## Borrowing Agreement between the Czech National Bank and the International Monetary Fund

## Source details

**Canonical URL:** [Borrowing Agreement between the Czech National Bank and the International Monetary Fund](https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2010/_033110.pdf)

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### Purposes and Amounts
- The Czech National Bank agrees to lend to the Fund an SDR-denominated amount up to the equivalent of EUR 1.03 billion.
- The agreement is based on Article VII, Section 1(i) of the Articles of Agreement of the IMF and is intended to support the Fund’s ability to provide timely and effective balance of payments assistance.
- The agreement is to be considered in light of the Fund’s Guidelines on Borrowing, which state that quota subscriptions remain the basic source of Fund financing and borrowing is a temporary supplement.

### Term of the Agreement
- The Fund may make drawings for a period of one year commencing on the date the agreement becomes effective according to paragraph 15(b).
- The Fund shall give the Czech National Bank at least five business days’ (Prague) notice of its intention to draw and provide payment instructions at least two business days (Prague) prior to the value date by SWIFT.
- The Fund may, after consultation with the Czech National Bank, extend the term by an additional one-year period and thereafter, with the agreement of the Czech National Bank, for additional one-year periods; provided the total term shall not exceed four years.
- The Czech National Bank may terminate the agreement if the Czech Republic or its official institutions become participants in an enlarged and amended New Arrangements to Borrow (“NAB”) that becomes effective after the date of this agreement.

### Uses, Estimates and Limits on Drawings
- Authorized uses of drawings:
  - (i) any use of Fund resources in the General Resources Account, or
  - (ii) payment of the Fund’s outstanding indebtedness under other official sector borrowing effected pursuant to Article VII, Section 1(i) where terms permit such use.
- Weekly and cumulative drawing limits:
  - The Fund shall not draw more than the equivalent of EUR 500 million during any calendar week, as calculated pursuant to paragraph 11(b).
  - The Fund shall not make a drawing if it would result in cumulative amount drawn under this agreement exceeding EUR 1.03 billion at the time of such drawing, as calculated pursuant to paragraph 11(b).
- Forecasting:
  - Prior to each quarter of the Fund’s financial year, the Fund shall provide the Czech National Bank with its best estimates of expected draws for the forthcoming quarter and revised estimates during each quarter where warranted.

### Evidence of Indebtedness
- At the Czech National Bank’s request, the Fund shall issue non-negotiable instruments evidencing indebtedness; form to be agreed.
- Upon repayment of an instrument and all accrued interest, the instrument shall be returned for cancellation.
- If less than the instrument amount is repaid, the instrument shall be returned and a new instrument for the remainder substituted with the same maturity date.

### Maturity
- Standard maturity:
  - Each drawing shall have a maturity date of three months from the drawing date, except as otherwise provided.
- Extensions:
  - The Fund may elect to extend the maturity date of any drawing or portion by additional periods of three months after the initial maturity date.
  - Extensions are automatically deemed elected for all drawings unless the Fund notifies the Czech National Bank at least five business days (Prague) before a maturity date that it does not elect extension for a particular drawing or portion.
  - No maturity date may be extended later than the fifth anniversary of the date of such drawing.
- Repayment mechanics:
  - The Fund shall repay principal on the maturity date applicable to that drawing.
  - The Fund may, after consultation, make early repayment in part or in full with at least five business days (Prague) written notice.
  - Repayments do not increase the total amount that can be drawn; extensions do not reduce the drawable amount.
  - If a maturity date is not a business day in the place where payment is to be made, payment date will be the next business day in that place and interest will accrue up to the payment date.

### Rate of Interest
- Interest rate:
  - Each drawing shall bear interest at the SDR interest rate established by the Fund pursuant to Article XX, Section 3 of the Fund’s Articles of Agreement.
  - If the Fund pays a higher interest rate on outstanding balances from any other comparable borrowing effected pursuant to Article VII, Section 1(i), the interest rate payable on drawings under this agreement shall be equivalent to that higher rate for as long as the higher rate remains in effect.
- Interest calculation and payment:
  - Interest shall be calculated on the basis of the outstanding amount of the drawing, shall accrue daily, and shall be paid promptly after each July 31, October 31, January 31 and April 30.

### Denomination, Media and Modalities of Drawings and Payments
- Denomination:
  - Each drawing and corresponding repayment shall be denominated in SDRs.
- Payment of drawings:
  - Unless otherwise agreed, each drawing shall be paid by the Czech National Bank, on the value date specified in the Fund’s notice under paragraph 2, by transfer of the SDR equivalent amount of Czech koruna to the account of the Fund at the designated depository of the Czech Republic.
- Repayments and interest:
  - Except as provided in paragraph 9 and unless otherwise agreed, repayments of principal shall be made in Czech koruna.
  - Interest payments shall normally be made in SDRs; the Fund and the Czech National Bank may agree interest payments in Czech koruna or any freely usable currency.
- Payment accounts:
  - Payments in Czech koruna shall be made by crediting an account specified by the Czech National Bank.
  - Payments in SDRs shall be made by crediting the Czech Republic’s account in the Special Drawing Rights Department.
  - Payments in any other currency shall be made to an account specified by the Czech National Bank.

