## pp4463-proposal-for-a-post-catastrophe-debt-relief-trust-fund

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### Overview
- Purpose: Sets forth proposed decisions and legal instruments to implement the Proposal for a Post-Catastrophe Debt Relief Trust Fund (the “PCDR Trust” or “Trust”), including adjustments following the May 19, 2010 Executive Board meeting.
- Key adjustments from original proposal:
  - Strengthened linkage between updated debt sustainability assessments and the “criticality” test for stock of debt relief (PCDR Trust Instrument Section III, paragraph 2(b)(i)): resources freed by stock relief are normally considered critical only if, based on an updated debt sustainability analysis, the member has a high level of debt in relation to GDP or exports, typically resulting in an assessment that the member is in debt distress or has a high risk of debt distress.
  - Minimum post-catastrophe “cooling-off” period of six months would normally apply before the Fund may decide on a member’s qualification for stock of debt relief (Section III, paragraph 2(b)(ii)).
- Income eligibility:
  - The original income criterion for PCDR eligibility is retained to target scarce grant resources to poorest countries; small states threshold set at twice the IDA operational cut-off.

### Summary of Key Provisions (Decision A and Trust Instrument)
- Legal basis and establishment:
  - Established pursuant to Article V, Section 2(b) of the Articles of Agreement (paragraph 1).
  - Request for establishment received from a group of Executive Directors (Mr. Hockin and Ms. Lundsager).
- Financing arrangements:
  - Amendment to the MDRI-I Trust authorizes transfer from that Trust (through the Special Disbursement Account (“SDA”)) to the PCDR Trust of SDR 280 million of excess SDA resources currently in the MDRI-I Trust (paragraph 2).
  - Adoption of this amendment (and Decision A overall) requires an 85 percent majority of the total voting power.
- Administration and costs:
  - In accordance with Article V, Section 12(i), the PCDR Trust would reimburse the General Resources Account (GRA) annually for costs of administering SDA resources in the PCDR Trust (paragraph 3).
  - Standard SDR “prescription” provisions included (paragraph 4).
- Trust Instrument — key features:
  - Structure: Sections I–II and IV align with comparable provisions in PRG-HIPC and MDRI Trusts.
  - Eligibility for Debt Relief: Members must be PRGT-eligible and meet the income criteria (Section III, paragraph 1).
  - Eligible Debt:
    - Includes (i) all outstanding debt to the Fund as of the date of the catastrophe for which the member had made regular scheduled debt service payments before the disaster, plus (ii) any disbursements made normally within four months following the catastrophe.
    - Excludes debt in protracted arrears and debt covered by assistance under other Fund debt relief trusts.
  - Debt Flow Relief:
    - Disbursed once the Fund concludes the member has a balance of payments need resulting from a Qualifying Catastrophic Disaster (Section III, paragraph 2(a)).
    - Covers all payments falling due on the member’s eligible debt from the date of the debt flow relief decision to the second anniversary of the Qualifying Catastrophic Disaster (Section III, paragraph 3(a)).
    - Emergency PRGT disbursement would typically not exceed 50 percent of quota (the annual ceiling for access under the shocks window of the Rapid Credit Facility) and often would be lower.
  - Debt Stock Relief:
    - Provided to enable early repayment of eligible debt held by the member on the second anniversary of the catastrophe or the later date the Fund determines requirements are met (Section III, paragraph 3(b)(i)).
    - Qualification requirements (Section III, paragraph 2) analogous to HIPC Initiative decision point determinations; delivery requirements (Section III, paragraph 3) analogous to HIPC Initiative completion point provisions.
    - Stock relief is only committed when the member is determined to qualify; delivery occurs only when creditor participation, cooperation and track record requirements are met (Section III, paragraph 3(b)(ii)).
    - Member must continue to make debt service payments until delivery conditions are met if requirements are satisfied later than the second anniversary.
  - Administration and investment:
    - Resources may be provided in any currency and contributions may be made in or exchanged for SDRs (Section I, paragraph 4).
    - Pending-use resources to be invested in instruments similar to PRG-HIPC and MDRI Trusts (Section IV, paragraph 3).
    - Fund may amend the Trust Instrument; certain “protected” provisions require contributor consent (Section VI).

