## _022216a — Handbook of IMF Facilities for LICs (Selected Excerpts) ## Source details **Canonical URL:** [_022216a — Handbook of IMF Facilities for LICs (Selected Excerpts)](https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2016/_022216a.pdf) ## Other formats - [Markdown version](/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2016/_022216a.pdf.md) - [Structured JSON version](/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2016/_022216a.pdf.json) --- ### Overview - Purpose: concessional facilities provide flexible, tailored support to low-income countries (LICs) to achieve, maintain, or restore a stable and sustainable macroeconomic position consistent with strong and durable poverty reduction and growth. - A stable and sustainable macroeconomic position is characterized by: absence of present or prospective balance of payments need; sustainable fiscal and current account balances; limited debt vulnerabilities; adequate international reserves; sufficient policy and institutional capacity; significant donor assistance may still be present but expected to decline over time. - Key historical milestones: - July 2009: Executive Board adopted overhaul of concessional facilities. - January 7, 2010: PRGT became effective. - September 28, 2012: three-pillar PRGT financial sustainability strategy including a base envelope of about SDR 1¼ billion in annual lending capacity. - April 8, 2013; June–July 2015: further reforms to tailor and increase access; set RCF interest rate at zero percent. - July 17, 2015: 69 IMF member countries are PRGT-eligible. ### LIC Facilities Architecture (instruments and roles) - Instruments: - Extended Credit Facility (ECF): medium-term tool for protracted BoP problems; successor to PRGF. - Standby Credit Facility (SCF): financing for short-term BoP needs. - Rapid Credit Facility (RCF): rapid low-access financing with limited conditionality for urgent BoP needs. - Policy Support Instrument (PSI): nonfinancial policy support; can facilitate access under SCF and RCF. - Ancillary options: Staff‑Monitored Programs (SMPs) and blending PRGT assistance with GRA facilities may be appropriate in some cases. ### Choosing the Appropriate Facility — Key factors - Choice depends on: - (i) expected duration/time to establish a stable macro position; - (ii) conditionality standard (UCT quality); - (iii) nature of the BoP need (present, prospective, potential; urgency). - Duration definitions: - Protracted BoP problem: expected to extend over normally three years or more, and in any case more than two years. - Short-term BoP need: normally two years or less, and in any case less than three years. - Conditionality standard: UCT conditionality requires commitment and capacity to implement policies adequate to correct external imbalances and enable repayment within specified maturity. - Nature of need: - Present (may be urgent), prospective (expected to arise), potential (may arise under downside scenarios). ### Rules of thumb for facility selection (high-level) - Protracted problem → ECF required; SCF/PSI not appropriate. - Short-term present need and UCT-quality program → SCF. - Short-term urgent need without UCT-quality program → RCF. - Precautionary short-term prospective/potential needs → SCF (precautionary). - Broadly stable macro position → PSI; if short-term BoP needs arise during PSI, request SCF or RCF. ### Blending (principles, presumptions, and limits) - Presumption: Some PRGT-eligible countries expected to receive blended PRGT:GRA resources. - Blending criteria (presumed blenders): - (i) per capita income above 100 percent of IDA operational cutoff; or - (ii) sustained past and prospective market access and per capita income > 80 percent of the IDA operational cutoff; - provided that (iii) not at high risk of debt distress or in debt distress per latest joint Bank‑Fund LIC DSA. - Blending mix and caps: - Blending rules stipulate a 1:2 mix of PRGT and GRA resources, with concessional access capped at applicable norm; all access above the norm met from GRA. - Current and previous blending: 1:2 (before July 2015: 1:1). - Operational notes: - For RCF (no norm) the cap on concessional resources is the annual limit; for SCF treated as precautionary cap applies to average annual access limit. - Blended ECF normally paired with EFF; blended SCF with SBA; blended RCF with RFI. ### Qualification, Track Record, and Program Capacity - ECF qualification requires Board finding that member is making effort to strengthen BoP position in context of a UCT-quality program and has capacity and commitment to implement policies to enable repayment. - Qualification evidence: LOI, MEFP, TMU elaborating UCT-quality program; recent policy performance; institutional capacity. - Track record building when UCT-quality program not immediately feasible: - SMP; or - RCF in case of urgent financing needs (with applicable policy commitments). ### Extended Credit Facility (ECF) — Duration, Extensions, and Use - Duration: - Initial term: 3 to 4 years (normally 3 years); extendable to total maximum of 5 years. - No limit on number of successor ECF arrangements if qualification criteria met. - Extensions, rephasing, augmentations: - Extensions requested by member and Board-approved before expiration; only if amounts under arrangement remain to be disbursed. - Rephasing: timing/level changes of programmed disbursements; augmentations to provide additional resources when shocks increase needs. - Short-term “technical” extensions (weeks/months) possible via short staff paper with LOT Board approval. - Automatic termination rule: - ECF arrangements approved after November 11, 2013 automatically terminate if no program review completed over an 18-month period; Board may delay termination up to three months at authorities’ request. ### Concurrent Use and Blending with ECF - ECF cannot be concurrent with SCF or PSI; pre-existing SCF or PSI must be cancelled before ECF approval, and vice versa. - RCF financing during an ECF arrangement permitted only when: - (i) ECF disbursements not possible; - (ii) RCF qualification requirements met (urgent BoP need and policy commitments); - (iii) need primarily caused by a sudden exogenous shock. - ECF can be used concurrently with GRA financing under certain circumstances; blended ECF–EFF modalities described (e.g., EFF qualification requirements must be met). ### Access: norms, limits, and procedural safeguards (ECF and PRGT-wide) - Access determination based case-by-case on: - (i) present and prospective BoP need; - (ii) program strength and capacity to repay; - (iii) outstanding Fund credit and record of past use. - Access norms (unblended ECF): - Norm = 90 percent of quota per three-year ECF arrangement for countries with outstanding concessional credit < 75 percent of quota. - Norm = 56.25 percent of quota per three-year arrangement for countries with outstanding concessional credit between 75 percent and 150 percent of quota. - For four-year ECF arrangements, fourth year access set in line with average annual access corresponding to the norm for a successor three-year arrangement. - Norms do not apply when outstanding concessional credit > 150 percent of quota; access guided by cumulative access limit of 225 percent of quota (300 percent in exceptional cases). - PRGT-wide sub-limits and cumulative limits (Table figures preserved): - Cumulative access limits (Current / Previous / Before July 2015): - All PRGT facilities-normal: 225 450 300 - All PRGT facilities-exceptional: 300 600 450 - RCF 2/: 75 150 100 - RCF (exogenous shocks window) 2/: 75 150 125 - RFI: 75 150 100 - Annual access limits: - All PRGT facilities-normal: 75 150 100 - All PRGT facilities-exceptional: 100 200 150 - SCF (precautionary) – average annual: 37.5 75 50 - SCF (precautionary), at approval: 56.25 112.5 75 - RCF 2/: 18.75 37.5 25 - RCF (exogenous shocks window) 2/: 37.5 75 50 - RFI: 37.5 75 50 - Norms: - 3-year ECF – High access: 90 180 120 - 3-year ECF – Low access: 56.25 112.5 75 - 18-month SCF – High access 5/: 90 180 120 - 18-month SCF – Low access: 56.25 112.5 75 - Blending proportions (PRGT:GRA): - Current: 1:2 with concessional access capped at the applicable norm. - Before July 2015: 1:1 with concessional access capped at the norm. - Procedural safeguards triggers: - Total access in any 24-month period—for DSA (update): 60 120 80 - Total access in any 36-month period—for an informal Board Meeting in advance of new PRGT request: 135 270 180 - Exceptional access across concessional facilities: - Permitted if criteria met (very large BoP need; strong adjustment program and ability to repay; lack of market access and income at/below IDA cutoff). - Hard caps: 100 percent of quota annually and 300 percent of quota cumulatively, net of scheduled repayments. ### Special low‑access ECF case - Members with protracted BoP problem but minimal present/prospective needs: standardized access level of 10 percent of quota per arrangement. ### Financing terms (ECF) - Repayments: - Made in 10 equal semi-annual installments; - Subject to a 5.5-year grace period from date of first disbursement; - 10-year final maturity. - Interest: - Paid semi-annually. - Interest rate on ECF credit currently set at zero percent, subject to biennial Board reviews within a 0.0–0.5 percent range. - Next review scheduled for December 2016. - Interest on overdue interest or repayments charged at SDR interest rate. - Financing assurances: - ECF arrangements and reviews can be approved/completed only when program is fully financed; no unfilled financing gaps over the 12 months immediately following approval (and each review). ### Treatment of arrears and LIA policy (ECF context) - Non-toleration principle for sovereign arrears to official multilateral creditors: Fund calls for resolution and non-accumulation of new arrears; existing arrears need not be settled immediately but macro assumptions should reflect realistic arrears resolution plans. - Arrears to official bilateral creditors: Category 1 (no restructuring required) vs Category 2 (restructuring required); financing notwithstanding arrears allowed only under circumscribed circumstances with financing assurances reviews. - Lending Into Arrears (LIA) policy for private external creditors: - Fund may lend in case of sovereign arrears to private external creditors only where: - (i) prompt Fund support essential for program success; and - (ii) member pursuing good faith efforts to reach collaborative agreement with private creditors. - Each Fund disbursement subject to financing assurances review. ### Safeguards assessments and fiscal safeguards - Aim to complete safeguards assessment prior to Board approval of new ECF arrangement but no later than first review. - Fiscal safeguards review required where exceptional access expected or at approval if member expects at least 25 percent of funds directed to financing state budget. ### Program objectives and conditionality (ECF) - Objectives: make significant progress toward a stable and sustainable macroeconomic position consistent with poverty reduction and growth. - Typical policy areas in LOI/MEFP: - Fiscal: anchored fiscal stance, revenue/spending mindful of growth and social objectives, medium-term fiscal frameworks. - Monetary: consistent with inflation, exchange rate, reserve objectives. - Exchange rate: unified rate, real exchange broadly in line with fundamentals. - Financial sector: stability and deepening. - PFM reforms, public debt management, revenue reforms, structural reforms. - Conditionality: - UCT standard required. - Types: quantitative periodic and continuous PCs, structural benchmarks, prior actions if necessary. - Frequency: quantitative PCs normally semi-annual; indicative targets quarterly. - Continuous PCs include non-introduction/intensification of exchange restrictions and non-accumulation of external payments arrears. - Misreporting: - Noncomplying disbursement procedures; MD informs member; Board may require repayment or waive nonobservance; de minimis deviations lead to waiver and not published. ### Social and Priority Spending; Debt Sustainability Analysis (ECF and other facilities) - Social and priority spending should be safeguarded and, where appropriate, increased; monitored via indicative floors where possible. - DSA: - Joint Bank‑Fund DSAs required for PRGT-eligible countries with access to IDA; full DSA at least once every three years, annual DSA as general rule. - LIC DSF 20-year forward-looking projections, risk rating (low/moderate/high/in debt distress), and policy recommendations. ### Standby Credit Facility (SCF) — Objectives and Modalities - Purpose: concessional financing to LICs with actual or potential short-term BoP needs; precautionary SCF possible. - Eligibility: - Available to PRGT-eligible members with short-term BoP needs unless predominant cause is donor withdrawal or protracted BoP problem. - Expectation to achieve stable macro position in normally two years or less. - Duration: - Minimum 12 months, maximum 24 months. - Use normally limited to two and a half out of any five-year period (rolling basis); precautionary or fully prospective SCF treated differently for counting limit. - Concurrent use: - SCF cannot be concurrent with ECF; RCF financing not allowed when SCF in place and on track. - SCF can run concurrently with PSI if on-track PSI; qualification presumed for on-track PSI users. - Blending: - SCF resources normally provided together with GRA resources under an SBA when blended. - Blended concessional component normally one-third of total access, capped at norm applicable to unblended arrangements. - Access norms for SCF (unblended): - 90 percent of quota per 18-month arrangement for outstanding concessional credit < 75 percent of quota. - 56.25 percent of quota per arrangement for outstanding concessional credit between 75 percent and 150 percent of quota. - Financing terms (SCF): - Repayments: nine equal semiannual installments; four-year grace period; eight-year final maturity. - Interest: currently 0.25 percent; for January 7, 2010 through December 31, 2016 no interest charged on outstanding balances; biennial review within 0.25–0.75 percent range; next review December 2016. - Availability fee: 0.15 percent per annum on undrawn portion each six-month period. - Safeguards, DSAs, conditionality, and program design largely mirror ECF principles adjusted for SCF short-term focus. ### Rapid Credit Facility (RCF) — Objectives, Qualification, and Modalities - Purpose: low-access concessional financing with limited conditionality to LICs facing urgent BoP need (exogenous shocks, natural disasters, post‑conflict, fragility). - Effective date: January 7, 2010; access norms/limits raised in 2015. - Eligibility: - Available to PRGT-eligible members facing urgent BoP needs unless predominantly caused by donor withdrawal or a UCT-quality program is both feasible and necessary. - Definition of urgent BoP need: present BoP need that, if not addressed, would result in immediate and severe economic disruption. - Use cases: - One-off disbursements; repeated use subject to limitations and track record conditions. - Repeated use rules: - Not more than two RCF disbursements in any 12-month period. - Qualification for disbursement only if: - no RCF disbursements in past three years; or - need caused primarily by sudden exogenous shock (shock window); or - member has established ~six months track record of adequate macro policies prior to request. - Access limits and sub-ceilings: - PRGT global limits: normally not exceed 75 percent of quota per year and 225 percent of quota cumulatively. - RCF sub-ceilings: - 18.75 percent of quota per year; - 75 percent of quota cumulative stock outstanding. - RCF shocks window permits augmented access up to 37.5 percent of quota per year and up to 75 percent cumulative, subject to conditions. - Purchases under the RFI since July 1, 2015 count towards RCF sub-ceilings. - Blending: - Blending presumed under same criteria as other facilities; blended RCF–RFI mix normally one-third concessional RCF component. - Financing terms (RCF): - Repayments: 10 equal semiannual installments; 5.5-year grace period; 10-year final maturity. - Interest: zero percent. - Safeguards: - RCF requests require commitment to undergo safeguards assessment and access to central bank external audit reports; timing case-by-case. - Conditionality and monitoring: - RCF provides outright disbursements based on ex ante policy undertakings; no ex post PCs; no time-bound arrangement or formal program reviews. - Prior actions only in exceptional circumstances; RCF track records can include monitorable quantitative and structural indicators; indicative targets do not have status of PCs and waivers not required if missed. - LIA flexibility: - LIA criteria may be relaxed in post-conflict or natural catastrophe circumstances; staff reports should provide information on arrears. ### Policy Support Instrument (PSI) — Purpose and Modalities - PSI available to members meeting PSI policy criteria: good track record of macro management and institutions of sufficient quality. - Assessment indicators: - Macroeconomic performance indicators (GDP growth, inflation, reserves, fiscal/current account balances, debt sustainability indicator). - Quality of policies and institutions: past program performance or recent Article IV reports. - Minimum CPIA threshold score: 3.25 for “medium institutional capacity.” - Duration: - Initial duration 1–4 years (default 3 years); overall maximum 5 years; extendable. - Concurrent use: - PSI cannot be concurrent with ECF. - PSI users can receive SCF or RCF financing without cancelling PSI. - Conditionality: - PSI must meet UCT-conditionality standard. - Conditionality under PSI uses ACs (assessment criteria), indicative targets, structural benchmarks; prior actions applied parsimoniously. - Waivers for nonobservance: formal waiver request not required; waivers of applicability not possible. - PRS/EDD linkages: - New PSI requests and reviews expected to include statement in LOI/MEFP on how PSI advances poverty reduction and growth objectives; EDD requirements apply for reviews. - Misreporting framework: - Simplified compared to UFR contexts; Board decisions conditioned on accuracy of information; MD informs member if inaccuracy found; Board consideration of misreporting normally at next scheduled PSI review. ### PRS, EDD, and Appendix V — Poverty Reduction Strategy guidance - New PRS policy (post-June 22, 2015) centers on Economic Development Document (EDD) as PRS document for Fund engagement. - EDD forms: - (i) existing national development plan/strategy; or - (ii) a newly prepared streamlined EDD (around 10–15 pages). - Timing: - EDD normally developed within the previous five years (but no more than six years) to complete reviews under ECF/PSI. - First (and every subsequent) review under ECF/PSI can only be completed if EDD issued to Executive Board and subject to staff analysis in staff report. - Minimum EDD elements (cover letter items preserved as examples in source): - Strategy or plan; specific policy elements; launch date and timeframe; extent of participatory process. - Bank assessment letter: - World Bank assessment letter requested and circulated to Board when an EDD is received. - Publication: - MD will not recommend approval/completion of ECF/PSI/HPIC decisions if member does not consent to publication of PRS-related document. ### HIPC, MDRI, CCR Trust (related appendices) - HIPC and MDRI: - HIPC instrument unchanged; decision/completion point PRS requirements remain under HIPC rules. - MDRI no longer active; MDRI-I and MDRI-II Trusts liquidated in 2015. - CCR Trust (Appendix VII): - Established 2015 with two windows: Post‑Catastrophe Relief (PCR) and Catastrophe Containment (CC). - Eligibility: PRGT-eligible countries with per capita GNI below IDA operational cut-off (or small states with population < 1.5 million and per capita income below twice IDA cutoff). - PCR window: qualification thresholds include directly affected population ≧ one-third and destruction > one-quarter of productive capacity or damage > 100 percent of GDP; flow relief and possible stock (cancellation) relief with track record and creditor assurances (e.g., 80 percent of official creditors). - CC window: for qualifying public health disasters; standard up-front grants to pay IMF debt service up to 20 percent of quota; exceptional cases permit larger support under defined conditions (e.g., high debt service burden, catalytic bilateral creditor relief, or high/in‑debt‑distress countries with 80 percent grant element target). ### Documentation, Mission, and Review Processes (Appendix I and operational guidance) - Key operational documents: Policy Note (PN), LOI, MEFP, TMU, staff report, DSA, PC/AC tables, structural benchmark table. - Typical timing and steps summarized (policy note, PCM, mission, BTO, staff report clearance, Board circulation). - Word count and length limits for policy notes and staff reports specified for different case types. - Staff-Monitored Programs (SMPs) and other track records: - SMPs: informal agreements to build track record toward UCT-quality program; typical SMP track record minimum six months; SMPs not Board‑endorsed. - Track records used when capacity/commitment concerns exist; RCF and informal track records are alternatives. *Source: _022216a — Excerpts from the 2016 Handbook of IMF Facilities for Low-Income Countries (ECF, SCF, RCF, PSI, PRGT rules, appendices including PRS/EDD, DSA, CCR Trust).