 9/21/1995) do not apply to SLL requests. - Waiver: Fund prepared to grant waiver of 200 percent of quota limitation in Article V, Section 3(b)(iii) whenever necessary to permit purchases under this Decision or to permit other purchases that would raise Fund holdings of the purchasing member’s currency above that limitation because of purchases outstanding under this Decision. ### B. Access Policy (Section B) - SLL access is carved out from the access limits set in the policy on overall access to the Fund’s resources in the GRA. - Access under the SLL is defined as a limit on the stock of Fund credit committed or outstanding (up to 145 percent of quota), not as flow-based phasing. - A member may purchase at any given time up to the amount of approved access under the SLL, minus outstanding purchases; repurchases reconstitute access. - Outstanding amounts under the SLL will count towards access limits when a member subsequently requests access under another Fund facility. ### C. Article IV Consultation Cycle (Section C) - Members with an SLL arrangement must remain or be placed on the 12-month Article IV consultation cycle. - Specific amendments: - Members with an FCL, PLL, or SLL arrangement will automatically be placed on a 12-month consultation cycle. - If, prior to approval, the member was on an extended cycle, the next Article IV consultation is expected to be completed by the later of (i) 6 months after approval, and (ii) 12 months plus a grace period of 3 months after completion of the previous Article IV consultation. - If an FCL or PLL arrangement is completed by drawing all amounts, expires with undrawn amounts, or is cancelled, or if an SLL arrangement expires or is cancelled, the member will remain on the standard 12-month cycle unless the Executive Board determines otherwise. ### D. Transparency Policy (Section D) - Publication timing and consent adapted to SLL approval process: - The Executive Board’s conditional approval of an SLL arrangement is unique in that the arrangement becomes effective only when the member provides a written communication confirming it wishes to avail itself of the SLL and consenting to publication at that time. - The publication deadline for the press release and staff report starts from the effective date of the member’s SLL arrangement, rather than from the date the underlying staff report is discussed. - The associated staff report and the authorities’ written communication are expected to be published by the Fund no later than fourteen calendar days after the member’s SLL arrangement becomes effective. ### E. Allocation of Repurchases (Section E) - Administrative clarification: repurchases under the SLL will be applied first to the longest outstanding purchase under the SLL (a “first out, first in” rule). ### F. Surcharges (Section F) - Level-based surcharge policy amended to include outstanding purchases under the SLL. - Fund holdings of a member’s currency over 187.5 percent of quota resulting from purchases in the credit tranches, under the SLL and the EFF, will be subject to a surcharge of 200 basis points per annum above the basic rate of charge. - Staff view reflected: purchases under the SLL should not be subject to the time-based surcharge because of their short-term repurchase obligation. ### G. Service Charge and Commitment Fee (Section G) - Amendments to Rules I-1 and I-8: - Service charge for purchases under the SLL: 21 basis points (Rule I-1). - Commitment fee for the SLL: 8 basis points on a non-refundable basis (Rule I-8). - Commitment fee mechanics: - Charged at the beginning of each SLL arrangement and not refunded if the member makes purchases under the arrangement. - A pro-rata portion of the commitment fee will be refunded if the member cancels its arrangement before expiry. *Source: Proposed Decision text on establishment of the Short-term Liquidity Line (SLL) and related amendments in the attached Proposed Decision.* ### 2. Paragraph 11 shall be amended to read as follows: ### ppea2020025 - 2. Paragraph 11 shall be amended to read as follows: ### Amendment to Paragraph 11 (Publication of Press Releases and Chairman’s statements) - Full amended text of paragraph 11: - “11. After the Executive Board (i) adopts a decision regarding a member’s use of Fund resources (including a decision completing a review under a Fund arrangement), or (ii) adopts a decision approving a PSI or a PCI, or conducts a review under a PSI or a PCI, or (iii) completes a discussion on a member’s participation in the HIPC Initiative, or (iv) completes a discussion on a member’s I-PRSP, PRSP, PRSP preparation status report, APR, EDD, or PRGS in the context of the use of Fund resources or a PSI, a Press Release, which will contain a Chairman’s statement on the discussion, emphasizing the key points made by Executive Directors, will be issued to the public. A Press Release containing a Chairman’s statement on the discussion, emphasizing the key points made by Executive Directors, will also be issued to the public after an SLL arrangement becomes effective. Where relevant, the Chairman’s statement will contain a summary of HIPC Initiative decisions pertaining to the member and the Executive Board’s views on the member’s I-PRSP, PRSP, PRSP preparation status report, APR, EDD or PRGS in the context of use of Fund resources or a PSI. Waivers for nonobservance, or of applicability, of performance criteria, and any other matter as may be decided by the Executive Board from time to time (Document 21), and waivers for nonobservance of assessment criteria, and any other matter as may be decided by the Executive Board from time-to-time (Document 22), will be mentioned in the factual statement section of the Press Release or in a factual statement issued in lieu of a Chairman’s statement as provided for in paragraph 13(b). Before a Press Release is issued, it will, if any Executive Director so requests, be read by the Chairman to the Executive Board and Executive Directors will have an opportunity to comment at that time. The Executive Director elected, appointed, or designated by the member concerned will have the opportunity to review the Chairman’s statement, to propose minor revisions, if any, and to consent to its publication immediately after the Executive Board meeting, or, in the case of the SLL, immediately after the SLL arrangement becomes effective. Notwithstanding the above, no Press Release published under this paragraph shall contain any reference to a discussion or decision pertaining to a member’s overdue financial obligations to the Fund, where a Press Release following an Executive Board decision to limit the member’s use of Fund resources because of the overdue financial obligations has not yet been issued. In the case of an Executive Board meeting pertaining solely to a discussion or decision with respect to a member’s overdue financial obligations, no Chairman’s statement will be published.” ### Key procedural points from the amendment - Press Releases with Chairman’s statements: - Issued after Executive Board adoption of decisions regarding use of Fund resources, approval/review of a PSI or PCI, completion of certain discussions (HIPC Initiative, I-PRSP, PRSP, PRSP preparation status report, APR, EDD, PRGS) in the context of use of Fund resources or a PSI. - Issued after an SLL arrangement becomes effective. - May summarize HIPC Initiative decisions and Executive Board views where relevant. - Waivers (Document 21 and Document 22) and other matters will be mentioned in factual statement section or in a factual statement in lieu of a Chairman’s statement as provided in paragraph 13(b). - Before issuance, Press Release will be read by the Chairman to the Executive Board if any Executive Director requests and Executive Directors may comment. - The Executive Director elected, appointed, or designated by the member concerned: - May review the Chairman’s statement, propose minor revisions, and consent to publication immediately after the Executive Board meeting or, for SLL, immediately after the arrangement becomes effective. - Restriction: - No Press Release under this paragraph shall reference discussions/decisions on a member’s overdue financial obligations to the Fund if a Press Release following an Executive Board decision to limit the member’s use of Fund resources because of the overdue financial obligations has not yet been issued. - Where a Board meeting pertains solely to overdue financial obligations, no Chairman’s statement will be published. --- ### New paragraph 13.b.