## ppea2025009

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**Canonical URL:** [ppea2025009](https://www.imf.org/-/media/files/publications/pp/2025/english/ppea2025009.pdf)

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### EXECUTIVE SUMMARY — Background and proposal
- Proposal: narrow, targeted change to the RST relevant where the concurrent Upper Credit Tranche (UCT)-quality instrument accompanying an RSF arrangement is a Flexible Credit Line (FCL) arrangement.
- Current requirement for RSF requests: qualifying concurrent UCT-quality instrument that is on-track and has at least 18 months remaining.
- Original 2022 design: an RSF arrangement terminates when the accompanying concurrent UCT-quality instrument is cancelled, terminates, or expires.
- May 2024 Board reform: allows RSF to continue when a member switches from one qualifying UCT-quality instrument to another if criteria (a)–(f) are met. Criteria include:
  - (a) approval of a new qualifying UCT-quality instrument effective immediately upon termination/cancellation of the existing concurrent instrument;
  - (b) remaining RSF period does not exceed duration of new UCT-quality instrument and minimum RSF duration across the two UCT-quality instruments is observed;
  - (c) most recent review under the current UCT-quality instrument completed no more than 10 months prior to approval of the new instrument;
  - (d) member’s performance under the program supported by the existing UCT-quality instrument was satisfactory;
  - (e) criteria for approving an RSF arrangement remain satisfied;
  - (f) remaining RSF-supported Reform Measures remain generally appropriate, or have been modified as necessary, and conditions remain in place for their successful completion.

### EXECUTIVE SUMMARY — Observations about application to FCL arrangements
- Staff observation: criteria (c) and (d) are not suited for RSF arrangements accompanied by an FCL:
  - Criterion (c) mismatch: FCL policy schedules the mid-term review with objective of completion immediately prior to lapse of the one-year period from approval; no other reviews are contemplated. The requirement that the most recent review be within the past 10 months is not aligned with annual periodicity of FCL qualification reviews.
  - Criterion (d) mismatch: stringent ex ante FCL qualification criteria make a Board assessment of satisfactory “program” performance not suited for an FCL arrangement.
- Application implication: as drafted, criteria (c) and (d) would imply a member could not continue its RSF arrangement when switching from an FCL to another UCT-quality instrument:
  - during the first 12 months of an FCL arrangement prior to completion of the mid-term review; or
  - during the last two months of a 2-year FCL arrangement (where the mid-term review has been completed but earlier than the previous 10 months).

### EXECUTIVE SUMMARY — Proposed safeguard modification for FCL cases
- Proposed safeguard: when the FCL is the existing UCT-quality instrument accompanying the RSF arrangement, require that the Executive Board has, within the previous 12 months, either:
  - approved the FCL arrangement; or
  - in the second year of the FCL arrangement, completed the mid-term review of the member’s qualification under the FCL arrangement.
- Rationale:
  - Approval of the FCL within the prior 12 months, or completion of the mid-term review, provides an appropriate indication that sufficient safeguards exist to anchor the RSF arrangement.
  - Staff judges that the stringent ex ante FCL qualification criteria ensure this modification does not introduce additional risks for use of RST resources and that adequate policy safeguards remain in place.
- Note: all other criteria for continuation of the RSF arrangement under the successor UCT-quality instrument remain valid and must be met.

### EXECUTIVE SUMMARY — Proposed decision text (summary of amendment)
- Amendment target: Section II, Paragraph 1(b)(4)(ii) of the Instrument to Establish the Resilience and Sustainability Trust to permit continuation/extension of an RSF arrangement when member requests a new concurrent qualifying UCT-quality instrument, provided:
  - (a) Executive Board approves the New Concurrent Qualifying UCT-quality Instrument to become effective immediately upon termination or cancellation of existing concurrent qualifying UCT-quality instrument(s);
  - (b) remaining RSF period will not exceed duration of the New Concurrent Qualifying UCT-quality Instrument and RSF arrangement remains subject to the minimum duration specified in Paragraph 1(b)(4)(i);
  - (c) criteria for approving an RSF arrangement, including Paragraph 1(b)(6), remain satisfied at time of approving the New Concurrent Qualifying UCT-quality Instrument;
  - (d) Reform Measures under the RSF arrangement remain generally appropriate, or are being modified as necessary, and conditions remain in place for their successful completion;
  - (I) for all qualifying UCT-quality instruments other than FCL arrangements, the most recent review under the existing concurrent qualifying UCT-quality instrument was completed no more than 10 months prior to the Executive Board approval of the New Concurrent Qualifying UCT-quality Instrument, and prior to the change in circumstances the member’s performance under the program supported by the existing instrument was satisfactory; and
  - (II) for FCL arrangements, the Executive Board has, within the previous 12 months, either approved the FCL arrangement, or in the second year of the FCL arrangement, completed the review specified in paragraph 5 of Decision No 14283-(09/29) on Flexible Credit Line arrangements.
- Adoption rule: proposed decision may be adopted by a majority of the votes cast.

### EXECUTIVE SUMMARY — Implementation and documentation
- Staff proposes adoption of the targeted modification to the RST instrument.
- Annex I contains a redlined text showing changes to Section II, Paragraph 1(b)(4)(ii) of the RST instrument.
- Prepared by staff in the Strategy, Policy, and Review, Finance, and Legal Departments; Approved By Dora Iakova, Bernhard Steinki and Papa N’Diaye; December 11, 2024.

### SECTION II — Trust Loans: Eligibility, financing and continuation rules
- RST-eligible members: Members of the Fund listed in the Annex to Decision No. [RST Decision 2].
- RSF financing:
  - An RST-eligible member may request financing under the RSF up to the maximum overall access specified in Paragraph 2(a).
  - RSF financing is committed and made available under an arrangement approved by the Trustee to support structural reforms to reduce and/or mitigate risks associated with Qualifying Longer-term Structural Challenges.
  - An RSF Arrangement shall normally be approved concurrently with approval of, or completion of a review under, a qualifying UCT-quality instrument (Stand-by Arrangement, Extended Arrangement under the Extended Fund Facility, Precautionary and Liquidity Line or Flexible Credit Line (“FCL”), Policy Coordination Instrument, Standby Credit Facility, or Extended Credit Facility). If accompanied by more than one qualifying UCT-quality instrument, each such instrument constitutes the qualifying UCT-quality instrument.
- Duration and continuation:
  - Expected to coincide with duration of a new qualifying UCT-quality instrument or remaining duration of an existing one, provided duration is no less than 18 months; for RSF arrangements approved during the period of 6 months from the date of the notification in paragraph 2 of Decision No. 17231-(22/37), duration shall be no less than 12 months.
  - RSF arrangements shall not extend beyond the duration of the concurrent qualifying UCT-quality instrument; ordinarily RSF terminates if the concurrent instrument terminates, expires, or is cancelled.
  - Continuation/extension despite termination/cancellation allowed if criteria are met, including:
    - Executive Board approval for New Concurrent Qualifying UCT-quality Instrument effective immediately upon termination/cancellation;
    - Remaining RSF period will not exceed duration of New Concurrent Qualifying UCT-quality Instrument and RSF duration from approval remains subject to minimum duration specified;
    - Most recent review under existing concurrent qualifying UCT-quality instrument completed no more than 10 months prior to Executive Board approval of the New Concurrent Qualifying UCT-quality Instrument (additional specific conditions for FCL arrangements);
    - Prior performance under existing instrument was satisfactory; criteria for approving RSF remain satisfied; Reform Measures remain generally appropriate or modified as necessary.
  - If accompanied by more than one concurrent qualifying UCT-quality instrument, RSF may continue if at least one concurrent instrument meets requirements for remainder of its duration.
  - All concurrent qualifying UCT-quality Instruments are considered the accompanying UCT-quality instrument under Appendix I for purposes of misreporting.
  - RSF may be extended at time of extension of concurrent instrument if additional time required to complete identified Reform Measures or additional Reform Measures are identified.

