## _041113b ## Source details **Canonical URL:** [_041113b](https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2013/_041113b.pdf) ## Other formats - [Markdown version](/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2013/_041113b.pdf.md) - [Structured JSON version](/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2013/_041113b.pdf.json) --- ### EXECUTIVE SUMMARY — Overview and motivation - RFAs recognized as an important layer of the global financial safety net (GFSN) following the 2008-09 global financial crisis. - Purpose of paper: summarize current landscape of RFAs, discuss IMF-RFA coordination to date, and explore options for enhancing cooperation; contribute to international discussions and solicit views from the Fund and RFA memberships. - GFSN comprises: multilateral institutions (IMF), RFAs, bilateral creditors, and individual countries’ own defenses. - RFAs: existed since the 1970s; crisis episodes and regional integration prompted new RFAs and expansions. - Fund response post-crisis: - Quadrupled lending resources and overhauled lending toolkit. - New instruments: Flexible Credit Line (FCL) and Precautionary and Liquidity Line (PLL). - Major central bank bilateral swap lines and multilateral development bank participation augmented global liquidity. - Observed synergies: - Increased aggregate firepower; shared expertise; strengthened ownership of adjustment programs. - Observed tensions: - Diverse mandates, funding, instruments, terms, conditionality; varying Fund involvement requirements; RFA safeguards less developed than Fund’s; some RFA conditionality beyond macro-critical measures; limited formal guidance risks uneven treatment and delays. ### Definition, origins, and objectives of RFAs - RFA definition (paper): financing mechanism where a regional group pledges financial support to members facing liquidity shortages or balance of payments difficulties; resources via pooled/borrowed resources or swaps. - Exclusions: stand-alone bilateral swap arrangements; lending instruments of multilateral/regional development banks for development financing; central banks of currency unions providing liquidity. - Selected origins and objectives: - FLAR: origin in Andean Reserve Fund established in 1978. - NAFA: introduced in 1994 as complement to NAFTA. - CMI/CMIM: response to late-1990s East and South East Asian currency crises. - EU BoP Assistance Facility: started in 1972. - EFSF/ESM: established during the eurozone crisis for currency-union financial stability. - AMF and FLAR: broader objectives include policy coordination and regional integration. - ACF: aims to help implement large investment projects to promote economic integration. ### Overview of selected RFAs — key features and exact figures - Arab Monetary Fund (AMF) - Founded in 1976; authorized capital US$2.7 billion; US$2.2 billion loans outstanding at end 2011. - Size relative to GDP/IMF quota (2011, percent): 0.1/10.9. - Terms: 7 credit facilities, maturities up to 7 years; maximum lending ceiling per facility 50% to 175% of paid-in capital (up to 475% by adding limits). - No explicit IMF role. - Latin American Reserve Fund (FLAR) - Created in 1991; subscribed capital US$2.34 billion; paid-up capital US$2.03 billion as of December 2011. - Size relative to GDP/IMF quota (2011, percent): 0.2/29.2. - Access limits at 250% of paid-in capital (260% for Bolivia and Ecuador). - No explicit IMF role. - North America Framework Agreement (NAFA) - Established 1994; US$9 billion. - Size relative to GDP/IMF quota (2011, percent): 0.1/10.9. - 90-day central bank swaps renewable up to one year. - US Treasury Secretary requires IMF Managing Director letter stating confidence in borrower’s policies. - EU Balance of Payments Assistance Facility - Established 2002; maximum lending capacity €50 billion. - Size relative to GDP/IMF quota (2011, percent): 1.5/212.3. - Financed by market borrowing by the EU; members obliged to consult EU before approaching IMF. - EFSM - Established 2010; maximum lending capacity €60 billion. - Size relative to GDP/IMF quota (2011, percent): 0.5/69.6. - Activation in context of joint EU/IMF support. - EFSF - Established May 2010 (temporary until June 2013); maximum lending capacity was €440 billion when first set up. - Size relative to GDP/IMF quota (2011, percent): 4.7/702.4. - Framework envisages support in conjunction with IMF. - ESM - Inaugurated October 2012; maximum lending capacity €500 billion (combined EFSF/ESM €700 billion) against capital contribution €700 billion; €80 billion paid-in capital; €620 callable capital from 17 euro-area Member States. - Size relative to GDP/IMF quota (2011, percent): 5.6/798.1. - Expectation that a euro area Member State requesting ESM assistance address a similar request to the IMF where possible. - ACF (EurAsEC Anti-Crisis Fund) - Established 2009; budget contributions totalling US$8.5 billion. - Size relative to GDP/IMF quota (2011, percent): 0.4/77.0. - No explicit IMF role. - CMIM - Established March 2010; US$120 billion (to be increased to US$240 billion when amended). - Size relative to GDP/IMF quota (2011, percent): 0.8/219.1. - 90-day USD-local currency swaps renewable up to seven times (~two years). - Disbursement in excess of 20 percent of maximum access conditional on Fund-supported program (threshold to be raised to 30 percent and to 40 percent in 2014 subject to review). ### Institutional frameworks, resources, funding, and lending instruments - Legal forms vary: public international law entities (AMF, FLAR), private company (EFSF), intergovernmental institution (ESM), treaty-based non-entity (ACF), contractual agreement with associated company (CMIM/AMRO). - Funding: most RFAs borrow on capital markets or from institutions backed by paid-in capital and guarantees; NAFA and CMIM rely on swap commitments rather than pooled borrowing. - Lending: mostly loans to members; NAFA/CMIM use swaps; some RFAs purchase sovereign bonds and finance bank recapitalizations (e.g., ESM). - Precautionary instruments: - FLAR contingent credit (six months, renewable; access up to 2 times paid-in capital; no eligibility criteria; no ex post conditionality). - ESM PCCL/ECCL (PCCL duration six months renewable up to three times; ECCL one or two years; ESM access limits: overall cap 1000 percent of quota; first-year access limit 500 percent of quota; per arrangement limit 250 percent of quota, 500 percent in exceptional circumstances). - CMIM-PL (duration one to two years; qualification criteria include five areas: external position and market access; fiscal policy; monetary policy; financial sector soundness and supervision; data adequacy). - IMF FCL/PLL: - FCL Duration: Six months; renewable in certain circumstances. FCL Access limits: None. FCL Eligibility criteria: list of nine specific items (sustainable external position; capital account dominated by private flows; steady sovereign access to international capital markets; relatively comfortable reserve position; sound public finances including sustainable public debt; low and stable inflation; absence of bank solvency problems; effective financial sector supervision; data transparency and integrity). FCL Ex post conditionality: None. - PLL Duration: One year, renewable up to twice (each for six months). PLL Access limits: overall cap 1000 percent of quota; first-year access limit 500 percent of quota; per arrangement limit 250 percent of quota (500 percent in exceptional circumstances). PLL Exclusions: four specific cases where Fund shall not approve a PLL. PLL Ex post conditionality: indicative targets and standard PCs; conditionality may include other PCs, prior actions and structural benchmarks; reviews semi-annual. Financing terms: repurchases in 3 ¼ to 5 years when purchased; commitment fee applied. ### Terms, maturities, conditionality, and governance differences - Terms and maturities differ widely across RFAs (short 30-day up to multi-year maturities); EU instruments flexible without specific access limits. - Conditionality varies by RFA: AMF, ACF, EU arrangements require agreement on adjustment programs; FLAR generally accepts member programs without adding conditionality; CMIM allows limited activation without Fund program up to 20 percent of access. - Governance: voting rules differ (absolute majority, 2/3, 3/4, unanimity like ESM); voting power often concentrated among a few countries; some RFAs have secretariats of varying size; legal forms and delegated authorities differ. ### Experience with IMF–RFA coordination - Coordination to date largely case-by-case; flexible approach generally functioned effectively. - Some RFAs formally require Fund involvement (CMIM thresholds; EU mechanisms: BoP Assistance Facility consult requirement; EFSM activation in joint EU/IMF support; EFSF envisaged in conjunction with IMF; ESM expects member to seek IMF where possible; NAFA requires IMF confidence letter for ESF). - AMF, FLAR, ACF generally do not envisage explicit IMF roles, though informal staff contacts occur. - Operational experience concentrated in Europe and over the past five years; examples: - NAFA/1995: NAFA contributed to US$18 billion ESF for Mexico preceding IMF Board approval of US$17.8 billion SBA; program design not formally coordinated. - Since 2008, IMF commitments in EU-supported programs varied: IMF provided as little as 20 percent or less of total financing (e.g., Latvia 2008, Greece 2012) to more than 60 percent (e.g., Hungary 2008, Romania 2009/2011). - Monitoring and technical assistance: - Fund provided monitoring in Spain’s financial sector recapitalization context; provided technical assistance to AMF; allowed participation of EU and FLAR officials in Fund training programs. ### Modalities, institutional considerations, and experiences outside Europe - CMIM prepared operational guidelines and is considering co-financing with IMF though CMIM has not been activated. - ACF has expressed interest in coordinating lending with IMF; FLAR has provided financing in context of Fund-supported programs. - Earmarking practice: some contributions earmarked to specific activities (e.g., in Greece since 2012 funds for bank recapitalization and resolution come only from EFSF). ### Limited formal guidance, risks, and options for enhancing coordination - Limited formal guidance on modalities provides flexibility but creates risks: unpredictability, delays, institutional arbitrage, facility shopping, inconsistent qualification criteria for precautionary instruments. - G-20 non-binding broad principles (November 2011) emphasize tailored flexible collaboration, respect for roles, early cooperation, information sharing, joint missions, seeking consistency of lending conditions, and RFAs respecting IMF preferred creditor status. - Literature perspectives: - One strand favors formalized cooperation, multilateral review, RFA representation at IMF, coordination on qualification for precautionary instruments, and reduced Fund-linkage in some RFAs to avoid stigma (e.g., CMIM). - Another strand prefers clearer division of labor: RFAs for idiosyncratic/smaller regional crises, Fund for systemic/larger financing needs. - Options for enhancing cooperation (presented for