## ppea2023020 — 2023 LIC FACILITIES HANDBOOK (selected excerpts) ## Source details **Canonical URL:** [ppea2023020 — 2023 LIC FACILITIES HANDBOOK (selected excerpts)](https://www.imf.org/-/media/files/publications/pp/2023/english/ppea2023020.pdf) ## Other formats - [Markdown version](/-/media/files/publications/pp/2023/english/ppea2023020.pdf.md) - [Structured JSON version](/-/media/files/publications/pp/2023/english/ppea2023020.pdf.json) --- ### Executive summary — purpose, scope, and contributors - Purpose and scope: - Guidance to staff on the IMF’s concessional financial facilities and non-financial instruments for low-income countries (LICs), defined as all countries eligible to obtain concessional financing from the Fund. - Updates the December 2017 Handbook by incorporating Board-approved modifications from multiple reviews and decisions (2018–19 LICFR, July 2021 PRGT reforms, and other Board papers). - Relevant IMF Executive Board decisions and LIC Trust Instruments remain the primary legal authority. - Document metadata: - Date on document: March 28, 2023. - Approved By: Guillaume Chabert. - Prepared by a multi-department team led by Diva Singh under guidance of Wes McGrew and Daehaeng Kim (SPR). - Related Board papers and reviews: lists of Board papers and reviews cited (2019 PRGT interest rate review; May 2019 and January 2020 eligibility papers; June 2019 disaster resilience paper; April–December 2020 emergency and access modifications; March–June 2021 temporary access/interest reviews; Oct 2022 proposals for food shock window and PMB). ### CHAPTER I — Facilities architecture: background, reforms, and funding strategy - Objectives: - Provide flexible and tailored concessional support to LICs to achieve, maintain, or restore a stable and sustainable macroeconomic position consistent with strong and durable poverty reduction and growth. - PRGT architecture and milestones: - July 2009: overhaul of concessional facilities architecture. - January 7, 2010: ESAF Trust → Poverty Reduction and Growth Trust (PRGT). - September 2012: PRGT three-pillar financial sustainability strategy including a base envelope initially SDR 1¼ billion and increased to SDR 1.65 billion in 2021 (annual lending capacity). - PRGT eligibility and scale: - As of the last review concluded on February 19, 2020, 69 IMF member countries are currently PRGT-eligible. - 2018–19 LICFR key reforms (approved May 2019): - one-third increase in access limits and norms; - additional access for fragile and conflict-affected states (FCS) and natural-disaster-vulnerable states; - blending policy reform to better target poorest and most vulnerable; - strengthened safeguards for high/exceptional access; - increased flexibility via SCF and ECF reforms. - July 2021 PRGT reforms (pandemic response): - 45 percent increase in normal limits on access to concessional financing; - elimination of hard limits on exceptional access for the poorest countries and modifications to norms; - two-stage funding strategy to ensure PRGT self-sustainability: - First stage: secure SDR 2.8 billion in subsidy resources and SDR 12.6 billion in loan resources as soon as feasible; - Second stage (set for 2024–25): seek a lasting financing solution in the context of a full LIC facilities review. - Relationship between GRA and PRGT: - All members eligible for GRA; only subset meeting income and market access criteria eligible for PRGT. - PRGT-eligible members advised to seek PRGT financing up to PRGT access limits before seeking GRA resources. ### Choosing the appropriate facility — factors and rules of thumb - Three main factors: - (i) Duration of adjustment and BoP needs; - (ii) Conditionality standard: UCT-quality program required or not; - (iii) Nature of BoP need: present, prospective, potential, or urgent. - Definitions and thresholds: - Protracted BoP problem: resolution normally three years or more. - Short-term BoP need: normally two years or less, and in any case not more than three years. - UCT-quality standard: policies giving substantial justification that BoP problems are being addressed and that the member can repay Fund resources when due. - Rules of thumb by instrument: - Extended Credit Facility (ECF) - Appropriate for protracted BoP problems; UCT-quality required. - Duration: 3 to 5 years (access norm for 3-year ECF: 145 percent of quota; norms scale with length). - Standby Credit Facility (SCF) - Appropriate for short-term BoP needs; UCT-quality generally required. - Duration: 12 to 36 months; norm for 18-month SCF: 145 percent of quota (proportionate for other lengths). - Rapid Credit Facility (RCF) - For urgent present BoP needs; UCT-quality not required. - Rapid low-access financing with limited conditionality; one-off outright disbursements; repeated use constrained (generally no more than two disbursements in any 12-month period; exception: food shock window). - Policy Support Instrument (PSI) - Nonfinancial instrument for broadly stable countries; UCT-quality required; duration typically 1 to 4 years (extendable to 5). - Staff-Monitored Program (SMP) - Track-record building; duration normally 6–18 months; UCT-quality not required (PMB option allows limited Board involvement for ring-fenced cases). ### Access limits, norms, blending, and procedural safeguards — key numeric parameters - PRGT global limits and RCF/RFI sub-ceilings (cumulative): - All PRGT facilities-normal: 435 - RCF (regular window): 100 - RCF (exogenous shock window): 100 - [150 until June 30, 2023] - [175 if food shock window is used] - RCF (large natural disasters window): 133.33 - [183.33 until June 30, 2023] - RFI (regular window): 100 - [150 until June 30, 2023] - [175 if food shock window is used] - RFI (large natural disasters window): 133.33 - [183.33 until June 30, 2023] - PRGT annual access limits: - All PRGT-facilities-normal: 145 - RCF (regular window): 50 - RCF (exogenous shock window): 50 - RCF (large natural disasters window): 80 - RCF (food shock window): 50 - RFI (regular window): 50 - RFI (large natural disasters window): 80 - RFI (food shock window): 50 - Per-disbursement limit: - RCF (regular window): 25 - Norms: - 3-year ECF: 145 - 18-month SCF: 145 - RCF (annual access under the regular window): 25 - Blending proportions for presumed blenders: - PRGT:GRA = 1:2 with concessional access capped at 145 percent of quota per arrangement. - Triggers for procedural safeguards and enhanced safeguards: - Total access in any 24-month period—for DSA (update): 80 - High access (flow trigger): total access in any 36-month period in excess of 240 percent of quota (previously 180 percent); stock trigger: total PRGT credit outstanding to exceed 300 percent of quota (previously 225 percent). - Enhanced safeguards (ES) triggers: annual access in excess of 100 percent of quota, or cumulative access in excess of 300 percent of quota, or countries at high risk of debt distress or in debt distress. - Lapse-of-Time (LOT) procedures not permitted for augmentations above: 15 ### Blending: presumption, criteria, and mechanics - Presumption and objective: - Higher-income PRGT-eligible countries presumed to blend PRGT resources with GRA to target scarce concessional PRGT resources to poorest and most vulnerable. - Income criterion for presumed blenders: - Annual GNI per capita exceeds the prevailing IDA operational cutoff by at least 5 percent for two consecutive years → meets income threshold. - Loses threshold if annual GNI per capita falls below 95 percent of IDA cutoff. - Debt-vulnerability criterion: - Deemed vulnerable if (i) in debt distress; or (ii) at high risk of debt distress and either limited past access to international markets or is a small state (population < 1.5 million) or microstate (population < 200,000). - Access modalities for presumed blenders: - PRGT resources only in a blend with GRA resources; 1:2 PRGT:GRA mix; concessional component capped at 145 percent of quota per arrangement; subject to overall PRGT limits (435 percent of quota cumulative). - RCF sub-limits apply to blended RCF/RFI cases; any RFI access counts toward RCF limits. ### High access, exceptional access, and PS-HCC - High access definition: - Flow trigger: total access under all concessional facilities to more than 240 percent of quota in any 36-month period. - Stock trigger: total outstanding PRGT credit above 300 percent of quota at any point during program. - Exceptional access availability: - Available to PRGT-eligible countries meeting criteria: exceptional BoP pressures; adequate containment of public debt sustainability risks (LIC-DSF low/moderate risk or restore sustainability with high probability within 36 months); do not meet income criterion for blending; have a reasonably strong prospect of program success. - As of July 14, 2021, no hard limits on exceptional access for qualifying PRGT-eligible countries. - PS-HCC (Policy Safeguards for High Combined Credit): - Applies when combined GRA-PRGT exposure would exceed normal GRA access limits. - Temporary thresholds in March 2023: increased from 145/435 percent of quota to 200/600 percent of quota annually/cumulatively (effective until March 4, 2024). - PS-HCC criteria align with PRGT exceptional access framework, except no income threshold. ### New enhanced safeguards (ES) for debt sustainability and capacity to repay - Rationale: - Introduced in 2021 to scrutinize debt and capacity-to-repay (CtR) risks following enlargement of normal access limits. - ES triggers: - Requests entailing access above 100 percent of quota annually or 300 percent of quota cumulatively; or requests from countries at high risk of debt distress or in debt distress under LIC-DSF. - Required program-document content when ES triggered: - Granular breakdowns of public external debt: - (i) de facto senior debt versus other debt; and - (ii) multilateral vs official bilateral vs private debt (ES1a). - Enhanced CtR analysis with cross-country comparisons of Fund exposure metrics and standardized charts (ES1b). - For countries at high risk or in debt distress, program must include explicit objective to reduce debt vulnerabilities (ES2). - Scope and exceptions: - ES does not apply to program reviews (unless augmentation), emergency financing, or non-financial instruments. - ES2 not applied in PRGT exceptional access cases (satisfied by exceptional access safeguards). ### Documentation, DSAs, and financing assurances - DSAs: - Joint Bank-Fund LIC DSAs required for LICs with IDA access; full DSA generally produced at least once every calendar year. - New DSA required for any new IMF financing request that involves exceptional access, brings cumulative access over 80 percent of quota in any 24-month period, or involves high risk of debt distress. - Financing assurances (ECF/SCF): - New ECF/SCF arrangements and review completions require programs to be fully financed—“firm commitments” for the 12 months following approval and “good prospects” for remaining period. - RCF disbursements do not require financing assurances (no underlying program). --- ### CHAPTER II — Extended Credit Facility (ECF): key operational rules and program design ### Access, norms, phasing, and augmentations - Access determination: case-by-case using standard criteria: - (i) present/prospective BoP needs; (ii) program strength and capacity to repay; (iii) outstanding Fund credit and past use. - Access norms and limits: - Access norm for a three-year ECF: 145 percent of quota. - For ECF longer than 3 years, norm scaled proportionally: 145/3 percent of quota per year. - Special case: protracted BoP with minimal present needs → standardized access of 10 percent of quota per arrangement. - Phasing: availability dates for disbursements not more than 6 months apart (except approval→first review interval). - Augmentations: - Determined on standard criteria; historical augmentations typically in range of 15–60 percent of quota for arrangements approved 2010–2021 (with some cases well above). - Ad hoc augmentations outside scheduled reviews can be approved if program on track; ad hoc augmentations not exceeding 15 percent of quota eligible for LOT approval. - Augmentations may be accompanied by rephasing and subject to blending rules where applicable. - Reductions: - Fund will not unilaterally reduce access unless BoP developments are substantially more favorable and improvement derives from external environment. ### Duration, extensions, cancellations, and lapse rules - Extensions: - Must be requested by the member and approved by the Board before expiration. - Only possible if needed to allow disbursement of amounts under the arrangement. - Short technical extensions (a few weeks/months) possible via LOT. - Automatic termination: - ECF arrangements automatically terminate before scheduled terms if no program review completed over 18 months; Board may delay termination by up to three months at authorities’ request. - Cancellation: - Authorities may cancel an ECF arrangement at any time. ### Conditionality, program design, and monitoring - UCT-quality required for ECF-supported programs. - Program aims: - Move toward stable macroeconomic position consistent with poverty reduction and growth; objectives include low/moderate inflation, sustainable fiscal/current account balances, limited debt vulnerabilities, adequate reserves, sufficient policy capacity. - Conditionality specification: - Quantitative periodic and continuous performance criteria (PCs), structural benchmarks, and prior actions where necessary. - PCs normally semi-annual; indicative targets usually quarterly. - Continuous PCs include commitments on exchange restrictions, multiple currency practices, and non-accumulation of external arrears. - Structural benchmarks used parsimoniously and macro-criticality explicitly justified. - Safeguards assessments: - Aim to complete before Board approval but no later than first review. - Exceptions: successor arrangements with recent assessments or central banks with strong track records. - Fiscal safeguards review required before first review when exceptional access requested or when ≥25 percent of funds directed to budget. ### PRGS and social spending - PRGS requirements: - PRGS (Poverty Reduction and Growth Strategy) need not be present at initial approval; second (and subsequent) review only completable if: - (i) PRS developed and publicly available normally within previous five years (but no more than six) covering the review date; and - (ii) PRS issued to Executive Board as PRGS and subject to staff analysis. - Extensions for limited capacity allowed up to fourth review, further extension up to sixth review under specified conditions. - Social and priority spending: - Should be safeguarded and monitored (typically an indicative floor) where possible. ### Financing terms and repayment - Repayment schedule for ECF credit: - Repayments in 10 equal semi-annual installments; - 51/2-year grace period from date of first disbursement; - 10-year final maturity. - Interest: - Interest rate currently set at zero percent for the ECF (set by PRGT interest rate mechanism for July 2021–July 2023), subject to biennial Board review within a 0.0–0.50 percent range. - Next PRGT interest rate structure review by no later than end-July 2023. - Overdue interest charged at SDR interest rate. ### Arrears, overdue obligations, and remedial measures - Requests for IMF financing, including ECF, will not be approved while the member is in arrears to the Fund; disbursements suspended until arrears cleared. - Timeline for overdue obligations: - MD notifies Executive Board after one month overdue; - Report issued two months after overdue and considered by Board one month later; - Factual statement posted when arrears > three months. - Remedial measures for PRGT arrears include removal from PRGT-eligible list, declaration of noncooperation, suspension of technical assistance. - Domestic arrears should be addressed in ECF program design. --- ### CHAPTER III — Standby Credit Facility (SCF): objectives and operational modalities ### Objectives and qualification - SCF purpose: - Concessional financing for actual or potential short-term BoP needs (normally resolved within two years, not more than three). - Appropriate for episodic, short-term financing and adjustment needs; precautionary use possible. - Qualification constraints: - Not available if predominant cause is withdrawal of donor support or if country faces protracted BoP problem. - UCT-quality program required for disbursements (qualification presumed for on-track PSI holders). ### Duration, extensions, and repeat use - Duration: - Minimum 12 months, maximum 36 months from Board approval. - Use limited to three years out of any six-year period (rolling basis); precautionary-only arrangements not counted. - Extensions and automatic termination: - Extensions requested by member and Board-approved; automatic termination if no review completed over 18 months for arrangements > 24 months (Board may delay termination up to 3 months). - Cancellation: - Authorities may cancel SCF arrangements at any time. ### Concurrent use, blending, and interaction with PSI/RCF/SMP - SCF cannot be used concurrently with ECF; must cancel an existing ECF or vice versa. - RCF financing generally not available if SCF in place and on track; RCF possible when SCF disbursements not possible and urgent exogenous shock exists. - SCF can be blended with GRA (SBA) resources for presumed blenders under 1:2 PRGT:GRA mix with concessional component capped at 145 percent of quota per arrangement. - SCF can run concurrently with PSI; qualification presumed for on-track PSI holders; documentation usually mirrored across instruments. ### Access norms, limits, and phasing - Norm for 18-month SCF: 145 percent of quota (proportionate with length up to 2-year SCF: 193.33 percent of quota). - Global PRGT limits apply: annual 145 percent and cumulative 435 percent of quota. - Phasing should mirror projected BoP needs and disbursements phased not more than 6 months apart (exception for approval→first review). ### Conditionality, monitoring, and DSAs - SCF requires UCT-quality program. - Conditionality includes quantitative periodic and continuous PCs, structural benchmarks, and prior actions as necessary. - DSAs: - Full joint DSA required annually; new DSA needed for new financing requests, modifications to debt-related PCs, or significant changes in circumstances. ### Financing terms, fees, and safeguards - Repayments of SCF credit: - Nine equal semiannual installments; - Four-year grace period from date of first disbursement; - Eight-year final maturity. - Interest: - Currently zero percent until end-July 2023; subject to biennial review within 0.0–0.50 percent range. - Availability fee: - 0.15 percent per annum on undrawn portion after each six-month period if no disbursement requested; reimbursed if funds drawn. - Fiscal safeguards: - Fiscal safeguards review required before first review when exceptional access requested or if ≥25 percent of funds directed to budget. --- ### Rapid Credit Facility (RCF): design, windows, access rules, and track records ### Purpose and design - RCF purpose: - Rapid concessional outright disbursements to LICs facing urgent BoP needs from exogenous shocks, natural disasters, conflict, domestic instability, emergencies, and fragility. - Designed where UCT-quality multi-year program is unnecessary or not feasible. - RCF features: - No ex post conditionality or formal reviews; ex ante policy undertakings required in LOI; disbursements are outright one-off loans; repeated use allowed under limitations and track-record rules. ### Windows, thresholds, and the Food Shock Window (FSW) - Windows: - Regular window; exogenous shock window; large natural disaster window (damages ≥ 20 percent of GDP); temporary Food Shock Window (FSW) active 12 months from September 30, 2022. - RCF access sub-ceilings (regular window): - Annual: 50 percent of quota per year (over any 12-month period). - Cumulative: 100 percent of quota (stock). - Per-disbursement limit: 25 percent of quota. - Exogenous shock window: - Annual sub-ceiling: 50 percent of quota; cumulative normally 100 percent, increased to 150 percent until end-June 2023 (Covid-19 response). - Large natural disaster window: - Annual access up to 80 percent of quota; cumulative up to 133.33 percent of quota (reverted to that level after end-June 2023; temporarily 183.33 until June 30, 2023). - Food Shock Window (FSW) specifics: - FSW access capped at 50 percent of quota; fully additional to RFI/RCF annual limits. - Cumulative access ceilings increased to 175 percent of quota for countries accessing FSW. - Qualification requires at least one food shock impact criterion (acute food insecurity warranting international effort; increase in food/fertilizer import costs with negative impact ≥ 0.3 percent of GDP over 12 months; cereal export shortfall with projected negative shock > 0.8 percent of projected GDP for compensable year). - Repayment: RFI FSW repaid within 3¼ to 5 years; RCF FSW repaid within 5½ to 10 years. ### Qualification, repeated use, and track records - Qualification: - Urgent BoP need that, if unaddressed, would result in immediate and severe economic disruption. - RCF only if UCT-quality program both not feasible and not necessary. - Ex ante undertakings required; safeguards assessment commitment and central bank audit access required at request time. - Repeated use limitations: - Generally no more than two RCF disbursements in any 12-month period. - More than one disbursement in any three-year period allowed only if BoP need primarily from a sudden exogenous shock (qualifies under exogenous shocks or large natural disaster windows) or if country has a track record of adequate macroeconomic policies for at least six months prior to request. - Track-record building: - RCF can establish monitorable indicators (indicative targets/benchmarks) and be used concurrently with an SMP to build toward UCT-quality program. - Requirements for repeated disbursement when prior RCF in past three years (and not in exogenous/large-disaster windows): - Track record of adequate macroeconomic policies normally covering at least six months immediately prior to disbursement. - Staff report should assess past policy performance against previously specified objectives. ### Access determination, DSAs, and safeguards - Access determination: based on member’s urgent BoP need; strength of policies and capacity to repay; outstanding Fund credit and record of past use; size and persistence of shock considered. - DSA requirements: - Thorough DSA underpinning required; joint Bank-Fund DSAs for LICs with IDA access. - New DSA required for any new IMF financing request meeting exceptional access/high-access triggers or involving high-risk debt statuses. - Safeguards: - Safeguards assessment commitment and access to central bank external audit reports required with written request for RCF resources. - Timing/modalities determined case-by-case; presumed completed before Board approval of subsequent arrangements. ### Financing terms, arrears, and overdue obligations - Repayment terms: - RCF credit repayments in 10 equal semiannual installments; 5.5-year grace period from disbursement; 10-year final maturity. - Interest rate set at zero percent. - Arrears policies: - RCF requests not approved if member in arrears to the Fund; special discretionary flexibilities in rare emergency cases for IFI/official bilateral arrears subject to policy guidance. - Fund arrears timeline and remedial measures as per PRGT instrument (MD notifications and Board reporting as noted under ECF). ### Conditionality, monitoring, and misreporting - Conditionality: - No UCT-quality program required; no ex post conditionality; ex ante policy undertakings and prior actions only in exceptional circumstances. - RCF can support track records via monitorable indicators; targets are indicative (not PCs) and waivers not required if missed. - Misreporting framework: - Noncomplying disbursement under RCF can only occur with respect to misreported prior actions. - Board may require repurchase/repayment or grant waiver (waivers normally only for minor/temporary deviations). --- ### Policy Support Instrument (PSI), SMPs, and documentation processes ### PSI — design, concurrent use, and procedural modalities - PSI purpose: - Nonfinancial instrument to endorse and monitor policies of countries in broadly stable macro positions; meets UCT-quality standard. - Extensions and terminations: - Extensions requested by member and Board-approved before PSI expiration; short technical extensions possible by LOT. - PSI terminates automatically upon noncompletion of two consecutive scheduled reviews (or no scheduled review completed within 12 months when concurrent with SCF), upon member incurring overdue Fund obligations, or upon approval of an ECF. - Concurrent use: - PSI cannot be concurrent with ECF but can run concurrently with SCF, RCF, RSF, and SMP (SCF/PSI combined modalities outlined with single program conditions and review schedule). - Blending expected for presumed blenders experiencing BoP needs during a PSI. - Program objectives and conditionality: - Aimed at maintaining or consolidating stable macroeconomic position consistent with poverty reduction and growth. - Conditionality includes quantitative periodic and continuous assessment criteria (ACs), indicative targets, structural benchmarks, and prior actions when critical. - Fixed review schedule typical; ACs set to cover next 12 months and test dates linked to reviews. ### SMPs and other track records - SMP purpose and design: - Informal instrument to establish or rebuild a policy track record toward a UCT-quality program; not Board-endorsed (except PMB cases). - Duration normally 6–18 months; expected at least nine months with at least two reviews where applicable; minimum track-record period often six months for RCF repeated disbursements. - SMPs should resemble Fund-supported program design and include LOI/MEFP and TMU for definitions and reporting. - PMB (Program Monitoring with Board Involvement): - Allows limited Board involvement in SMPs for candidates benefiting from targeted Executive Board input (e.g., coordinated creditor/donor effort). - Track records outside SMP/RCF: - Rare, used when targeted near-term corrective actions suffice; examples cited (The Gambia, Sao Tome, Djibouti). ### Documentation, mission cycle, and TMU - Documentation requirements: - Policy Note (PN) covering diagnostics, outlook, staff/authority positions, program objectives, risks, capacity-to-repay paragraph, and standard macro tables. - LOI/MEFP required for financing requests and reviews; must be accompanied by a TMU for PCs/ACs definitions, coverage, adjustors, and data requirements. - Staff reports required for Article IVs, initial arrangement requests, and program reviews; include macro tables, financing plans, CtR assessment, and staff appraisal. - TMU: - Must precisely define PCs/ACs, government/monetary coverage, exchange-rate valuation for program monitoring, program adjustors, and data submission requirements. - Review and clearance: - Area departments lead mission teams; SPR, LEG, and FIN review/clear according to procedures. - PN typically 3–4 pages; staff reports subject to word limits and management clearance processes. ### PRGS (Appendix V) — definition, timelines, and minimum standards - PRGS forms and issuance: - PRGS may be an existing national development plan or newly prepared PRS document; accompanied by a cover letter to the MD and issued to Executive Board. - PRS issued to Board on/after May 24, 2019 named PRGS; EDDs deemed PRGS. - PRGS timing relative to ECF/SCF/PSI: - Not required at initial Board consideration, but second (and subsequent) reviews for ECF/SCF/PSI (>2 years) can only be completed if PRGS publicly available normally within previous five years (but no more than six) and issued to Board with staff analysis. - Extensions up to fourth or sixth review possible for limited capacity cases under conditions. - Minimum standards and good-practice elements listed (strategy, specific policy elements, launch date/timeframe, participatory process; additional elements including poverty diagnostics, fiscal/debt framework, participatory process encouraged). - PRGS publication: - Publication voluntary but presumed; member consent required for publication; MD will not recommend approval of ECF/SCF/PSI review approval without explicit consent to PRS publication. ### Debt Sustainability Analysis (DSA) and collaboration - DSA principles: - Joint Bank-Fund DSAs required for LICs with IDA access; full DSA at least once a year and for each new IMF financing request as needed. - LIC DSF includes 20-year projections, stress tests, external debt distress rating, and borrowing strategy recommendations. - Collaboration: - JMAP calls for annual Bank-Fund consultations to coordinate macro and structural priorities. ### Appendix highlights: conditionality design, adjustors, reserves, and public debt limits - Quantitative conditionality: - PCs phased no more than six months apart; usually semiannual PCs and quarterly indicative targets. - Fiscal PCs choice and coverage: central government or general government depending on data and subnational responsibilities; adjustors used for volatile flows and defined in TMU. - Monetary targets: NDA or reserve money, MPCC option for evolving frameworks. - NIR definition: convertible, liquid, and unencumbered assets net of short-term foreign liabilities; valuation/exchange-rate treatment specified in TMU. - Public debt limits: policy reformed in 2020 (effective June 2021); guided by LIC-DSF or SRDSF depending on country type. *Italic: Source: ppea2023020 — 2023 LIC FACILITIES HANDBOOK (March 28, 2023).* ### EXECUTIVE SUMMARY ### EXECUTIVE SUMMARY ### Purpose, scope, and updates - This Handbook provides guidance to staff on the IMF’s concessional financial facilities and non-financial instruments for low-income countries (LICs), defined here as all countries eligible to obtain concessional financing from the Fund. - It updates the previous version of the Handbook that was published in December 2017 (IMF, 2017e) by incorporating modifications resulting from: - the 2018–19 Review of Facilities for Low-Income Countries and Review of the Financing of the Fund’s Concessional Assistance and Debt Relief to Low-Income Member Countries (IMF, 2019a, b), approved by the Board in May 2019; - the reforms introduced in 2021 on the basis of the Board paper Fund Concessional Financial Support for Low-Income Countries—Responding to the Pandemic (IMF, 2021a), approved in July 2021; - and a number of other recent Board papers. - The Handbook also notes that relevant IMF Executive Board decisions, including the terms of the various LIC Trust Instruments adopted by the Board, remain the primary legal authority on the matters covered in the Handbook. ### Related Board papers and reviews cited in the Handbook - These include (as listed in the source text): - the 2019 Review of the PRGT Interest Rate Structure (IMF, 2019d); - the May 2019 and January 2020 Board papers on the Eligibility to Use the Fund’s Facilities for Concessional Financing (IMF, 2019e and 2020a); - the June 2019 Board paper on Building Resilience in Developing Countries Vulnerable to Large Natural Disasters (IMF, 2019c); - the April 2020 Board paper on Enhancing the Emergency Financing Toolkit—Responding to the Covid-19 Pandemic—Supplementary Proposal on Handling PRGT High-Access Procedures Under Emergency Financing Requests (IMF, 2020b); - the July 2020 Board paper on Temporary Modification to the Fund’s Annual Access Limits (IMF, 2020c); - the August 2020 Board paper on Policy Safeguards for Countries Seeking Access to Fund Financial Support that Would Lead to High Levels of Combined GRA-PRGT Exposure (IMF, 2020d); - the March 2021 Board paper on Temporary Extensions and Modifications of Access Limits in the Fund’s Lending Facilities (IMF, 2021c); - the June 2021 Board paper on Short Extension of the Temporary Increases in PRGT Access Limits and the Review of the Interest Rate Structure Under the PRGT (IMF, 2021d); - the December 2021 Board paper on the Review of the Temporary Modifications to the Fund’s Access Limits in Response to the COVID-19 Pandemic (IMF, 2021b); - the October 2022 Board papers on the Proposal for a Food Shock Window under the Rapid Financing Instrument and Rapid Credit Facility (IMF, 2022e), and the Proposal for a Staff-Monitored Program with Executive Board Involvement (IMF, 2022f). ### Intended use and legal status - Designed as a comprehensive reference tool for program work on LICs. - Also summarizes a range of relevant policies that apply more generally to IMF members. - As with all guidance notes, the Handbook does not supersede relevant IMF Executive Board decisions and LIC Trust Instruments, which remain the primary legal authority. ### Approval, preparation, and contributors - Date on document: March 28, 2023. - Approved By: Guillaume Chabert. - This revised Handbook was prepared by a team led by Diva Singh, comprising Majdi Debbich, Souvik Gupta, Naoya Kato, Jung Kim, Lukas Kohler, Kyungsuk Lee, Andreja Lenarcic, Neree Noumon, Gaelle Pierre, and Maxwell Tuuli under the guidance of Wes McGrew and Daehaeng Kim (all SPR); Gabriela Rosenberg, Kyung Kwak, Gomiluk Otokwala, Anjum Rosha, Chanda DeLong, Gustavo Pinto, Amira Rasekh, Jonathan Swanepoel, Qingxiang Li, David McDonnell, Jonathan Pampolina, Sebastian Grund and Nouria El Mehdi (all LEG); and Natalia Aivazova, Elena Budras, Joanna Grochalska, Phil de Imus, Sanjeev Matai, Machiko Narita, Randa Sab, Nelson Sobrinho, Marta Spinella, Joseph Thornton, and Niklas Westelius (all FIN). - Administrative assistance provided by Alexandra Panagiotakopoulou and Linda Bisman (SPR). ### Contents overview (selected chapters and appendices as listed) - CHAPTER I: FACILITIES ARCHITECTURE OVERVIEW (page 7) - CHAPTER II: EXTENDED CREDIT FACILITY (page 26) - CHAPTER III: STANDBY CREDIT FACILITY (page 62) - CHAPTER IV: RAPID CREDIT FACILITY (page 93) - CHAPTER V: POLICY SUPPORT INSTRUMENT (page 115) - APPENDICES include: - I. Documentation and Review Process (page 135) - II. Quantitative Conditionality (page 147) - III. Staff-Monitored Programs and Other Track Records (page 155) - IV. HIPC and MDRI (page 159) - V. Poverty Reduction Objectives in the Context of Operations Under the Fund’s Facilities for Low-Income CountriesI (page 163) - VI. Eligibility to Use the Fund’s Facilities for Concessional Financing (page 171) - VII. The Catastrophe Containment and Relief Trust (page 175) - VIII. Access Norms—History and Key Facts (page 179) _Executive Summary — 2023 LIC Facilities Handbook (March 28, 2023)_ ### CHAPTER I: FACILITIES ARCHITECTURE OVERVIEW ### CHAPTER I: FACILITIES ARCHITECTURE OVERVIEW ### A. Background — objectives, history, and funding strategy - Purpose: The Fund’s concessional facilities aim to provide flexible and tailored support to low-income countries (LICs) to achieve, maintain, or restore a stable and sustainable macroeconomic position consistent with strong and durable poverty reduction and growth. - Reform milestones: - July 2009: Executive Board adopted a comprehensive overhaul of the Fund’s concessional facilities’ architecture. - January 7, 2010: Enhanced Structural Adjustment Facility (ESAF) Trust transformed into the Poverty Reduction and Growth Trust (PRGT). - September 2012: Executive Board adopted a three-pillar strategy to make the PRGT financially sustainable consisting of: - (i) base envelope — initially SDR 1¼ billion and increased to SDR 1.65 billion in 2021 in annual lending capacity; - (ii) contingent measures if average financing needs exceed the base envelope by a substantial margin for an extended period; - (iii) a principle of self-sustainability under which future modifications would ensure demand can be met under pillars (i) and (ii) under a plausible range of scenarios. - PRGT eligibility and scale: - Based on the last review concluded on February 19, 2020, 69 IMF member countries are currently PRGT-eligible. - 2018–19 Review of LIC Facilities (LICFR) — key reforms approved May 2019: - generalized one-third increase in access limits and norms; - additional increase in access to the RCF (and RFI) to better cater to fragile and conflict-affected states (FCS) and states vulnerable to natural disasters; - blending policy reform to enhance targeting of PRGT resources to the poorest and most vulnerable states; - strengthened safeguards for high access and exceptional access cases; - increased flexibility of PRGT instruments through reforms to the SCF and ECF. - July 2021 PRGT Reforms — objectives and funding: - Context: response to the COVID-19 pandemic and its aftermath; Fund lending to LICs saw an eightfold increase in 2020 relative to average lending levels in 2017–19. - Key elements: - 45 percent increase in the normal limits on access to concessional financing; - elimination of hard limits on exceptional access for the poorest countries and modifications to access norms; - changes to blending framework to make it more robust and less complex; - modifications to exceptional access criteria and stronger safeguards to address debt sustainability and capacity to repay given heightened debt vulnerabilities and increasing Fund credit exposure. - Two-stage funding strategy approved to cover cost and ensure PRGT self-sustainability: - First stage: secure SDR 2.8 billion in subsidy resources (to support zero interest rates) and an additional SDR 12.6 billion in loan resources, as soon as feasible; - Second stage (set for 2024–25): seek a more lasting solution to financing the Fund concessional lending model in the context of a full review of LIC facilities. - Relationship between GRA and PRGT: - Under the Articles of Agreement, all Fund members are eligible to access the Fund’s resources in the GRA; no income distinction applies to GRA eligibility. - Only a subsection of membership (developing countries meeting specified income and market access criteria) is eligible for concessional financial support under the PRGT. PRGT-eligible members are advised to seek PRGT financing for LIC needs up to applicable PRGT access limits before seeking GRA resources. ### B. Choosing the appropriate facility — factors and rules of thumb - Three main factors in facility choice: - (i) Duration of adjustment and balance of payments (BoP) needs — time needed to establish a stable and sustainable macroeconomic position. - (ii) Conditionality standard — whether the program meets the upper credit tranche (UCT) quality standard. - (iii) Nature of the balance of payments need — present, prospective, potential, or urgent. - Definitions and thresholds: - Protracted balance of payments problem: resolution expected to extend over normally three years or more. - Short-term balance of payments need: resolution expected to extend over normally two years or less, and in any case not more than three years. - UCT-quality standard: policies designed to provide substantial justification that balance of payments problems are being addressed and that the member can repay Fund resources when due. - Balance of payments needs may be present, prospective, potential, and a present need may be urgent if non-action would result in immediate and severe economic disruption. - Rules of thumb for instrument selection: - Extended Credit Facility (ECF) - Appropriate when a country faces a protracted BoP problem. - UCT-quality program required. - If UCT-quality program not feasible, build track record via a Staff Monitored Program (SMP); RCF can be used concurrently with an SMP if urgent financing is needed. - Standby Credit Facility (SCF) - Appropriate for short-term (present) BoP needs; UCT-quality program generally required. - RCF may be used as an alternative if UCT-quality program not feasible and the need is urgent or transitory. - If institutional capacity constrained, an SMP can be used to build a track record; RCF can be used concurrently with an SMP if urgent needs exist. - Rapid Credit Facility (RCF) - For urgent (present) BoP needs; UCT-quality program not needed. - Provides rapid low-access financing with limited conditionality (no ex post conditionality or reviews). - One-off disbursements; repeated use possible for sudden exogenous shocks or based on 6-monthly track records, but generally no more than two disbursements in any 12-month period (exception: food shock window not subject to the two disbursement limit). - Policy Support Instrument (PSI) - Designed for countries already in a broadly stable and sustainable macroeconomic position. - Nonfinancial instrument; UCT-quality standard required. - Can facilitate later access to SCF or RCF if needed; SCF can be used precautionarily in conjunction with a PSI for potential BoP needs. - Staff-Monitored Program (SMP) - Used to build or rebuild a track record toward a UCT-quality program; UCT-quality not required. - Duration normally 6–18 months and no Board endorsement (subject to September 30, 2022 amendment allowing limited Board involvement in ring-fenced cases, termed PMBs). - Table summary points (selected): - ECF: Protracted BoP problem; time needed ≧ 3 years; UCT-quality required; 3 to 5-year duration; PRGS required by 2nd review. - SCF: Short-term BoP need; time needed ≦ 2 years (not > 3 years); UCT-quality required; 1 to 3-year duration; precautionary use possible. - RCF: Urgent BoP need; UCT-quality not needed; urgent present BoP need must exist; one-off disbursements; no ex post conditionality or reviews. - PSI: Broadly stable macroeconomic position; UCT-quality required; 1 to 4-year duration, extendable to 5 years. - SMP: Could be short term or protracted; UCT-quality not required; duration normally 6–18 months. ### C. Access limits, norms, and procedural safeguards — key numeric parameters - Cumulative access limits (current): - All PRGT facilities-normal: 435 - RCF (regular window): 100 - RCF (exogenous shock window): 100 - [150 until June 30, 2023] - [175 if food shock window is used] - RCF (large natural disasters window): 133.33 - [183.33 until June 30, 2023] - RFI (regular window): 100 - [150 until June 30, 2023] - [175 if food shock window is used] - RFI (large natural disasters window): 133.33 - [183.33 until June 30, 2023] - Annual access limits (current): - All PRGT-facilities-normal: 145 - RCF (regular window): 50 - RCF (exogenous shock window): 50 - RCF (large natural disasters window): 80 - RCF (food shock window): 50 - RFI (regular window): 50 - RFI (large natural disasters window): 80 - RFI (food shock window): 50 - Per disbursement limit: - RCF (regular window): 25 - Norms: - 3-year ECF: 145 - 18-month SCF: 145 - RCF (annual access under the regular window): 25 - Blending proportions applicable to members presumed to blend (PRGT:GRA): - 1:2 with concessional access capped at 145 percent of quota per arrangement (all GRA thereafter). - Triggers for procedural safeguards on high access requests: - Total access in any 24-month period—for DSA (update): 80 - Informal Board Meeting as soon as management agrees that a new or augmented high access arrangement could be appropriate. - Total access in any 36-month period in excess of 240 percent of quota, or total PRGT credit outstanding to exceed 300 percent of quota at any point during the program period. - Triggers for enhanced safeguards: - ES1a and ES1b; ES2 (see Box 3). - Annual access in excess of 100 percent of quota, or cumulative access in excess of 300 percent of quota, or at high risk of debt distress or in debt distress. - Lapse of Time procedures: - Augmentations above which Lapse of Time procedures are not permitted: 15 *Source: CHAPTER I: FACILITIES ARCHITECTURE OVERVIEW (ppea2023020) — 2023 LIC FACILITIES HANDBOOK* ### 2023. Any RFI access also counts towards these limits. Note that the RFI is a GRA instrument. ### ppea2023020 - 2023. Any RFI access also counts towards these limits. Note that the RFI is a GRA instrument. ### C. Blending - Presumption and objective: - To target scarce concessional PRGT resources to the