## ppea2024045

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### EXECUTIVE SUMMARY — Background and purpose
- Paper provides additional analysis and a proposed reform package for charges and the surcharge policy for further consideration by the Executive Board.
- Board held an informal engagement in early July to discuss the margin for the basic rate of charge, fees, and the surcharge policy, and requested further analysis and stress testing.
- Reform assessment guided by four principles:
  - (i) reduction in the cost to borrowers;
  - (ii) impact on the price-based incentive structure;
  - (iii) implications for income generation; and
  - (iv) simplicity of the policy.

### EXECUTIVE SUMMARY — Directors’ informal feedback (July engagement)
- Broad consensus that surcharges remain relevant as a risk management tool and provide price-based incentives for prudent and temporary borrowing from the General Resources Account (GRA).
- Shared view that the sharp increase in the SDR interest rate (SDRi) over the last two years has been a problem for borrowers while the Fund’s financial position improved and the PB target of SDR 25 billion was reached by end-FY2024.
- Preliminary support for:
  - Parametric modifications within the current surcharge framework, led by higher thresholds for level-based surcharges and commitment fees to address erosion.
  - A meaningful reduction in the margin on the basic rate of charge.
  - Establishment of a regular review cycle for the surcharge policy.
- Consideration of lower surcharge rates received support, with views differing on magnitude and scope.
- Requests for additional analysis on market cost comparisons and the incentive effectiveness of time-based surcharges, plus stress testing and a communication strategy.

### INCENTIVE FUNCTION — Empirical findings on level- and time-based surcharges
- Level-based surcharges:
  - Peak credit outstanding for many countries clustered near the level-based surcharge threshold, indicating the threshold has influenced borrowing behavior.
  - For members facing severe financial distress, level-based surcharges appear less effective or ineffective.
  - Countries with peak borrowing closer to the threshold were generally less financially distressed.
- Time-based surcharges:
  - Provided incentives for early repurchases or avoidance of prolonged credit exposure for countries with moderate financing pressure.
  - Were ineffective in providing incentives for members facing protracted and severe financial distress (including current top surcharge payers and recurring Fund borrowers).
  - New timing evidence: 12 out of 19 countries made early repurchases within 12 months before or after the time-based surcharge kicked in; breakdown:
    - 1 country made early repurchases exactly when it reached the time-based surcharge trigger.
    - 7 countries made early repurchases between six and one month before reaching the trigger.
    - 2 countries made early repurchases within 6 months after being subject to time-based surcharges.

### COST COMPARISONS AND ROBUSTNESS
- Cost comparison:
  - The cost of borrowing from the Fund has been consistently lower and more stable than market costs.
  - Marginal cost of borrowing from the IMF, including time-based surcharges, has been significantly lower for surcharge-paying members than the cost of market financing.
- Robustness:
  - Stress tests indicate medium-term income and PB projections under the proposed package are robust; the package would keep PBs at or above the medium-term target of SDR 25 billion under various credit and interest scenarios (depending on any distributions).

### PROPOSED REFORM PACKAGE (staff proposals)
- Margin on the basic rate of charge:
  - Set the margin for the basic rate of charge at 70 basis points.
- Level-based surcharge thresholds:
  - Increase the level-based surcharge threshold to 300 percent of quota.
- Commitment fees:
  - Align the commitment fee thresholds to the overall annual and cumulative access limits under the GRA (currently 200 and 600 percent of quota).
- Time-based surcharge rate:
  - Reduce the time-based surcharge rate by 25 basis points to 75 basis points.
- Timing:
  - Changes could become effective promptly on November 1, 2024 (start of the third financial reporting quarter).
- Review cycle:
  - Move reviews of the surcharge policy to a regular five-year cycle.

### EXPECTED FINANCIAL AND INCIDENCE EFFECTS — Summary
- Aggregate borrower cost reduction:
  - Staff estimates the package would lower annual margin, commitment fee, and surcharge payments by about SDR 796 million (FY2026 basis), a reduction for borrowers of about one-third compared to no change in the policy.
- GRA net income projections:
  - Estimated net income of the GRA generated during FY2025–FY2026 (the period of the margin proposed in this paper) would be SDR 4.1 billion.
  - Assuming this margin and other policies are maintained through FY2029, estimated net income could reach SDR 9.1 billion.
- Precautionary balances:
  - The package would support a resilient income path and PBs at or above the medium-term target of SDR 25 billion under various scenarios, subject to distributions.

### POLICY TRADE-OFFS AND IMPLEMENTATION CONSIDERATIONS
- Package aims to lower the cost of borrowing while preserving:
  - The price-based incentive structure that encourages prudent and temporary borrowing.
  - Net income generation capacity to support PB accumulation and potential distributions.
- Parametric adjustments preferred over structural or complex rule changes to preserve policy simplicity.
- Implementation issues highlighted:
  - Need to assess the package holistically against implications for the Fund’s balance sheet and other upcoming policy reviews that may impact lending income and PBs.
  - Consider timing relative to the implementation of the 16th General Review of Quotas.
  - Importance of an effective communication strategy and operational readiness for prompt implementation.

### KEY STATISTICS AND PARAMETERS (preserved exactly)
- Margin for the basic rate of charge: 70 basis points
- Level-based surcharge threshold: 300 percent of quota
- Commitment fee thresholds aligned to: 200 and 600 percent of quota
- Time-based surcharge rate reduction: 25 basis points (to 75 basis points)
- Effective date (proposed): November 1, 2024
- Estimated borrower payment reduction: SDR 796 million (FY2026 basis)
- Estimated reduction share for borrowers: about one-third compared to no change
- Estimated net income FY2025–FY2026: SDR 4.1 billion
- Estimated net income through FY2029 if maintained: SDR 9.1 billion
- Precautionary balances medium-term target: SDR 25 billion