### Umbrella Account (Decision B) and Subaccounts
- Decision B conditioned on adoption of Decision A.
- Establishment and operations:
  - PCDR Trust Umbrella Account substantially similar to PRG-HIPC Umbrella Account; established by the Fund as trustee pursuant to the Trust.
  - Debt relief resources disbursed by the Trust to a member are placed in a specific subaccount within the Umbrella Account; donors may transfer contributions directly to the member’s subaccount.
  - Subaccount resources invested pending use; used to make payments on the member’s eligible debt consistent with the PCDR Trust Instrument.
  - Excess resources remaining after all PCDR eligible debt repaid are transferred from the member’s subaccount back to the PCDR Trust to fund debt relief to other eligible members (contrast with HIPC Initiative treatment).
  - Investment authority for the Umbrella Account similar to PRG-HIPC Umbrella Account.
- Voting and adoption thresholds:
  - Decision A may be adopted by an 85 percent majority of the total voting power.
  - Decision B may be adopted by a majority of the votes cast and is proposed only if Decision A is adopted.

### Additional Procedural and Legal Provisions
- Amendments to MDRI-I Trust:
  - Section V of the MDRI-I Trust shall be amended to transfer the equivalent of SDR 280 million from the Account (through the SDA) to the PCDR Trust prior to MDRI-I Trust liquidation (new Paragraph 2 under “Reduction of Balances”).
- Review:
  - The Fund shall review the financing and operations of the PCDR Trust at least every five years (Decision A, paragraph 1).
- SDR operations:
  - In accordance with Article XVII, section 3, an SDR Department participant or prescribed holder may transfer SDRs in effecting transfers to/from the PCDR Trust or the Account and subaccounts established under Section III, paragraph 4(b) of the PCDR Trust Instrument; operations shall be recorded in accordance with Rule P-9.

### Section I — General Provisions (Purposes; Trust Account; Unit of account; Media of payment)
- Purposes:
  - Trust grants provide balance of payments assistance in the form of grants to eligible low-income members.
  - Trust grants used for:
    - temporary relief of debt service payments (“debt flow relief”); and
    - in appropriate cases, permanent debt relief (“debt stock relief”).
- Trust Account and resources:
  - Operations conducted through an account (“the Account”); Trustee may establish sub-accounts.
  - Resources consist of:
    - (i) transfers from the Special Disbursement Account in accordance with Section V, paragraph 2 of the MDRI-I Trust;
    - (ii) grant contributions made to the Trust for purposes set forth in Section I, paragraph 1;
    - (iii) loans, deposits and other types of investments made by contributors to generate income; and
    - (iv) net earnings from investment of resources held in the Account.
- Unit of account:
  - The SDR is the unit of account for commitments and all other operations and transactions; commitments for contributions may also be made in currency.
- Media of payment of contributions and exchange of resources:
  - (a) Resources provided to the Account shall be in any currency.
  - (b) Payments by the Trust shall be made in U.S. dollars or such other media as agreed between Trustee and payee.
  - (c) Contributions may also be made in or exchanged for SDRs.
  - (d) Trustee may exchange any of the Trust resources for other resources.

### Section II–III — Contributions; Trust Grants Eligibility and Qualification
- Contributions to the Trust (Section II):
  - Trustee may accept contributions on terms agreed with contributors; Managing Director authorized to accept grants and enter into loan, deposit, or investment agreements.
- Trust Grants — Eligibility (Section III, paragraph 1):
  - Member is PRGT-eligible (list annexed to Decision No. 8240-(86/56) SAF, as amended).
  - Member has annual per capita gross national income below the IDA operational cut-off, or for “small country” less than twice the IDA operational cut-off.
- Qualification for assistance (Section III, paragraph 2):
  - Debt Flow Relief qualification:
    - Trustee determines member is experiencing a balance of payments need arising from a Qualifying Catastrophic Disaster.
    - Qualifying Catastrophic Disaster (post-January 1, 2010) — effects include:
      - (i) large portion of population directly affected, normally at least one-third of the population; and
      - (ii) large portion of economy directly affected, as evidenced by either:
        - (I) destruction of more than a quarter of productive capacity, or
        - (II) damage in an amount exceeding 100 percent of the member’s GDP prior to the disaster.
  - Debt Stock Relief qualification:
    - Eligible member that qualifies for debt flow relief shall also qualify for debt stock relief when Trustee determines:
      - (I) member has substantial balance of payments needs created or exacerbated by the disaster and recovery efforts expected to persist beyond debt flow relief; and
      - (II) resources freed by debt stock relief would be critical for meeting these needs — normally only if updated debt sustainability analysis indicates high level of debt in relation to GDP or exports, typically assessing debt distress or high risk of debt distress.
    - Decisions on qualification for debt stock relief normally adopted beginning six months after the disaster and no later than twenty-four months after such disaster.