Fund’s poorest and most vulnerable members, there is a presumption that higher income PRGT-eligible countries will receive PRGT-financing only in a blend with GRA resources (referred to as presumed blenders). - Blending signals movement toward middle-income or emerging market status. - Criteria for being a presumed blender: - Income criterion: - A country meets the income threshold for blending when its annual GNI per capita has exceeded the prevailing IDA operational cutoff by at least 5 percent for two consecutive years. - After qualification, the country continues to meet the income threshold unless its annual GNI per capita falls below 95 percent of the IDA operational cutoff; if it falls below 95 percent, the country no longer meets the income threshold and would no longer be a presumed blender until it re-qualifies. - Debt vulnerabilities that limit access to international financial markets: - A country is deemed to have such vulnerabilities if (i) it is assessed to be in debt distress; or (ii) it is assessed to be at high risk of debt distress (using the most recent joint Bank-Fund LIC DSA) and either a) has had limited past access to international financial markets or b) is a small state (population below 1.5 million) or microstate (population below 200,000). - Countries are assessed to have had limited past access to markets if they do not meet the criterion of “durable and substantial access to international financial markets” as defined in the first test of market access in the PRGT eligibility decision. - Access modalities: - Presumed blenders can access PRGT resources only in a blend with GRA resources. - Non-presumed blenders may access PRGT resources exclusively. - For presumed blenders, the blending rules stipulate a 1:2 mix of PRGT and GRA resources. - Access to concessional resources for presumed blenders is capped at 145 percent of quota per arrangement and subject to the overall limits on access to the PRGT; amounts above this level must be met from the GRA. - PRGT financing is also subject to the limit on normal cumulative access to the PRGT of 435 percent of quota. - RCF sub-limits apply where relevant; the RCF portion in blended RCF/RFI cases is limited by applicable RCF window sub-limits in addition to overall PRGT access policies. - Cross-references and tools: - The standard access criteria are: (i) the member’s balance of payments need; (ii) the strength of its program and capacity to repay the Fund; and (iii) the amount of outstanding Fund credit and the member’s record of past use. - The most recent joint Bank-Fund LIC Debt Sustainability Analysis (DSA) is used for debt vulnerability assessments. ### D. Access Limits and Access-Related Safeguards - Purpose of access limits: - Balance providing members and markets confidence about the scale of possible Fund financing with preserving Fund liquidity and the revolving character of Fund resources. - Support the Fund’s catalytic role and reduce risk that members become unable to repay the Fund. - All PRGT-eligible members can access concessional resources up to normal limits; exceptional access above normal limits is available only to the poorest LICs (those that do not meet the income criterion for blending). - Normal access limits: - Normal annual access limit: - Annual access to financing under the PRGT should normally not exceed 145 percent of quota across all concessional facilities. - Application considers access in any 12-month period on a backward- and forward-looking basis; the annual access limit applies to the sum of disbursements on a gross basis within any 12-month period. - The calculation uses availability dates under the phasing provision for current arrangements; past scheduled amounts are counted whether drawn or not. For past (expired or canceled) arrangements, only actual disbursements are counted. For past RCF approvals, the date of approval of the outright loan disbursement is used irrespective of drawing. - Normal cumulative access limit: - Cumulative access under the PRGT should normally not exceed 435 percent of quota, net of scheduled repayments. - Cumulative access is the sum of all disbursed and committed PRGT financing on a net basis; total outstanding concessional credit cannot normally exceed 435 percent of quota at any point in time based on projected disbursements and repayments. - Temporary and historical adjustments: - Annual access limits were temporarily increased to 245 percent of quota in response to the Covid-19 pandemic and decreased to 145 percent of quota end-December 2021 (level approved by the Board on July 14, 2021). - A “transition rule“ applies to countries that entered a new arrangement or received an augmentation or emergency financing between March 22, 2021 and end-2021. - The cumulative limit on access to PRGT resources was raised from 300 to 435 percent of quota in March 2021 and maintained in July 2021. - Absent a new Board decision, the 435 percent cumulative limit will continue until the next full review of LIC facilities, expected to be conducted in 2024–25. - High access: - Definition and triggers: - High access refers to requests that would bring (i) total access under all concessional facilities to more than 240 percent of quota, based on cumulative past and future scheduled disbursements in any 36-month period (the “flow” trigger) or (ii) total outstanding PRGT credit to above 300 percent of quota at any point over the lifetime of the existing or proposed arrangement (the “stock” trigger). - The flow and stock triggers were originally set at 180 percent and 225 percent of quota, respectively, and were increased to 240 and 300 percent of quota on March 22, 2021; these levels were decided to remain until the next full review of LIC facilities. - Procedural safeguards: - Financing requests that entail high access, even if within normal limits, are subject to enhanced procedural safeguards including an early informal staff consultation with the Executive Board before the negotiation mission. - Staff should provide a short note in advance of the informal Board meeting including information on BoP needs, key program measures, debt sustainability and capacity to repay, impact on PRGT finances, and timeframe for program discussions. - Exceptional access: - Eligibility and conditions: - Exceptional access above normal limits can be made available to PRGT-eligible countries that: (i) experience or have the potential to experience exceptional BoP pressures resulting in financing needs that cannot be met within normal limits; (ii) have risks to public debt sustainability adequately contained—i.e., rigorous and systematic analysis indicates a high probability that public debt is sustainable in the medium term (generally considered met for countries assessed under the LIC-DSF as having low or moderate overall risk of public debt distress), or where policies and non-Fund financing (which may include debt restructuring) restore sustainability with high probability within 36 months or within the period of a newly approved arrangement (whichever is longer), or within the remaining period in an augmentation/rephasing case; (iii) do not meet the income criterion for presumed blending when making a new financing request (including augmentation/rephasing); and (iv) have a policy program that provides a reasonably strong prospect of success, including institutional and political capacity to deliver adjustment. - As of July 14, 2021, there are no longer hard limits on exceptional access to PRGT resources for PRGT-eligible countries that meet these criteria; amounts exceeding normal access limits may be approved if criteria are satisfied. - Procedural safeguards: - Procedural safeguards similar to those for high access apply to exceptional access, including early informal Board engagement and provision of specified informational requirements. - Exceptional and high access procedures (Box 1 summary): - Early engagement via an informal Board meeting is required once management agrees that high or exceptional access could be appropriate and before the negotiation mission. - Informational requirements provided in advance to the Board should include: - The factors underlying the large BoP need, after accounting for donor financing. - A brief summary of main policy measures and macroeconomic framework. - Expected program strength and assessment of capacity to repay, including updated capacity-to-repay table. - Analysis of debt vulnerabilities, including identification of potential data weaknesses and discussion of results from “realism” tools in the LIC DSF. - Reference to impact on PRGT concessional resources. - Likely timetable for discussion with authorities. - An SEI table. - DSA charts. - The informal Board meeting should take place as soon as management concurs a request involving exceptional or high access could be appropriate to ensure Directors’ views are reflected in negotiations. - High Combined Access and PS-HCC: - Policy safeguards apply when combined GRA-PRGT exposure would exceed normal GRA access limits (Policy Safeguards for High Combined GRA and PRGT Credit, PS-HCC). - In March 2023, PS-HCC thresholds were temporarily increased from 145/435 percent of quota to 200/600 percent of quota annually/cumulatively in line with temporary 12-month increase in GRA annual/cumulative access limits, effective until March 4, 2024. - PS-HCC safeguards are broadly aligned with criteria and procedures applied in the GRA exceptional access framework. - Combined high access requests—like exceptional access—are expected to be exceptional. - PS-HCC criteria (Box 2a summary): - Criterion 1: Member is experiencing or has potential to experience exceptional BoP pressures that cannot be met without access in excess of PS-HCC thresholds. - Criterion 2: Risks to public debt sustainability are adequately contained: - For members where LIC-DSF is warranted: rigorous analysis indicates a high probability public debt is sustainable in the medium term (generally low or moderate overall risk under LIC-DSF); or where public debt is not assessed sustainable, combined access above thresholds is only available if policies and non-Fund financing (which may include debt restructuring) restore public debt sustainability with high probability within 36 months (or within the arrangement period). - For members where SRDSF is warranted: the debt sustainability requirements for providing exceptional access to GRA resources are met. - Criterion 3: Member’s policy program provides a reasonably strong prospect of success, including institutional and political capacity to deliver adjustment. *Italic: Source: 2023 LIC FACILITIES HANDBOOK: FACILITIES ARCHITECTURE OVERVIEW* ### Box 2a. PRGT Facilities Framework: Policy Safeguards for High Combined Credit (PS-HCC) ### Box 2a. PRGT Facilities Framework: Policy Safeguards for High Combined Credit (PS-HCC) ### Scope and applicability of the PS-HCC - Applies to: - a new arrangement in the GRA or under the PRGT; - a purchase under the RFI or a loan under the RCF; - an augmentation of access under an arrangement in the GRA or under the PRGT; or - a rephasing of scheduled purchases or disbursements under an arrangement approved after September 9, 2020, when access under the arrangement has not previously exceeded the HCC thresholds. - Procedural requirements for the PS-HCC are similar to PRGT (and GRA) exceptional access procedures. ### Procedural requirements (Box 2b) - Early Board consultation: - An informal Board meeting is required as soon as management determines that new or augmented access to resources in the GRA and/or in the PRGT exceeding the thresholds for high combined credit exposures may be appropriate. - An informal meeting is also required for a rephasing of approved access that would cause the thresholds to be exceeded where neither the annual nor the cumulative threshold for combined credit exposures have been previously exceeded. - In advance of the meeting, staff will circulate a note to the Board with a preliminary evaluation of the three substantive criteria applying under the proposed policy safeguards. Strict confidentiality requirements will be maintained. - The note will include the following elements: - The factors underlying the exceptional Balance of Payments need in the current or capital account, taking into account financing from donors; - A brief summary of main policy measures and the macro framework; - The assessment of a reasonably strong prospect of success under the third criterion will require, in addition to the specifications under the criterion, an assessment of capacity to repay including a capacity to repay table; - The impact on Fund resources, including the impact on the Fund’s concessional resources; - An analysis of debt vulnerabilities, including a preliminary DSA assessment and typically DSA charts; - A discussion of any deficiencies in the quality/transparency of public debt data; - The likely timetable for discussion with authorities; and - A Selected Economic Indicators table. - Consultation with Executive Directors: - Additional consultations with Executive Directors will normally be expected between the initial informal meeting and the Board's consideration of the staff report. - Briefings will aim to keep the Board abreast of program-financing parameters, including assumed rollover rates, economic developments, progress in negotiations, any substantial changes in understandings, and any changes to the initially envisaged timetable for Board consultation. - Staff reports: - The case for Fund financing above the thresholds for high combined PRGT and GRA credit exposures based on the three substantive criteria will be discussed in the staff reports at approval of the new financing request, and at each program review where the financing request, if approved, would result in credit exceeding the specified thresholds. - The staff report would be expected to discuss the impact of the financing request on Fund resources, including the impact on concessional resources, and credit risk exposure to the Fund where warranted. - Ex post Evaluation: - An ex-post evaluation (EPE) by the staff of arrangements that entail combined access exceeding the proposed thresholds will be expected within a year after the end of the arrangement. - Concurrence across PRGT and GRA procedures: - Where envisaged use of Fund resources also entails PRGT high access or PRGT EA, both the PRGT high access/EA informational requirements and the proposed policy safeguards procedures will apply. - Where envisaged use of Fund resources also entails GRA EA, the EA procedures under the GRA and the procedures under the proposed policy safeguards will both apply. - In cases that entail both PRGT high access/EA and GRA EA, only the EA procedures under the PRGT and GRA will apply. - In concurrent cases, the early Board consultation will involve one informal Board meeting and a single concise note meeting the substantive informational requirements under the applicable policies. ### New enhanced safeguards for debt sustainability and capacity to repay (ES) - Rationale: - New enhanced safeguards (ES) introduced in 2021 call for greater scrutiny of debt and capacity to repay (CtR) risks in requests for new PRGT arrangements or augmentations where access falls above certain thresholds or debt vulnerabilities are high. - The ES were introduced to address the gap created by the July 2021 increase in normal annual and cumulative access limits under the PRGT to 145 and 435 percent of quota, respectively, recognizing the need for stronger safeguards given rising debt vulnerabilities among LICs. - Triggers for ES: - Financing requests that: - (i) entail access to PRGT resources above 100 percent of quota annually or 300 percent of quota cumulatively, or - (ii) come from countries assessed to be at high risk of debt distress or in debt distress under the LIC-DSF. - Required program-document content when ES are triggered: - A more granular discussion of the composition and evolution of debt, with focus on external debt that is more difficult to restructure. Program documents must show two distinct breakdowns of public external debt: - i) de facto senior debt (debt to the IMF; debt to the World Bank and other international financial institutions; known collateralized debt) and other debt; and - ii) multilateral versus official bilateral versus private debt (ES1a). - An enhanced CtR analysis informed by cross-country comparisons of metrics of Fund exposure — the evolution of projected Fund debt and debt service relative to key economic metrics over the course of the repayment period as compared with other PRGT programs, supported by a set of standardized charts provided by the Finance Department. Where financing requests would result in comparatively elevated levels of key capacity to repay indicators, the staff report would examine the severity of the implied risks and explain how program design — including access, phasing, and conditionality — seeks to mitigate these risks (ES1b). - In cases involving countries at high risk of debt distress or in debt distress, program documents must include a discussion of the explicit program objective to reduce debt vulnerabilities (ES2). Reducing debt vulnerabilities would typically involve reducing breaches of thresholds for the four key indicators in the LIC-DSF over the program period under the baseline scenario. - Scope and exceptions: - The ES do not apply to program reviews (unless there is an augmentation request), emergency financing, or non-financial instruments. - In cases that involve exceptional access to PRGT resources, ES2 does not apply as it is automatically satisfied through more stringent debt sustainability safeguards under the PRGT exceptional access policy. ### Key thresholds and dates referenced - Rephasing applicability cutoff: arrangements approved after September 9, 2020. - PRGT normal annual and cumulative access limits (post-July 2021): 145 and 435 percent of quota, respectively. - Prior PRGT normal annual and cumulative access limits (prevailing up to July 2021): 100/300 percent of quota annually/cumulatively. - ES trigger access thresholds: above 100 percent of quota annually or 300 percent of quota cumulatively. - EPE timing: within a year after the end of the arrangement. *International Monetary Fund — 2023 LIC FACILITIES HANDBOOK: FACILITIES ARCHITECTURE OVERVIEW (Box 2a, Box 2b, Box 3).* ### 29. Extensions must be requested by the member and approved by the Board before the ### ppea2023020 - 29. Extensions must be requested by the member and approved by the Board before the ### Extensions: approval, conditions, and procedural modalities - Extensions must be requested by the member and approved by the Board before the expiration of the arrangement period. - Extensions are only possible if they are needed to allow for the disbursement of amounts under the arrangement; extensions are not possible when all scheduled amounts have already been disbursed. - Extensions are not automatic and are subject to appropriate conditions consistent with the terms of assistance under the ECF. - Extensions that involve rephasing and/or augmentations of access: - Normally approved by the Board on the basis of a request in an LOI and in the context of a program review (completion of the review demonstrates program is on track). - In exceptional circumstances (e.g., severe natural disaster preventing timely final review), rephasing extensions may be approved by the Board outside a scheduled program review if authorities and staff have understandings on appropriate policies documented by a letter from the authorities. - Board approval outside a review requires a staff report discussing reasons for the extension, why it is proposed outside a review, status of the program, and relevant policy understandings. - Short-term “technical” extensions (a few weeks or months) where no rephasing or access changes are needed: - Can be granted outside the context of a review if authorities and staff have reached (or are expected to reach imminently) understandings on policies to complete the review. - Board approval generally via a very short staff paper with lapse-of-time (LOT) Board approval; staff paper undergoes regular departmental review and must explain status of discussions, document preparation, and policy understandings. - ECF arrangements may be cancelled by the authorities at any time (e.g., when macroeconomic imbalances resolved, authorities lack capacity or commitment, or objectives/modalities of policies change substantially). - Arrangements automatically expire once all available amounts have been disbursed. - ECF arrangements will automatically terminate before scheduled terms if no program review has been completed over an 18-month period. - The Board may, at the authorities’ request, delay termination for up to three additional months—provided this extension does not fall outside the existing period of the arrangement—if an understanding between authorities and staff on targets and measures appears imminent. - The arrangement automatically expires at the end of that extended period unless a program review is completed within this period. ### Concurrent use of facilities and blending - Concurrent use: - The ECF cannot be used concurrently with the SCF or PSI; any pre-existing SCF arrangement or PSI must be cancelled before an ECF arrangement can be approved, and vice-versa. - A member cannot obtain RCF financing if an ECF arrangement is in place and on track. - RCF financing during an ECF arrangement can be provided only when: - (i) ECF disbursements are not possible (e.g., due to policy slippages or delays in program discussions); - (ii) qualification requirements for the RCF are met, including the existence of an urgent balance of payments need and relevant policy commitments; and - (iii) the balance of payments need is primarily caused by a sudden exogenous shock. - Implementation of policy commitments made in the LOI for the RCF request could serve as a track record to bring the ECF-supported program back on track. - In the absence of an urgent financing need, a track record could be built through an SMP. - The ECF can be used concurrently with GRA financing under certain circumstances. - Blending: - When providing financial assistance with blended resources, ECF resources will normally be provided together with GRA resources under the EFF. - Concurrent financial assistance under an ECF arrangement and an SBA would only be expected where pre-existing ECF support is supplemented by SBA financing later (including when an ECF arrangement initially blended with EFF financing is extended beyond four years, as EFF arrangements are limited to a four-year period). - Financing through the RFI under the GRA during an ECF arrangement would be expected only if the ECF-supported program is off track; RFI purchases would typically be combined with RCF disbursements. - Modalities of blended financial assistance broadly mirror stand-alone ECF arrangements (three-to five-year program, single set of program conditions, schedule of disbursements and reviews). - Differences under blending include: - Disbursements involve both PRGT and GRA resources, implying lower average concessionality than stand-alone ECF. - EFF qualification requirements must be met (e.g., clearly articulated structural reform agenda); if access under EFF were above GRA normal access limits, member would need to meet GRA Exceptional Access criteria. - Each disbursement under an ECF arrangement is linked to a specific test date, whereas EFF purchases are conditioned upon observance of Performance Criteria related to the most recent test date (“controlling” PCs). - Resulting implications: - Reviews under the EFF component of blended assistance may require waivers of applicability under certain circumstances. - Resources relating to the ECF component may be disbursed based on an earlier test date while EFF component resources are made available against a later test date. ### Access: determination, norms, limits, phasing, and blended rules - Determination of access—Main criteria (case-by-case basis): - (i) the member’s (present and prospective) balance of payments need (taking into account all projected balance of payments flows, including reserve accumulation and financing from other sources); - (ii) the strength of its program and capacity to repay the Fund (taking into account the member’s policy plans, adjustment effort, commitment to implement the program, institutional capacity, track record of policy implementation, and country circumstances such as vulnerabilities, imbalances, and debt sustainability); - (iii) the amount of outstanding Fund credit and the member’s record of past use. - All else equal, higher access is generally associated with a stronger program, stronger track record, and stronger capacity to repay. - Access principles: - Access may generally not exceed the member’s present and prospective balance of payments needs during the program period, and would typically be less than total financing needs, noting ECF programs are expected to catalyze financing from donors and creditors. - Unlike GRA/SCF/RCF financing, an ECF arrangement can be approved and individual disbursements made even in the absence of a present balance of payments need, provided the Executive Board has found the member is experiencing a protracted balance of payments problem at approval. Members do not need to represent they have a balance of payments need to request individual disbursements. - Access Norms: - Access norms apply to stand-alone ECF arrangements. - The access norm for a three-year ECF arrangement is 145 percent of quota. - For ECF arrangements longer than 3 years, the access norm is scaled up proportionally to the length of the arrangement (i.e., the norm is 145/3 percent of quota per year). - Access norms provide general guidance and do not represent ceilings, floors, or entitlements; access can deviate from norms if warranted by standard criteria. - Special case: members with a protracted balance of payments problem but minimal present or prospective balance of payments needs over the course of the ECF arrangement: - Practice has been to set access at a standardized level of 10 percent of quota per arrangement. - This low level is appropriate even when potential balance of payments needs are substantial because the ECF arrangement can be augmented if needs materialize. - The precautionary use of the ECF is not envisaged; members routinely draw amounts as they become available under the ECF irrespective of present balance of payments needs. - Access Limits: - A member’s total access under all concessional facilities in the PRGT is subject to “global” annual and cumulative limits, including credit outstanding and disbursements under the ECF, SCF, and RCF. - Total access to financing under the PRGT should normally not exceed 145 percent of quota per year across all concessional facilities. - Total access to financing under the PRGT should normally not exceed 435 percent of quota cumulatively, net of scheduled repayments. - Exceptional access: in exceptional circumstances, access above normal limits can be made available to PRGT-eligible countries that meet the exceptional access criteria. - Phasing of access: - Phasing of ECF access, determined at approval, must take into account applicable annual access limits, but does not have to mirror projected evolution of balance of payments needs over the arrangement. - Access should normally be phased smoothly but can be front-loaded or back-loaded if warranted by program strength, timing of key reforms, and/or time profile of balance of payments needs. - Significant front-loading has been applied in exceptional cases (e.g., repayment of emergency assistance to the Fund, arrangements following clearance of overdue obligations as part of arrears clearance strategies). - Standard practice for staff reports: present the balance of payments such that scheduled IMF disbursements plus other exceptional financing items do not exceed the overall balance of payments deficit and programmed reserve accumulation in any given period. - The PRGT instrument requires availability dates for disbursements to not be phased more than 6 months apart. - This rule does not apply to the interval between approval and the first review, which may be spaced more than 6 months apart if warranted. - Availability dates for disbursements should normally be phased at regular intervals, with some flexibility (e.g., reviews may be spaced 4 rather than 6 months to align with budget cycles). - Access under blended financial assistance: - When financing is blended under an ECF arrangement and a GRA arrangement for a presumed blender, the standard PRGT access norm does not apply; access under blended assistance is subject to specific rules. - Total access is still determined based on the standard criteria and should be comparable across similar country cases regardless of blending. - For presumed blenders: - Access to the concessional (ECF) component is in a 1:2 ratio of PRGT to GRA resources, with access to the concessional component capped at 145 percent of quota per arrangement and subject to overall PRGT limits on access. - Any additional needs are met through GRA financing. - At approval of a new ECF arrangement involving blended GRA assistance, each scheduled disbursement should generally involve both ECF and GRA resources. - For GRA resources, phasing and PCs apply only to purchases above the first credit tranche. - Shares of ECF and GRA financing at each disbursement can be determined individually, but generally reflect the 1:2 blending ratio unless reason to deviate exists. ### Augmentations and reductions of access - Access under an ECF arrangement can be augmented to meet larger balance of payments needs or to support a strengthening of the program. - Augmentation is often appropriate in the context of shocks unless the ECF-supported program is off track (in which case RCF financing may be appropriate). - When an ECF arrangement period is extended, the extension period may involve balance of payments needs not originally included, which can justify augmentation. - Augmentations based on program strengthening could occur if access was initially constrained by a high risk of debt distress that later subsided. - Under the Trade Integration Mechanism (TIM), augmented access not exceeding 10 percent of quota will be available to compensate balance of payments shortfalls arising from trade liberalization measures implemented by other countries. *International Monetary Fund — 2023 LIC FACILITIES HANDBOOK: EXTENDED CREDIT FACILITY* ### 50. Determination of access for an augmentation is based on the standard access criteria, ### 50. Determination of access for an augmentation is based on the standard access criteria, ### Basis for augmentations and timing - Determination of access for an augmentation is based on the standard access criteria, including balance of payments need and strength of the program. - No norms applicable to the size of an augmentation, but augmentations under PRGT-supported programs have been in the range of 15–60 percent of quota for arrangements approved from 2010-2021, with a few cases well above this range. - Staff reports in support of requests for augmentations should explicitly discuss the basis for the augmentation and its size, with reference to the main criteria for determining access, as well as to access norms and limits as applicable. - Augmentations would normally be approved at the time of a scheduled review under the arrangement. - When the increase in underlying balance of payments problems is so acute that the augmentation cannot await the next scheduled review, an augmentation can be requested outside of scheduled reviews. - Approval of such augmentations at an ad hoc review requires an assessment by the Board that the program is on track to achieve its objectives at the time of the augmentation (otherwise access under the RCF can be requested). - In making this finding, the Fund as Trustee will consider the member’s observance of the continuous performance criteria or whether a waiver of nonobservance is justified, that prior actions (if applicable) have been met, and that the member’s policies are suitable to address its balance of payments problems and, more generally, are consistent with program objectives. - The Board also takes into account any other relevant considerations, including exogenous developments and data on periodic PCs linked to future disbursements. ### Modalities for augmentations at ad hoc reviews - If the scheduled review associated with the most recent availability date preceding the augmentation request has not been completed, an augmentation request cannot be approved at an ad hoc review. - Requests are expected to be supported by a short staff report and an LOI from the member describing the nature and size of the problem, the policies being undertaken by the authorities to address its balance of payments difficulties, and any information relevant to program implementation, including exogenous developments. - Requests typically follow soon after a completed review; updating developments and policies along the lines described could suffice, with a more comprehensive assessment at the next scheduled review. - Augmentations of access approved in ad hoc reviews are only available to the member in a single disbursement following approval by the Board. - There is no limit on the amount of such a disbursement subject to the overall access limits and norms. - The augmentation is subject to blending rules and may be supplemented by a corresponding augmentation of the arrangement under the GRA. - The amount of the disbursement is limited to what is immediately needed by the member in light of its balance of payments difficulties; additional needs should be requested at a scheduled review. - The new disbursement approved at the ad hoc review is subject to observance of the continuous PCs under the arrangement, including the accuracy of information on the implementation of such PCs and of any prior actions established for that disbursement, as well as any other conditions as determined by the Board. - It is not subject to periodic PCs and other conditions linked to the remaining disbursements under the arrangement. - The augmented access is available upon the Executive Board’s approval at an ad hoc review, and the member may request to draw such disbursement at any time until the availability date of the next scheduled disbursement under the arrangement. - Augmentation requests at ad hoc reviews that do not exceed 15 percent of quota are eligible for approval on a LOT basis. - A scheduled review following an ad hoc review to consider an augmentation request is expected to undertake a comprehensive review of policies and cannot be completed on a LOT basis. ### Blending, limits, and exceptional combined access - For augmentations of access under arrangements presumed to involve blended PRGT and GRA resources, access should be set such that the total financing mix over the full course of the arrangement is guided by the specific rules on access under blended arrangements, including that total access (post-augmentation) to concessional financing would be one-third of total overall access to Fund resources, subject to a cap on the concessional component at 145 percent of quota. - For augmentations that result in combined access to PRGT and GRA resources above GRA access limits, the PS-HCC apply. - In March 2023, the PS-HCC thresholds were temporarily increased from 145/435 percent of quota to 200/600 percent of quota annually/cumulatively in line with the temporary 12-month increase in GRA annual/cumulative access limits, effective until March 4, 2024. ### Reductions in access - Access under an ECF arrangement could in principle be reduced rather than augmented. - The Fund will not unilaterally reduce access because of developments in the member’s balance of payments, unless such developments are substantially more favorable than envisaged at the time of approval and the improvement derives in particular from improvements in the external environment. ### Procedural safeguards for high-access requests (DSAs, ES, and informal Board meetings) - Staff report for any arrangement request or augmentation should provide an up-to-date assessment of debt vulnerabilities, with explicit reference to the impact of new borrowing from all sources, including prospective IMF disbursements. - A new DSA is required for any financing request under the PRGT (augmentation or new arrangement) if it: - (i) involves exceptional access to concessional resources; - (ii) brings total access, i.e., cumulative disbursements, under all concessional facilities to more than 80 percent of quota based on past and future scheduled disbursements in any 24-month period; - (iii) involves a member country with a high risk of debt distress or in debt distress. - All DSAs (full DSAs and updates) should be prepared jointly by Fund and Bank staff and must be submitted to both the IMF and IDA’s Executive Boards. - New enhanced safeguards (ES) introduced in 2021 call for greater scrutiny of debt and capacity to repay (CtR) risks in requests for new PRGT arrangements or augmentations where access falls above certain thresholds or debt vulnerabilities are high. - An early informal Board meeting is required if a financing request involves (i) exceptional access or (ii) high access to concessional financing. - Staff would provide early notice to the Board (for instance in an informal country matters session) of upcoming arrangement requests or augmentations where the envisaged financing commitment, in absolute terms, would have a large impact on the Fund’s overall concessional resources. - Exception: The requirement for a new DSA or a Board brief in high access cases does not apply for new financing requests of 15 percent or less of quota. - Requests resulting in combined PRGT and GRA access in excess of GRA normal access limits are subject to the PS-HCC (see above for temporary thresholds). ### Financing terms (ECF) - Repayments of ECF credit are made in 10 equal semi-annual installments, subject to a 51/2-year grace period from the date of the first disbursement and 10-year final maturity. - The authorities may decide to make early repayments at any time but would not be expected to do so. - Interest is paid semi-annually. - The interest rate on ECF credit is currently set at zero percent, but subject to biennial Board reviews that take account of developments in world interest rates. - At each review, interest rates would normally be adjusted if warranted by the prevailing SDR rate, within a 0.0–0.50 percent range for the ECF. - The new interest rate would apply to all outstanding ECF credit. - The next review of the PRGT interest rate structure will be completed by no later than end-July 2023. - Note: Based on the application of the PRGT interest rate mechanism, the interest rate on the ECF has been set at zero for the period July 2021–July 2023. This does not apply to interest on any overdue interest or overdue repayments of PRGT loans, which is charged at a rate equal to the SDR interest rate. ### Financing assurances, arrears, and safeguards - Financing assurances - ECF arrangements can only be approved (and reviews completed) when the program is fully financed. - Staff must confirm that the program is fully financed, i.e., “firm commitments” are in place over the 12 months immediately following the approval of the arrangement (and the completion of each review), and there are “good prospects” that financing will be adequate for the remaining program period beyond the upcoming 12 months. - Staff should assess that the member country has the capacity to repay the Fund based on medium-term balance of payments projections and, for new arrangements or augmentations, the standardized table on indicators of the capacity to repay the Fund as well as an enhanced CtR analysis informed by cross-country comparisons of metrics of Fund exposure whenever applicable. - Arrears policies and treatment - When a member is in arrears to external creditors, the Fund’s arrears policies must be satisfied for the Fund to lend. - The Fund has three arrears policies: - (i) the Non-Toleration Policy (NTP) — applies to certain official claims; - (ii) the Lending Into Official Arrears (LIOA) policy — applies to claims held by official bilateral creditors in some circumstances; - (iii) the Lending Into Arrears (LIA) policy — applies to arrears to private creditors. - International Financial Institutions (IFIs): - With respect to IFIs, the IMF’s NTP applies (except for possible exceptions where the LIOA policy would apply). - Determination depends on whether official sector involvement (“OSI”) is required and the nature/treatment of the institution in the restructuring. - Country teams should seek guidance from LEG and SPR on the application to specific IFIs. - Macroeconomic program assumptions should be consistent with expected resolution of existing arrears to IFIs. - Official bilateral creditors: - If arrears arise in a program where the economic parameters do not require restructuring of the underlying claim (non-OSI cases), the Fund’s NTP applies, requiring tacit approval of an official bilateral creditor’s Executive Director (i.e., non-objection at the Board meeting). - If arrears arise where restructuring is required (OSI cases), the Fund may provide financing notwithstanding those arrears only under carefully circumscribed circumstances. - Country teams should seek guidance from LEG and SPR on classification and application of LIOA. - Private creditors: - Arrears to private external creditors are covered by the Fund’s LIA policy. - Fund can lend, on a case-by-case basis, in sovereign arrears to private external creditors only where: - (i) prompt Fund support is considered essential for successful program implementation; and - (ii) the member is pursuing appropriate policies and making a good faith effort to reach a collaborative agreement with private creditors. - In preemptive restructuring cases, Fund financing requires adequate assurances that restructuring will be successful; such assurances rest on judgment that a credible restructuring process is underway and will result in sufficient creditor participation to restore debt sustainability within the program’s macro parameters, taking into account official sector commitments. - Approvals and each Fund disbursement are subject to a financing assurances review considering adequacy of safeguards for further Fund use and whether the member’s adjustment efforts are undermined by creditor-debtor developments. - Domestic arrears - ECF-supported programs should also address domestic arrears as part of overall program design. - Specification of policies related to domestic arrears will depend on country context, in particular the fiscal framework. *Source: 2023 LIC FACILITIES HANDBOOK: EXTENDED CREDIT FACILITY* ### 58. Where a member is in arrears to the Fund in the GRA, the Special Disbursement ### 58. Where a member is in arrears to the Fund in the GRA, the Special Disbursement Account, or the SDR Department, or to the Fund as Trustee (including the PRGT and RST) ### Overdue obligations: notification, Board action, and consequences - A request for IMF financing, including under the ECF, will not be approved and disbursements under an existing arrangement will be suspended until the arrears are cleared (PRGT Instrument, Section II, paragraph 1(e)(3) and 3(g)). - Timeline and reporting: - After one month after a financial obligation has become overdue, the Managing Director (MD) will notify the Executive Board that an obligation is overdue. - A report by the MD to the Executive Board will be issued two months after a financial obligation has become overdue, and will be given substantive consideration by the Executive Board one month. - A factual statement noting the existence and amount of arrears outstanding for more than three months will also be posted on the member’s country-specific page on the Fund’s external website. - Once the Executive Board adopts a decision to limit the member’s use of the Trust resources, a press release will be issued. - MD discretion: - The MD may recommend advancing the Executive Board’s consideration of the reports regarding overdue obligations. - The MD may also recommend postponing for up to one-year periods the Executive Board’s consideration of a report regarding a member’s overdue obligations in exceptional circumstances where the MD judges that there is no basis for an earlier evaluation of the member’s cooperation with the Fund. - While a member is in arrears to the Fund, policy support can only be provided through surveillance, technical assistance, and, under certain circumstances, SMPs. - Remedial measures for dealing with PRGT arrears include: - removal from the list of PRGT-eligible countries, - declaration of noncooperation with the PRGT Trust, - suspension of technical assistance. - Annual reporting: - Annual reports and financial statements will identify those members with overdue obligations to the Trust outstanding for more than six months. - References to detailed procedures: - See Appendix II of the PRGT Instrument on the Procedures for Addressing Overdue Financial Obligations to the PRGT and Appendix II of the RST Instrument on the Procedures for Addressing Overdue Financial Obligations to the RST. - See Review of the Fund’s Strategy on Overdue Financial Obligations, Annexes I and II (IMF, 2012e). *Source: 2023 LIC FACILITIES HANDBOOK: EXTENDED CREDIT FACILITY — relevant excerpts.