### SECTION II — Reform Measures, reviews, disbursements and conditions
- Reform Measures:
  - Member must present detailed statement of structural reforms to be implemented during RSF period (“Reform Measures”).
  - Reform Measures should help make significant progress toward strengthening prospective balance of payments stability by reducing macro-critical risks associated with Qualifying Longer-term Structural Challenges.
- Trustee assessments at approval and each review must confirm:
  - (i) Reform Measures meet standards in paragraph 5;
  - (ii) member’s debt sustainable in the medium-term under applicable debt sustainability framework;
  - (iii) member’s capacity to repay the Trust is assessed to be adequate.
- Commitments and disbursement timing:
  - RSF Arrangement specifies total committed resources, earliest availability date for each disbursement, and expected timing of reviews. No disbursement upon approval.
  - Each Reform Measure is linked to one disbursement; implementation monitored through reviews.
  - Phasing limit: total disbursements made available at a single review limited to not more than 50 percent of the member’s quota, though delays may lead to later reviews where total disbursements approved at that review may exceed 50 percent of the member’s quota.
- Reviews and bringing forward disbursements:
  - Reviews under RSF occur concurrently with reviews under accompanying qualifying UCT-quality instrument(s).
  - Trustee may allow a single disbursement to be brought forward to date of review if conditions (a)–(e) are met, including that 50 percent of quota limit at review would not be exceeded.
- Disbursement conditions:
  - Each disbursement requires: (i) completion of RSF review after availability date and Trustee assessment that Reform Measure was implemented or deviation was minor (or decision to bring forward availability date); and (ii) completion of corresponding review under accompanying qualifying UCT-quality instrument.
  - If approved concurrently with an FCL arrangement, RSF establishes schedule of stand-alone reviews and associated RSF disbursements after completion of such reviews.
- Cancellation and termination:
  - Member may cancel an RSF Arrangement at any time by notifying the Trustee; cancellation has no effect on accompanying qualifying UCT-quality instrument.
  - RSF Arrangement terminates automatically once all access under such arrangement has been disbursed.
- Conditionality guidance:
  - Guidelines on Conditionality (Decision No. 12864-(02/102)) do not apply to RSF conditionality except for general principles relevant to Reform Measures: national ownership, tailoring to member’s circumstances, clarity in specification, and effective coordination with other multilateral institutions.

### SECTION II — Amount of Financing and access rules
- Overall access cap for each RST-eligible member: lower of (i) 150 percent of quota and (ii) SDR 1 billion.
- Trustee may establish access norms; deviations considered taking into account:
  - (i) direct short to medium term balance of payments needs associated with implementation of Reform Measures;
  - (ii) strength and ambition of Reform Measures;
  - (iii) member’s capacity to repay the Trust, including debt sustainability and composition, and obligations owed to the Fund in the GRA and the PRGT.
- Access adjustments at reviews:
  - Access may be increased at review by providing additional disbursements linked to additional Reform Measures or increasing phased disbursements; access may be reduced at any review if requested by the member.
- Any commitment of Trust resources subject to availability of such resources.
- Restriction: Managing Director shall not recommend, and Trustee shall not approve, RSF request or continuation under Paragraph 1(b)(4)(ii) or (iii) whenever member has an overdue financial obligation to the Fund in the GRA, the Special Disbursement Account, the SDR Department, or the Fund as Trustee of this Trust or of the PRGT, or while failing to meet a repurchase expectation pursuant to Decision No. 7842-(84/165) or repayment expectation pursuant to Section II, paragraph 3(c) of the PRGT or Appendix 1 of such Trust, or Appendix I to this Instrument.
- Prioritization guidance: members with overdue obligations encouraged to prioritize GRA and/or PRGT obligations over Trust loan obligations.

### SECTION II — Disbursement timing and terms
- Commitments subject to availability of Trust resources.
- Disbursements must take place during the period of the RSF arrangement.
- Rephasing: Trustee may rephase disbursements over remaining RSF period if delays occur.
- Timing after review:
  - Following completion of a review and subject to rephasing rules, disbursement shall be requested no later than 30 calendar days of completion of the review and made on the earliest value date for which necessary notifications and payment instructions can be issued.
  - If not completed within 30 calendar days, member may again request disbursement within 30 days from completion of the next review.
- Misreporting and noncomplying disbursements:
  - Appendix I applies to misreporting and noncomplying disbursements of Trust loans.
- Suspension: Disbursements under an RSF Arrangement shall be suspended in all cases specified in Paragraph 20 of this Section.

### SECTION II — Terms of Trust Loans: currency, repayment, interest, charges, and grouping
- Currency: Disbursed in SDRs, or in a freely usable currency as determined by the Trustee.
- Repayment schedule: Repaid in twenty equal semi-annual installments beginning ten and a half years from the date of each disbursement.
- Interest:
  - Charged at a rate equal to sum of (i) the rate of interest on the SDR, and (ii) the applicable margin pursuant to subparagraphs (e) and (f), provided interest rate may be capped as in (f) and interest rate charge on all overdue obligations subject to a minimum of the SDR interest rate.
  - Interest accrues daily and paid in SDR promptly after April 30, July 31, October 31, and January 31 of each year.
- Service charge: Trustee may levy a service charge, set as a percentage of the disbursement amount, payable at time of disbursement.
- Member grouping for margin and service charge:
  - Group A: RST-eligible members that are also PRGT-eligible (or per capita gross national income at or below PRGT-eligibility list threshold) and who are not presumed to blend PRGT and GRA resources pursuant to Decision No. 17028-(21/71)–(“Blending Framework”).
  - Group B: RST-eligible members presumed to blend PRGT and GRA resources under the Blending Framework or who have a population below 1.5 million and per capita income below ten times the International Development Association operational cut-off as determined pursuant to paragraph 2(c) of Decision No. 12232-(22/37).
  - Group C: all other RST-eligible members.
  - The initial classification is set out in Appendix III.
- Applicable margins:
  - Group A: 55 basis points.
  - Group B: 75 basis points.
  - Group C: 95 basis points.
- Additional caps/limits for Group A:
  - (i) interest rate charged on the daily outstanding balance for members in Group A shall not exceed 2.25 percent per annum;
  - (ii) interest rate on any overdue repayments and any overdue interest payments for members in Group A shall not exceed 2.25 percent per annum or the rate of interest on the SDR, whichever is higher.
- Service charge levels:
  - Group A: zero.
  - Group B: 25 basis points.
  - Group C: 50 basis points.
- Change in group classification during an arrangement:
  - For applying service charge and margin to any loan disbursements under that arrangement (including commitments not yet disbursed or later augmentation), member treated as remaining in the group it was in at time of approval of that arrangement.
- Review of margin and service charge:
  - Reviewed pursuant to Section XI, either at periodic reviews of the RST or earlier if warranted. Trustee shall consider borrowing costs for RST-eligible members, projected net reserve coverage for Trust loans over lifecycle of the Trust, and costs of administrating the Trust.
- Rescheduling: Trustee may not reschedule the repayment of Trust loans.

### SECTION II — Modifications
- Modifications to provisions applicable to Trust loans affect only Trust loan disbursements made after effective date of the modification.
- Any modification of interest rates (including margins) shall apply to interest accruing after the effective date of the modification, subject to Paragraph 4(c).

### SECTION III — Contributions to the Trust: accounts and authorities
- Trustee may receive contributions for the Loan Account, the Reserve Account, and the Deposit Account on terms agreed between Trustee and contributor, subject to this Instrument.
- Trustee may accept a contribution to the Loan Account only where contributor also makes corresponding contributions to the Reserve Account and to the Deposit Account, equal to at least two percent and twenty percent, respectively, of its Loan Account contribution amount.
- Trustee may receive stand-alone contributions to the Reserve Account and/or the Deposit Account.
- Managing Director authorized to enter into agreements with contributors and make necessary arrangements for receiving contributions.