### Section III — Amount and Delivery of Assistance; Disbursements
- Debt Flow Relief (paragraph 3(a)):
  - Upon qualification, Trustee shall disburse to member’s subaccount a Trust grant equivalent to all payments on member’s eligible debt falling due from date of debt flow relief decision until two years after the Qualifying Catastrophic Disaster.
  - Eligible debt defined as all debt to the Fund outstanding as of the disaster date with regular scheduled payments before the disaster, plus disbursements normally within four months following the disaster; excludes debt scheduled to be repaid with assistance under other Fund debt relief trusts.
- Debt Stock Relief (paragraph 3(b)):
  - Trustee shall commit an amount up to which the Trust will disburse a Trust grant to effect early repayment of eligible debt outstanding as of the second anniversary of the disaster. Amount actually disbursed equals amount needed to effect early repayment outstanding as of the second anniversary or the date of the Trustee’s disbursement decision, whichever is later.
  - Disbursement conditions (paragraph 3(b)(ii)):
    - (I) Concerted international community effort evidenced by satisfactory assurances from other official sector creditors whose debts together account for at least eighty percent of member’s total sovereign external debt outstanding to official creditors (less amounts due to the Fund) at the time of the disaster.
    - (II) Member assurances to cooperate and refrain from inappropriate policies.
    - (III) Member has established a track record of adequate macroeconomic policies, normally for at least six months immediately preceding the Trustee’s decision to disburse debt stock relief.
- Disbursements (paragraph 4):
  - (a) All disbursements subject to availability of resources.
  - (b) Proceeds paid into subaccount within an Umbrella Account maintained by Trustee.
    - Trustee uses debt flow relief proceeds to make payments on eligible debt as they fall due within specified period.
    - Trustee uses debt stock relief proceeds promptly to effect early repayment as specified.
    - Excess amounts in subaccount may be retransferred to the Trust.
    - Terms and conditions for Umbrella Account operation determined by Trustee.

### Modifications, Administration, Investments, Period of Operation, Liquidation, Amendments
- Modifications (paragraph 5):
  - Modifications affect only Trust grants made after effective date of modification.
- Administration (Section IV):
  - Trustee: Fund administers Trust as Trustee; applies same rules as General Resources Account; Managing Director authorized to make arrangements and take administrative measures.
  - Separation, audits and reports:
    - Resources kept separate from other Fund accounts; separate financial records and statements prepared in accordance with International Financial Reporting Standards.
    - External audit firm under Section 20 of the Fund’s By-Laws audits financial transactions; Fund reports on Trust in Annual Report of Executive Board to Board of Governors including external audit report.
  - Investment of resources:
    - Any balance not immediately needed shall be invested.
    - Permissible investments:
      - (i) marketable obligations issued by international financial organizations and denominated in SDRs or member currency;
      - (ii) marketable obligations issued by a member or national official financial institution denominated in SDRs or member currency;
      - (iii) deposits with commercial banks, national official financial institutions, or international financial institutions denominated in SDRs or member currency.
- Period of operation and liquidation (Section V):
  - Trust remains in effect as long as necessary to conduct and wind up its business.
  - If wound up, resources used first to discharge liabilities; any remainder transferred to the General Subsidy Account of the Poverty Reduction and Growth Trust (PRGT), except contributors may request distribution of their pro rata share.
- Amendment of the Instrument (Section VI):
  - Fund may amend provisions, except amendments to Section I, paragraph 1, Section IV, Section V, and Section VI require consent of all contributors to the Trust.

### Attachment A — Terms and Conditions for Administration of Umbrella Account
- Purpose and contents:
  - Umbrella Account resources consist of:
    - (i) proceeds of grants paid into the Account for a member by the PCDR Trust;
    - (ii) contributions by other donors to finance debt relief on a member’s eligible debt to the Fund;
    - (iii) net earnings from investment of resources held in the Umbrella Account.
- Subaccounts:
  - Separate subaccount for each member for which resources have been paid; established at latest when Fund grants final approval of a Trust grant disbursement.
  - Subaccount resources (including net income) used to make payments specified in Section III, paragraph 4(b).
- Investment of subaccount resources:
  - Investments mirror those permissible for the Trust; earnings net of transactions costs accrue to the subaccount.
- Arrangements and currency/media of payments:
  - Managing Director authorized to implement operations; SDR is unit of account.
  - Resources may be in U.S. dollars or other media determined by Trustee; Trustee may exchange resources; payments from subaccount made in U.S. dollars or other media determined by Trustee.
- Separation, rules, charges, reporting:
  - Assets kept separate from other accounts; Trustee applies rules mutatis mutandis as for General Resources Account.
  - No charge levied for Trustee services in administration, operation, termination of Umbrella Account.
  - Separate financial records and statements prepared in SDRs; external audit firm audits operations; Trustee reports in Annual Report of the Executive Board to Board of Governors including external audit report.
- Termination and residual balances:
  - Umbrella Account remains in effect as long as necessary to conduct and wind up its business.
  - A subaccount wound up when resources exhausted in providing debt relief according to the PCDR Trust Instrument.
  - Any balance remaining in a subaccount upon termination after discharge of obligations transferred to the PCDR Trust; donors who contributed directly to a subaccount may request distribution of their pro rata share.