* ### INTRODUCTION—FACILITIES ARCHITECTURE OVERVIEW ____________________________________ 6 ### INTRODUCTION—FACILITIES ARCHITECTURE OVERVIEW ____________________________________ 6 ### Overview - Purpose: concessional facilities aim to provide flexible and tailored support to low-income countries (LICs) to achieve, maintain, or restore a stable and sustainable macroeconomic position consistent with strong and durable poverty reduction and growth. - A stable and sustainable macroeconomic position is characterized by the absence of a present or prospective balance of payments need, domestic and external stability necessary for poverty reduction and growth, sustainable fiscal and current account balances, limited debt vulnerabilities, adequate international reserves, and sufficient policy and institutional capacity. Significant levels of donor assistance may still be present, though aid dependence is expected to decline over time. ### A. Background - July 2009: Executive Board adopted a comprehensive overhaul of the Fund’s concessional facilities. - January 7, 2010: The new Poverty Reduction and Growth Trust (PRGT) became effective to finance concessional loans. - September 28, 2012: Executive Board adopted a three-pillar strategy to make the PRGT financially sustainable: - (i) a base envelope of about SDR 1¼ billion in annual lending capacity; - (ii) contingent measures if average financing needs exceed the base envelope by a substantial margin for an extended period; - (iii) a principle of self-sustainability under which future modifications would be expected to ensure demand can be met with available resources under pillars (i) and (ii). - April 8, 2013: Executive Board concluded the Review of Facilities for Low-Income Countries and approved proposals to improve tailoring and flexibility of LIC facilities. - June 22, 2015 and July 1, 2015: Board modified policy on Poverty Reduction Strategies and approved further reforms in the context of Financing for Development to: - (i) enhance access to all concessional facilities; - (ii) better target concessional financing to the poorest and most vulnerable members eligible for PRGT support, while boosting access for better-positioned members through greater use of financing from the General Resources Account (GRA); - (iii) complement increased access under the Rapid Credit Facility (RCF) for PRGT-eligible countries with a parallel increase of fast-disbursing support under the Rapid Financing Instrument (RFI) for all countries with urgent BoP needs, including fragile situations or those hit by conflict or natural disasters; - (iv) set the interest rate on RCF loans at zero percent. - July 17, 2015: Review of members’ eligibility for PRGT support concluded. Based on this review, 69 IMF member countries are currently PRGT-eligible. - The Post-Catastrophe Relief Window and the Catastrophe Containment Window of the Catastrophe Containment and Relief (CCR) Trust are discussed in Appendix VII. ### LIC Facilities Architecture (instruments and roles) - The architecture includes three concessional facilities and one nonfinancial instrument: - Extended Credit Facility (ECF): main tool for providing medium-term support to LICs with protracted balance of payments problems; successor to the Poverty Reduction and Growth Facility (PRGF). - Standby Credit Facility (SCF): provides financing to LICs with short-term balance of payments needs. - Rapid Credit Facility (RCF): provides rapid low-access financing with limited conditionality to meet urgent balance of payments needs. - Policy Support Instrument (PSI): nonfinancial policy support tool for LICs; can facilitate access under the SCF and RCF if needed. - Note: In some cases, Staff-Monitored Programs (SMPs) or blending PRGT assistance with GRA facilities may be appropriate. ### B. Choosing the Appropriate Facility — Key factors - Choice depends on three main factors: - (i) Expected duration/time needed to establish a stable and sustainable macroeconomic position (duration of adjustment and BoP needs). - (ii) Conditionality standard of Fund support (whether it meets the upper credit tranche, UCT, quality). - (iii) Nature of the balance of payments need (present, prospective, potential; and urgency). - Duration of adjustment and balance of payments needs: - Protracted balance of payments problem: resolution of underlying macroeconomic imbalances expected to extend over normally three years or more, and in any case more than two years. - Short-term balance of payments need: resolution expected to extend over normally two years or less, and in any case less than three years. - Borderline cases (more than two but less than three years) require judgment: substantial structural reform, capacity building needs, or frequently recurring financing needs indicate a protracted problem (ECF); front-loaded adjustment aimed at speedy restoration indicates SCF. - Conditionality standard: - Determined by whether authorities meet UCT quality—commitment and capacity to implement policies adequate to correct external imbalances and enable repayment within the specified maturity period. - Nature of the balance of payments need: - A need can be present (exists in the current period), prospective (expected/projected to arise in the future, including during program implementation), or potential (may arise under an alternative, typically downside, macroeconomic scenario). - A present need may be urgent—if not addressed it would result in immediate and severe economic disruption. - Protracted balance of payments problems may involve a combination of present, prospective, and potential needs and look across components of the BoP and other indicators. ### C. Blending - (Heading present in source; substantive text not included in the provided excerpt.) *2016 Handbook of IMF Facilities for LICs — INTRODUCTION—FACILITIES ARCHITECTURE OVERVIEW* ### 5. To determine the appropriate facility for a particular country case, the following rules of ### _022216a - 5. To determine the appropriate facility for a particular country case, the following rules of ### Rules of thumb for choosing the appropriate facility - If a country faces a protracted balance of payments problem: - It could be supported under the ECF, but not under the SCF or PSI. - The ECF is the appropriate instrument for supporting a UCT-quality economic program. - If the country cannot implement a UCT-quality program (institutional/policy capacity constrained or more time needed), it can: - build a track record through a Staff-Monitored Program (SMP); or - if urgent financing needs exist, have access to the RCF. - If a country does not have a protracted balance of payments problem but faces short-term (present) balance of payments needs: - It could be supported under the SCF, but not under the ECF. - The SCF is generally appropriate if a UCT-quality economic program can be implemented. - An RCF could be used as an alternative if a UCT-quality program is not deemed necessary and the need is urgent (e.g., transitory shock, expected to be resolved within one year and no major policy adjustments necessary). - If unable to implement a UCT-quality program, the country can build a track record via an SMP or use the RCF if urgent BoP needs exist. - If a country has neither a protracted balance of payments problem nor a present BoP need but faces short-term prospective or potential BoP needs: - The SCF could be used on a precautionary basis, with disbursements possible if and when a present BoP need arises. - If a country is already in a broadly stable and sustainable macroeconomic position: - It could be supported under the PSI (a non-financial instrument for low income countries to promote close policy dialogue). - If short-term BoP needs arise during the PSI, the country can request SCF financing or RCF financing if the need is urgent. - Precautionary support under the SCF is possible in conjunction with the PSI for periods of increased uncertainty or risk. ### Table 1 — Choice of program support: key features (bulleted highlights) - Extended Credit Facility (ECF) - Duration of adjustment and BoP needs: Protracted BoP problem. Time needed to achieve stable and sustainable macro position ≧ 3 years (in any case > 2 years). - UCT conditionality standard: Required. - Size and nature of BoP need: Present or prospective BoP needs exist (even if minimal) over course of 3-year arrangement, but a present need is not necessary for each disbursement. - Other aspects: 3 to 4-year duration, extendable to 5 years. Economic Development Document (EDD) required by 1st review. - Standby Credit Facility (SCF) - Duration of adjustment and BoP needs: Time needed to achieve stable and sustainable macro position ≦ 2 years (in any case < 3 years). - UCT conditionality standard: Required. - Size and nature of BoP need: SCF can be approved based on present, prospective, or potential short-term BoP needs. Precautionary use possible. Disbursements require a present need. - Other aspects: 1-2-year duration. Episodic use is the norm, i.e., no more than 2.5 out of every 5 years (excl. precautionary use). - Rapid Credit Facility (RCF) - Duration: Could be short term or protracted. - UCT conditionality standard: UCT conditionality not needed or not feasible. No ex post conditionality or reviews. Can help build track record. - Size and nature of BoP need: Urgent (present) BoP need must exist. Prospective or potential needs may also exist. - Other aspects: One-off disbursements. Repeated use possible based on sudden exogenous shocks or 6-monthly track records. - Policy Support Instrument (PSI) - Duration of adjustment and BoP needs: Broadly stable and sustainable macroeconomic position. - UCT conditionality standard: Required. - Size and nature of BoP need: At the time of approval, BoP needs may exist, but would be expected to be met through financing from non-Fund sources. - Other aspects: 1-4 year duration, extendable to 5 years. EDD document required by 1st review. - Staff-Monitored Program (SMP) - Duration: Could be short term or protracted. - UCT conditionality standard: Not required. SMP's purpose is to build a track record toward a UCT-quality program. - Size and nature of BoP need: Any type or size of BoP need may exist. - Other aspects: Duration normally 6-18 months. No Board endorsement. ### Access limits, norms, and procedural safeguards (Table 2 — selected figures preserved) - Cumulative access limits (Current (14th General Quota Review) / Previous / Before July 2015): - All PRGT facilities-normal: 225 450 300 - All PRGT facilities-exceptional: 300 600 450 - RCF 2/: 75 150 100 - RCF (exogenous shocks window) 2/: 75 150 125 - RFI: 75 150 100 - Annual access limits: - All PRGT facilities-normal: 75 150 100 - All PRGT facilities-exceptional: 100 200 150 - SCF (precautionary) – average annual: 37.5 75 50 - SCF (precautionary), at approval: 56.25 112.5 75 - RCF 2/: 18.75 37.5 25 - RCF (exogenous shocks window) 2/: 37.5 75 50 - RFI: 37.5 75 50 - Norms: - 3-year ECF – High access: 90 180 120 - 3-year ECF – Low access: 56.25 112.5 75 - 18-month SCF – High access 5/: 90 180 120 - 18-month SCF – Low access: 56.25 112.5 75 - Blending proportions (PRGT:GRA): - Current: 1:2 with concessional access capped at the applicable norm (all GRA thereafter) - Previous: 1:2 with concessional access capped at the applicable norm (all GRA thereafter) - Before July 2015: 1:1 with concessional access capped at the applicable norm (all GRA thereafter) - Triggers for procedural safeguards on high access requests: - Total access in any 24-month period—for DSA (update): 60 120 80 - Total access in any 36-month period—for an informal Board Meeting in advance of new PRGT request: 135 270 180 - Notes preserved exactly as presented: - High access norms apply if PRGT credit outstanding is less than 75 percent of quota. Norms are not applicable if PRGT credit outstanding >150 percent of quota. - For four-year ECF arrangements, access for the fourth year is expected to be set in line with the average annual access corresponding to the norm that would otherwise have applied to a successor three-year ECF arrangement. - For the RCF, which has no norm, the cap on access to concessional resources is the annual limit, while for the SCF treated as precautionary this cap applies to the average annual access limit. ### Blending of PRGT and GRA resources — principles and limits - Presumption: - There is a presumption that some PRGT-eligible countries are expected to receive financial assistance through blended PRGT and GRA resources, rather than relying on fully concessional Fund financing. - When financing is blended, total access is determined based on the standard criteria so total access is comparable across country cases with similar BoP needs, program strengths, and outstanding Fund credit. - PRGT-eligible countries should typically use either fully concessional or blended resources, rather than GRA-only financing, although they remain eligible for GRA resources. - Blending presumptions and limitations: - Blending is presumed for PRGT-eligible countries with either: - (i) per capita income above 100 percent of the International Development Association (IDA) operational cutoff; or - (ii) sustained past and prospective market access and a per capita income that exceeds 80 percent of the IDA operational cutoff provided that (iii) they are not deemed to be at a high risk of debt distress or in debt distress (as assessed by the most recent joint Bank-Fund LIC Debt Sustainability Analysis (DSA)). - Non-presumed blenders may meet needs entirely with assistance under the ECF, SCF or RCF subject to applicable norms and limits. - In exceptional circumstances where financing needs of a member that does not satisfy blending presumption criteria exceed applicable PRGT access limits, the member may be required to blend access under an ECF, SCF or RCF arrangement with GRA resources subject to meeting applicable GRA policies. - Blending rules and caps: - The blending rules stipulate a 1:2 mix of PRGT and GRA resources, with access to concessional resources capped at the norm (or equivalent) applicable to unblended arrangements. - All access above the norm needs to be met from the GRA. - For RCFs (no norm), the cap on access to concessional resources is the annual limit; for SCF arrangements treated as precautionary, the cap applies to the average annual access limit. - Operationally, the mix of PRGT and GRA resources depends on the type and length of the arrangement and outstanding PRGT access; these determine access norms and applicable sub-ceilings. - Additional operational note: - For PRGT-eligible countries meeting the blending criteria, any concessional financial support should be blended with GRA financing, normally resulting in ECF-EFF, SCF-SBA, and RCF-RFI blends. Purchases under the RFI count towards the applicable RCF annual and cumulative sub-ceilings. *Source: _022216a - 5. To determine the appropriate facility for a particular country case, the following rules of* ### 13. Qualification also requires a finding by the Board that the member is making an effort to ### 13. Qualification also requires a finding by the Board that the member is making an effort to ### Qualification requirements and program capacity - Qualification requires a Board finding that the member is making an effort to strengthen substantially and in a sustainable manner the country’s balance of payments position, in the context of a policy program that meets UCT conditionality standards and supports significant progress toward a stable and sustainable macroeconomic position consistent with strong and durable poverty reduction and growth. - Requires commitment and capacity by the authorities to implement a set of policies adequate to correct external imbalances and enable repayment to the Fund within the specified maturity period. - Qualification rests on: - Elaboration of a UCT-quality program in the Letter of Intent (LOI), Memorandum of Economic and Financial Policies (MEFP), and Technical Memorandum of Understanding (TMU). - Assurances that authorities have capacity and commitment to implement their program, evidenced by: - Recent policy performance (including under a recent Fund-supported program), - Institutional capacity, - Any other circumstances that may affect macroeconomic performance. ### Track record building when qualification not immediately met - Countries unable to meet ECF qualification requirements (in particular the capacity to implement a three-year UCT-quality program) can build a track record through: - an SMP, or - the RCF in cases of urgent financing needs (assuming applicable policy commitments are in place). --- ### B. Duration, Extensions, Cancellations, and Repeated Use ### Duration of ECF arrangements - Assistance under an ECF arrangement is available for an initial term of three to four years, from the date of the Board decision approving the arrangement. - Normally, ECF arrangements expected to be approved for an initial three-year term. - An initial duration of up to four years could be considered to align with the member’s Economic Development Document (EDD) cycle, or when blending with Extended Fund Facility (EFF) arrangements. - An ECF arrangement may be extended (including multiple times), subject to an overall five-year limit on the total duration of any ECF arrangement. - After expiration or cancellation of an ECF arrangement, additional ECF arrangements may be approved if relevant qualification criteria are met. - There is no limit on the number of successor ECF arrangements that can be approved. ### Extensions, rephasing, and augmentations - ECF arrangements can be extended at the request of the member to allow for disbursement of rephased amounts or to provide additional resources (i.e., augmentation), subject to appropriate conditions consistent with ECF terms. - Rephasing refers to changes in the timing and/or level of programmed disbursements. - Circumstances warranting rephasing or augmentation include: - (i) more time is needed to implement envisaged policies or reforms warranting a rephasing of access, - (ii) to provide an augmentation when a shock has led to additional financing and adjustment needs, - (iii) more time is needed to design a successor ECF-supported program, - (iv) the protracted balance of payments problem is expected to be resolved within the remaining maximum period of the ECF arrangement. - Extensions may involve establishment of additional reviews and can be combined with augmentations of access if warranted. ### Procedures and limits for extensions - Extensions must be requested by the member and approved by the Board before the expiration of the arrangement period. - Extensions are only possible if needed to allow for disbursement of amounts under the arrangement; cannot extend when all scheduled amounts have already been disbursed. - Extensions are not automatic and are subject to appropriate conditions consistent with ECF terms. - Extensions involving rephasing and/or augmentations of access would normally be approved by the Board based on a request in an LOI and in the context of a program review (completion of the review demonstrates program is on track). - In exceptional circumstances, extensions involving rephasing may be approved outside a scheduled program review, provided authorities and staff have understandings on appropriate policies documented by a letter from the authorities; Board approval requires a staff report discussing reasons, status of the program, and policy understandings. - Short-term “technical” extensions (a few weeks or months) can be granted outside the context of a review where additional time is needed to complete final review(s) and make final disbursement before expiration; generally approved via a short staff paper with lapse-of-time (LOT) Board approval. ### Cancellations and automatic termination rule - ECF arrangements may be cancelled by the authorities at any time (e.g., when macroeconomic imbalances resolved, authorities lack capacity/commitment, or objectives/modalities of economic policies change substantially). - ECF arrangements approved after November 11, 2013 will automatically terminate before their terms at approval if no program review has been completed over an 18-month period. - The Board may, at the authorities’ request, delay termination for up to three additional months—provided this extension does not fall outside the existing period of the arrangement—if an understanding between the authorities and staff on targets and measures to put the ECF-supported program back on track appears imminent. - The arrangement automatically expires at the end of that extended period unless a program review is completed within this period. --- ### C. Concurrent Use and Blending ### Concurrent use rules - The ECF cannot be used concurrently with the SCF or PSI; any pre-existing SCF arrangement or PSI must be cancelled before an ECF arrangement can be approved, and vice versa. - A member cannot obtain RCF financing (or start an SMP) if an ECF arrangement is in place and on track. - If additional balance of payments needs arise during an ECF arrangement, an augmentation of access under the ECF arrangement would typically be the appropriate response. - RCF financing during an ECF arrangement can only be provided when: - (i) ECF disbursements are not possible (e.g., due to policy slippages or delays in program discussions), - (ii) qualification requirements for the RCF are met, including the existence of an urgent balance of payments need and relevant policy commitments, - (iii) the balance of payments need is primarily caused by a sudden exogenous shock. - When access under the RCF exceeds 18.75 percent of quota by using the shock window, policies should be appropriate to address the shock. - RCF-supported policies could serve as a track record to bring the ECF-supported program back on track. - In the absence of an urgent financing need, a track record could be built through an SMP. - The ECF can be used concurrently with GRA financing under certain circumstances. ### Blending principles - Certain PRGT-eligible countries are expected to receive financial assistance through blended PRGT and GRA resources, rather than relying on fully concessional Fund financing. - When financing is blended under a PRGT arrangement and an arrangement under the GRA, total access is determined based on the standard criteria, implying total access should be comparable across country cases with similar needs, program strengths, and outstanding Fund credit, irrespective of whether assistance comes in the form of blended or PRGT-only resources. - Blending can signal movement toward middle-income or emerging market status. - PRGT-eligible countries, including members qualifying for an ECF arrangement, would typically use either fully concessional or blended resources, rather than GRA-only financing, although they are always eligible for access to the Fund’s general resources. ### Blending presumptions and limitations - Blending is presumed for PRGT-eligible countries with either: - (i) per capita income above the prevailing operational cutoff used by IDA, or - (ii) sustained past and prospective market access and a per capita income that exceeds 80 percent of the IDA operational cutoff, - provided that (iii) they are not deemed to be at a high risk of debt distress or in debt distress (as assessed by the most recent joint Bank-Fund LIC DSA). - Non-presumed blenders may meet their needs entirely under the ECF subject to applicable norms and limits. - In exceptional circumstances, where financing needs of a member that does not satisfy blending presumption criteria exceed applicable PRGT access limits under an ECF arrangement, the member may be required to blend with GRA resources subject to meeting applicable GRA policies. ### Modalities for blended ECF and EFF assistance - When providing blended resources, ECF resources will normally be provided together with GRA resources under the EFF. - Concurrent financial assistance under an ECF arrangement and an SBA would only be expected where pre-existing ECF support is supplemented by SBA financing later (including when an ECF initially blended with EFF financing is extended beyond four years, as EFF arrangements are limited to a four-year period). - Financing through the RFI under the GRA during an ECF arrangement would be expected only if the ECF-supported program is off track; RFI purchases would typically be combined with RCF disbursements. - Modalities of blended financial assistance under ECF and EFF arrangements broadly mirror stand-alone ECF arrangements but differences include: - Disbursements would involve both ECF and EFF resources, implying lower average concessionality than under a stand-alone ECF arrangement. - EFF qualification requirements must be met (e.g., clearly articulated structural reform agenda; if EFF access is above GRA normal limits, member must meet Exceptional Access criteria). - Reviews under the Extended arrangement of the blended assistance may require waivers of applicability under certain circumstances. - Each disbursement under an ECF arrangement is linked to a specific test date, whereas for extended arrangements purchases are conditioned upon observance of the Performance Criteria (PCs) related to the most recent test date. - Resources relating to the ECF component of the blend can be disbursed if PCs relating to an earlier test date have been met, while resources relating to the EFF component may not be disbursed if PCs relating to the most recent test date (controlling PCs) have not been observed unless waivers are granted. --- ### D. Access ### Access determination—main criteria - Access is determined case-by-case based on standard criteria: - (i) the member’s (present and prospective) balance of payments need (taking into account all projected balance of payments flows, including reserve accumulation and financing from other sources); - (ii) the strength of its program and capacity to repay the Fund (taking into account the member’s policy plans, adjustment effort, commitment to implement the program, institutional capacity, track record of policy implementation, and country circumstances such as vulnerabilities, imbalances, and debt sustainability); - (iii) the amount of outstanding Fund credit and the member’s record of past use. ### Access practical considerations - Access may generally not exceed the member’s present and prospective balance of payments needs during the program period, and would typically be less than total financing needs, recognizing that ECF-supported programs are expected to catalyze donor financing. - Unlike GRA financing (and the SCF and RCF), an ECF arrangement can be approved and individual disbursements can be made even in the absence of a present balance of payment need, provided the Executive Board has found the member is experiencing a protracted balance of payments problem at the time of approval. - Members do not need to make a representation that they are experiencing a balance of payments need at the time they request individual disbursements. ### Access norms (unblended ECF) - Access norms apply to unblended ECF arrangements; in blended arrangements the norms apply only as caps to the concessional resources. - The access norm is 90 percent of quota per three-year ECF arrangement for countries with total outstanding concessional IMF credit under all facilities of less than 75 percent of quota. - The norm is 56.25 percent of quota per three-year arrangement for countries with outstanding concessional credit of between 75 percent of quota and 150 percent of quota. - For four-year ECF arrangements, access for the fourth year is expected to be set in line with the average annual access corresponding to the norm that would otherwise have applied to a successor three-year ECF arrangement. - For countries whose outstanding concessional credit is above 150 percent of quota, the norms do not apply, and access is guided by consideration of the cumulative access limit of 225 percent of quota (300 percent of quota in exceptional cases), the expectation of future need for Fund support, and the repayment schedule. ### Nature and flexibility of access norms - Access norms provide general guidance and represent neither ceilings nor floors (nor entitlements). - Access can deviate from the norms if warranted by standard criteria for determining access: - Access may be above the norm when balance of payments needs are noticeably larger than in most other ECF cases (e.g., due to a large shock). - Access may be below the norm when balance of payments need is limited, policy capacity is constrained, or debt vulnerabilities are high. ### Special low-access case - For members with a protracted balance of payments problem but minimal present or prospective balance of payments needs over the course of the ECF arrangement, practice has been to set access at a standardized level of 10 percent of quota per arrangement. - This low level of access is appropriate even when potential balance of payments needs are considered substantial, as the ECF arrangement can be quickly augmented once such potential needs materialize. - In contrast to the SCF, the precautionary use of the ECF is not envisaged, and members have routinely drawn amounts as they become available under the ECF arrangement irrespective of present balance of payments needs. *Source: EXTENDED CREDIT FACILITY — INTERNATIONAL MONETARY FUND (excerpt).