### SECTION III — Loan Account resources, draws, and drawdown period
- Loan Account resources consist of:
  - (i) proceeds of Trust borrowing; and
  - (ii) repayments of principal and payments of interest on Trust loans funded with drawings under borrowing agreements to the Loan Account, subject to Section V, paragraph 1(f) and Section VI, paragraph 1(c).
- Drawdown period for Trustee draws under borrowing agreements to extend Trust loans shall extend through November 30, 2030; on an exceptional basis the Managing Director may agree on a shorter drawdown period than November 30, 2030.
- Drawings may be made for as long as claims under Trust loans remain outstanding.
- Trustee may draw under borrowing agreements to fund Trust loans and to fund early repayment of outstanding Trust borrowing under another borrowing agreement where contributor requesting early repayment represents its balance of payments and reserve position justify early repayment and Trustee agrees.

### SECTION III — Loan Account payments, transfers, and suspensions
- The Trust makes payments of principal and interest on its borrowing for the Loan Account from payments into the Loan Account by borrowers under Trust loans.
- Trustee shall pay interest on outstanding Trust borrowing at the interest rate set forth in the relevant borrowing agreement, provided that the rate of interest may not exceed the SDR interest rate.
- The Trust shall pay interest on a quarterly basis promptly after April 30, July 31, October 31, and January 31 of each year.
- Drawings shall be made with objective of maintaining over time broad proportionality of drawings relative to commitments under borrowing agreements of contributors.
- Temporary suspension of drawings: contributor’s request for early repayment suspends calls under its borrowing agreement; calls also suspended if currency of relevant member is no longer included for transfers in the Fund’s Financial Transactions Plan.

### SECTION III — Reserve Account and Deposit Account: resources, use, remuneration, and maturities
- Reserve Account resources include contributions to the Reserve Account; payments of service charges; transfers of margin income from Loan Account; net earnings from investment of Reserve Account resources; transfers of net earnings from temporary holding of Loan Account resources; payments/repayments when Reserve or Deposit Account resources used to make payments to contributors; transfers of net investment income attributable to contributors’ Deposit Account contributions upon full repayments.
- Reserve Account contributors have proportional shares; contributions not remunerated.
- Reserve Account uses:
  - (1) make repayments of principal and interest pursuant to borrowing agreements for Loan Account to extent receipts insufficient;
  - (2) pay costs of administering the Trust;
  - (3) make distributions to contributors to the Reserve Account pursuant to Paragraph 4.
- Deposit Account resources include contributions to the Deposit Account; net earnings from investment; payments/repayments to replenish Deposit Account principal contributions used to make payments due under borrowing agreements.
- Deposit Account contributors remunerated at SDR interest rate, provided individual agreements can provide for a lower rate.
- Maturity date of contributions to the Deposit Account by contributors that are also contributors to the Loan Account shall be November 30, 2050.
- Stand-alone Deposit Account contribution maturities: as agreed between the Managing Director and the contributor.
- Deposit Account uses:
  - (1) make payments of interest and repayments of principal to Deposit Account contributors;
  - (2) make repayments of principal and payments of interest under borrowing agreements for the Loan Account, to extent receipts and Reserve Account resources are insufficient; accumulated net investment earnings used first before principal.

### SECTION III — Transfers, administration, audits, reporting
- Transfer of claims: contributors may transfer claims on Loan Account or Deposit Account or share in Reserve Account to members, central banks/other fiscal agencies, or official SDR holders, subject to transferee acceptance of obligations and rights; encashment rights conditioned on transferee being member/central bank and sufficient balance of payments and reserve position.
- Administration:
  - Trust administered by the Fund as Trustee; Fund applies same rules as operate the General Resources Account.
  - Trustee, acting through Managing Director, authorized to make arrangements and administrative measures for Trust.
- Separation and audits:
  - Trust resources kept separate; Trustee shall maintain separate financial records and prepare separate financial statements.
  - External audit firm selected under Section 20 of the Fund’s By‑Laws shall audit financial transactions and records; audit relates to financial year of the Fund.
  - Fund shall report on resources and operations of the Trust in the Annual Report of the Executive Board to the Board of Governors and include the external audit firm report.

### SECTION IX — Period of Operation and Liquidation; amendment and review
- Period of operation: Trust remains in effect "for as long as is necessary, in the judgment of the Fund, to conduct and to wind up the business of the Trust."
- Liquidation:
  - Termination/distribution of Deposit Account per Section VI, Paragraph 5.
  - Reserve Account resources used to discharge liabilities; remainder distributed to contributors in accordance with shares.
- Amendment (Section X):
  - Trustee may amend provisions subject to Paragraph 2.
  - Amendments requiring contributor consent specified (Sections and Paragraphs listed).
  - Consequences of nonconsent by Loan Account contributor include suspension of further drawings under contributor’s borrowing agreement, except limited drawings to fund outstanding commitments; contributor may request return of share of principal contributions to Deposit and Reserve Accounts based on ratio of remaining uncommitted resources.
  - Deemed consent process: Trustee establishes deadlines; nonresponding contributor may be deemed to have consented but may have 6 months from effectiveness to object and request suspension and return of shares.
- Review (Section XI):
  - Trustee shall review operation of the Trust, including eligibility for Trust loans, adequacy of resources and reserve coverage, level of margins, service charges and interest rates.
  - First review no later than three years from date Managing Director notifies Executive Board that the Trust can begin lending operations.

### APPENDIX I — Misreporting and noncomplying disbursements
- Definition of noncomplying disbursement: Trustee completes review and makes disbursement based on finding that Reform Measure implemented or deviation minor, and that finding later proves incorrect.
- Noncomplying disbursement tied to misreporting in a concurrent review: disbursement noncomplying when Executive Board finds misreporting at completion of concurrent review under accompanying UCT-quality instrument, and misreporting is not de minimis or waived. Misreporting subject to same limitation period as under accompanying instrument.
- Notification and procedures: staff evidence triggers prompt notification by Managing Director to member; if Managing Director determines member received noncomplying disbursement, notify member and submit report to Executive Board with recommendations.
- Executive Board options if noncomplying disbursement made no more than four years prior to notification:
  - (i) call upon the member to make an early repayment, or
  - (ii) decide no early repayment required if objectives of Reform Measure achieved notwithstanding deviation because deviation is minor.
- Repayment expectation timing: if Board calls for early repayment, member expected to repay amount equivalent to noncomplying disbursement plus any interest accrued, normally within a period of 30 days from Executive Board decision.
- Failure to meet repayment expectation: Managing Director shall promptly submit report with proposal on how to deal with matter; interest charged at rate applicable to overdue amounts under Section II, Paragraph 4.
- If noncomplying solely because of misreporting under accompanying instrument, applicable misreporting procedures are those specified under that instrument.

### APPENDIX II — Procedures for addressing overdue financial obligations, removal and noncooperation
- Initial steps and suspension of access:
  - Staff sends communication urging prompt payment and follows up through Executive Director; member’s access to Fund resources including RST resources, PRGT and HIPC resources is suspended.
- Two-week overdue: Managing Director sends communication to Governor stressing seriousness.
- One-month overdue: Managing Director notifies Executive Board normally one month after obligation overdue and informs Board of arrears and steps to secure payment.
- Six-week overdue: Managing Director informs member that unless obligations settled a report will be issued to Executive Board within two weeks and may recommend written communication to Governors.
- Two-month and subsequent reviews:
  - Report issued two months after obligation overdue and given substantive consideration by Executive Board one month later; report will request Board limit member’s use of Trust resources.
  - Brief factual statement noting arrears outstanding for more than three months will be posted on member’s country-specific page on Fund external website and indicate suspension of access to Trust, PRGT and HIPC resources.
  - Press release issued following Executive Board decisions to limit or lift limitations.
  - Subsequent Executive Board review periods normally not exceed six months; Managing Director may advance or postpone in exceptional circumstances for up to one-year periods.
- Six-month disclosure: Annual Report and financial statements will identify members with overdue obligations outstanding for more than six months.
- Removal from RST-eligible list:
  - When a member’s longest overdue obligation has been outstanding for six months, Executive Board will review and may remove member from list of RST-eligible members; reinstatement requires new Board decision. Fund shall issue press releases upon removal and reinstatement; information included in Annual Report where pertinent.
- Declaration of noncooperation:
  - Twelve-month overdue threshold: declaration may be issued whenever member’s longest overdue obligation outstanding for twelve months.
  - Decision factors: (i) member’s performance in meeting obligations to Fund, including GRA and PRGT; (ii) whether member made payments to other creditors while in arrears to Trust; (iii) preparedness to adopt comprehensive adjustment policies.
  - Consequences: Board may terminate declaration; upon declaration Fund could suspend provision of technical assistance; Managing Director may limit technical assistance if not contributing to resolution. Press releases issued upon declaration and termination; information included in Annual Report(s).