* ### Safeguards Assessments Policy (paragraphs 59–60) - General principle: - Staff should aim to complete a safeguards assessment prior to Executive Board approval of a new ECF arrangement but no later than the first review under the arrangement. - Reporting expectations: - Once the first review under the program has passed, subsequent staff reports should highlight the status of the assessment and, if not completed, reasons for its delay. - Exceptions to full new assessment: - An update assessment would not be required for: - (i) successor arrangements where an assessment was completed no more than 18 months prior to the approval of the successor arrangement; or - (ii) central banks with a strong track record, if a previous assessment was completed within four years and no substantial issues were identified in the prior assessment or subsequent monitoring. - In the latter case, staff would only conduct safeguards procedures based on a review of external audit arrangements and audit results. - Safeguard assessment for regional central banks is conducted every four years. - Scope and content: - Safeguards assessments relate to the borrowing members’ central banks; a separate fiscal safeguards review may be required in some cases involving budget financing. - The safeguards process involves continuous analysis of information obtained primarily through documents and discussions with authorities and the central bank’s external auditors. - It entails evaluation of the central bank’s safeguards framework covering governance, auditing, financial reporting, control systems, autonomy, mandate and legal framework over the life of an arrangement and for as long as Fund credit remains outstanding. - Staff reporting content: - Staff reports should discuss the status of safeguards assessments, any significant recommendations on legislative amendments, and highlight problems in obtaining access to data and deviations from commitments relating to safeguards recommendations. - Safeguards assessment recommendations may be incorporated into conditionality or structural measures under the member’s program. - Coordination: - Close cooperation and coordination between FIN, other functional departments, and area departments is essential for the effective conduct of the safeguards process. - FIN should be kept informed by area departments of safeguards issues, including logistical issues such as the timing of new arrangements and reviews. - Monitoring procedures: - Monitoring procedures are streamlined to follow Post Financing Assessment (PFA) practices: once a member’s credit outstanding falls below the PFA threshold, the monitoring intensity is limited to only a review of the annual external audit results, unless a country continues to be subject to PFA. - References: - See Safeguards Assessments Policy— Review of Experience (IMF, 2015g), Safeguards Assessments Policy—External Expert Panel’s Advisory Report (IMF, 2015h), The Acting Chair’s Summing Up on Safeguards Assessments—Review of Experience (IMF, 2010i and 2015i). - The Fund’s safeguards policy is subject to periodic reviews, with the last review completed in the second half of 2022. See Safeguards Assessments - 2022 Review of Experience (IMF, 2022i). ### Program objectives and design (paragraphs 61–66) - Overall aim: - All ECF-supported programs are aimed at making significant progress toward a stable and sustainable macroeconomic position consistent with strong and durable poverty reduction and growth (see definition in Section A). This would involve addressing, though not necessarily resolving, the country’s entrenched macroeconomic imbalances over the course of the arrangement. - Specific aims (ECF-supported programs should aim to maintain or move toward): - (i) strong and durable poverty reduction and growth, - (ii) low or moderate inflation, - (iii) sustainable fiscal and current account balances, - (iv) limited debt vulnerabilities, - (v) adequate international reserves, and - (vi) sufficient policy and institutional capacity to implement appropriate macroeconomic policies. - Program design alignment: - The design of an ECF-supported program should be aligned with the country’s own poverty reduction and growth objectives. - Specific policy objectives should be clearly articulated in the LOI/MEFP and associated staff report for a new ECF arrangement and would typically include: - Fiscal policies: (i) fiscal stance well anchored to help ensure macroeconomic stability and fiscal/debt sustainability, (ii) revenue and spending policies take due account of the country’s growth and social objectives, and (iii) budgets are guided by medium-term fiscal frameworks to the extent possible; - Monetary policies consistent with inflation, exchange rate, and reserve objectives, while taking due account of cyclical considerations; - Exchange rate policies that ensure a unified exchange rate and a real exchange rate level broadly in line with fundamentals, ensuring a stable and sustainable external position consistent with adequate growth; - Financial sector policies geared toward financial stability and deepening to foster investment and forestall financial crises; - Public financial management reforms aimed at ensuring that resources are tracked, reported, and targeted appropriately (including by providing adequate resources for social and other priority spending), public debt management aimed at supporting debt sustainability, and revenue reforms aimed at broadening the revenue base, and enhancing tax efficiencies; - Other structural reforms that are critical for achieving the program’s macroeconomic objectives. - Fragile and conflict-affected states (FCS) guidance (paragraph 63): - For FCS emerging from conflict and/or facing substantial domestic instability or uncertainties, the design of ECF-supported programs should make full use of flexibility under the ECF to focus on critical near-term objectives, while meeting UCT standards and maintaining consistency with the provisions of the ECF. - The ECF can be used to support a program with conditionality tailored to the unique circumstances of each FCS, with an initial focus on near-term stabilization needs, guided by credible broad medium-term objectives. - At approval, the program should describe broad objectives for the full program period supported by a medium-term macroeconomic framework and DSA and include a detailed statement of the critical policies and measures the member intends to pursue for the first 12 months of the arrangement. - The structural reform agenda and related conditionality would reflect capacity constraints and prioritization of immediate stabilization objectives. - It would be understood that the medium-term framework is subject to higher uncertainty and that medium-term objectives may have to be adapted as circumstances evolve. - Specific policies and measures after the first 12 months would be defined in the context of future reviews, in line with the current provisions of the ECF. - See Staff Guidance Note on the Implementation of the IMF Strategy for Fragile and Conflict Affected States (IMF, 2023a). ### Role of ECF financial support (paragraphs 64–65) - Purposes of Fund support: - The balance of payments support under ECF arrangements can assist countries in smoothing the adjustment process toward a more stable and sustainable macroeconomic position. - The Fund’s financial support can be used both to strengthen the international reserve position of the member country and to provide liquidity for making external payments. - By relaxing external financing constraints, the Fund’s balance of payments support in effect also loosens domestic liquidity constraints of both the public and private sector. - Fund financing reduces the need for retrenchment in the public and private savings-investment balances, thus enhancing policy options (allowing less contractionary fiscal, monetary, and exchange rate policies) and cushioning private sector adjustment (e.g., investment and import declines). - The appropriate mix of financing and public/private adjustment is determined on a case-by-case basis. - Use of domestic counterpart for budget financing: - A member may use the domestic counterpart of resources received under an ECF arrangement to finance, directly or indirectly, the budget deficit of the government. - Direct budget support may be appropriate when: - (i) the program is designed in a manner that envisages that the entire amount of the Fund’s financial support is used to meet a present or prospective balance of payments need, - (ii) loosening fiscal financing constraints is an important macroeconomic objective under the program, and - (iii) the central bank cannot or should not (for legal or institutional reasons) lend to the government while the domestic financial sector is too shallow (or not stable enough) to provide the necessary budget financing (or the central bank plays a largely passive domestic policy role, for instance under a currency board or in a fully dollarized economy). - In these cases, staff reports should justify the use of the domestic counterpart of resources obtained from an ECF arrangement for budget financing where relevant and discuss safeguards implications. - Fiscal safeguards review requirement: - Under the safeguards policy, a fiscal safeguards review of the state treasury should in principle be conducted before the first program review for all arrangements where a member requests exceptional access to Fund resources, and/or if the member expects, at the time of program approval, that at least 25 percent of the funds will be directed to financing the state budget. - This requirement also applies to HCC cases with at least 25 percent of resources directed to budget financing, and to cases where a member requests exceptional access through an augmentation during an arrangement, unless (in the case of the latter) a fiscal safeguards review was completed within the previous 18 months. - A fiscal safeguards review will also be required when the above applicability criteria are met during an arrangement, as a result of (i) a decision to direct the Fund’s resources to budget financing taken at subsequent reviews, or (ii) member’s request for exceptional access (e.g., due to RCF/RFI financing). Such cases will be treated on a case-by-case basis with respect to the timing for completion of the fiscal safeguards review. - However, an updated fiscal safeguards review would not need to be conducted if one was completed not more than 18 months prior. - See IMF, 2015g, 2015h, 2015i, 2010k and 2022i. ### Links to Poverty Reduction Strategies (PRS) and social spending (paragraph 66) - Alignment requirement: - ECF-supported programs should be aligned with the country’s own poverty reduction and growth objectives. - Documentation requirement: - Any financing request or program review under the ECF must be accompanied by a statement, normally in the LOI or MEFP, of how the program advances the country’s poverty reduction and growth objectives. - In cases where a relevant PRS document exists, this description in the LOI/MEFP could cross-reference the PRS document, and the ECF-supported program should be consistent with the objectives of the PRS in the context of making significant progress toward a stable and sustainable macroeconomic position consistent with strong and durable poverty reduction and growth. - It is expected that the description would be more detailed at the time of the initial arrangement request or when a new Poverty Reduction and Growth Strategy (PRGS) is produced by the member country. - The PRGS (previously known as the Economic Development Document (EDD)) is a PRS document that meets the requirements defined below and in Appendix V. *Source: 2023 LIC FACILITIES HANDBOOK: EXTENDED CREDIT FACILITY — selected sections.* ### Appendix V. ### Appendix V. ### Poverty Reduction Strategy (PRGS) — Definition and Timelines - A PRGS may take two forms: (i) an existing national development plan or strategy document on the country’s PRS; or (ii) a newly prepared document on the country’s PRS. - A PRGS shall be accompanied by a cover letter from the member country concerned to the Managing Director, and shall be issued to the Executive Board with the cover letter. The cover letter shall be deemed to constitute part of the PRGS. - A PRS issued to the Executive Board on or after May 24, 2019 shall be named a PRGS and a PRS that has been issued to the Board as an EDD shall be deemed a PRGS. - The PRGS would need to meet minimum standards and countries would be encouraged to follow good practice guidelines. - Staff should inform authorities at an early stage about the relevant Definitions and Timelines for PRGS requirements to ensure adequate time for the PRS process whenever an ECF-supported program is under consideration (including cases where support is currently provided under an SMP or RCF). - Timing for PRGS in relation to ECF reviews: - While a PRGS is not required at the time of initial Board consideration of the ECF arrangement, the second (and every subsequent) review can be completed only if: - (i) a member has a PRS that has been developed and made publicly available normally within the previous five years, but no more than six years, and covers the period leading up to and covering the date of completion of the relevant review; and - (ii) the PRS has been issued to the Executive Board and has been the subject of staff analysis in the staff report on a request for an ECF arrangement or a review under an ECF arrangement. - Extensions for limited institutional capacity: - A country with limited institutional capacity may request Board approval of an extension of the deadline for meeting PRGS requirements up to the fourth review; any request for an extension shall be made no later than the time of the request for completion of the second review. - A member may request approval of a further extension up until the sixth review under the ECF arrangement, provided that: - (i) the member can provide adequate justifications based on persistent limited institutional capacity for meeting the PRGS requirement and other urgent priorities; and - (ii) the arrangement has a duration of at least four years, or an extension of the arrangement to at least four years is requested. - Any request for such additional extension shall be made no later than the time of the request for completion of the review corresponding to the extended deadline for the PRGS requirement. - Staff views and external assessment: - Staff views on the PRGS are to be provided in program documentation and the staff report should discuss how policies pursued under the ECF arrangement contribute to the member’s PRGS. - A letter of assessment of the authorities’ PRGS should be requested from the World Bank; the letter of assessment is circulated to the Board at the same time as the PRGS. - PRGS implementation monitoring: - Staff would report to the Board on the implementation of the PRGS by including a discussion of relevant developments in the implementation of policies supporting the member’s PRGS. - Staff assessment of PRGS implementation is done in the context of a PRGS Implementation Review (PIR). When PRGS requirements are met by the second review, the good practice on the PIR would be for it to take place by the fifth review. In the event of extensions of the PRGS requirements, the PIR is not an expected practice. - PRS implementation following its launch would also be tracked in the member’s LOI/MEFP. ### Social and Priority Spending - Social and other priority spending should be safeguarded and, whenever appropriate, increased under ECF-supported programs. - This should be monitored through explicit program targets, typically an indicative floor on social and other priority spending, whenever possible. - The definition of what constitutes social or other priority spending should be established by the member, in accordance with the authorities’ poverty reduction and growth strategy. - Where tracking of such expenditures is not feasible, program documentation should report on measures envisaged to develop an adequate tracking system. Staff should monitor progress in establishing these tracking systems, and the program may include relevant structural benchmarks if appropriate. ### Debt Sustainability Analysis (DSA) - ECF-supported programs should be underpinned by a thorough DSA to inform the elaboration of medium-term debt strategies and fiscal frameworks. - Country teams should engage with the authorities in the preparation of DSAs, discuss the results, and share the final files with relevant officials. - DSAs for all LICs should be prepared jointly with the World Bank, and country teams should also involve other relevant Multilateral Development Banks (MDBs). - Joint DSAs are required for all PRGT-eligible countries that also have access to IDA resources. - Frequency and triggers for new DSAs: - A full DSA should generally be produced at least once every calendar year. - A new DSA should be produced for any new request for IMF financing (even when an annual DSA has already been completed). - For program countries, a new DSA is needed where there is a proposed modification to a performance criterion related to debt limits, or a request for a waiver for non-compliance with a performance criterion related to debt limits, to assess the impact of the modification or waiver on debt sustainability. - A new DSA is also needed when the country experiences significant changes in economic circumstances and borrowing assumptions (including due to conflict and natural disasters). - DSAs for LICs should be presented as self-contained documents and should normally be prepared using the LIC Debt Sustainability Framework (DSF). - The LIC DSF analysis includes three components: - A forward-looking analysis (20-year projection) of debt and debt-service dynamics under a baseline scenario, alternative scenarios, and standardized stress tests; - An explicit rating of the risk of external debt distress (low, moderate, high, or in debt distress) based on indicative country-specific debt-burden thresholds that depend on the quality of policies and institutions in the country; and an assessment of the overall risk of debt distress; - Recommendations on a borrowing (and lending) strategy and other crucial macro policies to limit the risk of debt distress, while maximizing the resource envelope to achieve the country’s development objectives. ### Collaboration with the World Bank and Other Development Partners - Fund staff should consult closely with all major development partners active in the country when designing and monitoring an ECF-supported program. - The Joint Management Action Plan (JMAP) calls on Bank and Fund country teams to consult with each other at least once a year to identify the country's key macroeconomic and structural reform challenges and coordinate work plans. ### Conditionality Principles - Conditionality under an ECF arrangement is intended to ensure Fund resources assist members in resolving balance of payments problems consistent with the Fund’s Articles and establishing adequate safeguards to the Fund’s resources. - Conditions will normally consist of macroeconomic variables and structural measures reasonably within the member’s direct or indirect control and that are generally either: - (i) of critical importance for achieving the goals of the program (or for monitoring program implementation); or - (ii) necessary for the implementation of specific provisions of the IMF Articles of Agreement or policies adopted under them. - ECF-supported programs must meet the UCT-quality standard, requiring the commitment and capacity by the authorities to implement policies adequate to correct external imbalances and enable repayment to the Fund. - The ECF generally permits more flexibility than the SCF in the timing of measures given its medium- to longer-term focus. - For fragile and conflict-affected states emerging from conflict and/or facing substantial domestic instability or uncertainties, program design should use ECF flexibility to focus on critical near-term objectives while meeting UCT standards and ECF provisions. ### Specification of Program Conditions - Program conditionality will include quantitative periodic and continuous performance criteria (PCs) (including standard continuous PCs), typically also structural benchmarks, and prior actions, if necessary. - Conditionality is set at approval of the arrangement and updated at program reviews. Conditionality should normally be set (or modified) by the Board before the test date. - For post-dated PCs (test date already passed at time of Board consideration), program documents must be signed and circulated to the Board along with the staff report before the test date. - Prior actions: - Prior actions are measures that must be adopted prior to Fund approval, completion of a review, or granting of a waiver when critical for successful implementation. - Prior actions are set by management, applied parsimoniously, must be justified in terms of criticality, specified in clear and unambiguous terms, and should in principle be implemented at least five working days before the Board discussion. - Prior actions should be defined in the LOI/MEFP and cross-referenced in the relevant Board Decision; there should be no “silent” or “hidden” prior actions. - Frequency and setting of quantitative targets: - Quantitative PCs would normally be set on a semi-annual basis and tied to semi-annual program reviews; quantitative benchmarks (indicative targets) would normally be specified on a quarterly basis. - PCs and reviews could be scheduled no more than six months apart; each scheduled review must be associated with a set of performance criteria and a disbursement. - The requirement that availability dates for disbursements be spaced no more than 6 months apart does not apply to the time lag between approval of an ECF arrangement and the first review. - Conditionality should cover the 12 months following the Board meeting (initial approval or review). - Under semi-annual monitoring, PCs would normally be established for two future test dates at the time of approval and at each review (except penultimate and final reviews). If substantial uncertainty exists, the second set of PCs could initially be established as indicative targets (ITs). - Typical quantitative PCs include measures of net international reserves, central bank domestic assets, domestic and fiscal balances or financing, and other macro-critical indicators. - Public debt conditionality: - Public debt conditionality would normally be required when a member faces significant debt vulnerabilities, or when there are merits to using debt limits instead of, or as a complement to, "above-the-line" fiscal conditionality. - PCs are usually subject to program adjustors that reflect deviations from projected external flows. - Indicative targets should include a floor on social and other priority spending where possible and may include other indicators such as reserve money and domestic revenue mobilization. - Continuous PCs always include commitments related to non-introduction or intensification of exchange restrictions and on non-introduction or modification of multiple currency practices; concluding bilateral payment agreements inconsistent with Article VIII; and the non-introduction or intensification of import restrictions for balance of payments reasons. Continuous PCs are always included in the text of all Fund arrangements. - Structural benchmarks: - ECF arrangements should include an agenda for macro-critical structural reforms, with appropriate flexibility on timing. - Structural benchmarks are critical measures serving as clear markers in assessing progress on critical structural reforms in program reviews. - Structural benchmarks should be used parsimoniously and macro-criticality explicitly justified in program documents. - The program should identify overarching objectives of the structural reform agenda for the arrangement period, with more specific objectives for periods covered by individual reviews and related structural benchmarks linked to those reviews. - The appropriate number of structural benchmarks depends on country-specific factors, including the centrality of structural reforms and country capacity. - Structural PCs were discontinued in 2009; under the ECF, structural benchmarks may be targeted for implementation either by a specific test date or by the time of a specific program review. - A member’s failure to meet a structural benchmark does not by itself automatically interrupt a disbursement; deviations serve as indicators that the program may be off-track and completion of the review would require Board judgment that there are factors giving confidence that program objectives are being achieved. - Any unmet structural benchmark may be established by the Board as a new benchmark with a new date and linked to the next program review if it remains critical for program success. If implementation as originally defined is no longer possible, a new or modified benchmark may be proposed. ### Waivers and Modifications - Waivers for nonobservance of a PC may be granted if the Fund is satisfied that the program will nevertheless be successfully implemented—either because of the minor or temporary nature of the nonobservance or because of remedial actions taken by the authorities to preserve program objectives. - Upon verification that a PC was not met, a request for a waiver must be made by the member in the LOI. If staff supports the waiver, justification is provided in the staff report, which will include a proposed decision on the waiver. - Waivers for nonobservance are only required for quantitative PCs tied to the specific disbursement and to the review being completed (and for any standard continuous PC that has not been observed). Waivers for PCs tied to subsequent disbursements and reviews are not required even if information on nonobservance already exists, but the staff report and LOI/MEFP must provide assurances that understandings on appropriate policies have been reached. - Waivers of applicability could in principle be granted where information to assess observance is unavailable and the Fund is satisfied the program will be successfully implemented; however, waivers of applicability for the ECF would be highly unusual. - Modifications to program conditionality set by the Board may be appropriate when departures from PCs are expected—e.g., when basic program assumptions have not been realized or significant unanticipated developments occur—provided targets remain macro-critical. - Requests for such modifications must be made by the authorities and supported by staff in the Staff Report submitted to the Board before the relevant test date has been passed and must be approved by the Board before information on observance of the PC is available, normally in the context of a program review. - In exceptional cases, modifications of conditionality can be approved by the Board outside the context of a program review, provided authorities and staff have common understandings on appropriate policies through the next review, documented in a revised or new LOI with an updated PC table and, where relevant, an updated TMU. - Board approval outside a review requires a staff report that discusses reasons for the modification, why it is proposed outside the review context, status of the program, and relevant policy understandings. ### Misreporting - Misreporting occurs when members with a Fund-supported program obtain resources on the basis of inaccurate information regarding observance of quantitative or continuous PCs or prior actions (a “noncomplying disbursement”). - Under the ECF arrangement, a noncomplying disbursement occurs when: - (i) the Fund makes a disbursement on the basis of a finding that applicable conditions established for that disbursement (which include the accuracy of the information on PCs for which waivers have been requested) have been observed; and - (ii) that finding later proves to be incorrect. - Upon evidence that a member may have received a noncomplying disbursement, the MD shall inform the member promptly. After consultation with the member, if the MD determines that the member did receive a noncomplying disbursement, the MD shall promptly notify the member and submit a report to the Executive Board with recommendations. *International Monetary Fund — 2023 LIC FACILITIES HANDBOOK: EXTENDED CREDIT FACILITY — Appendix V* ### Section 5 regarding members’ obligations on data provision for Fund’s activities. ### Section 5 regarding members’ obligations on data provision for Fund’s activities. ### Misreporting, waivers, and publication - The Executive Board may decide that (a) the member shall be expected to repay the disbursed amount, or (b) that the nonobservance will be waived. Waivers will normally be granted only when the deviation from the relevant PC or other condition was minor or temporary, or if the member had adopted additional measures appropriate to achieve the objectives supported by the relevant decision on the disbursement. - Relevant information on misreporting should be made public by including it in the documents to be published after the Board discussion, such as a press release containing the Chairman’s Statement or summing up, with prior Board review of the text for publication. - Paragraph 86: Whenever the Executive Board finds that the noncomplying disbursement has been made but that the nonobservance of the relevant PC or other specified condition was also de minimis; i.e., when a deviation from a PC would be so small as to be trivial with no impact on the assessment of performance under the relevant member’s program, a waiver for nonobservance shall be granted by the Executive Board. - The discussion of de minimis misreporting will be included in a staff report on the member that deals with other issues but the discussion should be deleted if such a report is published. ### Program reviews: data prerequisites and Publicly Available PRS requirement - Purpose of program reviews: evaluate whether the program is on track to achieve its objectives based on backward-looking assessment (performance against quantitative PCs, structural and quantitative benchmarks, and prior actions) and forward-looking assessment (prospects for successful program implementation, policy capacity, and commitments). - Paragraph 87: The second (and every subsequent) review can only be completed if: - (i) a PRS has been developed and made publicly available normally within the five previous years, but no more than six years, and covers the period leading up to and covering the date of the completion of the relevant review (see paragraph 66 for conditions under which an extension of the PRS deadline may be granted); and - (ii) the PRS has been issued to the Executive Board as a PRGS (previously known as EDD) that has been the subject of staff analysis in the staff report of a request for an ECF arrangement or a review under an ECF arrangement. - At the time of the consideration of the final review under an ECF arrangement, and assuming that the protracted balance of payments problem has been resolved and no further program support from the Fund is expected, the scope of the forward-looking assessment could be more limited than for previous reviews. ### Timing of reviews, test dates, availability dates, and data availability - Paragraph 89: The timing of all reviews, test dates, and disbursements should be summarized in a staff report table at the time of approval of an ECF arrangement and updated as needed at the time of reviews. - The Arrangement text attached to the staff report for the initial ECF request specifies the test dates, reviews, availability dates, and disbursements for the first year of the arrangement. - The quantitative indicator table (“PC table”) attached to the LOI/MEFP should clearly identify PCs, indicative targets, and adjustors for at least a 12-month period from the Board date of the arrangement approval or review. - Structural benchmark table should cover measures over at least a 12-month period, clearly indicating the reviews that individual benchmarks are linked to and/or the dates for their implementation. - The first disbursement is made available upon approval of the arrangement, and subsequent disbursements will be conditional on observance of the PCs and a program review that confirms satisfactory progress in implementing the economic program. - Paragraph 90: Under a standard three-year ECF arrangement, reviews and disbursements are normally semi-annual, implying typically seven scheduled disbursements and six reviews (and thus six test dates with PCs). - Considerations for scheduling: - Align test dates with the country’s budget cycle. - Reviews and associated availability dates should be scheduled no more than six months apart, though the interval between arrangement approval and the first availability date could be longer if needed. - Flexibility exists to set specific review and test dates based on country circumstances, including more frequent reviews to align with national budget/reporting cycles or in contexts of significant short-term volatility and/or uncertainty. - Reviews and disbursements could shift frequency during an arrangement based on projected risk profile over time or country circumstances. - Paragraph 91: Test dates for PCs must be set so that all scheduled disbursements can take place before the end of the arrangement, taking into account reporting lags and preparation and circulation periods for staff reports. - Availability dates should be set such that all data needed to confirm observance of PCs at the related test dates would have become available. - Availability dates are specified in the Arrangement text and subsequent Decisions, and are summarized in the staff report table on the schedule of disbursements. - Reviews cannot be completed prior to the applicable availability date. ### Program period start and absence of blackout periods - Paragraph 92: The program period supported by an ECF arrangement would typically start somewhat before the Board approves the ECF arrangement, and three to six months before the first test date under semiannual monitoring. - The program period should normally not start more than three months prior to the Board meeting, and in any case not before the authorities and staff have discussed the parameters of the program. - Paragraph 93: In contrast to SBAs or EFF Arrangements, the design of an ECF arrangement avoids “blackout periods” because each disbursement is linked to completion of a specific review and observance of specific periodic performance criteria. - A disbursement is not blocked when a new test date passes because such new test date applies to a future disbursement subject to completion of a future scheduled review. - Consequently, there is no need for a waiver of applicability upon data unavailability when a new test date passes. ### Addressing interruptions in program implementation: track records, combined reviews, and rephasing - Paragraph 94: Interruptions/delays caused by substantial policy slippages often warrant establishing a track record before completing the next review. - A track record could be informal or monitored more formally under an SMP, or, in case of urgent financing needs caused by an exogenous shock, the RCF (assuming applicable policy commitments are in place). - Delays and interruptions can sometimes be addressed through extensions of the arrangement, combining reviews, rephasing of access, or some combination of the three. - Paragraph 95: Combining reviews - Two reviews can be combined when delays have occurred and performance can be assessed against two test dates linked to successive reviews. - Combining three or more reviews is very unusual. - Combining reviews is only possible if: - (i) the conditionality has been fully defined, including through applicable PCs, for these reviews and approved by the Board; - (ii) data are available for measuring observance of conditionality for the reviews; and - (iii) the dates specified as the earliest dates for conclusion of the reviews in the text of the arrangement have all passed. - Reviews are typically combined when the program is on track with respect to the most recent review and sufficient corrective action has offset problems with observance of conditions for earlier reviews. - If slippages relative to the most recent review are significant, combining reviews would not be appropriate; options include cancellation of the arrangement and consideration of support under a new instrument. - Paragraph 96: Rephasing disbursements - Disbursements may be rephased to change amounts under individual disbursements associated with specified reviews and/or change number or timing of disbursements and reviews. - Rephasing could spread access associated with specific review(s) across future reviews, consistent with the period of the current arrangement. - Rephasing may be combined with an extension of the arrangement or with short-term technical extensions (typically not more than three months) to complete final review(s). - Access should never be rephased in a manner that would make it impossible for the member to get the full, undisbursed amount under the arrangement. - If delays are substantial and rephasing would compress a very large amount of access into a short period (even with an extension), it may be appropriate to let the arrangement expire or be cancelled and proceed to a new ECF arrangement unless there has been a very sharp turnaround. ### Other relevant policies that intersect with data provision and monitoring - Ex Post Peer Reviewed Assessments (PRAs) - As of July 2015, Ex Post Assessments (EPAs) were discontinued and replaced by Ex Post Peer Reviewed Assessments (PRAs). - Staff reports for new arrangement requests are required to contain a succinct, peer-reviewed assessment for countries with longer term program engagement (LTPE), defined as having in place a Fund-supported financial arrangement for at least seven of the past 10 years, and for whom a PRA has not been prepared in the past five years. - Post Financing Assessments (PFAs) - Outstanding ECF credit is subject to a PFA (formerly PPM). - Members with outstanding credit from the Fund in the GRA and/or PRGT exceeding 200 percent of quota or SDR 0.38 billion from the PRGT (and/or SDR 1.5 billion from the GRA) after the expiry of their arrangements are expected upon the recommendation of the MD to engage with the Fund in a PFA of their economic developments and policies. - Normally, one stand-alone PFA paper is expected to be issued for Executive Board consideration within a twelve-month period. - Article IV consultation cycle - The 24-month cycle for Article IV consultations applies to members with an ECF arrangement. - Article IV consultations with members that have an on-track ECF arrangement in place would be expected to be completed within 24 months after the completion of the previous Article IV consultation. - Where a program review is not completed by the date for completion specified in the arrangement, the next Article IV consultation would be expected to be completed by the later of (i) six months after the scheduled review date and (ii) 12 months, plus a grace period of three months after the previous Article IV consultation, unless the program review has been completed prior to the later of these two dates. - A member that has completed an ECF arrangement by drawing all amounts may remain on the 24-month cycle, if it does not meet any of the criteria specified in paragraph 2 of Decision No. 14747-(10/96): (i) systemic or regional importance; (ii) perceived to be at risk because of policy imbalances or particular threats from exogenous developments, or facing pressing policy issues of broad interest to the Fund membership; or (iii) outstanding Fund credit exceeding 145 percent of quota. - Exchange system obligations and data provision under Article VIII, Section 5 - Requirements under Article VIII Sections 2, 3, and 4, and Article XIV are discussed elsewhere in the Handbook. - Important rule: "Article VIII, Section 5 of the Fund’s Articles of Agreement does not apply to the provision of information that is required for the purposes of Fund financial assistance under the ECF." - PRGT resources are held in an administered account and the obligations of a member using such resources are not governed by the Fund’s Articles (Article V, Section 2(b)). The obligations of a member using PRGT resources are governed exclusively by the terms of the PRG Trust Instrument, which are incorporated by an explicit reference into the terms of each ECF arrangement. - Accordingly, for the purposes of an ECF arrangement, the Fund cannot require a member to provide the Fund with information for the purposes of Article VIII, Section 5, and the failure of a member to provide information for the purposes of an ECF arrangement cannot give rise to the application of sanctions under Article XXVI, Section 2, as it is not a breach of obligation under the Articles of Agreement. *Source: 2023 LIC FACILITIES HANDBOOK: EXTENDED CREDIT FACILITY — Section 5 regarding members’ obligations on data provision for Fund’s activities.