### DETAILED PROPOSALS — Margin, thresholds, commitment fees, surcharge rates
- Margin on the rate of charge:
  - Staff proposal: set the margin at 70 basis points for the remainder of FY2025 and FY2026.
  - Projected effects at current surcharge policies:
    - Estimated intermediation costs covered: about SDR 126 million in FY2024.
    - Net income generation: about SDR 2.6 billion in FY2025 and SDR 2.2 billion in FY2026.
    - Relative to the current margin, the proposal would lower annual income by SDR 258 million (FY2026 basis).
  - Rationale references historical EMBIG spread probabilities and five-year median and average EMBIG spreads:
    - Overall five-year median EMBIG spreads for all borrowers is 366 bps.
    - Overall five-year average EMBIG spreads for all borrowers is 400 bps.
    - Over the last 20 years, probability of the lowest quartile EMBIG spreads falling below 50 basis points has been less than 1 percent; below 100 basis points has been about 17 percent.
- Level-based surcharge threshold:
  - Median erosion since 2016: around 33 percent of quota for both the world and EMDEs, suggesting an increase to about 280–285 percent of quota.
  - Restoring erosion since the 2009 review would require increase to about 325–330 percent of quota.
  - Staff pragmatic proposal: raise threshold to 300 percent of quota.
    - Projected effect: proposed higher threshold alone would reduce surcharge income by SDR 430 million in FY2026; seven surcharge payers would no longer be subject to surcharges.
    - Distributional note: top three surcharge payers’ share in total surcharge reduction about 46 percent versus their share in credit outstanding subject to surcharges of about 74 percent.
- Commitment fee thresholds:
  - Full offset of median erosion since 2016 would imply raising thresholds by about 50 percent (e.g., from 115 → 172.5 and 575 → 862.5 percent of quota), but staff opts for simpler alignment.
  - Staff proposal: align commitment fee thresholds with GRA access limits at 200 and 600 percent of quota.
  - Estimated fiscal effect: limited, estimated to amount to SDR 16 million in FY2026.
  - Proposed commitment fee schedule (current → proposed):
    - 15 basis points up to 115 → up to 200 (percent of quota)
    - 30 basis points between 115 and 575 → between 200 and 600
    - 60 basis points above 575 → above 600
- Surcharge rate reductions:
  - Directors showed relatively more support for lowering the time-based surcharge rate.
  - Staff proposal: reduce the time-based surcharge rate by 25 basis points to 75 basis points.
  - Illustrative income impacts:
    - Reduction of time-based surcharge rate by itself would lower annual lending income by about SDR 120 million (FY2026 basis) compared to current policies.
    - If implemented with increase in level-based threshold to 300 percent of quota, the reduction would lower total lending income by about SDR 520 million.
    - Alternative: reducing the level-based surcharge rate by 25 basis points would have broadly similar income implications.
    - An additional 25 basis point reduction in the time- or level-based surcharge rate (together with threshold increase to 300 percent of quota) would reduce net income by an additional SDR 90 million.

### AGGREGATE LENDING INCOME PROJECTIONS (FY2025–29) — Selected exact figures
- No policy changes — Total lending income (SDR million):
  - FY25 2,627; FY26 2,600; FY27 2,625; FY28 2,641; FY29 2,347; Total during FY25-29 12,840.
- Proposed Package — Total lending income (SDR million):
  - FY25 2,236; FY26 1,805; FY27 1,814; FY28 1,811; FY29 1,551; Total during FY25-29 9,217.
- Lending income loss compared with No policy changes (SDR million):
  - FY25 391; FY26 796; FY27 810; FY28 829; FY29 796; Total during FY25-29 3,623.
- Surcharge income (SDR million):
  - No policy changes: FY25 1,502; FY26 1,537; FY27 1,582; FY28 1,585; FY29 1,495; Total 7,701.
  - Proposed Package: FY25 1,248; FY26 1,015; FY27 1,043; FY28 1,043; FY29 946; Total 5,295.
- Number of surcharge payers:
  - No policy changes FY26 20; Proposed Package FY26 13.
- Share of lending income loss attributable to top three surcharge payers (percent): FY26 53.8.

### FY2026 COUNTRY-LEVEL INCIDENCE — Selected exact figures and examples
- Proposed package would reduce margin and surcharge payments by a total of SDR 780.6 million (aggregate reduction).
- Aggregate reduction in margin and surcharge payments in percentage of those payments under no policy change: 32.6 percent.
- Example country impacts:
  - Argentina:
    - Surcharges and margin payment reduction (SDR million): 259.2
    - Share in total reduction (percent): 33.2
    - Reduction of margin and surcharge payments in percentage of those payments under no policy change (percent): 23.6
    - Surcharge payments under proposed reform package (SDR million): 614.7
  - Ukraine:
    - Surcharges and margin payment reduction (SDR million): 113.5
    - Share in total reduction (percent): 14.5
    - Reduction percent: 34.6
    - Surcharge payments under proposed reform package (SDR million): 137.5
  - Pakistan:
    - Surcharges and margin payment reduction (SDR million): 92.8
    - Share in total reduction (percent): 11.9
    - Reduction percent: 53.7
    - Surcharge payments under proposed reform package (SDR million): 29.8
  - Egypt:
    - Surcharges and margin payment reduction (SDR million): 100.1
    - Share in total reduction (percent): 12.8
    - Reduction percent: 44.6
    - Surcharge payments under proposed reform package (SDR million): 64.9
- Members not paying surcharges under proposed package (while they would under no policy change): Benin; Côte d'Ivoire; El Salvador; Gabon; Georgia; Moldova; and Senegal.

### POLICY ASSESSMENT AGAINST REVIEW PRINCIPLES
- Sustaining effective price-based incentives:
  - Moderate margin and surcharge rate reductions broadly preserve the current price-based incentive structure.
  - Threshold increases broadly align GRA lending pricing with increases in global erosion metrics and demand for GRA resources.
- Lowering the cost of borrowing:
  - The package meaningfully reduces charges and surcharge payments for GRA borrowers, creating additional policy space and improving capacity to repay the Fund.
- Preserving adequate income-generation capacity:
  - The package retains substantial capacity to generate net income, including for possible placement in reserves.
- Maintaining policy simplicity:
  - The package would preserve and, in some parts, enhance framework simplicity.