consultation; not staff proposals): - Fine-tune current flexible case-by-case approach; preserve flexibility pending more co-financing experience. - Fund provides independent monitoring/technical services under Article V, Section 2 (b) when Fund financing is not provided—useful where institutional constraints prevent formal financing or to provide expertise (example: ESM support to Spain’s banking sector); such engagements may carry less credibility than co-financing. - Improve Fund’s operating framework in joint IMF–RFA programs: reach ex ante understandings to better align lending terms and qualification criteria for precautionary instruments; establish procedures for information sharing; identify contact persons and counterparts; conduct joint crisis scenario exercises; review internal Fund processes to adapt to coordination needs; examine “two-step” negotiating processes (Troika-style) as one modality while preserving member engagement and flexibility. - Consider developing overarching principles and detailed procedural guidelines covering aligning lending terms, clarifying qualification to precautionary instruments, establishing regular dialogue between staffs, and creating expectations that co-financing operations would be subject to principles/safeguards similar to the Fund’s (debt sustainability, market access, capacity to repay). ### Information sharing, surveillance, and lessons from Bank-Fund collaboration - Enhanced information sharing and regular dialogue between Fund and RFA staffs can leverage surveillance capabilities and build mutual trust outside crises. - Constraints: Fund policies restrict disclosure of confidential information and non-public Executive Board views per Article XII, Section 8; consents required for disclosure. - A more structured approach could evolve from guiding principles to detailed guidelines, and eventually MoUs or a voluntary “code of conduct” entered into bilaterally or collectively, requiring Board endorsement/approval. - Box 4 (Bank-Fund model) lessons: - Concordat on Bank-Fund Collaboration (1989) and subsequent JMAP experiences show benefits of joint missions, information sharing, and staff mobility. - Bank-Fund formal agreement took roughly two decades to reach; suggests that extensive practical cooperation may be a precondition for formal arrangements between IMF and RFAs. ### Appendix I — Main features of major RFAs (selected highlights) - AMF: paid-up capital US$2.8 billion as of December 2011; multiple loan types with access up to 250 percent of paid-in capital for some facilities; recent 2011 loans totaling US$536mn. - FLAR: subscribed capital US$2.3bn; paid-in capital US$2.0 bn as of December 2011; lending maturity examples and interest spread 150-400bps over 3-month LIBOR. - NAFA: swap amounts include US$2 billion, US$3 billion, and US$3 billion lines among central banks and ESF arrangements. - EU RFAs: BoP Facility (€50 billion cap), EFSM (€60 billion cap), EFSF (lending capacity €440 billion backed by €780 billion guarantees), ESM (capital stock €700 billion; effective lending capacity €500 billion; €80 billion paid-in capital; €620 callable capital). - ACF: US$8.5 billion resources; Financial Credits and Investment Loans; recent Financial Credits US$70 million to Tajikistan (August 2010) and US$3 billion to Belarus (June 2011). - CMIM: aggregate gross contribution US$120 billion; planned enhancement to US$240 billion, IMF de-linked portion to increase to 30 percent (planned), eventual 40 percent in 2014 subject to review; AMRO institutional development plans noted. *Italic: Source — EXECUTIVE SUMMARY; sections 7, 12, 18–28, 29–31; Appendix I; and ESM/CMIM excerpts from _041113b (Regional Financing Arrangements), April 11, 2013.* ### EXECUTIVE SUMMARY ### EXECUTIVE SUMMARY ### Overview - Following the global financial crisis of 2008-09, regional financing arrangements (RFAs) have been recognized as an important layer of the global financial safety net (GFSN). - This paper summarizes the current landscape of RFAs, discusses IMF-RFA coordination to date, and explores options for enhancing cooperation going forward. - Purpose: contribute to discussions at international fora and solicit views from the Fund and RFA memberships on how to enhance cooperation. ### Motivation and background - The GFSN comprises multilateral institutions like the IMF, RFAs, bilateral creditors, and individual countries’ own defenses that countries can draw on to cope with financing shortfalls, volatility and contagion. - RFAs have existed since the 1970s; crises of the 1990s and other developments (e.g., NAFTA) led to further RFA creation in some regions. - The global financial crisis led to the emergence of very large RFAs and the strengthening of existing ones; a few played a significant role in responding to the crisis. ### Key crisis-response developments and Fund actions - The Fund enhanced its ability to preempt and mitigate financial crises by quadrupling its lending resources and overhauling its lending toolkit. - New Fund instruments established include the Flexible Credit Line (FCL) and the Precautionary and Liquidity Line (PLL). - Major central banks established bilateral swap lines to provide foreign exchange liquidity; multilateral development banks participated in official sector support packages. - RFAs were established or expanded in several regions, including substantial EU mechanisms and strengthening of East Asian arrangements; a new RFA was created in 2009 by five CIS countries (Eurasian Economic Community) and Armenia to support stabilization and resilience to shocks. ### Observed synergies and tensions between RFAs and the Fund - Synergies: - Increased firepower in global crisis response. - Better understanding of economies and policies via shared expertise. - Strengthened ownership of adjustment programs and associated policies. - Tensions/coordination challenges: - Diverse mandates, funding, instruments, terms, and conditionality across RFAs. - Some RFAs require Fund involvement for lending; others do not. - RFA safeguards requirements are generally less developed than the Fund’s. - Some RFA conditionality goes beyond macro-critical measures. - Limited formal guidance on IMF-RFA modalities creates flexibility but risks perceptions of uneven treatment and potential delays in assistance. ### Experience with IMF-RFA coordination to date - The Fund has coordinated with some RFAs on a case-by-case basis; this flexible approach has generally functioned effectively. - Growing academic and policy calls for a more structured approach: to enhance predictability of co-financing, prevent arbitrage and facility shopping, and increase crisis-fighting efficacy. - The IMFC has repeatedly underscored the importance of effective cooperation. - G-20 Leaders endorsed six non-binding broad principles for IMF-RFA cooperation in November 2011 (see Box 1 in source), emphasizing: - Tailored, flexible collaboration to region-specific circumstances. - Respect for roles, independence, and decision-making processes. - Early/ongoing cooperation, information sharing, and joint missions. - Seeking consistency of lending conditions to the extent possible. - RFAs must respect the preferred creditor status of the IMF. ### Literature and analytical perspectives - One strand argues for formalized cooperation and ex ante organization of IMF-RFA coordination to avoid costly delays (e.g., proposals for multilateral review and representation of RFAs at the Fund). - Another strand emphasizes a clearer division of labor: RFAs handle idiosyncratic or smaller regional crises, the Fund addresses systemic crises and larger financing needs. - Specific literature proposals include: - Multilateral review of RFAs for consistency with Fund mandates. - Formal representation of RFAs at the IMF Executive Board. - Coordination on qualification to precautionary financing instruments. - Reducing Fund-linkage in certain RFAs (e.g., CMIM) to avoid stigma and activation constraints. ### Options for enhancing IMF-RFA cooperation (high-level) Possible approaches that respect independence and differing mandates include: - Fine-tuning the current flexible, case-by-case approach. - Developing a set of overarching principles and detailed procedural guidelines on IMF-RFA cooperation covering: - Aligning lending terms. - Clarifying how qualification to precautionary instruments would be applied. - Establishing avenues for regular dialogue between Fund and RFA staffs outside of crises. - Creating the expectation that co-financing operations would be subject to principles and safeguards similar to the Fund’s lending framework—such as debt sustainability, market access, and capacity to repay. ### Structure and scope of the paper - Section II: background on recent developments and academic literature. - Section III: current landscape of RFAs—objectives, institutional and lending frameworks, modalities for cooperation with international financial institutions. - Section IV: experience to date of Fund cooperation with RFAs. - Section V: options to enhance coordination going forward. - The paper stops short of specific proposals; such proposals would require consultations between the Fund and the various RFAs. ### Administrative and authorship details - Date: April 11, 2013 - Approved by Siddharth Tiwari. - Prepared by a team led by Toshiyuki Miyoshi and comprising Stephanie Segal, Preya Sharma, and Anish Tailor, with inputs provided by Mali Chivakul, Lorenzo Giorgianni, Gavin Gray, Bikas Joshi, Ben Kelmanson, Sergi Lanau, Martin Mühleisen, Uma Ramakrishnan, and Edouard Vidon. Overall guidance provided by James Roaf (all SPR). *Source: EXECUTIVE SUMMARY, Regional Financing Arrangements (International Monetary Fund), April 11, 2013.