*Source: ppea2025009*

### EXECUTIVE SUMMARY

### EXECUTIVE SUMMARY

### Background and proposal
- The paper proposes a narrow and targeted change to the RST relevant for cases where the concurrent Upper Credit Tranche (UCT)-quality instrument accompanying an RSF arrangement is a Flexible Credit Line (FCL) arrangement.
- Requests for arrangements under the Resilience and Sustainability Facility (RSF) require a qualifying concurrent UCT-quality instrument that is on-track and has at least 18 months remaining.
- As originally designed in 2022, an RSF arrangement would terminate when the accompanying concurrent UCT-quality instrument is cancelled, terminates, or expires.
- In May 2024, the Executive Board approved reforms allowing an RSF arrangement to continue when the member switches from one qualifying UCT-quality instrument to another, provided criteria (a)–(f) are met. These criteria include:
  - (a) approval of a new qualifying UCT-quality instrument effective immediately upon termination/cancellation of the existing concurrent instrument;
  - (b) the remaining period of the RSF arrangement does not exceed the duration of the new UCT-quality instrument and the minimum duration of the RSF arrangement across the two UCT-quality instruments is observed;
  - (c) the most recent review under the current UCT-quality instrument was completed no more than 10 months prior to the date of approval of the new UCT-quality instrument;
  - (d) the member’s performance under the program supported by the existing UCT-quality instrument was satisfactory;
  - (e) the criteria for approving an RSF arrangement remain satisfied; and
  - (f) the remaining RSF-supported reform measures remain generally appropriate, or have been modified as necessary, and conditions remain in place for their successful completion.

### Observations about application to FCL arrangements
- Staff observed that criteria (c) and (d) are not suited for an RSF arrangement accompanied by a concurrent FCL arrangement:
  - Criterion (c): Under the FCL policy, the mid-term review under two-year FCL arrangements “is scheduled with the objective of completion by the Executive Board immediately prior to the lapse of the one-year period” from the date of approval of the FCL arrangement. No other reviews are contemplated. The requirement that the most recent review should have been completed “within the past 10 months” is not suited to the annual periodicity of reviews of a member’s qualification under FCL arrangements.
  - Criterion (d): The stringent ex ante qualification criteria for accessing the FCL make the requirement for an assessment of satisfactory “program” performance by the Board not suited for an FCL arrangement.
- Applying criteria (c) and (d) as drafted would imply that a member could not continue its RSF arrangement when switching from an FCL to another UCT-quality instrument:
  - during the first 12 months of an FCL arrangement prior to the completion of the mid-term review; or
  - during the last two months of a 2-year FCL arrangement (where the mid-term review has been completed but earlier than the previous 10 months).

### Proposed safeguard modification for FCL cases
- Staff proposes that, when the FCL is the existing UCT-quality instrument accompanying the RSF arrangement, the appropriate safeguard is that the Executive Board has, within the previous 12 months, either approved the FCL arrangement or, in the second year of the FCL arrangement, completed the mid-term review of the member’s qualification under the FCL arrangement.
- Rationale:
  - The approval of the FCL within the prior 12 months, or completion of the mid-term review, provides an appropriate indication that sufficient safeguards exist to anchor the RSF arrangement.
  - The stringent ex ante qualification criteria for the FCL are judged by staff to ensure this modification does not introduce additional risks for the use of RST resources and that adequate policy safeguards remain in place.
- All other criteria for continuation of the RSF arrangement under the successor UCT-quality instrument remain valid and must be met.

### Proposed decision text (summary of amendment)
- Section II, Paragraph 1(b)(4)(ii) of the Instrument to Establish the Resilience and Sustainability Trust is to be amended to permit continuation and extension of an RSF arrangement when a member requests a new concurrent qualifying UCT-quality instrument, provided:
  - (a) the Executive Board approves the New Concurrent Qualifying UCT-quality Instrument to become effective immediately upon termination or cancellation of the existing concurrent qualifying UCT-quality instrument(s);
  - (b) the remaining period of the RSF arrangement will not exceed the duration of the New Concurrent Qualifying UCT-quality Instrument and the RSF arrangement remains subject to the minimum duration specified in Paragraph 1(b)(4)(i);
  - (c) the criteria for approving an RSF arrangement, including Paragraph 1(b)(6), remain satisfied at the time of approving the New Concurrent Qualifying UCT-quality Instrument;
  - (d) the Reform Measures under the RSF arrangement remain generally appropriate, or are being modified as necessary, and conditions remain in place for their successful completion;
  - (I) for all qualifying UCT-quality instruments other than FCL arrangements, the most recent review under the existing concurrent qualifying UCT-quality instrument was completed no more than 10 months prior to the Executive Board approval of the New Concurrent Qualifying UCT-quality Instrument, and prior to the change in circumstances the member’s performance under the program supported by the existing instrument was satisfactory; and
  - (II) for FCL arrangements, the Executive Board has, within the previous 12 months, either approved the FCL arrangement, or in the second year of the FCL arrangement, completed the review specified in paragraph 5 of Decision No 14283-(09/29) on Flexible Credit Line arrangements.
- The proposed decision may be adopted by a majority of the votes cast.

### Implementation and documentation
- Staff proposes adoption of the targeted modification to the RST instrument.
- Annex I contains a redlined text showing changes to Section II, Paragraph 1(b)(4)(ii) of the RST instrument.

*Prepared by staff in the Strategy, Policy, and Review, Finance, and Legal Departments; Approved By Dora Iakova, Bernhard Steinki and Papa N’Diaye; December 11, 2024.*

