## PRGT Facilities Framework: SPS—Calculation of Flow and Stock Triggers

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### Architecture and purpose of the SPS
- Effective date: January 1, 2025.
- Purpose: Strengthen scrutiny of debt sustainability and capacity to repay the Fund (CtR) to help manage and mitigate credit risk to the Fund.
- The SPS framework combines and supersedes the previous High Access Procedures (HAP) and Enhanced Safeguards for Debt Sustainability and Capacity to Repay the Fund (ES).
- Applicability:
  - Applies when proposed access under a new PRGT financing request (a new PRGT arrangement, a new RCF loan, or an augmentation of access under an existing arrangement) would exceed certain thresholds, and for countries at high risk of, or in overall debt distress.
  - Does not apply at program reviews that do not request an augmentation, nor to non-disbursing instruments.
- Note: All triggers and thresholds expressed as a percentage of quota will be automatically adjusted down when the general effectiveness conditions for the 16th General Review of Quotas (GRQ) increase have been met.

### SPS categories and triggering conditions
- Three SPS categories: SPS1, SPS2, SPS3.
- SPS1 triggers:
  - Flow: the proposed access under a new PRGT financing request would exceed 125 percent of the access norm for that arrangement (“flow” trigger); or
  - Stock: the proposed access under the financing request would cause the cumulative PRGT access (i.e., credit outstanding to the PRGT) to exceed 300 percent of quota at any point over the lifetime of the existing or proposed arrangement (“stock” trigger).
- SPS2 triggers:
  - Flow: the proposed access under a new PRGT financing request would exceed 150 percent of the access norm for that arrangement (“flow” trigger); or
  - Stock: the proposed access under the financing request would cause the cumulative PRGT access (i.e., credit outstanding to the PRGT) to exceed 300 percent of quota at any point over the lifetime of the existing or proposed arrangement (“stock” trigger).
- SPS3 trigger:
  - A new PRGT financing request is requested by a member that is assessed to be at high risk of, or in, overall debt distress.

### Triggers and core requirements (summary)
- SPS1 requirements:
  - Granular discussion of the composition and evolution of debt.
  - Enhanced CtR analysis informed by cross-country comparisons of metrics of Fund exposure.
- SPS2 requirements:
  - SPS1 requirements plus early engagement with the Board through an informal Board meeting once Management agrees that the new financing request, or proposed augmentation, or rephasing could be appropriate. A memo should be prepared for the informal Board meeting.
- SPS3 requirements:
  - SPS1 requirements plus an explicit program objective to reduce debt vulnerabilities.
- De-minimis threshold:
  - 25 percent of quota per financing request exempts a member at low or moderate risk of overall debt distress from SPS; SPS3 applies regardless of access level for members at high risk of, or in, overall debt distress.
- RCF specifics:
  - RCF exogenous shock window and the large natural disasters window are not subject to access norms and cannot trigger SPS via flow trigger.
  - RCF regular window is subject to a per disbursement access cap set at 25 percent of quota (17.5 percent of quota after the general conditions for effectiveness of the 16th GRQ increase have been met), which is the current de-minimis threshold exempting SPS. After the 16th GRQ increase becomes effective, the adjusted de-minimis threshold would be 15 percent of quota.

### Calculation of flow triggers (two-step)
- Key distinction: SPS flow trigger is based on the size of the arrangement (per arrangement), not total PRGT flows over a defined period; it is based on a multiple of the applicable access norm, not a fixed percentage of quota.
- Step 1 — applicable access norm:
  - As of January 1, 2025, the access norm is set at 145 percent of quota for a 3-year ECF and an 18-month SCF.
  - This should be prorated for shorter or longer arrangements, following the formula set out in the source.
  - Maximum applicable access norm for an SCF is 193 percent of quota (equating to the pro-rated norm of a 24-month SCF)—this maximum norm applies to all SCF with a duration between 24 and 36 months.
  - Note: the ECF and SCF access norm will be reduced to 100 percent of quota when the general effectiveness conditions for the 16th GRQ increase have been met.
- Step 2 — compare proposed access to the applicable norm and SPS thresholds:
  - Example numeric reproductions from source:
    - ECF1453642 = a / b x c = 169 = d * 1.25 = 211 = d * 1.5 = 254
    - SCF1451812 = a / b x c = 97 = d * 1.25 = 121 = d * 1.5 = 145
  - Example: a 42-month ECF request or an augmentation within a 42-month ECF bringing access under an arrangement above 211 percent of quota would trigger SPS1. SPS2 would be triggered for a 12-month SCF with access/augmentation above 145 percent of quota.

### Calculation and application of the stock trigger
- Definition: Credit outstanding is calculated for each proposed availability date using the sum of all disbursed and committed PRGT financing (including disbursements made available but not drawn in the context of the current arrangement) as well as the proposed PRGT disbursements (up to the availability date), on a net basis (subtracting scheduled repayments).
- Trigger condition:
  - If, for any proposed availability date, credit outstanding exceeds 300 percent of quota (200 percent of quota when the general effectiveness conditions for the 16th GRQ increase have been met), SPS1 and SPS2 will be triggered.
- Operational note:
  - Staff can assess whether the stock trigger is met by using the SPR Access Tool.
  - Currently the stock trigger would not apply to a request under the RCF regular window because of the 25 percent of quota per disbursement cap (17.5 percent after the 16th GRQ increase); once the 16th GRQ increase becomes effective, new RCF regular window requests could trigger SPS if requested access is above the adjusted 15 percent de-minimis threshold.

### Four SPS requirements (mapped to categories)
- Requirement 1 (SPS1, SPS2, SPS3): Granular discussion of the composition and evolution of debt in country documents.
- Requirement 2 (SPS1, SPS2, SPS3): Enhanced CtR analysis informed by cross-country comparisons of metrics of Fund exposure.
- Requirement 3 (SPS3): Discussion of an explicit program objective to reduce debt vulnerabilities.
- Requirement 4 (SPS2): Early engagement with the Board through an informal Board meeting once Management concurs that the new financing request, augmentation, or rephasing could be appropriate; prepare a memo for the informal meeting.

### Multi-layered framework and interaction with other safeguards
- SPS complement PRGT-EA, GRA EA, and PS-HCC and form part of a multi-layered credit-risk management framework.
- Country documents must assess qualification under PRGT-EA and PS-HCC at each program review.
- When financing requests trigger both SPS and PRGT-EA/PS-HCC, SPS1 requirements apply at time of financing request alongside PRGT-EA/PS-HCC requirements.
- SPS2 concurrent with PRGT-EA/GRA EA or PS-HCC: one informal Board meeting and a single concise note meeting substantive informational requirements.

### Key PRGT thresholds and illustrative limits
- PRGT normal access limits:
  - Annual PRGT access: 200 percent of quota annually (135 percent of quota after the 16th GRQ increase general conditions have been met).
  - Cumulative PRGT credit outstanding: 600 percent of quota (405 percent of quota after the 16th GRQ increase general conditions have been met).
- PS-HCC trigger:
  - Annual PRGT+GRA access above the GRA annual access limit of 200 percent of quota (135 percent after 16th GRQ increase conditions met).
  - Cumulative PRGT+GRA credit outstanding above the GRA cumulative access limit 600 percent of quota (405 percent after 16th GRQ increase conditions met).

### Composition, collateralized, and de facto senior debt—documentation and analytical requirements
- Country documents that trigger SPS1/SPS2/SPS3 must discuss:
  - Structure of public external debt and projected evolution, emphasizing debt owed to the IMF, to the World Bank and other multilaterals, and collateralized debt.
  - Support discussion with a table detailing breakdown and ratios of debt composition based on existing and projected additions to stock and debt service.
- Collateralized debt:
  - Staff should describe collateralization features that may complicate restructuring (asset-backed, SPV arrangements, commodity-backed debt, escrow accounts).
  - Report data inadequacies and note data gaps (including those due to non-disclosure agreements); consider debt conditionality to address gaps and limit new collateralized debt issuance.
- De facto senior/difficult-to-restructure debt metrics to be analyzed for CtR:
  - a) Fund credit outstanding as a ratio of total PPG external debt.
  - b) Fund plus World Bank and ADB/AfDB/IADB credit as a ratio of total PPG external debt.
  - c) All IFI credit plus collateralized debt as a share of total PPG external debt.
- Empirical reference (end-2023 ODI data for LICs sample of 68 PRGT-eligible countries at end-2023):
  - Average ratio of multilateral debt (including the IMF) to total PPG external debt in LICs: 57 percent.
  - Median: 54 percent.
  - 25th percentile: 44 percent.
  - 75th percentile: 74 percent.