* ### 7. Existing RFAs take various forms. For the purposes of this paper, an RFA is broadly defined ### 7. Existing RFAs take various forms. For the purposes of this paper, an RFA is broadly defined ### Definition and scope - An RFA is defined as a financing mechanism through which a group of countries in a region pledges financial support to members that are experiencing, or might experience, a liquidity shortage or balance of payments difficulties. - Resources are provided either through drawing from a pool of contributed or borrowed resources or through a swap of financial assets. - Exclusions from this definition: - Stand-alone bilateral swap arrangements. - Lending instruments of multilateral or regional development banks concerned with provision of development financing. - Central banks of currency unions providing liquidity. ### Origins and objectives of selected RFAs - Most RFAs were established to avert financing difficulties, exchange rate pressures, or financial instability in the context of increased regional integration. - Examples and origins: - Latin American Reserve Fund (FLAR): origin in the Andean Reserve Fund established in 1978 to avert balance of payments pressures in the context of the Andean Community integration process. - North American Framework Agreement (NAFA): introduced in 1994 as a complement to NAFTA. - Chiang Mai Initiative (CMI) / Chiang Mai Initiative Multilateralization (CMIM): established following the currency crises in East and South East Asia in the late 1990s. - EU Balance of Payments (BoP) Assistance Facility: started in 1972 to address BoP difficulties during stages of European economic convergence. - European Financial Stability Facility (EFSF) and European Stability Mechanism (ESM): established during the recent eurozone crisis to safeguard euro area financial stability in the context of a currency union. - Some RFAs have broader objectives: - Arab Monetary Fund (AMF) and FLAR include promotion of policy coordination and harmonization, and regional integration. - AMF additional objectives: eliminating trade restrictions, promoting development of capital markets, and promoting structural reforms, including in the financial sector and public finances. - Eurasian Community Anti-Crisis Fund (ACF) aims to help implement large investment projects to promote economic integration. ### Overview of selected RFAs — key features and exact figures - Arab Monetary Fund (AMF) - Founded in 1976. - Authorized capital of US$2.7 billion. US$2.2 billion loans outstanding at end 2011. - Size relative to GDP/IMF quota (2011, percent): 0.1/10.9. - Loans drawn from pooled member resources (via capital subscription); supplemented by market borrowing. - Terms and maturities vary across 7 credit facilities ranging from short-term to 7 years. Maximum lending ceiling for each facility ranges from 50% to 175% of paid-in capital (up to 475% by adding these limits). A program is required for loans over 100% of paid-in capital. - No explicit role for the IMF. - Legal entity of public international law. Decisions by absolute majority of voting power. - Latin American Reserve Fund (FLAR) - Created in 1991 (following accession of third countries to Andean Reserve Fund created in 1978). - Subscribed capital is US$2.34 billion; paid-up capital is US$2.03 billion as of December 2011. - Size relative to GDP/IMF quota (2011, percent): 0.2/29.2. - Loans drawn from pooled member resources (via capital subscription); supplemented by market borrowing. - Terms and maturities vary across 5 loan types (including a precautionary Contingent Credit), from 30 days up to 3 years. Access limits at 250% of paid-in capital (260% for Bolivia and Ecuador). - Central Banks present policy measures but FLAR has always accepted the program without adding conditionality. - No explicit role for the IMF. - Legal entity of public international law. Each country has one vote and one chair. Most decisions by 3/4 qualified majority. Board approval not required for short-term and contingent credits. - North America Framework Agreement (NAFA) - Established in 1994. - US$9 billion. - Size relative to GDP/IMF quota (2011, percent): 0.1/10.9. - Rubric for a network of bilateral currency swap arrangements. - 90-day central bank swaps, renewable up to one year. - US Treasury Secretary requires letter from IMF Managing Director stating confidence in the borrower's policies. - No legal entity or independent secretariat. - EU Balance of Payments Assistance Facility - Established in 2002 (originally medium-term financial assistance set up in 1971). - Maximum lending capacity is €50 billion. - Size relative to GDP/IMF quota (2011, percent): 1.5/212.3. - Lending facility financed by market borrowing by the EU. Financed through capital markets using the creditworthiness of the EU; lent under same conditions under which it was borrowed (back-to-back loans). - Loans and appropriate financing facility. Can be used for precautionary financing. Amount, duration, and other terms decided by the Council. Program and conditionality presented in an MoU and loan agreement. - No formal link to Fund-supported program but organised jointly in recent cases; members obliged to consult EU before approaching IMF. - Council Regulation No.332/2002. Decisions by qualified majority of the Council after proposal from the Commission consulting with the EFC. - European Financial Stabilisation Mechanism (EFSM) - Established in 2010. - Maximum lending capacity is €60 billion. - Size relative to GDP/IMF quota (2011, percent): 0.5/69.6. - Lending facility financed by market borrowing by the EU. - Loans and appropriate financing facility. Can be used for precautionary financing. Amount, duration, and other terms decided by the Council. Program and conditionality presented in an MoU and loan agreement. - EFSM Regulation: activation in context of a joint EU/IMF support. - Council Regulation No.407/2010. Decisions by qualified majority of the Council after proposal from the Commission consulting with the EFC. - European Financial Stability Facility (EFSF) - Established in May 2010 as a temporary mechanism until June 2013. - Maximum lending capacity was €440 billion when first set up. - Size relative to GDP/IMF quota (2011, percent): 4.7/702.4. - Lending and other financing facility financed by market borrowing; borrowings backed by guarantees of euro area MS in accordance with their share in paid-up capital of the ECB. - (i) Loans to Member States in financial difficulties; (ii) Intervention in debt primary and secondary markets; (iii) precautionary assistance; (iv) Loans to governments for bank recapitalization. - Framework envisages financial support provided in conjunction with the IMF. - Private company set up under Luxembourg law. - Note: The EFSF is a temporary facility that may engage in new support programs until June 30, 2013. - European Stability Mechanism (ESM) - Inaugurated in October 2012 as a permanent crisis resolution mechanism. - Maximum lending capacity is €500 billion (combined lending capacity of EFSF/ESM is €700 billion) against capital contribution of €700 billion. €80 billion is paid-in capital, provided in 5 equal installments. In addition, €620 callable capital from 17 euro-area Member States. - Size relative to GDP/IMF quota (2011, percent): 5.6/798.1. - Loan and other financing facility drawn from pooled member resources (via capital contributions), supplemented by market borrowing. - (i) Loans to Member States in financial difficulties; (ii) Intervention in debt primary and secondary markets; (iii) precautionary assistance; (iv) Loans to governments for bank recapitalization. - A euro area Member State requesting financial assistance from ESM is expected to address, wherever possible, a similar request to the IMF. - Intergovernmental institution under international law. Board of Governors are the Finance Ministers of euro area member states. Most important decisions require unanimity. Emergency voting procedure allows approval of financial assistance by a qualified majority of 85% of the votes cast. - Eurasian Economic Community (EurAsEC) Anti-Crisis Fund (ACF) - Established in 2009. - Budget contributions from member states totalling US$8.5 billion. - Size relative to GDP/IMF quota (2011, percent): 0.4/77.0. - Loans drawn from pooled member resources (via budget contribution). - (i) Financial Credits extended only to central governments to support stabilization programs. (ii) Investment Loans available to governments and/or companies implementing large investment projects. - No explicit role for the IMF. - ACF is treaty-based but is not a legal entity or an organization. ACF Council consists of finance ministers. Eurasian Development Bank manages resources. Decisions by simple majority. - Chiang Mai Initiative Multilateralization (CMIM) - Established in March 2010 (original CMI established in May 2000 as network of bilateral swap arrangements). - US$120 billion (to be increased to US$240 billion when the amended Agreement takes effect). - Size relative to GDP/IMF quota (2011, percent): 0.8/219.1. - USD-Local currency swap arrangements among ASEAN+3 countries (13) plus HKMA. Contributions based on commitments by member countries to provide financial resources within agreed amount. Funds transferred only when a request for drawing is made. - 90-day swaps that can be renewed up to seven times (approximately two years). When Agreement is amended, maturities will be lengthened and a precautionary line will be introduced. - Disbursement of an amount in excess of 20 percent of the maximum access is conditional on the existence of a Fund-supported program. When Agreement is amended, this threshold will be raised to 30 percent, and to 40 percent in 2014 subject to review as needed. - Based on a contract called "The CMI Multilateralization Agreement." Not a legal entity per se; ASEAN+3 Macroeconomic Research Office (AMRO) established as a company under Singaporean law. Lending decisions by 2/3 qualified majority of the voting power. ### Motivation and rationale - Shared motivations between RFAs and multilateral institutions like the Fund: - If RFA resources can be readily accessed, they can provide insurance against shocks in a cost-efficient manner. Economic and financial interconnectedness create spillovers and contagion risks, particularly among countries with geographic proximity, but accumulating reserves at the country level is costly. Moreover, reserves might not be readily used by countries for "fear of losing reserves." - Pooling resources can help countries gain access on better terms to international capital markets and can provide a source of countercyclical financing. - Sharing resources creates incentives to put in place a regional peer review or surveillance mechanism to monitor members’ economic developments and policies, contributing to early identification of crisis risks and prevention of a regional crisis. Where such a mechanism already exists, its effectiveness is likely strengthened by sharing resources. - In a currency union, an RFA provides an additional mechanism to cushion country adjustment in response to idiosyncratic shocks. - Additional drivers: - Dissatisfaction with past Fund-supported programs and/or governance of international financial institutions may have prompted RFAs. - Limited emphasis on conditionality attached to some RFA financing may reflect views that Fund conditionality is too onerous (example: FLAR has always accepted the member’s program without adding conditionality). - RFAs may enable more rapid access to emergency financing compared with the Fund or other multilateral institutions (example: CMI/CMIM put in place a regional "self-help" mechanism to provide "sufficient and timely" financial support). - The emergence of RFAs and wide use of bilateral swaps may be related to lingering political stigma associated with requesting Fund financial assistance, and concerns about ownership and governance of multilateral institutions. ### Institutional frameworks (selected points) - Legal forms vary: legal entity of public international law (AMF, FLAR), private company under local law (EFSF), intergovernmental institution under international law (ESM), treaty-based but not a legal entity (ACF), contractual agreement with associated company (CMIM/AMRO). - Decision-making rules vary: absolute majority, qualified majority (2/3, 3/4), unanimity for major ESM decisions, emergency qualified majority of 85% for ESM emergency approvals. - Interaction with the IMF: - Some RFAs have no explicit IMF role (AMF, FLAR, ACF). - Some RFAs envisage joint action or conditionality linked to Fund programs (EFSM, EFSF, ESM, CMIM