### Section II. Trust Loans

### Section II. Trust Loans

### Eligibility and Conditions for Financing
- RST-eligible members: Members of the Fund listed in the Annex to Decision No. [RST Decision 2].
- Financing under RSF Arrangements:
  - An RST-eligible member may request financing under the RSF up to the maximum overall access specified in Paragraph 2(a).
  - RSF financing is committed and made available under an arrangement approved by the Trustee to support structural reforms that aim to reduce and/or mitigate risks associated with Qualifying Longer-term Structural Challenges (an “RSF Arrangement”).
  - An RSF Arrangement shall normally be approved concurrently with approval of, or the completion of a review under, a qualifying UCT-quality instrument (Stand-by Arrangement, Extended Arrangement under the Extended Fund Facility, Precautionary and Liquidity Line or Flexible Credit Line (“FCL”), Policy Coordination Instrument, Standby Credit Facility, or Extended Credit Facility). If accompanied by more than one qualifying UCT-quality instrument, each such instrument constitutes the qualifying UCT-quality instrument.
- Duration and continuation rules for RSF Arrangements:
  - Generally expected to coincide with duration of a new qualifying UCT-quality instrument or remaining duration of an existing one, provided duration is no less than 18 months; for RSF arrangements approved during the period of 6 months from the date of the notification in paragraph 2 of Decision No. 17231-(22/37), duration shall be no less than 12 months.
  - RSF arrangements shall not extend beyond the duration of the concurrent qualifying UCT-quality instrument; ordinarily RSF terminates if the concurrent instrument terminates, expires, or is cancelled.
  - Continuation/extension despite termination/cancellation of concurrent instrument allowed if criteria are met, including:
    - Executive Board approval for New Concurrent Qualifying UCT-quality Instrument effective immediately upon termination/cancellation;
    - Remaining RSF period (including extensions) will not exceed duration of New Concurrent Qualifying UCT-quality Instrument and RSF duration from approval remains subject to the minimum duration specified;
    - Most recent review under existing concurrent qualifying UCT-quality instrument completed no more than 10 months prior to Executive Board approval of the New Concurrent Qualifying UCT-quality Instrument (additional specific conditions for FCL arrangements);
    - Prior performance under existing instrument was satisfactory; criteria for approving RSF remain satisfied; Reform Measures remain generally appropriate or are being modified as necessary.
  - RSF arrangement accompanied by more than one concurrent qualifying UCT-quality instrument may continue if at least one concurrent instrument meets requirements for the remainder of its duration.
  - All concurrent qualifying UCT-quality Instruments are considered the accompanying UCT-quality instrument under Appendix I for purposes of misreporting.
  - RSF arrangement may be extended at time of extension of concurrent instrument if additional time is required to complete identified Reform Measures or additional Reform Measures are identified.
- Reform Measures:
  - Member must present a detailed statement of structural reforms to be implemented during RSF period (“Reform Measures”).
  - Reform Measures should help make significant progress toward strengthening prospective balance of payments stability by reducing macro-critical risks associated with Qualifying Longer-term Structural Challenges.
- Trustee assessments at approval and at each review:
  - (i) Reform Measures meet standards in paragraph 5;
  - (ii) member’s debt sustainable in the medium-term under applicable debt sustainability framework;
  - (iii) member’s capacity to repay the Trust is assessed to be adequate.
- Commitments and disbursement timing:
  - RSF Arrangement will specify total committed resources, earliest availability date for each disbursement, and expected timing of reviews. No disbursement upon approval.
  - Each Reform Measure linked to one disbursement; implementation monitored through reviews.
  - Phasing limit: total disbursements made available at a single review limited to not more than 50 percent of the member’s quota, though delays may lead to later reviews where total disbursements approved at that review may exceed 50 percent of the member’s quota.
- Reviews and bringing forward disbursements:
  - Reviews under RSF occur concurrently with reviews under accompanying qualifying UCT-quality instrument(s).
  - At reviews, Trustee assesses implementation for disbursement requests whose availability date has passed and may reach new understandings including rephasing.
  - A member may request approval to bring forward availability date of a single disbursement to date of completion of review if: (a) Reform Measure completed early (including minor deviation as specified in Paragraph 10); (b) 50 percent of quota limit at review would not be exceeded; (c) more than one Reform Measure remain to be implemented; (d) Trustee satisfied quality of reform package has not diminished; (e) phasing remains appropriate.
- Conditions for disbursement:
  - Each disbursement requires: (i) completion of a review under the RSF arrangement after availability date and Trustee assessment that the specified Reform Measure was implemented or any deviation was minor (or decision to bring forward availability date); and (ii) completion of corresponding review under accompanying qualifying UCT-quality instrument.
  - If approved concurrently with an FCL arrangement, RSF establishes schedule of stand-alone reviews and associated RSF disbursements after completion of such reviews.
- Cancellation and termination:
  - Member may cancel an RSF Arrangement at any time by notifying the Trustee; cancellation has no effect on accompanying qualifying UCT-quality instrument.
  - RSF Arrangement terminates automatically once all access under such arrangement has been disbursed.
- Conditionality guidance:
  - Guidelines on Conditionality (Decision No. 12864-(02/102)) do not apply to RSF conditionality except for general principles relevant to Reform Measures: national ownership, tailoring to member’s circumstances, clarity in specification, and effective coordination with other multilateral institutions.

### Amount of Financing
- Overall access cap for each RST-eligible member: lower of (i) 150 percent of quota and (ii) SDR 1 billion.
- Trustee may establish access norms to guide determination of access; deviations below or above norms may be approved considering:
  - (i) any direct short to medium term balance of payments needs associated with implementation of Reform Measures;
  - (ii) strength and ambition of Reform Measures;
  - (iii) member’s capacity to repay the Trust, taking into account debt sustainability, debt carrying capacity and composition of debt, including obligations owed to the Fund in the GRA and the PRGT.
- Access adjustments at reviews:
  - Subject to maximum overall access in Paragraph 2(a), access under an RSF arrangement may be increased at a review by providing additional disbursements linked to additional Reform Measures or by increasing phased disbursements to strengthen existing Reform Measures.
  - Access may also be reduced at any review if requested by the member.
- Any commitment of Trust resources subject to availability of such resources.
- Restrictions on recommendation/approval:
  - Managing Director shall not recommend, and Trustee shall not approve, request for RSF Arrangement or continuation under Paragraph 1(b)(4)(ii) or (iii) whenever member has an overdue financial obligation to the Fund in the GRA, the Special Disbursement Account, the SDR Department, or the Fund as Trustee of this Trust or of the PRGT, or while failing to meet a repurchase expectation to the Fund pursuant to Decision No. 7842-(84/165) or a repayment expectation pursuant to Section II, paragraph 3(c) of the PRGT or Appendix 1 of such Trust, or a repayment expectation pursuant to Appendix I to this Instrument.
- Prioritization guidance:
  - If member has overdue obligations from a Trust loan and overdue obligations in the GRA or to the Fund as Trustee of the PRGT, or is at risk of incurring such arrears, member is encouraged to prioritize meeting obligations to the GRA and/or the PRGT over obligations under Trust loans.

### Disbursements
- Commitments subject to availability of Trust resources.
- Disbursements must take place during the period of the RSF arrangement.
- Rephasing:
  - If disbursement delayed due to delays in implementation of Reform Measures or delays in completion of reviews under accompanying qualifying UCT-quality instrument, Trustee may rephase disbursements over remaining RSF period.
- Timing after review:
  - Following completion of a review and subject to rephasing rules, disbursement shall be requested no later than 30 calendar days of completion of the review and made on the earliest value date for which necessary notifications and payment instructions can be issued.
  - If not completed within 30 calendar days, member may again request disbursement within 30 days from completion of the next review.
- Misreporting and noncomplying disbursements:
  - Provisions of Appendix I apply to misreporting and noncomplying disbursements of Trust loans.
- Suspension:
  - Disbursements under an RSF Arrangement to a qualifying member shall be suspended in all cases specified in Paragraph 20 of this Section.

### Terms of Trust Loans
- Currency: Disbursed in SDRs, or in a freely usable currency as determined by the Trustee.
- Repayment schedule: Repaid in twenty equal semi-annual installments beginning ten and a half years from the date of each disbursement.
- Interest:
  - Charged at a rate equal to sum of (i) the rate of interest on the SDR, and (ii) the applicable margin pursuant to subparagraphs (e) and (f), provided interest rate may be capped as in (f) and interest rate charge on all overdue obligations subject to a minimum of the SDR interest rate.
  - Interest accrues daily and paid in SDR promptly after April 30, July 31, October 31, and January 31 of each year.
- Service charge: Trustee may levy a service charge, set as a percentage of the disbursement amount, payable at time of disbursement.
- Member grouping for margin and service charge:
  - (i) Group A: RST-eligible members that are also PRGT-eligible (or per capita gross national income at or below PRGT-eligibility list threshold) and who are not presumed to blend PRGT and GRA resources pursuant to Decision No. 17028-(21/71)–(“Blending Framework”).
  - (ii) Group B: RST-eligible members presumed to blend PRGT and GRA resources under the Blending Framework or who have a population below 1.5 million and per capita income below ten times the International Development Association operational cut-off as determined pursuant to paragraph 2(c) of Decision No. 12232-(22/37).
  - (iii) Group C: all other RST-eligible members.
  - The initial classification is set out in Appendix III.
- Applicable margins:
  - Group A: 55 basis points.
  - Group B: 75 basis points.
  - Group C: 95 basis points.
  - Additional caps/limits for Group A:
    - (i) interest rate charged on the daily outstanding balance for members in Group A shall not exceed 2.25 percent per annum;
    - (ii) interest rate on any overdue repayments and any overdue interest payments for members in Group A shall not exceed 2.25 percent per annum or the rate of interest on the SDR, whichever is higher.
- Service charge levels:
  - Group A: zero.
  - Group B: 25 basis points.
  - Group C: 50 basis points.
- Change in group classification during an arrangement:
  - For applying service charge and margin to any loan disbursements under that arrangement (including commitments not yet disbursed or later augmentation), member treated as remaining in the group it was in at time of approval of that arrangement.
- Review of margin and service charge:
  - Reviewed pursuant to Section XI, either at periodic reviews of the RST or earlier if warranted.
  - In setting margin and service charge, Trustee shall consider borrowing costs for RST-eligible members, projected net reserve coverage for Trust loans over lifecycle of the Trust, and costs of administrating the Trust.
- Rescheduling:
  - Trustee may not reschedule the repayment of Trust loans.