### Enhanced CtR documentation and comparative analysis
- Country documents must include discussion of evolution of projected IMF debt and debt service compared with other PRGT-supported programs.
- Finance Department (FIN), with area departments, will prepare standardized charts of IMF debt and debt service relative to key economic metrics over the repayment period.
- Where financing requests would result in comparatively elevated CtR indicators, country documents should:
  - Examine severity of implied risks.
  - For UCT-quality programs, explain how program design (access, phasing, conditionality) seeks to mitigate these risks.

### CtR Dashboard: requirement, scope, and indicators
- Financing requests subject to SPS must include a CtR dashboard in country documents in addition to the standard CtR assessment and table.
- Dashboard features:
  - Eight metrics: six time-series charts (projected Fund credit outstanding relative to GDP, GIR, and PPG external debt; and projected annual debt service to the Fund relative to fiscal revenues excluding grants, exports of goods and services, and PPG external debt service) with projections starting from the year of the financing request and the following 10 years; plus two cross-section charts highlighting the highest peak credit indicators relative to PRGT countries with the highest Fund credit exposures.
- Comparator group: baseline comparator group is UCT-quality programs and emergency financing facilities (including blends) approved for PRGT-eligible countries over the most recent decade. Emergency financing facilities are included only from countries that also had a UCT quality program during the sample period.
- Interpretation benchmarks:
  - CtR risks generally acceptable if projections for all CtR indicators lie below the 75th percentile of the respective metric; levels above the 75th percentile require deeper analysis.
  - Staff combine benchmark comparisons with judgment informed by macroframework, DSA, risk matrix, and other analysis.

### Deeper CtR analysis: triggers, content, and mitigants
- Trigger for deeper analysis: elevated metrics combined with staff judgment indicating high risks to CtR.
- Deeper analysis should:
  - Draw from the CtR dashboard and standard CtR table.
  - Elaborate drivers of elevated CtR ratios relative to the control group; the size and duration above the 75th percentile; and economic significance.
  - Consider authorities’ willingness and ability to implement reforms.
- Risk-mitigating factors to discuss include:
  - Access: appropriateness of proposed access and whether it keeps Fund exposure manageable.
  - Phasing: whether phasing and strength of reforms are commensurate with disbursement phasing.
  - Conditionality and program policies: prospects of achieving program targets and reducing CtR ratios.
  - Country-specific factors: contingent liabilities; prospects for natural resource revenues; burden-sharing with other official creditors; prior calls on foreign exchange (earmarked revenue, escrow accounts, collateral).
  - Metrics could be adjusted to reflect unencumbered values when appropriate.

### Bottom-line CtR assessment and implications for financing
- The CtR paragraph must include a bottom-line assessment of capacity to repay in the topic sentence and must inform facility choice, program design, and level of access.
- A financing request may move forward only if CtR is assessed to be at least “adequate.”
- Where CtR risks are elevated but manageable, the bottom-line assessment should be conditional on the balance of risks (e.g., “CtR is adequate but subject to significant downside risks”).
- Where CtR is weak, the request should not move forward unless it includes clear measures that would restore CtR to at least adequate.

### Downside scenarios and realism checks
- CtR dashboard is based on the baseline macroeconomic scenario underpinning the proposed financing and may include downside scenarios if these are included in country documents and financing arrangements.
- Downside scenarios are particularly useful for PRGT-eligible countries highly vulnerable to exogenous shocks or requesting precautionary arrangements.
- Country documents for precautionary SCF or SCF/SBA blends are required to include a downside scenario that would give rise to potential BoP needs justifying drawings.
- Revisions to macro framework during internal review require a revised CtR analysis and updated CtR dashboard.

### Process, documentation, and operational notes
- Area departments must share underlying data with FIN before country documents are posted on eReview so FIN can produce the CtR dashboard for departmental review.
- FIN requires at least one business day to produce the CtR dashboard and return it to country teams; more time may be required for data discrepancies.
- Data underpinning control group samples will be updated annually by FIN, incorporating all UCT programs and emergency financing approved in the previous calendar year.

### SPS3: reducing debt vulnerabilities in high-risk or in-distress countries
- Policy note and staff report for PRGT financing requests by countries at high risk of, or in, overall debt distress that trigger SPS3 must include an explicit program objective to reduce debt vulnerabilities during the program and beyond.
  - Typically involves reducing breaches of LIC-DSF thresholds/benchmarks for debt and debt service indicators that trigger mechanical risk signals.
  - Discussion should cover trajectory of threshold/benchmark breaches during the program but does not require a downward trajectory in each individual indicator.
- SPS3 is less stringent than PRGT-EA; PRGT-EA requires overall public debt to be assessed as sustainable in the medium term with high probability and a credible plan to improve risk rating to at least moderate within 36 months from Board approval (or within the period of the new arrangement, whichever is longer), potentially via a debt restructuring.
- If debt is assessed to be unsustainable ex ante and the member is undertaking a debt restructuring to restore sustainability, the SPS3 requirement is automatically satisfied; approval conditioned on seeking a debt treatment consistent with restoring sustainability.

### Treatment of LIC-DSA indicators and judgmental adjustments under SPS3
- SPS3 write-up should focus on evolution of LIC-DSA external debt burden indicators that breach thresholds/benchmarks under the baseline during the program period and beyond.
- Four indicative external debt burden indicators: PV of PPG external debt relative to GDP and to exports (solvency); PPG external debt service relative to exports and to revenues (liquidity). There is also a benchmark for PV of total public debt to GDP.
- Practical considerations:
  - Breaches under the baseline typically need to be reduced to satisfy SPS3 but may not be reducible continuously across all indicators; the composite picture must show clear overall improvement.
  - Strong presumption that debt/GDP and debt/exports would decline over the program, supported by fiscal consolidation, debt limits, and growth; exceptions possible (front-loaded access, shocks).
  - Debt service trajectory may be fixed in the near term; programs should include policies to mobilize higher revenues where necessary.
  - Staff should supplement mechanical signals with judgment for country-specific circumstances (climate, conflict, arrears, pending debt operations, fragility).

### Early Board engagement requirement and informational needs
- An early informal Board consultation is required whenever a financing request triggers SPS2 or involves exceptional access to PRGT resources.
- Timing: informal Board meeting should take place as soon as Management concurs that a new request involving exceptional access or levels exceeding SPS2 stock or flow triggers could be appropriate.
- Informational requirements to the Executive Board for informal consultation include:
  - Factors underlying the large/exceptional BoP need after accounting for donor financing and initial assessment of BoP need and financing from other development partners.
  - Brief summary of main policy measures and macroeconomic framework.
  - For SPS2: expected strength of the program; for PRGT EA and PS-HCC: assessment of a reasonably strong prospect of success.
  - An assessment of capacity to repay including a capacity to repay table.
  - Reference to impact on the Fund’s resources (for PRGT EA and SPS2, to concessional Fund resources).
  - Analysis of debt vulnerabilities, including preliminary DSA assessment and standard DSA charts and realism-tool results.
  - Discussion of deficiencies in quality/transparency of public debt data.
  - Likely timetable for discussion with authorities.
  - A Selected Economic Indicators (SEI) table.
- SPS2-specific additions:
  - Enhanced CtR analysis informed by cross-country comparisons.
  - Granular discussion of composition and evolution of debt, focusing on external debt difficult to restructure.
  - SPS2 cases at high risk or in overall debt distress should have explicit program objective to reduce debt vulnerabilities.