* ### 33. A member’s total access under all concessional facilities is subject to “global” annual and ### _022216a - 33. A member’s total access under all concessional facilities is subject to “global” annual and ### Access limits under PRGT/ECF - Total access to financing under the PRGT should normally not exceed 75 percent of quota per year across all concessional facilities. - The annual access limit refers to past and future scheduled disbursements in any 12-month period, specifically: - (i) any actual disbursements under the RCF and past ECF and SCF arrangements at the time they became available (i.e., the date of the Board decision that makes the disbursement available), - (ii) any disbursements to date that became available under the current ECF arrangement, irrespective of whether they have been drawn or not, - (iii) any future disbursements under the ECF at the scheduled availability dates. - Total access to financing under the PRGT should normally not exceed 225 percent of quota cumulatively, net of scheduled repayments. - The cumulative access limit requires that total outstanding Fund concessional credit (including disbursements that were made available but not drawn in the context of the current arrangement) cannot normally exceed 225 percent of quota at any point in time based on projected disbursements and repayments. ### Exceptional access - In exceptional circumstances, access above normal limits can be made available if: - (i) the country experiences an exceptionally large balance of payments need that cannot be met within the normal limits (e.g., very large external shocks, very low levels of reserves); - (ii) the country has a comparatively strong adjustment program and ability to repay the Fund—this criterion would generally not be met for countries with a high risk of debt distress or those that are in debt distress as defined under the joint Bank-Fund DSA, unless expected debt relief or restructuring is projected to reduce the risk of debt distress to a moderate level or low level; - (iii) the country does not have sustained past and prospective access to capital markets, and has income at or below the prevailing operational cutoff for assistance from IDA. - Exceptional access is subject to hard caps of 100 percent of quota annually and 300 percent of quota on a cumulative basis, net of scheduled repayments, across all concessional facilities. ### Phasing of ECF access - Phasing of ECF access, determined at approval, must consider applicable annual access limits but need not mirror projected evolution of balance of payments needs. - Access should normally be phased smoothly over the three- to four-year period, but could be front-loaded or back-loaded based on program strength and the time profile of balance of payments needs. - Significant front-loading has been applied in exceptional cases (e.g., repayment of emergency assistance to the Fund or arrangements approved following clearance of overdue obligations). ### Presentation of balance of payments and financing - Standard practice is to present the balance of payments so that, in any given period, scheduled IMF disbursements and other exceptional financing items do not exceed the overall balance of payments deficit and the programmed level of reserve accumulation. - This presentation ensures the balance of payments is fully financed, at least in the near term, at the time of ECF approval and completion of each review, while residual financing gaps may appear in outer years. ### Access under blended financial assistance (PRGT + GRA) - Standard PRGT access norms do not apply when financing is blended; access under blended assistance is subject to specific rules, but total access is determined based on standard criteria so comparability across country cases is maintained. - Key rules for blended assistance: - Access to the concessional (ECF) component is normally one-third of total access, with the concessional component capped at the norm applicable to unblended arrangements. - At approval, each scheduled disbursement should generally involve both ECF and GRA resources; GRA phasing and PCs apply only to purchases above the first credit tranche. - The shares of ECF and GRA financing at each disbursement can be determined individually and need not remain constant across disbursements. - In exceptional circumstances with very large balance of payments needs, concessional resources under blended assistance could reach the annual access limit of 75 percent of quota or possibly the exceptional annual access limit of 100 percent of quota if criteria for exceptional concessional access are met. ### Augmentations and reductions of access - Access under an ECF arrangement can be augmented to meet larger balance of payments needs or to support program strengthening; augmentations are appropriate unless the ECF-supported program is off track (in which case RCF financing may be appropriate). - Augmentations can be justified when arrangement periods are extended or when program strength improves (e.g., reduced debt distress risk). - Under the Trade Integration Mechanism (TIM), augmented access not exceeding 10 percent of quota is available to compensate balance of payments shortfalls arising from trade liberalization measures implemented by other countries. - Determination of access for an augmentation is based on standard access criteria (balance of payments need and program strength). - There are no norms for size of an augmentation; many augmentations have been in the range of 15–45 percent of quota (pre-14th Review of Quotas), with some cases well above this range. - Staff reports for augmentations should explicitly discuss the basis and size of the augmentation with reference to main criteria and applicable access norms and limits. - Augmentations would normally be approved at scheduled reviews, but can be requested between scheduled reviews if the increase in balance of payments problems is too acute to await the next review. ### Modalities for ad hoc augmentations between reviews - Ad hoc augmentation approvals require the Board to assess that the program is on track to achieve its objectives at the time of augmentation (otherwise RCF may be appropriate). - Factors the Fund as Trustee considers include observance of continuous performance criteria or justification for a waiver, fulfillment of prior actions (if applicable), and appropriateness of policies to address balance of payments problems and program objectives. - Modalities: - Requests should be supported by a short staff report and an LOI describing the problem, policies to address it, and relevant information on program implementation. - Augmentations approved at ad hoc reviews are available in a single disbursement following Board approval; no limit on amount subject to overall access limits and norms. - The disbursement amount is limited to what is immediately needed; additional amounts can be requested at later scheduled reviews. - The new disbursement is subject to observance of continuous PCs under the arrangement and accuracy of information on implementation and any prior actions; it is not subject to periodic PCs linked to remaining disbursements. - If the scheduled review associated with the most recent availability date preceding the augmentation request has not been completed, an augmentation request cannot be approved at an ad hoc review. - A member may request an undrawn disbursement made available upon Board approval of the augmentation until the availability date of the next scheduled disbursement. - Augmentation requests at ad hoc reviews that do not exceed 12.5 percent of quota are eligible for approval on a LOT basis. The following scheduled review must undertake a comprehensive policy review and cannot be completed on a LOT basis. ### Blended arrangements and augmentations - For augmentations presumed to involve blended PRGT and GRA resources, access should be set so the total financing mix over the full course of the arrangement follows rules on blended access, including that total concessional financing post-augmentation would normally be one-third of total overall access, subject to a cap on concessional component at the norm for unblended arrangements. ### Reductions of access - Access under an ECF arrangement could in principle be reduced rather than augmented. - The Fund will not unilaterally reduce access because of developments in the member’s balance of payments, unless developments are substantially more favorable than envisaged at approval and the improvement derives in particular from improvements in the external environment. ### Procedural safeguards on high access requests—DSAs and informal Board meetings - Procedural safeguards apply uniformly across all concessional facilities to protect PRGT-eligible members’ debt sustainability and the Fund’s concessional resources. - Staff reports for any arrangement request or augmentation should provide an up-to-date assessment of debt vulnerabilities, explicitly referencing the impact of new borrowing from all sources, including prospective IMF disbursements. - Requirements: - A new DSA is required for any financing request under the PRGT if it: - (i) involves exceptional access to concessional resources; - (ii) brings total access (cumulative disbursements) under all concessional facilities to more than 60 percent of quota, based on cumulative past and future scheduled disbursements in any 24-month period, specifically: - (a) any actual disbursements under the RCF, SCF, ESF, and past ECF arrangements at the time they became available (i.e., the date of the Board decision), - (b) any disbursements to date that became available under the current ECF arrangement, irrespective of whether they have been drawn or not, - (c) any future scheduled disbursements under the ECF; - (iii) involves a member country with a high risk of debt distress or in debt distress. - All DSAs (Full DSAs and updates) should be prepared jointly by Fund and Bank staff and must be submitted to both the IMF and IDA’s Executive Boards. - An early informal Board meeting is required if a financing request would: - (i) involve exceptional access to concessional financing; or - (ii) bring total access under all concessional facilities to more than 135 percent of quota, based on cumulative past and future scheduled disbursements in any 36-month period, specifically: - (a) any actual disbursements under the RCF, SCF, ESF, and past ECF arrangements at the time they became available (i.e., the date of the Board decision), - (b) any disbursements to date that became available under the current ECF arrangement, irrespective of whether they have been drawn or not, - (c) any future scheduled disbursements under the ECF. - The Board brief for such early informal meetings would typically be a 2–3 page note including: - (i) factors underlying the large balance of payments need, taking into account financing from donors, - (ii) a brief summary of main policy measures and macroeconomic framework, - (iii) expected strength of the program and capacity to repay the Fund, - (iv) analysis of debt vulnerabilities reflecting all projected debt financing, including from the Fund, - (v) reference to impact on the Fund’s concessional resources, - (vi) likely timetable for discussion with the authorities, - (vii) a selected indicators table and, if possible, the standard DSA charts. - The meeting should take place before staff reaches understandings, ad referendum, with the authorities. - Staff would provide early notice to the Board (e.g., in an informal country matters session) of upcoming arrangement requests or augmentations where envisaged financing commitments would have a large impact on the Fund’s overall concessional resources. - As an exception, the requirement for a new DSA or a Board brief does not apply for new financing requests of 5 percent or less of quota. ### Financing terms (ECF) - Repayments of ECF credit: - Made in 10 equal semi-annual installments, - Subject to a 5.5-year grace period from the date of the first disbursement, - 10-year final maturity. - Authorities may make early repayments at any time, but would not be expected to do so. - Interest: - Paid semi-annually. - The interest rate on ECF credit is currently set at zero percent, but subject to biennial Board reviews that take account of developments in world interest rates. - At each review, interest rates would normally be adjusted if warranted by the prevailing SDR rate, within a 0.0–0.5 percent range for the ECF. - The new interest rate would apply to all outstanding ECF credit. - The next such review is scheduled for December 2016. - Note: interest on overdue interest or overdue repayments of PRGT loans is charged at a rate equal to the SDR interest rate. ### Financing assurances - ECF arrangements (and reviews) can only be approved/completed when the program is fully financed. - Staff should confirm there are no unfilled financing gaps over the 12 months immediately following the approval of the arrangement (and each review), and that there is a clear expectation the program will be fully financed through the remainder of the arrangement period. - Assurances should also confirm the member country has the capacity to repay the Fund based on medium-term projections of the balance of payments and, for new arrangements or augmentations, the standardized table on indicators of the capacity to repay the Fund. *Source: EXTENDED CREDIT FACILITY (excerpts).* ### 47. Under the Fund’s policy of non-toleration of sovereign arrears to official multilateral ### _022216a - 47. Under the Fund’s policy of non-toleration of sovereign arrears to official multilateral ### Treatment of arrears to official multilateral creditors - Under the Fund’s policy of non-toleration of sovereign arrears to official multilateral creditors, the Fund generally calls for: - resolution of existing arrears to official multilateral creditors; and - non-accumulation of new arrears during the period of the program. - Existing arrears need not be settled immediately and can be addressed in a number of ways depending on the type of creditor. - Country teams should seek guidance from Legal Department (LEG) and SPR on application to specific creditors. - Macroeconomic program assumptions under the ECF arrangement should be consistent with the expected resolution of existing arrears to official multilateral creditors, implying common understandings on timing and modalities of arrears clearance between authorities and staff. - The assumptions on arrears clearance do not prejudge eventual agreements between the member and official multilateral creditors; staff should have reasonable assurances that arrears clearance understandings are realistic. - Footnote guidance (as in the source): - Arrears to multilateral creditors are considered resolved if the program provides for their clearance; debtor authorities must have a credible plan and projected financing to eliminate arrears, but concurrence of the creditor on this plan is not required. - With respect to arrears to the World Bank, upfront clearance or an agreed plan on terms of clearance over a defined period has generally been required in line with the terms of the 1989 WB-IMF Concordat. ### Treatment of arrears to official bilateral creditors - Two categories: - Category 1: If arrears arise where economic parameters do not require restructuring of the underlying claim, the Fund maintains non-toleration. In practice, tacit approval of an official bilateral creditor’s Executive Director (i.e., non-objection at the Board meeting) has been deemed sufficient. - Category 2: If arrears arise where restructuring of such claims is required under program parameters, the Fund may provide financing notwithstanding those arrears only under carefully circumscribed circumstances. In this case: - each Fund disbursement is subject to a financing assurances review in which the Board considers, inter alia, whether adequate safeguards remain in place for further use of the Fund’s resources. - Country teams should seek guidance from LEG and SPR on categorization for particular cases. - Additional footnote detail: - A creditor may consent to Fund financing notwithstanding the arrears. - Where there is an adequately representative Paris Club agreement, arrears covered by the Club’s “Agreed Minute” are deemed resolved for Fund program purposes when financing assurances are received from the Paris Club prior to approval or review completion. - An agreement is “adequately representative” when it provides a majority of total financing contributions required from official bilateral creditors over the program period. - Where no such agreement and absent creditor consent, Fund financing despite arrears may be provided only if conditions (i), (ii), and (iii) in the source are met. ### Lending into Arrears (LIA) policy for private external creditors - The LIA policy applies to both sovereign arrears to external private creditors and non-sovereign arrears arising from exchange controls. - The Fund can lend, on a case-by-case basis, in situations of sovereign arrears to private external creditors only where: - (i) prompt Fund support is considered essential for successful implementation of the member’s adjustment program; and - (ii) the member is pursuing appropriate policies and is making a good faith effort to reach a collaborative agreement with its private creditors (or to facilitate a collaborative agreement between private debtors and their creditors and good prospects exist for removal of exchange controls). - Whenever the LIA policy applies, each Fund disbursement is subject to a financing assurances review in which the Board considers, inter alia, whether adequate safeguards remain in place for further use of Fund resources and whether the member’s adjustment efforts are undermined by developments in creditor-debtor relations. - Application of the LIA policy has been attenuated in Fund arrangements constituting the track record toward the HIPC Completion Point, with the requirements of good faith efforts satisfied by the member communicating with, and ultimately offering, HIPC terms to creditors. ### Domestic arrears and ECF program design - ECF-supported programs should address domestic arrears as part of overall program design. - Specification of policies related to domestic arrears depends on country context, particularly the fiscal framework (see Appendix II in source). ### Overdue obligations to the Fund - If a member is in arrears to the Fund in the GRA, the Special Disbursement Account, the SDR Department, or to the Fund as Trustee (including the PRGT): - a request for IMF financing, including under the ECF, will not be approved; and - disbursements under an existing arrangement will be suspended (PRGT Instrument, Section II, paragraph 1(e)(3) and 3(g)) until arrears are cleared. - After one month the Managing Director (MD) will notify the Executive Board that an obligation is overdue. - For protracted arrears (i.e., arrears of more than six months’ duration), annual reports are to be issued to the Executive Board, except for status changes. - The MD may recommend postponing for up to one-year periods the Executive Board’s consideration of a report regarding a member’s overdue obligations in exceptional circumstances where the MD judges there is no basis for an earlier evaluation of cooperation. - While a member is in arrears to the Fund, policy support can only be provided through surveillance, technical assistance, and, under certain circumstances, SMPs. - Remedial measures for dealing with PRGT arrears include removal from the list of PRGT-eligible countries, declaration of noncooperation, and suspension of technical assistance. - See Appendix II of the PRGT Instrument on Procedures for Addressing Overdue Financial Obligations to the PRGT. ### Safeguards assessments policy - General principle: staff should aim to complete a safeguards assessment prior to Executive Board approval of a new ECF arrangement but no later than the first review under the arrangement. - Once the first review has passed, subsequent staff reports should highlight the status of assessment and, if not completed, reasons for delay. - In general safeguards assessments are conducted for each new arrangement; update assessments are not required for: - (i) successor arrangements where an assessment was completed no more than 18 months prior to approval of the successor arrangement; or - (ii) central banks with a strong track record, if previous assessment was completed within four years and no substantial issues were identified in the prior assessment or subsequent monitoring. - Safeguards assessments relate to borrowing members’ central banks; a separate fiscal safeguards review may be required in some cases involving direct budget financing. - A summary of safeguards issues should be reflected in the main body of staff reports for as long as Fund credit remains outstanding. - The safeguards process involves continuous analysis based primarily on documents and discussions with authorities and the central bank’s external auditors, evaluating governance, auditing, financial reporting, control systems, and legal autonomy. - Staff reports should discuss status of safeguards assessments, significant recommendations on legislative amendments, problems in obtaining access to data, and deviations from commitments; safeguards recommendations may be incorporated into conditionality or structural measures. - Close cooperation between FIN, other functional departments, and area departments is essential; FIN should be kept informed of safeguards issues and logistical timing. ### Program objectives and design (ECF) - All ECF-supported programs aim at making significant progress toward a stable and sustainable macroeconomic position consistent with strong and durable poverty reduction and growth (see definition in Section A). - This involves addressing, though not necessarily resolving, entrenched macroeconomic imbalances over the arrangement. - ECF-supported programs should aim to maintain or move toward: - (i) strong and durable poverty reduction and growth, - (ii) low or moderate inflation, - (iii) sustainable fiscal and current account balances, - (iv) limited debt vulnerabilities, - (v) adequate international reserves, - (vi) sufficient policy and institutional capacity to implement appropriate macroeconomic policies. - Program design should be aligned with the country’s poverty reduction and growth objectives; specific policy objectives should be clearly articulated in the LOI/MEFP and staff report. ### Typical policy areas to be included in LOI/MEFP for ECF arrangements - Fiscal policies: - (i) fiscal stance well anchored to ensure macroeconomic stability and fiscal/debt sustainability, - (ii) revenue and spending policies take due account of growth and social objectives, - (iii) budgets guided by medium-term fiscal frameworks to the extent possible. - Monetary policies consistent with inflation, exchange rate, and reserve objectives, considering cyclical factors. - Exchange rate policies ensuring a unified exchange rate and a real exchange rate broadly in line with fundamentals to ensure a stable and sustainable external position consistent with adequate growth. - Financial sector policies geared toward financial stability and deepening to foster investment and forestall financial crises. - Public financial management reforms to ensure resources are tracked, reported, and targeted appropriately (including adequate resources for social and priority spending), public debt management to support debt sustainability, and revenue reforms to broaden the revenue base and enhance tax efficiencies. - Other structural reforms critical to achieving macroeconomic objectives. ### Role of ECF financial support - ECF balance of payments support assists countries in smoothing adjustment toward a more stable and sustainable macroeconomic position. - Fund financial