* ### CHAPTER III: STANDBY CREDIT FACILITY _____________________________________________________ 62 ### CHAPTER III: STANDBY CREDIT FACILITY ### A. Objectives and Qualification - Purpose and objective - The SCF provides concessional financing to LICs with actual or potential short-term balance of payments needs. - The purpose is to assist eligible member countries in implementing economic programs aimed at achieving, maintaining, or restoring a stable and sustainable macroeconomic position consistent with strong and durable poverty reduction and growth. - A stable and sustainable macroeconomic position would typically be associated with sustainable fiscal and current account balances, limited debt vulnerabilities, adequate international reserves, and sufficient policy and institutional capacity. - Use of the SCF is appropriate for episodic, short-term financing and adjustment needs not expected to persist over the medium or longer term. - Member countries facing potential balance of payments needs, but not presently facing a need, may request an SCF arrangement on a precautionary basis. - SCF disbursements can be used to strengthen international reserves and loosen financing constraints for public and private sectors; assistance can catalyze additional donor financing. - Qualification - Assistance under the SCF is available to all PRGT-eligible member countries that experience actual or potential short-term balance of payments needs, unless: - (i) the predominant cause of the balance of payments difficulties is a withdrawal in financial support by donors; or - (ii) the country faces a protracted balance of payments problem. - To qualify for the SCF, there should be an expectation that the member will achieve a stable and sustainable macroeconomic position in normally two years and in any event not more than three. - If macroeconomic imbalances needed to establish a stable and sustainable position are expected to persist for three years or more, an ECF arrangement would be the appropriate instrument. - Choice between SCF and ECF when a stable position is expected within three years should be determined case-by-case, noting the minimum length for an ECF arrangement is three years and SCF use is normally limited to three out of any six-year period assessed on a rolling basis. - Indicators favoring an ECF: substantial structural reform or capacity building needs, frequently recurring financing needs. - Indicators favoring an SCF: needs for a relatively front-loaded adjustment process aimed at speedy restoration of macroeconomic stability. - The SCF can support members experiencing actual (present or prospective) or potential balance of payments needs, as long as the need is short-term rather than protracted. - If an SCF arrangement is precautionary at approval (no present need), a PSI could be more appropriate when needs are purely potential and risks are moderate or low. - Individual disbursements can only be made based on the member’s representation of the existence of an actual (present) balance of payments need. - Qualification also requires a Board finding that the member is implementing, or is committed to implement, policies aimed at resolving balance of payments difficulties in the context of a program that meets UCT-quality policy standards and aims to achieve, maintain, or restore a stable and sustainable macroeconomic position consistent with strong and durable poverty reduction and growth. - Qualification evidence includes recent policy performance, institutional capacity, and other circumstances affecting macroeconomic performance; qualification is presumed (but must be established) for countries with an on-track PSI that experience or may experience a balance of payments need. - Countries not currently able to meet SCF qualification (capacity to implement a UCT-quality program) can build a track record via an SMP or, in urgent cases, the RCF (assuming applicable policy commitments), or concurrent use of both instruments. - Countries with capacity to implement a UCT-quality program but with needs expected to be resolved within one year and no major policy adjustments necessary may request RCF financing for urgent needs. ### B. Duration, Extensions, Cancellations, and Repeat Use - Duration and limits - Assistance under an SCF arrangement is available for a minimum of 12 months and a maximum of 36 months from the date of the Board decision approving the arrangement. - Use is limited to three years out of any six-year period, assessed on a rolling basis. - Past SCF arrangements treated in their entirety as precautionary (no disbursement) and new SCF arrangements for which the Fund assesses that the member does not have an actual balance of payments need at approval are not counted towards the limit of three years out of any six-year period. - SCF arrangements may be extended (including multiple times) subject to a 36-month maximum total duration. - After expiration, cancellation, or automatic termination, additional SCF arrangements may be approved if qualification criteria are met, including the overall time limit. - Extensions, rephasing, and augmentations - Extensions can be requested to allow disbursement of rephased amounts or to provide additional resources (augmentation) in light of projected balance of payments developments, subject to appropriate conditions consistent with SCF terms. - Rephasing refers to changes in the timing and level of programmed disbursements. - Extensions must be requested by the member and approved by the Board before expiration of the arrangement period; extensions are only possible if needed to allow for disbursement of amounts under the arrangement (i.e., not possible when all scheduled amounts have already been disbursed). - Extensions are not automatic and are subject to appropriate conditions consistent with the terms of assistance. - Extensions involving rephasing and/or augmentations would normally be approved by the Board on the basis of an LOI and in the context of a program review (where the review demonstrates program is on track). - In exceptional circumstances (e.g., severe natural disaster preventing timely final review), extensions involving rephasing may be approved outside the context of a scheduled program review if authorities and staff have policy understandings documented by a letter from the authorities; Board approval would require a staff report discussing reasons, program status, and policy understandings. - Extensions that do not involve rephasing or augmentation but provide additional time to complete final review(s) and make final disbursement available before expiration can be short-term (a few weeks or months), sometimes referred to as “technical” extensions; these can be granted outside the context of a review if understandings on appropriate policies to complete the review have been or are expected to be reached. - Automatic termination rule - An SCF arrangement with an initial duration of more than 24 months or extended to more than 24 months will automatically terminate before its scheduled term if no program review under the arrangement has been completed over a period of eighteen months. - The Board may, at the authorities’ request, delay termination by up to three months where understandings on targets and measures to put the SCF-supported program back on track appear imminent; the arrangement will automatically terminate at the end of the extended period unless a program review is completed within this period. - Cancellation by authorities - SCF arrangements may be cancelled by the authorities at any time, for example when macroeconomic imbalances have been resolved, when authorities no longer have capacity or commitment to implement the program, or when objectives or modalities of policies have changed substantially. ### C. Concurrent Use and Blending - Concurrent use constraints and flexibilities - The SCF cannot be used concurrently with the ECF; any pre-existing ECF arrangement would need to be cancelled before an SCF arrangement can be approved and vice-versa. - A member cannot obtain RCF financing (or start an SMP) if an SCF arrangement is in place and on track. - RCF financing during an SCF arrangement can only be provided when: - (i) SCF disbursements are not possible (e.g., due to policy slippages or delays in program discussions); - (ii) qualification requirements for the RCF are met, including the existence of an urgent balance of payments need and relevant policy commitments; and - (iii) the balance of payments need is primarily caused by a sudden exogenous shock. - Policy commitments made in the context of an RCF disbursement (such as an RCF concurrently with an SMP) could serve as a track record to bring an SCF-supported program back on track; in the absence of an urgent financing need, a track record could be built through an SMP. - The SCF can be used concurrently with GRA financing under certain circumstances. - Interaction with PSI - The SCF can be used flexibly in conjunction with a PSI. - Qualification for the SCF would be presumed for countries with an on-track PSI that experience or may experience a balance of payments need (present, prospective, or potential), provided relevant qualification requirements are met. - An on-track PSI with UCT-conditionality reduces the time normally required to design an SCF-supported program. - There is no need to cancel the PSI; an SCF can run concurrently with a PSI. - PSI users can request concurrent precautionary support under the SCF for periods of increased uncertainty or risk. - Modification of the PSI-supported program may be warranted when changed circumstances affect a country’s ability to meet program objectives. - If the PSI is off track, SCF approval would typically occur only when appropriate corrective actions have been taken. *2023 LIC FACILITIES HANDBOOK: STANDBY CREDIT FACILITY — CHAPTER III* ### 113. Concurrent support under a PSI and SCF arrangement would have modalities akin to ### 113. Concurrent support under a PSI and SCF arrangement would have modalities akin to ### Concurrent support modalities (PSI + SCF) - Program documentation and program targets: the two instruments would support an economic program based on a single set of program conditions, schedule of reviews, and other requirements that largely mirror those applicable to stand-alone SCF arrangements or PSIs. - Key differences: - The choice of duration of the SCF arrangement (between 12 and 36 months) would depend on the length of financing and adjustment needs, and would not necessarily be tied to the PSI period. - If the expiration date of the SCF arrangement comes after that of the PSI, approval of a new PSI would normally take place only after the expiration or cancellation of the SCF arrangement, as qualification for the PSI requires a broadly stable and sustainable macroeconomic position, which would imply that no IMF financing is needed. However, a new PSI could be approved when the authorities intend to treat the SCF as precautionary. It may also be possible to extend the existing PSI for a short period to complete the final review. - The review schedule for the PSI could remain on the “fixed review cycle” or be aligned to the more flexible review cycle of the SCF. - With a PSI remaining on the fixed cycle, the documentation for a PSI review would have to be issued to the Executive Board before the next relevant test date, irrespective of program performance and whether the review will be completed, except for the staff report which could be issued up to one month after the test date of the periodic assessment criteria (ACs) linked to the next scheduled review. - Shifting a PSI to the SCF review schedule would require adjusting the standard PSI decision language such that a PSI review can be completed at a later stage. ### Blending (SCF with GRA/SBA resources) - SCF resources will normally be provided together with GRA resources under the SBA when providing financial assistance with blended resources. - Financing through the RFI under the GRA during an SCF arrangement would be expected only if the SCF-supported program is off track, in which case RFI purchases would typically be blended with disbursements under the RCF. - Modalities of blended financial assistance under SCF arrangements and SBAs are broadly the same as those applicable under a stand-alone SCF arrangement, supporting up to three-year economic programs for countries with short-term balance of payments needs. - Differences in blended cases: - Disbursements would involve both SCF and SBA resources, implying lower average concessionality of the Fund’s financial support than under a stand-alone SCF arrangement. - SBA qualification requirements must be met—for instance, when blended arrangements push (annual or cumulative) access above GRA normal limits, the member would also need to meet the Exceptional Access criteria. - Each disbursement under an SCF arrangement is linked to a specific test date, whereas for GRA arrangements, purchases are conditioned upon observance of the PCs relating to the most recent test date (the “controlling” PCs). - In contrast to SCF arrangements, reviews under the SBA component of the blended financial assistance may require waivers of applicability under certain circumstances. - There could be situations where SCF component resources are disbursed based on an earlier test date, while SBA component resources are made available against a later test date. ### Determination of Access—Main Criteria - Access is determined on a case-by-case basis based on the following standard criteria: - (i) the member’s (present, prospective, and potential) balance of payments needs (taking into account all projected balance of payments flows, including reserve accumulation and financing from other sources); - (ii) the strength of its program and capacity to repay the Fund (taking into account the member’s policy plans, adjustment effort, commitment to implement the program, institutional capacity, track record of policy implementation, and country circumstances such as vulnerabilities, imbalances, and debt sustainability); - (iii) the amount of outstanding Fund credit and the member’s record of past use. - All else being equal, higher access would generally be associated with a stronger program, stronger track record, and stronger capacity to repay. - In precautionary arrangements, the baseline scenario should be presented showing no Fund financing; potential needs that might emerge could be highlighted by discussing volatility of external flows or presenting alternative scenarios. ### Access norms and limits - Access norms: - The norm for access under an 18-month SCF arrangement is set equal to that of the 3-year ECF arrangement at 145 percent of quota, varying proportionately with the length of the SCF arrangement, up to the amount associated with a 2-year SCF arrangement (193.33 percent of quota). - Access norms provide general guidance and do not represent ceilings, floors or entitlements; access can deviate from the norms if warranted by the standard criteria. - Access limits: - A member’s total access under all concessional facilities in the PRGT is subject to “global” annual and cumulative limits, including credit outstanding and disbursements under the ECF, SCF and RCF. - Total access to financing under the PRGT should normally not exceed 145 percent of quota per year across all concessional facilities. - Total access to financing under the PRGT should normally not exceed 435 percent of quota cumulatively, net of scheduled repayments. - In exceptional circumstances, access above the normal limits can be made available to PRGT-eligible countries that meet the exceptional access criteria. ### Phasing of access and disbursement timing - Phasing of SCF access should mirror the projected evolution of balance of payments needs over the arrangement and must take into account applicable annual access limits. - Access could be front-loaded or back-loaded depending on program strength, timing of reforms, and the time profile of needs. - Standard practice: present the balance of payments so that, in any given period, scheduled IMF disbursements, together with other exceptional financing items, do not exceed the overall balance of payments deficit and the programmed level of reserve accumulation; the balance of payments would be fully financed, at least in the near term, at the time of SCF approval and completion of each review. - PRGT instrument rule: availability dates for disbursements must not be phased more than six months apart. - Exception: the interval between approval and the first review may be spaced more than 6 months apart if warranted. - Availability dates should normally be phased at regular intervals, with flexibility (e.g., reviews may be spaced 4 rather than 6 months apart to align with budget cycles). ### Access when SCF is treated as precautionary - When an SCF arrangement is treated as precautionary, members retain and accumulate rights to request disbursements during the arrangement, provided the most recent scheduled review (associated with the corresponding availability date) was completed. - Design avoids “blackout periods” by allowing disbursements based on completed reviews without the need to verify observance of performance criteria whose test dates have passed while the related scheduled review date has not yet passed. - Delays in completing a scheduled review beyond its date block access to accumulated disbursement rights and incremental access associated with the latest test date. - A member may request previously scheduled and undrawn disbursements provided the most recently scheduled review under the arrangement prior to the request has been completed. ### Access under blended financial assistance (rules and ratios) - For presumed blenders, total access is determined based on the standard criteria, implying comparable total access across cases with similar needs, program strength, and outstanding Fund credit, irrespective of whether assistance is blended or PRGT-only. - Access norms do not apply to blended financial assistance; access under blended assistance is subject to specific rules: - Access to the concessional (SCF) component for presumed blenders is in a 1:2 ratio of PRGT to GRA resources, with access to the concessional component capped at 145 percent of quota per arrangement. Any additional needs would need to be met through GRA financing. - At approval of a new SCF arrangement involving blended financial assistance from a GRA arrangement, each scheduled disbursement should generally involve both SCF and GRA resources. - For GRA resources, phasing and performance criteria apply only to purchases above the first credit tranche. - Shares of SCF and GRA financing at each disbursement can be determined individually, but the general principle is that they reflect the 1:2 blending mix ratio unless there is a reason to deviate. ### Augmentations and reductions of access - Augmentation purposes: - To meet larger balance of payments needs, or to support a strengthening of the program. - To respond to increased needs from shocks unless the SCF-supported program is off track (in which case RCF financing could be appropriate). - Where access was initially constrained by a high risk of debt distress that later subsided. - When an extension of the arrangement involves needs not originally included, justifying augmentation. - Under the TIM, augmented access not exceeding 10 percent of quota will be available to compensate for balance of payments shortfalls arising from trade liberalization measures implemented by other countries. - Determination of augmentations is based on the standard access criteria; no norms apply to augmentation size. - Historical range for augmentations under PRGT-supported programs: 15–60 percent of quota for arrangements approved from 2010–2021, with a few cases well above this range. - Augmentations for presumed blended arrangements: - Total financing mix over the course of arrangements is guided by the rules on access under blended arrangements, including that total access (post-augmentation) to concessional financing would be one-third of total overall access to Fund resources with a cap of 145 percent of quota per arrangement. - Shares of PRGT and GRA financing at each disbursement can be set individually but generally reflect the 1:2 mixing ratio. - Ad hoc augmentations (outside scheduled reviews) modalities: - If the scheduled review associated with the most recent availability date preceding the augmentation request has not been completed, an augmentation request cannot be approved at an ad hoc review. - Requests are expected to be supported by a short staff report and an LOI describing the nature and size of the problem, policies to address it, and relevant implementation information. - Ad hoc augmentations are available to the member in a single disbursement following Board approval; no limit on the amount of such a disbursement subject to overall access limits and norms. - The new disbursement is subject to observance of continuous PCs under the arrangement, including accuracy of information on implementation and prior actions for that disbursement, but is not subject to periodic performance criteria and other conditions linked to remaining disbursements. - The augmented access is available upon the Board’s approval and may be drawn until the availability date of the next scheduled disbursement. - Augmentation requests at ad hoc reviews that do not exceed 15 percent of quota are eligible for approval on a LOT basis. - A scheduled review following an ad hoc review to consider an augmentation is expected to undertake a comprehensive review of policies and cannot be completed on a LOT basis. *Source: ppea2023020 - 113.* ### 132. The Fund cannot unilaterally reduce access under the SCF. However, although not ### 132. The Fund cannot unilaterally reduce access under the SCF. However, although not ### Procedural safeguards on high access requests — DSAs and informal Board meetings - Financing requests under the PRGT are subject to uniform procedural safeguards aimed at protecting PRGT-eligible members’ debt sustainability and the Fund’s concessional resources. - Staff reports for any arrangement request or augmentation must provide an up-to-date assessment of debt vulnerabilities, explicitly referencing the impact of new borrowing from all sources, including prospective IMF disbursements. - A DSA is required for any financing request under the PRGT (augmentation or new arrangement) if it: - involves exceptional access to concessional resources; - brings total access, i.e., cumulative disbursements, under all concessional facilities to more than 80 percent of quota, based on cumulative past and future scheduled disbursements in any 24-month period; - involves a member country with a high risk of debt distress or in debt distress. - All DSAs (full and updates) should be prepared jointly by Fund and Bank staff and must be submitted to both the IMF and IDA’s Executive Boards (be it for discussion or for information). - New enhanced safeguards (ES) introduced in 2021 call for greater scrutiny of debt and capacity to repay (CtR) risks in requests for new PRGT arrangements or augmentations where access falls above certain thresholds, or debt vulnerabilities are high. - An early informal Board meeting is required if a financing request under the PRGT (augmentation or a new arrangement) involves: - exceptional access; or - high access to concessional financing. - Staff would provide early notice to the Board (for instance in an informal country matters session) of upcoming arrangement requests or augmentations where the envisaged financing commitment, in absolute terms, would have a large impact on the Fund’s overall concessional resources. - Exception: The requirement for a new DSA or a Board brief in high access cases does not apply for new financing requests of 15 percent or less of quota. ### High combined credit (PS-HCC) - Requests resulting in combined PRGT and GRA access in excess of the GRA access limits are subject to the PS-HCC. - In March 2023, the PS-HCC thresholds were temporarily increased from 145/435 percent of quota to 200/600 percent of quota annually/cumulatively, in line with the temporary 12-month increase in GRA annual/cumulative access limits, effective until March 4, 2024. - The PS-HCC comprise criteria and procedural requirements substantively the same as those of the PRGT exceptional access framework, with the notable exception that they do not include an income threshold. Procedural requirements are similar to PRGT and GRA exceptional access procedures. ### Financing terms - Repayments of SCF credit: - made in nine equal semiannual installments; - subject to a four-year grace period from the date of the first disbursement; - eight-year final maturity. - Authorities may decide to make early repayments at any time but would not be expected to do so. - Interest: - paid semi-annually; - the interest rate on SCF credit is currently set at zero percent, until end-July 2023. - The next biennial Board review of the interest rate structure is scheduled for no later than July 2023. - At each such review, interest rates would normally be adjusted if warranted by the prevailing SDR rate, within a 0.0–0.50 percent range. The new interest rate would apply to all outstanding SCF credit. - Availability fee: - a fee at 0.15 percent per annum is levied on the undrawn portion of the amount available for drawing after each six-month period under an SCF arrangement if no disbursement is requested. - If the funds are drawn, the availability fee is reimbursed for the amounts drawn. ### Financing assurances, arrears, and safeguards - Refer to Section F of Chapter II for detailed treatment of financing assurances, arrears, and safeguards. - In cases involving direct budget support, staff reports should justify the use of the domestic counterpart of resources for budget financing and discuss safeguards implications. - Under the safeguards policy, a fiscal safeguards review of state treasury must be conducted before the first program review for: - all arrangements where a member requests exceptional access to Fund resources; and/or - if the member expects, at the time of program approval, that at least 25 percent of the funds will be directed to financing the state budget. - The fiscal safeguards review requirement also applies to HCC cases with at least 25 percent of resources directed to budget financing, and to cases where a member requests exceptional access through an augmentation during an arrangement, unless a fiscal safeguards review was completed within the previous 18 months. ### Program objectives and design — objectives - SCF-supported programs aim to achieve, maintain, or restore a stable and sustainable macroeconomic position consistent with strong and durable poverty reduction and growth. - Programs should address and typically aim to resolve the country’s macroeconomic imbalances over the course of the arrangement. - SCF-supported programs should aim to maintain or achieve: - strong and durable poverty reduction and growth; - low or moderate inflation; - sustainable fiscal and current account balances; - limited debt vulnerabilities; - adequate international reserves; - sufficient policy and institutional capacity to implement appropriate macroeconomic policies. ### Program objectives and design — policy content - Program design should be aligned with the country’s own poverty reduction and growth objectives. - Specific policy objectives should be clearly articulated in the LOI/MEFP and associated staff report and would typically include: - Fiscal policies: fiscal stance well anchored to ensure macroeconomic stability and fiscal/debt sustainability; revenue and spending policies consistent with growth and social objectives; budgets guided by medium-term fiscal frameworks to the extent possible. - Monetary policies: consistent with inflation, exchange rate, and international reserves objectives, while taking due account of cyclical considerations. - Exchange rate policies: ensure a unified exchange rate and a real exchange rate level broadly in line with fundamentals, consistent with adequate growth. - Financial sector policies: geared toward financial stability and deepening to foster investment and forestall financial crises. - Public financial management reforms: ensure resources are tracked, reported, and targeted appropriately (including adequate resources for social and other priority spending); public debt management to support debt sustainability; revenue reforms to broaden the revenue base and enhance tax efficiencies. - Other structural reforms critical for achieving the program’s macroeconomic objectives. ### Role of SCF financial support - SCF balance of payments support can assist countries in smoothing the adjustment process toward a stable and sustainable macroeconomic position. - Fund financial support can be used to strengthen international reserves and provide liquidity for external payments. - By relaxing external financing constraints, SCF support loosens domestic liquidity constraints of public and private sectors, reducing the need for retrenchment in public and private savings-investment balances and enhancing policy options (allowing less contractionary fiscal, monetary, and exchange rate policies). - The appropriate mix of financing and public/private adjustment is determined on a case-by-case basis. ### Direct and indirect budget support - A member may use the domestic counterpart of SCF resources to finance, directly or indirectly, the government budget deficit, consistent with the Fund’s legal framework if the member has balance of payments problems and is implementing a program that will assist in resolving these problems. - Direct budget support may be appropriate when: - the program envisages that the entire amount of Fund financial support is used to meet a present or prospective balance of payments need; - loosening fiscal financing constraints is an important macroeconomic objective under the program; - the central bank cannot or should not lend to the government (legal or institutional reasons) while the domestic financial sector is too shallow or not stable enough to provide necessary budget financing. - In cases involving budget financing, roles and responsibilities for financial obligations to the Fund should be clarified in a framework agreement between the government and the central bank. ### Links to Poverty Reduction Strategies (PRS) and social spending - SCF-supported programs should be aligned with the country’s poverty reduction and growth objectives. Specific guidance: - Any financing request or program review under the SCF must be accompanied by a statement, normally in the LOI or MEFP, of how the program advances the country’s poverty reduction and growth objectives. Where a relevant PRS document exists, the LOI/MEFP description may cross-reference it. - PRS documents are not required for approval or review of an SCF arrangement with duration of two years or less. Staff should inform authorities early about PRGS requirements when a future PSI- or ECF-supported program is under consideration. - For SCF arrangements with initial duration exceeding two years, a PRS document (PRGS) is required. The PRGS may be an existing national development plan/strategy or a newly prepared PRS document, and must be accompanied by a cover letter from the member to the Managing Director and issued to the Executive Board. - A PRS issued to the Executive Board on or after May 24, 2019 shall be named a PRGS; a PRS document issued as an EDD is deemed a PRGS. - For SCF arrangements with initial duration exceeding two years, while a PRGS is not required at initial Board consideration, the second (and every subsequent) review can be completed only if: - the member has a PRS developed and made publicly available normally within the previous five years, but no more than six years, covering the period up to the relevant review; and - the PRS has been issued to the Executive Board as a PRGS and has been the subject of staff analysis in the staff report for the request or review under an SCF arrangement. - Requests for extensions beyond the second review of the deadline to produce the PRGS will not be permitted under SCF arrangements. - Staff views on the PRGS are to be provided in program documentation; the staff report should discuss how SCF policies contribute to the member’s PRGS. - A letter of assessment of the authorities’ PRGS should be requested from the World Bank to inform Fund staff and the Board; the letter is circulated to the Board with the PRGS. ### PRGS implementation and social spending monitoring - Staff report to the Board on PRGS implementation by discussing relevant developments; PRS implementation is assessed in a PRGS Implementation Review (PIR) by the time of the fifth review. - Social and other priority spending should be safeguarded and, whenever appropriate, increased under SCF-supported programs. - Such spending should be monitored through explicit program targets, typically an indicative floor on social and other priority spending, whenever possible. - The definition of social or other priority spending should be consistent with the authorities’ poverty reduction and growth objectives. - Where tracking such expenditures is not feasible, program documentation should report measures to develop adequate tracking systems; staff should monitor progress and the program may include structural benchmarks if appropriate. *2023 LIC FACILITIES HANDBOOK: STANDBY CREDIT FACILITY.* ### 146. SCF-supported programs should be underpinned by a thorough DSA to inform the ### 146. SCF-supported programs should be underpinned by a thorough DSA to inform the ### Debt Sustainability Analysis (DSA) requirements and process - DSAs should underpin elaboration of medium-term debt strategies and fiscal frameworks. - Country teams should engage with the authorities in the preparation of DSAs, discuss the results, and share the final files with the relevant officials. - DSAs for LICs (full DSAs and updates) should be prepared jointly with the World Bank, and country teams should also involve other relevant MDBs in the preparation of DSAs. - Joint DSAs are required for PRGT-eligible countries that also have access to IDA resources. - A full DSA should generally be produced at least once every calendar year. - A new DSA should be produced for any new request for IMF financing (even when an annual DSA has already been completed). - For program countries, a new DSA is also needed where there is: - a proposed modification to a performance criterion related to debt limits, or - a request for a waiver for non-compliance with a performance criterion related to debt limits. - A new DSA is also needed when the country experiences significant changes in economic circumstances and borrowing assumptions (including due to conflict and natural disasters). - Article IV Consultations should be accompanied by a DSA. ### LIC DSA presentation and LIC-DSF components - DSAs for LICs should be presented as self-contained documents. - They should normally be prepared using the LIC DSF. - The LIC DSF analysis includes three components: - A forward-looking analysis (20-year projection) of debt and debt-service dynamics under a baseline scenario, alternative scenarios, and standardized stress tests; - An explicit rating of the risk of external debt distress (low, moderate, high, or in debt distress) based on indicative country-specific debt-burden thresholds that depend on the quality of policies and institutions in the country; and an assessment of the overall risk of debt distress; - Recommendations on a borrowing (and lending) strategy and other crucial macro policies to limit the risk of debt distress, while maximizing the resource envelope to achieve the country’s development objectives. ### Collaboration with World Bank and other development partners - Fund staff should consult closely with all major development partners active in the country when designing and monitoring a SCF-supported program. - The JMAP approved by the Boards of the World Bank and IMF calls on Bank and Fund country teams to consult with each other at least once a year to identify the country's key macroeconomic and structural reform challenges and coordinate work plans. ### Conditionality: principles and standards - Conditionality under an SCF arrangement aims to ensure Fund resources support meeting program objectives, with adequate safeguards to the Fund’s resources. - Conditions will normally consist of macroeconomic variables and structural measures reasonably within the member’s direct or indirect control and generally either: - of critical importance for achieving program goals or monitoring program implementation, or - necessary for implementation of specific IMF Articles of Agreement or policies adopted under them. - In some cases, conditions may be outside the Fund’s core areas of expertise; a detailed explanation of their critical importance is required. - SCF-supported programs must meet the UCT-quality standard, which requires the commitment and capacity by the authorities to implement a set of policies adequate to correct external imbalances and enable repayment to the Fund. - The appropriate adjustment path is determined by the country’s circumstances, objectives, policy constraints, and the severity of balance of payments needs. - The adjustment effort required to attain full sustainability would not be expected to extend much beyond the expiration date of the SCF arrangement, and would often fall fully within the arrangement period. - Conditionality should be limited to policies critical to achieving the part of the overall adjustment process covered by the arrangement. - Given its focus on restoring sustainability in the short term, the SCF will generally permit less flexibility than the ECF in the timing of measures. ### Specification of program conditions and monitoring cadence - Program conditionality will include quantitative periodic and continuous PCs (including standard continuous PCs), and typically also structural benchmarks, as well as prior actions, if necessary. - Conditionality is set at the time of approval of the arrangement and updated at the time of program reviews. Conditionality should normally be set (or modified) by the Board before the test date. - For post-dated PCs (test date passed at time of Board consideration), program documents must be signed and circulated to the Board along with the staff report before the test date; no information on implementation of the so established conditionality would be available at the time of the Board meeting. - Prior actions: - Are measures to be adopted prior to IMF approval of an SCF arrangement, completion of a review, or granting of a waiver with respect to a PC when critical for program success. - Are set by management, applied parsimoniously, and specified in clear, objective, and unambiguous terms. - Should in principle be implemented at least five working days before the Board discussion. - Should be defined in the LOI/MEFP and cross-referenced in the relevant Board Decision; there should be no “silent” or “hidden” prior actions. - Quantitative PCs: - Would normally be set on a semi-annual basis and tied to semi-annual program reviews. - Quantitative benchmarks (indicative targets) would normally be specified on a quarterly basis. - Where closer monitoring or more flexibility is needed, PCs and reviews could be set flexibly provided they are scheduled with availability dates for disbursements no more than six months apart. - Flexibility can be used to align monitoring with national budget/reporting cycles, but the overwhelming majority of cases will follow the standard semi-annual or quarterly review schedule. - Conditionality should cover the 12 months following the Board meeting (initial approval or review). - Under semiannual monitoring, PCs would normally be established for two future test dates at approval and at each review (except penultimate and final reviews). - Under quarterly monitoring, PCs should normally be set for four future test dates, and in any case not less than for two future test dates. - Typical quantitative periodic PCs include measures of: - net international reserves, central bank domestic assets, domestic and fiscal balances or financing, and any other macro-critical indicators. - Public debt conditionality: - Would normally be required when a member faces significant debt vulnerabilities, or when there are merits to using debt limits instead of, or as a complement to, "above-the line" fiscal conditionality. - PCs are usually subject to program adjustors that reflect deviations from projected external flows. - Indicative targets should include a floor on social and other priority spending where possible, and may include other indicators such as reserve money. ### Continuous PCs and structural benchmarks - Continuous PCs always include commitments related to: - non-introduction or intensification of certain exchange restrictions and on non-introduction or modification of multiple currency practices; - concluding bilateral payment agreements that are inconsistent with Article VIII; and - non-introduction or intensification of import restrictions for balance of payments reasons. - These continuous PCs are always included in the text of all Fund arrangements and, given their non-quantitative nature, are usually not listed in the PC table. - Other continuous PCs typically include the non-accumulation of external payments arrears. - Structural benchmarks: - Should cover structural reforms deemed critical for achieving a stable and sustainable macroeconomic position in the short term. - Are critical measures intended to serve as clear markers in assessment of progress during program reviews. - Should be used parsimoniously, with their macro-criticality explicitly justified in program documents, ideally in the structural benchmark table. - Reviews are the primary tool for monitoring structural elements by judging progress relative to objectives. - Specific objectives should be defined for periods covered by individual reviews, with related structural benchmarks that are critical for achieving program objectives. - The appropriate number of structural benchmarks depends on country-specific factors; SCF arrangements would typically contain less than five structural benchmarks per semiannual review. - Use of structural PCs was discontinued in 2009. - If a structural benchmark is not met by the test date: - It will be deemed not met. - The measure constituting the benchmark should be established by the Board as a new structural benchmark with a new date and linked to the next program review if it remains macro-critical. - If implementation as originally defined becomes impossible, a new or modified benchmark may be proposed to the Board if it remains critical to program goals. - Failure to meet a structural benchmark does not automatically interrupt a disbursement under an ECF arrangement; deviations serve as indicators the program may be off-track and completion of the review requires Board judgment. ### Waivers, modifications, and observance issues - Waiver for non-observance of a PC may be granted if the Fund is satisfied the program will nevertheless be successfully implemented because: - the nonobservance was minor or temporary, or - remedial actions by the authorities preserve program objectives. - Upon verification that a PC was not met, a request for a waiver of its nonobservance must be made by the member in the LOI. - If staff supports granting the waiver, relevant justification would be provided in the staff report, which will include a proposed decision on the waiver. - Waivers for nonobservance are only required for quantitative PCs that are tied to the specific disbursement and to the review being completed (and for any standard continuous PC that has been missed). - Waivers for PCs tied to subsequent disbursements and reviews are not required even if information on nonobservance already exists; staff report and LOI/MEFP must provide assurances that understandings on appropriate policies have been reached to complete the subsequent review. - Waivers of applicability (when information necessary to assess observance is unavailable) could in principle be granted, but in the case of the SCF would be highly unusual. - Unlike purchases under the SBA, each SCF disbursement is linked to specific PC test dates and to a specific review, and thus the disbursement is not blocked when a new test date passes and information on performance under it is unavailable. - While in theory a waiver of applicability could be granted for a PC at a test date linked to the current review, this would raise serious questions about the country’s capacity to provide timely data for SCF reviews. - In arrangements with blended financing, waivers of applicability will be required for the GRA-financed arrangement if the review is being conducted after the most recent test date has passed and data are not yet available. - With respect to the GRA financial arrangement, the member may purchase any amount available based on earlier completed reviews if the purchase is requested within 45 days of