### Illustrative thresholds and examples (text excerpts)
- SPS2 flow trigger example: 150 percent of the norm.
- SPS2 stock trigger example: 300 percent of quota.
- Annual access limit example: 200 percent of quota.
- 125 percent of the norm example quantified as: 181.25 percent of the quota.
- De-minimis after 16th GRQ increase: 15 percent of quota.

### Annex II — Sample Country X findings (selected preserved numeric entries and summaries)
- Composition and evolution highlights:
  - At program initiation: de facto senior debt plus other multilateral and collateralized debt as a share of total PPG external debt is below 50 percent and projected to rise to 50 percent over the medium term under the baseline.
  - At program initiation: debt held by institutions afforded de facto preferred creditor status—the IMF, World Bank, and other major development banks—accounts for 34 percent of PPG external debt; adding other multilaterals and collateralized debt brings the total to 44 percent.
  - The combined share is projected to rise to 50 percent of PPG external debt by 2024.
  - Total multilateral plus collateralized debt as a share of GDP projected to decline from 32 to 22 percent of GDP under the program.
- Country X creditor-profile selected table entries (preserved exactly):
  - Total debt: 11,477 11,061 10,650 10,022
  - External debt: 10,099 9,678 9,267 8,639
  - Multilateral creditors: 4,010 3,881 3,750 3,615
    - o/w IMF and WB: 2,168 2,080 1,990 1,896
    - o/w: IMF: 992 952 911 868
    - o/w: ADB/AfDB/IADB: 1,327 1,307 1,288 1,270
    - o/w: Other multilaterals: 514 494 472 450
  - Bilateral creditors: 3,801 3,518 3,248 2,990
    - o/w: Paris Club: 2,136 2,098 2,065 2,031
    - o/w: Non-Paris Club: 1,666 1,420 1,183 959
  - Private creditors: 2,288 2,279 2,269 2,034
    - o/w: Bonds: 1,373 1,367 1,361 1,220
    - o/w: Loans: 915 912 908 814
  - Domestic debt: 1,378 1,383 1,383 1,383
  - Collateralized debt: 547 567 587 609
    - o/w: Related: 438 453 470 487
    - o/w: Unrelated: 113 113 117 122
  - Nominal GDP: 14,129 15,933 16,859 19,456
  - Percent of external debt (multilateral and collateralized): 40 40 40 42
  - Percent of GDP (multilateral and collateralized): 28 24 22 19
  - o/w: IMF and WB: 2,168 2,080 1,990 1,896
    - Percent of external debt: 21 21 21 22
    - Percent of GDP: 15 13 12 10
  - Collateralized debt: 547 567 587 609
    - Percent of external debt: 5 5 6 6
    - Percent of GDP: 4 4 3 3
- Country X enhanced CtR analysis summary:
  - Under the baseline, stock of debt to the Fund as a share of GDP peaks in T+3 at almost 5 percent of GDP; described as “well above the 75th percentile of past PRGT arrangements” and among the PRGT’s top exposures in the last decade.
  - Debt to the Fund as a share of exports and debt service as a share of revenues and exports are not elevated; debt service indicators close to or below the median for the comparator group.
  - Country X’s CtR is subject to significant downside risks (failure of large energy projects, natural disasters, deterioration in security, materialization of fiscal risks).
  - Under a downside scenario assuming significant delays in energy projects, most Fund credit indicators exceed the 75th percentile of past PRGT financing, though risks remain manageable given no large contingent liability risks under energy contracts and continued structural reforms.
- Country X—reducing debt vulnerabilities (high-risk/distress summary):
  - Country X assessed to be in overall debt distress due to pre-HIPC arrears and official arrears to a Paris Club creditor being addressed.
  - Debt vulnerabilities projected to be reduced under the program with downward paths for five debt burden indicators supported by fiscal adjustments, limits on non-concessional debt, LNG investment benefits, and enhanced natural resource revenue management.
  - Baseline external and overall debt-to-GDP indicators remain above DSA thresholds/benchmark until the late 2020s; external debt service indicators expected to bottom out temporarily at DSA thresholds then decline as LNG exports/revenues materialize.

### Program design, monitoring, and next steps (Country X template elements)
- Program focus and objectives: reducing debt vulnerabilities, improving public spending efficiency with a social focus, supporting private sector-led growth.
- Fiscal strategy examples:
  - Gradually bring overall fiscal deficit to no more than 3 percent of GDP over the medium term.
  - Emphasize domestic revenue mobilization and improved budgeting/procurement.
- Monitoring and conditionality:
  - Semi-annual reviews; QPCs and quarterly ITs scheduled; structural benchmarks (e.g., regular debt bulletin).
- Capacity to repay summary (Country X):
  - CtR adequate under baseline but subject to significant downside risks.
  - Under baseline: stock of debt to the Fund peaks in T+3 at almost 5 percent of GDP (above 75th percentile).
  - Downside risks and mitigating factors listed (authorities’ track record, fiscal measures, governance, disbursement phasing).
- Next steps and timing:
  - Program discussions scheduled in forthcoming mission dates; potential Executive Board consideration if staff-level agreement reached.

*Italic line: Source: ppea2025006*

### 1. PRGT Facilities Framework: SPS—Calculation of Flow and Stock Triggers _______________________ 6

### 1. PRGT Facilities Framework: SPS—Calculation of Flow and Stock Triggers

### Architecture and purpose of the SPS
- Effective date: January 1, 2025.
- Purpose: Strengthen scrutiny of debt sustainability and capacity to repay the Fund (CtR) to help manage and mitigate credit risk to the Fund.
- The SPS framework combines and supersedes the previous High Access Procedures (HAP) and Enhanced Safeguards for Debt Sustainability and Capacity to Repay the Fund (ES).
- Applicability:
  - Applies when proposed access under a new PRGT financing request (a new PRGT arrangement, a new RCF loan, or an augmentation of access under an existing arrangement) would exceed certain thresholds, and for countries at high risk of, or in overall debt distress.
  - Does not apply at program reviews that do not request an augmentation, nor to non-disbursing instruments.
- Note: All triggers and thresholds expressed as a percentage of quota will be automatically adjusted down when the general effectiveness conditions for the 16th General Review of Quotas (GRQ) increase have been met.

### SPS categories and triggering conditions
- The SPS include three categories of scrutiny: SPS1, SPS2, SPS3.
- SPS1 is triggered when:
  - Flow: the proposed access under a new PRGT financing request would exceed 125 percent of the access norm for that arrangement (“flow” trigger); or
  - Stock: the proposed access under the financing request would cause the cumulative PRGT access (i.e., credit outstanding to the PRGT) to exceed 300 percent of quota at any point over the lifetime of the existing or proposed arrangement (“stock” trigger).
- SPS2 is triggered when:
  - Flow: the proposed access under a new PRGT financing request would exceed 150 percent of the access norm for that arrangement (“flow” trigger); or
  - Stock: the proposed access under the financing request would cause the cumulative PRGT access (i.e., credit outstanding to the PRGT) to exceed 300 percent of quota at any point over the lifetime of the existing or proposed arrangement (“stock” trigger).
- SPS3 is triggered when:
  - A new PRGT financing request is requested by a member that is assessed to be at high risk of, or in, overall debt distress.

### Table of triggers and core requirements (summary of Table 1)
- Triggers and associated required content in country documents:
  - SPS1
    - Flow: PRGT access per arrangement exceeds 125 percent of the access norm, or
    - Stock: PRGT credit outstanding exceeds 300 percent of quota (200 percent of quota after the general conditions for effectiveness of the 16th GRQ increase have been met).
    - Requirements: Granular discussion of the composition and evolution of debt; and enhanced CtR analysis informed by cross-country comparisons of metrics of Fund exposure.
  - SPS2
    - Flow: PRGT access per arrangement exceeds 150 percent of the access norm, or
    - Stock: PRGT credit outstanding exceeds 300 percent of quota (200 percent of quota after the general conditions for effectiveness of the 16th GRQ increase have been met).
    - Requirements: SPS1 requirements plus early engagement with the Board through an informal Board meeting once Management agrees that the new financing request, or proposed augmentation, or rephasing could be appropriate.
  - SPS3
    - Trigger: Being at high risk, or in, overall debt distress.
    - Requirements: SPS1 requirements plus an explicit program objective to reduce debt vulnerabilities.