support can be used to: - strengthen the international reserve position; and - provide liquidity for making external payments. - By relaxing external financing constraints, Fund balance of payments support also loosens domestic liquidity constraints for public and private sectors, reducing the need for retrenchment in public and private savings-investment balances and enhancing policy options. - Appropriate mix of financing and public/private adjustment is determined case-by-case. ### Direct budget support and safeguards implications - The domestic counterpart of ECF resources may be used to finance directly or indirectly the government budget deficit when: - (i) the program envisages the entire Fund support used to meet present or prospective balance of payments need, - (ii) loosening fiscal financing constraints is an important macroeconomic objective, and - (iii) the central bank cannot or should not lend to the government (legal/institutional reasons) while the domestic financial sector is too shallow or unstable, or the central bank plays a largely passive domestic policy role (e.g., currency board or fully dollarized economy). - Staff reports should justify use of domestic counterpart for budget financing and discuss safeguards implications. - Under safeguards policy, a fiscal safeguards review of the state treasury should be conducted for all arrangements before the first program review where a member requests exceptional access; and at program approval if the member expects at least 25 percent of funds will be directed to financing the state budget. - This requirement also applies when a member requests exceptional access during an arrangement, unless a fiscal safeguards review was completed within the previous 18 months. ### Links to poverty reduction strategies (PRS) and social spending - ECF-supported programs should be aligned with the country’s poverty reduction and growth objectives. - Specific guidance: - Any financing request or program review under the ECF must be accompanied by a statement, normally in the LOI or MEFP, of how the program advances the country’s poverty reduction and growth objectives; where a relevant PRS exists, the LOI/MEFP could cross-reference it. - The EDD may take two forms: - (i) an existing national development plan or strategy document on the country’s PRS; or - (ii) a newly prepared document on the country’s PRS. - PRSPs already issued to the Board at the time of approval of the current PRS policy (June 22, 2015) and subject to staff analysis in a staff report of an ECF request or review would be deemed to satisfy EDD requirements, subject to coverage and expiration requirements. - Staff should inform authorities early about Definitions and Timelines for EDD requirements (Appendix V). - An EDD is not required at initial Board consideration of the ECF arrangement, but the first (and every subsequent) review can only be completed if: - (i) a member has a PRS developed and made publicly available normally within the previous five years, but no more than six years, covering the period up to the completion date of the relevant review; and - (ii) the PRS has been issued to the Executive Board as an EDD that has been the subject of staff analysis in the staff report on a request for an ECF arrangement or a review under an ECF arrangement. - Staff views on the PRS are to be provided in program documentation; staff reports should discuss how ECF policies contribute to the member’s PRS. - A letter of assessment of the authorities’ PRS should be requested from the World Bank and circulated to the Board at the same time as the EDD. - Staff would report to the Board on PRS implementation, including a PRS Implementation Review (PIR) by the time of the fourth review; PRS implementation following launch would also be tracked in the member’s LOI/MEFP. *Source: _022216a - 47. Under the Fund’s policy of non-toleration of sovereign arrears to official multilateral creditors (provided content).* ### 59. Social and other priority spending should be safeguarded and, whenever appropriate, ### _022216a - 59. Social and other priority spending should be safeguarded and, whenever appropriate, ### Social and other priority spending (paragraph 59) - Social and other priority spending should be safeguarded and, whenever appropriate, increased under ECF-supported programs. - Monitoring mechanism: explicit program targets, typically an indicative floor on social and other priority spending, whenever possible. - Definition: what constitutes social or other priority spending should be established by the member, in accordance with the authorities’ poverty reduction and growth strategy. - Where tracking is not feasible: program documentation should report measures envisaged to develop an adequate tracking system. - Staff responsibilities: monitor progress in establishing tracking systems; program may include relevant structural benchmarks if appropriate. ### Debt sustainability analysis (DSA) (paragraphs 60–62) - Purpose: ECF-supported programs should be underpinned by a thorough DSA to inform medium-term debt strategies and fiscal frameworks. - Collaboration and templates: - Country teams should engage authorities in DSA preparation, discuss results, and share final files with relevant officials. - DSAs for all LICs should be prepared jointly with the World Bank; country teams should involve other relevant MDBs. - Joint DSAs are required for all PRGT-eligible countries that also have access to IDA resources. - For PRGT-eligible countries with durable and substantial access to market financing, Fund staff may deem it appropriate to produce a DSA using the template for market access countries; close consultation with the Bank is recommended. - Frequency and triggers: - As a general rule, a full DSA should be produced at least once every calendar year. - A fully elaborated DSA is required at least once every three years, or whenever circumstances have changed significantly since the previous DSA. - Shorter annual updates possible in interim years in the absence of significant changes. - Full DSAs should be prepared in periods of heightened domestic, external, or global risk. - The precise timing may be driven by program requirements (e.g., design of debt limits under an ECF arrangement, determination of access to concessional resources, higher access financing requests). - LIC DSA presentation and components: - DSAs for LICs should be presented as self-contained documents. - They should normally be prepared using the LIC Debt Sustainability Framework (DSF), although the market access template can be used for countries with durable and substantial market access. - The LIC DSF analysis includes three components: - A forward-looking analysis (20-year projection) of debt and debt-service dynamics under a baseline scenario, alternative scenarios, and standardized stress tests; - An explicit rating of the risk of external debt distress (low, moderate, high, or in debt distress) based on indicative country-specific debt-burden thresholds that depend on the quality of policies and institutions in the country; and an assessment of the overall risk of debt distress; and - Recommendations on a borrowing (and lending) strategy and other crucial macro policies to limit the risk of debt distress, while maximizing the resource envelope to achieve the country’s development objectives. ### Collaboration with the World Bank and other development partners (paragraph 63) - Fund staff should consult closely with all major development partners active in the country when designing and monitoring an ECF-supported program. - Joint Management Action Plan (JMAP): Bank and Fund country teams to consult at least once a year to identify key macroeconomic and structural reform challenges and coordinate work plans. ### Conditionality principles (paragraphs 64–65) - Purpose: conditionality ensures Fund resources assist members to resolve balance of payments problems consistent with the Fund’s Articles and establish adequate safeguards to Fund resources. - Nature of conditions: - Consistent with the Fund’s Guidelines on Conditionality. - Conditions will normally consist of macroeconomic variables and structural measures reasonably within the member’s direct or indirect control and that are either: - (i) of critical importance for achieving program goals (or monitoring implementation); or - (ii) necessary for implementing specific provisions of the IMF Articles of Agreement or policies adopted under them. - When conditions are outside the Fund’s core expertise, a more detailed explanation of their critical importance is required. - UCT standard: - ECF-supported programs must meet the UCT conditionality standard, requiring commitment and capacity by the authorities to implement policies adequate to correct external imbalances and enable repayment to the Fund. - Adjustment path determined by country circumstances, objectives, policy constraints, and severity of balance of payments needs. - Adjustment effort to attain full sustainability may extend beyond the duration of the ECF arrangement; conditionality limited to policies critical to the part of the adjustment covered by the arrangement. - The ECF generally permits more flexibility than the SCF in the timing of measures given its medium- to longer-term focus. ### Specification of program conditions (paragraphs 66–71) - Types of conditions: quantitative periodic and continuous performance criteria (PCs), quantitative and structural benchmarks, and prior actions if necessary. - Timing and updates: - Conditionality is set at approval and updated at program reviews. - Conditionality should normally be set (or modified) by the Board before the test date. - For post-dated PCs, program documents must be signed and circulated to the Board with the staff report before the test date. - Prior actions (paragraph 67): - Expected to be adopted prior to Fund approval, completion of a review, or granting of a waiver when critical for successful implementation. - Applied parsimoniously, justified by criticality, specified in clear, objective, unambiguous terms. - Should in principle be implemented at least five working days before the Board discussion and defined in the LOI/MEFP and cross-referenced in the Board Decision. - Frequency of PCs and benchmarks (paragraph 68): - Quantitative PCs would normally be set on a semi-annual basis and tied to semi-annual program reviews. - Quantitative benchmarks (indicative targets) would normally be specified on a quarterly basis. - Flexibility: PCs and reviews could be scheduled no more than six months apart when needed; each scheduled review must be associated with a set of performance criteria and a disbursement. - Conditionality should cover the 12 months following the Board meeting; under semi-annual monitoring, PCs normally established for two future test dates at approval and at each review (except penultimate and final reviews). - Typical quantitative PCs and indicative targets (paragraph 69): - Quantitative periodic PCs typically include measures of net international reserves, central bank domestic assets, domestic and fiscal balances or financing, and any other macro-critical indicators. - Public debt conditionality normally required when a member faces significant debt vulnerabilities, or when debt limits are preferred to, or complementary with, "above-the-line" fiscal conditionality. - PCs usually subject to program adjustors reflecting deviations from projected external flows. - Indicative targets should include a floor on social and other priority spending where possible and may include other indicators such as reserve money. - Continuous PCs (paragraph 70): - Always include commitments related to non-introduction or intensification of exchange restrictions and on non-introduction or modification of multiple currency practices. - Other continuous PCs typically include the non-accumulation of external payments arrears. - Structural benchmarks and agenda for reforms (paragraph 71): - ECF arrangements should include an agenda for macro-critical structural reforms with appropriate timing flexibility. - Structural benchmarks are clear markers for assessing progress on critical structural reforms; should be used parsimoniously with macro-criticality explicitly justified in program documents. - Reviews are primary tool for monitoring structural elements; specific objectives and related structural benchmarks should be defined for periods covered by individual reviews. - Use of structural PCs was discontinued in 2009. - Under the ECF, structural benchmarks may be targeted for implementation by a specific test date or by the time of a specific program review. ### Delays, re-dating, and modification of structural benchmarks (paragraph 72) - If a structural benchmark is significantly delayed, it can be re-dated and re-linked to the next program review if it remains macro-critical. - If implementation as originally defined becomes impossible due to changes in reform plans or circumstances, a new or modified benchmark may be appropriate provided it remains critical to program goals. ### Waivers and modifications (paragraphs 73–75) - Waivers for non-observance of a PC (paragraph 73): - May be granted if the Fund is satisfied the program will nevertheless be successfully implemented due to minor/temporary nature of nonobservance or remedial actions by authorities. - Upon verification that a PC was not met, a waiver request can be made by the member in the LOI; if staff supports it, justification provided in the staff report with a proposed Board decision. - Waivers required only for quantitative PCs tied to the specific disbursement and to the review being completed (and for any standard continuous PC missed). - Waivers for PCs tied to subsequent disbursements/reviews are not required even if nonobservance information exists; the staff report and LOI/MEFP must provide assurances that understandings on appropriate policies exist to complete the subsequent review. - Waivers of applicability (paragraph 74): - Could be granted if information to assess observance of a PC is unavailable and the Fund is satisfied the program will be successfully implemented with no clear evidence the PC has not been met. - For the ECF, waivers of applicability would be highly unusual because each ECF disbursement is linked to specific PC test dates and a specific review. - In arrangements with blended financing, waivers of applicability would be required for the GRA-financed arrangement if the review is conducted after the most recent test date has passed and data are not yet available. - With respect to the GRA financial arrangement, the member may purchase any amount available based on earlier completed reviews if the purchase is requested within 45 days of the most recent test date and all conditions in paragraph 2 of the Reduction of Blackout Periods in GRA arrangements decision (Decision No. 14407-(09/105)) are met. - Modifications to Board-set conditionality (paragraph 75): - Appropriate when departures from PCs are expected due to unrealized basic program assumptions or significant unanticipated developments, provided targets remain macro-critical. - Requests for modifications must be submitted to the Board before the relevant test date has passed and approved by the Board before information on observance is available, normally in a program review. - In exceptional cases, modifications can be approved by the Board outside a review if authorities and staff have common understandings documented in a revised or new LOI with an updated PC table and, where relevant, an updated TMU. - Board approval requires a staff report discussing reasons for modification, status of the program, and relevant policy understandings. ### Misreporting (paragraph 76) - Definition and consequences: - Misreporting occurs when members obtain resources on the basis of inaccurate information regarding observance of quantitative or continuous PCs or prior actions (a “noncomplying disbursement”). - Under the ECF, a noncomplying disbursement occurs when: - (i) the Fund makes a disbursement based on a finding that applicable conditions for that disbursement have been observed; and - (ii) that finding later proves incorrect. - Procedures: - Upon evidence that a member may have received a noncomplying disbursement, the MD shall inform the member promptly. - After consultation with the member, if the MD determines the member did receive a noncomplying disbursement, the MD shall promptly notify the member and submit a report to the Executive Board with recommendations. - The Board may decide either: - (a) that the member shall be expected to repay the disbursed amount, or - (b) that the nonobservance will be waived. - Waivers will normally be granted only when the deviation was minor or temporary, or if the member adopted additional measures appropriate to achieve the objectives supported by the relevant decision on the disbursement. *Source: _022216a - 59. Social and other priority spending should be safeguarded and, whenever appropriate,* ### Section 5 regarding members’ obligations on data provision for Fund’s activities. ### Section 5 regarding members’ obligations on data provision for Fund’s activities ### Waiver for de minimis nonobservance and misreporting - Whenever the Executive Board finds that a noncomplying disbursement has been made but the nonobservance of the relevant PC or other specified condition was de minimis (i.e., a deviation so small as to be trivial with no impact on the assessment of performance under the relevant member’s program), a waiver for nonobservance shall be granted by the Executive Board. - De minimis misreporting will not be published in a staff report. - Reference to further detail: Appendix I of the PRGT Instrument and Decision No. 14354-(09/79). Also, Making the Misreporting Policies Less Onerous in De Minimis Cases (IMF, 2006e). ### Purpose and completion conditions for program reviews - Program reviews: - Evaluate whether the program is on track to achieve its objectives based on: - backward-looking assessment (performance against quantitative PCs, structural and quantitative benchmarks, and prior actions), and - forward-looking assessment of prospects for successful program implementation, including policy capacity and commitments. - The first (and every subsequent) review can only be completed if: - (a) a PRS has been developed and made publicly available normally within the five previous years, but no more than six years, and covers the period leading up to and covering the date of the completion of the relevant review; and - (b) the PRS has been issued to the Executive Board as an EDD that has been the subject of staff analysis in the staff report of a request for an ECF arrangement or a review under an ECF arrangement. - At the time of the consideration of the final review under an ECF arrangement, and assuming the protracted balance of payments problem has been resolved and no further program support from the Fund is expected, the scope of the forward-looking assessment could be more limited than for previous reviews. - Reviews update program design, specify forward-looking policies and conditionality, and are the main vehicle for potential modifications (changes in access, phasing, conditionality) necessary to achieve program objectives. - At approval and for each review: - the authorities’ LOI presents or updates their policy program, and - a staff report provides an overall assessment of performance and policy commitments. ### Timing of reviews, test dates, and disbursements (scheduling rules) - The timing of reviews, test dates, and disbursements is summarized in a staff report table at approval and updated as needed at reviews. - The Arrangement text attached to the initial staff report specifies test dates, reviews, availability dates, and disbursements for the first year. - The quantitative indicator table (“PC table”) attached to the LOI/MEFP should clearly identify PCs, indicative targets, and adjustors for at least a 12-month period from the Board date of program approval or review. - The structural benchmark table should cover measures over at least a 12-month period, indicating linked reviews and implementation dates. - The Decision attached to the staff report should specify all PCs and review/availability dates, normally over the next 12 months from the Board date of program approval/review. - First disbursement: made available upon approval of the arrangement. - Subsequent disbursements: conditional on observance of the PC and a program review confirming satisfactory progress. ### Typical frequency and flexibility of reviews and disbursements - Under a standard three-year ECF arrangement: - normally semi-annual reviews and disbursements, - typically seven scheduled disbursements and six reviews (thus six test dates with PCs). - Design considerations: - Align test dates with the country’s budget cycle. - Reviews must be scheduled no more than six months apart. - Flexibility exists to set review/test dates for country-specific circumstances. - Deviations and alternatives: - More frequent reviews can be considered (e.g., to align monitoring with national cycles or in the context of significant short-term volatility and/or uncertainty). - If arrangement approved well before the first test date (e.g., four months or earlier), there may be only six disbursements and five reviews. - Reviews and disbursements could be more frequent or shifted between semi-annual and higher frequencies during the course of an arrangement based on volatility/uncertainty or projected risk profile. ### Availability dates, test date sequencing, and program start - Test dates for PCs must be set so that all scheduled disbursements can take place before the end of the arrangement, accounting for reporting lags and staff report preparation/circulation periods. - Availability dates for disbursements should allow time for all data needed to confirm observance of PCs to become available. - Availability dates are specified in the Arrangement text and subsequent Decisions and summarized in the staff report table. - Reviews cannot be completed prior to the applicable availability date. - Program period: - would typically start somewhat before the Board approves the ECF arrangement, - and three to six months before the first test date under semiannual monitoring. - The program period should normally not start more than three months prior to the Board meeting, and in any case not before the authorities and staff have discussed the parameters of the program. ### Blackout periods and data unavailability - Unlike SBAs or EFF Arrangements, ECF design avoids “blackout periods” because each disbursement is linked to a specific review and observance of specific periodic performance criteria. - A disbursement is not blocked when a new test date passes (no need for a waiver of applicability upon data unavailability) because the new test date applies to a future disbursement subject to completion of a future scheduled review. - Broader policy references: Reduction of Blackout Periods in GRA Arrangements (IMF, 2009h) and Blackout Periods in GRA Arrangements and the Extended Rights to Purchase Policy—A Review (IMF, 2013a). ### Addressing interruptions: track records, combined reviews, and rephasing - Interruptions and delays in ECF-supported programs: - If caused by substantial policy slippages, often appropriate to establish a track record before completing the next review. - Track record options: - informal (time-bound policy actions and targets), - monitored under an SMP, - or, for urgent exogenous financing needs, the RCF (assuming applicable policy commitments are in place). - Remedies for delays: extensions of the arrangement, combining reviews, rephasing of access, or a combination. - Combining reviews: - Two reviews can be combined when delays have occurred and performance can be assessed against two test dates linked to successive reviews. - Combining three or more reviews is very unusual because PCs are typically not defined for more than two future test dates under semiannual monitoring. - ECF arrangement is automatically terminated if no review is completed over an 18-month period. - Conditions for combining reviews: - (i) conditionality fully defined, including PCs, and approved by the Board; - (ii) data available for measuring observance of conditionality for the reviews; - (iii) earliest dates for conclusion of the reviews in the arrangement text have all passed. - Combining reviews is typical when the program is on track for the most recent review and sufficient corrective action offsets earlier problems; not appropriate when slippages for the most recent review are significant. - Alternatives when combining is not appropriate: - authorities could request cancellation of the arrangement and discuss support under a new instrument; or - complete the past review if earlier slippages were broadly satisfactory or corrected, establish a