the most recent test date and all the conditions specified in paragraph 2 of the Reduction of Blackout Periods in GRA arrangements decision (Decision No. 14407-(09/105)) are met. - Modifications to program conditionality already set by the Board may be appropriate when departures from PCs are expected due to unrealized assumptions or significant unanticipated developments, provided targets remain macro-critical. - Requests for modifications must be made by the authorities and supported by staff in the Staff Report submitted to the Board before the relevant test date has been passed, and must be approved by the Board before information on observance is available, normally in the context of a program review. - In exceptional cases, modifications can be approved by the Board outside the context of a program review, provided authorities and staff have common understandings documented in a revised or new LOI with an updated PC table and, where relevant, TMU. - Such out-of-review approvals require a staff report discussing reasons for the modification, status of the program, and relevant policy understandings. ### Misreporting and consequences - Misreporting occurs when members with a Fund-supported program obtain resources based on inaccurate information regarding observance of quantitative or continuous PCs or prior actions (a “noncomplying disbursement”). - Under the SCF arrangement, a noncomplying disbursement occurs when: - the Fund makes a disbursement based on a finding that applicable conditions established for that disbursement have been observed, and - that finding later proves to be incorrect. - Upon evidence that a member may have received a noncomplying disbursement: - The MD shall inform the member promptly. - After consultation, if the MD determines the member did receive a noncomplying disbursement, the MD shall promptly notify the member and submit a report to the Executive Board with recommendations. - The Board may decide either: - that the member shall be expected to repurchase/repay the disbursed amount, or - that the nonobservance will be waived. - Waivers will normally be granted only when the deviation was minor or temporary, or if the member had adopted additional measures appropriate to achieve the objectives supported by the relevant decision. - Relevant information on misreporting should be made public by including it in documents to be published after the Board discussion, such as a press release containing the Chairman’s Statement or summing up, with prior Board review of the text for publication. *2023 LIC FACILITIES HANDBOOK: STANDBY CREDIT FACILITY* ### 163. Whenever the Executive Board finds that the noncomplying disbursement has been ### 163. Whenever the Executive Board finds that the noncomplying disbursement has been ### De minimis misreporting and waivers - If the Executive Board finds a noncomplying disbursement was made but the nonobservance of the relevant PC or other specified condition was de minimis misreporting (i.e., a deviation from a PC so small as to be trivial with no impact on the assessment of performance under the relevant member’s program), a waiver for nonobservance shall be granted by the Executive Board. - The discussion of de minimis misreporting will be included in a staff report on the member that deals with other issues but the discussion should be deleted if such a report is published. ### Purpose of Program Reviews - Program reviews evaluate whether the program is on track to achieve its objectives through: - A backward-looking assessment: performance against quantitative PCs, structural and quantitative benchmarks, and prior actions. - A forward-looking assessment: prospects for successful program implementation, including whether policy capacity and commitments are adequate to achieve the program’s objectives. - At the time of the consideration of the final review under an SCF arrangement, and assuming no further program support from the Fund is expected, the scope of the forward-looking assessment could be more limited than for previous reviews. - Reviews update program design and are the main vehicle for modifications to program design (changes in access, phasing, and conditionality). - At approval and for each review, the authorities’ LOI presents or updates their policy program, and a staff report provides an overall assessment of performance and policy commitments. ### Timing of Reviews, Test Dates, and Disbursements - The timing of all reviews, test dates, and disbursements is summarized in a staff report table at the time of approval of an SCF arrangement and updated as needed at the time of reviews. - The Arrangement text attached to the staff report for the initial SCF request specifies the test dates, reviews, availability dates, and disbursements for the first year of the arrangement. - The quantitative indicator table (“PC table”) attached to the LOI/MEFP should clearly identify PCs, indicative targets, and adjustors for at least a 12-month period from the Board date of the program approval or review. - The structural benchmark table should cover measures over at least a 12-month period, indicating the reviews that individual benchmarks are linked to. - The text of the arrangement attached to the staff report should specify all PCs and review/availability dates normally over the next 12 months from the Board date of the program approval/review. - The first disbursement is made available upon approval of the arrangement; subsequent disbursements are conditional on observance of PCs and a program review confirming satisfactory progress and adequate safeguards. ### Frequency of Disbursements and review considerations - Disbursements and reviews under an SCF arrangement are expected to normally be semiannual, or quarterly where closer monitoring is needed. - Reviews and associated availability dates must be scheduled no more than six months apart (although the interval between program approval and the first availability date could be longer to harmonize with budget cycles). - There is flexibility to set specific review and test dates based on country-specific circumstances; deviations (more frequent reviews) can be considered to align monitoring with national budget/reporting cycles. - It is possible to shift between semiannual reviews and higher frequencies of phasing during an arrangement or schedule such shifts at approval based on projected risk profiles over time. ### Test dates, availability dates, and program period - Test dates for PCs must be set so that all scheduled disbursements can take place before the end of the SCF arrangement, accounting for reporting lags and staff report preparation/circulation. - Availability dates for disbursements should be set so that all data needed to confirm observance of PCs at related test dates would have become available. - Availability dates are specified in the Arrangement text and subsequent Decisions, and are summarized in the staff report table on the schedule of disbursements. - Reviews cannot be completed prior to the applicable availability date. - The program period supported by an SCF arrangement would typically start somewhat before the Board approves the SCF arrangement, and three to six months before the first test date under semi-annual monitoring. - The program period should normally not start more than three months prior to the Board meeting, and in any case not before the authorities and staff have discussed the parameters of the program. ### Blackout periods and disbursement blocking - In contrast to SBAs, SCF design typically avoids “blackout periods” because each disbursement is linked to a specific review and periodic PCs; a disbursement is not blocked when a new test date passes since that test date applies to a future disbursement. - Previously approved disbursements may still be blocked once a scheduled review date has passed (or if a continuous PC has not been met). ### Addressing interruptions: track records, combined reviews, and rephasing - Interruptions and delays in SCF-supported programs may require establishing a track record before completing a review; a track record could be: - Informal (time-bound policy actions and targets), - Monitored under an SMP, or - Addressed via the RCF or concurrent instruments in urgent exogenous shock cases. - Delays can be addressed through extensions of the arrangement, combining reviews, rephasing of access, or combinations thereof. - Combining two reviews is possible when delays occurred and performance can be assessed against two test dates linked to successive reviews; combining three or more reviews is very unusual. - Conditions for combining reviews: - (i) Conditionality fully defined and Board-approved (including applicable PCs) for these reviews; - (ii) Data are available to measure observance of conditionality for the reviews; - (iii) Anticipated dates for conclusion of the reviews in the arrangement text have all passed. - Reviews are typically combined when the program is on track with respect to the most recent review and sufficient corrective action offsets earlier nonobservance. - If slippages relative to objectives and conditionality for the most recent review are significant, combining reviews would not be appropriate; alternatives include cancellation of the arrangement and discussion of support under a new instrument, or completing the past review and establishing a new future test date and conditionality, typically with rephasing of access. ### Rephasing disbursements and extensions - Disbursements may be rephased to change amounts under individual disbursements or to change the number or timing of disbursements and reviews. - Rephasing is appropriate where program objectives can still be achieved, including through corrective actions; typically involves spreading access associated with specific review(s) across future reviews within the current arrangement period. - Rephasing can be combined with an extension of the arrangement when only a few reviews remain, to allow completion before expiry. - Short-term technical extensions (typically not more than three months) can be used to complete final review(s) and make final disbursement available before arrangement expiration without rephasing. - Access should never be rephased in a manner that would make it impossible for the member to obtain the full, undisbursed amount under the arrangement. - If delays are substantial and rephasing would compress a very large amount of access into a short period (even with an extension), it is normally appropriate to let the arrangement expire or be canceled and proceed to a new SCF arrangement unless there has been a very sharp turnaround in performance. ### Other relevant policies (selected modalities and requirements) - Ex-Post Peer Review Assessments (PRAs) - Access to resources under SCF arrangements counts toward the policy on LTPE, except if the arrangement was treated in its entirety as precautionary and no disbursements were made. - Members that have had a UCT arrangement in place for at least seven out of the past 10 years, and for whom a PRA has not been prepared in the past five years, should have an ex post PRA prepared in time to be considered by the Board at the time of a request for a new Fund arrangement. - Post-Financing Assessments (PFAs) - Outstanding SCF credit is subject to PFA. - Members with outstanding credit from the Fund in the GRA and/or PRGT exceeding 200 percent of quota or SDR 0.38 billion from the PRGT (and/or SDR 1.5 billion from the GRA) after the expiry of their arrangements are expected, upon the recommendation of the MD, to engage with the Fund in PFA. - Normally one stand-alone PFA paper is expected to be issued for Executive Board consideration within a 12-month period. - Article IV consultation cycle - The 24-month cycle for Article IV consultations applies to members with an SCF arrangement. - Article IV consultations with members that have an on-track SCF arrangement in place would be expected to be completed within 24 months after the completion of the previous Article IV consultation. - If a program review is not completed by the date specified in the arrangement, the next Article IV consultation would be expected to be completed by the later of (i) six months after the scheduled review date and (ii) 12 months, plus a grace period of three months after the previous Article IV consultation, unless the program review has been completed earlier. - A member that has completed an SCF arrangement by drawing all amounts may remain on the 24-month cycle if it does not meet any of the criteria in paragraph 2 of Decision No. 14747-(10/96), as amended: (i) systemic or regional importance; (ii) perceived to be at risk or facing pressing policy issues of broad interest; or (iii) outstanding Fund credit exceeding 145 percent of quota. - At the final review, staff should assess whether the consultation cycle should be shortened back to 12 months based on the above criteria; the staff report should seek the Board’s approval when shortening is warranted. - Article VIII and XIV obligations and data - A standard continuous PC applies inter alia to non-introduction or intensification of exchange restrictions and to non-introduction or modification of multiple currency practices. - Article VIII, Section 5 does not apply to information required for the purposes of Fund financial assistance under the SCF. - HIPC - Performance under an SCF arrangement can count toward a track record of strong policy performance required for the HIPC decision point and completion point. - The minimum required track record for the decision point is six months. For the completion point, there is no minimum duration for the track record (except where Fund-supported programs have been off track for more than six months); the Fund assesses performance on particular outcomes. - Side letters - Use of side letters in SCF arrangements has been extremely rare; side letters may be used when release of information on policy understandings at the time of a program request or review would cause adverse market reaction or undermine authorities’ efforts to prepare domestic groundwork for a measure. *2023 LIC FACILITIES HANDBOOK: STANDBY CREDIT FACILITY (paragraphs 163–174).* ### 175. The RCF provides rapid concessional financial assistance as outright disbursements to ### ppea2023020 - 175. The RCF provides rapid concessional financial assistance as outright disbursements to ### Purpose, scope, and design of the RCF - The RCF provides rapid concessional financial assistance as outright disbursements to LICs facing urgent balance of payments needs. - Financing needs covered include those caused by exogenous shocks, natural disasters, emergence from conflict, domestic instability, emergencies, and fragility. - The RCF is designed for situations where a multi-year UCT-quality Fund-supported program is either not necessary or not feasible: - Not necessary: e.g., due to the transitory nature of the adjustment need and the financing. - Not feasible: e.g., limited capacity in post-conflict, disaster, or fragile situations or when more time is needed to design a multiyear program. - Repeated use of the RCF may be warranted in certain circumstances and subject to limitations under the legal framework of the PRGT Instrument. - Purpose of RCF support: - Help members address urgent balance of payments needs. - Assist implementation of policies to make progress toward achieving or restoring a stable and sustainable macroeconomic position consistent with strong and durable poverty reduction and growth. - Characteristic features of the desired position: absence of present, prospective balance of payments need; domestic and external stability; sustainable fiscal and current account balances; limited debt vulnerabilities; adequate international reserves; sufficient policy and institutional capacity. - RCF support can help replenish international reserves, loosen financing constraints for public and private sectors, provide policy support, and catalyze additional donor financing. ### Windows and thresholds - RCF support is available under different windows: - Regular window (not linked to a specific shock). - Exogenous shock window for urgent BoP needs resulting primarily from a sudden and exogenous shock. - Large natural disaster window for qualifying countries with damages equivalent to at least 20 percent of GDP. - Temporary food shock window (FSW) available under the RCF for a period of 12 months from September 30, 2022, to qualifying countries that experience urgent balance of payments needs associated with the global food shock. - Access limits and conditions vary by window. ### Qualification for RCF assistance - Assistance is available to PRGT-eligible member countries that face urgent balance of payments needs unless: - (i) the BoP difficulties underlying the financing need are predominantly caused by a withdrawal in financial support by donors; or - (ii) a UCT-quality program is both feasible and necessary. - Definitions and criteria: - An urgent balance of payments need is characterized by a present BoP need that, if not addressed, would result in immediate and severe economic disruption. - The RCF can only be used if it is either not feasible or not necessary to implement a UCT-quality Fund-supported program. - Typical member qualification for the RCF: - (i) The BoP need is expected to be resolved within one year and no major policy adjustments are necessary; or - (ii) A UCT-quality program cannot be put in place owing to limited policy implementation capacity or when urgency requires assistance before a UCT-quality program can be adopted. - For countries seeking to build a track record toward a UCT-quality program, an SMP would normally be preferred; policy commitments in a recent RCF disbursement can be used to build the policy track record required for a repeat RCF disbursement. - Ex-ante policy undertakings required: - Member must outline policies in a LOI and set out additional understandings to assure it will not introduce measures that compound BoP difficulties (typically including commitment not to introduce or intensify exchange and trade restrictions). - Sufficient policy capacity and commitment to implement policies must exist to safeguard Fund resources. - Fund assessment of member cooperation in seeking solutions for BoP difficulties is required. - Additional criteria apply for access to the temporary food shock window under the RCF/RFI (see Box 4). ### Food Shock Window (FSW) — design, access, and qualification - The FSW was approved on September 30, 2022, and is temporary for 12 months from that date. - Purpose: address urgent BoP needs associated with rising food and fertilizer import costs, cereal export shortfalls, or acute food insecurity following the Russian invasion of Ukraine in February 2022. - Access rules: - Access under the FSW does not exceed qualifying countries’ actual BoP need and capped at 50 percent of quota. - It is fully additional to the annual access limits under the RFI and RCF. - Cumulative access limits under the RFI regular window and RCF exogenous shocks window will be increased to 175 percent of quota for countries accessing the FSW. - Access counts towards exceptional access safeguards thresholds for the GRA, PRGT, and PS-HCC. - In blending cases, the RFI component counts towards applicable RCF annual/cumulative access sub-ceilings. - Outstanding disbursements from all RCF/RFI windows are included in calculating total cumulative access. - Qualification criteria (in addition to standard emergency financing criteria): - The requesting member must fulfil at least one of the food shock impact criteria: - (i) a situation of acute food insecurity inflicting serious economic disruption within the member on such a scale as to warrant a concerted international effort; - (ii) an increase in food or fertilizer import costs that adversely impact the member’s current account, where such negative impact is at least 0.3 percent of GDP over a 12-month period; and/or - (iii) a shortfall in cereal exports where the projected negative shock to cereal exports, benchmarked against the previous year, is larger than 0.8 percent of projected GDP for the compensable year, except if due to the member’s own ban or restrictions on cereal exports. - Safeguards and other terms: - Access under the FSW is subject to debt sustainability and adequate capacity to repay requirements. - Members are expected to commit to transparency and accountability measures in the use of emergency resources. - Timing and modalities of safeguards assessment determined case-by-case; normally completed before Executive Board approval of any subsequent arrangement to which the Fund’s safeguards policy applies, with some exceptions for recent assessments. - Disbursements under the FSW do not count towards the limit of two disbursements within a 12-month period under the RCF. - Repayment terms: RFI FSW financing repaid within 3¼ to 5 years; RCF FSW financing repaid within 5½ to 10 years. - Concurrent use of the FSW with an SMP/PMB can be considered when a country needs to build a track record toward a UCT-quality program, with the PMB available in narrowly tailored circumstances. - Documentation requirements for FSW requests: - PN/SR should include explanation of how member meets FSW qualifying criteria and justification for requested access level. - LOI requesting FSW support should discuss general policies to address BoP difficulties, how policies advance poverty reduction and growth objectives (required for RCF), and intention not to introduce measures that would compound BoP difficulties. - Include relevant commitments for safeguards assessment policy requirements and tailored transparency/accountability measures. - Prior actions should be set only exceptionally. - If a UCT-quality program is necessary but not feasible, the FSW PN/SR should describe the authorities’ transition strategy. - PN/SRs must include standard capacity to repay and DSA analyses; agreement with the World Bank on the DSA required for joint IMF-World Bank LIC-DSA cases. ### Repeated use, limitations, and track record - RCF resources are provided as outright loan disbursements and not phased under an arrangement. - Support can be one-off or provided under repeated RCF disbursements over a limited period; each disbursement requested and approved separately. - Policy commitments under repeated RCF disbursements should typically be used to facilitate a transition to a UCT-quality program (normally under an ECF arrangement). - Use in post-conflict and similar instability/limited capacity situations would be similar to the RFI (previously EPCA). - SMP use to build a track record concurrently with RCF is normally preferred; RCF with appropriate policy understandings can also build the policy track record. - Limitations to avoid supporting weak policies or creating moral hazard: - A member may not receive more than two RCF disbursements in any 12-month period. - A member can only receive more than one RCF disbursement in any three-year period if: - the BoP need was caused primarily by a sudden, exogenous shock (qualifying under the exogenous shocks or large natural disaster window where damage assessed to be equivalent to or exceed 20 percent of GDP); or - the member country has established a track record of adequate macroeconomic policies for at least six months prior to the request. ### Concurrent use and blending - Concurrent use: - A member will generally not obtain RCF financing if a UCT-quality Fund-supported program (e.g., ECF or SCF) is in place, on track, and feasible. - RCF financing during an ECF or SCF arrangement can be provided only when: - (i) disbursements under the ECF or SCF arrangement are not possible (e.g., policy slippages or delays); - (ii) RCF qualification requirements are met, including existence of an urgent BoP need and relevant policy commitments; and - (iii) the BoP need giving rise to the RCF request is primarily caused by a sudden exogenous shock. - When RCF access exceeds 25 percent of quota by using the exogenous shocks or large natural disasters window, existing and prospective policies should be sufficiently strong to address the shock. - RCF-supported policies could serve as a track record to bring an ECF- or SCF-supported program back on track. - The RCF can be used concurrently with GRA financing under certain circumstances. - Interaction with PSI, PCI, and SMP: - Support under the RCF can be combined with programs supported under the PSI, PCI, or monitored under an SMP. - Satisfactory performance under a PSI, PCI, or SMP for at least six months would normally satisfy the track record requirement for repeated RCF use and facilitate rapid disbursement. - A short LOI and short staff paper would normally suffice for requesting an RCF loan disbursement during an on-track PSI, PCI, or SMP. - Blending: - When providing blended assistance, RCF resources will normally be provided together with GRA resources under the RFI. - Use of the RCF with GRA arrangements is expected where pre-existing SBA or extended arrangements are off track; RCF financing would normally be blended with RFI financing. - Modalities and documentation of blended RCF-GRA financing broadly the same as a stand-alone RCF disbursement, but imply lower average concessionality. - RFI qualification requirements apply when applicable. ### Determination of access — main criteria - Area departments may consult with SPR and FIN early when considering access. - Staff reports should explicitly discuss the basis for access determination with reference to main criteria and access limits. - Access under the RCF is determined case-by-case based on: - (i) the member’s urgent BoP need (taking into account all BoP flows, including reserve accumulation and financing from other sources); - (ii) the strength of its policies and capacity to repay the Fund (taking into account policy plans, adjustment effort, commitment to implement policy plans, institutional capacity, track record of policy implementation, and country circumstances such as vulnerabilities, imbalances, and debt sustainability); - (iii) the amount of outstanding Fund credit and the member’s record of past use. - All else equal, higher access generally associated with stronger policies, stronger track record, and stronger capacity to repay. - Access shall also take into account the size and likely persistence of the shock where applicable. *2023 LIC FACILITIES HANDBOOK: RAPID CREDIT FACILITY — Excerpt provided in the source content unit* ### 189. The amount of any RCF disbursement may not exceed the member’s balance of ### 189. The amount of any RCF disbursement may not exceed the member’s balance of ### RCF disbursement purpose and representations - RCF disbursement may not exceed the member’s balance of payments need and would typically be less than total financing needs. - RCF support is expected to catalyze financing from donors and creditors. - When requesting assistance under the RCF, the member will need to make a representation, normally in an LOI, that it is experiencing an urgent balance of payments need. - In repeated RCF disbursements, timing and amounts of access would not be expected to mirror the projected evolution of financing needs. - Given limits on number of disbursements in any 12-month period and sub-ceilings on RCF access, disbursements would often cover only a small part of total financing needs, with the remainder mobilized from other sources, including development partners. - When urgent financing needs are projected to persist or reoccur and transition to a UCT-quality arrangement is not expected in the near term, access should be set so successive disbursements could be accommodated under the applicable RCF access sub-ceilings. ### Access limits (PRGT global limits and RCF sub-ceilings) - Total access to financing under the PRGT should normally not exceed 145 percent of quota per year across all concessional facilities. - Total access to financing under the PRGT should normally not exceed 435 percent of quota cumulatively, net of scheduled repayments. - In exceptional circumstances, access above the normal global limits can be made available to PRGT-eligible countries that meet the PRGT exceptional access criteria. - RCF regular window sub-ceilings: - 50 percent of quota per year (over any 12-month period). - 100 percent of quota on a cumulative basis (total stock of RCF credit outstanding at any point in time). - Per disbursement limit of 25 percent of quota. - Annual access in excess of 25 percent of quota under the regular window would require an additional RCF disbursement within the year and, absent an exogenous shock or large natural disaster, would have to be linked to a track record of adequate macroeconomic policies. - RCF exogenous shock window: - Subject to a sub-ceiling of 50 percent of quota per year. - Cumulative limit normally 100 percent of quota, but increased to 150 percent of quota until end-June 2023 in response to the Covid-19 pandemic, after which it will revert to 100 percent of quota. - Purchases under the RFI made after July 1, 2015 count towards the applicable RCF annual and cumulative sub-ceilings. - RCF large natural disasters window: - Allows access of up to 80 percent of quota per year for natural disasters where damage is assessed to be equivalent to or exceed 20 percent of the member’s GDP. - Cumulative access up to 183.33 percent of quota on a cumulative basis until end-June 2023 on account of the Covid-19 pandemic, following which the cumulative limit will revert to 133.33 percent of quota. - There are no norms for access under the RCF “exogenous shocks” and “large natural disaster” windows; sub-ceilings should not be considered norms and individual disbursements would in most cases be below applicable annual sub-ceilings. - Examples: a disbursement of 50 percent of quota under the “exogenous shocks” window or 80 percent of quota under the “large natural disasters” window would only be expected where financing need is very large and economic policy context is relatively strong (including limited debt vulnerabilities). ### Access under blended financial assistance - When RCF disbursements are blended with concurrent GRA disbursements, total access to financial assistance (e.g., RCF together with RFI) is determined based on the standard criteria, implying that total access should be comparable across countries with similar balance of payments needs, strength of policies, and outstanding Fund credit. - For presumed blenders, access to the concessional (RCF) financing component of blended assistance would be in a 1:2 ratio of PRGT to GRA resources, with the remainder met by GRA financing. - Any RFI access is counted towards the annual and cumulative RCF access limits, irrespective of the RCF window. ### Procedural safeguards on high access requests — DSAs and informal Board meetings - Staff reports for any RCF disbursement should provide an up-to-date assessment of debt vulnerabilities, with explicit reference to the impact of new borrowing from all sources, including prospective IMF disbursements. - A new DSA is required for any financing requests under the PRGT if it: - (i) involves exceptional access to concessional resources; - (ii) brings total access (cumulative disbursements) under all concessional facilities to more than 80 percent of quota, based on cumulative past and future scheduled disbursements in any 24-month period; or - (iii) involves a member country with a high risk of debt distress or in debt distress. - All DSAs (full DSAs and updates) should be prepared jointly by Fund and World Bank staff and must be submitted to both the IMF and IDA’s Executive Boards. - An early informal Board meeting is required if a financing request under the PRGT would involve (i) exceptional access or (ii) high access to concessional financing. - Staff would provide early notice to the Board of upcoming financing requests where envisaged financing commitment would have a large impact on the Fund’s overall concessional resources. - Exception: requirement for a new DSA or a Board brief in high access cases does not apply for new financing requests of 15 percent or less of quota. ### High combined credit and PS-HCC - Requests resulting in combined PRGT and GRA access in excess of the GRA access limits are subject to the Policy Safeguards on High Combined Credit Exposure (PS-HCC). - In March 2023, the PS-HCC thresholds were temporarily increased from 145/435 percent of quota to 200/600 percent of quota annually/cumulatively, effective until March 4, 2024. - PS-HCC comprise criteria and procedural requirements substantively the same as PRGT exceptional access framework, except they do not include an income threshold. ### Financing terms - Repayments of RCF credit are made in 10 equal semiannual installments, subject to a 5.5-year grace period from the date of the disbursement and 10-year final maturity. - Interest rate on RCF credit is set at zero percent. ### Financing assurances, arrears, and safeguards - The Fund’s policy on financing assurances requires that financial arrangements can only be approved (and reviews can only be completed) when the program is fully financed. - Financing assurances are not required for RCF disbursements, given there is no underlying economic program; staff reports for RCF requests should provide information on projected financing gaps. - Where RCF may be used to build a track record for a UCT-quality Fund-supported program, staff reports should discuss prospects for financing assurances required for such an arrangement. - Assurances should be given that the member country has the capacity to repay the Fund based on medium-term balance of payments projections and the standardized table on indicators of the capacity to repay the Fund. ### Arrears policies and RCF - If a member has arrears to an international financial institution (IFI), the Fund will apply either the NTP policy or the LIOA policy; country teams should seek guidance from LEG and SPR on application to specific creditors. - Treatment of arrears to official bilateral creditors: - If arrears do not require restructuring of the underlying claim (non-OSI cases), the Fund maintains a policy of non-toleration; tacit approval of an official bilateral creditor’s Executive Director has been deemed sufficient in practice. - If restructuring is required (OSI cases), the Fund may provide financing notwithstanding those arrears only under carefully circumscribed circumstances; country teams should seek guidance from LEG and SPR. - In a small subset of emergency situations (e.g., aftermath of a natural disaster), the Fund may provide financing under the RCF despite arrears owed to official bilateral creditors, where extraordinary demands leave insufficient time for debtor to undertake good faith efforts to reach agreement; Fund support is expected to help advance normalization of relations with official bilateral creditors and resolution of arrears. - Flexibility under the Fund’s LIA policy (sovereign arrears to private external creditors and non-sovereign arrears due to exchange controls): - Fund can lend on a case-by-case basis in sovereign arrears to private external creditors only where: (i) prompt Fund support is essential for successful implementation of the member’s adjustment program; and (ii) the member is pursuing appropriate policies and making a good faith effort to reach a collaborative agreement with creditors. - For the RCF, these conditions may not be required in all cases (e.g., in the wake of conflict or natural catastrophe), but Fund support is expected to help advance normalization of relations with private creditors and resolution of arrears. - Staff reports should provide information on arrears to private external creditors. ### Overdue obligations to the Fund - Where a member is in arrears to the Fund in the GRA, the Special Disbursement Account, the SDR Department, or to the Fund as Trustee (including the PRGT and RST), a request for IMF financing, including under the RCF, will not be approved and disbursements under an existing arrangement would be suspended. - Timetable of Fund actions when a financial obligation becomes overdue: - After one month after a financial obligation has become overdue, the MD will notify the Executive Board that an obligation is overdue. - A report by the MD to the Executive Board will be issued two months after a financial obligation has become overdue, and will be given substantive consideration by the Executive Board one month later. - A factual statement noting existence and amount of arrears outstanding for more than three months will be posted on the member’s country-specific page on the Fund’s external website. - Once the Executive Board adopts a decision to limit the member’s use of Trust resources, a press release will be issued. - The MD may recommend advancing or postponing Executive Board consideration of reports regarding overdue obligations in exceptional circumstances for up to one-year periods. - While a member is in arrears to the Fund, policy support can only be provided through surveillance, technical assistance, and, under certain circumstances, SMPs. - Remedial measures for dealing with PRGT arrears include removal from the list of PRGT-eligible countries, declaration of noncooperation with the PRGT Trust, and suspension of technical assistance. - Annual reports and financial statements will identify members with overdue obligations to the Trust outstanding for more than six months. *2023 LIC FACILITIES HANDBOOK: RAPID CREDIT FACILITY — Extracted content* ### 210. Under the RCF, a member’s request for assistance will require a commitment to undergo a ### 210. Under the RCF, a member’s request for assistance will require a commitment to undergo a ### Safeguards assessment (paragraph 210) - A member requesting RCF assistance must commit to undergo a safeguards assessment and provide Fund staff access to the central bank’s most recently completed external audit reports (whether or not the audit is published); the member shall authorize its external auditors to hold discussions with staff. - The commitment and authorization must be provided when the member makes a formal written request for RCF resources. - Timing and modalities of the assessment are determined case-by-case based on the institutional and administrative capacity of the central bank. - It is presumed the safeguards assessment would have been completed before Board approval of any subsequent arrangement to which the Fund’s safeguards policy applies. - The safeguards process involves continuous analysis of information obtained primarily through documents and discussions with authorities and the central bank’s external auditors, evaluating governance, auditing, financial reporting, control systems, autonomy, mandate and legal framework over the life of an arrangement and while Fund credit remains outstanding. - Close cooperation and coordination between FIN, other functional departments, and area departments is essential; FIN should be kept informed by area departments of safeguards issues, including logistical issues such as timing of new arrangements. ### Policy objectives for RCF support (paragraphs 211–212) - The member’s policies should not compound existing balance of payments difficulties and should be aimed at making progress toward achieving or restoring a stable and sustainable macroeconomic position consistent with strong and durable poverty reduction and growth (see definition in Section A). - Objectives include steps to address, though not necessarily resolve, macroeconomic imbalances and maintain or move toward: - strong and durable poverty reduction and growth; - low or moderate inflation; - sustainable fiscal and current account balances; - limited debt vulnerabilities; - adequate international reserves; - sufficient policy and institutional capacity to implement appropriate macroeconomic policies. - RCF-supported policies should, to the extent possible, be aligned with the country’s own poverty reduction and growth objectives. - The LOI and staff report should discuss the current situation, cause of the urgent balance of payments need, and macroeconomic prospects; near-term RCF-supported policies should be clearly articulated in the LOI and MEFP (optional) and associated staff report, and be consistent with medium- and longer-term policy objectives, which would typically include: - Fiscal policies: (i) fiscal stance well anchored for macro stability and fiscal/debt sustainability, (ii) revenue and spending policies taking due account of growth and social objectives, (iii) budgets guided by medium-term fiscal frameworks to the extent possible. - Monetary policies: consistent with inflation, exchange rate, and reserve objectives, while taking due account of cyclical considerations. - Exchange rate policies: ensure a unified exchange rate and a real exchange rate level broadly in line with fundamentals, ensuring a stable and sustainable external position consistent with adequate growth. - Financial sector policies: geared toward financial stability and deepening to foster investment and forestall financial crises. - Public financial management reforms: ensure resources are tracked, reported, and targeted appropriately (including adequate resources for social and other priority spending); public debt management to support debt sustainability; revenue reforms to broaden the revenue base and enhance tax efficiencies. - Other structural reforms critical for achieving the member’s macroeconomic objectives. ### Role of RCF financial support (paragraphs 213–214) - RCF balance of payments support can assist countries in smoothing adjustment toward a more stable and sustainable macroeconomic position. - Fund financial support can be used to replenish international reserves and to provide liquidity for external payments. - By relaxing external financing constraints, Fund support also loosens domestic liquidity constraints for public and private sectors—reducing the need for retrenchment in public and private savings-investment balances and enhancing policy options (allowing less contractionary fiscal, monetary, and exchange rate policies) and cushioning private sector adjustment. - The appropriate mix of financing and public/private adjustment is determined case-by-case. - A member may use the domestic counterpart of RCF resources to finance, directly or indirectly, the government budget deficit; such direct budget financing may be appropriate when: - (i) policies envisage that the entire Fund financial support is used to meet a present or prospective balance of payments need; - (ii) loosening fiscal financing constraints is an important macroeconomic objective under the policies; - (iii) the central bank cannot or should not lend to the government while the domestic financial sector is too shallow or unstable to provide necessary budget financing (or the central bank plays a largely passive domestic policy role). - Staff reports should justify use of domestic counterpart for budget financing where relevant and discuss safeguards implications, including referring to a memorandum of understanding between the central bank and fiscal authorities. ### Links to Poverty Reduction Strategies and social spending (paragraphs 215–216) - Any RCF financing request must be accompanied by a statement, normally in the LOI or MEFP, of how RCF-supported policies advance the country’s poverty reduction and growth objectives; linkage may be indirect, e.g., through bolstering macroeconomic stability needed to underpin poverty reduction and growth. - When a relevant PRS document exists, the LOI/MEFP description can cross-reference it; RCF-supported policies should take into account and generally be consistent with PRS objectives in promoting a stable and sustainable macroeconomic position consistent with strong and durable poverty reduction and growth. - PRS documents are not required for RCF disbursements. - Staff should inform authorities early about definitions and timelines for PRGS requirements when future ECF-, SCF-, PSI- or PCI-supported programs are under consideration. - Social and other priority spending should be safeguarded and, whenever appropriate, increased under RCF-supported policies. - When LOI/MEFP includes indicative targets (e.g., establishing a track record), these should include a floor on social and other priority spending, whenever possible. - Definition of social or other priority spending should be consistent with authorities’ poverty reduction and growth objectives; where tracking is not feasible, RCF documentation should report measures to develop an adequate tracking system and staff should monitor progress; programs may include structural measures to establish tracking systems. ### Debt Sustainability Analysis (DSA) requirements (paragraphs 217–219) - RCF-supported policies should be underpinned by a thorough DSA to inform medium-term debt strategies and fiscal frameworks. - Country teams should engage with authorities in DSA preparation, discuss results, and share final files with relevant officials. - DSAs for LICs should be prepared jointly with the World Bank, and country teams should involve other relevant MDBs; joint DSAs are required for all PRGT-eligible I countries that also have access to IDA resources. - A full DSA should generally be produced at least once every calendar year. - A new DSA should be produced for any new request for IMF financing (even when an annual DSA has already been completed). - DSAs for LICs should be presented as self-contained documents and should normally be prepared using the LIC DSF. - The LIC DSF analysis includes three components: - A forward-looking analysis (20-year projection) of debt and debt-service dynamics under a baseline scenario, alternative scenarios, and standardized stress tests; - An explicit rating of the risk of external debt distress (low, moderate, high, or in debt distress) based on indicative country-specific debt-burden thresholds that depend on the quality of policies and institutions; and an assessment of the overall risk of debt distress; - Recommendations on a borrowing (and lending) strategy and other crucial macro policies to limit the risk of debt distress, while maximizing the resource envelope to achieve the country’s development objectives. ### Collaboration with World Bank and development partners (paragraph 220) - Fund staff should consult closely with all major development partners active in the country when designing and monitoring RCF-supported policies. - The JMAP approved by the Boards of the World Bank and IMF calls on Bank and Fund country teams to consult at least once a year to identify key macroeconomic and structural reform challenges and coordinate work plans. ### Conditionality under the RCF (paragraphs 221–225) - The RCF does not require a UCT-quality economic program and does not involve ex post conditionality (no quantitative or continuous performance criteria), a time-bound arrangement, or formal program reviews. - The RCF provides outright disbursements based on ex ante policy undertakings (see Section A on Eligibility and Qualification). Prior actions (paragraph 222) - Prior actions could be specified in exceptional circumstances when it is critical that a measure be taken prior to RCF financial assistance. - Prior actions may be appropriate after severe policy slippages to secure capacity and commitment to implement policies that would not compound balance of payments difficulties. - Prior actions should be implemented no later than five working days before the Board discussion and be defined in the LOI/MEFP and cross-referenced in the Board Decision approving disbursements. Monitoring policies and track records (paragraphs 223–224) - RCF allows flexibility in supporting forward-looking policies; disbursements do not require program understandings other than general ex ante policy undertakings, including cooperation and non-introduction of measures that would compound balance of payments difficulties. - RCF policy commitments can provide general policy support, establish a track record of economic performance (similar to an SMP), and help monitor implementation of UCT-quality policies. - Where the RCF supports a track record, the LOI/MEFP would typically set out agreed monitorable quantitative and structural indicators (indicative targets or benchmarks) with specific test dates and deadlines. - Design of monitoring could mirror SMPs or past EPCAs but is generally flexible and does not require a time-bound program period. - Targets are not PCs; waivers are not required if missed, and program adjustors are not needed. - Quantitative periodic indicative targets could include measures of net international reserves, central bank domestic assets, domestic and fiscal balances or financing, external debt, social and other priority spending where possible, and any other relevant macro-critical indicators. - Continuous measures could include commitments related to non-introduction of certain exchange restrictions and multiple currency practices, and non-accumulation of external arrears. - RCF-supported policy track records could include an agenda for macro-critical structural reforms, with flexibility on timing; structural benchmarks should be used parsimoniously, explicitly justified as macro-critical, and indicate envisaged time frames. Misreporting (paragraph 225) - Misreporting occurs when members obtain resources on the basis of inaccurate information regarding observance of quantitative or continuous PCs or prior actions (a “noncomplying disbursement”). - As there are no PCs under the RCF, a noncomplying disbursement can only occur with respect to misreporting of prior actions. - Upon evidence that a member may have received a noncomplying disbursement, the MD shall inform the member promptly; after consultation, if the MD determines the member did receive a noncomplying disbursement, the MD shall notify the member and submit a report to the Executive Board with recommendations. - The Board may decide (a) the member shall be expected to repurchase/repay the disbursed amount, or (b) the nonobservance will be waived; waivers will normally be granted only when the deviation was minor or temporary, or if the member adopted appropriate additional measures post-disbursement. - Relevant information on misreporting should be made public by inclusion in documents published after the Board discussion, such as a press release containing the Chairman’s Statement or summing up, with prior Board review of the text for publication. *2023 LIC FACILITIES HANDBOOK: RAPID CREDIT FACILITY, paragraphs 210–225.