(iii) (SLL staff report publication fallback) - Text of new paragraph 13.b.(iii): - “(iii) With respect to the consent provisions set forth in paragraph 4(c), if, after twenty-eight calendar days from the effective date of an SLL arrangement, the staff report has not been published, a brief factual statement will be issued stating the fact of the effectiveness of an SLL arrangement for a member and clarifying the authorities’ publication intention with respect to the staff report.” - Operational implication: - If staff report remains unpublished twenty-eight calendar days after SLL effectiveness, Fund issues brief factual statement noting effectiveness of SLL and clarifying authorities’ publication intention for the staff report. --- ### Amendment to indicative list of documents (item 11) - Amended item 11 text: - “11. Letters of Intent and Memoranda of Economic and Financial Policies (LOIs/MEFPs), and Written Communications” --- ### E. Attribution of Reductions in Fund’s Holdings of Currencies (Decision 6831-(81/65) amendments) - Amendment to paragraph 1(a): - “(a) Subject to paragraphs (b), (c) and (e) below a member shall be free to attribute a reduction in the Fund’s holdings of its currency (i) to any obligation to repurchase, and (ii) to enlarge its reserve tranche.” - New paragraph 1(c): - “(c) Repurchases of credit outstanding under the Short-term Liquidity Line (SLL) shall be attributed to the first maturing repurchase obligation under the SLL.” --- ### F. Surcharges on Purchases in Credit Tranches and Under Extended Fund Facility (Decision No. 12346-(00/117) amendment) - Amended paragraph 1 (rate and additional surcharges text): - “1. Subject to paragraphs 2 and 3 below, the rate of charge under Article V, Section 8(b) on the Fund’s combined holdings of a member’s currency in excess of 187.5 percent of the member’s quota in the Fund resulting from purchases in the credit tranches, under the Short-term Liquidity Line and under the Extended Fund Facility shall be 200 basis points per annum above the rate of charge referred to in Rule I-6(4) as adjusted for purposes of burden sharing; and for the Fund’s combined holdings resulting from purchases in the credit tranches and under the Extended Fund Facility, it shall also include an additional 100 basis points per annum on such holdings in any case where they are outstanding for more than 36 months in the case of purchases in the credit tranches, or 51 months in the case of purchases under the Extended Fund Facility.” --- ### G. Rules and Regulations of the International Monetary Fund (Rule amendments) - Rule I-1 amended service charges: - Full text: - “I-1. The service charge payable by a member buying, in exchange for its own currency, the currency of another member or SDRs from the General Resources Account shall be 0.5 percent for purchases in the credit tranches and under the Extended Fund Facility and 0.21 percent for purchases under the Short-term Liquidity Line. No service charge shall be payable in respect of any purchase to the extent that it is a reserve tranche purchase. The service charge shall be paid at the time the transaction is consummated.” - Rule I-8 amendments: - Introductory clause amended: - “I-8. The following provisions (a) – (f) shall apply to all General Resources Account (“GRA”) arrangements, except Short-term Liquidity Line (“SLL”) arrangements, in which case provision (g) shall apply:” - New paragraph I-8(g): - “(g) With respect to SLL arrangements, a charge of 8/100 of 1 percent per annum on the total amount of access approved by the Fund for a member under a SLL arrangement shall be payable at the beginning of the arrangement. This charge shall not be refundable against purchases made during the course of the arrangement. If the member notifies the Fund that it wishes to cancel an SLL arrangement, the Fund shall repay to the member a portion of the charge. The portion repaid shall represent the prorated amount of the charge that corresponds to the period remaining unexpired at the date of cancellation. Such repayment shall be made in the media selected by the Fund.” --- ### Access Policy and Limits in the Credit Tranches, EFF, SLL, and Overall GRA Access - Key numerical limits and provisions (text preserved): - Overall access by members to the Fund’s general resources: - Subject to (i) an annual limit of 145 percent of quota; and (ii) a cumulative limit of 435 percent of quota, net of scheduled repurchases; provided that these limits will not apply in cases where a member requests a Flexible Credit Line arrangement in the credit tranches or where a member requests a Short-term Liquidity Line arrangement, although outstanding holdings of a member’s currency arising under such arrangements will be taken into account when applying these limits in cases involving requests for access under other Fund facilities. - Exceptional access approval (paragraph 3) requires four substantive criteria to be met: - (a) The member is experiencing or has the potential to experience exceptional balance of payments pressures on the current account or the capital account, resulting in a need for Fund financing that cannot be met within the normal limits. - (b) A rigorous and systematic analysis indicates that there is a high probability that the member’s public debt is sustainable in the medium term. Where the member’s debt is assessed to be unsustainable ex ante, exceptional access will only be made available where the financing being provided from sources other than the Fund restores debt sustainability with a high probability. Where the member’s debt is considered sustainable but not with a high probability, exceptional access would be justified if financing provided from sources other than the Fund, although it may not restore sustainability with high probability, improves debt sustainability and sufficiently enhances the safeguards for Fund resources. For purposes of this criterion, financing provided from sources other than the Fund may include, inter alia, financing obtained through any intended debt restructuring. This criterion applies only to public (domestic and external) debt. However, the analysis of such public debt sustainability will incorporate any relevant contingent liabilities, including those potentially arising from private external indebtedness. - (c) The member has prospects of