thresholds tied to existence of a Fund-supported program). - NAFA requires a letter from the IMF Managing Director stating confidence in the borrower's policies for US Treasury Secretary action. *Italic: Source — _041113b - 7. Existing RFAs take various forms. For the purposes of this paper, an RFA is broadly defined* ### 12. The institutional structure and lending frameworks across different RFAs vary widely. ### 12. The institutional structure and lending frameworks across different RFAs vary widely. ### Resources - European RFAs are described as sizable, while other RFAs are small relative to standard metrics such as regional GDP (Figure 2). - Even small RFAs can effectively help countries, especially small members, but the amount of financing available may be insufficient to cover region-wide crises if multiple countries simultaneously suffer liquidity shortages or balance of payments difficulties—a situation where risk diversification by pooling regional resources is ineffective. - Footnote reference: For example, Volz (2012). ### Funding - Most RFAs borrow on capital markets or from monetary and financial institutions, backed by contributions in the form of paid-in capital (from international reserves or the budget), and/or explicit or implicit guarantees from members. - Under the NAFA and CMIM, which take the form of swap arrangements, resources are not borrowed or pooled; instead members make a commitment to provide a portion of their international reserves to the requesting member when a request for drawing is made. ### Lending - In most cases, financial assistance by RFAs is in the form of loans to members facing balance of payments or other financing needs. - NAFA and CMIM assistance is extended via swaps of a member’s local currency and a reserve currency or another strong major currency. - Other forms of assistance include purchases of bonds issued by members in the primary and secondary markets and loans to sovereigns for recapitalization of the banking system, such as in the ESM. - Footnote reference: In addition, there have been discussions about providing the ESM with a tool to recapitalize the euro area banks directly. ### Precautionary lending (overview and instrument comparison) - Until 2011, only FLAR provided contingent credit; since then, the EU has incorporated precautionary loans in its lending toolkit. The CMIM is set to introduce a precautionary swap line when its Agreement is amended. - The ESM’s Precautionary Conditioned Credit Line (PCCL) and Enhanced Conditions Credit Line (ECCL) appear similar to the Fund’s FCL and PLL, respectively. - The CMIM Precautionary Line resembles the PLL in terms of qualification, but has greater flexibility regarding the extent of ex post conditionality. - No mechanism is currently in place between these institutions and the Fund to coordinate the respective qualification criteria (Table 2). - Selected instrument details (from Table 2; preserved terms and numeric values exactly as in source): - FLAR Contingent Credit: - Duration: Six months; renewable subject to approval by FLAR. - Access limits: Up to 2 times of paid-in capital (2.1 times for Bolivia and Ecuador). - Eligibility or Qualification criteria: None. - Ex post conditionality: None. - Reviews: None. - Financing terms: When disbursed, repayable in six months; repayment period can be extended once for six months. Commitment fee applied. - Other requirements: Granting or the credit is the purview of the Executive President and subject to the availability of liquid resources at FLAR. Credit needs to be secured to the satisfaction of FLAR. - ESM Precautionary Conditioned Credit Line (PCCL) and Enhanced Conditions Credit Line (ECCL): - PCCL Duration: Six months; renewable up to three times (each for six months). - ECCL Duration: One year or two years; renewable. - ESM Access limits: Overall cap of 1000 percent of quota; First-year access limit of 500 percent of quota. - Per arrangement limit: 250 percent of quota (500 percent of quota in exceptional circumstances due to the impact of exogenous shocks). - PCCL Eligibility criteria include: (i) Respect of the commitments under the stability and growth pact; (ii) A sustainable general government debt; (iii) Respect of the commitments under the excessive imbalance procedure; (iv) A track record of access to international capital markets on reasonable terms; (v) A sustainable external position; and (vi) The absence of bank solvency problems that would pose systemic threats to the stability of the euro area banking system. - ECCL: Access to an ECCL is open to ESM members that do not comply with some of the eligibility criteria required for accessing a PCCL but whose general economic and financial situation remains sound. - Ex post conditionality for PCCL/ECCL: Where a PCCL is drawn, the beneficiary ESM Member will be subject to enhanced surveillance by the European Commission for the availability period of the credit line and should adopt measures aimed at addressing the sources or potential sources of difficulties. The beneficiary ESM Member will be subject to enhanced surveillance by the European Commission for the availability period of the credit line and should adopt corrective measures aimed at addressing the weaknesses and avoiding any future problems in respect of access to market financing, while ensuring a continuous respect of the eligibility criteria. - Reviews: Continuous respect of the eligibility criteria will be monitored by the European Commission; Enhanced surveillance when drawn. - Financing terms: Maturity: six months for the IMF de-linked portion; and one year for the IMF linked portion. Commitment fee applied. - Other requirements: The requesting member needs to submit an economic report to ELDMB. - CMIM Precautionary Line (CMIM-PL): - Duration: From one to two years; renewable. - Access limits: Subject to maximum access set aside for the member for both CMIM Stability Facility (for actual BoP need) and CMIM-PL. - Eligibility or Qualification criteria (ELDMB will apply these five criteria for ex ante qualification and ex post conditionality): (i) external position and market access, (ii) fiscal policy, (iii) monetary policy, (iv) financial sector soundness and supervision, and (v) data adequacy. - Ex post conditionality: ELDMB to set ex post conditionality according to its assessment of the member's fundamentals and policies. - Reviews: Enhanced surveillance. - Financing terms: Commitment fee applied. - Other requirements: The member needs to submit a written communication outlining its policy goals and strategies and its commitment to take adequate corrective measures to deal with shocks. - IMF Flexible Credit Line (FCL) and Precautionary and Liquidity Line (PLL): - FCL Duration: Six months; renewable in cases where BoP need is longer than originally anticipated due to exogenous shocks. - PLL Duration: One year, renewable up to twice (each for six months). - FCL Access limits: None. - PLL Access limits: Overall cap of 1000 percent of quota; First-year access limit of 500 percent of quota. In addition to the overall access cap, a per arrangement limit of 250 percent of quota (500 percent of quota in exceptional circumstances due to the impact of exogenous shocks). - FCL Eligibility criteria: (i) a sustainable external position; (ii) a capital account position dominated by private flows; (iii) steady sovereign access to international capital markets; (iv) a relatively comfortable reserve position; (v) sound public finances, including a sustainable public debt position; (vi) low and stable inflation; (vii) the absence of bank solvency problems; (viii) effective financial sector supervision; and (ix) data transparency and integrity. - PLL Eligibility/qualification: Qualification is assessed in the following areas (The requesting member is expected to perform strongly in most of these areas and not to substantially underperform in any of them): (i) external position and market access, (ii) fiscal policy, (iii) monetary policy, (iv) financial sector soundness and supervision, and (v) data adequacy. - PLL Exclusions: The Fund shall not approve a PLL arrangement for a member facing: (i) sustained inability to access international capital markets, (ii) the need to undertake a large macroeconomic or structural policy adjustment (unless such adjustment has credibly been launched before approval), (iii) a public debt position that is not sustainable in the medium term with a high probability, or (iv) widespread bank insolvencies. - FCL Ex post conditionality: None. - PLL Ex post conditionality: Indicative targets and standard PCs. Conditionality may also include other PCs, prior actions and structural benchmarks where warranted. Focused on addressing remaining vulnerabilities. - Reviews: FCL: None. PLL: Semi-annual reviews. - Financing terms for PLL: When purchased, repurchases need to be made in 3 ¼ to 5 years. Commitment fee applied for precautionary arrangements. - Approval: PLL Subject to a decision by ESM Board of Governors (as noted in the table context). ### Terms and maturities - Lending terms differ based on the type of assistance both across and within RFAs. - Some facilities are bilateral swaps or close to them, while others resemble Fund instruments, trade finance, or medium-term development financing. - Examples: - AMF and FLAR have a number of loan types with varying maximum access, maturity, and conditions according to the nature of financing needs. - NAFA swaps: take the form of three-month swap arrangements that can be renewed up to one year. - CMIM swaps: use 90-day swaps that can be renewed up to seven times (approximately two years). - EU lending instruments are flexible with no specific access limits or maturity. ### Conditionality - AMF, ACF, and EU arrangements require agreement with the requesting member on an adjustment program and conditionality for their lending. - Under swap arrangement schemes (NAFA and CMIM), conditionality is subject to discretion of the member(s) providing hard currency. - CMIM: a Fund-supported program is not required for activation of CMIM swaps for drawings of up to 20 percent of the requesting member’s maximum access; the CMIM may set its own conditionality on this portion. - FLAR requires an adjustment program by a requesting member but generally has accepted the member’s program without adding conditionality. - Areas where RFAs attach conditionality tend to vary reflecting objectives and institutional frameworks. Relations between RFA and Fund conditionality, including Fund program involvement as a requirement of RFA lending, are discussed in the next section. ### Governance - Most RFAs are legal entities established by international agreement or domestic corporate law; swap arrangement schemes do not depend on creation of such an entity. - AMF and FLAR are legal entities of public international law. - EU arrangements are based on: - Council Regulations (the BoP Assistance Facility and the European Financial Stability Mechanism (EFSM)); - corporate law of a member state and the Framework Agreement between euro area countries and the entity (EFSF); - an international treaty (ESM). - NAFA and CMIM do not have a legal entity—the