### HOLISTIC BALANCE SHEET CONSIDERATIONS AND ROBUSTNESS
- Baseline income outlook under no-policy change:
  - Fund would generate net income of about SDR 2.5-2.8 billion per year over the next five years.
  - PBs would reach SDR 38.5 billion by FY2029 in case of full retention.
- Under the proposed reform package:
  - The GRA would maintain a net income capacity of about SDR 1.7 billion annually after policy changes.
  - Projected net income could accommodate distributions of SDR 1.4 billion per year (cumulatively SDR 7 billion from FY2025 to FY2029) while leaving room for further reserve accumulation.
  - Annual net income after implementing the reform package would reach SDR 1.7 billion before income distribution; the standard deviation of annual net income over the past 10 years was about SDR 660 million.
- PB accumulation implications:
  - Even with cumulative distributions of SDR 7 billion during FY2025–29, about SDR 2 billion could be retained to increase PBs.
  - A moderate accumulation beyond the SDR 25 billion target would provide an additional prudential buffer.
- Robustness to adverse scenarios (selected exact figures):
  - Low-lending scenario with illustrative net income distributions of SDR 1.4 billion per year: residual PB accumulation over the 5-year period would fall to about SDR 1 billion.
  - Adverse investment return scenario: annual FI investment return could at most fall to a minimum of 2.9 percent, or SDR 858 million per annum on average (compared with baseline 3.6 percent or SDR 1,042 million per annum).
  - Joint shock of low lending and low investment returns with illustrative net income distributions of SDR 1.4 billion annually would leave PBs broadly unchanged at SDR 25.3 billion by end-FY2029.
- Policy responses available if net income or PBs fall:
  - Delay or spread out distributions of net income.
  - Under Rule I-6(4), biennial reviews of the margin of charge could allow raising the margin for the basic rate of charge to increase reserve accumulation.
  - The Board could at any time review surcharge policies.

### SCENARIOS, LENDING PROJECTIONS, AND KEY ASSUMPTIONS
- Policy changes assumed to take effect on November 1, 2024.
- Lending projections:
  - Period end-June 2024 to end of FY 2026 based on Fund’s desk survey.
  - For FY2027-29, new arrangements assumed to cover about 60 percent of the repurchases during the period.
- Selected exact figures:
  - Margin income (SDR million) No policy changes: FY25 903; FY26 859; FY27 873; FY28 866; FY29 823; Total 4,324.
  - Margin income (SDR million) Proposed Package: FY25 767; FY26 601; FY27 611; FY28 606; FY29 576; Total 3,161.
  - Commitment fee income (SDR million) No policy changes: FY25 143; FY26 159; FY27 126; FY28 159; FY29 0; Total 587.
  - Commitment fee income (SDR million) Proposed Package: FY25 142; FY26 144; FY27 116; FY28 131; FY29 0; Total 533.
  - Total cumulative income loss over FY2025-29 estimated at about SDR 3.6 billion.
  - Proposed average reduction of about 33 percent in combined margin and surcharge payments in FY2026 relative to a no policy change scenario.
  - Number of surcharge-paying members would decline from 20 to 13 in FY2026 under the proposed package.
  - Projected baseline FI investment return: 3.6 percent (SDR 1,042 million per annum on average); 95 percent confidence adverse floor: 2.9 percent (SDR 858 million per annum on average).

### BOX 3 — Projected Investment Income Under the Baseline and Adverse Scenarios (selected exact figures)
- FI projected return range (FY2025–29): between 3.3 and 4.8 percent.
- FI mean projected return: 3.6 percent → average annual investment income SDR 1,042 million.
- FI adverse (95th percentile) minimum return: 2.9 percent → SDR 858 million.
- FI strategy objective: annual return margin over the SDR interest rate of 50 bps.
- FI interest rate duration: normally in a range of 1.5-2 years.
- EA long-term target real return: 3 percent in US dollars.
- EA payout sustainable upper bound: up to 2 percent of NAV = USD 184 million = SDR 138 million.
- EA baseline payout assumed: 1.5 percent = USD 138 million = SDR 104 million.

### ANNEX I — Overview of Charges and Surcharge Policy Framework (key points)
- Surcharge framework (current):
  - Level-based surcharges of 200 basis points applied on the portion of GRA credit outstanding greater than 187.5 percent of quota.
  - Time-based surcharges of 100 basis points applied on the portion of GRA credit exceeding the level-based threshold for more than 36 months (or 51 months for EFF borrowings).
- Concessional Fund lending under the PRGT and lending under the RST are not subject to surcharges.
- Objective of surcharges:
  - Discourage large and prolonged use of GRA resources.
  - Help accumulate PBs to protect the Fund’s balance sheet.
  - Provide price-based incentives to limit Fund borrowing, diversify financing sources, and encourage timely repayment.
- Margin-setting under Rule I-6(4):
  - Margin equals the SDR interest rate plus a fixed margin set every two years.
  - Margin-setting criteria include covering intermediation expense, generating net income for placement to reserves considering PBs and expected surcharges and commitment fees, and a “market test.”
  - Margin has been unchanged at 100 basis points since May 1, 2012.
- Commitment fee framework (current tiers):
  - 15 basis points for committed amounts up to 115 percent of quota.
  - 30 basis points for committed amounts above 115 percent and up to 575 percent of quota.
  - 60 basis points for committed amounts exceeding 575 percent of quota.

_Executive Summary and selected sections from ppea2024045 - REVIEW OF CHARGES AND THE SURCHARGE POLICY (International Monetary Fund, August 29, 2024)._

### EXECUTIVE SUMMARY

### EXECUTIVE SUMMARY

### Background and purpose
- Paper provides additional analysis and a proposed reform package for charges and the surcharge policy for further consideration by the Executive Board.
- Board held an informal engagement in early July to discuss the margin for the basic rate of charge, fees, and the surcharge policy, and requested further analysis and stress testing.
- Reform assessment guided by four principles: (i) reduction in the cost to borrowers; (ii) impact on the price-based incentive structure; (iii) implications for income generation; and (iv) simplicity of the policy.

### Directors’ informal feedback (July engagement)
- Broad consensus that surcharges remain relevant as a risk management tool and provide price-based incentives for prudent and temporary borrowing from the General Resources Account (GRA).
- Shared view that the sharp increase in the SDR interest rate (SDRi) over the last two years has been a problem for borrowers while the Fund’s financial position improved and the PB target of SDR 25 billion was reached by end-FY2024.
- Preliminary support for:
  - Parametric modifications within the current surcharge framework, led by higher thresholds for level-based surcharges and commitment fees to address erosion.
  - A meaningful reduction in the margin on the basic rate of charge.
  - Establishment of a regular review cycle for the surcharge policy.
- Consideration of lower surcharge rates received support, with views differing on magnitude and scope.
- Requests for additional analysis on market cost comparisons and the incentive effectiveness of time-based surcharges, plus stress testing and a communication strategy.