new future test date/conditionality, and typically rephase access over the remainder of the arrangement. - Rephasing disbursements: - Disbursements may be rephased to change financing amounts under individual disbursements and/or change number or timing of disbursements and reviews. - If delays cannot be accommodated by extensions or combining reviews, total access can be rephased into a new pattern of test dates and reviews, generally only after using the maximum possible extension. - Access must never be rephased in a manner that makes it impossible for the member to obtain the full, undisbursed amount under the arrangement. - If rephasing would compress a very large amount of access into a short period (even with a potential extension), it is normally appropriate to let the current arrangement expire or be canceled and proceed to a new ECF arrangement with more attainable goals, unless there has been a very sharp turnaround in performance. ### Other relevant policies and data-provision implications - Ex Post Peer Reviewed Assessments (EPPRAs): - As of July 2015 Ex Post Assessments (EPAs) have been discontinued and replaced by Ex Post Peer Reviewed Assessments. - Staff reports for new Fund-supported program requests are required to contain a succinct, peer-reviewed assessment for countries with longer term program engagement (LTPE), defined as having in place a Fund-supported financial arrangement for at least seven of the past 10 years. - Access to resources under ECF arrangements counts toward the policy on LTPE. - A guidance note on EPPRAs will be issued in early 2016. - Post-Program Monitoring (PPM): - Outstanding ECF credit will be subject to PPM. - Normally, members with outstanding credit from the Fund in the GRA and/or PRGT exceeding 100 percent of quota after the expiry of their arrangements are expected upon the recommendation of the MD to engage with the Fund in PPM (unless the member is implementing a Fund-supported program or SMP). - References: Extension of Post-Program Monitoring to Cover the Use of PRGF Resources (IMF, 2005); Guidance Note on the Implementation of Post-Program Monitoring (IMF, 2010e); Decision No. 13454-(05/26), as amended. - Article IV cycle: - The 24-month cycle for Article IV consultations applies to members with an ECF arrangement. - Article IV consultations with members that have an on-track ECF arrangement in place would be expected to be completed within 24 months after the completion of the previous Article IV consultation. - If a program review is not completed by the date specified in the arrangement, the next Article IV consultation is expected to be completed by the later of: - (i) six months after the scheduled review date and - (ii) 12 months, plus a grace period of three months after the previous Article IV consultation, - unless the program review has been completed prior to the later of these two dates, in which case the 24-month cycle continues. - A member that has completed an ECF arrangement by drawing all amounts may remain on the 24-month cycle unless meeting criteria in paragraph 2 of Decision No. 14747-(10/96): (i) systemic or regional importance; (ii) perceived to be at risk or facing pressing policy issues of broad interest to the Fund membership; or (iii) outstanding Fund credit exceeding 145 percent of quota. - At the time of the final review, staff should assess whether the consultation cycle should be shortened back to 12 months based on the above criteria and seek Board approval when appropriate. - Exchange system obligations and Article VIII, Section 5: - Requirements under Article VIII Sections 2, 3, and 4, and Article XIV are discussed elsewhere (Article VIII Acceptance by IMF Members—Recent Trends and Implications for the Fund (IMF, 2006d)). - A standard continuous PC applies to the non-introduction or intensification of exchange restrictions and to the non-introduction or modification of multiple currency practices (see Appendix II, Section G). - Article VIII, Section 5 of the Fund’s Articles of Agreement does not apply to the provision of information that is required for the purposes of Fund financial assistance under the ECF. - PRGT resources are held in an administered account and obligations of a member using such resources are governed by the PRGT Instrument incorporated into each ECF arrangement. Accordingly, the Fund cannot require a member to provide information for the purposes of Article VIII, Section 5 for an ECF arrangement, and failure to provide such information for an ECF arrangement cannot give rise to sanctions under Article XXVI, Section 2, as it is not a breach under the Articles of Agreement. - Heavily Indebted Poor Country (HIPC) Initiative: - Performance under an ECF arrangement can count toward a track record of strong policy performance required for the HIPC decision point and completion point. - Minimum required track record: six months for the decision point and one year for the completion point. - Side letters: - Use of side letters in LIC programs is extremely rare. - Side letters may be used when release of information on policy understandings at the time of a program request or review would cause adverse market reaction or undermine authorities’ efforts to prepare domestic groundwork for a measure. - Reference: Decision No. 12067-(99/108). *Source: Section 5 regarding members’ obligations on data provision for Fund’s activities, _022216a - Section 5 regarding members’ obligations on data provision for Fund’s activities.* ### CHAPTER II—STANDBY CREDIT FACILITY _____________________________________________________ 50 ### CHAPTER II—STANDBY CREDIT FACILITY ### A. Objectives and Qualification - Purpose and objective: - The SCF provides concessional financing to LICs with actual or potential short-term balance of payments needs. - The purpose of an SCF arrangement is to assist eligible member countries in implementing economic programs aimed at achieving, maintaining, or restoring a stable and sustainable macroeconomic position consistent with strong and durable poverty reduction and growth. - A stable and sustainable macroeconomic position would typically be associated with sustainable fiscal and current account balances, limited debt vulnerabilities, adequate international reserves, and sufficient policy and institutional capacity to implement appropriate macroeconomic policies. - Use of the SCF is appropriate where a country may experience episodic, short-term financing and adjustment needs, not expected to persist over the medium or longer term. - Member countries facing potential balance of payments needs, but not presently facing a need, may request an SCF arrangement on a precautionary basis. - SCF resources can be used to strengthen the country’s international reserve position and loosen financing constraints for both the public and private sectors and can catalyze additional financing from donors. - Eligibility and qualification: - Assistance under the SCF is available to all PRGT-eligible member countries that experience short-term balance of payments needs, unless: - (i) the predominant cause of the balance of payments difficulties is a withdrawal in financial support by donors; or - (ii) the country faces a protracted balance of payments problem. - To qualify for the SCF, there should be an expectation that the member will achieve a stable and sustainable macroeconomic position in normally two years or less. - If a protracted balance of payments problem is expected to persist for three years or more, an ECF arrangement would be appropriate. - Where a stable position is expected in more than two but less than three years, the choice between SCF and ECF should be determined case-by-case, noting the minimum length for an ECF arrangement is three years and use of the SCF is normally limited to two and a half out of any five-year period assessed on a rolling basis. - Substantial structural reform or capacity building needs, or frequently recurring financing needs, indicate a protracted problem (favoring ECF); needs for a relatively front-loaded adjustment aimed at speedy restoration argue for SCF. - SCF arrangements can provide support to members experiencing actual (present or prospective) or potential balance of payments needs, provided the need is short term rather than protracted. - If at approval a member does not presently face balance of payments needs but such needs are expected to arise, the arrangement is treated at least initially as precautionary. - If balance of payments needs are purely potential and risks are moderate or low, a PSI could be more appropriate. - Individual disbursements require the member’s representation of the existence of an actual (present) balance of payments need. - Qualification requires a Board finding that the member is implementing, or is committed to implement, policies aimed at resolving balance of payments difficulties in the context of a policy program that meets UCT conditionality standards and aims to achieve, maintain, or restore a stable and sustainable macroeconomic position consistent with strong and durable poverty reduction. - Qualification requires assurance of capacity and commitment to implement the program, evidenced by recent policy performance (including under a recent Fund-supported program), institutional capacity, and other circumstances affecting macroeconomic performance. - Qualification is presumed (but must be established) for countries with an on-track PSI that experience or may experience a balance of payments need. - Countries unable to meet SCF qualification requirements can build a track record through an SMP or, in urgent cases, the RCF (assuming applicable policy commitments are in place). - Countries with capacity to implement a UCT-quality program but needing only up to one year to resolve the need may opt for RCF financing for urgent needs. ### B. Duration, Extensions, Cancellations, and Repeated Use - Duration and overall limits: - Assistance under an SCF arrangement is available for a minimum of 12 months and a maximum of 24 months from the date of the Board decision approving the arrangement. - The SCF is intended to address episodic short-term needs; its use is normally limited to two and a half years out of any five-year period, assessed on a rolling basis. - Past SCF arrangements treated in their entirety as precautionary (i.e., not one disbursement was made) and prospective SCF arrangements for which the Fund assesses that the member does not have an actual balance of payments need at the time of approval are not counted towards the two and a half year limit. - SCF arrangements may be extended (including multiple times) subject to a 24-month maximum total duration. - After expiration or cancellation of an SCF arrangement, additional SCF arrangements may be approved if qualification criteria are met, including the overall time limit on use of the SCF. - Extensions, rephasing, and augmentations: - SCF arrangements can be extended at the request of the member and approved by the Board before the expiration of the arrangement period. - Extensions are only possible if needed to allow for disbursement of amounts under the arrangement; it is not possible to extend when all scheduled amounts have already been disbursed. - Extensions are not automatic and are subject to appropriate conditions consistent with SCF assistance terms. - Extensions can allow for rephased amounts or provide additional resources (augmentation) in light of projected developments in the member’s balance of payments position. - Rephasing may be appropriate when more time is needed to implement policies or reforms, when the duration of needs is longer than envisaged due to a shock, or due to heightened risks warranting further precautionary support. - Extensions involving rephasing and/or augmentations would normally be approved by the Board on the basis of a LOI and in the context of a program review (where the conclusion demonstrates the program is on track). - In exceptional circumstances, extensions involving rephasing may be approved by the Board outside the review context if authorities and staff have understandings documented by a letter from the authorities and a staff report discusses reasons for the extension and program status. - In cases not involving rephasing (or changes in access or establishment of additional reviews), short-term ("technical") extensions for a few weeks or months can be granted outside the context of a review to complete a final review and make a final disbursement available, provided understandings on appropriate policies to complete the review have been reached or are expected to be reached in the very near term. - Board approval of short-term extensions generally occurs via a very short staff paper with a decision proposed for LOT Board approval; the staff paper should explain the status of discussions and policy understandings. - Cancellation: - SCF arrangements may be cancelled by the authorities at any time, for instance when underlying macroeconomic imbalances have been resolved, when authorities no longer have capacity or commitment to implement the program, or when objectives or modalities of economic policies have changed substantially. ### C. Concurrent Use and Blending - Concurrent use: - The SCF cannot be used concurrently with the ECF; any pre-existing ECF arrangement must be cancelled before an SCF arrangement can be approved and vice versa. - A member cannot obtain RCF financing (or start an SMP) if an SCF arrangement is in place and on track. - If additional balance of payments needs arise during an SCF arrangement, an augmentation of access would typically be the appropriate response. - RCF financing during an SCF arrangement can only be provided when: - (i) SCF disbursements are not possible (e.g., due to policy slippages or delays in program discussions); - (ii) qualification requirements for the RCF are met, including the existence of an urgent balance of payments need and relevant policy commitments; and - (iii) the balance of payments need is primarily caused by a sudden exogenous shock. - When access under the RCF exceeds 18.75 percent of quota by using the shock window, policies should be appropriate to address the shock. - RCF-supported policies could serve as a track record to bring the SCF-supported program back on track. - In the absence of an urgent financing need, a track record could be built through an SMP. - The SCF can be used concurrently with GRA financing under certain circumstances (described elsewhere in the source). - Use with a PSI: - The SCF can be used flexibly in conjunction with a PSI. - While a PSI does not provide automatic access to SCF financing, qualification for the SCF would be presumed for countries with an on-track PSI that experience or may experience a balance of payments need (present, prospective, or potential), provided qualification requirements are met. - An on-track PSI with UCT-conditionality would reduce the time normally required to design an SCF-supported program; there would be no need to cancel the PSI, and an SCF could run concurrently with a PSI. - PSI users can request concurrent precautionary support under the SCF; modification of the PSI-supported program may be warranted if changed circumstances affect the country’s ability to meet program objectives. - If the PSI is off track, SCF approval would typically occur only when appropriate corrective actions have been taken. - Concurrent PSI and SCF support would have modalities akin to those applicable under a PSI or SCF individually with regard to program documentation and program targets; both instruments would support an economic program based on a single set of program conditions, schedule of reviews, and other requirements largely mirroring those applicable to stand-alone SCF arrangements or PSIs. - Key differences when PSI and SCF run concurrently include: - The choice of SCF duration (between 12 and 24 months) depends on the length of financing and adjustment needs and would not necessarily be tied to the PSI period. - If the SCF expiration date comes after that of the PSI, approval of a new PSI would normally take place only after the expiration or cancellation of the SCF arrangement, since qualification for the PSI requires a broadly stable and sustainable macroeconomic position implying no IMF financing is needed. A new PSI could be approved when the authorities intend to treat the SCF as precautionary. - It may be possible to extend the existing PSI for a short period to complete the final review (see Section B). - An SCF arrangement does not require the issuance of a PRS-related document, but such a document must exist by the time of the completion of the second and subsequent reviews of a PSI. - The review schedule for the PSI could remain on the “fixed review cycle” or be aligned to the more flexible SCF review cycle. With a PSI remaining on the fixed cycle, documentation for a PSI review must be issued to the Executive Board before the next relevant test date, irrespective of program performance and whether the review will be completed, except the staff report which could be issued up to one month after the test date of the periodic assessment criteria (ACs) linked to the next scheduled review. - Shifting a PSI to the SCF review schedule would require adjusting the standard PSI decision language so a PSI review can be completed later. *Source: CHAPTER II—STANDBY CREDIT FACILITY (excerpts).* ### 104. Certain PRGT-eligible countries are expected to receive financial assistance through blended ### 104. Certain PRGT-eligible countries are expected to receive financial assistance through blended ### Blended financing overview - PRGT-eligible countries may receive financial assistance through blended PRGT (concessional) and GRA resources, rather than fully concessional Fund financing. - Total access for blended arrangements is determined based on the standard criteria, implying total access should be comparable across country cases with similar balance of payments needs, program strength, and outstanding Fund credit, irrespective of whether assistance is blended or PRGT-only. - Blending can signal that the borrower is moving toward middle-income or emerging market status. - PRGT-eligible countries, including members qualifying for an SCF arrangement, are expected to use either fully concessional or blended resources, rather than GRA-only financing, although they remain eligible for GRA general resources. ### Presumptions and limitations for blending - Blending is presumed for PRGT-eligible countries with either: - (i) per capita income above the prevailing operational cutoff used by IDA, or - (ii) sustained past and prospective market access and a per capita income that exceeds 80 percent of the IDA operational cutoff, - provided that (iii) they are not deemed to be at high risk of debt distress or in debt distress (as assessed by the most recent joint Bank-Fund LIC DSA). - As of July 2015, the IDA operational cutoff was US$1,215. It is revised each year, typically in July. - A member is presumed to have had past market access if it tapped international financial markets during at least two of the last five years, and with the total access over the five years amounting to a minimum of 50 percent of quota. - Non-presumed blenders may meet their needs entirely under the SCF subject to applicable norms and limits. - Exceptional circumstance: if a member that does not satisfy blending presumption criteria has financing needs exceeding applicable SCF access limits, the member may be required to blend under an SCF arrangement with GRA resources, subject to meeting applicable GRA policies. ### Modalities and operational differences for blended SCF–GRA assistance - SCF resources will normally be provided together with GRA resources under the SBA when assistance is blended. - Financing through the RFI under the GRA during an SCF arrangement is expected only if the SCF-supported program is off track, typically combined with disbursements under the RCF. - Blended modalities broadly mirror stand-alone SCF arrangements: one- to two-year economic program, single set of program conditions, schedule of disbursements and reviews. - Key differences in blended cases: - Disbursements would involve both SCF and SBA resources, implying lower average concessionality than stand-alone SCF. - SBA qualification requirements must be met; if blend pushes access above GRA normal limits, the member would need to meet Exceptional Access criteria. - While effectiveness and expiration dates of SCF and SBA are normally identical, blending could involve an SBA of more than 24 months with a 2-year SCF if SCF qualification requirements are met (absence of a protracted balance of payments need). - SBA reviews in the blend may require waivers of applicability under certain circumstances. - Each SCF disbursement is linked to a specific test date; GRA purchases are conditioned on observance of PCs relating to the most recent test date. This can create situations where SCF resources can be disbursed (if earlier test-date PCs met) while SBA resources cannot unless waivers are granted. ### Determination of access — main criteria - Access is determined case-by-case based on: - (i) the member’s present, prospective, and potential balance of payments needs (taking into account all projected balance of payments flows, including reserve accumulation and financing from other sources); - (ii) the strength of its program and capacity to repay the Fund (policy plans, adjustment effort, commitment, institutional capacity, track record, vulnerabilities, imbalances, and debt sustainability); - (iii) the amount of outstanding Fund credit and the member’s record of past use. - For precautionary arrangements, the baseline scenario should present no Fund financing; potential needs should be highlighted (e.g., how volatile external flows might be affected) and alternative scenarios presented. - Each individual disbursement under an SCF requires a member representation of an actual balance of payments need (normally in an LOI); the Fund will not challenge this representation prior to disbursement but may impose remedial measures afterward if disbursement occurred in absence of a present need. ### Access norms, limits, and phasing - Access norms for SCF arrangements (not applicable in blended cases): - 90 percent of quota per 18-month arrangement for countries with total outstanding IMF concessional credit of less than 75 percent of quota. - 56.25 percent of quota per arrangement for countries with outstanding concessional credit between 75 percent and 150 percent of quota. - For arrangements > 18 months, norm increased proportionally; for < 18 months, decreased proportionally. - For countries with outstanding concessional credit above 150 percent of quota, norms do not apply; access guided by cumulative access limit of 225 percent of quota (300 percent in exceptional cases), expectation of future need, and repayment schedule. - Access norms are guidance, not ceilings or floors; access may deviate if warranted by standard criteria. - Global annual and cumulative limits under PRGT across all concessional facilities (ECF, SCF, RCF, ESF): - Total access should normally not exceed 75 percent of quota per year across all concessional facilities (annual access limit). - Total access should normally not exceed 225 percent of quota cumulatively, net of scheduled repayments. - The annual access limit refers to past and future scheduled disbursements in any 12-month period, including (i) actual disbursements under RCF and past ECF and SCF at time they became available, (ii) disbursements to date that became available under the current SCF, irrespective of draw, and (iii) future disbursements under the SCF at scheduled availability dates. - The cumulative limit requires total outstanding Fund concessional credit (including disbursements made available but not drawn) normally cannot exceed 225 percent of quota at any point, based on projected disbursements and repayments. - Exceptional access above normal limits is possible where: - (i) exceptionally large balance of payments need cannot be met within normal limits; - (ii) comparatively strong adjustment program and ability to repay the Fund (generally not met for countries with high risk of debt distress or in debt distress unless projected debt relief/restructuring reduces risk to moderate or low); - (iii) do not have sustained past and prospective capital market access, and have income at or below the prevailing operational cutoff for IDA assistance. - Exceptional access is subject to hard caps: 100 percent of quota annually and 300 percent of quota cumulatively, net of scheduled repayments, across all concessional facilities. - Sub-ceiling for precautionary SCF arrangements: - If potential but no actual balance of payments need at approval, annual access limited to 56.25 percent of quota and average annual access cannot exceed 37.5 percent of quota, with possibility to augment later if actual need arises. - Phasing of access: - Determined at approval to mirror projected evolution of balance of payments needs and must consider applicable annual access limits. - Access may be front-loaded or back-loaded based on program strength and time profile of needs. - Frontloading could be appropriate in exceptional cases (e.g., repayment of emergency assistance, clearance of overdue obligations) or for precautionary SCF arrangements. - Example: a two-year SCF approved without an actual balance of payments need could provide 56.25 percent of quota in year one and 18.75 percent of quota in year two. ### Access under blended financial assistance (specific rules) - When financing is blended under an SCF arrangement and a GRA arrangement: - Total access is determined based on the standard criteria; the SCF access norms do not apply. - Specific rules for blended access: - Access to the concessional (SCF) component is normally one-third of total access, with concessional resources capped at the norm applicable to unblended arrangements. All access above the norm is met by GRA financing. - At approval, each scheduled disbursement should generally involve both SCF and GRA resources. For GRA resources, phasing and performance criteria apply only to purchases above the first credit tranche. - The shares of SCF and GRA financing at each disbursement can be determined individually and need not remain constant across disbursements. - Exceptional circumstances with very large needs could allow concessional resources under blended assistance to reach the annual access limit of 75 percent of quota or possibly the exceptional annual access limit of 100 percent of quota if criteria for exceptional concessional access are met (including that the country does not meet income or market access criteria for blending). - For blended SCF arrangements treated as precautionary, access to the concessional component is capped at the average annual access limit of 37.5 percent of quota. ### Augmentations and reductions of access - Access under an SCF arrangement can be augmented to meet larger balance of payments needs or support a strengthened program. - Augmentation appropriate as response to shocks unless SCF-supported program is off track (in which case RCF financing could be appropriate). - Augmentation may follow improved program strength (e.g., risk of debt distress subsides). - Extension of SCF arrangement could justify augmentation if extension covers balance of payments needs not originally included. - Under the TIM, augmented access not exceeding 10 percent of quota will be available to compensate for balance of payments shortfalls arising from trade liberalization measures implemented by other countries. *Source: Excerpt from the STANDBY CREDIT FACILITY chapter provided in the source content.