### Calculation of flow triggers (Box 1)
- Key distinction:
  - SPS flow trigger is based on the size of the arrangement (per arrangement), not total PRGT flows over a defined period as under HAP/ES.
  - Flow trigger is based on a multiple of the applicable access norm, not a fixed percentage of quota.
- Two-step calculation:
  - Step 1: Calculate the applicable access norm.
    - As of January 1, 2025, the access norm is set at 145 percent of quota for a 3-year ECF and an 18-month SCF.
    - This should be prorated for shorter or longer arrangements, following the formula set out in the source.
    - Note: the maximum applicable access norm for an SCF is 193 percent of quota (equating to the pro-rated norm of a 24-month SCF)—this maximum norm applies to all SCF with a duration between 24 and 36 months.
  - Step 2: Compare the proposed access (new request or existing arrangement plus augmentation) to the applicable norm and SPS1 and SPS2 triggers.
    - Example given in source: In the example above, if a 42-month ECF request or an augmentation within a 42-month ECF brings access under an arrangement above 211 percent of quota, SPS1 would be triggered. SPS2 would be triggered for a 12-month SCF with access/augmentation above 145 percent of quota.
- Notes:
  - The ECF and SCF access norm will be reduced to 100 percent of quota when the general effectiveness conditions for the 16th GRQ increase have been met.
- Numerical examples reproduced exactly from source:
  - ECF1453642 = a / b x c = 169 = d * 1.25 = 211 = d * 1.5 = 254
  - SCF1451812 = a / b x c = 97 = d * 1.25 = 121 = d * 1.5 = 145

### Calculation and application of the stock trigger
- Definition: Credit outstanding is calculated for each proposed availability date under the proposed financing request using the sum of all disbursed and committed PRGT financing (including disbursements that were made available but not drawn in the context of the current arrangement) as well as the proposed PRGT disbursements (up to the availability date for which the credit outstanding is determined), on a net basis (i.e., subtracting the scheduled repayments).
- If, for any of the proposed availability dates, the credit outstanding exceeds 300 percent of quota (200 percent of quota when the general effectiveness conditions for the 16th GRQ increase have been met), SPS1 and SPS2 will be triggered.
- Staff can assess whether the stock trigger is met by using the SPR Access Tool.
- Note: Currently, the stock trigger would not apply to a request for financing under the RCF regular window since it is subject to a 25 percent of quota per disbursement access cap (17.5 percent of quota after the general effectiveness conditions for the 16th GRQ increase have been met), which is currently the de-minimis threshold that exempts a financing request from the application of SPS. After the general conditions for effectiveness of the 16th GRQ increase become effective, new requests for financing under the RCF regular window could trigger SPS if the requested access is above the adjusted de-minimis threshold of 15 percent of quota.

### Four SPS requirements (to be implemented depending on which SPS category is triggered)
- Requirement 1 (SPS1, SPS2, SPS3): Granular discussion of the composition and evolution of debt to be included in country documents (policy notes and staff reports).
- Requirement 2 (SPS1, SPS2, SPS3): Enhanced CtR analysis informed by cross-country comparisons of metrics of Fund exposure.
- Requirement 3 (SPS3): Discussion of the explicit program objective to reduce debt vulnerabilities.
- Requirement 4 (SPS2): Early engagement with the Board through an informal Board meeting once Management agrees that the new financing request, or proposed augmentation, or rephasing could be appropriate. A memo should be prepared for the informal Board meeting.

### De‑minimis threshold and RCF specifics
- De-minimis threshold for SPS application: 25 percent of quota per financing request. If the access level of a new PRGT financing request is at, or below, 25 percent of quota, a member at low or moderate risk of overall debt distress would not be subject to the SPS.
- Exception: For members at high risk of, or in, overall debt distress, SPS3 would be triggered regardless of the requested level of access.
- RCF specifics:
  - An RCF request cannot trigger the SPS through the flow trigger because the RCF exogenous shock window and the large natural disasters window are not subject to access norms.
  - The RCF regular window is subject to a per disbursement access cap set at 25 percent of quota, the de minimis threshold that exempts a financing request from application of the SPS.
  - An RCF request under the exogenous shock window or the large natural disasters window could trigger the SPS through the stock trigger.

### RSF requirements (note on analogous treatment)
- Requests for new RSF arrangements or augmentations under an existing RSF arrangement have similar requirements to SPS1.
- All Board documents for new RSF financing requests or augmentations under an existing RSF arrangement should include:
  - (i) an extended CtR analysis that covers the RSF repayment period, including the CtR “dashboard”, taking into account all Fund borrowing by the member;
  - (ii) debt risk analysis over a longer time horizon (up to 20 years); and
  - (iii) the composition of public debt, including the share of de facto senior debt.

*IMF PRGT—GUIDANCE NOTE ON THE STRENGTHENED POLICY SAFEGUARDS (excerpt)*

### 7.      The SPS are part of the Fund’s multi-layered framework for managing credit risk and

### 7.      The SPS are part of the Fund’s multi-layered framework for managing credit risk and

### Multi-layered framework and interaction with other safeguards
- The SPS (Strengthened Policy Safeguards) complement existing tools for addressing debt vulnerabilities and capacity to repay the Fund, and form part of a multi-layered framework that also includes the Exceptional Access Policy (EA), PRGT-EA, and PS-HCC (Policy Safeguards for High Combined Credit).
- Country documents must assess qualification under the criteria for PRGT-EA and PS-HCC at each program review.
- Financing requests that trigger the SPS may also trigger PRGT-EA and/or PS-HCC; in such cases SPS1 requirements apply at the time of the financing request alongside PRGT-EA or PS-HCC requirements.
- When PRGT-EA and/or PS-HCC are triggered without triggering SPS, SPS documentation and procedural requirements do not apply, although teams may include additional SPS-type information.
- When SPS2 is triggered concurrently with PRGT-EA, GRA EA or PS-HCC, the early Board consultation will involve one informal Board meeting and staff will prepare a single concise note that meets the substantive informational requirements under the applicable policies.

### Triggers and procedural requirements (key thresholds and processes)
- PRGT normal access limits:
  - Annual PRGT access: 200 percent of quota annually (135 percent of quota after the general conditions for effectiveness of the 16th GRQ increase have been met).
  - Cumulative PRGT credit outstanding: 600 percent of quota (405 percent of quota after the general conditions for effectiveness of the 16th GRQ increase have been met).
- PS-HCC trigger:
  - Annual PRGT+GRA access above the GRA annual access limit of 200 percent of quota (135 percent of quota after the general conditions for effectiveness of the 16th GRQ increase have been met).
  - Cumulative PRGT+GRA credit outstanding above the GRA cumulative access limit 600 percent of quota (405 percent of quota after the general conditions for effectiveness of the 16th GRQ increase have been met).
- Early Board engagement: An informal Board meeting once Management agrees the request/augmentation/rephasing could be appropriate; an additional consultation with Executive Directors will normally occur between the initial informal meeting and the Board's consideration of the staff report.
- 15 percent of quota is referenced in relation to increases when the general effectiveness conditions for the 16th GRQ increase have been met.

### Composition and evolution of debt — documentation and analytical requirements
- Country policy notes and staff reports for PRGT financing requests that trigger SPS1, SPS2, or SPS3 must include a discussion of the structure of public external debt and its projected evolution over time, with particular emphasis on:
  - Debt owed to the IMF, to the World Bank and other multilateral creditors.
  - Collateralized debt that may be more difficult to restructure.
- The discussion should be supported by a table detailing the breakdown and ratios of debt composition, based on existing and projected additions to the stock of debt and debt service (template illustrated in Table 3).
- The Debt Holder Profile table required under the IMF’s 2020 Debt Limits Policy (DLP) already provides the breakdown of existing debt stock and related debt service on existing debt according to authorities’ classification of creditors; projections of this breakdown over time can be obtained from DSA files.
- When a member is undertaking a debt restructuring aimed at restoring sustainability:
  - Specific provisions apply: the analysis and associated table should not include projections of debt evolution broken down by creditor composition to avoid prejudging burden-sharing among creditors.
  - A brief discussion of composition based on the latest available data will suffice.