### Additional analytical findings
- Cost comparison:
  - The cost of borrowing from the Fund has been consistently lower and more stable than market costs.
  - Marginal cost of borrowing from the IMF, including time-based surcharges, has been significantly lower for surcharge-paying members than the cost of market financing.
- Incentive function:
  - Level-based surcharges are less effective in moderating borrowing when members face a high level of financial distress.
  - Time-based surcharges have provided incentives for early repurchases or avoidance of prolonged credit exposure for countries with moderate financing pressure, but not for members facing severe and sustained financial distress.
- Robustness:
  - Stress tests indicate medium-term income and PB projections under the proposed package are robust; the package would keep PBs at or above the medium-term target of SDR 25 billion under various credit and interest scenarios (depending on any distributions).

### Proposed reform package (staff proposals)
- Margin on the basic rate of charge:
  - Set the margin for the basic rate of charge at 70 basis points.
- Level-based surcharge thresholds:
  - Increase the level-based surcharge threshold to 300 percent of quota to address erosion.
- Commitment fees:
  - Align the commitment fee thresholds to the overall annual and cumulative access limits under the GRA (currently 200 and 600 percent of quota).
- Time-based surcharge rate:
  - Reduce the time-based surcharge rate by 25 basis points.
- Timing:
  - Changes could become effective promptly on November 1, 2024 (start of the third financial reporting quarter).
- Review cycle:
  - Move reviews of the surcharge policy to a regular five-year cycle.

### Expected financial and incidence effects
- Aggregate borrower cost reduction:
  - Staff estimates the package would lower annual margin, commitment fee, and surcharge payments by about SDR 796 million (FY2026 basis), a reduction for borrowers of about one-third compared to no change in the policy.
- GRA net income projections:
  - Estimated net income of the GRA generated during FY2025–FY2026 (the period of the margin proposed in this paper) would be SDR 4.1 billion.
  - Assuming this margin and other policies are maintained through FY2029, estimated net income could reach SDR 9.1 billion.
  - This income outlook could allow for possible distributions to the membership and some further accumulation of precautionary balances (PBs).
- Precautionary balances:
  - The package would support a resilient income path and PBs at or above the medium-term target of SDR 25 billion under various scenarios, subject to distributions.

### Policy trade-offs and considerations
- Package aims to lower the cost of borrowing while preserving:
  - The price-based incentive structure that encourages prudent and temporary borrowing.
  - Net income generation capacity to support PB accumulation and potential distributions.
- Parametric adjustments preferred over structural or complex rule changes to preserve policy simplicity.
- Other reform options discussed at the July 8 session (summarized separately) include multiple thresholds, time-varying surcharge rates tied to the basic rate of charge, capping total interest rates, and grace periods for level-based surcharges; these faced concerns about complexity, parametrization, income risks, and operational challenges.

### Implementation issues highlighted
- Need to assess the package holistically against implications for the Fund’s balance sheet and other upcoming policy reviews that may impact lending income and PBs.
- Consider timing relative to the implementation of the 16th General Review of Quotas.
- Importance of an effective communication strategy and operational readiness for prompt implementation.

- Key statistics and parameters preserved exactly as proposed:
  - Margin for the basic rate of charge: 70 basis points
  - Level-based surcharge threshold: 300 percent of quota
  - Commitment fee thresholds aligned to: 200 and 600 percent of quota
  - Time-based surcharge rate reduction: 25 basis points
  - Effective date (proposed): November 1, 2024
  - Estimated borrower payment reduction: SDR 796 million (FY2026 basis)
  - Estimated reduction share for borrowers: about one-third compared to no change
  - Estimated net income FY2025–FY2026: SDR 4.1 billion
  - Estimated net income through FY2029 if maintained: SDR 9.1 billion
  - Precautionary balances medium-term target: SDR 25 billion

_Executive Summary of ppea2024045 - REVIEW OF CHARGES AND THE SURCHARGE POLICY (International Monetary Fund, August 29, 2024)._

### 8.      The spread charged by the Fund (margin and surcharges) is broadly comparable to

### ppea2024045 - 8.      The spread charged by the Fund (margin and surcharges) is broadly comparable to 

### Comparability of Fund spreads with other IFIs and markets
- Fund spreads (margin and surcharges) are broadly comparable to those applied by other international financial institutions (IFIs), though comparisons are subject to limitations.
- Key reasons comparisons are imperfect:
  - Fund lending aims to close BOP financing gaps with shorter-term financing; other IFIs and bilaterals mainly provide longer-term development/project finance.
  - IFI lending instruments differ in currency composition vis-à-vis the SDR denomination of Fund lending, making total-cost comparisons less informative.
  - The Fund does not raise funding from markets and cannot apply a portfolio approach with binding country or regional limits to its lending; its lending is more concentrated and driven by members’ BOP financing needs—affecting relative pricing.

### Incentive function of surcharges — empirical findings
- Level-based surcharges:
  - Evidence shows many countries’ peak credit outstanding clustered near the level-based surcharge threshold, indicating the threshold has played a role in keeping credit outstanding close to it.
  - Some countries had peak credit outstanding far above the threshold, indicating price incentives were less effective or ineffective for them.
  - Countries with peak borrowing closer to the threshold were generally less financially distressed.
  - Conclusion: Level-based surcharges appear to moderate borrowing for countries facing moderate financial stress but are less effective or ineffective for members facing severe financial distress.
- Time-based surcharges:
  - Earlier evidence: time-based surcharges provided incentives for early repurchases for borrowers with access to favorable alternative financing; effectiveness was unclear in recent cases and where financing pressures are protracted.
  - New evidence: for countries facing moderate financing pressures, time-based surcharges provided incentives for early repurchases and for reducing credit outstanding over time, even when early repurchases were not made.
  - For countries with protracted and severe financial stress (including current top surcharge payers and recurring Fund borrowers), time-based surcharges have not provided incentives for early repurchases or for reducing credit outstanding.
- Methodological note: conclusively assessing surcharge effectiveness is challenging because counterfactuals cannot be observed and decisions may reflect non-price considerations (reputational, confidence effects).

### Proposed reform package — contours and trade-offs
- Staff proposes consideration of a package including:
  - Lowering the margin on the rate of charge.
  - Increasing thresholds for level-based surcharges and commitment fees to broadly compensate for erosion.
  - Moderately reducing surcharge rates.
- Assessment dimensions: incidence across borrowers, impact on incentives, impact on the Fund’s income, and policy simplicity.