gaining or regaining access to private capital markets within a timeframe and on a scale that would enable the member to meet its obligations falling due to the Fund. - (d) The policy program of the member provides a reasonably strong prospect of success, including not only the member’s adjustment plans but also its institutional and political capacity to deliver that adjustment. - When exceptional access is approved under a PLL arrangement pursuant to paragraph 3: - Such access, combined with the member’s access to the Fund’s resources under other PLL arrangements, shall in no event exceed a cumulative limit of 500 percent of quota, net of scheduled repurchases. - Procedures set forth in BUFF/02/159 (9/20/02), BUFF/03/28 (3/5/03), and BUFF/05/68 (4/13/05) shall apply to all cases involving access in excess of the limits set forth in this Decision, unless otherwise specified. - This Decision shall be reviewed on an as needed basis in accordance with Decision No. 15764-(15/39), adopted April 23, 2015, on implementing streamlining of policy reviews. --- ### Article IV Consultation Cycles (framework and cycles) - General rule and timing: - Article IV consultations in principle will take place annually. - Standard twelve-month cycle consultations will be subject to a grace period of 3 months and expected to be completed within 15 months of the date of the completion of the most recent consultation. - Fund may place a member on an extended cycle longer than 12 months but not longer than 24 months only if the member does not meet any of the following criteria: - (a) the member is of systemic or regional importance; - (b) the member is perceived to be at some risk because of policy imbalances or particular threats from exogenous developments, or the member is facing pressing policy issues of broad interest to the Fund membership; or - (c) the member has outstanding credit to the Fund under all facilities above one hundred forty-five percent (145%) of the member’s quota. - The Fund will place a member on an extended cycle only after consulting with the Executive Director for the member and obtaining the member’s consent. - Consultations when Fund arrangements or instruments are approved: - Paragraph 2 (24-month cycle): - Whenever a Fund arrangement (other than an arrangement under the Flexible Credit Line (FCL), or Precautionary and Liquidity Line (PLL)), or Short-term Liquidity Line (SLL)), Policy Coordination Instrument (PCI), or a Policy Support Instrument (PSI) is approved for a member, that member shall automatically be placed on a 24-month consultation cycle. - Article IV consultations with such members expected to be completed within 24 months of the date of completion of the previous Article IV consultation. - Where program reviews delay, specified shortening rules apply (dates and conditions retained verbatim in text). - Paragraph 3 (12-month cycle): - Whenever an FCL, or a PLL, or SLL arrangement is approved for a member, that member will automatically be placed on a 12-month consultation cycle. - Specific rules: - (a) If, prior to approval of the FCL/PLL/SLL, the member was on an extended cycle, the next Article IV consultation will be expected to be completed by the later of (i) 6 months after the date of approval of the arrangement, and (ii) 12 months, plus a grace period of 3 months, after the date of completion of the previous Article IV consultation. - (b) If an FCL or a PLL arrangement is completed by drawing all amounts, expires with undrawn amounts, or is cancelled by the member, or if an SLL arrangement expires or is cancelled by the member, that member will remain on the standard 12-month cycle, unless the Executive Board determines a different cycle will apply. - Administration: - At the conclusion of each Article IV consultation, the Fund will specify the cycle that will apply to the next Article IV consultation with the member. - Repeal: - Decision No. 12794-(02/76), adopted July 15, 2002, as amended, is hereby repealed. (SM/10/253, 9/21/10) --- ### 2013 Review of the Fund’s Transparency Policy (Preamble and Country Documents publication procedures) - Preamble principle: - Fund will strive to disclose documents and information on a timely basis unless strong and specific reasons argue against such disclosure; principle respects voluntary nature of publication of documents that pertain to member countries and need to safeguard confidential information and Article XII, Section 8. - I. General Provisions on Authorization and Consent: - Managing Director shall arrange for publication by the Fund of Country Documents, Fund Policy Documents and Multi-Country Documents in accordance with the attached Indicative List. - Publication consents and approvals: - Publication of Country Documents is subject to the consent of the member concerned. - Publication of Fund Policy Documents requires approval of the Executive Board. - Publication of Multi-Country Documents requires the consents of the members concerned or the approval of the Executive Board, as set forth in paragraphs 20-26. - Publication of documents jointly authored by the Fund and the World Bank requires authorization of the World Bank. - Definition of "prompt publication" under paragraphs 3(b), 14, 21(b) and 24: - Means expected publication no later than (a) fourteen calendar days after the Executive Board has considered the document, or (b) twenty-eight calendar days after the document has been issued to the Executive Board, whichever is later. - II. Country Documents — Consent procedures: - Paragraph 3(a)–(e) key points: - Member’s consent to publication is voluntary but presumed; Fund encourages consent. - Except as otherwise provided, Fund publication of an applicable document will occur unless prior to conclusion of the Executive Board meeting at which the document is considered or the date of adoption of a decision on a lapse-of-time basis the member notifies the Fund that it: - (i) objects to publication; or - (ii) requires additional time to decide whether or not to publish; or - (iii) consents to publication but subject to reaching agreement with the Fund on deletions. - Members who notify under (ii) or (iii) are expected to reach a decision within twenty-eight calendar days of the Executive Board meeting or decision. - If the member provides notification under (i), (ii), or (iii), the applicable document shall not be published unless the member’s explicit consent is received. - For Documents 3, 5, 10 and 15-16, paragraph 3(b) applies only if the document has been circulated to the Executive Board in the context of a meeting or a proposal for lapse-of-time approval; if circulated for information only, paragraph 28 applies and the member’s explicit consent must be provided prior to publication. - Paragraph 3(b) will not apply to Press Releases containing Chairman’s Statements for use of Fund resources (Document 7), in the context of a PSI (Document 20), in the context of a PCI (Document 20), or Press Releases for an Article IV consultation, a regional surveillance discussion or a Board consideration of Financial System Stability Assessment (FSSA) report (Document 4). Publication of these documents governed by paragraphs 11 and 12. - Secretary’s cover memorandum will indicate that a document subject to paragraph 3(b) will be published promptly after the relevant Executive Board meeting or decision on a lapse-of-time basis unless the member notifies the Fund as provided for