### Collateralized debt — risks, presentation, and data gaps
- Collateralization characteristics:
  - Collateralized debt gives creditors security interests in assets, revenue streams or other resources that can complicate restructuring.
  - Collateral-like features (e.g., oil pre-payment agreements) may have similar implications.
  - Collateral may be project-related (revenue streams/assets generated by a project) or “unrelated” (e.g., budgetary loans secured by commodity export revenues).
  - Indirect collateralization via SPVs or commodity-backed debt arrangements can extend creditor claims to government resources.
  - Escrow accounts covering significant amounts can pose similar challenges as collateralized debt in restructurings.
- Implications:
  - Collateralized claims tend to complicate restructurings, but do not necessarily make restructuring impossible; outcomes depend on contractual features, jurisdiction, and bargaining power of debtor and creditors.
  - Staff should describe specific collateralization features that may complicate potential future restructuring (e.g., asset-backed obligations, SPV arrangements, commodity-backed debt).
- Data and remedial measures:
  - Staff should report inadequacies in data on collateralized debt and briefly note data gaps (including due to non-disclosure agreements).
  - The 2021 Guidance Note on Implementation of the Debt Limits Policy provides guidance on assessing data inadequacies and remedial measures.
  - Where appropriate, debt conditionality can help address data gaps, limit new issuances of collateralized debt, and target reduction of its existing stock.

### Analysis of de facto senior and difficult-to-restructure debt for Capacity to Repay (CtR)
- SPS require analysis of the composition and projected evolution of debt that may be de facto senior or difficult to restructure, referring to:
  - a) Fund credit outstanding as a ratio of total PPG external debt.
  - b) Fund plus World Bank and ADB/AfDB/IADB credit as a ratio of total PPG external debt.
  - c) All IFI credit plus collateralized debt as a share of total PPG external debt.
- Rationale: Fund de facto Preferred Creditor Status (PCS) protection rests on the presence of a cushion of restructurable junior debt; high shares of de facto senior/difficult-to-restructure debt indicate rigidities.
- Empirical reference (end-2023 ODI data):
  - Average ratio of multilateral debt (including the IMF) to total PPG external debt in LICs: 57 percent.
  - Median: 54 percent.
  - 25th percentile: 44 percent.
  - 75th percentile: 74 percent.
  - LICs sample: 68 PRGT-eligible countries at end-2023.
- Interpretive guidance:
  - A high ratio of de facto senior/difficult-to-restructure debt may warn of elevated CtR risk.
  - A high ratio alone may not indicate elevated CtR vulnerabilities if debt and debt service ratios are low; LIC DSA assesses vulnerabilities associated with debt and debt service indicators.
  - A combination of being at high risk of, or in, debt distress and high ratios of de facto senior/difficult-to-restructure debt is a clear indicator of elevated CtR risk.

### Enhanced safeguards on Capacity to Repay — documentation and comparative analysis
- Country documents for PRGT financing requests that trigger SPS1, SPS2, or SPS3 must include a discussion of the evolution of projected IMF debt and debt service compared with other PRGT-supported programs.
- Finance Department (FIN), in collaboration with area departments, will prepare standardized charts of IMF debt and debt service relative to key economic metrics over the course of the repayment period to support this discussion.
- Where financing requests would result in comparatively elevated levels of CtR indicators, country documents should:
  - Examine the severity of the implied risks.
  - For UCT-quality programs, explain how program design — including access, phasing and conditionality — seeks to mitigate these risks.

*Source: PRGT—GUIDANCE NOTE ON STRENGTHENED POLICY SAFEGUARDS (excerpts).*

### Annex II.

### Annex II.

### CtR Dashboard requirement and scope
- Financing requests subject to SPS must include a CtR dashboard in country documents in addition to the standard assessment and CtR table.
- The dashboard includes relevant economic metrics for the country in question and a comparator group so as to benchmark the IMF’s credit exposure to the country in question and signal cases of elevated risk.
- For financing requests not subject to SPS, country documents should continue to include a CtR assessment supported by information from the What-If Projections and the indicators of Fund credit table; information from the CtR dashboard is optional for such requests.

### Economic metrics presented in the dashboard
- The dashboard presents eight metrics illustrated in panel charts showing the evolution of projected Fund credit and debt service to the Fund both for the country in question and for the comparator group.
- Six time-series charts (projections starting from the year of the financing request and the following 10 years):
  - Three stock indicators: projected stock of Fund credit outstanding relative to i) GDP, ii) gross international reserves (GIR), and iii) public and publicly guaranteed (PPG) external debt.
  - Three flow indicators: projected annual debt service to the Fund relative to i) fiscal revenues (excluding grants), ii) exports of goods and services, and iii) PPG external debt service.
- Two cross-section charts highlighting the highest peak credit indicators for the above metrics relative to PRGT countries with the highest Fund credit exposures, i.e., the two most elevated of the six metrics listed above.

### Comparator groups and sample period
- The baseline comparator group for the CtR dashboard is based on a combination of UCT-quality programs and emergency financing facilities (both including blends) approved for PRGT-eligible countries over the most recent decade.
- The sample period includes emergency financing facilities only from countries that also had a UCT quality program during the sample period.

### Elevated levels of IMF credit exposure: benchmarks and interpretation
- The median and interquartile ranges for the control group provide benchmarks for exposure metrics.
- In general, CtR risks would be deemed at acceptable levels if projections for all CtR indicators lie below the 75th percentile of the respective metric, while levels above the 75th percentile would require a deeper analysis.
- The control group of countries with top exposure levels consists of the top quartile of past exposures.
- Country teams should combine benchmark comparisons with staff judgment informed by the macroframework, DSA, risk matrix, and other relevant analysis.
  - Small and/or temporary deviations above the triggers do not necessarily indicate elevated CtR risks.
  - Absence of metrics exceeding the 75th percentile does not necessarily imply absence of elevated risks.

### Deeper CtR analysis: triggers and content
- When elevated metrics combined with staff judgment indicate high risks to CtR, a deeper analysis of risks and risk-mitigating factors should be included in the SPS write-up (CtR paragraph).
- The deeper analysis should draw from the CtR dashboard and the standard CtR Table and focus on CtR indicators pointing to elevated Fund exposure.
  - Elaborate on drivers of elevated CtR ratios relative to the control group; the size of elevated ratios; the duration above the 75th percentile; and economic significance of identified risks.
  - Consider risks associated with authorities’ willingness and ability to implement reforms needed to strengthen CtR.
- Risk-mitigating factors to discuss include:
  - Access: Is proposed access appropriate? Does the proposed access level keep Fund exposure at manageable levels?
  - Phasing: Is phasing and strength of reforms commensurate with disbursement phasing, or are disbursements frontloaded while reforms are not?
  - Conditionality and program policies: Prospects of achieving program targets and whether policies help reduce elevated CtR ratios over the repayment period.
  - Country-specific factors: magnitude of contingent liabilities; prospects for growth (or depletion) of natural resource revenues; burden-sharing with other official creditors; prior calls on foreign exchange that weaken capacity to repay (e.g., earmarked revenue, escrow accounts, collateral).
  - Metrics could be adjusted to reflect unencumbered values when appropriate.

### Bottom-line CtR assessment and implications for financing
- The CtR paragraph should include a bottom-line assessment of a country’s capacity to repay the Fund in the topic sentence; this assessment must inform facility choice, program design, and level of access.
- For a financing request to move forward, CtR must be assessed to be at least “adequate.”
- Where CtR risks are elevated but manageable, the bottom-line assessment should be conditional on the balance of risks, e.g., “CtR is adequate but subject to significant downside risks.”
- Where CtR is deemed weak, the request should not move forward unless it includes clear measures that would restore CtR to at least adequate.