### Margin on the rate of charge — proposal and rationale
- Rule I-6(4) guidance: margin should (i) cover the Fund’s estimated intermediation costs and (ii) generate net income for placement to reserves, taking into account current PBs and expected contribution from surcharges and commitment fees; margin should also satisfy a “market test.”
- Staff proposal: set the margin at 70 basis points (middle of illustrated 40–100 basis points range) for the remainder of FY2025 and FY2026.
- Projected financial effects at current surcharge policies:
  - Estimated intermediation costs covered: about SDR 126 million in FY2024.
  - Net income generation: about SDR 2.6 billion in FY2025 and SDR 2.2 billion in FY2026.
  - Relative to the current margin, the proposal would lower annual income by SDR 258 million (FY2026 basis), reducing payments by GRA borrowers in proportion to their credit outstanding.
- Rationale for 70 basis points versus alternatives:
  - Margin near 40 basis points: would make Fund credit very low relative to market costs. Over the past 20 years, probability of the lowest quartile EMBIG spreads falling below 50 basis points has been less than 1 percent.
  - Margin near 100 basis points: would appear high relative to recent market developments and projected Fund income given PBs at or above target. Over the last 20 years, probability of the lowest quartile EMBIG spreads falling below 100 basis points has been about 17 percent (but not since late 2007).
  - Historical comparators:
    - Overall five-year median EMBIG spreads for all borrowers is 366 bps.
    - Overall five-year average EMBIG spreads for all borrowers is 400 bps.
  - Recent relative position: over the past five years, the average difference between the Fund’s margin and the median EMBIG spread of the bottom quartile has been about 30 basis points; a 70 basis point margin would reflect that historical 30 basis point difference and be broadly consistent with recent experience.

### Level-based surcharge threshold — proposal and incidence
- Erosion since 2016:
  - Median erosion across metrics was around 33 percent of quota for both the world and EMDEs, suggesting an increase in the threshold by about 50 percent to 280–285 percent of quota.
  - Restoring erosion since the 2009 review would require an increase by about 75 percent to 325–330 percent of quota.
- Staff pragmatic proposal: raise the threshold to 300 percent of quota.
  - Justification: broadly offsets erosion, enhances simplicity, translates into 200 percent of “new” quota to maintain nominal SDR value once the 16th GRQ increase is effective.
  - Projected effect: the proposed higher threshold alone would reduce surcharge income by SDR 430 million in FY2026; seven surcharge payers would no longer be subject to surcharges.
  - Distributional note: reduction would benefit smaller surcharge payers relatively more; the top three surcharge payers’ share in total surcharge reduction would be about 46 percent (compared to their share in credit outstanding subject to surcharges of about 74 percent).
  - Trade-off: threshold increases reduce surcharge burdens of small borrowers relatively more, while rate reductions favor large borrowers more.

### Commitment fee thresholds — proposal and fiscal impact
- Fully offsetting median erosion since 2016 would require raising commitment fee thresholds by about 50 percent (e.g., lower threshold to 172.5 percent of quota from 115 percent; higher threshold to 862.5 percent from 575 percent), but that would increase framework complexity.
- Staff proposal: align commitment fee thresholds with GRA access limits at 200 and 600 percent of quota, respectively.
  - Aligns trigger for producing assessment of impact on the Fund’s finances and liquidity with exceptional access policy requirements.
  - Estimated fiscal effect: limited to users of precautionary facilities, estimated to amount to SDR 16 million in FY2026.
- Commitment fee thresholds (current → proposed):
  - 15 basis points up to 115 → up to 200 (percent of quota)
  - 30 basis points between 115 and 575 → between 200 and 600
  - 60 basis points above 575 → above 600

### Surcharge rate reductions — considerations and effects
- Directors supported considering lower surcharge rates, with relatively more support for lowering the time-based surcharge rate.
- Potential effects of rate reductions relative to the four guiding principles:
  - Lowering borrowing cost of members: reduces borrowing costs of surcharge payers, benefiting large borrowers relatively more.
  - Sustaining effective price-based incentives: rate reductions would weaken price-based incentives in principle; the impact can be mitigated by limiting the size of reductions.
  - Preserving income generation capacity: loss of lending income can be limited by the size of the rate reduction.
  - Maintaining policy simplicity: surcharge rate reductions would generally preserve the simplicity of the current surcharge policy framework.
- Interaction with other package elements:
  - Threshold increases and rate reductions have different incidence: threshold increases favor smaller exposures; rate reductions favor large borrowers. Combined calibration can balance incidence.

*Source: IMF staff paper (Review of Charges and the Surcharge Policy).*

### 18.      Conceptually, level- and time-based surcharge rate reductions differ in terms of

### 18.      Conceptually, level- and time-based surcharge rate reductions differ in terms of

### Comparison of level-based and time-based surcharge rate reductions
- Level-based surcharge rate reductions:
  - Lower the burden on borrowers at the inception of a program, when financing needs are highest.
  - Partially address procyclicality concerns by helping the country at the time of maximum financing need and least margins for maneuver.
- Time-based surcharge rate reductions:
  - Defer the reduction in borrowing costs, giving borrowers extra time to make policy changes needed for external adjustment.
  - Particularly relevant for members experiencing persistent BOP pressures originating from structural problems or suffering from repeated exogenous shocks.
- Near-term incidence:
  - Despite conceptual differences, in the near term there would be very little difference between lowering the time-based or the level-based surcharge rates because of the current structure of credit outstanding and other reform elements.
  - With the proposed increase in the surcharge threshold, almost all credit outstanding would be subject to both level- and time-based surcharges; impacts on incentives, GRA income, and incidence on borrowing members would be broadly the same.

### Staff proposal on surcharge rates
- Proposal:
  - Reduce the time-based surcharge rate by 25 basis points to 75 basis points.
  - Rationale includes shock-prone environment and Directors’ relative preference expressed in the informal meeting.
- Illustrative impacts:
  - Reduction of time-based surcharge rate by itself would lower the surcharge burden more for large borrowers, balancing the package as threshold increases reduce burden more for small borrowers.
  - Proposed reduction would lower annual lending income by about SDR 120 million (FY2026 basis) compared to current policies.
  - If implemented together with an increase in the level-based threshold to 300 percent of quota, the reduction would lower total lending income by about SDR 520 million.
  - Alternative option: reducing the level-based surcharge rate by 25 basis points would have broadly similar income implications.
  - An additional 25 basis point reduction in the time- or level-based surcharge rate (together with a threshold increase to 300 percent of quota) would reduce net income by an additional SDR 90 million.