* ### 121. Determination of access for an augmentation is based on the standard access criteria, ### _022216a - 121. Determination of access for an augmentation is based on the standard access criteria, ### Determination of access and typical augmentation sizes - Determination of access for an augmentation is based on the standard access criteria, including balance of payments need and strength of the program. - There are no norms applicable to the size of an augmentation, although many augmentations have been in the range of 15–45 percent of quota (pre-14th General Review of Quotas), with a few cases well above this range. - Staff reports supporting requests for augmentations should explicitly discuss the basis for the augmentation and its size, with reference to the main criteria for determining access, as well as to access norms and limits as applicable. ### Augmentations for blended PRGT and GRA arrangements - For augmentations of arrangements presumed to involve blended PRGT and GRA resources: - Access should be set so that the total financing mix over the full course of the arrangement is guided by the specific rules on access under blended arrangements. - Normally, total access (post augmentation) to concessional financing would be one third of total overall access to Fund resources. - A cap applies at the norm applicable to unblended arrangements. - Augmentations would normally be approved at the time of a scheduled review under the arrangement. ### Ad hoc augmentations between scheduled reviews — approval conditions and modalities - Ad hoc augmentations between scheduled reviews are permitted when the increase in the underlying balance of payments problems is so acute that the augmentation cannot await the next scheduled review. - Approval at ad hoc reviews requires an assessment by the Fund as Trustee that the program is on track to achieve its objectives at the time of the augmentation; the Board assesses: - observance of the continuous performance criteria or justification for a waiver of nonobservance; - whether prior actions (if applicable) have been met; - that the member’s policies are suitable to address balance of payments problems and are consistent with program objectives; - other relevant considerations, including exogenous developments and data on periodic performance criteria linked to future disbursements. - Modalities for augmentations at ad hoc reviews: - Requests are expected to be supported by a short staff report and an LOI from the member describing the nature and size of the problem, policies being undertaken, and any information relevant to program implementation, including exogenous developments. - Augmentations of access are only available to the member in a single disbursement following Board approval. There is no limit on the amount of such a disbursement subject to overall access limits and norms. - Augmentation disbursements are limited to what is immediately needed by the member in light of its balance of payments difficulties; additional amounts can be requested in the context of a regular program review. - The new disbursement approved at the ad hoc review is subject to observance of the continuous PCs under the arrangement, accuracy of information on implementation of such PCs, and any prior actions established for that disbursement; it is not subject to periodic performance criteria and other conditions linked to remaining disbursements under the arrangement. - If the scheduled review associated with the most recent availability date preceding the augmentation request has not been completed, an augmentation request cannot be approved at an ad hoc review. - A member may request an undrawn disbursement made available upon the Board’s approval of the requested augmentation until the availability date of the next scheduled disbursement under the arrangement. - Augmentation requests at ad hoc reviews that do not exceed 12.5 percent of quota are eligible for approval on a LOT basis. A subsequent scheduled review must undertake a comprehensive review of policies and cannot be completed on a LOT basis. ### Ability to reduce access - The Fund cannot unilaterally reduce access under the SCF. Authorities could request a reduction, for instance, in case of a marked and unexpected improvement in the balance of payments resulting from changes in the external environment. - (PRGT Instrument caveat referenced regarding availability of resources and possible access reductions in very specific circumstances.) ### Procedural safeguards for high access requests — DSAs and informal Board meetings - Financing requests are subject to procedural safeguards across all concessional facilities; staff reports should provide an up-to-date assessment of debt vulnerabilities, explicitly referencing impact of new borrowing from all sources, including prospective IMF disbursements. - A DSA is required for any financing request under the PRGT (augmentation or new arrangement) if it: - (i) involves exceptional access to concessional resources; - (ii) brings total access, i.e., cumulative disbursements, under all concessional facilities to more than 60 percent of quota, based on cumulative past and future scheduled disbursements in any 24-month period, specifically including: - (a) any actual disbursements under the RCF, ECF, ESF, and past SCF arrangements at the time they became available (the date of the Board decision), - (b) any disbursements to date that became available under the current SCF arrangement, irrespective of whether drawn or not, and - (c) any future scheduled disbursements under the SCF; - (iii) involves a member country with a high risk of debt distress or in debt distress. - All DSAs (full and updates) should be prepared jointly by Fund and Bank staff and must be submitted to both the IMF and IDA’s Executive Boards. - An early informal Board meeting is required if a financing request under the PRGT (augmentation or new arrangement) would: - (i) involve exceptional access to concessional financing; or - (ii) bring total access under all concessional facilities to more than 135 percent of quota, based on cumulative past and future scheduled disbursements in any 36-month period, specifically including the same categories (a), (b), and (c) described above. - Information to the Board for such an early informal meeting would typically be a two to three page note including: - factors underlying the large balance of payments need, taking into account financing from donors; - brief summary of main policy measures and macroeconomic framework; - expected strength of the program and capacity to repay the Fund; - analysis of debt vulnerabilities reflecting all projected debt financing, including from the Fund; - reference to the impact on the Fund’s concessional resources; - likely timetable for discussion with the authorities; - a selected indicators table and, if possible, the standard DSA charts. - The meeting should take place before staff reaches understandings, ad referendum, with the authorities. - Staff would also provide early notice to the Board (e.g., in informal country matters) of upcoming arrangement requests or augmentations where the envisaged financing commitment would have a large impact on the Fund’s overall concessional resources. - Exception: the requirement for a new DSA or a Board brief in high access cases does not apply for new financing requests of 5 percent or less of quota. ### Financing terms for SCF credit - Repayments of SCF credit: - made in nine equal semiannual installments; - subject to a four-year grace period from the date of the first disbursement; - eight-year final maturity. - Authorities may make early reimbursements at any time but would not be expected to do so. - Interest: - Interest is paid semiannually. - The interest rate on SCF credit is currently set at 0.25 percent. - For the period from January 7, 2010 through December 31, 2016, no interest shall be charged on outstanding balances of SCF credit. - Interest rates are subject to biennial Board reviews; at each review interest rates would normally be adjusted if warranted by the prevailing SDR rate, within a 0.25–0.75 percent range for the SCF. - The new interest rate would apply to all outstanding SCF credit. - The next such review is scheduled for December 2016. - Availability fee: - A fee at 0.15 percent per annum is levied on the undrawn portion of the amount available for drawing each six-month period under an SCF arrangement. ### Financing assurances, arrears, and safeguards - Financing assurances: - SCF arrangements can only be approved (and reviews completed) when the program is fully financed; donors and creditors must furnish assurances to provide necessary support on terms consistent with return to external viability. - Staff should confirm no unfilled financing gaps over the 12 months immediately following approval of the arrangement (and completion of each review), and that there is a clear expectation the program will be fully financed through the remainder of the arrangement period. - Assurances should also confirm the member country has capacity to repay the Fund based on medium-term balance of payments projections and, for new arrangements and augmentations, the standardized table on indicators of the capacity to repay the Fund. - Arrears to official multilateral and official bilateral creditors: - The Fund generally calls for resolution of existing arrears to official multilateral creditors and non-accumulation of new arrears during the program; existing arrears need not be settled immediately and can be addressed in a number of ways depending on creditor type. - Macroeconomic program assumptions should be consistent with expected resolution of existing arrears to official multilateral creditors; staff should have reasonable assurances that arrears clearance understandings are realistic. - Treatment of arrears to official bilateral creditors: - Category 1: If arrears arise where economic parameters do not require restructuring of the underlying claim, the Fund maintains a policy of non-toleration; tacit approval of an official bilateral creditor’s Executive Director (non-objection at the Board meeting) has been deemed sufficient in practice. - Category 2: If arrears arise where restructuring of such claims is required under program parameters, the Fund may provide financing notwithstanding those arrears only under carefully circumscribed circumstances; each Fund disbursement is then subject to a financing assurances review. - Country teams should seek guidance from LEG and SPR on applicability in particular cases. - Arrears to private external creditors: - Covered by the Fund’s LIA policy; Fund can lend in cases of sovereign arrears to private external creditors only where: - (i) prompt Fund support is considered essential for successful implementation of the member’s adjustment program; and - (ii) the member is pursuing appropriate policies and making good faith efforts to reach a collaborative agreement with private creditors (or to facilitate such agreement). - Whenever LIA applies, each Fund disbursement is subject to a financing assurances review concerning adequate safeguards for further use of Fund resources and whether adjustment efforts are undermined by creditor-debtor developments. - Domestic arrears: - SCF-supported programs should address domestic arrears as part of overall program design; specification depends on country context and fiscal framework. - Overdue obligations to the Fund: - Where a member is in arrears to the Fund in the GRA, the Special Disbursement Account, the SDR Department, or to the Fund as Trustee (including the PRGT), a request for IMF financing, including under the SCF, will not be approved and disbursements under an existing arrangement will be suspended until the arrears are cleared. - After one month the MD will notify the Executive Board that an obligation is overdue. - In the case of protracted arrears (arrears of more than six months’ duration), annual reports are to be issued to the Executive Board, except for status changes. - The MD may recommend postponing for up to one-year periods the Executive Board’s consideration of a report regarding a member’s overdue obligations in exceptional circumstances where the MD judges there is no basis for an earlier evaluation of the member’s cooperation with the Fund. - While a member is in arrears to the Fund, policy support can only be provided through surveillance, technical assistance and, under certain circumstances, SMPs. - Remedial measures for PRGT arrears include removal from the list of PRGT-eligible countries, declaration of noncooperation and suspension of technical assistance. *Source: STANDBY CREDIT FACILITY (selected sections as provided in the source content).* ### 135. As a general principle staff should aim to complete a safeguards assessment prior to ### _022216a - 135. As a general principle staff should aim to complete a safeguards assessment prior to ### Safeguards assessments: timing, scope, and reporting - Staff should aim to complete a safeguards assessment prior to Executive Board approval of a new SCF arrangement, but no later than the first review under the arrangement and for all augmentations for existing arrangements. - Once the first review under the program has passed, subsequent staff reports should highlight the status of assessment and, if not completed, reasons for its delay. - Safeguards assessments are conducted for each new arrangement; an update assessment would not be required for: - successor arrangements where an assessment was completed no more than 18 months prior to the approval of the successor arrangement; or - central banks with a strong track record, if previous assessment was completed within four years and no substantial issues were identified in the prior assessment or subsequent monitoring. - Safeguards assessments relate to the borrowing members’ central banks; a separate fiscal safeguards review may be required in some cases involving direct budget financing. - A summary of safeguards issues should be reflected in the main body of staff reports for as long as Fund credit remains outstanding. - The safeguards process: - involves continuous analysis of information obtained primarily through collection of documents and discussions with the authorities and the central bank’s external auditors; - evaluates the central bank’s safeguards framework covering governance, auditing, financial reporting, control systems, and its legal autonomy over the life of an arrangement and for as long as Fund credit remains outstanding; - should discuss status of assessments, significant recommendations on legislative amendments, and problems in obtaining access to data or deviations from commitments relating to safeguards recommendations. - Safeguards assessment recommendations may be incorporated into conditionality or structural measures under the member’s program. - Close cooperation and coordination between FIN, other functional departments, and area departments is essential; FIN should be kept informed by area departments of safeguards issues, including logistical issues such as the timing of new arrangements and reviews. - Monitoring procedures are streamlined to follow PPM practices: once a member’s credit outstanding falls below the PPM threshold, the monitoring intensity is limited to only require a review of the annual external audit results, unless a country continues to be subject to PPM. ### Program objectives and design (SCF-supported programs) - SCF-supported programs aim to achieve, maintain, or restore a stable and sustainable macroeconomic position consistent with strong and durable poverty reduction and growth. - Programs should address and typically aim to resolve the country’s macroeconomic imbalances over the course of the arrangement. - SCF-supported programs should aim to maintain or achieve: - strong and durable poverty reduction and growth; - low or moderate inflation; - sustainable fiscal and current account balances; - limited debt vulnerabilities; - adequate international reserves; - sufficient policy and institutional capacity to implement appropriate macroeconomic policies. - Design should be aligned with the country’s own poverty reduction and growth objectives. - Specific policy objectives typically included in the LOI/MEFP and staff report: - Fiscal policies where (i) the fiscal stance is well anchored to help ensure macroeconomic stability and fiscal/debt sustainability, (ii) revenue and spending policies take due account of the country’s growth and social objectives, and (iii) budgets are guided by medium-term fiscal frameworks to the extent possible. - Monetary policies consistent with inflation, exchange rate, and reserve objectives, while taking due account of cyclical considerations. - Exchange rate policies ensuring a unified exchange rate and a real exchange rate level broadly in line with fundamentals. - Financial sector policies geared toward financial stability and deepening. - Public financial management reforms to ensure resources are tracked, reported, and targeted appropriately; public debt management to support debt sustainability; revenue reforms to broaden the revenue base and enhance tax efficiencies. - Other structural reforms critical for achieving macroeconomic objectives. ### Role of SCF financial support - SCF balance of payments support can assist countries in smoothing the adjustment process toward a stable and sustainable macroeconomic position. - Fund financial support can be used to: - strengthen the international reserve position of the member country; and - provide liquidity for making external payments. - By relaxing external financing constraints, SCF support also loosens domestic liquidity constraints of both the public and private sectors, reducing the need for retrenchment in public and private savings-investment balances and enhancing policy options. - The appropriate mix of financing and public/private adjustment is determined case-by-case. ### Direct budget support and fiscal safeguards review - A member may use the domestic counterpart of resources received under an SCF arrangement to finance, directly or indirectly, the budget deficit of the government, consistent with the Fund’s legal framework when the member has balance of payments problems and is implementing a program to resolve them. - Direct budget support may be appropriate when: - (i) the program envisages the entire amount of the Fund’s financial support is used to meet a present or prospective balance of payments need; - (ii) loosening fiscal financing constraints is an important macroeconomic objective under the program; - (iii) the central bank cannot or should not lend to the government while the domestic financial sector is too shallow (or not stable enough) to provide necessary budget financing (or the central bank plays a largely passive domestic policy role). - Staff reports should justify the use of the domestic counterpart of resources as budget financing where relevant and discuss safeguards implications. - Under safeguards policy, a fiscal safeguards review of state treasury should be conducted for all arrangements before the first program review where: - a member requests exceptional access to Fund resources, and - at the time of program approval the member expects that at least 25 percent of the funds will be directed to financing the state budget. - This requirement also applies when a member requests exceptional access during an arrangement, unless a fiscal safeguards review was completed within the previous 18 months. ### Links to poverty reduction strategies and social spending - SCF-supported programs should be aligned with the country’s own poverty reduction and growth objectives. - PRS linkage guidance: - Any financing request or program review under the SCF must be accompanied by a statement, normally in the LOI or MEFP, of how the program advances the country’s poverty reduction and growth objectives; description expected to be more detailed at initial program request. - If a PRS document exists, the SCF-supported program should be consistent with PRS objectives in the context of promoting a stable and sustainable macroeconomic position consistent with strong and durable poverty reduction and growth. - PRS documents are not required for approval or review of an SCF arrangement, consistent with its short-term focus; staff should inform authorities early about definitions and timelines for EDD requirements when a future PSI- or ECF-supported program is under consideration. - Social and other priority spending should be safeguarded and, whenever appropriate, increased under SCF-supported programs. - This should be monitored through explicit program targets, typically an indicative floor on social and other priority spending, whenever possible. - Definition of social or other priority spending should be consistent with the authorities’ poverty reduction and growth objectives. - Where tracking is not feasible, program documentation should report measures envisaged to develop tracking systems; staff should monitor progress and programs may include relevant structural benchmarks. ### Debt sustainability analysis (DSA) - SCF-supported programs should be underpinned by a thorough DSA to inform medium-term debt strategies and fiscal frameworks. - Country teams should engage authorities in DSA preparation, discuss results, and share final files with relevant officials. - DSAs for LICs (full DSAs and updates) should be prepared jointly with the World Bank; involve other relevant MDBs; joint DSAs are required for PRGT-eligible countries that also have access to IDA resources. - DSA timing and frequency: - As a general rule, a DSA should be produced at least once every calendar year. - A fully elaborated DSA is required at least once every three years, or whenever circumstances have changed significantly since the previous DSA, with shorter annual updates possible in the absence of such significant changes. - Full DSAs should be prepared in periods of heightened domestic, external, or global risk. - The design of debt limits under an SCF arrangement is