in paragraph 3(b)(i), (ii), or (iii). *Source: https://www.imf.org/-/media/files/publications/pp/2020/english/ppea2020025.pdf* ### 4. a. The Managing Director will not recommend that the Executive Board approve (i) an ### ppea2020025 - 4. a. The Managing Director will not recommend that the Executive Board approve (i) an ### Consent and Publication Conditions (Paragraphs 4–6) - The Managing Director will not recommend Board approval of: - an arrangement under the Poverty Reduction and Growth Trust (PRGT) or completion of a review under such arrangement, or - a Heavily Indebted Poor Countries (HIPC) decision point or completion point decision, or - a member’s request for a PSI or the completion of a review under a PSI, - if the member does not explicitly consent to publication of its I-PRSP, PRSP, PRSP preparation status report, PRSP annual progress report (APR) or Economic Development Document (“EDD”) (Document 10 or Document 15, as the case may be). (Paragraph 4(a)) - Generally, the Managing Director will not recommend Board approval of: - requests for access to resources in the General Resources Account or the PRGT, - access to Fund resources under the HIPC Trust, - assistance through a PSI or a PCI, - unless the member explicitly consents to publication of the associated staff report. (Paragraph 4(b)) - For purposes of paragraph 4(b), approval of use of the Fund’s resources includes completion of a review under an arrangement; assistance through a PSI or a PCI includes completion of a review under the PSI or the PCI. (Paragraph 4(b)) - For the PCI, non-consent to publication of an interim performance update may be taken into account when deciding whether to recommend approval of a subsequent review of the member’s PCI. (Paragraph 4(b)) - Executive Board approval of a Short-term Liquidity Line (SLL) arrangement is conditioned on receipt of the member’s consent to publication at the time the member sends written communication confirming it wishes to avail itself of the SLL arrangement. The associated staff report and authorities’ written communication are expected to be published no later than fourteen calendar days after the member’s SLL arrangement becomes effective. (Paragraph 4(c)) - Except as provided in paragraphs 11 and 12, a member’s explicit consent must be communicated in writing, normally to the Secretary of the Fund. Such consent may be communicated by the Executive Director elected, appointed, or designated by the member. (Paragraph 5) - If a Fund staff report (Documents 1, 6, 14 and 19) on a member is to be published under this Decision, the member shall be given the opportunity to provide a statement regarding the staff report and the Executive Board assessment; that statement shall be communicated to the Fund and published together with the staff report. (Paragraph 6) ### Deletions and Rephrasing in Country Documents (Paragraphs 7–8) - Deletions may be made to Country Documents for publication, except for country policy intention documents on poverty reduction strategies (Documents 10 and 15). (Paragraph 7(a)) - Deletions should be limited to: - (i) highly market-sensitive material, mainly on the outlook for exchange rates, interest rates, the financial sector, and assessments of sovereign liquidity and solvency; and - (ii) material not in the public domain, on a policy the country authorities intend to implement, where premature disclosure of the operational details would seriously undermine implementation. (Paragraph 7(a)) - Definition: For this Decision, highly-market sensitive material means material that (a) is not in the public domain, (b) is market relevant within the near term, and (c) is sufficiently specific to create a clear risk of triggering a disruptive market reaction if disclosed. (Paragraph 7(a)) - Politically sensitive material shall not be deleted unless it satisfies (i) or (ii) above. (Paragraph 7(a)) - Information relating to any performance criterion or structural benchmark (Documents 1, 6 and 11-12), or to any quantitative or structural benchmark (Documents 13-14), or to any assessment criterion or structural benchmark (Documents 1, and 17-19), may not be deleted, unless the information is of such character that it would have enabled it to be communicated to the Fund in a side letter pursuant to Decision No. 12067-(99/108), September 22, 1999. (Paragraph 7(a)) - If the Managing Director determines proposed deletions satisfy criteria (i) or (ii), deletions may be accompanied by minor rephrasing to retain candor or minimize misinterpretation. (Paragraph 7(b)) - Requests for deletions to Country Documents (except Documents 10 and 15) may be made by the member concerned. Other members may request deletions to Documents 1-3, 6, 14, and 19 if: - (i) the text to be deleted relates to that other member, - (ii) the member to whom the document relates consents to the deletion, and - (iii) the criteria in paragraph 7 are met. Criterion (ii) does not apply to staff reports for Article IV consultation and regional surveillance discussions (Documents 1 and 2). (Paragraph 8(a)) - Deletions shall be requested in writing and are expected to be communicated no later than two business days before: (i) the Executive Board meeting at which the document is discussed or (ii) the date of adoption of a decision on a lapse-of-time basis to which the document relates. (Paragraph 8(b)) - In any event, deletion requests shall normally be made no later than (a) seven calendar days after the Executive Board has considered the document, or (b) twenty-one calendar days after the document was issued to the Executive Board, whichever is later. (Paragraph 8(b)) - Once approved by the Managing Director, deletions and related rephrasing shall be circulated to the Executive Board in redlined form and include the justification for each modification. (Paragraph 8(c)) - Dispute resolution procedures: - (i) In a serious disagreement between the Managing Director and a member regarding that member’s request for deletions, the matter may be referred to the Executive Board by the Managing Director or the member’s Executive Director. (Paragraph 8(d)(i)) - (ii) For staff reports for Article IV consultation and regional surveillance discussion (Documents 1 and 2), if the Managing Director approves deletions requested by other members and the member to whom the document relates disagrees, the matter may be referred to the Executive Board. (Paragraph 8(d)(ii)) - (iii) If the Managing Director believes requested deletions would produce a document that, if published, would undermine the overall assessment and credibility of the Fund, the Managing Director shall recommend to the Executive Board that the document not be published. (Paragraph 8(d)(iii)) ### Corrections to Country Documents (Paragraphs 9–10) - Corrections are limited to: - (i) data and typographical errors, - (ii) factual mistakes, - (iii) mischaracterization of views expressed by the authorities concerned, and - (iv) evident ambiguity. (Paragraph 9) - Corrections shall normally take the form of substitution of text in existing sentences rather than addition or deletion of entire sentences. (Paragraph 9) - Corrections are expected to be requested no later than two business days before the conclusion of the Executive Board’s consideration of the document or the adoption of a lapse-of-time decision. (Paragraph 10) - Corrections made after Board consideration are limited to: - (i) cases where the