former is based on a group of bilateral swap arrangements and the latter on a single multilateral contract among the authorities. - ACF does not have a separate legal entity; its resources are managed by the Eurasian Development Bank. - Many RFAs have an organization that plays the role of a secretariat; size and functions vary. - Distribution of voting power generally corresponds to financial support and/or economic size of members and is generally concentrated in a small number of countries (Figure 3). - Unanimity is required for key lending decisions at the EFSF/ESM (Appendix I). ### Experience with IMF-RFA coordination — A. Lending - Some RFAs require the Fund’s involvement in lending operations; others do not. - CMIM requires the existence of a Fund-supported program to provide assistance in excess of 20 percent of maximum access. - EU mechanisms: - BoP Assistance Facility legally allows provision of loans solely by the EU, but programs have been jointly developed with the Fund as a matter of policy and practice; the Facility obliges members to consult the EU before approaching the Fund. - EFSM Regulation explicitly states activation will be in the context of a joint EU/IMF support. - EFSF Framework Agreement envisages provision of support in conjunction with the Fund. - ESM treaty explicitly states the requesting member state should address a similar request to the Fund wherever possible. - NAFA: the U.S. Secretary of the Treasury seeks a letter by the IMF Managing Director that states his/her confidence in the economic policies of the borrower when drawing from the Exchange Stabilization Fund. - AMF, FLAR, and ACF: no explicit Fund role is envisaged for their loans, although informal staff-level contacts often occur. - Operational experience with IMF-RFA cooperation has been limited and concentrated over the past two decades, with the bulk occurring over the past five years. - Example: NAFA contributions provided a portion of financing to a US$18 billion exchange stabilization fund for Mexico in January 1995; NAFA financing preceded IMF Board approval of Mexico’s US$17.8 billion Stand-by Arrangement (SBA), and program design under the SBA was not formally coordinated between the IMF and NAFA. - Lending by RFAs, such as FLAR, has been incorporated in Fund-supported programs as a source of financing, but the RFA has not explicitly been involved in designing the program. - Since 2008, significant Fund resources have been committed in collaboration with EU institutions, with variable burden-sharing across programs. - The IMF provided as little as 20 percent or less of total financing (e.g., Latvia in 2008 and Greece in 2012) to more than 60 percent (e.g., Hungary in 2008 and Romania in 2009/2011). - Fund financial commitments vary based on country-specific circumstances, overall financing need, role of bilateral creditors, and terms of financing instruments at creditors’ disposal. ### Experience with IMF-RFA coordination — B. Monitoring and other technical assistance - The Fund has provided monitoring in the context of European financial assistance for recapitalization of the financial sector in Spain. - Terms of reference agreed with Spanish authorities and the European Commission make clear the Fund will provide independent advice and is not party to the Memorandum of Understanding for the financial assistance or implementation of conditionality. - Purpose: support Spain’s efforts to recapitalize and restructure its financial sector with support from the ESM. - The Fund has coordinated with RFAs to provide technical assistance to member countries and, subject to approval by the Executive Board, provided technical assistance directly to RFAs. - Example: Fund provided technical assistance to the AMF on domestic bond market development in Arab countries. - Fund has allowed participation of officials of international agencies, including the EU and FLAR, in its training programs. ### Experience with IMF-RFA coordination — C. Modalities and Institutional Considerations - RFAs outside Europe are examining the scope for co-financing with the Fund. - Neither the CMI nor CMIM have been activated, but CMIM has prepared operational guidelines for activating swap operations, with a view to possible co-financing of requesting members’ adjustment programs with the Fund. - The ACF has expressed possible interest in coordinating its lending with the Fund and, like FLAR, has provided financing to some members in the context of Fund-supported programs. - Annex note: In certain cases, some contributions are earmarked only to certain activities in modalities for program financing (e.g., in Greece’s program since 2012, funds for bank recapitalization and resolution come only from the EFSF). *Source: _041113b - 12. The institutional structure and lending frameworks across different RFAs vary widely.* ### 18. There is currently limited formal guidance on modalities for coordination, leaving ### _041113b - 18. There is currently limited formal guidance on modalities for coordination, leaving ### Overview - Paragraphs referenced: 18–28. - There is limited formal guidance on modalities for IMF–RFA coordination, providing ample flexibility to tailor joint work to country-specific circumstances. - Europe has evolved from ad hoc modalities toward a structured “Troika” framework (IMF, EC, ECB) in euro area programs; no similar practice exists in other regions. ### Experience with EU institutions (Box 3) - Since the global financial crisis, Fund resources have been committed to programs with close cooperation and co-financing with EU institutions. - Program discussions have typically produced a unified set of macroeconomic and structural policy parameters. - For EU member states outside the euro area: trilateral discussions among the authorities, the EC, and the IMF. - For euro-area programs: ECB participation in discussions with focus on the financial sector strategy. - Program parameters documented in the IMF Memorandum of Economic and Financial Policies (MEFP) and the EC Memorandum of Understanding (MoU). - Typical division of roles: - Fund: greater role in designing the macroeconomic framework. - EC: lead on consistency of program design and conditionality with EU-wide rules, especially on structural issues and fiscal targets. - ECB (euro-area programs): focus on financial sector strategy. - Issues arising from multi-institution coordination: - Engagement with country authorities: potential constraints from regionally-agreed targets; varying degrees of country involvement in tripartite discussions. - Flexibility: EFSF/ESM unanimity requirement can multiply policy “redlines”; rule-based EU/euro-area frameworks can constrain room for maneuver. - Timing: coordination among multiple institutions/member states can delay financial support. - Confidentiality: broad involvement may hinder confidentiality, affecting implementation of market- or politically-sensitive measures. - The Troika structure improved information sharing, streamlined discussions, and coordinated external communications, but differing mandates/priorities continue to pose challenges. ### Differences in mandates, policies, and procedures (¶19) - The Fund: - Operations governed by the Articles of Agreement. - Required to assist members in resolving balance of payments problems consistent with the Articles and to establish adequate safeguards for temporary use. - Financing is subject to policy conditionality, safeguards, access limits, and phasing to preserve revolving quota-based resources. - Develops details of requirements via rules, policies, procedures, and practices to ensure uniformity of treatment. - Cannot provide its general resources to RFAs; only countries can be Fund members; Executive Board consists of country representatives. - Cross-conditionality (subjecting Fund resources to rules/decisions of other organizations) is prohibited under the Fund’s Guidelines on Conditionality (Decision No. 12864-(02/102), as amended). - The Fund makes its own judgments on whether conditions for use of its resources have been met and will not disburse if it assesses conditions have not been met, regardless of RFA judgments. - Regional Financing Arrangements (RFAs): - Frameworks generally afford greater flexibility than the Fund’s lending framework (e.g., no formal requirements or established practice on debt sustainability, market access, or borrower’s capacity to repay). - Some RFAs can directly purchase sovereign bonds in secondary and primary markets. - RFAs may be within regional institutional arrangements or treaties that can impose legally-binding obligations (e.g., macroeconomic targets, common market policies) that reduce room for maneuver. - In practice, some RFAs require Fund involvement formally; others coordinate informally. ### Benefits of IMF–RFA cooperation (¶20–21) - Joint IMF–RFA financing can: - Increase available firepower to tackle large-scale crises by pooling risks and mobilizing regional and global resources. - Combine regional and IMF expertise to boost program ownership and increase chances of program success. - Fund involvement can enhance program credibility and financial safeguards by leveraging: - Conditionality - Debt sustainability assessments - Market access and capacity to repay analysis - Financing assurances - Fund involvement contributes to risk diversification due to near-universal membership—relevant for region-wide shocks. - Division of labor advantages: - RFAs’ regional knowledge strengthens ownership and legitimacy and may encourage earlier requests for assistance. - Fund often leads on designing macroeconomic/policy frameworks, bringing cross-country experience to increase program success chances. - Sharing information and separate interactions can improve policy understanding and program design; information flows need careful management. ### Challenges and risks in coordination (¶22–24) - Added complexity in coordinating program design and conditionality: - Convergence on program design between RFA and Fund can require iterations and cause delays. - Different financing terms and maturities between Fund and RFA instruments create potential maturity mismatches (e.g., RFA may be repaid early while Fund still disburses; or longer-maturity RFA instruments could support longer-duration adjustment programs than typical Fund short-term support). - Institutional mandates and policies may constrain coordination (e.g., regional obligations, Fund requirement that financing address temporary BOP problems where debt is sustainable and prospects for market re-access exist). - Discrepancies can lead to one layer of the GFSN lending while another cannot, causing protracted discussions or pressure for forbearance. - Risks of coordination failures and ad hoc approaches (¶23): - Ad hoc modalities risk reducing predictability of assistance and delays when timely support is most critical. - Different financing terms and conditionality can lead to institutional arbitrage and facility shopping, deferring necessary adjustments and undermining global financial safety net functioning. - Lack of coordination in qualification criteria for precautionary instruments could send conflicting signals and