* ### 226. Whenever the Executive Board finds that a noncomplying disbursement has been ### ppea2023020 - 226. Whenever the Executive Board finds that a noncomplying disbursement has been ### De minimis misreporting and waivers - Paragraph 226: Whenever the Executive Board finds that a noncomplying disbursement has been made but that the nonobservance of the relevant specified condition was also de minimis misreporting, a waiver for nonobservance shall be granted by the Executive Board. - The discussion of de minimis misreporting will be included in a staff report on the member that deals with other issues but the discussion should be deleted if such a report is published. - Footnote references in the source note misreporting is distinct from members’ obligations under Article VIII, Section 5; see Appendix I of the PRGT Instrument and Decision No. 14354-(09/79) and the Guidance Note on the Fund’s Transparency Policy for more details. ### RCF Track Records (Section I) - Paragraph 227: The RCF can be used to build a track record of policy performance to enable repeated disbursements under the RCF or to support a transition to a UCT-quality program. - Key operational features: - RCF involves outright disbursements without program reviews; there is no phasing of disbursements or test dates for indicative targets. - Track records would typically include agreed monitorable quantitative and structural indicators (which could be called indicative targets or benchmarks). - Test dates for quantitative targets can be set on a monthly, quarterly, semi-annual, or annual basis, including combinations thereof. - Test dates should generally be set to provide useful information for assessing performance in advance of potential future Fund support through the RCF. - If a clear and explicit policy framework is needed to establish a track record for a UCT-quality program, an RCF could be used concurrently with an SMP. - Appendix III in the source discusses different types of track records. - Paragraph 228: Requirements for repeated RCF disbursement when member received RCF in past three years and is not in “exogenous shocks” or “large natural disasters” windows: - A track record of adequate macroeconomic policies is required. - Such a track record would normally cover at least six months immediately prior to the disbursement. - The staff report should provide an assessment of past policy performance against any previously specified policy objectives and targets. - The track record period would normally start around the time the relevant track record objectives and policies become clear: - Start no earlier than the first-time substantive policy discussions on near-term macroeconomic targets started between the country team and the authorities. - Start no later than the time ad referendum understandings were reached on such targets. - Approval of a repeated disbursement is based on a finding that the member’s overall policy performance was adequate, taking into consideration the severity of the economic situation and the member’s capacity. - In exceptional cases where no relevant pre-determined monitorable objectives exist at the time a successive RCF disbursement is requested in response to an urgent financing need, the track record could be based on the Fund’s assessment that macroeconomic policies have been adequate at least over the most recent six-month period. ### Other Relevant Policies (Section J) - Paragraph 229: Additional modalities and policy requirements applying to the RCF include: - Ex-Post Peer Review Assessments (PRAs): Access to resources under the RCF does not count toward the policy on LTPE or the requirement to conduct an Ex-Post Peer Reviewed assessment. - Post Financing Assessments (PFAs): Outstanding RCF credit will be subject to PFA. - Normally, members with outstanding credit from the Fund in the GRA and/or PRGT exceeding 200 percent of quota or SDR 0.38 billion from the PRGT (and/or SDR 1.5 billion from the GRA) after the expiry of their arrangements are expected, upon the recommendation of the MD, to engage with the Fund in PFA of their economic developments and policies. - Normally one standalone PFA paper is expected to be issued for Executive Board consideration in a 12-month period. - Article IV consultation cycle: RCF support does not alter the regular (typically 12-month) cycle for Article IV consultations. The pre-existing consultation cycle is preserved (12 or 24 month), at the time of RCF approval, subject to other conditions/criteria as specified in Decision No. 14747-(10/96). - Exchange System obligations under Articles VIII and XIV and Data Provision under Article VIII, Section 5: Requirements under Article VIII Sections 2, 3, 4 and Article XIV are discussed in IMF (2006d). The Fund may require members to furnish it with such information as it deems necessary for its activities, including program monitoring. - HIPC: A period of performance under a monitorable track record supported by the RCF can count toward a track record of strong policy performance required for the HIPC decision point where the SMP has been endorsed by the Executive Board as being of UCT-quality. - The minimum required track record for the decision point is six months. - Side letters: The use of side letters in LIC programs and financing requests has been extremely rare. Side letters may be used when release of information on policy understandings at the time of a RCF request would cause adverse market reaction or undermine the authorities’ efforts to prepare the domestic groundwork for a measure. ### Transition and Program Options toward PSI (context from subsequent content) - RCF-supported track records can support transitions to UCT-quality programs and to instruments such as SMPs. - The Policy Support Instrument (PSI) provides an option for countries that do not require Fund financing at approval but seek Board endorsement and monitoring to consolidate policies and support donor/creditor confidence. - Countries not yet meeting PSI qualification can build a track record through an SMP or, in case of urgent financing needs, the RCF (assuming applicable policy commitments are in place). *Source: Extracted from the supplied content of the 2023 LIC Facilities Handbook: Rapid Credit Facility and subsequent PSI chapter as provided.* ### 240. PSI-supported programs can be extended at the member’s request subject to ### ppea2023020 - 240. PSI-supported programs can be extended at the member’s request subject to ### Extensions and Board approval - Extensions must be requested by the member and approved by the Board before the expiration of the PSI period (¶241). - Extensions that involve establishment of new test dates and reviews: - Would normally be approved by the Board on the basis of an LOI and in the context of a program review where the review shows the program is on track (¶241). - May be approved outside the context of a scheduled program review in exceptional circumstances (e.g., severe natural disaster), provided the authorities and staff have documented understandings on appropriate policies to be implemented through the next review, evidenced by a letter from the authorities. Board approval requires a staff report describing reasons for the extension, why it is outside the review context, program status, and relevant policy understandings (¶241). ### Short-term ("technical") extensions - Where no additional test dates or reviews are involved, PSIs can be extended for a short period (a few weeks or months) to complete the final review before PSI expiration (¶242). - Short-term extensions can be granted outside the context of a review if authorities and staff have reached (or are expected to reach imminently) policy understandings to complete the review (¶242). - Board approval of short-term extensions generally takes place via a very short staff paper with a decision proposed for LOT Board approval; the staff paper is subject to the regular review process and should explain status of discussions, document preparation, and policy understandings (¶242). ### Cancellation and automatic termination - A PSI may be cancelled by the authorities at any time, for reasons including: - Financing or adjustment needs expected to extend beyond the short term (possibly warranting a switch to an ECF arrangement). - Authorities no longer have capacity or commitment to implement the program. - Substantial changes in objectives or modalities of economic policies. - Authorities no longer seek Fund support (¶243). - A PSI will terminate automatically upon: - (i) noncompletion of two consecutive PSI scheduled reviews (or, if concurrent with the SCF, if no scheduled review is completed within 12 months of the completion of the last scheduled review) (¶244); - (ii) the relevant member incurring overdue financial obligations to the GRA, PRGT or the RST (¶244); - (iii) approval of an ECF arrangement for that member (¶244). ### Concurrent use with SCF, RCF, RSF, and SMP - The PSI cannot be used concurrently with an ECF arrangement, but countries with an approved PSI can receive financial support under the SCF or RCF without canceling the PSI (¶245). - SCF: - Qualification for an SCF arrangement is presumed for countries with an on-track PSI that experience a balance of payments need, provided SCF qualification requirements are met (¶246). - SCF may be requested as precautionary support when the need is potential (¶246). - Concurrent PSI+SCF would be based on a single set of program conditions and review schedule; key differences include: - SCF qualification requirements must be met at SCF approval, including existence of a present, prospective, or potential balance of payments need (¶247). - Use of the SCF is limited to 3 years out of any 6-year period, assessed on a rolling basis, with exceptions for precautionary SCF arrangements and SCF arrangements for which the Fund assesses the member does not have an actual BoP need (¶247). - Duration of the SCF arrangement can be between 12 and 36 months and is not necessarily tied to PSI duration (¶247). - If SCF expiration comes after PSI expiration, approval of a new PSI would normally take place only after expiration or cancellation of the SCF arrangement, since PSI qualification requires a broadly stable and sustainable macroeconomic position implying no IMF financing is needed at time of PSI approval. A new PSI could be approved when authorities intend to treat the SCF as precautionary; alternatively, the existing PSI could be extended for a short period to complete the final review (¶247). - While an SCF arrangement does not require issuance of a PRS-related document, such a document must exist by the time of completion of the second and subsequent reviews under a PSI with an initial duration of more than two years (¶247). - The review schedule for the PSI could remain on the “fixed review cycle” or be aligned to the more flexible SCF review cycle (¶247). - RCF: - Access to RCF support is presumed for countries with an approved PSI that subsequently experience an urgent balance of payments need, subject to RCF qualification requirements (¶248). - RSF: - It would be possible for members to seek financial support under the new Resilience and Sustainability Facility (RSF) through a concurrent program supported by the PSI; safeguards policies would apply to the RSF request (footnote 226). - Blending and eligibility: - Countries meeting criteria that create a presumption for blending would be expected to receive financial assistance through blended GRA and PRGT resources if they experience a balance of payments need during a PSI (¶249). - PRGT-eligible countries, including members qualifying for SCF or RCF financing during a PSI, should typically use either fully concessional or blended resources rather than GRA-only financing, although they remain eligible for general resources if relevant policies are met (¶249). - SMP: - Members may use an SMP (or, in urgent financing needs and assuming applicable policy commitments are in place, the RCF) to establish a track record for a PSI. The normal procedure for bringing an off-track PSI back on track would be completing the next scheduled review (after corrective actions) rather than through an SMP (¶250). ### Program objectives and design - PSI-supported programs aim to maintain or consolidate a stable and sustainable macroeconomic position consistent with strong and durable poverty reduction and growth (¶252). - PSI-supported programs should aim to maintain or consolidate: - (i) strong and durable poverty reduction and growth; - (ii) low or moderate inflation; - (iii) sustainable fiscal and current account balances; - (iv) limited debt vulnerabilities; - (v) adequate international reserves; - (vi) sufficient policy and institutional capacity to implement appropriate macroeconomic policies (¶252). - Program design should align with the country’s poverty reduction and growth objectives; specific policy objectives typically included in LOI/MEFP and staff report: - Fiscal policies: fiscal stance anchored, revenue and spending aligned with growth and social objectives, budgets guided by medium-term fiscal frameworks (¶253). - Monetary policies: consistent with inflation, exchange rate, and reserve objectives, accounting for cyclical considerations (¶253). - Exchange rate policies: unified exchange rate and a real exchange rate level broadly in line with fundamentals (¶253). - Financial sector policies: geared toward financial stability and deepening (¶253). - Public financial management reforms, public debt management, and revenue reforms (¶253). - Other structural reforms, focusing on second-generation reforms to enhance growth potential and capacity to manage volatility (¶253). ### Links to Poverty Reduction Strategies (PRS) and social spending - PSI-supported programs should be aligned with country poverty reduction and growth objectives; guidance on PRS linkages includes (¶254): - New PSI requests and PSI reviews are expected to be accompanied by a statement, normally in the LOI or MEFP, of how the PSI advances the country’s poverty reduction and growth objectives; where a relevant PRS exists, the LOI/MEFP may cross-reference it (¶254). - A PRS issued to the Board on or after May 24, 2019 shall be named a PRGS; a PRS issued as an EDD is deemed a PRGS. The PRGS may be: (i) an existing national development plan/strategy document on the country’s PRS; or (ii) a newly prepared PRS document. The PRGS must meet minimum standards and good practice guidelines and be accompanied by a cover letter to the Managing Director and issued to the Executive Board (¶254). - For a PSI with an initial duration of more than two years, staff should inform authorities early about PRGS definitions and timelines to ensure adequate time for PRGS preparation; a PRGS is not required for PSI-supported programs of two years or less (¶254). - For a PSI with initial duration of more than two years, the second (and every subsequent) review can be completed only if: - (a) the member has a PRGS developed and made publicly available normally within the previous five years, but no more than six years, covering the period up to and including the date of completion of the relevant review; and - (b) the PRGS has been issued to the Executive Board and has been the subject of a staff analysis in the staff report on the request for a PSI or a review under a PSI (¶254). - Requests for extensions to produce the PRGS beyond the second review will not be permitted under the PSI (¶254). - Staff views on the PRGS are to be provided in program documentation and the staff report should discuss how PSI policies contribute to the PRGS (¶254). - A letter of assessment of the PRGS should be requested from the World Bank and circulated to the Board with the PRGS (¶254). - Staff report to the Board on PRGS implementation, with a PRGS Implementation Review (PIR) by the time of the fifth review; PRGS implementation would also be tracked in the LOI/MEFP (¶254). - Social and other priority spending: - Should be safeguarded and, whenever appropriate, increased under PSI-supported programs (¶255). - Could be monitored through explicit program targets, e.g., an indicative floor on social and other priority spending (¶255). - Definition of social or other priority spending should be consistent with authorities’ poverty reduction and growth objectives; where not tracked, program documentation could report progress in developing a tracking system (¶255). - Staff should alert authorities that the Fund’s concessional financial support generally includes conditionality related to safeguarding social and other priority spending where feasible (¶255). ### Debt Sustainability Analysis (DSA) and collaboration - PSI-supported programs should be underpinned by a thorough DSA to inform medium-term debt strategies and fiscal frameworks; country teams should engage authorities in DSA preparation, discuss results, and share final files with relevant officials (¶256). - DSAs for LICs should be prepared jointly with the World Bank; teams should involve other relevant MDBs. Joint DSAs are required for PRGT-eligible countries that also have access to IDA resources (¶256). - As a general rule, a DSA should be produced at least once every calendar year (¶257). - A new DSA is required for any new request for IMF financing (even when an annual DSA exists) (¶257). - For program countries, a new DSA is needed where there is a proposed modification to a performance criterion related to debt limits, or a request for a waiver for non-compliance with such a performance criterion (¶257). - A new DSA is also needed when the country experiences significant changes in economic circumstances and borrowing assumptions (including due to conflict and natural disasters) (¶257). - DSAs for LICs should be presented as self-contained documents and normally prepared using the LIC DSF (¶258). - The LIC DSF analysis includes three components (¶258): - A forward-looking analysis (20-year projection) of debt and debt-service dynamics under a baseline scenario, alternative scenarios, and standardized stress tests; - An explicit rating of the risk of external debt distress (low, moderate, high, or in debt distress) based on indicative country-specific debt-burden thresholds that depend on the quality of policies and institutions in the country; and an assessment of the overall risk of debt distress; - Recommendations on a borrowing (and lending) strategy to limit the risk of debt distress while maximizing the resource envelope to achieve the country’s development objectives. *Source: 2023 LIC FACILITIES HANDBOOK: POLICY SUPPORT INSTRUMENT (extracts, paragraphs 240–258).* ### 259. Fund staff should consult closely with all major development partners active in the ### 259. Fund staff should consult closely with all major development partners active in the country when designing and monitoring a PSI-supported program ### Consultation with development partners - Fund staff should consult closely with all major development partners active in the country when designing and monitoring a PSI-supported program. - In addition to routine collaboration, the JMAP 235 approved by the Boards of the World Bank and IMF calls on Bank and Fund country teams to consult with each other at least once a year to identify the country’s key macroeconomic and structural reform challenges and coordinate work plans. ### Conditionality Principles - Conditionality under a PSI is aimed at assessing whether a member’s policies are strong enough to meet program objectives. - Consistent with the Fund’s Guidelines on Conditionality, 236 conditions will normally: - consist of macroeconomic variables and structural measures reasonably within the member’s direct control; and - be either (i) of critical importance for achieving program goals (or for monitoring implementation), or (ii) necessary for implementing specific provisions of the IMF Articles of Agreement or policies adopted under them. - Where conditions fall outside the Fund’s core expertise, a more detailed explanation of their critical importance is required. - PSI-supported programs must meet the UCT-conditionality standard (analogous to ECF and SCF), which requires commitment and capacity by the authorities to implement policies adequate to correct external imbalances and enable repayment to the Fund within the specified maturity period if Fund resources are used or credit is outstanding under the GRA or PRGT. ### Specification of Program Conditions - Program conditionality will include: - quantitative periodic and continuous ACs, - typically indicative targets and structural benchmarks, - and prior actions if critical. - Conditionality is set at PSI approval and updated at program reviews; it should normally be set (or modified) by the Board before the test date. - For post-dated ACs, program documents must be signed and circulated to the Board along with the staff report before the test date; no implementation information will be available at the Board meeting for such conditionality. - Prior actions: - expected to be adopted prior to PSI approval, review completion, or waiver granting when critical to successful implementation; - applied parsimoniously and specified in clear, objective, and unambiguous terms; - should in principle be implemented at least five working days before the Board discussion; - to be defined in the LOI/MEFP and cross-referenced in the relevant Board Decision; - expected to be used less frequently than in Fund financial arrangements. - Timing and frequency of quantitative conditions: - Quantitative ACs would normally be set on a semiannual basis and tied to semiannual program reviews. - Quantitative benchmarks (indicative targets) would normally be specified on a quarterly basis. - Review intervals may not exceed six months and there should be ACs associated with each review. - Conditionality should cover all test dates that fall within the 12 months after the Board meeting. - At initial approval and each review, ACs must be established for the shorter of (i) the next two scheduled reviews or (ii) the remaining period of the PSI. - Typical quantitative ACs include: - measures of net international reserves, central bank domestic assets, domestic and fiscal balances or financing, limits on external debt, and other macro-critical indicators; - ACs are usually subject to program adjustors that reflect deviations from projected external flows. - Indicative targets should: - include a floor on social and other priority spending where possible; - may include indicators such as reserve money. - Continuous ACs always include commitments related to: - non-introduction or intensification of exchange restrictions; - non-introduction or modification of multiple currency practices; - other typical continuous ACs include the non-accumulation of external payments arrears. - Public debt conditionality: - normally required when a member faces significant debt vulnerabilities or when debt targets are preferable to, or complement, "above-the-line" fiscal conditionality 237. - Structural benchmarks and reforms: - PSI-supported programs normally include an agenda for macro-critical structural reforms, focusing on “second-generation reforms” to enhance growth potential and volatility management capacity. - Structural benchmarks are critical markers for assessing progress on critical structural reforms in program reviews. - Structural benchmarks should be used parsimoniously and their macro-criticality explicitly justified, ideally in the structural benchmark table. - Reviews are the primary tool for monitoring structural program elements. - Specific objectives should be defined for periods covered by individual reviews, with related structural benchmarks that are critical for achieving program objectives. - Appropriate number of structural benchmarks depends on country-specific factors; PSI-supported programs would typically contain less than five structural benchmarks per semiannual review. - The use of structural ACs was discontinued in 2009. - Delays and modification of structural benchmarks: - If implementation of a structural benchmark is delayed beyond the test date, it is found not to have been met but can be proposed to the Board as a new structural benchmark linked to the next program review if still macro-critical. - If implementing a benchmark as defined is no longer possible, a new or modified benchmark may be appropriate if critical to program goals. ### Waivers and Modifications - Waivers for nonobservance of an AC may be granted if the Fund is satisfied the program will nevertheless be successfully implemented because of the minor or temporary nature of the nonobservance or remedial actions by the authorities. - Under the PSI, a formal waiver request from the member is not required, and the staff report title need not state waivers are proposed. - Waivers for nonobservance are only approved for quantitative ACs tied to the review being completed or for continuous ACs that have been missed. - Waivers of applicability are not possible under a PSI. - If authorities do not provide data allowing determination of observance or warranting a waiver, the corresponding review cannot be completed. - When data for an assessment criterion is unavailable, the review (which cannot be completed) will nevertheless assess performance against other ACs and program elements with available data. - Modifications to Board-set conditionality: - May be appropriate when departures from ACs are expected due to unmet program assumptions or significant unanticipated developments, provided new targets remain macro-critical. - Requests for modifications must be submitted to the Board before the relevant test date and approved before information on observance is available, normally in the context of a program review. - In exceptional cases, modifications can be approved by the Board outside a review if authorities and staff have common understandings through the next review documented in a revised or new LOI with an updated AC table and, where relevant, TMU. - Modifications outside a review could be appropriate if original targets are no longer critical due to developments beyond authorities’ control (including staff errors). - Board approval outside a review requires a staff report explaining the reasons, the program status, and relevant policy understandings. ### Misreporting - The PSI misreporting framework is tailored to PSI modalities and the fact that the PSI does not entail the UFR; it is simplified compared to the framework applicable in the UFR context. 239 - Board decisions approving a PSI or completing a review under a PSI are conditioned on the accuracy of information reported by the member on performance under assessment criteria (whether met or waived) and on implementation of prior actions specified in the Board decision. - If evidence indicates reported information was inaccurate for a PSI approved or review completed within the preceding three years, the MD shall promptly inform the member concerned. - “Inaccuracy” is interpreted as in misreporting under financial arrangements (e.g., reporting an AC met when it was not). - If after consultation the MD finds the member reported inaccurate information, the MD shall promptly notify the member of this finding. - The Board’s consideration of misreporting will normally occur at the next scheduled PSI review via a combined misreporting/review staff report, but could occur earlier if warranted. - The Executive Board shall reassess program performance in light of revised information associated with the misreporting. - Reassessment will not lead to retroactive reversal of the Board decision completing a review that became associated with misreporting. - Where the Board determines misreporting has occurred (except de minimis cases 240), relevant information on the Board decision and any impact on past Board assessments under the member’s PSI will be published by including it in documents to be published after the Board discussion, such as a press release containing the Chairman’s Statement or summing up, with prior Board review of the text for publication. - There are no waivers in the PSI misreporting framework. ### Program Reviews - Purpose: - Program reviews evaluate whether the program is on track to achieve objectives based on a backward-looking assessment (performance against quantitative ACs, structural and quantitative benchmarks, and prior actions) and a forward-looking assessment of prospects for successful implementation and authorities’ policy capacity and commitments. - For a PSI with initial duration > two years, the second (and every subsequent) review can only be completed if: - (a) the member has a PRS document developed and made publicly available normally within the five previous years, but no more than six years, covering the period up to and covering the review completion date; and - (b) the PRS has been issued to the Executive Board as an PRGS that has been the subject of staff analysis in the staff report of a request for a PSI or a review under a PSI. - Completion and noncompletion: - Completion of a review by the Board signifies the Fund’s assessment that the program is on track, 241 whereas noncompletion signals the program is off track. - Noncompletion of two consecutive scheduled reviews automatically terminates the PSI. - Reviews update program design by specifying forward-looking policies and conditionality, and are the main vehicle for conditionality modifications necessary to achieve objectives in changing circumstances. - At approval and each review, the authorities’ LOI presents or updates their policy program; the staff report provides overall assessment of performance and policy commitments. - “Fixed” review schedule and test dates: - Timing of all reviews and test dates is summarized in a staff report table at PSI approval and updated as needed at reviews. - The quantitative indicator table (“AC table”) attached to the LOI/MEFP should clearly identify ACs and indicative targets, including adjustors, for at least a 12-month period from the Board date of PSI approval or review. - The structural benchmark table should cover measures over at least a 12-month period, clearly indicating reviews individual benchmarks are linked to. - The Decision attached to the staff should specify all ACs and review dates over the next 12 months from the Board date of program approval/review. - Test dates for quantitative ACs are linked to reviews that will be conducted irrespective of program implementation status or prospects. - When designing test date schedules, careful consideration should be given to alignment with the country’s budget cycle. - Some flexibility exists in setting specific review and test dates relative to the regular cycle, provided they are scheduled at most six months apart. - Periodicity of program reviews can be timed flexibly; each review needs its own set of ACs and disbursements, so PSIs with higher review frequency require ACs and disbursements of similar frequency. - Test dates must be set so all scheduled reviews can take place before the end of the PSI period, accounting for reporting lags and staff report preparation/circulation periods. - Review dates in the LOI/MEFP and the Decision should be set such that all data needed to confirm AC observance at test dates would have become available. - All program documentation for a review should normally be issued to the Board within four months following the test date for the quantitative ACs linked to that review, and the LOI shall in any case be issued prior to the test date for the earliest periodic quantitative ACs linked to the next scheduled review. 242 - In line with circulation periods (Appendix I), Board discussion of the review would normally occur two weeks after issuance of such documentation. - This “fixed” review schedule provides regular reviews with flexibility around a semiannual schedule and is intended to ensure the strength and consistency of the Fund’s signal and provide donors and the private sector timely information for financing decisions. *Source: 2023 LIC FACILITIES HANDBOOK: POLICY SUPPORT INSTRUMENT (selected sections).