### Overall implications of the proposed reform package
- Components analyzed together:
  - (i) reduction in the margin for the basic rate of charge to 70 basis points;
  - (ii) increase in the level-based surcharge threshold to 300 percent of quota;
  - (iii) alignment of commitment fee thresholds with the GRA access limits;
  - (iv) reduction of the time-based surcharge rate to 75 basis points.
- Lending income impact (FY2025–29) — Table 2 highlights:
  - A. No policy changes: Total lending income (SDR million): FY25 2,627; FY26 2,600; FY27 2,625; FY28 2,641; FY29 2,347; Total during FY25-29 12,840.
  - B. Proposed Package: Total lending income (SDR million): FY25 2,236; FY26 1,805; FY27 1,814; FY28 1,811; FY29 1,551; Total during FY25-29 9,217.
  - Lending income loss compared with A. (SDR million): FY25 391; FY26 796; FY27 810; FY28 829; FY29 796; Total during FY25-29 3,623.
  - Surcharge income (SDR million) under No policy changes: FY25 1,502; FY26 1,537; FY27 1,582; FY28 1,585; FY29 1,495; Total 7,701.
  - Surcharge income (SDR million) under Proposed Package: FY25 1,248; FY26 1,015; FY27 1,043; FY28 1,043; FY29 946; Total 5,295.
  - Number of surcharge payers: No policy changes FY26 20; Proposed Package FY26 13.
  - Share of lending income loss attributable to top three surcharge payers (percent): FY26 53.8.
- FY2026 country-level incidence (Table 3 highlights):
  - Proposed package would reduce margin and surcharge payments by a total of SDR 780.6 million (table total shows 780.6 and 780.6/780.6?). Table lists total 780.6 and total 780.6 vs 780.6; combined figures show total 780.6 and surcharge payments under proposed reform package 1,014.6.
  - Aggregate reduction in margin and surcharge payments in percentage of those payments under no policy change: 32.6 percent (table total).
  - Example country impacts (selection):
    - Argentina: Surcharges and margin payment reduction (SDR million) 259.2; Share in total reduction (percent) 33.2; Reduction of margin and surcharge payments in percentage of those payments under no policy change (percent) 23.6; Surcharge payments under proposed reform package (SDR million) 614.7.
    - Ukraine: Surcharges and margin payment reduction (SDR million) 113.5; Share in total reduction (percent) 14.5; Reduction percent 34.6; Surcharge payments under proposed reform package (SDR million) 137.5.
    - Pakistan: Surcharges and margin payment reduction (SDR million) 92.8; Share in total reduction (percent) 11.9; Reduction percent 53.7; Surcharge payments under proposed reform package (SDR million) 29.8.
    - Egypt: Surcharges and margin payment reduction (SDR million) 100.1; Share in total reduction (percent) 12.8; Reduction percent 44.6; Surcharge payments under proposed reform package (SDR million) 64.9.
  - Members not paying surcharges under proposed package (while they would under no policy change): Benin; Côte d'Ivoire; El Salvador; Gabon; Georgia; Moldova; and Senegal.

### Policy assessment against review principles
- Sustaining effective price-based incentives:
  - Moderate margin and surcharge rate reductions broadly preserve the current price-based incentive structure.
  - Threshold increases broadly align GRA lending pricing with increases in global erosion metrics and demand for GRA resources.
- Lowering the cost of borrowing:
  - The package meaningfully reduces charges and surcharge payments for GRA borrowers, creating additional policy space and improving capacity to repay the Fund.
- Preserving adequate income-generation capacity:
  - The package retains substantial capacity to generate net income, including for possible placement in reserves.
- Maintaining policy simplicity:
  - The package would preserve and, in some parts, enhance framework simplicity.

### Holistic balance sheet considerations and income robustness
- Baseline income outlook under no-policy change:
  - Fund would generate net income of about SDR 2.5-2.8 billion per year over the next five years.
  - PBs would reach SDR 38.5 billion by FY2029 in case of full retention.
- Under the proposed reform package:
  - The GRA would maintain a net income capacity of about SDR 1.7 billion annually after policy changes.
  - Projected net income could accommodate distributions of SDR 1.4 billion per year (cumulatively SDR 7 billion from FY2025 to FY2029) while leaving room for further reserve accumulation.
  - Annual net income after implementing the reform package would reach SDR 1.7 billion before income distribution; the standard deviation of annual net income over the past 10 years was about SDR 660 million.
- PB accumulation implications:
  - Even with cumulative distributions of SDR 7 billion during FY2025–29, about SDR 2 billion could be retained to increase PBs.
  - A moderate accumulation beyond the SDR 25 billion target would provide an additional prudential buffer.
- Robustness to adverse scenarios (summary):
  - Low-lending scenario with illustrative net income distributions of SDR 1.4 billion per year: residual PB accumulation over the 5-year period would fall to about SDR 1 billion.
  - Adverse investment return scenario: annual FI investment return could at most fall to a minimum of 2.9 percent, or SDR 858 million per annum on average (compared with baseline 3.6 percent or SDR 1,042 million per annum).
  - Joint shock of low lending and low investment returns with illustrative net income distributions of SDR 1.4 billion annually would leave PBs broadly unchanged at SDR 25.3 billion by end-FY2029.
- Policy responses available if net income or PBs fall:
  - Delay or spread out distributions of net income.
  - Under Rule I-6(4), biennial reviews of the margin of charge could allow raising the margin for the basic rate of charge to increase reserve accumulation.
  - The Board could at any time review surcharge policies.

### Scenarios and key numerical assumptions
- Policy changes assumed to take effect on November 1, 2024.
- Lending projections:
  - Period end-June 2024 to end of FY 2026 based on Fund’s desk survey.
  - For FY2027-29, new arrangements assumed to cover about 60 percent of the repurchases during the period.
- Table highlights and selected exact figures:
  - Margin income (SDR million) No policy changes: FY25 903; FY26 859; FY27 873; FY28 866; FY29 823; Total 4,324.
  - Margin income (SDR million) Proposed Package: FY25 767; FY26 601; FY27 611; FY28 606; FY29 576; Total 3,161.
  - Commitment fee income (SDR million) No policy changes: FY25 143; FY26 159; FY27 126; FY28 159; FY29 0; Total 587.
  - Commitment fee income (SDR million) Proposed Package: FY25 142; FY26 144; FY27 116; FY28 131; FY29 0; Total 533.
  - Total cumulative income loss over FY2025-29 estimated at about SDR 3.6 billion.
  - Proposed average reduction of about 33 percent in combined margin and surcharge payments in FY2026 relative to a no policy change scenario.
  - Number of surcharge-paying members would decline from 20 to 13 in FY2026 under the proposed package.
  - Projected baseline FI investment return: 3.6 percent (SDR 1,042 million per annum on average); 95 percent confidence adverse floor: 2.9 percent (SDR 858 million per annum on average).