*Source: https://www.imf.org/-/media/files/publications/pp/pp4463-proposal-for-a-post-catastrophe-debt-relief-trust-fund.pdf*

### 1.      This paper sets forth the proposed decisions and related legal instruments that are

### pp4463-proposal-for-a-post-catastrophe-debt-relief-trust-fund

### Overview
- Purpose: Sets forth the proposed decisions and related legal instruments needed to implement the arrangements in Proposal for a Post-Catastrophe Debt Relief Trust Fund (the “PCDR Trust” or “Trust”), including adjustments following the May 19, 2010 Executive Board meeting.
- Key adjustments from original proposal:
  - The link between updated debt sustainability assessments and the “criticality” test for stock of debt relief is amplified and clarified (PCDR Trust Instrument Section III, paragraph 2(b)(i)). Resources freed by stock relief are normally considered critical only if, based on an updated debt sustainability analysis, the member has a high level of debt in relation to GDP or exports, typically resulting in an assessment that the member is in debt distress or has a high risk of debt distress.
  - A minimum post-catastrophe “cooling-off” period of six months would normally apply before the Fund may take a decision on a member’s qualification for stock of debt relief (Section III, paragraph 2(b)(ii) of the Instrument). This six month period provides time to collect necessary information and undertake economic and debt sustainability analysis.
- Income eligibility: The original income criterion for PCDR eligibility is retained. Rationale:
  - Fund can generally provide effective support through existing PRGT and GRA instruments; PCDR is exceptional additional support for the poorest countries.
  - Scarce grant resources are targeted at members most in need of concessional support; the income cut-off practically covers low-income countries that would in almost all cases use PRGT-only financing.
  - The income threshold for small states is set at twice the IDA operational cut-off, consistent with the Fund’s approach to PRGT entry and avoids multiple small state thresholds across LIC purposes.

### Summary of Key Provisions (Decision A and Trust Instrument)
- Legal basis and establishment:
  - The PCDR Trust would be established pursuant to Article V, Section 2(b) of the Articles of Agreement (paragraph 1).
  - A request for establishment has been received from a group of Executive Directors (Mr. Hockin and Ms. Lundsager).
- Financing arrangements:
  - The MDRI-I Trust will be amended to authorize the transfer from that Trust (through the Special Disbursement Account (“SDA”)) to the PCDR Trust of SDR 280 million of excess SDA resources currently in the MDRI-I Trust (paragraph 2). Adoption of this amendment (and Decision A overall) requires an 85 percent majority of the total voting power.
- Administration and costs:
  - In accordance with Article V, Section 12(i), the PCDR Trust would reimburse the General Resources Account (GRA) annually for the costs of administering SDA resources in the PCDR Trust, excluding expenses already attributed to other accounts or trusts administered by the Fund (paragraph 3).
  - Standard SDR “prescription” provisions are included to facilitate use of SDRs by the PCDR Trust (paragraph 4).
- Trust Instrument — key features:
  - Overall structure: Sections I–II and IV align with comparable provisions in PRG-HIPC and MDRI Trusts.
  - Eligibility for Debt Relief: Members must be on the PRGT eligibility list and meet the income criteria for entry onto that list, including flexible small states requirements (Section III, paragraph 1).
  - Eligible Debt:
    - Includes (i) all outstanding debt to the Fund as of the date of the catastrophe for which the member had made regular scheduled debt service payments (interest and amortization) before the disaster, plus (ii) any disbursements made normally within four months following the catastrophe.
    - Excludes debt in protracted arrears and debt covered by assistance under other Fund debt relief trusts.
  - Debt Flow Relief:
    - Disbursed once the Fund concludes the member has a balance of payments need resulting from a Qualifying Catastrophic Disaster (Section III, paragraph 2(a)).
    - Covers all payments falling due on the member’s eligible debt from the date of the debt flow relief decision to the second anniversary of the Qualifying Catastrophic Disaster (Section III, paragraph 3(a)).
    - Note: an emergency PRGT disbursement would typically not exceed 50 percent of quota (the annual ceiling for access under the shocks window of the Rapid Credit Facility) and often would be lower.
  - Debt Stock Relief:
    - Provided to enable early repayment of eligible debt held by the member on the second anniversary of the catastrophe or the later date the Fund determines requirements are met (Section III, paragraph 3(b)(i)).
    - Qualification requirements (Section III, paragraph 2) are analogous to HIPC Initiative decision point determinations; delivery requirements (Section III, paragraph 3) are analogous to HIPC Initiative completion point provisions.
    - Stock relief is only committed when the member is determined to qualify; delivery occurs only when creditor participation, cooperation and track record requirements are met (Section III, paragraph 3(b)(ii)).
    - There may be a gap if requirements for stock relief are met later than the second anniversary; the member must make debt service payments until delivery conditions are met.
  - Administration and investment:
    - Resources may be provided in any currency and contributions may be made in or exchanged for SDRs (Section I, paragraph 4).
    - Resources pending use to be invested in instruments similar to those used by PRG-HIPC and MDRI Trusts (Section IV, paragraph 3).
    - Fund may amend the Trust Instrument; certain “protected” provisions require contributor consent (Section VI).