### Downside scenarios and realism checks
- The CtR dashboard should be based on the baseline macroeconomic scenario but could also include information on downside scenarios where applicable.
  - The dashboard is based on the baseline underpinning the proposed financing.
  - It could add downside scenarios if these are included in country documents and a financing arrangement (drawing or precautionary) is incorporated in that scenario.
  - If no Fund-supported program is assumed under the downside scenario, it would not be included in the CtR dashboard.
- Downside scenarios are particularly useful for PRGT-eligible countries highly vulnerable to adverse exogenous shocks or requesting precautionary arrangements.
- Country documents for precautionary SCF or Stand-by Credit Facility/Stand-by Arrangement (SCF/SBA) blend arrangements are required to include a downside scenario that would give rise to potential BoP needs, justifying drawings upon emergence of actual need.
- The CtR write-up should discuss downside scenarios when applicable, including policy responses that would mitigate adverse impacts on CtR and reference to CtR risks under the downside scenario.
- Revisions to the macroeconomic framework during internal review necessitate a revised CtR analysis and updated CtR dashboard and assessment.

### Process, documentation, and other operational issues
- Area departments should share with FIN the underlying data necessary for preparing the CtR dashboard before country documents are posted on eReview so the dashboard and CtR analysis can be included in the document sent for departmental review.
- FIN requires at least one business day to produce the CtR dashboard and send it back to country teams, though more time may be required for cases with data discrepancies.
- Revised data should be shared during the internal review process when baseline and/or downside scenarios or the What-If projections are revised.
- The data underpinning the samples of control groups will be updated annually by FIN, incorporating all UCT programs and emergency financing approved in the previous calendar year.

### Reducing debt vulnerabilities in programs with countries at high risk of, or in, overall debt distress (SPS3)
- Policy note and staff report for PRGT financing requests by countries at high risk of, or in, overall debt distress that trigger SPS3 must include as an explicit program objective the concrete reduction of debt vulnerabilities over the course of the program and beyond.
  - This typically involves reducing breaches of thresholds/benchmark for debt and debt service indicators in the LIC-Debt Sustainability Framework (DSF) that trigger mechanical risk signals.
  - The requirement involves discussion of trajectory of threshold/benchmark breaches during the program but does not require a downward trajectory in each individual indicator.
- SPS3 is less stringent than PRGT exceptional access policy (PRGT-EA); PRGT-EA requires overall public debt to be assessed as sustainable in the medium term with high probability and a credible plan to improve risk rating to at least moderate within 36 months from Board approval or within the period of the new arrangement (whichever is longer) via policies and financing from sources other than the Fund (which may include a debt restructuring).
- If debt is assessed to be unsustainable ex ante and the member is undertaking a debt restructuring to restore sustainability, the SPS3 requirement is automatically satisfied.
  - Approval of Fund financing in such cases would be predicated on the member seeking a debt treatment consistent with restoring debt sustainability.
  - Operationally, the SPS3 write-up can be very short and refer to the DSA explaining how the restructuring would restore sustainability.

### Focus of the SPS3 write-up and treatment of LIC-DSA indicators
- The SPS3 write-up should focus on the evolution of LIC-DSA debt vulnerability indicators that breach thresholds/benchmark under the baseline during the program period and beyond.
- The DSA uses indicative thresholds for four external debt burden indicators: PV of PPG external debt relative to GDP and to exports (solvency risks); and ratio of PPG external debt service relative to exports and to revenues (liquidity risks).
- There is also a benchmark for an overall public debt burden indicator: the PV of total public debt to GDP.
- The model-based signal for risk of PPG external debt distress is derived by comparing each indicator’s projected evolution under the baseline and shock scenarios relative to its statistically determined threshold.
- Thresholds vary depending on a country’s assessed debt-carrying capacity (low, medium, or high).
- High risk of debt distress is signaled when one or more indicators breach its threshold in the baseline; moderate risk occurs when there are no extended breaches in the baseline; low risk occurs when there are no breaches under the baseline and shock scenarios.

### Practical considerations for reducing breaches and judgmental adjustments
- Breaches of thresholds/benchmark under the baseline would typically need to be reduced to satisfy SPS3; however, it may not be possible or appropriate to reduce all breaches continuously over the program period.
- The composite picture of vulnerabilities should show a clear overall improvement; cases where some indicator breaches widen over part of the program period should be explained and justified.
  - Strong presumption that debt/GDP and debt/exports would decline over the program, supported by fiscal consolidation, debt limits, and expected growth; exceptional cases may see initial widening (e.g., front-loaded access, shocks reducing exports/GDP).
  - Debt service trajectory is largely fixed in the near term reflecting past borrowing; rising debt service may not be reducible in the near term even with revenue measures, though programs would normally include policies to mobilize higher revenues where debt service/revenues breaches occur.
  - Staff should rely on judgment to supplement mechanical signals where country-specific circumstances affect final risk ratings (e.g., long-term climate or disaster risks, unresolved external arrears, pending debt operations, fragility/conflict, limited financing).
- There are examples where countries have been assessed as high risk of debt distress despite not breaching any LIC-DSF indicators under the baseline in the near to medium term.

*Annex II.*

### 35.      PRGT safeguards require that an early informal board consultation takes place

### PRGT safeguards require that an early informal board consultation takes place

### Early Board Engagement Requirement
- An early informal Board consultation is required whenever a financing request triggers SPS2 or involves exceptional access to PRGT resources.
- 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.
- This requirement does not apply to new financing requests by members of 25 percent of quota or less (the de minimis threshold).
- To ensure Executive Directors’ views on access levels are appropriately reflected in negotiations, the informal Board meeting should take place as soon as management concurs that a new request involving exceptional access or at levels that exceed the SPS2 stock or flow triggers could be appropriate.
- Early notice example timing: the informal Board meeting should be held as soon as management concurs that the request could be appropriate.

### Informational Requirements for Informal Board Consultation
- The Executive Board must be provided with specific information to enable it to review the case for high or exceptional access. Required information includes:
  - The factors underlying the large/exceptional BoP need, after accounting for financing from donors, including an initial assessment of the member’s BoP need and financing available from other development partners.
  - A brief summary of the main policy measures and macroeconomic framework.
  - For SPS2: the expected strength of the program; for PRGT EA and PS-HCC: the assessment of a reasonably strong prospect of success including the member’s adjustment plans and its institutional and political capacity to deliver that adjustment.
  - An assessment of capacity to repay including a capacity to repay table.
  - A reference to impact on the Fund’s resources (in the case of the PRGT EA and SPS2, to concessional Fund resources).
  - An analysis of debt vulnerabilities, including a preliminary DSA assessment and the standard DSA charts; the discussion should include the results from the “realism” tools in the LIC DSF.
  - A discussion of any deficiencies in the quality/transparency of public debt data.
  - The likely timetable for discussion with the authorities.
  - A Selected Economic Indicators (SEI) table.

### Additional SPS2-Specific Informational Requirements
- When SPS2 is triggered, informational requirements also include (the first two are optional when, in rare occasions, SPS2 is not triggered but PRGT EA or PS-HCC are triggered):
  - An enhanced CtR analysis informed by cross-country comparisons of metrics of Fund exposure (as required under SPS).
  - A granular discussion of the composition and evolution of debt, with a particular focus on external debt that is more difficult to restructure (as required under SPS).
  - SPS2 cases with a high risk of, or in, overall debt distress should have an explicit program objective to reduce debt vulnerabilities (as required under SPS).

### Illustrative Access-Triggering Scenarios and Thresholds (from text)
- SPS2 flow trigger example: 150 percent of the norm.
- SPS2 stock trigger example: 300 percent of quota.
- Annual access limit example: 200 percent of quota.
- 125 percent of the norm example quantified as: 181.25 percent of the quota.
- Example sequence: a precautionary SCF for 18 months at 120 percent of quota, then a new 18-month SCF for 150 percent of quota with a frontloaded disbursement of 90 percent of quota at approval — the new disbursement causes the annual access limit (200 percent of quota) to be exceeded, triggering the PRGT EA, while access under the new arrangement is less than 125 percent of the norm (less than 181.25 percent of the quota), so the SPS flow trigger is not activated; cumulative access at the end of the new arrangement being 270 percent of quota, which is less than 300 percent of quota, so the stock SPS triggers are not activated.
- Note on de minimis: 15 percent of quota after the general conditions for effectiveness of the 16th GRQ increase have been met.