correction is brought to the attention of the Executive Board before the conclusion of its consideration, or - (ii) cases where failure to make the correction would undermine the overall value of publication. (Paragraph 10) - Corrections shall be circulated to the Executive Board in redlined form. Corrections with significant implications for substance shall be discussed and justified in a supplementary staff report or corrections memorandum. (Paragraph 10) ### Press Releases and Factual Statements (Paragraphs 11–13) - After the Executive Board: - (i) adopts a decision regarding a member’s use of Fund resources (including a decision completing a review under a Fund arrangement), or - (ii) adopts a decision approving a PSI or a PCI, or conducts a review under a PSI or a PCI, or - (iii) completes a discussion on a member’s participation in the HIPC Initiative, or - (iv) completes a discussion on a member’s I-PRSP, PRSP, PRSP preparation status report, APR, EDD, or PRGS in the context of the use of Fund resources or a PSI, - a Press Release containing a Chairman’s statement on the discussion, emphasizing key points made by Executive Directors, will be issued to the public. A Press Release with a Chairman’s statement will also be issued after an SLL arrangement becomes effective. (Paragraph 11) - The Chairman’s statement will, where relevant, summarize HIPC Initiative decisions and the Executive Board’s views on I-PRSP/PRSP/PRSP preparation status report/APR/EDD/PRGS in the context of use of Fund resources or a PSI. (Paragraph 11) - Waivers for nonobservance or applicability of performance criteria and waivers for nonobservance of assessment criteria (Documents 21 and 22) will be mentioned in the factual statement section of the Press Release or in a factual statement issued in lieu of a Chairman’s statement. (Paragraph 11) - Before issuance, the Press Release will, if any Executive Director requests, be read by the Chairman to the Executive Board and Executive Directors will have the opportunity to comment; the Executive Director for the member concerned may review the Chairman’s statement, propose minor revisions, and consent to its publication immediately after the Board meeting or, for SLL, immediately after the SLL becomes effective. (Paragraph 11) - No Press Release under paragraph 11 shall reference a discussion or decision pertaining to a member’s overdue financial obligations to the Fund where a Press Release following an Executive Board decision to limit the member’s use of Fund resources because of overdue obligations has not yet been issued. For meetings solely about overdue obligations, no Chairman’s statement will be published. (Paragraph 11) - Press Releases for Article IV consultations, regional surveillance discussions, or stand-alone FSSA Board considerations (Document 1 or Document 3): - The Press Release will be brief (normally 3-4 pages) and consist of: - (i) a background section with factual information (including a table of economic indicators for Article IV/regional surveillance; factual information on the financial system for FSSA), and - (ii) the Fund’s assessment corresponding closely to the Chairman’s summing up. (Paragraph 12(a)) - The Executive Director concerned may review the draft Press Release prior to issuance to propose changes consistent with paragraphs 7–10. (Paragraph 12(b)) - In case of serious disagreement between the Managing Director and the Executive Director on the draft, either may request Executive Board consideration. (Paragraph 12(c)) - If a staff report is not expected to be published within seven calendar days of Board consideration, a Press Release will be issued shortly after Board consideration if the member has consented to staff report publication. In combined cases (Article IV with use of Fund resources/PCI/PSI), a single Press Release will normally be issued immediately after Board consideration. A Press Release under this paragraph will not be issued before circulation of the summing up as a Fund document. (Paragraph 12(d)) - Issuance of Press Releases does not affect the summing up process; the Chairman’s summing up will continue to be provided for review following the Executive Board meeting. (Paragraph 12(e)) - Non-publication and issuance of brief factual statements: - (a)(i) If, after twenty-eight calendar days from Board consideration of an Article IV, regional surveillance discussion, FSSA, post-program monitoring, ex post assessment or ex post evaluation, a member does not consent to publication of a Press Release, a brief factual statement will be issued stating the fact of the Board’s consideration. (Paragraph 13(a)(i)) - (a)(ii) If, after twenty-eight calendar days from Board consideration, the staff report has not been published, a brief factual statement will be issued stating the fact of the Board’s consideration and clarifying authorities’ publication intention with respect to the staff report. (Paragraph 13(a)(ii)) - (b)(i) If a member does not consent to a Press Release containing a Chairman’s statement under paragraph 11 where applicable, or if no Chairman’s statement has been issued because a decision was taken on a lapse-of-time basis, a brief factual statement will be issued immediately after Board consideration describing the Executive Board’s decision relating to the member’s use of Fund resources (including HIPC decisions (Document 8), waivers (Document 21), and consideration of PRSP documents and EDDs (Document 10), when relevant), or the approval of a PSI or a PCI, or the conduct of a review under that PSI or PCI (including waivers (Document 22) and consideration of PRSP documents and EDDs (Document 15), when relevant). (Paragraph 13(b)(i)) - (b)(ii) With respect to paragraph 4(b) consent provisions, if after twenty-eight calendar days from Board consideration the staff report has not been published, a brief factual statement will be issued stating the fact of the Board’s consideration and clarifying authorities’ publication intention with respect to the staff report. (Paragraph 13(b)(ii)) - (b)(iii) With respect to paragraph 4(c) consent provisions, if after twenty-eight calendar days from the effective date of an SLL arrangement the staff report has not been published, a brief factual statement will be issued stating the fact of the effectiveness of an SLL arrangement and clarifying authorities’ publication intention with respect to the staff report. (Paragraph 13(b)(iii)) ### Fund Policy Documents and Press Releases on Policy Issues (Paragraph 14) - After the Executive Board meets on Fund policy issues or adopts a lapse-of-time decision, it shall be presumed that the staff report (Document 23) and/or a Press Release (Document 24) pertaining to the consideration will be published, subject to risk that immediate publication could undermine decision making. (Paragraph 14) - The presumption does not apply to administrative policy issues except matters pertaining to the Fund’s income, financing or budget matters that do not involve market sensitive information. (Paragraph 14) - Publication of a policy paper or Press Release requires an Executive Board decision. Staff should set out a recommendation on publication in the cover memorandum and explain if publication is not recommended. (Paragraph 14) - When publication is approved, the paper and/or Press Release will normally be published promptly after the Executive Board meeting or informal session, or date of adoption of a lapse-of-time decision. For informal sessions, publication will be deemed approved unless an Executive Director objects by the date set in the Secretary’s cover memorandum. (Paragraph 14) *Source: Excerpts from the Decision text (paragraphs 4–14) in the provided IMF document.