pressure to lower the qualification bar, undermining credibility. - Some RFAs envisage co-financing to borrow program credibility from the Fund’s framework; this can shift stigma onto the Fund or create pressure for greater discretion in applying Fund lending policies. - G-20 Principles (¶24): - Suggest broad direction toward enhanced cooperation but are not legally binding and lack detailed guidance on division of labor and institutional relations. ### Options for enhancing coordination (¶25–28) - These options are presented for soliciting views and do not represent staff proposals or recommendations. - Option: Fine-tune the current flexible approach (¶26) - Preserve flexibility while respecting mandates and policies of each institution. - Recognize limited IMF–RFA co-financing experience (mostly in Europe with a monetary union); premature to adopt detailed coordination rules for diverse RFAs elsewhere. - Guard against perceptions of differentiated treatment and ensure uniformity of treatment is preserved. - Option: Fund provides independent monitoring without program involvement (¶27) - Provision of technical services under Article V, Section 2 (b) of the Fund’s Articles of Agreement. - Useful when institutional constraints prevent formal Fund financing or when Fund resources are not needed but authorities/RFA want close Fund involvement for expertise (example cited: modality in ESM support to Spain’s banking sector). - These engagements preserve coordination benefits but may carry less credibility than co-financing—especially if absence of Fund lending is seen as due to nonobservance of Fund lending policy requirements (e.g., debt sustainability). - Fund can signal borrower policy quality via assessment letters providing candid staff assessments when an up-to-date Article IV staff report is not available. - Option: Improve the Fund’s operating framework in joint IMF–RFA programs (¶28) - Reach ex ante understandings, within legal/policy constraints, to better align lending terms and application of qualification criteria for precautionary instruments. - Establish procedures for information sharing, identify contact persons and counterparts beforehand, and conduct crisis scenario exercises jointly. - Review how internal Fund processes (e.g., Policy Notes, Policy Consultation Meetings, Board briefings) could be adapted to coordination with RFAs to ensure integrity of Fund decision-making and reflect regionally-made policy impacts. - Examine experience with “two-step” negotiating processes (e.g., Troika framework) where discussions with the RFA precede discussions with the member country to align objectives and positions, while leaving room for adjustments in response to developments and member priorities. *International Monetary Fund. Regional Financing Arrangements (excerpts, paragraphs 18–28).* ### 29. Outside of co-financing engagement, there are gains from enhanced information ### 29. Outside of co-financing engagement, there are gains from enhanced information sharing on economic developments and policy issues facing member countries. ### Gains from enhanced information sharing and cooperation - Enhanced information sharing could take the form of more regular dialogue between Fund and RFA staffs, including in the context of economic monitoring of the regions as well as individual countries. - RFAs and the Fund could leverage each other’s surveillance capabilities: - Regional surveillance or peer review mechanisms could benefit from the Fund’s analyses from its global and cross-regional perspectives, such as Spillover- and External Sector Reports. - The Fund could enrich its surveillance by utilizing the RFA’s regional expertise. - Strengthening relationships with RFAs outside of crisis lending could: - Contribute toward shared diagnosis of underlying imbalances. - Promote policy adjustment. - Build mutual trust in non-crisis times that would be invaluable for rapid joint responses in a crisis. - Constraints on information sharing: - Sharing of information or documents by Fund management or staff can only be done within the constraints of the applicable Fund policies and procedures. - Information or documents provided to Fund management or staff on a confidential basis may not be disclosed beyond management or staff without the consents of the provider of the information or documents. - Consistent with Article XII, Section 8, non-public views of the Fund (i.e., the Executive Board) regarding a member’s economic policies may not be disclosed without the consent of that member. (footnote 30) ### Toward a more structured approach to IMF–RFA coordination - A more structured approach could include developing formal agreement on guiding principles and/or detailed procedural guidelines to enhance predictability and help avoid coordination failures. - Any shared understandings would be developed within the constraints of the applicable Fund policies and procedures and in a transparent manner to ensure evenhandedness in the Fund’s engagement with RFAs across regions. - Examples of what formalized guidelines or understandings could include: - RFAs and the Fund could formalize the expectation that co-financing operations would be subject to certain overarching principles and safeguards, including debt sustainability, market access, and capacity to repay similar to those found in the Fund’s lending framework. - These overarching principles would also include that RFAs respect the preferred creditor status of the Fund. - Both sides could acknowledge their respective primary responsibilities and lead areas. - Detailed guidelines could provide concrete guidance on how these principles could be achieved, particularly in procedures. - Evolution of arrangements: - After experience in co-financing operations is accumulated, the understandings in the detailed guidelines could evolve into a memorandum of understanding (MoU) or a voluntary “code of conduct” on IMF-RFA cooperation, which could be entered into by the Fund and RFAs bilaterally or collectively. (footnote 31) - Such arrangements would require Board endorsement or approval. (footnote 31) - Balance and flexibility considerations: - Care would need to be taken to preserve a certain degree of flexibility if detailed guidelines, MoUs or codes of conduct are adopted. - A balance needs to be struck between flexibility needed to tailor cooperation to different RFAs given their diverse institutional structures and comparative advantages, and the Fund’s guiding principles of uniformity of treatment in applying its policies and practices. - It would also be important to ensure that a more structured approach did not result in undue delays or inhibit rapid responses to crisis situations. ### Box 4: Bank-Fund Collaboration (relevance as a model) - Historical context: - Formal guidelines on Bank-Fund collaboration were established in the 1960s. - A Concordat on Bank-Fund Collaboration was adopted in 1989, recognizing the Fund’s primary responsibility for “aggregate aspects of macroeconomic policy and their related instruments” and the Bank’s primary responsibilities for “development strategies, sector project investments and structural adjustment programs.” - The 2007 External Review Committee confirmed the Concordat’s continued relevance and called for a flexible approach to enhancing collaboration. - The 2010 report on Implementation of the Joint Management Action Plan on Bank-Fund Collaboration (JMAP) called for promoting joint country-team consultations; enhancing clarity on information sharing; and improving awareness of each institution’s organizational structure. - Typical collaboration practices: - Staffs of the Bank and the Fund typically collaborate closely on country assistance and policy issues relevant to both institutions; on occasion they conduct parallel missions and staff participate in each other’s missions. - Fund assessments of a country’s general economic situation and policies provide input to the Bank’s assessments of potential development projects or reforms; Bank advice on structural and sectoral reforms is taken into account by the Fund. - The staffs jointly conduct debt sustainability analyses in low-income countries and cooperate on conditionality involved in respective lending programs. - Distinct mandates and lending patterns: - The Bank’s lending operations support development objectives through financing projects and structural reforms; the Fund aims to help countries achieve and maintain macroeconomic and external stability through provision of temporary financing to smooth adjustment. - The Bank generally maintains a sustained lending relationship with developing and emerging market countries, while Fund financing is episodic and varies significantly across countries and time. - Lessons for IMF–RFA coordination: - Certain aspects of Bank-Fund coordination may represent a model for IMF-RFA coordination. - Common missions and coordination on conditionality are already in practice in some instances. - Initiatives to promote better coordination—such as agreements on information sharing and staff mobility between institutions—may be helpful in promoting a solid working relationship between RFAs and the Fund going forward. - It took roughly two decades before a formal agreement on Bank-Fund coordination was reached, suggesting a critical mass of practical experience working together may be needed before well-reasoned recommendations can be made and implemented. *REGIONAL FINANCING ARRANGEMENTS, INTERNATIONAL MONETARY FUND (pages 29–31).* ### APPENDIX I. MAIN FEATURES OF MAJOR ### APPENDIX I. MAIN FEATURES OF MAJOR REGIONAL FINANCING ARRANGEMENTS ### A. The Arab Monetary Fund (AMF) - Establishment: The AMF was established in 1976. - Members: Algeria, Bahrain, Comoros, Djibouti, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Mauritania, Morocco, Oman, West Bank and Gaza, Qatar, Saudi Arabia, Somalia, Sudan, Syria, Tunisia, United Arab Emirates, and Yemen. - Purpose: - Correct balance-of-payments disequilibria. - Support implementation of structural reforms in the financial and banking sector as well as in public finance sector. - Promote exchange rate stability. - Eliminate trade restrictions. - Promote the development of capital markets. - Develop policy coordination. - Resources: The paid-up capital of the AMF is US$2.8 billion as of December 2011. The AMF may borrow from member countries, Arab and foreign monetary and financial institutions and markets and can issue securities. - Lending instruments: - Automatic Loan: unconditional facility with access up to 75 percent of the member’s paid-in capital in convertible currencies, maturity of three years, not conditional on program implementation. - Ordinary Loan: extended if financing needs are over 75 percent and provided the member has already withdrawn its reserve tranche from similar regional or international organizations; generally offered up to 100 percent of paid-in capital; could be supplemented with an Automatic Loan (total of 175 percent) and must be accompanied by a macroeconomic adjustment program of at least one year agreed with the AMF. - Extended Loan: for countries suffering chronic balance-of-payments deficits arising from