### Umbrella Account (Decision B) and Subaccounts
- Decision B would be adopted only if Decision A is adopted.
- Establishment and operations:
  - The PCDR Trust Umbrella Account is substantially similar to the PRG-HIPC Umbrella Account; it is established by the Fund as trustee pursuant to the Trust.
  - Debt relief resources disbursed by the Trust to a member are placed in a specific subaccount within the Umbrella Account established for that member; donors may transfer contributions directly to the member’s subaccount.
  - Resources in a member’s subaccount are invested pending use and are used to make payments on the member’s eligible debt consistent with the PCDR Trust Instrument.
  - Excess resources remaining after all PCDR eligible debt has been repaid are transferred from the member’s subaccount back to the PCDR Trust to fund debt relief to other eligible members (unlike the HIPC Initiative where disbursed amounts were irrevocably transferred to members’ HIPC subaccounts, subject to limited exceptions).
  - The proposed investment authority for the Umbrella Account is similar to that applicable to the PRG-HIPC Umbrella Account.
- Voting and adoption thresholds:
  - Decision A may be adopted by an 85 percent majority of the total voting power.
  - Decision B may be adopted by a majority of the votes cast and is proposed only if Decision A is adopted.

### Additional Procedural and Legal Provisions
- Amendments to MDRI-I Trust:
  - Section V of the MDRI-I Trust (Decision No. 13588-(05/99) MDRI, adopted November 23, 2005) shall be amended to transfer the equivalent of SDR 280 million from the Account (through the SDA) to the PCDR Trust prior to MDRI-I Trust liquidation (new Paragraph 2 under “Reduction of Balances”).
- Review:
  - The Fund shall review the financing and operations of the PCDR Trust at least every five years (Decision A, paragraph 1).
- SDR operations:
  - In accordance with Article XVII, section 3, an SDR Department participant or prescribed holder may transfer SDRs in effecting transfers to/from the PCDR Trust or the Account and subaccounts established under Section III, paragraph 4(b) of the PCDR Trust Instrument; operations shall be recorded in accordance with Rule P-9.

*Source: https://www.imf.org/-/media/files/publications/pp/pp4463-proposal-for-a-post-catastrophe-debt-relief-trust-fund.pdf*

### Section I.   General Provisions

### pp4463-proposal-for-a-post-catastrophe-debt-relief-trust-fund - Section I.   General Provisions

### Purposes
- The Trust shall provide balance of payments assistance in the form of grants (“Trust grants”) to eligible low-income members that qualify for assistance under the terms of this Instrument.
- Trust grants shall be used to deliver:
  - temporary relief of debt service payments (interest and principal) on such members’ eligible debt (“debt flow relief”); and
  - in appropriate cases, permanent debt relief on such debt (“debt stock relief”),
  - subject to the terms of this Instrument, including the requirements set forth in Section III of this Instrument.

### Trust Account and resources
- Operations and transactions of the Trust shall be conducted through an account (“the Account”).
- The Trustee may establish such sub-accounts within the Account as it deems necessary.
- Resources held in the Account shall consist of:
  - (i) transfers from the Special Disbursement Account in accordance with Section V, paragraph 2 of the Multilateral Debt Relief Initiative-I Trust established pursuant to Decision No. 13588-(05/99) MDRI, as amended by Decision No. 14649-(10/64);
  - (ii) grant contributions made to the Trust for the purposes set forth in Section I, paragraph 1;
  - (iii) loans, deposits and other types of investments made by contributors with the Trust to generate income to be used for the purposes set forth in Section I, paragraph 1; and
  - (iv) net earnings from investment of resources held in the Account.