* ### 283. The program period supported by a PSI would typically start somewhat before the ### ppea2023020 - 283 ### Program period and timing - The program period supported by a PSI would typically start somewhat before the Board approves the PSI, and three to six months before the first test date under semiannual monitoring. - The program period should normally not start more than three months prior to the Board meeting, and in any case not before the authorities and staff have discussed the parameters of the program. - If a member implementing a PSI-supported program also has an SCF arrangement in place: - Program reviews under the SCF arrangement should be scheduled at the same time as reviews of the PSI-supported program. - Performance criteria under the SCF shall normally be established for the same test dates (and apply to the same variables and measures) as ACs under the PSI. - A single set of documents related to PSI and SCF reviews should normally be issued to the Board. - The schedule of reviews can be aligned either with the “fixed review cycle” of the PSI or on the more flexible review cycle of the SCF. - With a PSI remaining on the fixed cycle, documentation for a review under the PSI must be issued to the Executive Board before the next relevant test date, irrespective of program performance and whether the review will be completed. ### Noncompletion of reviews and lapse mechanism - If performance is not sufficiently strong, or forward-looking understandings cannot be reached: - A staff report must still be circulated to the Board normally within four months of the test date of the periodic ACs linked to that review and in any event prior to the test date linked to the next scheduled review. - The report will assess performance relative to program objectives, indicate clearly areas of divergence (including through appropriate tables), and recommend that the review not be completed at this time. - The staff appraisal will, to the extent possible, elaborate on steps needed to bring the program back on track. - Returning an off-track program to on-track status: - The normal procedure is completion of the next scheduled review (assessment criteria are required to be set for two upcoming test dates). - Corrective action is required if performance was insufficient to complete a particular review. - Staff assessment letters can fill information gaps between scheduled reviews and report on performance improvements following an uncompleted scheduled review. - Constraints on returning to an uncompleted review: - Returning to an uncompleted review is possible but very rare, since related documentation would have to be issued to the Board prior to the test date linked to the review, allowing only a very narrow timeframe. - This option is not available if the review is the second consecutive uncompleted scheduled review. - Lapse rule: - The noncompletion of two consecutive scheduled reviews (or, when PSI is used concurrently with the SCF, if no scheduled review is completed within 12 months of the completion of the last scheduled review) signifies the lack of Board endorsement of the member’s policies, and the PSI would automatically lapse as of the date of the Board’s second consecutive decision not to complete a scheduled review. - An SMP may be appropriate, in some circumstances, to reestablish a track record for a future Fund-supported program under the PSI, SCF, or (in rare cases) ECF after a PSI has terminated in this fashion. ### Other relevant policies and modalities (summary) - Ex-Post Peer Review Assessments: - Engagement under the PSI does not count toward determining the policy on LTPE. - For members interested in a PSI and for which an ex-post peer review assessment is otherwise required, it is expected that the ex post peer review assessments would be conducted and presented to the Executive Board for consideration at the time of the request for a PSI. - PFA: - Engagement in a PSI would provide an alternative vehicle for PFA with respect to members that are, in principle, subject to such monitoring. - Members with a PSI would be treated similarly to members with programs supported by a Fund financial arrangement or SMPs for the purposes of PFA. - PSI staff reports should include a section on the member’s capacity to repay the Fund. - Article IV consultation cycle: - The 24-month cycle for Article IV consultations applies to members with a PSI. - Article IV consultations with members that have an on-track PSI in place would be expected to be completed within 24 months after the completion of the previous Article IV consultation. - If a program review is not completed by the date specified in the PSI, the next Article IV consultation would be expected to be completed by the later of (i) six months after the scheduled review date and (ii) 12 months plus a grace period of three months after the previous Article IV consultation, unless the program review has been completed prior to the later of these two dates, in which case the 24-month cycle continues to apply. - A member that has completed a PSI by completing all reviews may remain on the 24-month cycle, if it does not meet any of the criteria in paragraph 2 of Decision No. 14747-(10/96): (i) the member is of systemic or regional importance; (ii) the member is perceived to be at risk, or is facing pressing policy issues of broad interest to the Fund membership; or (iii) the member has outstanding Fund credit exceeding 145 percent of quota. - At the time of the final review under the PSI, staff should assess whether the consultation cycle should be shortened back to 12 months, based on the criteria above; the staff report for the final review should seek the Board’s approval of such shortening. - Where the PSI is cancelled by the member or expires with uncompleted reviews, the member will remain on the existing cycle, unless the Executive Board determines otherwise based on the criteria specified in paragraph 1 of Decision No. 14747-(10/96). - Exchange System obligations and Data Provision: - Requirements under Article VIII Sections 2, 3, 4, and Article XIV are discussed in IMF (2006d). - A standard continuous AC applies, inter alia, to the non-introduction or intensification of exchange restrictions and on the non-introduction or modification of multiple currency practices. - HIPC: - Countries with unsustainable external debt situations that qualify for HIPC debt relief would, by definition, not meet the qualification standard for a PSI. - PSI-supported programs are therefore not included in the programs specified by the PRGF-HIPC Trust Instrument for establishing track records toward the HIPC decision or completion points. - Side letters: - The use of side letters in LIC programs has been extremely rare. - Side letters may be used when release of information on policy understandings at the time of a PSI request or review would cause adverse market reaction or undermine the authorities’ efforts to prepare the domestic groundwork for a measure. ### Appendix I — Documentation and review process (mission cycle and documentation requirements) - Organizational responsibilities: - All staff papers concerning the UFR, other program support (PSI and SMP) and surveillance for a particular country are prepared by area department-led mission teams. - The area department and SPR have joint responsibility for clearance prior to submission to management. - The review process also involves LEG and FIN; other functional departments will review according to their internal rules and follow the review-on-demand principle. - Pre-mission work and early consultation: - Mission teams are encouraged to consult informally with SPR (and if relevant FIN or LEG) at an early stage for information on Fund policies, choice of LIC instrument, access and phasing, PRS and DSA requirements, early Board briefings, and technical issues related to HIPC/MDRI, safeguards assessments, fiscal safeguards reviews, external arrears, financing assurances, misreporting, exchange restrictions, as applicable. - Policy Note (PN): - The PN should include exposition of (i) background diagnostics (including recent developments), (ii) the economic outlook, (iii) the staff’s and the authorities’ positions on key policy issues, (iv) program objectives and design where relevant, (v) risks and mitigation measures, and (vi) a capacity to repay paragraph with a bottom line assessment and references to metrics in the CtR table and/or cross-country CtR charts when applicable. - The PN should include standard macroeconomic tables and supportive charts. - Divergences of views with reviewing departments should be flagged upfront in the PN. - The final PN should be sent to management for clearance. - A full PN is typically three–four pages of text and is required for all missions, staff visits, and authorities’ visits with substantive policy discussions not mostly covered in a previously cleared PN. - Shortened PNs are acceptable when discussions continue on the basis of a previously cleared PN; shortened PNs should include a brief update and justification for any proposed changes. - Standard macroeconomic and program tables: - Macroeconomic tables include: (i) selected economic indicators; (ii) government accounts (in national currency and percent of GDP); (iii) monetary survey (central bank accounts and commercial bank accounts); and (iv) the balance of payments. - Program tables should include: (i) a PC table covering (a) previously established targets and outturns (PCs and indicative targets) over at least the past 12 months, (b) PCs established for the next 12 months (from the expected Board date), and (c) indicative targets through the end of the calendar year (or fiscal year) for which policies are being discussed; (ii) a structural benchmark table covering implementation status and benchmarks covering the next 12 months; (iii) a table with the approved and proposed schedule of disbursements and reviews; (iv) financing requirements and sources; and, when relevant, (v) the member’s capacity to repay the Fund. - Background attachments and DSA: - Area departments are encouraged to attach concise focused appendices (analytical underpinnings of program design, exchange rate assessment, HIPC/MDRI issues). - When the DSA is required, the DSA graph and tables should be attached to the PN. - Attaching draft staff reports is not encouraged. - Timeline and coordination: - Area departments should informally contact functional departments about one to two months before the scheduled mission for cross-country information and analysis. - A Policy Consultation Meeting (PCM) should be held approximately two to three weeks prior to missions to establish the final PN content and to raise all policy issues. - The final PN should be sent to management for clearance with a cover memorandum that includes: (i) key issues—economic situation, including vulnerabilities; (ii) staff’s main recommendations; (iii) main issues raised in the review process, including reconciliation of diverging departmental views; and (iv) any controversial aspects. - SPR will review the cover memorandum but does not “clear it”; the section detailing the review process should be cleared by SPR. - LOI/MEFP requirements: - For new financing/arrangement/instrument requests and for program reviews (including under the PSI), authorities need to sign an LOI and typically an accompanying MEFP. - The LOI must be signed by representatives of agencies responsible for formulating and implementing the policy commitments; standard practice is for both the minister of finance and the governor of the central bank to sign the LOI, although the latter may not be appropriate in currency unions. - For routine program reviews, a more detailed LOI could obviate the need for an MEFP if a previous MEFP discussed the policies applicable to the 12-month period following the review. - The LOI/MEFP should contain (i) a table with quantitative performance criteria that cover the next 12 months (from the Board date) and indicative targets through the end of the calendar year (or fiscal year), and (ii) a structural benchmark table with benchmarks covering the next 12 months, highlighting timing and criticality. - The LOI should include the standard consultation clause that authorities will consult with the Fund ahead of any revisions to the measures outlined in the MEFP. - The LOI/MEFP should specify how the program advances the country’s poverty reduction and growth objectives and policies; this description is expected to be more detailed at the time of the initial arrangement/financing/instrument request. - A draft LOI/MEFP should be discussed during the mission and authorities should be advised that these understandings are reached with staff ad referendum; authorities should not sign the LOI prior to management approval. *ppea2023020 - 283* ### 11. Technical Memorandum of Understanding (TMU): For new arrangement/financing/ ### 11. Technical Memorandum of Understanding (TMU): For new arrangement/financing/ ### TMU and LOI/MEFP requirements - For new arrangement/financing/instrument requests, the LOI/MEFP must be accompanied by a TMU that: - Clearly and precisely defines the PCs under the program, including the definitions of indicators. - Specifies the coverage of government and the monetary authorities. - Defines exchange rate valuation for program purposes. - Specifies program adjustors and data submission requirements. - Standard language on the definition for external debt should also be included. ### Side letters - Use of side letters in PRGT programs and financing requests has been extremely rare. - Side letters may be used when release of information on policy understandings at the time of an emergency financing request or a request for financing or non-financing arrangement or review would cause adverse market reaction or undermine the authorities’ efforts to prepare the domestic groundwork for a measure. - Reference: Fund’s policy on side letters (Decision No. 12067-(99/108)). ### Concluding Statements and End-of-mission Press Releases - Mission Concluding Statements: - Summarize discussions between country authorities and an IMF staff team. - Are not negotiated documents; drafts are typically shared with country authorities as a courtesy. - Can be posted on the IMF website with the consent of country authorities. - For Article IV missions, teams normally leave a Concluding Statement recapitulating the mission’s assessment and policy advice. - End-of-mission Press Releases: - Useful when understandings on a new arrangement/financing/instrument request or program review are reached. - Staff should inform the authorities of intent to issue; missions are encouraged to inform COM country press officer or Media Relations and should clear the written statement before release. - Authorities should be given an opportunity to review the draft press statement. - Preferable to publish either a concluding statement or a press release at mission end, but both may be warranted in some circumstances (e.g., authorities undecided on concluding statement at mission end). ### Post-Mission Work: Reporting and timing - Back-to-Office Report (BTO): - Mission chief should send a BTO to management within two working days of the mission's return to headquarters. - BTO should be short (up to two pages) and mention the nature of the mission (with mission members listed in a footnote) and the key issues, with an attached Selected Economic Indicators table. - Staff Report: - Required for an Article IV consultation, initial arrangement (financing or non-financing instrument) request, and at the time of each program review (includes the ECF, SCF, RCF, PSI, and SMP). - Short staff reports to the Board required where program design is modified between reviews (e.g., modification of PCs, short-term extension of arrangements, augmentation requests at ad hoc reviews). - Staff reports should include: - (i) background diagnostics (including recent economic and political developments), - (ii) the economic outlook, including downside risks and debt vulnerabilities (referring to the most recent DSA), - (iii) the authorities’ policy objectives and plans, - (iv) capacity to repay with a bottom line assessment and references to metrics in the CtR table and/or to metrics included in cross country CtR charts when applicable, and - (v) a staff appraisal of the key policy issues. - Where applicable, staff appraisals should recommend approvals for: (i) waivers of nonobservance of PCs, (ii) extension of arrangement, (iii) augmentation, (iv) rephasing, and (v) modification of existing PCs, with justification based on material in the report. - Staff reports for members subject to safeguards assessments/monitoring should include a summary safeguards paragraph in the main body on status and significant recommendations. ### Program documents, program design, and financing - Program documents involving initial requests for ECF, SCF, RCF, or PSI support should set out overall program objectives and specific policy understandings. - Staff reports should explain: - The choice of instrument. - The determination and phasing of access. - The design of conditionality. - All program staff reports (initial requests and reviews) should discuss key near-term policy goals and commitments (typically over the next 12 months) and program financing. - Staff reports for program reviews should discuss performance relative to program conditionality. ### Required macroeconomic and program tables - Staff reports should contain a full set of macroeconomic tables, including: - (i) selected economic indicators; - (ii) government accounts (in national currency and percent of GDP); - (iii) monetary survey (central bank accounts and commercial bank accounts); - (d) the balance of payments. - A standard table on Sustainable Development Goals (SDG) indicators is not required but is encouraged about once a year (normally staff reports covering Article IV consultations and request for new Fund arrangements/instruments/financing). - Additional tables for arrangements/instruments/financing requests or reviews should include: - (i) the approved and proposed schedule of disbursements and reviews; - (ii) financing requirements and sources; - For new financing requests or augmentations, or if the macroeconomic environment has changed significantly, the member’s capacity to repay the Fund. - The staff report should include staff’s qualitative assessment of the member’s capacity to repay the Fund. ### LOI/MEFP content and conditionality tables - The LOI/MEFP attached to arrangements/instruments/financing requests or reviews should include: - (i) a table with quantitative conditionality (the “PC table”) that covers: - (a) previously established targets and outturns (PCs and indicative targets) over at least the past 12 months—alternatively, reporting on past performance relative to quantitative targets can be included as a separate table in the staff report, - (b) PCs established for the next 12 months (from the expected Board date), - (c) indicative targets through the end of the calendar year (or fiscal year) for which policies are being discussed; - (ii) a structural benchmark table covering: - (a) the implementation status of previously established benchmarks—alternatively, reporting on status can be included as a separate table in the staff report, - (b) benchmarks covering the next 12 months, highlighting their timing and criticality. ### Management clearance - Management clearance of staff reports is based on a clearance note that: - States the main issues addressed in the report. - Lays out any differences in views among departments. - Explains any significant deviations from the PN. - Highlights potentially controversial issues. - A copy of the staff report’s Executive Summary should be attached. ### Debt Sustainability Framework (DSF) / DSA - A Joint Bank-Fund low-income country DSF (LIC DSA) should be prepared once a year for PRGT-eligible countries that also have access to IDA resources. - A DSF (or DSF update) may be required to support the proposed level of access. - Main conclusions of the DSF and its update should be discussed in the body of the staff report. - The DSF or its update is subject to the same review process as a staff report and, when finalized, if not published standalone, should be included as a supplement to the staff report. - Final versions of the DSF files (external and fiscal templates) should be submitted to the SPR review box at the time the DSF (and staff report) is sent to the Board. ### Informational annexes and posting - An informational annex should be issued as a supplement to ECF, SCF, RCF, PSI, SMP requests, and Article IV reports, comprising: - Relations with the Fund and Bank-Fund Collaboration, including the JMAP matrix. - Relations with other Multilateral Institutions, if applicable. - A Statistical Issues annex should be included at least for Article IV reports. - Annexes are subject to departmental review but do not require management clearance. - Annexes should not be attached to the staff report; instead, at issuance of the staff report to the Board, annexes should be sent to SEC and posted on the web as a supplement to the staff report. ### Summing Up, Chairman’s Statement, and Press Release: roles and requirements - All stand-alone UFR discussions and combined UFR with Article IV discussions require both a Summing Up and Chairman's Statement. - Summing Up: - Presents the Executive Board's formal views on key issues. - For combined UFR with Article IV, contains a section on key policy issues from the Article IV consultation followed by a short section on key program issues (only the latter required for a standalone UFR discussion). - Should cover core areas: recent economic performance or performance under the program, the economic outlook, risks and challenges, and macroeconomic and structural policy issues. - Should be forward-looking and, for countries with Fund-supported programs, include what directors consider most critical for program success. - Chairman’s Statement: - Prepared after the Executive Board adopts a decision regarding a country's use of Fund resources or completes a discussion about participation in the HIPC initiative or a PRS-related document. - Intended to inform the public of the Board's decision on UFR and the Board's overall policy message. - Should convey a few (three to four) points on which the Board placed emphasis and should not attribute statements to directors. - Staff should exercise caution when referring to highly market-sensitive issues. - Table summary (Appendix I. Table 2) indicates presence/absence of Summing Up, Chairman’s Statement, and Press Release for various discussion types (stand-alone UFR, combined UFR with Article IV, combined Ex Post Assessment/UFR, stand-alone Post-Financing Assessment or Ex Post Assessment). ### Press Releases, Staff Statements, and Supplements timing - COM issues Press Releases for new financing requests and program reviews, containing the Chairman’s statements. Area Departments prepare the background section, reviewed by SPR upon demand. COM prepares the initial draft and requests comments from the area department, LEG, FIN, and the executive director of the country in question. - Staff Statements and Supplements: - Prepared as needed if new or additional information becomes available after submission of the staff report to the Board and before the Board meeting. - Statements should explicitly mention whether the new information changes the thrust of staff’s assessment. - If significant changes occur, a staff supplement should be issued. - Statements and supplements should be sent to SPR for clearance. - Timing requirements: - Statements: at least four days before the Board meeting. - Supplements: at least three days before the Board meeting. ### Other documents: Ex-Post Peer Reviewed Assessments (EPA) and DSAs - Ex-Post Peer Reviewed Assessment (EPA): - Required for all members considered as having LTPE, defined as having a Fund-supported financial arrangement for at least seven of the past 10 years. - Time spent under the PSI and arrangements treated as precautionary do not count towards LTPE. - For members identified as meeting LTPE and without an EPA in the past five years, an EPA should be prepared if a successor arrangement is contemplated and considered by the Board at the time of a new arrangement request. - Staff should conduct an EPA at the beginning of successor program negotiation or during the Article IV consultation, whichever is earlier, and incorporate lessons into new program design. - Ex post peer review assessments should be presented to the Executive Board as part of the staff report for request of a new program (as an annex or in the main text). - Joint Bank-Fund LIC DSA: - Should be prepared annually for PRGT-eligible countries with access to IDA. - A fully elaborated DSA is required at least once every three years, or whenever circumstances have changed significantly since the previous DSA, with shorter annual updates in interim years possible. - Full DSAs should be prepared in periods of heightened domestic, external, or global risk. - A DSA (or DSA update) may be required to support the proposed level of access. - DSAs should be self-contained documents, normally issued as a supplement to staff reports, and include a clear description of macroeconomic assumptions without referring to the Fund staff report. - Full DSAs should be concise (four to five pages, excluding figures and tables or any appendices). - LIC DSA updates (between full DSAs) are lighter exercises with a very short write-up covering important changes and the usual tables and charts. - All DSAs must be prepared jointly by both institutions and submitted to both the IMF’s and World Bank Executive Boards. ### PRS documentation and JMAP - PRS documentation (Poverty Reduction and Growth Strategy—PRGS): - For ECF and SCF arrangements and PSIs with an initial duration exceeding two years, a PRGS is required to be issued to the Board for completion of the second and subsequent reviews. - The PRS covered in the PRGS must have been developed normally within five years but no more than six years leading up to and covering the relevant review. - An assessment of the country’s PRS must be requested from World Bank staff and circulated to the Fund Executive Board for information. - Joint Management Action Plan (JMAP): - Bank and Fund country teams document results of an annual consultation in a joint memorandum for files identifying: - (i) key macroeconomic and macro-critical structural challenges facing the country; - (ii) policies and reforms to address these challenges and each institution’s priorities for supporting these reforms; - (iii) respective work plans and outputs for the next 12 to 24 months, with tentative mission schedules and delivery dates summarized in an “action matrix” appended to the memorandum; - (iv) information, analytical cross support, and other inputs needed from institutional counterparts, including agreed delivery dates; - (v) any substantive disagreement on any of the above issues. - When a Fund team prepares a staff report, it is expected to document Bank-Fund Collaboration in the appendix to the staff report; to avoid duplication, the appendix can be an appropriately reformatted version of the memorandum with procedural detail of little interest to the Board deleted. *2023 LIC FACILITIES HANDBOOK: APPENDIX I. DOCUMENTATION AND REVIEW PROCESS* ### 31. Review of Joint Fund-Bank Documents: Staff of both institutions should communicate at ### 31. Review of Joint Fund-Bank Documents ### Coordination and review procedures - Staff of both institutions should communicate at the outset with their counterparts to discuss respective review requirements and agree on a coordinated timetable for all joint documents that require review by both institutions and consideration by the Boards of the institutions. - For further details, see Appendix V, as well as IMF (2015b). See IMF, 2007c and 2010d. ### Assessment Letters - Purpose and typical requesters: - Produced in response to requests from multilateral or bilateral donors or creditors, in particular, the World Bank and other multilateral institutions; sometimes requested directly by the member country approaching donors for financial assistance. - Content requirements: - Contain a clear and candid assessment of the member’s macroeconomic conditions and prospects, and of macroeconomic and related structural policies. - Specifically should (i) identify existing macroeconomic imbalances and structural distortions; (ii) indicate to what extent current and planned policies are dealing with (or perhaps contributing to) these imbalances and distortions; and (iii) highlight policy areas where there are major outstanding concerns. - Should be derived from and consistent with the most recently available report (PNs, staff reports, etc.), to the extent possible. - Should contain an account of the Fund’s relations with the member country, including, where relevant, program discussions. - May not include language directly encouraging or discouraging assistance from donors. - Review, clearance, and dissemination: - Subject to the same SPR review and clearance procedures as program-related documents, and require management approval. - Circulation to the Board for information is required at the time of external dissemination. - May be published on the IMF's external website or by the recipient institutions only with the consent of the authorities. - Reference: - For more information, see Guidance Note on Letters and Statements Assessing Members' Economic Conditions and Policies (IMF, 2011d). ### HIPC Documents - Sequence: - If a country satisfies all eligibility criteria and decides to request HIPC assistance, a preliminary HIPC document is first required, followed by a decision point document and, finally, a completion point document (see Appendix IV). - Production and review: - HIPC documents, including HIPC DSAs, are produced jointly with the Bank and are reviewed by both institutions. - Standard procedures apply at the Fund for the review, clearance, and submission to the Board of HIPC documents. ### Disbursements outside of scheduled reviews of available but undrawn amounts under SCF arrangements - Conditions allowing draw outside scheduled reviews: - (i) the member’s representation of a balance of payments need meets the requirements of the PRGT instrument; - (ii) the most recently scheduled review under the arrangement prior to the request has been completed; and - (iii) available information indicates that its continuous PCs are being met. - Trust Instrument constraints and Board remedy: - The Trust Instrument precludes staff from challenging a member’s representation of a balance of payments need prior to providing the requested disbursement. - If subsequently the Board decided that the disbursement took place in the absence of a need, it could seek repayment with interest normally within 30 days of its decision that early repayment is required. - Processing steps: - For a country to draw outside of scheduled reviews, it must send a letter to the MD communicating and explaining the decision. - Staff will then circulate a short note for information to the Board, attaching the letter of the authorities. - A press release is issued shortly afterwards. ### Length of Country Documents (management decision) - Approval and effective date: - On July 22, 2014, management approved the below limits on document length for PNs and staff reports, which apply for all notes/reports sent to management on or after September 1, 2014. - Management requested that documents subject to word limits indicate both the actual word count and the applicable limit in the cover note, and that staff indicate the reasons for significant deviation in the cover note. - Appendix I. Box 1. Summary Table. Length Limits for Country Documents (In words) - Policy notes - Typical surveillance and on-track programs: 2,800 - High vulnerability, G20 country and other global financial center, program request, program cases that are off-track, and combined AIV/UFR-PSI-SMP: 3,600 - Attachments (indicative limit; not for management clearance): 6,000 (or draft staff report, consistent with limits below) - Staff Reports Limits (excluding annexes) - Stand-Alone AIV: regular: 6,000 - Stand-Alone AIV: G20 and global financial center: 9,500 - Stand-Alone UFR, PSI, SMP: request: 6,000 - Stand-Alone UFR, PSI, SMP: review: 5,000 - Exceptional access UFR: 9,500 - Combined AIV/UFR-PSI-SMP: 9,500 - Annexes (indicative limit; excluding DSA, informational annex, LOI, MEFP, TMU, and proposed decision): 2,000 - Note 1/: The limits would exclude the cover page/memo, (text) tables, (text) figures, the RAM, the ESR country page, and annexes regarding follow up to previous staff AIV advice or FSAP recommendations. --- ### Appendix II. Quantitative Conditionality ### A. Periodicity and Definitions - Phasing and typical timing: - Quantitative PCs—or ACs in the case of the PSI— shall be phased no more than six months apart. - In practice, PCs are usually set on a semiannual basis and tied to semiannual program reviews, while quantitative benchmarks (also referred to as indicative targets) are normally specified for the intervening quarters. - When closer monitoring is helpful, PCs and reviews could be at quarterly intervals. - There is scope for some flexibility in setting specific availability/test dates relative to strict adherence to six-monthly cycles, for example to align with national budget/reporting cycles, as long as deviations are minor. - Coverage and horizon: - Quantitative periodic conditionality should normally cover all test dates that fall within the 12 months after the Board meeting (initial approval or review). - Under semiannual monitoring, PCs would normally be established for two future test dates at the time of approval of the arrangement and at each review (except for the penultimate and final reviews). - In circumstances where there is uncertainty relating to the PCs for the second test date, the targets may initially be set as ITs at the time of arrangement approval or review, and subsequently converted into PCs at the time of the next review. - The PC table attached to the LOI/MEFP should clearly identify PCs, indicative targets, and adjustors for at least a 12-month period from the Board date of the arrangement approval or review. - Indicative targets should extend through the end of the calendar year (or fiscal year) for which policies are being discussed. - Definitions and measurement: - The precise definitions of PCs should be set out in a TMU attached to the LOI. - PCs and indicative targets should be defined simply and clearly, and in a manner that makes it easy and relatively quick to measure. - Quantitative periodic conditionality is normally set as cumulative flows or changes in stocks from a single reference date (normally, the beginning of a calendar or fiscal year) through each test date. - The first such reference date must coincide with or predate the start of the program period and would usually be moved ahead by one year on an annual basis. - Certain indicative targets (for instance on monetary aggregates or international reserves) may be set as period averages (e.g., over a number of days before or after the end-quarter date). - Typical indicators: - Net international reserves, central bank domestic assets, domestic and fiscal balances or financing, limits on external debt (where applicable), non-accumulation of external payments arrears, and any other macro-critical indicators. - PCs are often subject to program adjustors that reflect deviations from projected external flows. - Indicative targets should include a floor on social and other priority spending where possible. ### B. Fiscal Targets - Coverage and choice of aggregate: - Programs should have fiscal PCs and indicative targets based on appropriate analytical fiscal indicators and with desired institutional coverage. - Most targets are specified at the central government or general government level; general government is appropriate where sub-national governments have major fiscal responsibilities and relevant data are available. - Fiscal PCs should generally cover both budgetary and extra-budgetary activities of the government. - The TMU should provide a clear definition of what is included in the term “government” for purposes of fiscal PCs. - Indicators to monitor the fiscal stance: - The general stance is normally monitored through a PC on either a credit aggregate (e.g., net domestic financing of the government or net banking system credit to the government) or a deficit measure (e.g., the overall deficit or the primary deficit of the government) or some combination. - Where a program addresses broad macroeconomic concerns, a deficit measure is a more appropriate basis for a PC. - The overall deficit excluding grants often guides the impact of fiscal policy on aggregate demand and inflation; the overall deficit including grants will contain the government’s borrowing requirement and debt accumulation. - In many LICs, the near-term fiscal anchor focuses on domestic revenues and spending (excluding more volatile receipts/outlays related to donor support); countries with higher capacity may focus on the overall fiscal deficit; oil exporters may focus on non-oil balances. - Adjustors may be used to correct for volatile or one-off flows. - Where debt sustainability is a concern, the primary fiscal balance is sometimes used as an alternative to the overall balance. - Indicative fiscal targets may include domestic revenue, domestic arrears, or social and other priority spending. - Measurement and data: - The quality, accuracy, and timeliness of data are important factors determining the precise definition of fiscal targets and whether certain targets should be PCs or indicative targets. - The PC measuring the general stance is often measured using “below-the-line” financing data because such data are usually available more frequently, are more timely, and are of better quality. - Revenue and expenditure data should be monitored to establish an above-the-line fiscal deficit that can be reconciled with below-the-line financing data. - Exceptional receipts and social spending: - Exceptional receipts to the budget (e.g., proceeds from privatization or from a petroleum fund) should normally be defined as a financing item for program purposes, though provisions may allow some/all of these resources to be spent where appropriate. - One-off receipts should not be used to finance permanent expenditure increases, even if treated as revenue in statistical manuals. - Social and other priority spending should generally be safeguarded and monitored through explicit program targets, typically an indicative floor on social and other priority spending, whenever possible. - The definition of social or other priority spending should be consistent with the authorities’ poverty reduction and growth objectives. - Where tracking is not feasible, program documentation should report measures to develop a tracking system, and staff should monitor progress; programs may include relevant structural benchmarks if appropriate. ### C. Monetary Targets - Typical monetary PCs: - Monetary developments are normally monitored by setting a PC on net domestic assets (NDA), either of the central bank or the banking system (central bank more likely in many LICs). - NDA of the central bank may be defined as reserve money minus net international reserves or reserve money minus net foreign assets. - Indicative additional targets: - May include an indicative target on reserve money, banking sector credit, or broad money when money or credit growth are concerns for inflation or banking system stability. - A few Fund arrangements have set a PC on reserve money instead of NDA. - Adjustors and MPCC: - Money targets set as PCs should include an adjustor for changes in the reserve requirement, if applicable. - A review-based monetary policy consultation clause (MPCC) could be used to provide flexibility and incentives for developing a coherent monetary analysis and monitoring framework. - MPCC suitability: - May be used by countries with evolving monetary policy frameworks that have minimal fiscal dominance, relatively low and stable inflation, and a good track record of monetary policy implementation supported by central bank technical and institutional development. - Under the MPCC: - Monetary conditionality would include a quantified macroeconomic framework with a set of quarterly or semiannual monetary aggregate or inflation targets set normally within a single tolerance band, assessed during program reviews. - Deviations from the band will trigger a consultation with the Executive Board as part of the general review process, which focuses on (i) broad-based assessment of monetary policy stance and program traction; (ii) reasons for program deviations, taking into account compensating factors; and (iii) proposed remedial actions if necessary. - When consultation is triggered, access to Fund resources would be interrupted until it takes place and the relevant program review is completed. - These programs would include a NIR floor, as a PC, to maintain external sustainability and safeguard the use of Fund resources. - Indicative targets related to monetary policy (e.g., on NDA or credit to the government) could be included to address country-specific risks. - If inflation is the central target, a narrower inner band could be used as an early warning mechanism that would trigger an informal consultation with Fund staff. - Exceptions: - Monetary ceilings are not required in programs that incorporate a currency board arrangement, or when the country is a member of a monetary union. - Where the rules of the currency board or monetary union give the member some degree of control over credit growth, a monetary ceiling may be included in program conditionality. - References: - For further discussion, see IMF, 2007a (paragraph 40), Conditionality in Evolving Monetary Policy Regimes (IMF, 2014a), and Revised Operational Guidance to IMF Staff on the 2002 Conditionality Guidelines (IMF, 2014b) (paragraphs 21-22). ### D. Targets for International Reserves - Typical reserve target: - Developments in international reserves are normally monitored by setting a floor on official (i.e., the central bank’s) net international reserves (NIR). - The definition of the PC should specify the precise coverage of the monetary authority, particularly where this differs from, or is broader than, the net foreign assets on the balance sheet of the central bank. - Composite aggregates for direct budget financing: - In programs involving disbursements of Fund resources made directly to an account of the member’s Treasury in the central bank (direct budget financing), a composite central bank-Treasury aggregate should be used. - The NIR (and NDA) measure used as a PC should combine central bank and Treasury positions. - Example mechanics: - Where Fund disbursements are deposited to the Treasury account at the central bank, central bank NIR increases but composite NIR remains unchanged (central bank gross reserves increase, while Treasury liabilities to the Fund increase). - Similarly, while central bank NDA declines, composite NDA remains unchanged (with increased government deposits at the central bank lowering central bank NDA and increasing Treasury NDA). *2023 LIC FACILITIES HANDBOOK: APPENDIX I–II. INTERNATIONAL MONETARY FUND* ### 15. Because international reserves must be usable, they should be defined to include only ### 15. Because international reserves must be usable, they should be defined to include only ### Definition and composition of Net International Reserves (NIR) - NIR should include only convertible, liquid, and unpledged (unencumbered) assets that constitute claims on nonresidents, net of short-term foreign liabilities that are public or publicly guaranteed. - The outstanding stock of Fund credit is netted out to ensure that the member cannot meet (miss) a performance criterion by purchasing/requesting loans (not purchasing/ not requesting loans) from the Fund. - Assets that are the counterpart to foreign currency reserve requirement liabilities (i.e., foreign currency liabilities of the central bank to domestic commercial banks) are often excluded from NIR because they are not usable for balance of payments purposes or under the control of the authorities (they would need to be refunded to the extent that foreign currency deposits of commercial banks are withdrawn). - Foreign liabilities are defined as loan, deposit, swap, and forward liabilities to residents and nonresidents whose value is guaranteed in foreign currency terms (denominated or indexed). - The TMU should specify if liabilities to the participants to the SDR department are included. ### Valuation and exchange-rate treatment for NIR floors - Valuation effects arising from changes in the exchange rate or the price of gold should be excluded when defining the floors for net international reserves. - The set of exchange rates and gold valuation used for calculating NIR should be specified in the TMU. - TMU should specify the exchange rate at which each component of NIR will be valued for program monitoring. - To avoid suggesting accounting rates are forecasts, constant values should be used. - NDAs and net credit to the government should also be calculated using accounting exchange rates where foreign currency items are important in the domestic banking system and where these can be monitored. - Accounting exchange rates should be based on those prevailing at some recent, easily-checked date (e.g., the end of the previous year) and may be updated periodically during the life of an arrangement. ### Currency board arrangements - In cases of a currency board arrangement, the monetary authority ensures the maintenance of full foreign reserve backing for the currency board’s liabilities for the duration of the Fund-supported program. - The definition of this PC should specify the exact coverage of the foreign reserve backing. - Floors on international reserves are not required for a country that is a member of a monetary union. ### Public debt limits (Section E) - Public debt limits in Fund-supported programs and PSIs seek to prevent the build-up of unsustainable debt while providing flexibility to raise financing for productive investments. - Public debt conditionality should normally be included in Fund arrangements and PSIs when a member faces significant debt vulnerabilities, or when there are merits to using debt limits instead of, or as a complement to, "above-the line" fiscal conditionality. - The policy on public debt limits was last reformed in 2020 and the new guidelines became effective in June 2021. - Appropriate form of debt conditionality differs: - For countries that normally rely on official external financing on concessional terms, a debt sustainability analysis is typically undertaken using the LIC-DSF (conducted jointly by World Bank and Fund staff). Assessment of public debt vulnerabilities is informed by the risk of external debt distress and, where relevant, the overall risk of debt distress. - For countries that do not normally rely on official external financing on concessional terms, debt sustainability assessments are undertaken using the Sovereign Risk and Debt Sustainability Framework for Market Access Countries (SRDSF). Public debt limits for these countries are typically established in nominal terms and could take the form of limits on total public debt or limits on sub-categories of total public debt. ### Payments arrears (Section F) - In cases with external or domestic payments arrears, indicative targets or performance criteria may be set for their phased elimination. - The concept of government should be clearly defined (e.g., whether state-owned enterprises or social security and pension funds are included), as should the method for measuring arrears. - Domestic arrears may present measurement and controllability problems that preclude use as performance criteria; judgment should reflect the commitment control and measurement systems and data quality of individual countries. ### Continuous Performance Criteria (PCs) (Section G) - Continuous PCs always include commitments related to non-introduction of exchange restrictions and multiple currency practices. - Continuous conditionality specifically covers: - (i) imposition or intensification of restrictions on the making of payments and transfers for current international transactions; - (ii) introduction or modification of multiple currency practices; - (iii) conclusion of bilateral payments agreements that are inconsistent with Article VIII; and - (iv) imposition or intensification of import restrictions for balance of payments reasons. - Continuous PCs are always included in the text of all Fund arrangements and, given their nonquantitative nature, are usually not listed in the PC table. - Other continuous PCs typically include the non-accumulation of external payments arrears; where external debt ceilings are set at zero, these should be specified as continuous PC. - Monitoring requires staff to ascertain continuous compliance based on data provided by the authorities. ### Wage bill ceilings (Section H) - The use of wage bill ceilings