### Modifications
- Modifications to provisions applicable to Trust loans affect only Trust loan disbursements made after effective date of the modification.
- Any modification of interest rates (including margins) shall apply to interest accruing after the effective date of the modification, subject to Paragraph 4(c).

*Source: ppea2025009 - Section II. Trust Loans*

### Section III. Contributions to the Trust

### Section III. Contributions to the Trust

### Authority to Receive Contributions
- The Trustee may receive contributions of resources for the Loan Account, the Reserve Account, and the Deposit Account on such terms and conditions as may be agreed between the Trustee and the respective contributor, subject to the provisions of this Instrument.
- The Trustee may only accept a contribution to the Loan Account where the contributor also makes corresponding contributions to the Reserve Account and to the Deposit Account, equal to at least two percent and twenty percent, respectively, of its Loan Account contribution amount.
- The Trustee may receive stand-alone contributions to the Reserve Account and/or the Deposit Account.

### Authority of the Managing Director
- For the purpose of receiving contributions to the Loan Account, the Reserve Account, and the Deposit Account pursuant to paragraph 1 of this Section, the Managing Director of the Trustee is authorized to enter into agreements with contributors and to make the necessary arrangements in accordance with the provisions of this Instrument.

### The Loan Account — Resources
- Definition: “borrowing agreement” comprises loan and note purchase agreements; “Trust borrowing” comprises loans made to the Trust and notes issued by the Trust.
- Loan Account resources shall consist of:
  - (i) the proceeds of Trust borrowing; and
  - (ii) repayments of principal and payments of interest on Trust loans funded with drawings under borrowing agreements to the Loan Account, subject to Section V, paragraph 1(f) and Section VI, paragraph 1(c) of this Instrument.
- Loan Account resources may be held temporarily in the short-term instruments pending transfer and use in operations.

### The Loan Account — Drawdown Period and Drawings
- Drawdown period for Trustee draws under borrowing agreements to extend Trust loans shall extend through November 30, 2030; on an exceptional basis the Managing Director may agree on a shorter drawdown period than November 30, 2030.
- Drawings pursuant to Paragraph 3(b) may be made for as long as claims under Trust loans remain outstanding.
- The Trustee may draw under borrowing agreements to fund Trust loans.
- The Trustee may draw to fund early repayment of outstanding Trust borrowing under another borrowing agreement with the Loan Account (“encashment”) where:
  - a contributor requesting early repayment represents that its balance of payments and reserve position (or that of a relevant member if the contributor is the central bank or other official institution of such member) justify early repayment, and
  - the Trustee, having given this representation the overwhelming benefit of any doubt, agrees.
- As from the effective date of such early repayment, a contributor whose borrowing agreement has been drawn to fund an encashment call shall have the same rights to repayment as the contributor requesting the encashment had with respect to the encashed claim, including all rights to repayments of principal and payments of interest pursuant to Paragraph 5 of Section IV.
- Drawings shall be made with the objective of maintaining over time broad proportionality of drawings relative to commitments under borrowing agreements of contributors.

### The Loan Account — Temporary Suspension of Drawings
- A contributor’s request for early repayment pursuant to paragraph 3(b) shall suspend calls under its borrowing agreement.
- Calls under a contributor’s borrowing agreement shall also be automatically suspended when the currency of the relevant member is no longer included for transfers in the Fund’s Financial Transactions Plan.
- Following any suspension under the preceding subparagraphs, drawings shall be resumed as soon as the balance of payments and reserve position of the relevant member have improved as evidenced by inclusion of its currency for transfers in the Fund’s Financial Transactions Plan.

### The Loan Account — Payments of Principal and Interest
- The Trust shall make payments of principal and interest on its borrowing for the Loan Account from the payments into the Loan Account of principal and interest made by borrowers under Trust loans.
- The Trustee shall pay interest on outstanding Trust borrowing at the interest rate set forth in the relevant borrowing agreement, provided that the rate of interest may not exceed the SDR interest rate.
- The Trust shall pay interest on a quarterly basis, normally promptly after April 30, July 31, October 31, and January 31 of each year to the account of the relevant member in the SDR Department or as otherwise agreed between the Trustee and the contributor.
- Each drawing under a borrowing agreement shall be repaid in accordance with the repayment schedule for Trust loans as set out in Section II, paragraph 4(b).
- The Trustee may repay part or all of the outstanding drawing under any borrowing agreement at any time prior to the maturity of such borrowing in the event of early repayment to the corresponding Trust loan.

### The Loan Account — Transfers to Reserve and Deposit Accounts
- Margin income from Trust loans that accumulates in the Loan Account shall be transferred on a quarterly basis promptly after April 30, July 31, October 31, and January 31 of each year to:
  - first fully replenish any use of Deposit Account principal contributions pursuant to Section VI, Paragraph 1(c); and
  - then to the Reserve Account.

### Reserve Account — Resources
- Resources held in the Reserve Account shall consist of:
  - (a) proceeds of contributions to the Reserve Account pursuant to Section III, Paragraph 1;
  - (b) payment of service charges pursuant to Section II, Paragraph 4(d);
  - (c) transfers of margin income from the Loan Account pursuant to Section IV, Paragraph 6;
  - (d) net earnings from investment of resources held in the Reserve Account pursuant to Paragraph 3;
  - (e) transfers of net earnings from temporary holding of Loan Account resources pending use in operations pursuant to Section IV, Paragraph 1(b);
  - (f) payments of overdue principal or interest or interest thereon under Trust loans and repayments of principal under Trust loans to the extent Reserve or Deposit Account resources have been used to make payments to a contributor due to timing or amount differences between scheduled principal repayments to the contributor and principal repayments under Trust loans, provided these payments and repayments may only be made into the Reserve Account after the Deposit Account’s principal contributions are fully replenished pursuant to Section VI, Paragraph 1(c);
  - (g) transfers of net investment income attributable to contributors’ contributions to the Deposit Account upon full repayments of these contributions pursuant to Section VI, Paragraph 5(d).

### Reserve Account — Remuneration and Shares
- Contributions to the Reserve Account shall not be remunerated.
- Each Reserve Account contributor shall have a proportional share in the Reserve Account balances.
- Resources accruing to or used from the Reserve Account shall be attributed to contributors in proportion to their shares at the time of the respective accruement or use.
- Net investment earnings in the Deposit Account attributed to a contributor’s contribution and transferred to the Reserve Account per Section VI, Paragraph 5(d) shall be included in that contributor’s share in the Reserve Account.
- Any repayments of overdue obligations that accrue to the Reserve Account pursuant to Paragraph 1(f) and were funded by a contributor’s accumulated net investment earnings in the Deposit Account pursuant to paragraph 4(b)(2) of Section VI shall be attributed to that contributor’s share in the Reserve Account.

### Reserve Account — Investment, Use, and Distributions
- Pending use, Reserve Account resources shall be invested in accordance with guidelines adopted by the Trustee, which may be amended from time to time.
- Reserve Account resources shall be used by the Trustee to:
  - (1) make repayments of principal and payments of interest pursuant to borrowing agreements for the Loan Account, to the extent receipts from borrowers under Trust loans are insufficient to cover payments to contributors to the Loan Account as they become due and payable;
  - (2) pay for the costs of administering the Trust; and
  - (3) make distributions to contributors to the Reserve Account pursuant to Paragraph 4.
- Contributions to the Reserve Account shall have no fixed maturity, provided the Managing Director may agree to a fixed maturity for stand‑alone contributions taking into account the investment strategy.
- For any stand‑alone contribution to the Reserve Account that matures before liquidation of the Reserve Account, an amount equal to the lesser of (i) the original contribution amount or (ii) the relative share of that contribution amount in the Reserve Account, shall be distributed to the contributor by the maturity date; remaining amounts attributable to the contribution shall be received upon liquidation of the Reserve Account or as part of an early distribution pursuant to subparagraph (d).
- Upon liquidation of the Trust, all resources in the Reserve Account, including accumulated income, net of any distribution to stand‑alone contributors and net of liabilities authorized to be discharged by the Reserve Account, shall be distributed to contributors in proportion to their shares.
- Prior to liquidation, and only following full repayment of all Deposit Account principal contributions in accordance with Section VI, Paragraph 5(b) and (c), the Trustee may decide to distribute a portion of Reserve Account balances if justified by reserve coverage for the remaining life cycle of the Trust; any distribution would be made in proportion to each contributor’s share.