### Unit of account
- The SDR shall be the unit of account for commitments and all other operations and transactions of the Trust, provided that commitments for contributions may also be made in currency.

### Media of payment of contributions and exchange of resources
- (a) Resources provided to the Account shall be in any currency.
- (b) Payments by the Trust shall be made in U.S. dollars or such other media as may be agreed between the Trustee and the payee.
- (c) Contributions to the Trust may also be made in or exchanged for SDRs in accordance with such arrangements as may be made by the Trust for the holding and use of SDRs.
- (d) The Trustee may exchange any of the resources of the Trust for other resources.

### Contributions to the Trust (Section II)
- The Trustee may accept contributions of resources for the Account on such terms and conditions as may be agreed between the Trustee and the respective contributors, subject to the provisions of this Instrument.
- The Managing Director of the Trustee is authorized to accept grants and enter into loan, deposit, or other types of investment agreements with the contributors to the Trust.

### Trust Grants — Eligibility and Qualification (Section III)
- Eligibility for assistance (paragraph 1):
  - (a) the member is PRGT-eligible (i.e., is included in the list of members annexed to Decision No. 8240-(86/56) SAF, as amended);
  - (b) the member has an annual per capita gross national income, as assessed by the Trustee in accordance with paragraph 1(E) of Decision No. 14521-(10/3), that is below the International Development Association operational cut-off or, for a member qualifying as a “small country” under the definition set forth in paragraph 1(D) of that decision, is less than twice the International Development Association operational cut-off.
- Qualification for assistance (paragraph 2):
  - (a) Debt Flow Relief:
    - An eligible member shall qualify for debt flow relief when the Trustee determines that the member is experiencing a balance of payments need that arises from a Qualifying Catastrophic Disaster.
    - A Qualifying Catastrophic Disaster means an exceptional natural disaster occurring any time after January 1, 2010 that the Trustee determines, based on available information, including preliminary estimates, has had the following effects:
      - (i) a large portion of the member’s population has been directly affected (i.e., deceased, injured, and/or displaced), such portion normally being at least one-third of the population; and
      - (ii) a large portion of the member’s economy has been directly affected, as evidenced by either (I) the destruction of more than a quarter of the member’s productive capacity measured by destroyed structures, impact on key economic sectors and public institutions, and other relevant early indicators, or (II) damage in an amount exceeding 100 percent of the member’s GDP prior to the Qualifying Catastrophic Disaster.
  - (b) Debt Stock Relief:
    - (i) An eligible member that qualifies for debt flow relief shall also qualify for debt stock relief when the Trustee determines, based on available information, that:
      - (I) the member has substantial balance of payments needs that have been created or exacerbated by the Qualifying Catastrophic Disaster and the subsequent economic recovery efforts and are expected to persist beyond the period covered by debt flow relief; and
      - (II) the resources that would be freed up by the debt stock relief would be critical for meeting these needs. For purposes of (II), resources would normally be considered critical for meeting the member’s needs only if, based on an updated debt sustainability analysis conducted after the Qualifying Catastrophic Disaster, the member has a high level of debt in relation to GDP or exports prior to the delivery of any debt relief after the Qualifying Catastrophic Disaster, typically resulting in an assessment that the member is in debt distress or has a high risk of debt distress.
    - (ii) Decisions on a member’s qualification for debt stock relief will normally be adopted by the Trustee in the period beginning six months after the occurrence of the Qualifying Catastrophic Disaster and ending in all cases no later than twenty-four months after such disaster.