over extended periods should be avoided, while ensuring flexibility in application and requiring a clear justification in program documents. - Wage bill ceilings should be used selectively and limited to circumstances when they are designed as short-term measures when first-best options are not available. - The use of medium-term expenditure frameworks and strengthened budget and payroll systems is preferable and expected to obviate the need for wage ceilings over time. - When substantial technical assistance is needed to develop such systems, wage ceilings may be needed in exceptional cases based on macroeconomic considerations. ### Adjustors (Section I) - Purpose: Adjustors protect the program from foreseeable shocks/developments beyond the authorities’ immediate control by pre-specifying the policy response to deviations from program assumptions without compromising the objective and predetermined nature of PCs. - Adjustors can be used only with PCs and are automatic, distinguishing them from waivers, modifications of PCs, and adjustments during program reviews. - Design principles: - Used sparingly to limit major policy adjustments in the face of uncertainty and volatility of key variables (e.g., export prices, foreign financing, privatization receipts, certain policy actions). - Simple and clearly defined, including in the TMU and PC table. - Generally used for temporary deviations; lasting or large deviations should be addressed in program reviews. - Based on realistic projections; e.g., an adjustor allowing domestic bank financing to compensate for consistent overestimates of external financing may render a program overly relaxed. - Technical points: - By convention, adjustors are applied to ceilings/floors set for the PCs rather than to actual outturns. - If several adjustors apply to the same PC, they should apply to the net cumulative sum of deviations from program assumptions. - Unless the potential shock affects money demand, an adjustor on net international reserves should have a symmetric adjustor (opposite sign) on net domestic assets. - Distinction should be made between project and program financing. - Common usages: - Deviations from projected external program grants and lending (budget/balance of payments support) often lead to adjustment of the NIR floor, the NDA ceiling, and the net domestic financing of the government ceiling. - Deviations from projected external project lending lead to adjustment of the overall fiscal balance floor if applicable. - Deviations from projected fiscal revenues lead to (usually partial) adjustment in the overall fiscal balance floor or net domestic financing of the government ceiling. - It is often useful to apply adjustors symmetrically and apply symmetric caps. - The TMU should define adjustors, including variables subject to adjustment, explicit adjustment formulas, trigger events, caps, and thresholds; the baseline projection for the indicator and a footnote indicating the adjustor mechanism should appear in the PC table. --- ### Appendix III. Staff‑Monitored Programs (SMPs) and other track records — purpose and design - Purpose: SMPs are informal agreements between national authorities and Fund staff to monitor implementation of the authorities’ economic program to establish a track record of policy implementation that could pave the way for a new Fund financial arrangement or repeat Fund emergency assistance, or for resumption of an existing arrangement that has gone off track. - Track record demonstrates commitment and capacity to implement economic policies, including credible data submission, consistent with the member’s stated objectives as assessed by staff. - SMPs are generally not endorsed by the Executive Board and do not need to meet UCT-quality standards. ### Limited Executive Board involvement and PMB - A “Program Monitoring with Board Involvement” or “PMB” allows limited Executive Board involvement to opine on robustness of a member’s policies under an SMP. - PMB use is available to members seeking to build/rebuild a track record for UCT Use of Fund Resources (UFR) who would benefit from targeted Executive Board involvement because of either: - (i) an ongoing concerted international effort by creditors or donors to provide substantial new financing or debt relief to the member, or - (ii) significant outstanding Fund credit under emergency financing instruments at the time new emergency financing is received. - Standard SMPs remain the IMF’s workhorse instrument to build/rebuild a track-record for UCT-UFR. ### UCT-quality SMP for HIPC debt relief - In the context of reaching HIPC Decision Point, the Board could find that an SMP is of UCT-quality; such an SMP could count toward the track record required under the HIPC Initiative. - Staff’s assessment that policies under the SMP meet UCT-quality standards must be supported by the Board. - Reaching HIPC decision point using an SMP requires a Board assessment that the member’s performance under the SMP has been satisfactory for a sufficient period (in practice, a minimum of six months) since the Board’s initial determination that the SMP meets UCT-quality standards. ### SMP design, monitoring, and modalities - Design: SMPs should be sufficiently ambitious to provide a basis for proceeding to a Fund financial arrangement; for PRGT-eligible members this implies progressing toward a stable and sustainable macroeconomic position consistent with poverty reduction and growth. - SMP design should generally resemble a Fund-supported program and draw on the CD-CSN and a PRGS, if available; for FCS, design should be guided by the 2023 FCS GN and the Strategy Board paper and could benefit from a CES if available. - The member's objectives and main policies over the SMP period are specified in an LOI and elaborated in an MEFP; a TMU should clarify quantitative conditionality and reporting. - Monitoring: Staff should conduct regular assessments of performance, typically semi-annually, linked to quantitative targets (QTs) and indicative targets (ITs) with specified assessment dates (“test dates”). - Reviews assess implementation of structural benchmarks (SBs) and prior actions (PAs) by agreed due dates. - Modalities and duration: - SMP starts with Fund management’s approval of the SR requesting the SMP, which initiates the period for establishing a track record. - The end date should be set after the final test date and accommodate time to complete the final review. - Extensions require Fund management approval before the original end date and come in two forms: (1) three months or less or (2) longer extensions, which generally require staff to outline additional conditionality and a short staff paper. - Duration is expected to be at least nine months, with at least two reviews and test dates, though shorter durations are possible; duration would not be expected to extend beyond 18 months. - Applicability of other IMF policies: - Many Fund policies on use of Fund resources do not fully apply to SMPs (e.g., debt sustainability, financing assurances, other UFR safeguards). - Continuous adherence to exchange system obligations under Article VIII is an obligation of all members and compliance should be encouraged. - UFR misreporting guidelines for non-complying purchases or disbursements do not apply, but data credibility is critical. - PRGS documents are not required, but SMP-supported policies should be consistent with poverty reduction and growth objectives, normally outlined in the LOI or MEFP. - SMPs should include safeguards on social and other priority spending, such as an indicative floor on social and other priority spending, defined by the authorities, where possible. ### Choice of track record: SMPs, other track records, and RCF support - Purpose: Track records provide assurances about authorities’ capacity and commitment to implement a UCT-quality program; they are not for signaling purposes. - Types: - SMP is the preferred modality for building a track record. - Track records may also be built in the context of the RCF, involving time-bound policy commitments specified in the LOI at the time of an RCF disbursement request; RCF may be used concurrently with an SMP in urgent financing needs. - Since RCFs do not include monitoring and assessments of commitments, SMP is normally preferred where a clear policy framework and comprehensive monitoring are needed. - Limited examples exist where a track-record has been built outside these modalities; use of similar approaches should be limited and first discussed with SPR. *2023 LIC FACILITIES HANDBOOK: APPENDIX II/III. QUANTITATIVE CONDITIONALITY / STAFF‑MONITORED PROGRAMS AND OTHER TRACK RECORDS — INTERNATIONAL MONETARY FUND* ### Appendix III. Box 1. Establishing Track Records Outside of an SMP and RCF ### Appendix III. Box 1. Establishing Track Records Outside of an SMP and RCF ### When this option is used - Used when broader actions need to be taken for macroeconomic stability or other conditions necessary for a UFR request, but a more comprehensive SMP is not considered necessary. - Applied when resuming program reviews does not require taking specific actions, critical to program success, for which PAs would be most appropriate. - Corrective actions under this option should be documented, time-bound, near-term policy actions, and communicated to management (e.g., BTO, memorandum to management, PN, SLA or LOI). - Resumption of the program or staff support for a new program would require inter-departmental review and agreement that a sufficient track record has been established. - The approach is not very prevalent; examples are somewhat dated but illustrative. ### Illustrative examples cited - The Gambia (new ECF, May 2012): in the PN, staff outlined several macro policies to “reestablish a track -record” and address macroeconomic risks, that were preconditions to IMF staff supporting the program request. - Sao Tome Principe (new ECF, July 2012): the PN notes that after a failed ECF, authorities had “tightened fiscal policy in 2010 and 2011, and have brought the fiscal program back on track”. - Djibouti (2nd review of PRGT, January 2011): in the PN, staff outlined “April-September 2010 track record period targets” to move forward with the combined 2nd and 3rd reviews. ### Track record period: length and starting point - Under an SMP: - A track record period can vary as a function of the member’s past track record and the measures needed to establish a record of policy implementation. - Normally, such monitoring would be expected to cover at least nine months and two reviews and test dates, though the minimum period is normally six months. - For SMPs, the track record period starts at management approval of the SR requesting the SMP. - For an RCF or other track record: - The track record period would normally start around the time that associated actions by the authorities have started. - Track records under an RCF would normally cover at least six months. *Source: Appendix III. Box 1. Establishing Track Records Outside of an SMP and RCF (concluded).* ### 4. The three concessional facilities established under the PRGT (ECF, SCF, and RCF) and ### 4. The three concessional facilities established under the PRGT (ECF, SCF, and RCF) and the PSI ### Purpose and program alignment - The ECF, SCF, RCF, and the PSI are designed to assist LICs in making progress toward, or in achieving, maintaining, or restoring, a stable and sustainable macroeconomic position consistent with strong and durable poverty reduction and growth. - Policies supported by Fund concessional financing under all facilities, or the PSI, should be aligned with the country’s poverty reduction and growth objectives. ### Requirements for financing requests, arrangements, and reviews - Any financing request under the ECF, SCF, or RCF and program reviews must be accompanied by a statement, normally in the LOI or MEFP, of how the program advances the country’s poverty reduction and growth objectives. - The description is expected to be more detailed at the time of the initial arrangement request or when a new PRGS is produced. - Where a relevant PRS exists, the LOI/MEFP description can cross-reference the PRS, and policies supported by ECF/SCF/RCF/PSI should be consistent with the PRS objectives in the context of promoting a stable and sustainable macroeconomic environment consistent with strong and durable poverty reduction and growth. ### PRGS timing and review completion conditions - For ECF arrangements and for SCF arrangements and PSIs exceeding two years, while a PRGS is not required at initial Board consideration, the second (and every subsequent) review can only be completed if: - (i) the member has a PRS document that has been developed and made publicly available normally within the five previous years, but no more than six years, and covers the period leading up to and covering the date of the completion of the relevant review; and - (ii) the PRS has been issued to the Executive Board as a PRGS that has been the subject of staff analysis in the staff report of a request for an ECF arrangement, SCF arrangement or PSI, or a related review. - Where the PRGS does not cover a 12-month forward-looking period, the member is expected to document in the LOI/MEFP: - (i) the procedures underway to establish a successor PRGS; and - (ii) the relevance of the current PRGS for the coming year. ### Early engagement on PRS/PRGS process - Whenever an ECF arrangement or an SCF arrangement or PSI with an initial duration exceeding two years is under consideration (including cases where support is currently provided under an SMP, or RCF), staff should inform authorities at an early stage about the relevant PRS and PRGS requirements to ensure adequate time for the PRS process. - Authorities need not produce their PRS for Fund engagement purposes only; PRS production can be aligned with other domestic policy cycles. ### PRGS cover letter requirements and functions - A PRGS, whether based on an existing national PRS document or newly prepared, is to be accompanied by a cover letter from the member country to the MD, which will be deemed part of the PRGS issued to the Board. - Key functions of the cover letter: - (i) describe the role that the national document issued as a PRGS or a new PRGS plays in guiding the member’s PRS and the participatory process that may be reflected in the PRS; and - (ii) inform the date when the national document issued as the PRGS was publicly announced and the period it is covering. - The cover letter may also be used to update elements of a national development plan or strategy issued as a PRGS, include complementary analysis or information to meet minimum standards, or provide greater alignment with the good practice guidelines for PRGS. ### Minimum standards for a PRGS (Appendix V. Box 1) A PRGS or the associated cover letter would include the following core elements: - Strategy or plan: describe an overall strategy or plan for poverty reduction and growth. - Specific policy elements: describe how the strategy would be pursued through specific policies, including macroeconomic and financial policies, specific projects, infrastructure plans, and/or goals for public expenditure prioritization, with clear relationships to the overall strategy. - Launch date and timeframe for implementation: define a launch date and implementation period (example provided: "became effective on July 1, 2016 and covers the period 2016–2020"). - Extent of participatory process: note whether a participatory process occurred and, if so, its nature. ### Good practice guidelines for a PRGS (Appendix V. Box 2) A comprehensive and operationally relevant PRGS would include elements beyond the minimum standards: - Existing poverty situation and trends: describe existing poverty situation and recent trends, referencing household income expenditure surveys and health and social indicators where relevant. - Factors influencing poverty: identify determinants of poverty and bottlenecks to poverty reduction to guide strategy and policy choices. - Strategy for poverty reduction: describe macro-related aspects of the PRS, including approaches to foster sustained, strong growth and ensure inclusive income growth (e.g., safety nets, better targeting). - Specific policies: document intended policies under the PRS and their targeted impact on poverty reduction and social development, including public spending priorities, financial inclusion plans, and institutional capacity building and technical assistance needs; outline expected donor coordination and contributions. - Fiscal and debt framework: prioritize development spending based on realistic assessment of fiscal space; define priority social spending and set indicative targets in LOI/MEFP; discuss how PRS financing impacts debt strategy. - Spending effectiveness: mention steps to strengthen efficiency of public spending where relevant. - Safety nets and risk mitigation: discuss steps to mitigate negative spillovers and risks from adjustment policies and external shocks (e.g., social safety nets, food security arrangements). - Participatory process: authorities are strongly encouraged to seek CSO inputs during PRGS preparation; authorities are responsible for the level of consultation needed to ensure broad ownership. ### Treatment of PRGS submissions that fall short of minimum standards - If a proposed PRGS falls short of minimum standards, staff will indicate the additional content needed. - For newly-drafted, streamlined PRGS, the document could be modified to cover missing content ahead of submission to the Executive Board. - If a national development plan or strategy fails to meet minimum standards, staff could request a newly-prepared PRGS or ask the member to provide missing elements in the cover letter to the MD to ensure the PRS documentation, taken together, meets Fund requirements. - ECF, SCF or PSI staff reports and LOIs/MEFPs should discuss how significant weaknesses in the poverty reduction strategy, including those identified through the PIR, have been addressed. ### Participatory processes and Bank assessment - Participatory processes are strongly encouraged but not required; the PRGS must clarify the extent and nature of any participatory process. - An assessment letter from Bank staff must be requested when a PRGS is received by IMF staff. The assessment letter: - Provides Bank staff’s perspective on strengths and weaknesses and identifies priority action areas and risks for attention during implementation. - Should be requested at the time a PRGS is received by IMF staff; following Bank management clearance it will be circulated to the Fund Board together with the PRGS. - Will not be published by the Fund. ### Protection and monitoring of social and priority spending - Under all Fund facilities for LICs, social and other priority spending should be safeguarded and, whenever appropriate, increased. - This should be monitored through explicit targets, typically an indicative floor on social or other priority spending, whenever possible. - Determination of what constitutes social or other priority spending should be based on the authorities’ PRS or, where absent, the medium-term poverty reduction and growth objectives and policies outlined by the authorities in program documentation. - Where tracking is not feasible, members will be encouraged to develop adequate expenditure tracking systems, which may require technical assistance. ### PRGS issuance, publication, and consent - PRGSs are not distributed in paper format; they are registered by SEC as official Board documents and made available to Executive Directors via posting to IMF Connect, with notification by email to Executive Directors and designated member authorities. - Posting to IMF Connect will be taken to constitute “issuance” to the IMF Board for PRS requirements for ECF, SCF arrangements and PSIs. - Publication of PRS documents is voluntary but presumed; a member’s consent is required for publication. - The MD will not recommend approval of: - (i) an ECF, SCF arrangement or completion of a review under such arrangement, or - (ii) a member’s request for initial approval or review of a PSI, - if the member does not explicitly consent to publication of the PRS-related document. - Staff should discuss publication intention during mission and obtain explicit consent prior to submitting relevant UFR or PSI documents to management for clearance; the management clearance note should state that authorities have consented to publication. ### Poverty Reduction Strategy Implementation Review (PIR) - Staff is expected to report to the Board on PRS implementation through regular reporting and periodic in-depth analysis. - Regular staff reports should include discussion of developments in implementation of policies supporting the PRS (e.g., resource prioritization in annual budget and outturns, adoption of social safety nets, progress on growth-promoting reforms). - A PRS Implementation Review (PIR) is expected by the time of the fifth review under the ECF or under SCF arrangements or PSIs with an initial duration exceeding two years (i.e., once for any given ECF, SCF arrangement or PSI). - PIR is not mandatory for decisions on ECF, SCF and PSI support but is a good practice based on informal consultations with authorities and stakeholders, including the World Bank. - The PIR outcome is documented in the staff report and is expected to cover: - (i) performance relative to PRS benchmarks and monitoring indicators; - (ii) observed linkages between the PRS and national systems and processes (e.g., budget monitoring and planning); - (iii) the coming year’s policy intentions, particularly as reflected in the budget. - The PIR is encouraged as a good practice and could be conducted independent of a Fund program relationship. ### PRS under the HIPC Initiative - Remaining eligible countries under the HIPC Initiative must continue to document their PRS in line with PRS documentation requirements under the HIPC Initiative to reach decision and completion points. --- ### Appendix VI. Eligibility to Use the Fund’s Facilities for Concessional Financing — key elements - PRGT eligibility framework is set out in IMF (2009k) and Executive Board Decision No. 14521-(10/3), adopted January 11, 2010, as amended pursuant to IMF 2012b, 2013c, 2015d, 2017a and 2020. - PRGT eligibility will be reviewed by the Executive Board every two years, with the next review scheduled for 2023. Decisions on entry or graduation can be adopted between reviews; graduation decisions can be adopted in the interim for members that request graduation and meet criteria. Entry Criteria - A member would be added to the list of PRGT-eligible countries if: - (i) its annual per capita gross national income (GNI), based on the latest available qualifying data, is (a) below the operational International Development Association (IDA) cutoff, or (b) less than twice the IDA operational cutoff for small countries (countries with population below 1.5 million but not less than 200,000), or (c) less than five times the IDA operational cutoff for microstates (countries with population below 200,000); and - (ii) the sovereign does not have capacity to access international financial markets on a durable and substantial basis. The market access criterion for entry is assessed using the same tests as for graduation except that market access under the first alternative test exists where bond issuance or disbursements under commercial loans during at least two of the last five years are equivalent to a cumulative amount of at least 25 percent of quota. Graduation Criteria - A PRGT-eligible country will graduate if it meets either or both the income and market access criteria, and does not face serious short-term vulnerabilities. A. Income Criterion - The country’s annual per capita GNI: - (i) has been above the IDA operational cutoff for at least the last five years (for which qualifying data are available); and - (ii) has not been on a declining trend in the same period (comparing the first and final years of the available data); and - (iii) is currently (a) at least twice the operational IDA cutoff, or (b) at least three times the IDA operational cutoff for small countries, or (c) at least six times the IDA operational cutoff for microstates. B. Market Access Criterion - The sovereign has the capacity to access international financial markets on a durable and substantial basis, as measured by one of two tests: - (i) Public sector issuance or guaranteeing of external bonds or by disbursements under public and publicly guaranteed external commercial loans in international markets during at least three of the last five years in a cumulative amount over that period equivalent to at least 50 percent of the country’s quota at the Fund at the time of the assessment. - External bonds and commercial loans issued or contracted in markets that are not integrated with broader international markets do not qualify, including loans or bonds subsidized or guaranteed (partially or fully) by official external entities, and loans from foreign state-owned banks. - If the amount of issuance or guarantee in a single qualifying year totals less than two percent of the member’s quota at the time of assessment, then that year shall not count towards the graduation duration threshold. - (ii) A country would also be deemed to meet the market access criterion if there were convincing evidence that the sovereign could have tapped international markets on a durable and substantial basis, even though actual public-sector borrowing fell short of the specified thresholds (case-specific assessment). - For precise definitions of public sector, external bonds, external commercial loans, guidance on data sources for market access, and clarification on what constitutes borrowing on international financial markets, see Decision No. 14521-(10/3), as amended, and IMF 2020. *Source: 2023 LIC Facilities Handbook: Appendix V. Poverty Reduction Objectives under the IMF LIC Facilities; Appendix VI. Eligibility for Concessional Financing.* ### 6. Both tests of the market access criterion would take into account bonds/loans issued, ### 6. Both tests of the market access criterion would take into account bonds/loans issued, ### Market access criterion - Both tests of the market access criterion take into account bonds/loans issued, contracted, or guaranteed by non-sovereign public-sector debtors when such a debtor’s ability to access international markets is assessed to be an indicator of the sovereign’s creditworthiness. - Footnote: Borrowing by a public corporation will generally not be assessed as an indicator of the sovereign’s creditworthiness where such borrowing is based on the public corporation’s own balance sheet (including by collateralizing its own assets) and is not guaranteed by the sovereign. ### Additional safeguards for candidacy under the market access criterion - Countries would be considered candidates for graduation under the market access criterion only if: - (i) their annual per capita GNI is above the IDA operational cutoff; and - (ii) their annual per capita GNI has not been on a declining trend during the last five years for which qualifying data are available (comparing the first and last relevant annual data). ### C. Absence of Serious Short-Term Vulnerabilities — requirements for graduation - In addition to meeting either or both the income and market access criteria, the country should not face serious short-term vulnerabilities. The assessment requires, in particular: - absence of risks of a sharp decline in income or of a loss of market access; - limited debt vulnerabilities, as indicated by the latest Debt Sustainability Analysis (DSA); - confirmation that overall debt vulnerabilities have remained limited since the DSA was conducted. - Exception: For a member whose annual per capita GNI exceeds the applicable income graduation threshold by 50 percent or more: - graduation from PRGT eligibility will not be subject to the assessment of serious short-term vulnerabilities; - however, an Executive Board assessment of serious short-term vulnerabilities is required where such members have “IDA grant-only” or “IDA loan-grant mix” status at the World Bank; in that case, graduation will depend on an assessment that the member does not have such serious short-term vulnerabilities. ### Timing and treatment of ongoing arrangements at graduation - Once the Executive Board takes the decision to graduate a member from the PRGT-eligibility list, the decision becomes effective five months later. - Any arrangement or PSI in which the country is engaged under the PRGT at the time of the Executive Board decision may continue until its expiration. - Such an arrangement or PSI may be extended or have its access augmented as appropriate under the existing policies and guidance (Decision 14251-(10/3) as amended in IMF 2020). *Italic: Source: 2023 LIC FACILITIES HANDBOOK: APPENDIX VI–VIII (excerpts).* ### References ### References ### Operational arrangements, access policy, and facility architecture (1987–2009) - International Monetary Fund, 1987, The Chairman’s Summing Up of the Discussion on the Enhancement of the Structural Adjustment Facility—Operational Arrangements (Washington). - ———, 1990, Summing Up by the Chairman—Operational Modalities of the Rights Approach (Washington). - ———, 1997, Acting Chair’s Summing Up - Instrument to Establish a Trust for Special Poverty and Growth Operations for the Heavily Indebted Poor Countries Initiative and Interim ECF Subsidy Operations (Washington). - ———, 1999a, Summing Up by the Acting Chairman—Fund Policy on Arrears to Private Creditors—Further Considerations (Washington). - ———, 1999b, Poverty Reduction Strategy Papers—Operational Issues (Washington). - ———, 1999c, Summing Up by the Acting Chairman - Modifications to the Initiative for Heavily Indebted Poor Countries Executive Board Meeting 99/89 August 1999 (Washington). - ———, 2002c, Summing Up by the Acting Chair—Access Policy in Capital Account Crises (Washington). - ———, 2003, The Acting Chair’s Summing Up - Review of Access Policy Under the Credit Tranches and the Extended Fund Facility, and Access Policy in Capital Account Crises-Modifications to the Supplemental Reserve Facility and Follow-Up Issues Related to Exceptional Access Policy Executive Board Meeting 03/16-February 26, 2003 (Washington). - ———, 2009b, The Fund’s Facilities and Financing Framework for Low-Income Countries (Washington). - ———, 2009e, A New Architecture of Facilities for Low-Income Countries (Washington). - ———, 2009f, A New Architecture of Facilities for Low-Income Countries and Reform of the Fund’s Concessional Financing Framework—Proposed Decision (Washington). ### Poverty Reduction Strategy Papers (PRSP), PRGT, and HIPC (1999–2016) - ———, 1999b, Poverty Reduction Strategy Papers—Operational Issues (Washington). - ———, 2001, Guidelines for World Bank and IMF Staffs for Joint Staff Advisory Notes (JSAN) for Poverty Reduction Strategy Papers (Washington). - ———, 2002b, Review of the Poverty Reduction Strategy Paper Approach—Early Experience with Interim PRSPs and Full PRSPs (Washington). - ———, 2004b, Poverty Reduction Strategy Papers—Progress in Implementation (Washington). - ———, 2004c, Poverty Reduction Strategy Papers—Proposed Amendments to the PRGF Trust and PRGF-HIPC Trust Instruments (Washington). - ———, 2007d, Proposals to Modify the PRGF-HIPC Trust Instrument—Further Considerations (Washington). - ———, 2010j, Heavily Indebted Poor Countries (HIPC) Initiative and Multilateral Debt Relief Initiative (MDRI)—Status of Implementation (Washington). - ———, 2011c, Heavily Indebted Poor Countries (HIPC) Initiative and Multilateral Debt Relief Initiative (MDRI)—Status of Implementation and Proposals for the Future of the HIPC Initiative (Washington). - ———, 2016b, Poverty Reduction and Growth Trust—Review of Interest Rate Structure (Washington). - ________, 2016e, Heavily Indebted Poor Countries (HIPC) Initiative and Multilateral Debt Relief Initiative (MDRI)—Statistical Update (Washington). - ________, 2017e, 2017 Handbook of IMF Facilities for Low-Income Countries (Washington). ### Conditionality, program design, and operational guidance (2002–2015) - ———, 2002d, Guidelines on Conditionality (Washington). - ———, 2006a, Revised IMF Staff Statement on Principles Underlying the Guidelines on Conditionality and Operational Guidance to IMF Staff on the 2002 Conditionality Guidelines (Washington). - ———, 2008a, Revised Operational Guidance to IMF Staff on the 2002 Conditionality Guidelines (Washington). - ———, 2010b, Operational Guidance to IMF Staff on the 2002 Conditionality Guidelines, Revised January 25, 2010 (Washington). - ———, 2011a, 2011 Review of Conditionality—Content and Application of Conditionality (Washington). - ———, 2014b, Revised Operational Guidance to IMF Staff on the 2002 Conditionality Guidelines (Washington). - ———, 2015e, Staff Guidance Note on the Implementation of Public Debt Limits in Fund-Supported Programs (Washington). - ———, 2015j, Guidance Note for Surveillance Under Article IV Consultation (Washington). - ———, 2015m, The Acting Chair’s Summing Up - Reform of the Fund’s Policy on Poverty Reduction Strategies in Fund Engagement with Low-Income Countries—Proposals Executive Board Meeting 15/62 June 22, 2015 (Washington). ### Safeguards, transparency, and safeguards assessments (2002–2022) - ———, 2002a, The Acting Chair’s Summing Up on Safeguards Assessments—Review of Experience and Next Steps (Washington). - ———, 2010g, Safeguards Assessments—Review of Experience (Washington). - ———, 2010h, The Acting Chair’s Summing Up Safeguards Assessments—Review of Experience; The Safeguards Policy—Independent Panel’s Advisory Report (Washington). - ———, 2015g, Safeguards Assessments—Review of Experience (Washington). - ———, 2015h, Safeguards Assessments Policy—External Expert Panel’s Advisory Report (Washington). - ———, 2015i, The Acting Chair’s Summing Up Safeguards Assessments—Review of Experience, Executive Board meeting 15/96, October 23, 2015 (Washington). - ———, 2022i, Safeguards Assessments - 2022 Review of Experience (Washington). - ———, 2013h, Guidance Note on the Fund’s Transparency Policy (Washington). ### Debt limits, debt sustainability, arrears, and sovereign debt (2009–2022) - ———, 2009g, Debt Limits in Fund-Supported Programs—Proposed New Guidelines, and Supplementary Information and Proposed Decision (Washington). - ———, 2009l, Staff Guidance Note on Debt Limits in Fund-Supported Programs, (Washington). - ———, 2010a, Staff Guidance Note on the Application of the Joint Bank-Fund Debt Sustainability Framework for Low-Income Countries (Washington). - ———, 2012a, Revisiting the Debt Sustainability Framework for Low-Income Countries (Washington). - ———, 2013b, Review of the Policy on Debt Limits in Fund-Supported Programs (Washington). - ———, 2013e, Sovereign Debt Restructuring—Recent Developments and Implications for the Fund’s Legal and Policy Framework (Washington). - ———, 2019b, 2018-19 Review Of The Financing Of The Fund’s Concessional Assistance And Debt Relief To Low-Income Member Countries (Washington). - ———, 2022a, Poverty Reduction and Growth Trust – Guidance Note on New Enhanced Safeguards for Debt Sustainability and Capacity to Repay (Washington). - ———, 2022b, Reviews of the Fund’s Sovereign Arrears Policies and Perimeter (Washington). ### Aid inflows, external financing, and the financial safety net (2007–2017) - ———, 2007a, Aid Inflows—The Role of the Fund and Operational Issues for Program Design (Washington). - ———, 2007b, IMF Executive Board Discusses Operational Implications of Aid Inflows for IMF Advice and Program Design in Low-Income Countries, PIN No. 07/83 (Washington). - ———, 2010f, Staff Guidance Note on the Use of Fund Resources for Budget Support (Washington). - ———, 2015c, Financing for Development—Enhancing the Financial Safety Net for Developing Countries (Washington). - ________, 2016c, Financing for Development: Enhancing the Financial Safety Net for Developing Countries—Further Considerations (Washington). - ———, 2017c, Adequacy of the Global Financial Safety Net—Proposal for a New Policy Coordination Instrument (Washington). ### Reviews of facilities, program design, and streamlining (2009–2019) - ———, 2009a, Joint Staff Advisory Notes (JSANs)—Proposed Amendments to Streamline Modalities (Washington). - ———, 2009i, Creating Policy Space—Responsive Design and Streamlined Conditionality in Recent Low-Income Country Programs (Washington). - ———, 2012c, Handbook of IMF Facilities for Low-Income Countries (Washington). - ———, 2012d, Review of Facilities for Low-Income Countries (Washington). - ———, 2013d, Review of Facilities for Low-Income Countries—Proposals for Implementation (Washington). - ———, 2018b, Guidance Note on the Bank-Fund Debt Sustainability Framework for Low Income Countries (Washington). - ———, 2019a, 2018-19 Review of Facilities for Low-Income Countries---Reform Proposals (Washington). - ———, 2019e, 2018 Review of Program Design and Conditionality (Washington). - ———, 2019f, The Acting Chair’s Summing Up -2018-19 Review of Facilities for Low-Income Countries—Reform Proposals; Review of the Financing of the Fund’s Concessional Assistance and Debt Relief to Low-Income Countries Executive Board Meeting 19/42 May 24, 2019 (Washington). ### Pandemic, emergency financing, and temporary access modifications (2020–2021) - ———, 2020b, Enhancing the Emergency Financing Toolkit—Responding to the Covid-19 Pandemic—Supplementary Proposal on Handling PRGT High-Access Procedures Under Emergency Financing Requests (Washington). - ———, 2020c, Temporary Modification to the Fund’s Annual Access Limits (Washington). - ———, 2020d, Policy Safeguards for Countries Seeking Access to Fund Financial Support that Would Lead to High Levels of Combined GRA-PRGT Exposure (Washington). - ———, 2021a, Fund Concessional Financial Support for Low-Income Countries—Responding to the Pandemic (Washington). - ———, 2021b, Review of the Temporary Modifications to the Fund’s Access Limits in Response to COVID-19 Pandemic (Washington). - ———, 2021c, Temporary Extensions and Modifications of Access Limits in the Fund’s Lending Facilities (Washington). - ———, 2021d, Short Extension of the Temporary Increases in PRGT Access Limits and the Review of the Interest Rate Structure Under the PRGT (Washington). - ———, 2021f, Post Program Monitoring During the Pandemic: Proposal for Temporary Streamlining of Procedures and Renaming of Policy (Washington). ### Surveillance, Article IV guidance, and country engagement (2011–2023) - ———, 2011d, Guidance Note on Letters and Statements Assessing Members’ Economic Conditions and Policies (Washington). - ———, 2013i, Staff Guidance Note for Public Debt Sustainability Analysis in Market-Access Countries (Washington). - ———, 2015j, Guidance Note for Surveillance Under Article IV Consultation (Washington). - ———, 2017d, Guidance Note on Post Program Monitoring (Washington). - ———, 2022h, Guidance Note for Surveillance Under Article IV Consultations (Washington). - ———, 2023a, Staff Guidance Note on the Implementation of the IMF Strategy for Fragile and Conflict Affected States (Washington). ### Fragile and conflict-affected states, resilience, and disaster response (2017–2023) - ———, 2017b, Large Natural Disasters—Enhancing the Financial Safety Net for Developing Countries (Washington). - ———, 2018a, IEO Report on The IMF and Fragile States (Washington). - ———, 2019c, Building Resilience in Developing Countries Vulnerable to Large Natural Disasters (Washington). - ———, 2022c, IMF Strategy for Fragile and Conflict-Affected States (FCS) (Washington). - ———, 2022e, Proposal for a Food Shock Window under the Rapid Financing Instrument and Rapid Credit Facility (Washington). - ———, 2022g, Proposal to Establish a Resilience and Sustainability Trust (Washington). - ———, 2023a, Staff Guidance Note on the Implementation of the IMF Strategy for Fragile and Conflict Affected States (Washington). ### Miscellaneous guidance, reviews, and proposals (2004–2023) - ———, 2004d, Signaling by the Fund—A Historical Review (Washington). - ———, 2005a, Extension of Post-Program Monitoring to Cover the Use of PRGF Resources (Washington). - ———, 2006b, Review of Ex Post Assessments and Issues Relating to the Policy on Longer-Term Program Engagement (Washington). - ———, 2006c, The Acting Chair's Summing—Up Review of Ex Post Assessments and Issues Related to the Policy on Longer-Term Program Engagement (Washington). - , 2006d, Article VIII Acceptance by IMF Members—Recent Trends and Implications for the Fund (Washington). - ———, 2006e, Making the Misreporting Policies Less Onerous in De Minimis Cases (Washington). - ———, 2007c, Enhancing Collaboration—Joint Management Action Plan (Washington). - ———, 2009h, Reduction of Blackout Periods in GRA Arrangements (Washington). - , 2009k, Eligibility to Use the Fund’s Facilities for Concessional Financing, (Washington). - ———, 2010c, Ex Post Assessments of Members with a Longer-Term Program Engagement—Revised Guidance Note (Washington). - ———, 2010d, Implementation of the Joint Management Action Plan on Bank-Fund Collaboration (Washington). - ———, 2010e, Guidance Note on the Implementation of Post-Program Monitoring (Washington). - ———, 2010k, Proposal for a Post-Catastrophe Debt Relief Trust Fund (Washington). - ———, 2011b, The Fund’s Financing Role—Reform Proposals on Liquidity and Emergency Assistance (Washington). - ———, 2012f, Proposal to Distribute Remaining Windfall Gold Sales Profits and Strategy to Make the Poverty Reduction and Growth Trust Sustainable (Washington). - ———, 2012g, Staff Guidance Note on the Fund’s Engagement with Countries in Fragile Situations (Washington). - ———, 2013f, Unification of Discount Rates Used in External Debt Analysis for Low-Income Countries (Washington). - ———, 2014a, Conditionality in Evolving Monetary Policy Regimes (Washington). - ———, 2014c, Poverty Reduction and Growth Trust—Review of Interest Rate Structure (Washington). - ———, 2014d, Reform of the Policy on Public Debt Limits in Fund-Supported Programs (Washington). - ———, 2014e, Reform of the Policy on Public Debt Limits in Fund-Supported Programs—Proposed Decision and New Proposed Guidelines (Washington). - ———, 2015a, Proposal to Enhance Fund Support for Low-Income Countries Hit by Public Health Disasters (Washington). - ———, 2015b, Reform of the Fund’s Policy on Poverty Reduction Strategies in Fund Engagement with Low-Income Countries—Proposals (Washington). - ———, 2015f, Reforming the Fund’s Policy on Non-Toleration of Arrears to Official Creditors (Washington). - ———, 2015k, The Chairman’s Summing Up – Reforming the Fund’s Policy on Non-Toleration of Arrears to Official Creditors (Washington). - ———, 2015l, Selected Streamlining Proposals Under the FY16–18 Medium-Term Budget—Implementation Issues (Washington). - ———, 2016a, Staff Guidance Note for the Conduct of Ex Post Peer Reviewed Assessments of Members with Longer-Term Program Engagement (Washington). - ———, 2017a, Eligibility to Use the Fund’s Facilities for Concessional Financing, 2017 (Washington). - ———, 2018b, Guidance Note on the Bank-Fund Debt Sustainability Framework for Low Income Countries (Washington). - ———, 2019d, 2019 Review of the PRGT Interest Rate Structure (Washington). - ———, 2020a, Eligibility to Use the Fund’s Facilities for Concessional Financing (Washington). - ———, 2021e, Macroeconomic Developments and Prospects in Low-Income Countries—2021 (Washington). - ———, 2022d, Staff Guidance Note on the Sovereign Risk and Debt Sustainability Framework for Market Access Countries (Washington). - ———, 2022f, Proposal for a Staff-Monitored Program with Executive Board Involvement (Washington). - ———, 2023b, Changes to the Fund’s Financing Assurances Policy in the Context Of Fund Upper Credit Tranche (UCT) Financing Under Exceptionally High Uncertainty (Washington). *pp ea2023020 - References* --- _Source: https://www.imf.org/-/media/files/publications/pp/2023/english/ppea2023020.pdf_