* ### 15. A Press Release pertaining to Board consideration of Fund policy issues will be based on the ### ppea2020025 - 15. A Press Release pertaining to Board consideration of Fund policy issues will be based on the ### Press Releases for Board consideration of Fund policy issues - A Press Release pertaining to Board consideration of Fund policy issues will be based on the decision adopted by the Executive Board and/or the Chairman’s summing-up, or the Chairman’s Concluding Remarks, as the case may be. - The Press Release will also include a short section setting out background information. - If a policy staff report is not expected to be published within seven calendar days of the Board consideration, a Press Release will be issued shortly after the Board consideration. ### Corrections, deletions and rephrasing for Fund policy staff reports (paragraph 16) - Prior to publication of a Fund policy staff report, the Managing Director may make necessary factual corrections, deletions, and related rephrasing with respect to the report (including of highly market-sensitive material and country-specific references). - Staff’s proposals in a report shall not be modified prior to its publication. - Where confusion might arise from differences between staff’s proposals in the report and the Executive Board’s conclusions regarding those proposals as reflected in the Press Release pertaining to the Executive Board consideration, it will be clearly indicated in the published version of the report which staff proposals the Executive Board did not endorse. ### Multi-Country Documents — scope and types (paragraphs 17–19) - Multi-Country Documents comprise: - (i) Multilateral Policy Issues Documents, - (ii) Country Background Pages, and - (iii) Cluster Documents. - Definitions: - Multilateral Policy Issues Documents address multilateral global economic issues. - Country Background Pages are characterized by specific information pertaining to individual countries and to individual country data but the analysis of respective individual countries and individual country data is not integrated. - Cluster Documents include analysis of issues affecting a group of countries where each individual country analysis is integrated into the broader analysis. - Multi-Country Documents pertain to both individual documents and material sections within individual documents; material sections shall mean whole chapters or appendices. - A single Multi-Country Document may comprise any combination of a Multilateral Policy Issues Document, a Country Background Pages, and a Cluster Document. - For Multi-Country Documents, the Secretary’s cover memorandum will indicate the publication rules governing the document. ### Multilateral Policy Issues Documents (paragraph 20) - Publication provisions applicable to Fund policy staff reports and Press Releases in paragraphs 14-15 apply to Multilateral Policy Issues Documents and their Press Releases. - Paragraph 16 (modification rules) applies to all Multilateral Policy Issues Documents, except for the World Economic Outlook (WEO), the Global Financial Stability Report (GFSR) and the Fiscal Monitor (FM). - In accordance with established practice, staff may modify the WEO, GFSR and FM prior to publication to, inter alia, take into account views expressed at the relevant Executive Board meeting. ### Country Background Pages — publication and member consent (paragraphs 21–22) - Publication of Country Background Pages or a material section requires the consent of the member to which the document or section pertains (the “member concerned”). - Fund publication will occur unless, prior to the conclusion of the Executive Board meeting at which that document is considered or the date of adoption of a decision on a lapse-of-time basis to which that document pertains, a member concerned notifies the Fund that it: - (i) objects to publication; or - (ii) requires additional time to decide whether or not to publish; or - (iii) consents to publication but subject to reaching agreement with the Fund on deletions. - If no member concerned provides a notification referred to in (i), (ii) or (iii) above, the document or section shall be published by the Fund promptly after the relevant Executive Board meeting or the date of adoption of a decision on a lapse-of-time basis. - If one or more members concerned object to publication of information pertaining to it, the Managing Director may: - (i) decide to publish the Country Background Pages without the information pertaining to the objecting member, or - (ii) recommend to the Executive Board not to publish the Country Background Pages and/or, as the case may be, the associated Multilateral Policy Issues Document or Cluster Document, if the non-publication would substantially undermine the overall analysis and substance of the document. - For deletions and corrections, the member concerned has the right to request deletions or corrections to information pertaining to it in accordance with the criteria and procedures applicable to Country Documents as set forth in paragraphs 7-10 of this Decision. ### Cluster Documents — consent, publication, and disputes (paragraphs 23–26) - The consent of each member to which a Cluster Document pertains (the “members Concerned”) is required for publication of the report and a Press Release pertaining to the report. - If one or more members concerned object to publication, the document shall not be published. - If the members concerned have consented to publication, publication will be made along with the publication of a Press Release. - Fund publication of a Cluster Document will occur promptly after the relevant Executive Board meeting or the date of adoption of a decision on a lapse-of-time basis, unless, prior to the conclusion of the Executive Board meeting or the date of adoption of a decision on a lapse-of-time basis, one or more members concerned notifies the Fund that it: - (i) objects to the publication of the document; or - (ii) requires additional time to decide whether or not to publish; or - (iii) consents to publication but subject to reaching agreement with the Fund on deletions to the document. - For deletions and corrections, each member concerned has the right to request deletions or corrections in accordance with the criteria and procedures applicable to Country Documents as set forth in paragraphs 7-10, subject to the following considerations: - In the case of serious disagreement amongst the members concerned regarding requests for deletions, the Managing Director shall propose a solution to the members concerned. - If a commonly acceptable solution cannot be found, then the Managing Director, or Executive Directors elected, appointed, or designated by the members concerned, may refer the matter to the Executive Board. - Press Release timing for Cluster Documents: - a. If a Cluster Document is not expected to be published within seven calendar days of the Executive Board consideration, a Press Release will be issued shortly after the Board consideration, if the members concerned consent to issuance of the Press Release. In any event, a Press Release pertaining to a Clustered