### Deposit Account — Resources
- Resources in the Deposit Account shall consist of:
  - (a) proceeds of contributions to the Deposit Account pursuant to Section III, Paragraph 1;
  - (b) net earnings from investment of resources held in the Deposit Account pursuant to Paragraph 4(a);
  - (c) payments of overdue principal or interest or interest thereon under Trust loans, repayments of principal under Trust loans to the extent Reserve or Deposit Account resources have been used to make payments to a contributor due to timing or amount differences, and any margin income from Trust loans, to replenish any amounts of Deposit Account principal contributions used to make payments due under borrowing agreements for the Loan Account pursuant to Paragraph 4(b)(2).

### Deposit Account — Remuneration and Shares
- Contributions to the Deposit Account shall be remunerated at the SDR interest rate, provided that individual contribution agreements can provide for a rate lower than the SDR interest rate.
- The share of a contributor in the Deposit Account shall be based on its principal contributions to this account.
- Investment earnings and losses shall be attributed to contributors in proportion to their share in account balances.
- Any payment of interest and repayment of principal contribution, including early repayment under Paragraph 5(e), shall be counted toward, and be limited to, the contributor’s contribution to the Deposit Account and its accumulated net investment earnings that remain in this account.
- Any replenishment of the Deposit Account pursuant to Paragraph 1(c) shall be attributed to contributors in accordance with their shares in the principal contributions used to make payments due under borrowing agreements for the Loan Account pursuant to Paragraph 4(b)(2).

### Deposit Account — Maturity of Contributions
- The maturity date of contributions to the Deposit Account by contributors that are also contributors to the Loan Account under Section III, Paragraph 1(b) shall be November 30, 2050.
- The maturity date for stand‑alone contributions to the Deposit Account pursuant to Section III, Paragraph 1(c) shall be as agreed between the Managing Director and the contributor, taking into account the investment strategy.

### Deposit Account — Investment and Use
- Deposit Account resources shall be invested in accordance with guidelines adopted by the Trustee which may be amended from time to time.
- The Trustee shall use Deposit Account resources to:
  - (1) make payments of interest and repayments of principal to contributors to the Deposit Account; and
  - (2) make repayments of principal and payments of interest under borrowing agreements for the Loan Account, to the extent receipts from borrowers under Trust loans and Reserve Account resources are insufficient to cover payments to contributors to the Loan Account as they become due and payable; provided that all resources attributable to accumulated net investment earnings in the Deposit Account shall first be used in proportion to each contributor’s share in these earnings before using resources attributable to contributors’ principal contributions.

### Deposit Account — Payments and Repayments
- Interest on principal shall be calculated and accrued daily.
- The Trust shall pay interest on a quarterly basis promptly after April 30, July 31, October 31, and January 31 of each year to the account of the relevant member in the SDR Department or as otherwise agreed by the Trustee and the contributor.
- Contributions to the Deposit Account shall be repaid upon maturity of the respective contributions or the liquidation of the Deposit Account, whichever is earlier.
- The Trustee may make early repayments of part or all of Deposit Account principal contributions prior to maturity or liquidation if the Trustee determines such distribution can be justified in light of net reserve coverage based on Reserve Account and remaining Deposit Account resources, including accumulated net investment earnings, for the remaining life cycle of the Trust.
- Following full repayment of a contributor’s Deposit Account contribution, the accumulated net investment earnings in the Deposit Account attributable to that contributor shall be transferred to the Reserve Account under that contributor’s contribution.
- A contributor may seek early repayment of all or part of the principal contribution if the contributor represents that its balance of payments and reserve position (or that of the relevant member if the contributor is the central bank or other official institution of such member) justify the early repayment, and the Trustee, having given this representation the overwhelming benefit of any doubt, agrees. The contributor shall reconstitute any repaid amount once its balance of payments and reserve position (or that of the relevant member) improves as evidenced by inclusion of the member’s currency for transfers in the Fund’s Financial Transactions Plan.

### Transfer of Claims
- Any contributor shall have the right to transfer at any time all or part of any claim on the Loan Account or the Deposit Account or its share in the Reserve Account to:
  - any member of the Fund,
  - the central bank or other fiscal agency designated by any member for purposes of Article V, Section 1 of the Fund’s Articles of Agreement (“other fiscal agency”),
  - or any official entity prescribed as a holder of SDRs pursuant to Article XVII, Section 3 of the Fund’s Articles of Agreement.
- Condition on transfer: the transferee must notify the Trustee prior to transfer that it accepts all obligations of the transferor relating to the transferred claim with respect to renewal of maturities, as applicable, and shall acquire all rights of the transferor with respect to repayments of principal and payments of interest, except:
  - any right to encashment for drawings under borrowing agreements pursuant to Section IV, Paragraph 3 and for Deposit Account claims pursuant to Section VI, Paragraph 5(e) shall be acquired only if the transferee is a member of the Fund or the central bank or other fiscal agency of a member and, at the time of transfer, the balance of payments and reserve position of the relevant member is considered sufficiently strong, as evidenced by inclusion of its currency for transfers under the Fund’s Financial Transactions Plan.

### Administration of the Trust — Trustee and Governance
- The Trust shall be administered by the Fund as Trustee. Decisions and other actions taken by the Fund as Trustee shall be identified as taken in that capacity.
- Subject to the Instrument’s provisions, the Fund in administering the Trust shall apply the same rules as apply to the operation of the General Resources Account of the Fund.
- The Trustee, acting through its Managing Director, is authorized:
  - (1) to make all arrangements, including establishing accounts in the name of the International Monetary Fund, which shall be accounts of the Fund as Trustee, with such depositories as the Trustee deems necessary; and
  - (2) to take all other administrative measures that the Trustee deems necessary to implement the provisions of this Instrument.

### Administration of the Trust — Separation, Audits, and Reporting
- Trust resources shall be kept separate from property and assets of all other Fund accounts, including other trusts and administered accounts, and shall be used only for Trust purposes; however, resources may be pooled with resources of other trusts or accounts for investment purposes under arrangements allowing attribution of pooled investments to each relevant trust or account.
- Property and assets held in other Fund accounts shall not be used to discharge liabilities or meet losses arising out of administration of the Trust; likewise Trust resources shall not be used to discharge liabilities or meet losses arising out of administration of other accounts.
- The Trustee shall maintain separate financial records and prepare separate financial statements for the Trust.
- The external audit firm selected under Section 20 of the Fund’s By‑Laws shall audit the financial transactions and records of the Trust. The audit shall relate to the financial year of the Fund.
- The Fund shall report on the resources and operations of the Trust in the Annual Report of the Executive Board to the Board of Governors of the Trustee and shall include in that Annual Report the report of the external audit firm on the Trust.

*ppea2025009 - Section III. Contributions to the Trust*

### Section IX. Period of Operation and Liquidation

### Section IX. Period of Operation and Liquidation

### Period of Operation
- The Trust established by this Instrument shall remain in effect "for as long as is necessary, in the judgment of the Fund, to conduct and to wind up the business of the Trust."

### Liquidation of the Trust
- Termination and distribution of the Deposit Account shall be in accordance with Section VI, Paragraph 5.
- Resources in the Reserve Account shall be used to discharge any liabilities of the Trust and any remainder shall be distributed to contributors to the Reserve Account in accordance with their shares of contributions.