### Annex II — Sample Country X write-ups (key analytic elements)
- Composition and evolution of debt (excerpted findings for Country X):
  - At program initiation, the size of de facto senior debt plus other multilateral and collateralized debt as a share of total PPG external debt is below 50 percent and projected to rise to 50 percent over the medium term under the baseline.
  - At program initiation, debt held by institutions afforded de facto preferred creditor status—the IMF, World Bank, and other major development banks—accounts for 34 percent of PPG external debt; adding debt held by other multilaterals and collateralized debt brings the total to 44 percent.
  - The combined share of such debt is projected to rise to 50 percent of PPG external debt by 2024.
  - Total multilateral plus collateralized debt as a share of GDP is projected to decline under the program, from 32 to 22 percent of GDP.

- Country X creditor-profile actuals and projections (selected table entries preserved exactly):
  - Total debt: 11,477 11,061 10,650 10,022
  - External debt: 10,099 9,678 9,267 8,639
  - Multilateral creditors: 4,010 3,881 3,750 3,615
    - o/w IMF and WB: 2,168 2,080 1,990 1,896
    - o/w: IMF: 992 952 911 868
    - o/w: ADB/AfDB/IADB: 1,327 1,307 1,288 1,270
    - o/w: Other multilaterals: 514 494 472 450
  - Bilateral creditors: 3,801 3,518 3,248 2,990
    - o/w: Paris Club: 2,136 2,098 2,065 2,031
    - o/w: Non-Paris Club: 1,666 1,420 1,183 959
  - Private creditors: 2,288 2,279 2,269 2,034
    - o/w: Bonds: 1,373 1,367 1,361 1,220
    - o/w: Loans: 915 912 908 814
  - Domestic debt: 1,378 1,383 1,383 1,383
  - Collateralized debt: 547 567 587 609
    - o/w: Related: 438 453 470 487
    - o/w: Unrelated: 113 113 117 122
  - Nominal GDP: 14,129 15,933 16,859 19,456
  - Multilateral debt (repeated): 4,010 3,881 3,750 3,615
  - Percent of external debt (multilateral and collateralized): 40 40 40 42
  - Percent of GDP (multilateral and collateralized): 28 24 22 19
  - o/w: IMF and WB: 2,168 2,080 1,990 1,896
    - Percent of external debt: 21 21 21 22
    - Percent of GDP: 15 13 12 10
  - Collateralized debt: 547 567 587 609
    - Percent of external debt: 5 5 6 6
    - Percent of GDP: 4 4 3 3

- Enhanced Capacity to Repay (CtR) analysis — Country X summary:
  - Under the baseline, the stock of debt to the Fund as a share of GDP remains at elevated levels based on existing and prospective drawings, peaking in T+3 at almost 5 percent of GDP.
  - This peak is described as “well above the 75th percentile of past PRGT arrangements” and among the PRGT’s top exposures in the last decade.
  - Debt to the Fund as a share of exports and debt service as a share of revenues and exports are not elevated, with indicators of debt service to the Fund close to or below the median for the comparator group.
  - Country X’s capacity to repay is subject to significant downside risks (failure of large energy projects, natural disasters, deterioration in the security situation, materialization of fiscal risks).
  - Under a downside scenario assuming significant delays in energy projects, most Fund credit indicators exceed the 75th percentile of past PRGT financing, although risks remain manageable given no large contingent liability risks under energy contracts and continued structural reforms.

- Reducing Debt Vulnerabilities in programs with countries at high risk of, or in, overall debt distress:
  - Country X is assessed to be in overall debt distress, due to pre-HIPC arrears and official arrears to a Paris Club creditor that are being addressed with an agreement on amounts and a repayment plan.
  - Absent these arrears, Country X would still be at high risk of overall debt distress, with all four external debt indicators and the indicator on overall debt above the respective DSA thresholds/benchmark in the baseline.
  - Debt vulnerabilities are projected to be reduced under the program, with a downward path for the five debt burden indicators over the course of the program, underpinned by fiscal adjustments (revenue and wage bill measures), limits on non-concessional debt, LNG investment benefits, and enhanced natural resource revenue management.
  - The baseline external and overall debt-to-GDP indicators remain above DSA thresholds/benchmark until the late 2020s.
  - External debt service indicators (relative to exports and revenues) are expected to bottom out temporarily in the medium term at the DSA thresholds and then resume a downward trajectory as LNG-related exports and revenues are realized.

### Sample Statement for an Informal Board Meeting (Country X template)
- Template opening paragraph elements (placeholders preserved as in source):
  - The authorities of Country X have requested a new IMF-supported arrangement to address protracted balance of payment needs and support reforms.
  - Country X’s exposure to the PRGT currently stands at XX percent of quota.
  - Proposed access of XX percent of quota over XX months [exceeding the SPS2 flow trigger of 150 percent of the norm], with planned disbursements and repayment schedule projecting total PRGT credit outstanding to peak at XX percent of quota [exceeding the SPS2 stock trigger of 300 percent of quota], which triggers SPS2.
  - Discussions with the authorities are planned for [Month Day, Year].

- Key write-up sections in the template:
  - I. Background — country challenges, shocks, donor support conditions.
  - II. Macroeconomic Outlook and Risks — placeholders include growth projections: XX percent in 2025, YY percent in 2026, ZZ percent over the medium term, from XX percent in 2024; inflation scenarios; current account and external financing gap placeholders (XX, YY, ZZ).
  - III. Policy Framework Underpinning the Proposed Program — external financing needs cited as XX (YY percent of GDP), program financing, burden sharing, and commitments for first 12 months.

*International Monetary Fund — PRGT Guidance Note on Strengthened Policy Safeguards (selected excerpts).*

### 13.      The new ECF arrangement will seek to build on the progress under the previous

### 13.      The new ECF arrangement will seek to build on the progress under the previous

### Program focus and objectives
- Primary focus areas:
  - (i) reducing debt vulnerabilities to protect macroeconomic stability,
  - (ii) improving the efficiency of public spending with an increased focus on social expenditure and poverty reduction,
  - (iii) supporting the foundations for private sector-led growth.
- Objectives are fully aligned with the authorities’ reform agenda, reflecting strong program ownership.

### Proposed policies to achieve objectives
- Fiscal and spending strategy:
  - Gradually bring the overall fiscal deficit to no more than 3 percent of GDP over the medium term.
  - Domestic revenue mobilization efforts to broaden the tax base and tackle informality.
  - Improve budgeting, procurement and project selection.
  - Enhance the efficacy of social protection spending.
- Private sector and governance support:
  - Promote better access to credit.
  - Strengthen good governance and transparency.

### Institutional capacity and reform actions
- Authorities have developed a robust medium term revenue strategy with FAD support to implement high-yield revenue reforms.
- Procurement reforms (with development partner support) to enable greater transparency and scale up well-targeted social spending.
- A newly appointed investment agency tasked with addressing business environment weaknesses and expanding financial inclusion.
- Staff assess a strong prospect of success given adjustment plans and institutional and political capacity.

### Key program design principle
- Meet expenditure needs while maintaining fiscal sustainability through revenue mobilization, spending efficiency, and support for private sector growth.