Document will not be issued before the circulation of the summing up as a Fund document. - b. If, after twenty-eight calendar days from the relevant Board consideration, one or more members concerned do not consent to the publication of a Press Release pertaining to the Board consideration, a brief factual statement will be issued stating the fact of the Board’s consideration of the matter. - c. If, after twenty-eight calendar days from the relevant Board consideration, the staff report has not been published, a brief factual statement will be issued stating the fact of the Board’s consideration of the matter and clarifying the publication intention of the members concerned with respect to the staff report. ### Other matters — deletions and corrections before publication (paragraph 27) - Before a document is published, the following shall be removed: - (i) references to unpublished Fund documents, - (ii) references to certain internal processes that are not disclosed to the public under existing policies, including inquiries regarding possible misreporting and breaches of members’ obligations, - (iii) any discussion of a breach of obligation under Article VIII, Section 5 or misreporting under applicable Fund policies that the Managing Director has proposed be treated as de minimis in nature as defined in paragraph 1 of Decision No. 13849-(06/108), December 20, 2006. ### Timing and means of Fund publication (paragraphs 28–29) - Documents may be published under this decision only after their consideration by the Executive Board, except for documents that are circulated for information only including: - (i) I-PRSPs, PRSPs and EDDs; and - (ii) Reports on Observance of Standards and Codes (ROSCs) and Assessment of Financial Sector Supervision and Regulation (AFSSR) Reports. - Documents covered by this paragraph may be published immediately after circulation to the Executive Board. - Publication by the Fund under this decision shall normally mean publication on its website but may include publication through other media. ### Article XII, Section 8 (paragraph 30) - Nothing in this decision shall be construed to be inconsistent with the power of the Fund to decide under Article XII, Section 8, by a seventy percent majority of the total voting power, to publish a report made to a member regarding its monetary or economic conditions and developments which directly tend to produce a serious disequilibrium in the international balance of payments of members. ### Non-Members (paragraph 31) - For a document pertaining to a country which is not a member of the Fund: - (i) all references to “member” in this decision shall be taken to mean “country”; and - (ii) all references to “Executive Director elected, appointed, or designated by that member” shall be taken to refer to the appropriate authorities of the country concerned. ### Review (paragraph 32) - This decision is expected to be reviewed in light of experience no later than 2018. ### Indicative list of documents covered by the Decision — overview - The list is indicative and not exhaustive. Country Documents, Fund Policy Documents and Multi-Country Documents that may be created between reviews of the Transparency Policy will be subject to this Decision, unless the Executive Board decides otherwise on a case-by-case basis. - The publication rules applicable to Multi-Country Documents will be explained in the Secretary’s cover memorandum for the documents. - Country Documents and Fund Policy Documents pertain to individual documents. Multi-Country Documents pertain to both individual documents and material sections within individual Multi-Country Documents. - To the extent coverage of any document is not clear, publication will be guided by the overarching principles set forth in the preamble to the Transparency Policy Decision. ### Selected enumerated document types covered (indicative list excerpts) - I. Country Documents — Surveillance and Combined Documents, Use of Fund Resources Documents, Staff Monitored Program (SMP) Documents, Policy Support Instrument (PSI) and Policy Coordination Instrument (PCI) Documents, Statements on Fund Decisions. - II. Fund Policy Documents — Fund Policy Issues Papers; Press Releases following Executive Board consideration of policy issues. - III. Multi-Country Documents — Multilateral Policy Issues Documents such as the World Economic Outlook, the Global Financial Stability Report, the Fiscal Monitor, and Spillover Reports; Press Releases following Executive Board consideration of Multilateral Policy Issues; Country Background Pages; Press Releases following Executive Board consideration of Country Background Pages; Cluster Documents; Press Releases following Executive Board consideration of Cluster Documents. ### Attribution of reductions in Fund’s holdings of currencies (selected provisions) - 1. (a) Subject to paragraphs (b), (c) and (e) below a member shall be free to attribute a reduction in the Fund’s holdings of its currency (i) to any obligation to repurchase, and (ii) to enlarge its reserve tranche. - (b) For a member with overdue repurchase obligations, the reduction shall be attributed to any obligation to repurchase. - (c) [Repealed]Repurchases of credit outstanding under the Short-term Liquidity Line (SLL) shall be attributed to the first maturing repurchase obligation under the SLL. - (e) A reduction resulting from a repurchase made pursuant to a repurchase expectation under paragraph 10(a) of Decision No. 4377-(74/114) shall be attributed to the member’s repurchase obligation arising from the same purchase three years after the original date on which that repurchase expectation was to be met. - 2. A reduction attributed to a reserve tranche position will not discharge an expectation of repurchase under the Guidelines for Early Repurchase. - 3. If the member when asked does not make an attribution in accordance with 1 above, it will be deemed to be discharging the first maturing repurchase obligation. ### Surcharges on purchases in credit tranches and under Extended Fund Facility (selected provisions) - 1. Subject to paragraphs 2 and 3 below, the rate of charge under Article V, Section 8(b) on the Fund’s combined holdings of a member’s currency in excess of 187.5 percent of the member’s quota in the Fund resulting from purchases in the credit tranches, under the Short-term Liquidity Line and under the Extended Fund Facility shall be 200 basis points per annum above the rate of charge referred to in Rule I-6(4) as adjusted for purposes of burden sharing; and for the Fund’s combined holdings resulting from purchases in the credit tranches and under the Extended Fund Facility, it shall also include an additional 100 basis points per annum, as adjusted for purposes of burden sharing, on such holdings in any case where they are outstanding for more than 36 months in the case of purchases in the credit tranches, or 51 months in the case of purchases under the Extended Fund Facility. - 2. The relevant threshold in paragraph 1 shall be 300 percent instead of 187.5 percent: - (i) for all members until February 17, 2016; and - (ii) for members whose quota increase under the 14th Review was not effective on February 17, 2016 until the date their quota increase under the 14th General Review becomes effective, or February 26, 2016, whichever is earlier. - If, during the period of February 1 through February 16, 2016, the Fund’s combined holdings of a member’s currency