### Amendment of the Instrument (Section X)
- The Trustee may amend the provisions of this Instrument, subject to Paragraph 2 of this Section.
- Amendments requiring contributor consent (Paragraph 2):
  - Sections requiring Loan Account contributors' consent: Section I, Paragraph 1; Section II, Paragraphs 4 (b) and 4(j); Section IV, Paragraphs 2 to 5; Section V, Paragraphs 2 to 4; Section VI, Paragraphs 2 to 5; Section VIII, Paragraph 2(a) and (b); Section IX, Paragraph 2; and Section X.
  - Amendments to Section V, Paragraphs 2 to 4 require consent of stand-alone contributors to the Reserve Account.
  - Amendments to Section VI, Paragraphs 2 to 5 require consent of stand-alone contributors to the Deposit Account.
- Consequences of nonconsent by a Loan Account contributor (subparagraph b):
  - Further drawings under the contributor’s borrowing agreement will be suspended, except for drawings to fund disbursements for outstanding commitments of Trust loans and to fund any requests pursuant to Section IV, Paragraph 3(b) for early repayment of Trust borrowing outstanding at the time the amendment becomes effective.
  - The contributor may request the return of a share of its principal contributions to the Deposit Account and Reserve Account based on the ratio of remaining uncommitted resources under its borrowing agreements to total commitments under its borrowing agreements to the Loan Account.
- Consequences of nonconsent by a stand-alone contributor to the Reserve Account or the Deposit Account (subparagraph c):
  - The contributor may request repayment of its principal contribution, net of any losses or retained investment earnings.
  - The contributor shall receive any remaining amount attributable to its contribution to the Reserve Account or the Deposit Account upon the liquidation of, or as part of an early distribution or repayment pursuant to subparagraph (d).
- Consent process and deemed consent (subparagraph d):
  - The Trustee shall establish a deadline for explicit consent, followed by a second deadline after which a nonresponding contributor may be deemed to have consented.
  - A contributor deemed to have consented will have 6 months from the effectiveness of the amendment to notify its objection and request a suspension of drawings under its borrowing agreement to the Loan Account and the return of its share in the Reserve Account and the Deposit Account pursuant to subparagraphs (b) or (c).

### Review (Section XI)
- The Trustee shall review the operation of the Trust, including:
  - eligibility for Trust loans,
  - adequacy of resources and reserve coverage,
  - level of margins, service charges and interest rates.
- The first such review will take place no later than three years from the date on which the Managing Director notifies the Executive Board that the Trust can begin lending operations.

### Appendix I — Misreporting and Noncomplying Disbursements under the Resilience and Sustainability Trust
- Definition of noncomplying disbursement (paragraph a):
  - Occurs when (i) the Trustee completes a review and makes a disbursement based on a finding (supported by information provided by the member) that a Reform Measure has been implemented or that the deviation was minor, and (ii) that finding later proves to be incorrect.
- Noncomplying disbursement tied to misreporting in a concurrent review (paragraph b):
  - A disbursement is noncomplying when the Executive Board finds misreporting at completion of a concurrent review under an accompanying UCT-quality instrument, and such misreporting is not de minimis or waived.
  - A "concurrent review" is a review under the accompanying UCT-quality instrument completed at the same time as a review under the RSF arrangement.
  - Misreporting under paragraph b is subject to the same limitation period that applies to the misreporting under the accompanying UCT-quality instrument.
- Notification and procedures upon evidence of noncomplying disbursement (paragraphs c–d):
  - Staff evidence triggers prompt notification by the Managing Director to the member.
  - If, after consultation, the Managing Director determines the member received a noncomplying disbursement, the Managing Director shall promptly notify the member and submit a report to the Executive Board with recommendations.
- Executive Board options if noncomplying disbursement was made no more than four years prior to notification (paragraph e):
  - (i) call upon the member to make an early repayment, or
  - (ii) decide that no early repayment is required if satisfied that the objectives of the Reform Measure have been achieved notwithstanding the deviation because the deviation in policy implementation is minor.
- Repayment expectation timing (paragraph f):
  - If the Executive Board calls for early repayment, the member will be expected to repay an amount equivalent to the noncomplying disbursement, together with any interest accrued thereon, normally within a period of 30 days from the date of the Executive Board decision.
- Failure to meet repayment expectation (paragraph g):
  - (i) The Managing Director shall promptly submit a report to the Executive Board together with a proposal on how to deal with the matter.
  - (ii) Interest shall be charged on the amount subject to the repayment expectation at the rate applicable to overdue amounts under Section II, Paragraph 4 of this Instrument.
- Misreporting solely under accompanying instrument (paragraph h):
  - If a disbursement is noncomplying solely because of misreporting under the accompanying UCT-quality instrument, the applicable misreporting procedures are those specified under that instrument.

### Appendix II — Procedures for Addressing Overdue Financial Obligations
- Purpose:
  - Procedures aim to prevent the emergence or accumulation of overdue financial obligations to the Trust; implemented whenever a member has failed to make a repayment of principal or payment of interest to the Trust (“financial obligation”).
- Initial steps and suspension of access (1):
  - Staff will immediately send a communication urging prompt payment and follow up through the office of the Executive Director concerned.
  - At this stage, the member’s access to the Fund’s resources, including RST resources, the Poverty Reduction and Growth Trust and HIPC resources, is suspended.
- Two-week overdue action (2):
  - When outstanding for two weeks, the Managing Director will send a communication to the Governor stressing the seriousness and urging full and prompt settlement.
- One-month overdue action (3):
  - The Managing Director will notify the Executive Board normally one month after a financial obligation has become overdue and will inform the Board of the nature and level of arrears and steps being taken to secure payment.
- Six-week overdue action (4):
  - When the longest overdue obligation has been outstanding for six weeks, the Managing Director will inform the member that unless all overdue obligations are settled, a report will be issued to the Executive Board within two weeks.
  - The Managing Director will recommend whether a written communication should be sent to a selected set of Fund Governors or to all Fund Governors, and the Board will consider the thrust and timing accordingly.
- Two-month and subsequent reviews (5):
  - A report will be issued two months after a financial obligation becomes overdue and given substantive consideration by the Executive Board one month later.
  - The report will request that the Executive Board limit the member’s use of Trust resources.
  - A brief factual statement noting arrears outstanding for more than three months will be posted on the member’s country-specific page on the Fund’s external website and will indicate suspension of access to Trust, PRGT and HIPC resources.
  - A press release will be issued following Executive Board decisions to limit or to lift limitations on the member’s use of Fund resources.
  - Periods between subsequent Executive Board reviews of arrears reports will normally not exceed six months; the Managing Director may recommend advancing or, in exceptional circumstances, postponing consideration for up to one-year periods.
- Six-month disclosure (6):
  - The Annual Report and financial statements will identify members with overdue obligations to the Trust outstanding for more than six months.

### Removal from the List of RST-Eligible Members
- Six-month overdue threshold for removal (7):
  - When a member’s longest overdue financial obligation has been outstanding for six months, the Executive Board will review the situation and may remove the member from the list of RST-eligible members.
  - Reinstatement requires a new decision of the Executive Board.
  - The Fund shall issue a press release upon removal and upon reinstatement.
  - Information in such press releases shall be included in the Annual Report for the year concerned where pertinent.

### Declaration of Noncooperation with the Trust
- Twelve-month overdue threshold (8):
  - A declaration of noncooperation may be issued whenever a member’s longest overdue financial obligation has been outstanding for twelve months.
- Decision factors for declaration:
  - (i) the member’s performance in meeting financial obligations to the Fund, including to the GRA and PRGT where applicable, accounting for exogenous factors;
  - (ii) whether the member made payments to creditors other than the Fund while continuing to be in arrears to the Trust;
  - (iii) the preparedness of the member to adopt comprehensive adjustment policies.
- Consequences and termination:
  - The Executive Board may terminate the declaration at any time based on the member’s progress.
  - Upon declaration, the Fund could decide to suspend the provision of technical assistance.
  - The Managing Director may limit technical assistance if it is not contributing adequately to resolution of overdue obligations.
  - The Fund shall issue press releases upon declaration and upon termination; information shall be included in the Annual Report(s) for the year(s) concerned.

*Source: ppea2025009 - Section IX. Period of Operation and Liquidation*

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_Source: https://www.imf.org/-/media/files/publications/pp/2025/english/ppea2025009.pdf_