*Italic line: Source: ppea2025006 - 13.      The new ECF arrangement will seek to build on the progress under the previous*

---

### IV. Analysis of Debt Vulnerabilities

- Staff baseline assessment:
  - Under staff’s baseline scenario, Country X’s debt is sustainable with [high risk of overall and external debt distress].
  - Preliminary updated DSA shows [multiple breaches of PPG external debt burden indicators (the present value of PPG external debt to export ratio and PPG external debt service to export ratio) in the baseline scenario] that signal high risk of external and overall debt distress.
- Medium- and long-run conditions:
  - Authorities’ sustained commitment to sound macroeconomic policies and economic reforms, and further strengthening debt management supported by the Fund’s Debt Limit Policies and associated conditionality, are critical to buttress debt sustainability.
- Fiscal adjustment realism:
  - DSA realism tools indicate the macroeconomic baseline is broadly in line with [country’s] recent history and cross-country distributions.
  - The three-year adjustment in the primary balance is equal to XX percent of GDP and deemed achievable, despite being in the upper quartile of fiscal adjustment in typical Fund-support programs for LICs.
- Composition and restructuring risk:
  - The share of external debt that is more difficult to restructure is projected to [increase].
  - Program will place particular focus on the composition and evolution of debt, with a specific focus on external debt that is more difficult to restructure.
- Debt data and transparency:
  - Program will improve the quality and transparency of public debt data.
  - IMF TA missions identified weaknesses in debt recording and management; a reform plan has been agreed.
  - Structural benchmarks include a regular debt bulletin that covers a greater segment of the public sector.
- If high risk or in overall debt distress:
  - Program includes an explicit objective to reduce debt vulnerabilities.
  - Fiscal consolidation plan will reduce the present value of overall public debt to moderate by 2027.
  - Quantitative targets on domestic borrowing will reduce demands on the domestic bond market.
  - Greater access to concessional external finance will reduce external vulnerabilities in the medium term, notably on indicators related to external debt service.

### DSA and realism tools
- DSA realism tools used to validate baseline and assess the plausibility of growth, fiscal adjustment, and public investment assumptions.
- Output referenced: Figure 1, 2; DSA realism outputs.

*Italic line: Source: ppea2025006 - 13.      The new ECF arrangement will seek to build on the progress under the previous*

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### V. Program Modalities and Impact on the Fund’s Concessional Resources

- Proposed access and phasing:
  - Staff propose access of SDR XX million (XX percent of quota), with YY reviews and disbursements peaking in [year].
  - Example phasing language: The phasing [e.g. will be equal/frontloaded because...].
  - Example access trigger language: program access of [e.g. 250 percent of quota over 36 months would trigger the SPS2 flow trigger].
- Cumulative access and triggers:
  - Considering Country X’s current exposure and planned disbursements and repayments, total access to PRGT resources would rise to [just over the 300 percent of quota, thereby triggering the SPS2 stock trigger], while remaining [below the cumulative access limit of 600 percent].
- Monitoring and conditionality:
  - Program performance monitored through semi-annual reviews.
  - Quantitative performance criteria (QPCs) for [end-December year] and [end-June year].
  - Quarterly indicative targets (ITs) for [end-September year] and [end-March year].
  - Structural Benchmarks to be discussed during the upcoming mission.
- Capacity to repay (CtR) assessment summary:
  - Country X’s capacity to repay the Fund is adequate under the baseline, but subject to significant risks in a downside scenario.
  - Under the baseline: stock of debt to the Fund as a share of GDP peaks in T+3 at almost 5 percent of GDP, well above the 75th percentile of past PRGT financing.
  - Debt to the Fund as a share of exports and debt service as a share of revenues and exports are not elevated; indicators of debt service to the Fund close to or below the median for the comparator group.
  - Downside risks include failure of large energy projects, natural disasters, deterioration in the security situation, and materialization of fiscal risks.
  - Mitigating factors: authorities’ strong track record of servicing Fund obligations, fiscal policy measures in the program, governance strengthening measures, and smoothed phasing of Fund disbursements.
  - Under a downside scenario assuming significant delays in energy projects, most Fund credit indicators would exceed the 75th percentile of past PRGT arrangements.
- Impact on Fund’s resources:
  - Arrangement requested under the ECF for [X] percent of quota will have a [significant/manageable] impact on the Fund’s concessional resources.
  - Proposed access would bring total PRGT exposure to [Country] to about [X] percent of PRGT credit outstanding (from [X] percent), increasing PRGT credit concentration.
  - Would represent [X] percent of the balance in the PRGT Reserve Accounts.
  - Proposed access would imply a cost of about [SDR XX million] in PRGT subsidies, about [X] percent of the balance in the PRGT Subsidy Accounts.

*Italic line: Source: ppea2025006 - 13.      The new ECF arrangement will seek to build on the progress under the previous*

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### VI. Next Steps and Implementation Timing

- Program discussions scheduled during [month day-day, year] in [place].
- Consideration by the Executive Board:
  - If staff level agreement with the authorities is reached, a program request could be presented for Executive Board consideration in [month year].
- Program documentation and tables/figures referenced:
  - Selected Economic Indicator (SEI)
  - Debt Composition
  - DSA: Indicators of Public and Publicly Guaranteed External Debt Under Alternative Scenarios, 2025–2035
  - DSA: Indicators of Public Debt under Alternative Scenarios, 2025–2035
  - Output from DSA Realism tools
  - Indicators of capacity to repay the Fund
  - Dashboard: Capacity to Repay Indicators Compared to PRGT Countries

*Italic line: Source: ppea2025006 - 13.      The new ECF arrangement will seek to build on the progress under the previous*

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### Annex III — Q&A highlights on the Strengthened Policy Safeguards (SPS)

- SPS requirements and categories:
  - Four requirements (relevant depending on access levels and debt situation): (i) granular discussion of the structure and evolution of debt, accompanied by a table; (ii) discussion of CtR risks based on a dashboard showing Fund exposure metrics compared to past PRGT programs; (iii) discussion of how the program seeks to reduce debt vulnerabilities; (iv) early engagement with the Board through an informal Board meeting.
  - Three categories of scrutiny: SPS1, SPS2, SPS3. Each category entails two or more SPS requirements.
- Triggers and requirements (summary from Annex III. Table 1):
  - SPS1 triggers:
    - Flow: PRGT access per arrangement exceeds 125 percent of the access norm, or
    - Stock: PRGT credit outstanding exceeds 300 percent of quota (200 percent of quota after the general conditions for effectiveness of the 16th GRQ increase have been met).
    - Requirements: Granular discussion of the composition and evolution of debt; enhanced CtR analysis informed by cross-country comparisons of metrics of Fund exposure.
  - SPS2 triggers:
    - Flow: PRGT access per arrangement exceeds 150 percent of the access norm, or
    - Stock: PRGT credit outstanding exceeds 300 percent of quota (200 percent of quota after the general conditions for effectiveness of the 16th GRQ increase have been met).
    - Requirements: SPS1 + Early engagement with the Board through an informal Board meeting once Management agrees that the new financing request could be appropriate.
  - SPS3 trigger:
    - Being at high risk, or in, overall debt distress.
    - Requirements: SPS1 + Explicit program objective to reduce debt vulnerabilities.
- Application and scope:
  - SPS apply only to financing under the PRGT; GRA access under a blend financing request does not count toward SPS trigger.
  - SPS required for new financing arrangements or augmentations; not required for non-financing instruments or reviews without augmentation.
  - If SPS triggered previously and program seeks augmentation, SPS requirements must be met again.
  - For PRGT EA/PS-HCC requests, SPS could be triggered; however, the requirement to include an explicit discussion of how the program seeks to reduce debt vulnerabilities would not apply because reducing debt to moderate or low is already required under those policies.
  - For cases with debt restructuring where debt is unsustainable, the granular discussion of structure and composition is required (but should present only current composition data), and program commitment to reduce vulnerabilities is automatically satisfied.
  - If potentially senior or hard to restructure debt is comparatively low, a granular discussion is still required but can be brief.
  - If CtR metrics are not elevated, the enhanced CtR analysis is still required but can be brief; deeper discussion required when metrics indicate higher risk.
- CtR dashboard guidance:
  - Use baseline scenario underpinning country documents; optional inclusion of downside scenarios.
  - Dashboard should include eight indicators: Fund credit outstanding as a ratio of GDP, GIR, and PPG external debt; debt service to the Fund as a ratio of fiscal revenue (excl. grants), exports of goods and services, and PPG external debt service; and two charts highlighting the highest peak credit indicators relative to PRGT countries with top Fund credit exposures.
  - Baseline comparator group: PRGT UCT-quality programs and PRGT emergency financing facilities (both including blends) approved in the recent decade.
  - CtR dashboards prepared in joint collaboration by FIN staff and country teams based on data provided by country teams before PN or SR finalization.

*Italic line: Source: ppea2025006 - 13.      The new ECF arrangement will seek to build on the progress under the previous*

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_Source: https://www.imf.org/-/media/files/publications/pp/2025/english/ppea2025006.pdf_