### Amount and delivery of assistance (paragraph 3)
- Debt Flow Relief (paragraph 3(a)):
  - (i) Upon determination that a member qualifies for debt flow relief, the Trustee shall disburse to the subaccount established for the benefit of the member a Trust grant in an amount equivalent to all payments on the member’s eligible debt falling due within the period beginning on the date of the debt flow relief decision and ending two years after the occurrence of the Qualifying Catastrophic Disaster.
  - For this purpose, eligible debt is defined as all of the member’s debt to the Fund (including to the Fund as Trustee) that was outstanding as of the date of the Qualifying Catastrophic Disaster and in respect of which the member had made regular scheduled debt service payments (interest and principal) before the Qualifying Catastrophic Disaster, plus any disbursements by the Fund (including by the Fund as Trustee) to the member made normally within four months following such disaster, but excluding any debt to the Fund that is scheduled to be repaid with assistance under other debt relief trusts administered by the Fund.
- Debt Stock Relief (paragraph 3(b)):
  - (i) Upon determination that a member qualifies for debt stock relief, the Trustee shall commit an amount up to which the Trust will disburse a Trust grant for debt stock relief. The amount committed shall be the amount needed to effect the early repayment of the member’s eligible debt that is outstanding as of the second anniversary of the occurrence of the Qualifying Catastrophic Disaster. The amount actually disbursed shall be the amount needed to effect the early repayment of the member’s eligible debt that is outstanding as of the second anniversary of the occurrence of the Qualifying Catastrophic Disaster or on the date of the Trustee’s decision to disburse debt stock relief, whichever is later.
  - (ii) The Trustee shall disburse debt stock relief to the subaccount for the benefit of the member as of the date the Trustee determines that:
    - (I) a concerted effort exists within the international community to provide similar debt relief to the member, evidenced by satisfactory assurances regarding the debt relief to be provided by the member’s other official sector creditors whose debts together account for at least eighty percent of the member’s total sovereign external debt outstanding to official creditors (less amounts due to the Fund) at the time of the Qualifying Catastrophic Disaster;
    - (II) the member has provided assurances that it will cooperate with the Trustee in an effort to find solutions to its balance of payments problems and will refrain from any inappropriate policies that could compound these problems; and
    - (III) taking into account the member’s implementation capacity after the Qualifying Catastrophic Disaster, the member has established a track record of adequate macroeconomic policies, normally for a period of at least six months immediately preceding the Trustee’s decision to disburse debt stock relief.

### Disbursements (paragraph 4)
- (a) All disbursements of Trust grants shall be subject to the availability of resources to the Trust.
- (b) Proceeds of Trust grants shall be paid into a subaccount for the benefit of the relevant member that is maintained within a separate Umbrella Account established and administered by the Trustee.
  - The Trustee shall use proceeds disbursed as debt flow relief (including any income from investments of such proceeds) to make payments on the member’s eligible debt as they fall due within the period specified in paragraph 3(a)(i).
  - The Trustee shall use proceeds disbursed as debt stock relief promptly after such disbursement to effect the early repayment of the member’s eligible debt as of the date specified in paragraph 3(b)(i).
  - If amounts disbursed to the subaccount exceed the amounts needed to effect payments falling due on, and early repayment of, the member’s eligible debt pursuant to the terms of this Instrument, the Trustee shall be authorized to retransfer to the Trust an amount equivalent to such excess.
  - Terms and conditions for operation of the Umbrella Account shall be determined by the Trustee.

### Modifications (paragraph 5)
- Any modification of these provisions will affect only Trust grants made after the effective date of the modification.

### Administration of the Trust (Section IV)
- Trustee (paragraph 1):
  - (a) 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.
  - (b) Subject to the provisions of this Instrument, the Fund in administering the Trust shall apply the same rules as apply to the operation of the General Resources Account of the Fund.
  - (c) The Trustee, acting through its Managing Director, is authorized:
    - (i) to make all arrangements, including establishment of accounts in the name of the International Monetary Fund, which shall be accounts of the Fund as Trustee, with such depositories of the Fund as the Trustee deems necessary; and
    - (ii) to take all other administrative measures that the Trustee deems necessary to implement the provisions of this Instrument.
- Separation of assets and accounts, audits and reports (paragraph 2):
  - (a) Resources of the Trust shall be kept separate from the property and assets of all other accounts of the Fund and used only for the purposes of the Trust.
  - (b) Property and assets held in the other accounts of the Fund shall not be used to discharge liabilities or to meet losses arising out of the administration of the Trust; and vice versa.
  - (c) The Fund shall maintain separate financial records and prepare separate financial statements for the Trust in accordance with International Financial Reporting Standards.
  - (d) 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.
  - (e) 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 and shall include in the Annual Report the report of the external audit firm on the Trust.
- Investment of resources (paragraph 3):
  - (a) Any balance held by the Trust and not immediately needed in operations shall be invested.
  - (b) Permissible investments:
    - (i) marketable obligations issued by international financial organizations and denominated in SDRs or in the currency of a member of the Fund;
    - (ii) marketable obligations issued by a member or by a national official financial institution of a member and denominated in SDRs or in the currency of that member; and
    - (iii) deposits with a commercial bank, a national official financial institution of a member, or an international financial institution that are denominated in SDRs or in the currency of a member.