structural imbalances; requires withdrawal of its reserve tranche from similar organizations; access up to 175 percent of paid-in capital and can be supplemented by an Automatic Loan to access a total of 250 percent of paid in capital. - Compensatory Loan: for unanticipated balance-of-payments needs from export shortfalls or increased agricultural import values; access up to 50 percent of paid-in capital. - Structural Adjustment Facility: available for members that have achieved progress in macroeconomic stability and agree to implement a sectoral reform program (particularly financial/banking sector or public finance); access up to 175 percent of paid-in capital for each sector, complementary to other loans. - Trade Reform Facility: assists members in meeting finance costs associated with implementation of trade reforms (up to 175 percent of paid in capital). - Oil Facility: for net oil importing members affected by a rise in world oil and gas prices (access of up to 200 percent of paid in capital). - Short-term liquidity facility: assists developments in the international financial markets; access up to 100 percent of the member’s quota. - Recent activity: The AMF extended two loans in 2011 amounting to US$536mn. Egypt received an Automatic Loan and a Structural Adjustment Loan, together amounting to US$470 million. Morocco received financing under the Oil Facility. - IMF role in lending operations: Institutional set up does not envisage an explicit role for the IMF; however, under a number of loan facilities the AMF requires its member to first withdraw its reserve tranche from the IMF and other similar regional or international organizations of which they are a member. - Governance: Management consists of a Board of Governors and Board of Executive Directors chaired by the Director General. Each member has 75 votes plus one vote for each share held. All matters are decided by absolute majority (more than 50 percent of the total voting power). The number of AMF staff is about 100. ### B. The Latin American Reserve Fund (FLAR) - Establishment: The Andean Reserve Fund was established in 1978, transformed into the Latin American Reserve Fund (FLAR) in 1991 to allow membership from all Latin American countries. - Purpose: - Support member countries’ balance of payments through credit and guarantees. - Improve conditions of international reserve investments by members. - Contribute to harmonization of members’ exchange rate, monetary, and financial policies. - Members: Bolivia, Colombia, Ecuador, Costa Rica, Perú, Uruguay, and Venezuela. - Resources: The subscribed capital is US$2.3bn. As of December 2011, the paid-in capital is US$2.0 bn. Members can borrow up to 250 percent of their paid-in capital contribution, except for Bolivia and Ecuador that have a cap of 260 percent. - Lending instruments: - Balance of payments credit: three-year maturity, one-year grace, access up to 2.5 times paid-in capital. - Foreign debt restructuring of central banks: three-year maturity, one-year grace, access up to 1.5 times paid-in capital. - Liquidity credit: up to one year and one time the paid-in capital. - Contingent credit: up to six months, renewable, and twice the paid-in capital. - Treasury credit: up to 30 days and twice the paid-in capital. - Interest rate: spread of 150-400bps over the three-month LIBOR. - Application requirement: A member applying for a loan shall present policy measures it intends to implement to correct balance of payments imbalances; as a general rule FLAR has accepted the program without additional conditionality. - Other services: Asset management, term deposits, short-term notes, compliance and risk measurements of investment portfolios, training, and seminars. - Recent activity: US$480 million balance of payments loan to Ecuador in 2009. - IMF role in lending operations: Institutional set up does not envisage an explicit role for the IMF. - Governance: Representatives’ Assembly consists of the finance ministers of members; lending decisions are made at the Board of Directors consisting of the central bank governors and the Executive President (no vote). Each member country has the same voting power (one vote) irrespective of paid-in capital. Most decisions are made by a three-quarter qualified majority; lending decisions for Liquidity, Contingency, and Treasury credit are made by the Executive President. Number of FLAR’s permanent staff is 52. ### C. North American Framework Agreement (NAFA) - Establishment: The NAFA was established in April 1994, enlarging prior bilateral swap agreements among Canada, Mexico, and the United States; serves as the rubric for separate bilateral agreements. - Purpose: Established as a financial agreement parallel to the North American Free Trade Agreement. - Members: Canada, Mexico, and the United States. - Resources (swap amounts): - Bank of Canada and the Bank of Mexico: C$1 billion equivalent. - Bank of Canada and the U.S. Federal Reserve: US$2 billion equivalent. - Bank of Mexico and the Federal Reserve: US$3 billion equivalent. - Mexico and the United States Exchange Stabilization Fund (ESF): US$3 billion equivalent. - Lending instruments: Bilateral swap arrangements. The ESF maintains a standing swap line, the Exchange Stabilization Agreement, with Mexico. Agreements between central banks need to be renewed annually. - Recent activity: In January 1995, the U.S. and Canadian authorities activated the swap agreements with Mexico, followed by additional swap operations between the United States and Mexico in February 1995. - IMF role in lending operations: In drawing on the ESF, the US Secretary of the Treasury requires that the IMF Managing Director provide a letter stating his/her confidence in the economic policies of the borrower. ### D. RFAs in the European Union #### Balance-of-Payments (BoP) Assistance Facility - Establishment: Introduced by Council Regulation (EC) No 332/2002 of 18 February 2002, replacing an earlier facility established in 1988. - Purpose: - Provide mutual assistance to a non-euro area EU member state in difficulties or seriously threatened with difficulties as regards its balance of payments. - Encourage member states to adopt economic policy measures to prevent acute balance of payments crises. - Support efforts towards convergence. - Members (access restricted to non-euro area EU members): Bulgaria, Czech Republic, Denmark, Latvia, Lithuania, Hungary, Poland, Romania, Sweden, and the United Kingdom. - Resources: Total outstanding amount of loans limited to €50 billion in principal. Funds raised by the European Commission (EC) on behalf of the EU on international financial markets or from financial institutions. - Lending instruments: Amount, average duration (normally about five years), and disbursement terms decided by the Council based on funding conditions. Terms and economic program presented in the Memorandum of Understanding (MoU) and the Loan Agreement. Scope expanded in 2011 to allow precautionary arrangements. - Recent activity: Four joint EU/IMF-supported programs in Hungary, Latvia, and Romania (twice) approved to date for a total financial assistance of €52.9 billion, of which €16.0 billion under the BoP Assistance Facility. - Hungary: €20.0 bn / €6.5 bn, Until November 2010, Expired in November 2010 (€ 1 bn unclaimed), Post program surveillance. - Latvia: €7.5 bn / €3.1 bn, Until January 2012, Completed (disbursements completed in October 2010; Part of bilateral funding was treated as credit lines), Post program surveillance. - Romania: €20.0 bn / €5.0 bn, Until June 2011, Completed (disbursements completed in June 2011). - Romania: €5.4 bn / €1.4 bn, Until March 2013, Precautionary (not disbursed). - IMF role in lending operations: Framework allows loans solely by the EU, but recent assistance has been extended in co-operation with the IMF and other international institutions or countries. The EU developed guidelines on cooperation with the IMF to ensure consistent policy advice in joint EU/IMF-supported programs. - Governance: Financial assistance granted by Council decision acting by a qualified majority on a proposal from the EC. The EC is delegated authority to monitor the program and approve disbursements. #### European Financial Stabilization Mechanism (EFSM) - Establishment: Introduced by Council Regulation (EC) No 407/2010 of 11 May 2010, reproducing the BoP Assistance Facility for all EU member states. - Purpose: Provide external financial assistance to a member state experiencing, or seriously threatened with, a severe economic and financial disturbance caused by exceptional occurrences beyond the member state's control. - Members: All EU member states: Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovak Republic, Slovenia, Spain, Sweden, and the United Kingdom. - Resources: EC authorized to borrow on capital markets or from financial institutions on behalf of the EU. Maximum financing capacity of the EFSM is €60 billion and is backed by an implicit EU guarantee. - Lending instruments: Amount, average duration, and disbursement terms decided by the Council. Terms and economic program presented in the MoU and the Loan Agreement. - Recent activity: Two joint EU/IMF-supported programs in Ireland and Portugal approved to date for a total financial assistance of €163 billion, of which €48.5 billion under the EFSM. - Ireland: €85 bn / €22.5 bn, Until November 2013, Active (€21.7 bn disbursed from EFSM). - Portugal: €78 bn / €26 bn, Until May 2014, Active (€22.1 bn disbursed from EFSM). - IMF role in lending operations: EFSM Regulation explicitly states activation will be in the context of a joint EU/IMF support. - Governance: Financial assistance granted by Council decision acting by a qualified majority on a proposal from the EC. Policy conditionality defined by the EC in consultation with the ECB and spelled out in a MoU. The EC is delegated authority to monitor the program and approve disbursements. #### European Financial Stability Facility (EFSF) - Establishment: EFSF framework established on June 7, 2010 and became fully operational on August 4, 2010. Temporary facility that may engage in new support programs until June 30, 2013, and will continue to exist until its last financial obligation has been fully repaid. - Purpose: Preserve the financial stability of Europe’s monetary union by providing temporary assistance to euro area member states in difficulties caused by exceptional circumstances beyond such member states’ control. - Members: All euro area member states: Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, Netherlands, Portugal, Slovak Republic, Slovenia, and Spain. - Resources: Funding obtained by issuing bonds and other debt instruments or entering into other financing arrangements. Guarantees by euro area member states to the EFSF total €780 billion, providing a lending capacity of €440 billion. (Due to drop outs, some issuance of the EFSF was not backed by all 17 euro area members.) - Lending instruments: - Provide loans to member states in financial difficulties. - Purchase bonds of a euro area member state in primary and secondary markets. - Provide precautionary financial assistance. - Provide loans to governments for