### Termination of Drawings at Request of the Czech National Bank
- The Czech National Bank’s commitment to meet drawings shall be terminated at its request if:
  - (i) it represents that the balance of payments and reserve position of the Czech Republic does not justify further drawings, and
  - (ii) the Fund, having given this representation the overwhelming benefit of any doubt, determines that no further drawing should be made in light of that position.

### Early Repayment at Request of the Czech National Bank
- At the Czech National Bank’s request it shall obtain early repayment at face value of all or a portion of outstanding drawings if:
  - (i) the Czech National Bank represents that the balance of payments and reserve position of the Czech Republic justifies such repayment, and
  - (ii) the Fund, having given this representation the overwhelming benefit of any doubt, determines that there is a need for the early repayment.
- Repayments pursuant to paragraph 9 may be made in SDRs or a freely usable currency as determined by the Fund after consultation.

### Transferability
- General rule:
  - The Czech National Bank may not transfer its obligations or claims under this agreement except with prior consent of the Fund and on terms the Fund may approve, except as provided in subparagraphs (b)–(h).
- Permitted transfers:
  - The Czech National Bank may transfer all or part of any claim on the Fund 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”),
    - any official entity prescribed as a holder of SDRs pursuant to Article XVII, Section 3.
- Conditions on transferee:
  - Transferee assumes the Czech National Bank’s liabilities regarding extension of maturities per paragraph 5(a).
  - Transferred claims held by transferee are on same terms except:
    - (i) transferee acquires the right to request early repayment under paragraph 9 only if it is a member or central bank/other fiscal agency of a member and, at transfer, the member’s balance of payments and reserve position is considered sufficiently strong in the opinion of the Fund that its currency is used in transfers under the Financial Transactions Plan;
    - (ii) if transferee is a member or its central bank/other fiscal agency, references to Czech koruna in paragraph 7 shall be deemed to refer to the transferee’s currency; otherwise deemed to refer to a freely usable currency determined by the Fund;
    - (iii) payments related to the transferred claim shall be made to an account specified by the transferee;
    - (iv) references to business days (Prague) shall be deemed to refer to business days in the place where the transferee is situated.
- Transfer mechanics:
  - Price of a transferred claim shall be as agreed between the Czech National Bank and transferee.
  - Czech National Bank shall notify the Fund promptly of details of the transfer: claim amount, transferee name, agreed price, and value date.
  - A notified transfer shall be reflected in Fund records if in accordance with paragraph 10; effective as of the agreed value date.
  - If a claim is transferred during a quarterly period as described in paragraph 6(b), the Fund shall pay interest to the transferee on the amount transferred for the whole of that period.
  - If requested, the Fund shall assist in seeking to arrange transfers.

### Effective Exchange Rate
- Exchange rate determination:
  - Unless otherwise agreed, all drawings, exchanges, and payments of principal and interest under this agreement shall be made at the exchange rates for the relevant currencies in terms of the SDR established pursuant to Article XIX, Section 7(a) and the rules and regulations of the Fund thereunder for the second business day of the Fund before the value date of the transfer, exchange or payment.
  - If this exchange rate determination date is not a business day in Prague, such date shall be the last preceding business day of the Fund that is also a business day in Prague.
- For application of drawing limits (paragraphs 1, 3(b), 3(c)):
  - The Euro value of each SDR-denominated drawing shall be determined and permanently fixed on the value date of the drawing based on the Euro/SDR exchange rate established pursuant to Article XIX, Section 7(a) and the Fund’s rules and regulations for the second business day of the Fund before the value date of the drawing.
  - If this rate determination date is not a business day in Prague, such date shall be the last preceding business day of the Fund that is also a business day in Prague.

### Changes in Method of Valuation of SDR
- If the Fund changes the method of valuing the SDR, all transfers, exchanges and payments of principal and interest made two or more business days of the Fund after the effective date of the change shall be made on the basis of the new method of valuation.

### Non-Subordination of Claims
- The Fund agrees it will not take any action that would have the effect of making the Czech National Bank’s claims resulting from outstanding drawings under this agreement subordinate in any way to claims resulting from any other borrowing effected pursuant to Article VII, Section 1(i).

### Settlement of Questions
- Any question arising under this agreement shall be settled by mutual agreement between the Czech National Bank and the Fund.

*Source: Borrowing Agreement between the Czech National Bank and the International Monetary Fund (Content unit: _033110).*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2010/_033110.pdf_