### Period of Operation and Liquidation (Section V)
- Period of operation (paragraph 1):
  - The Trust 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 (paragraph 2):
  - If the Trustee decides to wind up operations, resources in the Account shall be used first to discharge all liabilities of the Trust.
  - Any amount remaining after discharge of liabilities shall be transferred to the General Subsidy Account of the Poverty Reduction and Growth Trust established pursuant to Decision No. 8759-(87/176) ESAF, as amended, (“PRGT”) for use in accordance with the provisions of the PRGT Instrument; provided that, at the request of a contributor that has provided resources to the Trust, its pro rata share of any such remaining resources in the Trust, or any portion of such share, shall be distributed to the contributor.

### Amendment of the Instrument (Section VI)
- The Fund may amend the provisions of the Instrument, except that any amendment of Section I, paragraph 1, Section IV, Section V, and this Section shall require the consent of all contributors to the Trust.

### Attachment A — Terms and Conditions for Administration of Umbrella Account
- Purpose and contents:
  - Resources of the Umbrella Account shall consist of:
    - (i) proceeds of grants paid into the Account for the benefit of a member by the PCDR Trust,
    - (ii) contributions by other donors to finance debt relief on a member’s eligible debt to the Fund, and
    - (iii) net earnings from the investment of resources held in the Umbrella Account.
- Subaccounts:
  - A separate subaccount shall be established within the Umbrella Account for the benefit of each member for which resources have been paid.
  - A subaccount shall be established at the latest whenever the Fund as Trustee of the PCDR Trust grants final approval of the disbursement of a Trust grant under the PCDR Trust.
  - The Fund, as Trustee, is authorized to use subaccount resources (including net income) to make payments for the benefit of the member as specified in Section III, paragraph 4(b).
- Investment of subaccount resources:
  - (a) Resources held in a subaccount and not immediately needed for operations shall be invested.
  - (b) Permissible investments mirror those for the Trust: marketable obligations (SDR-denominated or in member currency) and deposits with commercial banks, national official financial institutions, or international financial institutions denominated in SDRs or member currency.
  - Earnings, net of transactions costs, shall accrue to the subaccount and be available for its purposes.
- Arrangements and currency/media of payments:
  - The Managing Director of the Trustee is authorized to make arrangements, establish accounts in the name of the Trustee, and take measures necessary to implement operations of the Account.
  - The SDR shall be the unit of account.
  - (a) Resources received into a subaccount may be in U.S. dollars or such other media as may be determined by the Trustee.
  - (b) Resources may be currencies or currencies exchanged for SDRs in accordance with Trustee arrangements.
  - (c) The Trustee may exchange subaccount resources for other resources.
  - (d) Payments from a subaccount shall be made in U.S. dollars or such other media as may be determined by the Trustee.
- Separation, rules, charges, and reporting:
  - Assets held in the Umbrella Account shall be kept separate from assets of all other accounts administered by the Trustee and shall not be used to discharge liabilities of other accounts.
  - Subject to this decision, the Trustee shall apply, mutatis mutandis, the same rules and procedures as apply to the operations of the General Resources Account of the Fund.
  - No charge shall be levied for services rendered by the Trustee in administration, operation, and termination of the Umbrella Account.
  - The Trustee shall maintain separate financial records and prepare separate financial statements for the Umbrella Account in accordance with International Financial Reporting Standards; financial statements shall be expressed in SDRs.
  - The external audit firm selected under Section 20 of the Trustee’s By-Laws shall audit operations and transactions of the Umbrella Account; the audit shall relate to the financial year of the Trustee.
  - The Trustee shall report on resources and operations of the Umbrella Account in the Annual Report of the Executive Board to the Board of Governors and include the external audit firm’s report.
- Termination and residual balances:
  - The Umbrella Account shall remain in effect for as long as is necessary, in the judgment of the Trustee, to conduct and to wind up the business of the Umbrella Account.
  - A subaccount for a particular member would be wound up when its resources have been exhausted in providing debt relief according to the PCDR Trust Instrument.
  - Any balance remaining in a subaccount upon termination after discharge of obligations shall be transferred promptly to the PCDR Trust for use in accordance with the purposes of that Trust; provided that, at the request of a donor that has contributed directly to a subaccount pursuant to paragraph 1(ii), its pro rata share of any such remaining resources in the subaccount shall be distributed to the donor.

*pp4463-proposal-for-a-post-catastrophe-debt-relief-trust-fund - Section I.   General Provisions*

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_Source: https://www.imf.org/-/media/files/publications/pp/pp4463-proposal-for-a-post-catastrophe-debt-relief-trust-fund.pdf_