recapitalization of financial institutions. - Permitted funding flexibility on currency, timing, interest rate base, and maturity of funding instruments. No access limits set for loans to individual members; access based on member’s financing need. Access subject to agreement on a MoU between the member state and the EC containing policy conditionality. - Recent activity: Three joint EU/IMF-supported programs in Ireland, Portugal, and Greece approved to date for a total financial assistance of €335.6 billion, of which €140.4 billion is under the EFSF. - Ireland: €85 bn / €17.7 bn, Until November 2013, Active (€12.0 bn disbursed from EFSF). - Portugal: €78 bn / €26 bn, Until May 2014, Active (€18.2 bn disbursed from EFSF). - Greece: €172.6 bn / €144.6 bn, Until December 2014, Active (€110.2 bn disbursed from EFSF). - IMF role in lending operations: EFSF Framework Agreement establishes that financial support by the EFSF is to be provided in conjunction with the Fund and subject to conditionality set out in a MoU negotiated in liaison with the Fund and the ECB. - Governance: EFSF is a société anonyme set up under Luxembourgish law. Key decisions reserved to euro area member states and generally require unanimity, including approval of loan facility agreements and disbursements. EFSF Board of Directors consists of representatives of all shareholders with votes proportional to their contribution shares. The EC is delegated authority to negotiate MoUs with borrowers and to monitor implementation of policy programs. *APPENDIX I. MAIN FEATURES OF MAJOR REGIONAL FINANCING ARRANGEMENTS* ### 2012. The ESM was inaugurated on October 8, 2012 upon completion of the ratification process. ### 2012. The ESM was inaugurated on October 8, 2012 upon completion of the ratification process. ### European Stability Mechanism (ESM) — Purpose and design - Purpose: safeguard the financial stability of the euro area by providing temporary stability support to euro area member states experiencing or threatened by financial difficulties. - Complementarity: complements the new EU framework for economic surveillance that focuses on debt sustainability and crisis prevention. ### European Stability Mechanism (ESM) — Membership - Members: Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, Netherlands, Portugal, Slovak Republic, Slovenia, and Spain. - Participation: open to non-euro area EU member states for ad hoc participation in financial assistance operations for euro area member states. ### European Stability Mechanism (ESM) — Resources and funding - Capital stock: €700 billion, of which €80 billion is paid-in capital and €620 billion is callable capital. - Effective lending capacity: €500 billion. - Funding mechanism: issuing bonds or other debt instruments on the financial markets. ### European Stability Mechanism (ESM) — Lending instruments and conditionality - Lending instruments: - (i) provides loans to member states in financial difficulties; - (ii) purchases bonds of a euro area member state in primary and secondary markets; - (iii) provides precautionary financial assistance; - (iv) provides loans to governments for the purpose of recapitalization of financial institutions. - Conditionality: All financial assistance is linked to appropriate conditionality specified in a Memorandum of Understanding (MoU) between the member state and the EC containing policy conditionality. ### European Stability Mechanism (ESM) — Recent activity - Financial assistance granted on July 20, 2012, to recapitalize the banking sector and restore market confidence in Spain. - Total committed amount: €100 billion. - Disbursed amount: €39.5 billion was disbursed on December 11, 2012. ### European Stability Mechanism (ESM) — IMF role in lending operations - Fund participation: sought on a technical and financial level wherever possible. - Coordination: MoUs negotiated by the EC in liaison with the ECB and the Fund. - Debt sustainability analysis: jointly conducted by the EC and the Fund. - Expectation: a euro area member state requesting financial assistance from the ESM is expected to address, wherever possible, a similar request to the Fund. ### European Stability Mechanism (ESM) — Governance and staffing - Legal form: intergovernmental organization under public international law. - Board of Governors: consists of the Finance Ministers of the euro area member states (with the European Commissioner for Economic and Monetary Affairs and the ECB President as observers). - Decision rule: key decisions under the ESM Agreement generally require unanimity, including decisions to grant financial assistance and approve a MoU. - Board of Directors: consists of representatives appointed by Governors. - Voting rights: proportional to the number of ESM shares allocated. - Delegated authority: The EC is delegated authority to conduct debt sustainability analyses, negotiate MoUs with borrowers, and monitor implementation of programs. - Staffing: The number of ESM staff is 75 as ### Eurasian Economic Community Anti-Crisis Fund (ACF) — Establishment and purpose - Establishment: established on June 9, 2009 upon the signing of the Treaty on the Establishment of the Anti-Crisis Fund. - Purpose: - Assist member states in overcoming the consequences of the global financial crisis; - Ensure their long-run economic stability; - Foster economic integration; - Support stabilization programs by supporting budget, balance of payments, and currencies; and - Help implement large investment projects. ### Eurasian Economic Community Anti-Crisis Fund (ACF) — Membership and resources - Members: Armenia, Belarus, Kazakhstan, Kyrgyz Republic, Russian Federation, and Tajikistan. - Resources: Budget contributions from member states total US$8.5 billion. ### Eurasian Economic Community Anti-Crisis Fund (ACF) — Lending instruments and recent activity - Lending instruments: - (i) Financial Credits (maturity of up to 10 years including a grace period of up to five years; concessional credits available to low-income members) extended only to central governments to support stabilization programs; - (ii) Investment Loans available to governments and/or companies implementing large investment projects that spur regional integration as well as large national investment projects. - Currency of loans: All ACF loans are extended in U.S. dollars or euro. - Recent activity: - Financial Credits of US$70 million to Tajikistan in August 2010. - Financial Credits of US$3 billion to Belarus in June 2011. ### Eurasian Economic Community Anti-Crisis Fund (ACF) — IMF role and governance - IMF role: The ACF’s institutional set up does not envisage an explicit role for the Fund. - Governance: - The ACF is not a legal entity or an organization. - ACF Council (top decision-making body) consists of the ministers of finance of the member states. - Council decisions drafted by the Council of Experts comprised of senior managers of the ministries of finance. - Management: The Eurasian Development Bank manages the resources of the ACF, and its ACF Manager conducts evaluation of programs of requesting members. ### Chiang Mai Initiative Multilateralization (CMIM) — Establishment and purpose - Establishment: ASEAN+3 Finance Ministers agreed to launch the Chiang Mai Initiative (CMI) in May 2000; the CMI Multilateralization Agreement took effect on March 24, 2010. - Purpose: address short-term liquidity and balance of payments difficulties and supplement the existing multilateral financial arrangements. ### Chiang Mai Initiative Multilateralization (CMIM) — Membership and resources - Members: Brunei Darussalam, Cambodia, China, Indonesia, Japan, Republic of Korea, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. - Resources: aggregate gross amount of contribution is US$120 billion. - Commitment: Members commit to provide financial support within the agreed amount of contribution. - Disbursement mechanism: Funds are transferred from the central banks/monetary authorities only when a request for drawing is made. ### Chiang Mai Initiative Multilateralization (CMIM) — Lending instruments and recent activity - Lending instruments: Members are entitled to swap their local currencies with U.S. dollars up to a multiple of their contributions to the scheme. - Tenor: The 90-day swaps can be renewed up to seven times (approximately two years). - Recent activity: No drawing has been made. ### Chiang Mai Initiative Multilateralization (CMIM) — IMF role and governance - IMF linkage: - The first 20 percent of the amount disbursable (‘‘IMF de-linked portion’’) to each member does not require an IMF-supported program. - Disbursement of the amount in excess of the 20 percent (‘‘IMF linked portion’’) is conditional on the existence of an IMF-supported program. - Governance: - Decisions on drawings made by a two-third majority at the Executive Level Decision-Making Body consisting of deputy-level representatives of the ASEAN+3 Finance Ministries and Central Banks and the Monetary Authority of Hong Kong SAR. - Voting power distributed according to amount of contribution, supplemented by basic votes allocated equally. - Two countries (one from the ASEAN countries and the other from China, Japan, and Korea) will be appointed to coordinate the activation process when a request for drawing is made. - AMRO: In May 2011, the ASEAN+3 Ministers established a dedicated surveillance unit (ASEAN+3 Macroeconomic Research Office—AMRO). The number of AMRO staff is 11 as of 2011. ### Chiang Mai Initiative Multilateralization (CMIM) — Planned enhancement (May 2012 agreement, yet to take effect) - (i) Double the total size to US$240 billion; - (ii) Increase the IMF de-linked portion to 30 percent when the Agreement is amended, with a view to increasing it to 40 percent in 2014 subject to review should conditions warrant; - (iii) Establish a CMIM Precautionary Line (CMIM-PL) as an instrument to address members’ potential liquidity or balance of payments need, supplementing the existing swap arrangements for actual need (CMIM Stability Facility (CMIM-SF)). Qualification for CMIM-PL is based on five criteria (external position and market access, fiscal policy, monetary policy, financial sector soundness and supervision, and data adequacy), supplemented by ex post conditionality as necessary; - (iv) Lengthen the maturity of swaps from 90 days to six months for the IMF de-linked portion and to one year for the IMF linked portion. For CMIM-SF, the swaps can be renewed up to three times for the IMF de-linked portion (totalling to a maximum of two years) and twice for the IMF linked portion (totalling to the maximum of three years). For CMIM-PL, the duration of access is granted for six months with renewal permitted up to three times (totalling to the maximum of two years); - (v) Conduct monitoring on a semi-annual basis. - Institutional development: plan to transform AMRO, a company set up under Singaporean law, into an international organization based on an international agreement such as a treaty. *Italic: Content extracted from _041113b - 2012. The ESM was inaugurated on October 8, 2012 upon completion of the ratification process.* --- _Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2013/_041113b.pdf_