resulting from purchases in the credit tranches and under the Extended Fund Facility fell below 300 percent of the member’s quota, such interruption shall not be taken into account for purposes of calculating the 36 and 51 month periods. - 3. A member with credit outstanding in the credit tranches or under the Extended Fund Facility, or with an arrangement in effect on February 17, 2016, may notify the Fund by February 25, 2016 that it elects to have the rate of charge on such existing holdings of the member’s currency, and on holdings of the member’s currency arising from future purchases under such an effective arrangement, to be based on the threshold of 300 percent member’s quota in effect prior to its quota increase under the 14th General Review of Quotas, instead of the threshold of 187.5 percent under paragraph 1 above. - Absent such notification, the rate of charge shall be computed pursuant to paragraphs 1 and 2 above. - If a member has made an election under this paragraph 2, such election shall cease to apply as of the date of the Fund’s approval of any new access to the Fund’s general resources for that member, including an augmentation of an arrangement in effect on February 17, 2016, and the rate of charge under this Decision shall be computed for all holdings of the member’s currency in the credit tranches or under the Extended Fund Facility pursuant to paragraph 1 above. *International Monetary Fund — A New Short-Term Liquidity Line (excerpts)* ### 4. This Decision shall be reviewed on an as needed basis in accordance with Decision No. ### 4. This Decision shall be reviewed on an as needed basis in accordance with Decision No. ### Review and procedural references - This Decision shall be reviewed on an as needed basis in accordance with Decision No. 13814-(06/98), adopted November 15, 2006, and Decision No. 15764-(15/39), adopted April 23, 2015, on implementing streamlining of policy reviews. - Administrative reference: (SM/16/10, Sup. 3, 02/16/16) ### Rule I-1 — Service charge for GRA transactions - The service charge payable by a member buying, in exchange for its own currency, the currency of another member or SDRs from the General Resources Account shall be: - 0.5 percent for purchases in the credit tranches and under the Extended Fund Facility; and - 0.21 percent for purchases under the Short-term Liquidity Line. - Exception: n No service charge shall be payable in respect of any purchase to the extent that it is a reserve tranche purchase. - Timing: The service charge shall be paid at the time the transaction is consummated. ### Rule I-8 — Charges on GRA arrangements (general and SLL-specific) - Scope: The following provisions (a)-(f) apply to all General Resources Account (“GRA”) arrangements, except Short-term Liquidity Line (“SLL”) arrangements, in which case provision (g) applies. - (a) Charge payable at the beginning of each twelve-month period (“the relevant period”) of an arrangement: - 15/100 of 1 percent per annum on amounts of up to 115 percent of the member’s quota that could be purchased during the relevant period; and - 3/10 of 1 percent per annum on amounts in excess of 115 percent and up to 575 percent of the member’s quota that could be purchased during the relevant period; and - 3/5 of 1 percent per annum on amounts in excess of 575 percent of the member’s quota that could be purchased during the relevant period. - (b) Reduction and refund of the charge when a purchase is made under an arrangement: - (i) If purchases during the relevant period do not exceed 115 percent of the member’s quota, reduce the portion of the charge calculated under (a)(i) by the proportion that the amount of the purchase bears to the amount of the arrangement not exceeding 115 percent of the member’s quota that could be purchased during the relevant period. - (ii) If purchases during the relevant period exceed 115 percent but do not exceed 575 percent of the member’s quota, reduce the portion of the charge calculated under (a)(ii) by the proportion that the amount of the purchase bears to the amount of the arrangement exceeding 115 percent but not exceeding 575 percent of the member’s quota that could be purchased during the relevant period. - (iii) If purchases during the relevant period exceed 575 percent of the member’s quota, reduce the portion of the charge calculated under (a)(iii) by the proportion that the amount of the purchase bears to the amount of the arrangement exceeding 575 percent of the member’s quota that could be purchased during the relevant period. - (c) Cancellation by member: If a member notifies the Fund that it wishes to cancel an arrangement, the Fund shall repay to the member a portion of the charge representing the charge for the period remaining unexpired at the date of cancellation for the amount that could still be purchased under the arrangement at the date of cancellation for which the member has paid a charge. - (d) Mode of repayment and refunds: Refunds for reductions under (b) and repayments under (c) shall be made in the media selected by the Fund. - (e) Transitional thresholds until quota increase effective date or February 26, 2016: - Instead of the thresholds of 115 percent and 575 percent referred to in (a) and (b), the thresholds of 200 percent and 1000 percent, respectively, shall be used in computing charges and refunds for a member until the earlier of (i) the effective date of that member’s quota increase under the 14th General Review of Quotas, or (ii) February 26, 2016. - (f) Election for arrangements in effect on February 17, 2016: - A member with an arrangement in effect on February 17, 2016 may notify the Fund by February 25, 2016 that it elects to have the charges and refunds applicable to such arrangement to be based on the thresholds of 200 percent and 1000 percent of the member’s quota in effect prior to the effectiveness of the quota increase for that member under the 14th General Review of Quotas, instead of the thresholds of 115 percent and 575 percent under (a) and (b). - Absent such notification, relevant charges and refunds shall be determined under (a), (b), (c) and (d). - If a member has made an election under this paragraph, such election shall cease to apply as of the date of the Fund’s approval of any augmentation of an arrangement in effect for that member on February 17, 2016. The member shall then be subject to the relevant charges and refunds as determined under (a), (b), (c) and (d). - New arrangements approved by the Fund after February 17, 2016 are not eligible for the election under this paragraph. - (g) SLL-specific charge and cancellation refund: - For SLL arrangements, a charge of 8/100 of 1 percent per annum on the total amount of access approved by the Fund for a member under a SLL arrangement shall be payable at the beginning of the arrangement. - This charge shall not be refundable against purchases made during the course of the arrangement. - If the member notifies the Fund that it wishes to cancel an SLL arrangement, the Fund shall repay to the member a portion of the charge representing the prorated amount of the charge that corresponds to the period remaining unexpired at the date of cancellation. - Such repayment shall be made in the media selected by the Fund. *International Monetary Fund — Rules and Regulations excerpt as provided in the source content.* --- _Source: https://www.imf.org/-/media/files/publications/pp/2020/english/ppea2020025.pdf_