*REVIEW OF CHARGES AND THE SURCHARGE POLICY INTERNATIONAL MONETARY FUND*

### Box 3. Projected Investment Income Under the Baseline and Adverse Scenarios

### Box 3. Projected Investment Income Under the Baseline and Adverse Scenarios

### Investment Account structure and objectives
- The Investment Account (IA) consists of the Fixed-Income Subaccount (FI) and the Endowment Subaccount (EA).
- FI characteristics and objective:
  - Invests in high grade fixed-income assets.
  - Maintains a relatively short interest rate duration (normally in a range of 1.5-2 years).
  - Investment strategy objective: generate an annual return margin over the SDR interest rate of 50 bps on average over the medium term.
  - Portfolio’s average overall investment return over the next 3-4 years is projected to be very close to the current level of short-term bond yields; beyond that horizon, returns depend more on the future path of the SDR interest rate.
- EA characteristics and objective:
  - Multi-asset portfolio invested across global fixed-income and equity markets.
  - Objective to achieve a long-term real rate of return of 3 percent in US dollars.
  - EA’s long-term strategy can result in significant volatility of annual investment returns; these do not directly impact GRA income.
  - Board-established payout policy: constant real payout rule with safeguards, including a mechanism to suspend payouts to the GRA to help protect the real value of the EA.

### Projected FI returns and investment income (FY2025–29)
- Staff projections for the FI over the next 5 years (FY 2025–29):
  - Projected return range: between 3.3 and 4.8 percent on average.
  - Mean projected return: 3.6 percent.
  - This mean projected return would translate to an average annual investment income of SDR 1,042 million.
- Adverse investment return scenario (95th percentile of projected returns):
  - Expected minimum annual return: 2.9 percent.
  - Corresponding investment income: SDR 858 million.
- Additional numerical points presented in the projected total FI portfolio return figure:
  - Values shown include: 4.2%, 4.8%, 3.9%, 3.6%, 3.1%, 2.9%, 3.6%, 3.3% (Mean and Interquartile range; 95th percentile).

### EA payout timing, size, and baseline assumption
- Annual payouts from the EA to the GRA have not yet been initiated but are imminent.
- Staff expects to propose commencing the initial payout in the context of the Review of the Fund’s Income Position for FY2025 - barring any major negative developments in markets in the near term.
- Analytical findings on sustainable payout levels:
  - Payouts of up to 2 percent of the EA’s NAV could be made while preserving the real value of the EA’s corpus over a medium to long-term horizon with a relatively high level of confidence.
  - 2 percent of EA’s NAV is equivalent to USD 184 million, or SDR 138 million.
- Baseline payout assumption:
  - A payout of 1.5 percent is assumed.
  - 1.5 percent is equivalent to USD 138 million or SDR 104 million.
- Suspension mechanism:
  - If the suspension mechanism is activated, no income would be transferred from the EA to the GRA.

### Key numeric summaries
- FI projected return range (FY2025–29): between 3.3 and 4.8 percent.
- FI mean projected return: 3.6 percent → average annual investment income SDR 1,042 million.
- FI adverse (95th percentile) minimum return: 2.9 percent → SDR 858 million.
- FI strategy objective: annual return margin over the SDR interest rate of 50 bps.
- FI interest rate duration: normally in a range of 1.5-2 years.
- EA long-term target real return: 3 percent in US dollars.
- EA payout sustainable upper bound: up to 2 percent of NAV = USD 184 million = SDR 138 million.
- EA baseline payout assumed: 1.5 percent = USD 138 million = SDR 104 million.

*Source: Box 3. Projected Investment Income Under the Baseline and Adverse Scenarios, ppea2024045*

### Annex I. Overview of Charges and Surcharge Policy Framework

### Annex I. Overview of Charges and Surcharge Policy Framework

### Surcharge Policy Framework and Objectives
- Two types of surcharges:
  - Level-based surcharges of 200 basis points applied on the portion of GRA credit outstanding greater than 187.5 percent of quota.
  - Time-based surcharges of 100 basis points applied on the portion of GRA credit exceeding the level-based threshold for more than 36 months (or 51 months in the case of borrowings under the Extended Arrangements under the Extended Fund Facility (EFF)).
- Concessional Fund lending to low-income countries under the Poverty Reduction and Growth Trusts (PRGT) and lending under the Resilience and Sustainability Trust (RST) are not subject to surcharges.
- Policy objectives:
  - Discourage large and prolonged use of GRA resources.
  - Help accumulate PBs to protect the Fund’s balance sheet by absorbing possible credit and other financial losses and preserving the value of reserve assets.
  - Provide price-based incentives for members to limit the size of Fund borrowing, diversify financing sources, and encourage timely repayment once imbalances are resolved and market access is regained.
  - Underlying presumption: members using Fund financing for large BOP problems should be able to gradually find alternative, cheaper financing sources.
- Historical notes:
  - Current framework of level- and time-based surcharges introduced in 2009.
  - 2016 Review adjusted the level threshold and extended the trigger for time-based surcharges in anticipation of the 14th General Review of Quotas (which doubled quotas).
  - Threshold for level-based surcharges adjusted from 300 percent of (13th General Review) quota to 187.5 percent of (14th General Review) quota, increasing the nominal SDR value of the threshold by 25 percent.
  - Trigger for time-based surcharges for credit under the EFF increased from 36 months to 51 months to better reflect expected adjustment paths.

### Framework for Setting the Margin for the Basic Rate of Charge
- The basic rate of charge equals the SDR interest rate plus a fixed margin set by the Executive Board every two years in accordance with Rule I-6(4).
- Margin-setting criteria under Rule I-6(4):
  - Set at a level adequate to cover estimated intermediation expense of the Fund considering income from service charges.
  - Generate an amount of net income for placement to reserves; the appropriate reserve contribution assessed considering current precautionary balances, any floor or target for precautionary balances, and expected contribution from surcharges and commitment fees.
  - Cross-check (“market test”) to ensure the margin does not make Fund credit cost too high or too low relative to long-term credit market conditions.
  - Exceptional circumstances clause allows setting margin based on other considerations if income from other sources is insufficient to cover non-lending administrative expenses.
- Application requires Executive Board judgment on desirable net income and reserve accumulation levels and application of the market test.
- The margin has been unchanged at 100 basis points since the current rule for setting the margin was first applied on May 1, 2012.

### Commitment Fee Framework and Objectives
- Commitment fees compensate the Fund for the cost of establishing and monitoring arrangements and for setting aside resources to be used if a purchase were made.
- They also discourage unnecessarily high precautionary access and help contain risks to the Fund’s liquidity.
- Fee structure (upward sloping):
  - 15 basis points for committed amounts up to 115 percent of quota.
  - 30 basis points for committed amounts above 115 percent and up to 575 percent of quota.
  - 60 basis points for committed amounts exceeding 575 percent of quota.
- The tiered structure established in 2009; thresholds were adjusted in 2016 from 200 percent and 1,000 percent of quota to 115 and 575 percent of quota, respectively.

*Source: ppea2024045 - Annex I. Overview of Charges and Surcharge Policy Framework*

### 3.       However, four out of the six countries whose peak credit outstanding exceeded the

### 3.       However, four out of the six countries whose peak credit outstanding exceeded the 

### Effectiveness of level‑based incentive for highly distressed countries
- Four out of the six countries whose peak credit outstanding exceeded the level-based threshold by more than 200 percent faced high levels of financial distress, indicating the incentive appears to have been less effective for highly distressed countries.
- The two countries with moderate distress in this bucket are Portugal and Ireland, whose financial pressures moderated a few months before credit outstanding peaked, but they experienced severe distress earlier when credit outstanding rose above the surcharge threshold.

### Time‑based surcharges: country grouping and overall findings
- Staff used the same three country groups identified in the initial engagement Board paper to assess the efficacy of time-based surcharge price-incentives:
  - Group 1: Countries that borrowed significantly above the surcharge threshold but made early repayments around the time when time-based surcharges kicked in to bring credit outstanding closer to or below the threshold.
  - Group 2: Relatively small surcharge payers that did not make early repurchases even though the spread between the market rate and the basic rate of charge had fallen below the marginal rate of surcharges.
  - Group 3: Current top surcharge payers or repeated borrowers who were subject to time-based surcharges for the second time; their sovereign spreads remained generally far above the surcharge rates.
- New evidence in this paper:
  - For countries facing moderate financing pressures (group 1), time-based surcharges provided incentives for making early repurchases to reduce or avoid surcharge payments.
  - Time-based surcharges provided price incentives for countries to reduce credit outstanding over time even when they did not lead to early repurchases (group 2).
  - For countries that have faced protracted and severe financial stress (group 3), including the current top surcharge payers and repeated Fund borrowers, time-based surcharges have not provided incentives for early repurchases or for reducing credit outstanding.

### Group 1 — Moderate financing pressures and early repurchases
- Complementary evidence confirms incentives were effective for group 1.
- Observations:
  - Annex III. Figure 2 plots months after credit outstanding exceeded the level-based threshold (x-axis) versus the ratio of credit outstanding to the level-based surcharge threshold (y-axis).
  - The orange vertical line marks when the time-based surcharge kicked in; grey vertical lines indicate instances of early repayments.
  - Some countries started making early repurchases before time-based surcharges were triggered to either lower (Antigua and Barbuda, Portugal, and St. Kitts and Nevis) or completely avoid surcharge payments (Ireland).
  - Greece took longer to make early repayments after time-based surcharges kicked in.
  - All countries were under moderate financing pressures when they made early repurchases.

### Timing evidence on early repurchases
- Most borrowers that made early repurchases did so before or around the time when time-based surcharges kicked in, suggesting motivation to avoid surcharge payment.
- Specific timing statistics:
  - 12 out of 19 countries made early repurchases within 12 months before or after the time-based surcharge kicked in.
  - Of these 12 countries:
    - 1 country made early repurchases exactly when it reached the time-based surcharge trigger (x-axis equal to zero).
    - 7 countries made early repurchases between six and one month before they reached the time-based surcharge trigger.
    - 2 countries made early repurchases within 6 months after they were subject to time-based surcharges.

### Group 2 — No early repurchases but declining credit trends
- Even without early repurchases, a generally declining trend of Fund credit suggests time-based surcharges may have helped prevent higher and longer exposures.
- Observations:
  - Annex III. Figure 4 shows credit dynamics: for these countries, credit outstanding was either already on a downward trend when time-based surcharges kicked in or started to decrease close to that time.
  - Most of these countries exhibited moderate financing distress when (or shortly after) the time-based surcharge kicked in, with Albania being the exception.
  - Although financing conditions and spreads improved and fell below the level of the IMF marginal rate for countries like Mongolia, Jordan, and Albania around the time when time-based surcharges kicked in, these countries did not make early repurchases.
  - The difference between market spreads and the Fund’s marginal rate for these countries was much smaller compared to those who made early repurchases.
  - Given sustained downward trends and proximity to the surcharge threshold, small differences between market rates and the Fund’s marginal rates may not have provided sufficient incentives for early repurchases; still, time-based surcharges could have helped keep credit on a downward path by aligning Fund borrowing cost closer to market levels.

### Group 3 — Protracted severe stress and ineffectiveness of time‑based surcharges
- For top surcharge payers or repeat-borrowers subject to time-based surcharges for a second time (group 3), time-based surcharges were ineffective.
- Observations:
  - Sovereign spreads for these borrowers remained far above the surcharge rates, rendering time-based surcharges ineffective.
  - For Argentina, Ecuador, Egypt, and Ukraine:
    - Market cost was significantly higher than the Fund borrowing cost when time-based surcharge threshold kicked in and remained higher thereafter.
    - Credit outstanding was and remained significantly above the threshold.
    - These countries experienced severe financing stress when time-based surcharges were triggered and continued to experience distress subsequently.
    - Only for countries in this group did credit outstanding remain at elevated levels or even increase after time-based surcharges kicked in, suggesting the price-based incentive from time-based surcharges was not effective.

*Source: ppea2024045 - 3.       However, four out of the six countries whose peak credit outstanding exceeded the*

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_Source: https://www.imf.org/-/media/files/publications/pp/2024/english/ppea2024045.pdf_