systematically related to assessment of countries’ debt vulnerabilities. - DSA may need to be prepared for higher access financing requests (augmentation or new arrangement). - DSAs for LICs should be presented as self-contained documents and normally prepared using the LIC DSF, except for countries with durable and substantial market access where the market-access template may be used. - The LIC DSF analysis includes: - A forward-looking analysis (20-year projection) of debt and debt-service dynamics under a baseline scenario, alternative scenarios, and standardized stress tests; - An explicit rating of the risk of external debt distress (low, moderate, high, or in debt distress) based on indicative country-specific debt-burden thresholds that depend on the quality of policies and institutions in the country; and an assessment of the overall risk of debt distress; - Recommendations on a borrowing (and lending) strategy and other crucial macro policies to limit the risk of debt distress, while maximizing the resource envelope to achieve the country’s development objectives. ### Collaboration with the World Bank and other development partners - Fund staff should consult closely with all major development partners active in the country when designing and monitoring an SCF-supported program. - The JMAP approved by the Boards of the World Bank and IMF calls on Bank and Fund country teams to consult at least once a year to identify key macroeconomic and structural reform challenges and coordinate work plans. ### Conditionality: principles and specification - Conditionality under an SCF arrangement is intended to ensure Fund resources support meeting program objectives, with adequate safeguards to the Fund’s resources. - Conditions will normally consist of macroeconomic variables and structural measures reasonably within the member’s direct or indirect control and that are: - (i) of critical importance for achieving program goals or monitoring implementation, or - (ii) necessary for implementation of specific provisions of the IMF Articles of Agreement or policies adopted under them. - SCF-supported programs must meet the UCT conditionality standard, which requires the commitment and capacity by the authorities to implement a set of policies adequate to correct external imbalances and enable repayment to the Fund. - Conditionality should be limited to policies critical to achieving the part of the overall adjustment process covered by the arrangement; given the SCF’s short-term focus, it will generally permit less flexibility than the ECF in timing. - Program conditionality composition and timing: - Will include quantitative periodic and continuous PCs, typically quantitative and structural benchmarks, and prior actions if necessary. - Conditionality is set at the time of approval and updated at program reviews; should normally be set (or modified) by the Board before the test date. - For post-dated PCs, program documents must be signed and circulated to the Board along with the staff report before the test date. - Prior actions are measures expected to be adopted prior to approval of an SCF arrangement, completion of a review, or granting of a waiver with respect to a PC; prior actions should be applied parsimoniously, specified in clear objective terms, and in principle implemented at least five working days before the Board discussion. - Quantitative PCs would normally be set on a semi-annual basis and tied to semi-annual program reviews; quantitative benchmarks (indicative targets) would normally be specified on a quarterly basis. - Flexibility: quantitative PCs and reviews could be scheduled no more than six months apart and each review associated with a set of PCs and a disbursement; the majority of cases will follow standard semi-annual or quarterly review schedules. - Conditionality should cover the 12 months following the Board meeting (initial approval or review). - Under semiannual monitoring, PCs would normally be established for two future test dates at approval and at each review (except penultimate and final reviews). - Under quarterly monitoring, PCs should normally be set for four future test dates, and in any case not less than for two future test dates. *Source: _022216a - 135. As a general principle staff should aim to complete a safeguards assessment prior to (IMF PDF).* ### 152. Quantitative periodic PCs typically include measures of net international reserves, central ### _022216a - 152. Quantitative periodic PCs typically include measures of net international reserves, central ### Quantitative periodic performance criteria (PCs) - Typically include measures of net international reserves, central bank domestic assets, domestic and fiscal balances or financing, and any other macro-critical indicators. - Public debt conditionality: - Normally required when a member faces significant debt vulnerabilities, or when there are merits to using debt limits instead of, or as a complement to, "above-the line" fiscal conditionality (see Annex II Section E for details on specification of debt conditionality). - Program documents should include a borrowing plan used as a basis to derive quantitative debt limits (see Annex II Section E). - Borrowing plans help assess circumstances leading to a nonobservance of debt conditionality in program reviews (e.g., whether there was a change in the projected financing mix or the level of new borrowing accommodated under the debt limit). - PCs are usually subject to program adjustors that reflect deviations from projected external flows. - Indicative targets should include a floor on social and other priority spending where possible, and may include other indicators such as reserve money. ### Continuous performance criteria - Continuous PCs always include commitments related to non-introduction or intensification of certain exchange restrictions and on non-introduction or modification of multiple currency practices. - Other continuous PCs typically include the non-accumulation of external payments arrears. - See Appendix II, Section G, for details. ### Structural benchmarks under the SCF - SCF arrangements should cover structural reforms deemed critical for achieving a stable and sustainable macroeconomic position in the short term. - Structural benchmarks: - Intended to serve as clear markers in the assessment of progress in implementation of critical structural reforms in the context of a program review. - Should be used as parsimoniously as possible, and their macro-criticality explicitly justified in program documents, ideally in the structural benchmark table. - Reviews are the primary tool for monitoring performance on structural elements, by judging progress relative to relevant objectives. - Specific objectives should be defined for periods covered by individual reviews, with related structural benchmarks critical for achieving the program’s objectives. - The appropriate number depends on country-specific factors, including the centrality of structural reforms and country capacity; SCF arrangements would typically contain less than five structural benchmarks per semiannual review. - The use of structural PCs was discontinued in 2009. - Delays and modifications: - Any structural benchmark that is significantly delayed can be re-dated and re-linked to the next program review, if it remains macro-critical. - If implementing a structural benchmark is no longer possible as defined under the program, a new benchmark or a modified version may be appropriate as long as it is critical to achieve program goals. ### Waivers and modifications of conditionality - Waivers for non-observance of a PC may be granted if the Fund is satisfied that the program will nevertheless be successfully implemented because of the minor or temporary nature of the nonobservance or remedial actions taken by the authorities. - Process for waiver: - Upon verification that a PC was not met, a request for a waiver can be made by the member in the LOI. - If staff supports the waiver, relevant justification is provided in the staff report, which will include a proposed decision on the waiver. - Waivers for nonobservance are only required for quantitative PCs tied to the specific disbursement and to the review being completed (and for any standard continuous PC that has been missed). - Waivers for PCs tied to subsequent disbursements and reviews are not required even if information on nonobservance already exists; staff report and LOI/MEFP must provide assurances that understandings on appropriate policies have been reached to complete the subsequent review. - Waivers of applicability: - Could in principle be granted if information necessary to assess observance is unavailable but the Fund is satisfied the program will be successfully implemented and there is no clear evidence the PC has not been met. - In the case of the SCF, waivers of applicability would be highly unusual because each SCF disbursement is linked to specific PC test dates and to a specific review, and the disbursement is not blocked when a new test date passes and information on performance under it is unavailable. - In arrangements with blended financing, waivers of applicability will be required for the GRA-financed arrangement if the review is being conducted after the most recent test date has passed and data are not yet available. - With respect to the GRA financial arrangement, the member may purchase any amount available based on earlier completed reviews if the purchase is requested within 45 days of the most recent test date and all conditions specified in paragraph 2 of the Reduction of Blackout Periods in GRA arrangements decision (Decision No. 14407-(09/105)) are met. - Modifications to Board-set conditionality: - Appropriate when departures from PCs are expected to occur because basic program assumptions were not realized or significant unanticipated developments have occurred, provided targets remain macro-critical. - Requests for modifications must be submitted to the Board before the relevant test date has been passed and approved by the Board before information on observance is available, normally in the context of a program review. - In exceptional cases, modifications can be approved by the Board outside a review if authorities and staff have common understandings documented in a revised or new LOI with an updated PC table and, where relevant, TMU. - Board approval requires a staff report discussing reasons for the modification, status of the program, and relevant policy understandings. ### Misreporting and noncomplying disbursements - Misreporting: members obtain resources on the basis of inaccurate information regarding observance of quantitative or continuous PCs or prior actions (a “noncomplying disbursement”). - Under the SCF, a noncomplying disbursement occurs when: - (i) the Fund makes a disbursement on the basis of a finding that applicable conditions established for that disbursement have been observed, and - (ii) that finding later proves to be incorrect. - Process after evidence of a noncomplying disbursement: - The MD shall inform the member promptly. - After consultation, if the MD determines the member received a noncomplying disbursement, the MD shall notify the member and submit a report to the Executive Board with recommendations. - The Board may decide either (a) that the member shall be expected to repurchase/repay the disbursed amount, or (b) that the nonobservance will be waived. - Waivers will normally be granted only when the deviation was minor or temporary, or if the member had adopted additional measures appropriate to achieve objectives supported by the disbursement decision. - De minimis misreporting: - When the deviation from a PC would be so small as to be trivial with no impact on the assessment of performance under the program, a waiver for nonobservance shall be granted by the Executive Board. - De minimis misreporting will not be published in a staff report. ### Reviews and disbursements: purpose and process - Purpose of program reviews: - Evaluate whether the program is on track to achieve its objectives based on backward-looking assessment (performance against quantitative PCs, structural and quantitative benchmarks, and prior actions) and a forward-looking assessment of prospects for successful implementation. - At the final review under an SCF arrangement, the scope of the forward-looking assessment could be more limited if no further Fund support is expected. - Reviews update program design, specifying forward-looking policies and conditionality, and are the main vehicle for potential modifications to program design (changes in access, phasing, conditionality). - At approval and for each review, the authorities’ LOI presents or updates their policy program; a staff report provides an overall assessment of performance and policy commitments. ### Timing of reviews, test dates, and disbursements - The timing of reviews, test dates, and disbursements is summarized in a staff report table at approval and updated as needed at reviews. - Arrangement text attached to the staff report for the initial SCF request specifies test dates, reviews, availability dates, and disbursements for the first year of the arrangement. - The quantitative indicator table (“PC table”) attached to the LOI/MEFP should clearly identify PCs, indicative targets, and adjustors for at least a 12-month period from the Board date of program approval or review. - The structural benchmark table should cover measures over at least a 12-month period, indicating the reviews individual benchmarks are linked to. - The Decision attached to the staff report should specify all PCs and review/availability dates normally over the next 12 months from the Board date of program approval/review. - First disbursement available upon approval; subsequent disbursements conditional on observance of PCs and a program review confirming satisfactory progress and adequate safeguards. ### Frequency, scheduling, and data considerations - Disbursements and reviews under an SCF arrangement are expected to normally be semiannual, or quarterly where closer monitoring is needed (e.g., significant volatility and/or uncertainty). - Test dates and review dates must be scheduled no more than six months apart; flexibility allowed to align with national budget/reporting cycles. - It is possible to shift between semiannual reviews and higher frequencies during an arrangement; shifts can be scheduled at approval if warranted by projected risk profile. - Test dates must be set such that all scheduled disbursements can take place before the end of the SCF, accounting for reporting lags and preparation/circulation periods for staff reports. - Availability dates should be set such that all data needed to confirm observance at related test dates would have become available. - Reviews cannot be completed prior to the applicable availability date. ### Program period and blackout periods - Program period supported by an SCF arrangement would typically start somewhat before Board approval and three to six months before the first test date under semi-annual monitoring. - The program period should normally not start more than three months prior to the Board meeting, and in any case not before authorities and staff have discussed program parameters. - In contrast to SBAs, SCF design typically avoids “blackout periods” because each disbursement is linked to completion of a specific review and observance of specific periodic performance criteria. ### Addressing interruptions: track records, combined reviews, and rephasing - Interruptions and delays in implementation: - If caused by substantial policy slippages, it is often appropriate to establish a track record before completing the review. - A track record could be informal (time-bound policy actions and targets) or monitored more formally under an SMP, or, in case of urgent financing needs caused by an exogenous shock, the RCF (assuming applicable policy commitments are in place). - Bringing the program back on track may require modification to timing of disbursements and reviews; delays can be addressed through extensions, combining reviews, rephasing of access, or combinations thereof. - Combining reviews: - Two reviews can be combined when delays have occurred and performance can be assessed against two test dates linked to successive reviews. - Combining three or more reviews would be very unusual. - Combining reviews is possible only if: - (i) conditionality has been fully defined, including applicable PCs, and approved by the Board; - (ii) data are available for measuring observance for the reviews; and - (iii) anticipated dates for conclusion of the reviews in the arrangement text have all passed. - Reviews are typically combined when the program is on track with respect to the most recent review and corrective action offsets earlier nonobservance; not appropriate if slippages for the most recent review are significant. - Alternatives include cancellation of the arrangement and discussion of support under a new instrument, or completing the past review while establishing a new future test date and conditionality, typically combined with rephasing of access. - Rephasing access: - Disbursements may be rephased to change financing amounts under individual disbursements and/or change number or timing of disbursements and reviews. - If delays cannot be accommodated by extensions or combining reviews alone, total access can be rephased into a new pattern of test dates and reviews, generally only after full use of the maximum possible extension. - Access should never be rephased in a manner that would make it impossible for the member to get the full, undisbursed amount under the arrangement. - If delays are substantial and rephasing would compress a very large amount of access into a short period (even with potential extension), it would normally be appropriate to let the current arrangement expire or for the member to cancel it and proceed to a new SCF arrangement with more attainable goals, unless there has been a very sharp turnaround in performance. *International Monetary Fund — STANDBY CREDIT FACILITY (excerpts).* ### 171. A number of additional modalities and policy requirements apply to the SCF, including the ### _022216a - 171. A number of additional modalities and policy requirements apply to the SCF, including the ### SCF — Additional Modalities and Policy Requirements - Ex-Post Peer Review Assessments (EPA) - Access to resources under SCF arrangements counts toward the policy on LTPE, except if the arrangement was treated in its entirety as precautionary and no disbursements were made.135, 136 - Members that have had a UCT arrangement in place for at least seven out of the past 10 years, and for whom an EPA has not been prepared in the past five years, an ex post peer review assessment should be prepared in time to be considered by the Board at the time of a request for a new Fund-supported program. - Post-Program Monitoring (PPM) - Outstanding SCF credit will be subject to PPM.137 - Normally, members with outstanding credit from the Fund in the GRA and/or PRGT exceeding 100 percent of quota after the expiry of their arrangements are expected, upon the recommendation of the MD, to engage with the Fund in PPM of their economic developments and policies (unless the member is implementing a Fund-supported program or SMP). - Article IV consultation cycle - The 24-month cycle for Article IV consultations applies to members with an SCF arrangement.138 - Article IV consultations with members that have an on-track SCF arrangement in place would be expected to be completed within 24 months after the completion of the previous Article IV consultation. - If a program review is not completed by the date for completion specified in the arrangement, the next Article IV consultation would be expected to be completed by the later of: - (i) six months after the scheduled review date; and - (ii) 12 months, plus a grace period of three months after the previous Article IV consultation, - unless the program review has been completed prior to the later of these two dates, in which case the 24-month cycle continues to apply. - A member that has completed an SCF by drawing all amounts may remain on the 24-month cycle if it does not meet any of the criteria specified in paragraph 2 of Decision No. 14747-(10/96), as amended: - (i) the member is of systemic or regional importance; - (ii) the member is perceived to be at risk, or is facing pressing policy issues of broad interest to the Fund membership; or - (iii) the member has outstanding Fund credit exceeding 145 percent of quota. - At the time of the final review under the arrangement, staff should assess whether the consultation cycle should be shortened back to 12 months, based on the criteria above; the staff report for the final review should seek the Board’s approval of such shortening.139 - Where the arrangement is cancelled by the member or expires with undrawn amounts, the member will remain on the existing cycle, unless the Executive Board determines, based on the above criteria, that a different cycle will apply. - Exchange System obligations and Data Provision - Requirements under Article VIII Sections 2, 3, 4, and Article XIV are discussed in Article VIII Acceptance by IMF Members—Recent Trends and Implications for the Fund (IMF, 2006d). - A standard continuous PC applies, inter alia, to the non-introduction or intensification of exchange restrictions and on the non-introduction or modification of multiple currency practices (see Appendix II, Section G). - Article VIII, Section 5 does not apply to the provision of information that is required for the purposes of Fund financial assistance under the SCF.140 - HIPC Initiative - Performance under an SCF arrangement can count toward a track record of strong policy performance under Fund-supported programs required for the HIPC decision point and completion point.141 - The minimum required track record is six months for the decision point and one year for the completion point. - Side letters - Use of side letters in LIC programs has been extremely rare. - Side letters may be used when release of information on policy understandings at the time of a program request or review would cause adverse market reaction or undermine the authorities’ efforts to prepare the domestic groundwork for a measure.142 *Source: _022216a - 171. A number of additional modalities and policy requirements apply to the SCF, including the* ### CHAPTER III — Rapid Credit Facility (RCF): Objectives, Qualification, and Modalities ### RCF — Overview and Purpose - The RCF provides low-access concessional financing with limited conditionality to LICs facing an urgent balance of payments need.143 - Purpose and objective - The RCF provides rapid concessional financial assistance as outright disbursements to LICs facing urgent balance of payments needs (exogenous shocks, natural disasters, emergence from conflict, domestic instability, emergencies, fragility). - Designed where a multi-year UCT-quality Fund-supported program is either not necessary or not feasible (e.g., limited capacity in post-conflict, disaster, or fragile situations). - The RCF can be used to help move to a UCT-quality program (typically supported under the ECF); repeated use may be warranted under certain circumstances and subject to PRGT Instrument legal framework limitations. - The purpose is to meet urgent balance of payments needs and assist implementation of policies aimed at achieving or restoring a stable and sustainable macroeconomic position consistent with strong and durable poverty reduction and growth. - Characteristics of the desired macroeconomic position: absence of present or prospective balance of payments need; sustainable fiscal and current account balances; limited debt vulnerabilities; adequate international reserves; sufficient policy and institutional capacity. Aid dependence may still be significant but expected to decline. - RCF financing smooths economic adjustment, helps replenish international reserves, loosens financing constraints, provides policy support, and can catalyze additional donor financing. - RCF effective date and notes - The RCF became effective on January 7, 2010.143 - Access norms and limits were raised in 2015. ### Eligibility and Qualification - Assistance under the RCF is available to PRGT-eligible member countries144 that face urgent balance of payments needs unless: - (i) the balance of payments difficulties underlying the financing need are predominantly caused by a withdrawal in financial support by donors; or - (ii) a UCT-quality program is both feasible and necessary. - Definitions and conditions - An urgent balance of payments need is characterized by a present balance of payments need145 that, if not addressed, would result in immediate and severe economic disruption. Non-urgent financing needs could be met by the ECF or SCF. - The RCF can only be used if either: - (i) the balance of payments need is expected to be resolved within one year and no major policy adjustments are necessary; or - (ii) a UCT-quality Fund-supported program cannot be put in place owing to limited policy implementation capacity or when urgency calls for assistance before a UCT-quality program can be put in place (or be brought back on track). In the latter case the RCF can be used to build a track record for moving to a UCT-quality arrangement. - Protracted balance of payments problem: resolution expected to extend over normally three years or more; may involve present, prospective, and potential needs.146 - Ex ante policy undertakings required for qualification - Member must outline in a LOI the policies it plans to pursue and any additional understandings to assure it will not introduce measures that compound balance of payments difficulties (typically commitment not to introduce or intensify exchange and trade restrictions). - Sufficient policy capacity and commitment must exist to safeguard Fund resources; the Fund must assess cooperation in seeking solutions to balance of payments difficulties. ### Repeated Use - RCF resources are provided as outright loan disbursements and not phased under an arrangement. - RCF accommodates one-off disbursements or repeated disbursements over a limited period for recurring or ongoing urgent financing needs; use should typically facilitate eventual transition to a UCT-quality program (normally ECF). - Use in post-conflict and similar instability/limited capacity situations is similar to the RFI (previously EPCA).147 - To avoid supporting weak policies or moral hazard, RCF financing is subject to limitations on repeated use and sub-ceilings on access: - A member may not receive more than two RCF disbursements in any 12-month period. - A member can qualify for an RCF disbursement only if one or more of the following apply: - no RCF disbursements have been made in the past three years; - the balance of payments need was caused primarily by a sudden, exogenous shock (shock window); or - the member country has established a track record of adequate macroeconomic policies for about six months prior to the request. ### Concurrent Use and Blending - Concurrent use - A member cannot obtain RCF financing if a UCT-quality financial arrangement (e.g., under the ECF or SCF) is in place and on track. - RCF financing during an ECF or SCF arrangement can be provided only when: - (i) disbursements under the ECF or SCF arrangement are not possible (e.g., due to policy slippages or delays in program discussions); - (ii) RCF qualification requirements are met, including existence of an urgent balance of payments need and relevant policy commitments; and - (iii) the balance of payments need giving rise to the RCF request is primarily caused by a sudden exogenous shock. - When access under the RCF exceeds 18.75 percent of quota by using the shock window, existing and prospective policies should be sufficiently strong to address the shock. - RCF-supported policies could serve as a track record to bring an ECF- or SCF-supported program back on track. - The RCF can be used concurrently with GRA financing under certain circumstances. - Interaction with PSI and SMP - The RCF can be combined with programs supported under the PSI or monitored under an SMP. - Satisfactory performance under a PSI or SMP for at least six months would normally satisfy the track record requirement for repeated use of the RCF and facilitate rapid disbursement. - A short LOI together with a short staff paper would normally suffice for requesting an RCF loan disbursement when an urgent need arises during an on-track PSI or SMP. - In case of program slippages under a PSI, policies supported under the RCF (similar to an SMP) could help build a track record for bringing the PSI-supported program back on track. - Blending - Certain PRGT-eligible countries are expected to receive financial assistance through blended PRGT and GRA resources rather than fully concessional Fund financing.148 - PRGT-eligible countries, including members qualifying for RCF support, would typically use either fully concessional or blended resources, rather than GRA-only financing, although they are always eligible for access to the Fund’s general resources. *Source: _022216a - 171. A number of additional modalities and policy requirements apply to the SCF, including the* ### 182. Blending of RCF and GRA resources is subject to the following presumptions and ### 182. Blending of RCF and GRA resources is subject to the following presumptions and limitations ### Blending presumptions and applicability - Blending is presumed for PRGT-eligible countries with either (i) per capita income above the prevailing operational cutoff used by the IDA or (ii) sustained past and prospective market access and a per capita income that exceeds 80 percent of the IDA operational cutoff, provided that (iii) they are not deemed to be at high risk of debt distress or in debt distress (as assessed by the most recent joint Bank-Fund LIC Debt Sustainability Analysis (DSA)). - For all PRGT-eligible members, outstanding credit under the RFI shall count towards the RCF access limit. - Non-presumed blenders may meet their needs entirely under the RCF subject to the applicable norms and limits while also remaining eligible for financing from general resources if the relevant GRA policies are met. - In exceptional circumstances, where the financing needs of a member that does not satisfy the blending presumption criteria exceed the applicable RCF access limits, the member may be required to blend under an RCF arrangement with GRA resources subject to meeting the applicable GRA policies. - When providing financial assistance with blended resources, RCF resources will normally be provided together with GRA resources under the RFI. - Use of the RCF in conjunction with financing under GRA arrangements would only be expected in cases where the programs financed under the pre-existing SBA or EFF arrangements are off track; in this case, RCF financing would normally be provided together with RFI resources. - The modalities (and documentation) of blended RCF-GRA financing would be broadly the same as those applicable under a stand-alone RCF disbursement. The main difference is that Fund financial assistance would typically involve both RCF and GRA resources, implying lower average concessionality of the Fund’s financial support than under stand-alone RCF support. Additionally, RFI qualification requirements must be met when applicable. ### Access — determination and main criteria - Access under the RCF is determined on a case-by-case basis based on the following standard criteria: - (i) the member’s (present) balance of payments need (taking into account all balance of payments flows, including reserve accumulation and financing from other sources); - (ii) the strength of its policies and capacity to repay the Fund (taking into account the member’s policy plans, adjustment effort, commitment to implement the program, institutional capacity, track record of policy implementation, and country circumstances such as vulnerabilities, imbalances, and debt sustainability); - (iii) the amount of outstanding Fund credit and the member’s record of past use. - The amount of individual RCF disbursements may not exceed the member’s present balance of payments need, and would typically be less than total financing needs. - When requesting individual disbursements, the member will need to make a representation, normally in an LOI, that it is experiencing an urgent balance of payments need. - In the RCF context, there is no ex ante “phasing” of disbursements, in contrast to the ECF and SCF where amounts and timing of access are predetermined. ### Access limits — global and RCF sub-ceilings - Total access to financing under the PRGT should normally not exceed 75 percent of quota per year across all concessional facilities. - Total access to financing under the PRGT should normally not exceed 225 percent of quota cumulatively, net of scheduled repayments. - Exceptional access above the normal global limits can be made available to countries that: - (i) experience an exceptionally large balance of payments need that cannot be met within the normal limits, - (ii) have a comparatively strong adjustment program and ability to repay the Fund—this criterion would generally not be met for countries with a high risk of debt distress or those that are in debt distress as defined under the joint Bank-Fund DSA, unless expected debt relief or restructuring is projected to reduce the risk of debt distress to a moderate level or low level, and - (iii) do not have sustained past and prospective access to capital markets, and have income at or below the prevailing operational cutoff for assistance from IDA. - Exceptional access is subject to hard caps of 100 percent of quota annually and 300 percent of quota on a cumulative basis across all concessional facilities. - In addition to global limits, access to the RCF is subject to sub-ceilings: - 18.75 percent of quota per year (i.e., over any 12-month period) - 75 percent of quota on a cumulative basis (i.e., total stock of RCF credit outstanding at any point in time). - Purchases under the RFI made since July 1, 2015 will count towards the applicable RCF annual and cumulative sub-ceilings. - The RCF “shocks window” permits augmented access up to 37.5 percent of quota per year and up to 75 percent on a cumulative basis provided that: - (i) the primary cause of the balance of payments need is a sudden exogenous shock other than a withdrawal in financial assistance by donors, and - (ii) existing and prospective policies are sufficiently strong to address the shock. - The amount of augmented access provided under the shocks window cannot exceed the size of the financing need created by the exogenous shock. - There are no norms for access under the RCF; the above sub-ceilings should not be considered norms. Individual disbursements would in most cases be below the applicable annual sub-ceilings. - Examples of expectations: - A disbursement of 37.5 percent of quota under the shocks window would only be expected where the financing need is very large and the economic policy context is relatively strong (including limited debt vulnerabilities). - In the absence of an exogenous shock, a disbursement of 18.75 percent of quota would be rare and could only be appropriate where the financing need is relatively large and the economic policy context strong enough (including limited debt vulnerabilities) to provide a realistic near-term prospect of a transition to a UCT-quality program. ### Access under blended financial assistance - When RCF disbursements are blended with concurrent GRA disbursements, total access to financial assistance (e.g., RCF together with RFI) is determined based on the standard criteria, implying that total access should be comparable across countries with similar balance of payments needs, strength of policies, and outstanding Fund credit, irrespective of whether the Fund’s financial assistance comes in the form of blended or PRGT-only resources. - Access to the concessional (RCF) financing component of blended financial assistance would normally be one-third of total access, with initial access to resources capped at the annual access limit of 37.5 percent of quota (or 75 percent of quota under the shock window). The remainder of the total access would be met by GRA financing. ### Procedural safeguards for high access requests (DSAs and informal Board meetings) - Staff reports for any RCF disbursement should provide an up-to-date assessment of the debt vulnerabilities, with an explicit reference to the impact of new borrowing from all sources, including prospective IMF disbursements. - A new DSA is required for any financing request under the PRGT if it: - (i) involves exceptional access to concessional resources; - (ii) brings total access, i.e., cumulative disbursements, under all concessional facilities to more than 60 percent of quota, based on cumulative past and future scheduled disbursements in any 24-month period (including specified past and future disbursements under RCF, ESF, ECF, SCF); - (iii) involves a member country with a high risk of debt distress or in debt distress. - All DSAs (full DSAs and updates) should be prepared jointly by Fund and World Bank staff and must be submitted to both the IMF and IDA’s Executive Boards. - An early informal Board meeting is required if a financing request under the PRGT would: - (i) involve exceptional access to concessional financing; or - (ii) bring total access under all concessional facilities to more than 135 percent of quota, based on cumulative past scheduled and future scheduled disbursements in any 36-month period (including specified RCF, ESF, ECF, SCF disbursements). - Information to the Board would typically be in a 2–3 page note including: (i) factors underlying the large balance of payments need, (ii) a brief summary of the needed main policy measures and macroeconomic framework, (iii) expected strength of program and capacity to repay the Fund, (iv) analysis of debt vulnerabilities reflecting all projected debt financing, including from the Fund, (v) reference to the impact on the Fund’s concessional resources, (vi) likely timetable of discussion with the authorities, and (vii) a selected indicators table and, if possible, the standard DSA charts. - The early informal Board meeting should take place before staff reaches understandings, ad referendum, with the authorities. - Staff would provide early notice to the Board of upcoming financing requests where the envisaged financing commitment, in absolute terms, would have a large impact on the Fund’s overall concessional resources. - As an exception, the requirement for a new DSA or a Board brief in high access cases does not apply for new financing requests of 5 percent or less of quota. ### Financing terms - Repayments of RCF credit are made in 10 equal semiannual installments, subject to a 5.5-year grace period from the date of the first disbursement and 10-year final maturity. - The authorities may decide to make early repayments at any time, but would not be expected to do so. - Financing under the RCF carries a zero interest rate. ### Financing assurances, arrears, and safeguards - Financing assurances required for other Fund arrangements are not required for RCF disbursements. However, staff reports for RCF requests should provide information on projected financing gaps. - To the extent the RCF may be used to build a track record for a UCT-quality arrangement, the staff report should discuss prospects for financing assurances that would be required for such an arrangement. - Assurances should also be given that the member country has the capacity to repay the Fund based on medium-term projections of the balance of payments and the standardized table on indicators of the capacity to repay the Fund. Arrears - The Fund’s policy of non-toleration of sovereign arrears to official multilateral creditors remains generally applicable in the context of RCF support. The Fund generally calls for the resolution of existing arrears to official multilateral creditors and non-accumulation of new arrears. Existing arrears need not necessarily be settled immediately—they can be addressed in a number of ways, depending on the type of creditor. Country teams should seek guidance from LEG and SPR on the application of the policy to specific creditors. - The Fund’s policy on arrears to official bilateral creditors also remains generally applicable in the context of RCF support. Generally, treatment falls into two categories: - First, if arrears arise in a program where the economic parameters do not require a restructuring of the underlying claim, the Fund maintains a policy of non-toleration; in practice, tacit approval of an official bilateral creditor’s Executive Director has been deemed sufficient. - Second, if arrears arise in a program where a restructuring of such claims is required under the program parameters, the Fund may provide financing notwithstanding those arrears only under carefully circumscribed circumstances. - In a small subset of emergency situations (e.g., aftermath of a natural disaster) where extraordinary demands make it infeasible for the debtor to undertake good faith efforts to reach agreement with creditors, the Fund may provide financing under the RCF despite arrears owed to official bilateral creditors and without assessing the usual criteria or obtaining the creditor’s consent. It would be expected that the Fund’s support in such cases would help advance normalization of relations with official bilateral creditors and the resolution of arrears. *Source: _022216a - 182. Blending of RCF and GRA resources is subject to the following presumptions and limitations* ### 202. There is also scope for flexibility in applying the Fund’s LIA policy, which covers sovereign ### _022216a - 202. ### Scope and flexibility of LIA policy (paragraph 202) - The Fund’s LIA policy covers sovereign arrears to private external creditors and non-sovereign arrears that arise by virtue of the imposition of exchange controls. - Under this policy, the Fund can lend, on a case-by-case basis, in a situation of sovereign arrears to private external creditors only where: - (i) prompt Fund support is considered essential for the successful implementation of the member’s adjustment program; and - (ii) the member is pursuing appropriate policies and is making a good faith effort to reach a collaborative agreement with its creditors (or to facilitate a collaborative agreement between private debtors and their creditors and good prospects exist for the removal of exchange controls). - For the RCF, these conditions may not be required in all cases, in particular in the wake of a conflict or natural catastrophe; staff reports should nonetheless provide information on arrears to private external creditors. ### Domestic arrears and RCF-supported policies (paragraph 203) - RCF-supported economic policies should take into account the presence of any domestic arrears. - Specification of policies related to domestic arrears depends on country context, in particular the fiscal framework (see Appendix II). ### Overdue obligations to the Fund (paragraph 204) - If a member is in arrears to the Fund in the GRA, the Special Disbursement Account, the SDR Department, or to the Fund as Trustee (including the PRGT), a request for IMF financing, including under the RCF, will not be approved and disbursements under an existing arrangement will be suspended (PRGT Instrument, Section II, paragraph 1(e)(3) and 3(g)) until the arrears are cleared. - After one month, the MD will notify the Executive Board that an obligation is overdue. - In the case of protracted arrears to the Fund (i.e., arrears of more than six months’ duration), annual reports are to be issued to the Executive Board, except for status change. - The MD may recommend postponing for up to one-year periods the Executive Board’s consideration of a report regarding a member’s overdue obligations in exceptional circumstances where the MD judges that there is no basis for an earlier evaluation of the member’s cooperation with the Fund. - While a member is in arrears to the Fund, policy support can only be provided through surveillance, technical assistance and, under certain circumstances, SMPs. - Remedial measures for dealing with PRGT arrears include removal from the list of PRGT-eligible countries, declaration of noncooperation and suspension of technical assistance. ### Safeguards assessments policy (paragraph 205) - Under the RCF, a member’s request for assistance requires a commitment to undergo a safeguards assessment and to provide Fund staff access to the central bank’s most recently completed external audit reports (whether or not the audit is published); the member shall authorize its external auditors to hold discussions with staff. - The commitment and authorization must be provided at the time when the member makes a formal written request for RCF resources. - Timing and modalities of the assessment are determined case-by-case depending on the institutional and administrative capacity of the central bank; it is presumed the safeguards assessment would have been completed before Board approval of any subsequent arrangement to which the Fund’s safeguards policy applies. - The safeguards process involves continuous analysis of information obtained primarily through documents and discussions with authorities and the central bank’s external auditors, and evaluates governance, auditing, financial reporting, control systems, and legal autonomy. - Close cooperation between FIN, other functional departments, and area departments is essential; FIN should be kept informed of safeguards issues, including logistical issues such as timing of new arrangements. ### Policy objectives for RCF support (paragraphs 206–207) - RCF policy standard is more flexible than for UCT-quality arrangements under the ECF and SCF, but member policies should not compound existing balance of payments difficulties and should aim to make progress toward achieving or restoring a stable and sustainable macroeconomic position consistent with strong and durable poverty reduction and growth. - RCF-supported policies should generally: - address, though not necessarily resolve, macroeconomic imbalances; - maintain or move toward: - (i) strong and durable poverty reduction and growth, - (ii) low or moderate inflation, - (iii) sustainable fiscal and current account balances, - (iv) limited debt vulnerabilities, - (v) adequate international reserves, - (vi) sufficient policy and institutional capacity to implement appropriate macroeconomic policies. - LOI and staff report for an RCF request should discuss the current situation, cause of the urgent balance of payments need, and macroeconomic prospects; near-term policies should be clearly articulated in the LOI/MEFP and consistent with medium- and longer-term objectives. ### Typical policy areas to be included in RCF-supported programs (paragraph 207, bullet list) - Fiscal policies: - (i) fiscal stance well anchored to ensure macroeconomic stability and fiscal/debt sustainability, - (ii) revenue and spending policies account for growth and social objectives, - (iii) budgets guided by medium-term fiscal frameworks to the extent possible. - Monetary policies consistent with inflation, exchange rate, and reserve objectives while considering cyclical factors. - Exchange rate policies ensuring a unified exchange rate and a real exchange rate broadly in line with fundamentals. - Financial sector policies aimed at financial stability and deepening to foster investment and forestall crises. - Public financial management reforms to ensure resources are tracked, reported, and targeted appropriately; public debt management to support debt sustainability; revenue reforms to broaden the revenue base and enhance tax efficiencies. - Other structural reforms critical for macroeconomic objectives. ### Role of RCF financial support (paragraphs 208–209) - RCF balance of payments support can assist countries in smoothing adjustment toward a more stable and sustainable macroeconomic position. - Fund financial support can be used to replenish international reserves and provide liquidity for making external payments. - By relaxing external financing constraints, Fund support loosens domestic liquidity constraints for public and private sectors, reducing the need for retrenchment in public and private savings-investment balances and enhancing policy options (allowing less contractionary fiscal, monetary, and exchange rate policies) and cushioning private sector adjustment. - Appropriate mix of financing and public/private adjustment is determined case-by-case. - A member may use the domestic counterpart of resources received under an RCF to finance, directly or indirectly, the government budget deficit when: - (i) the policies envisage the entire amount of Fund support is used to meet a present or prospective balance of payments need, - (ii) loosening fiscal financing constraints is an important macroeconomic objective, - (iii) the central bank cannot or should not lend to the government (legal or institutional reasons) while the domestic financial sector is too shallow or not stable enough to provide necessary budget financing, or the central bank plays a largely passive domestic policy role. - Staff reports should justify use of the domestic counterpart for budget financing where relevant and discuss safeguards implications. - A fiscal safeguards review is required if an RCF disbursement meets the criteria for conducting fiscal safeguards reviews during an arrangement. ### Links to poverty reduction strategies and social spending (paragraphs 210–211) - RCF-supported policies should generally be aligned with the country’s poverty reduction and growth objectives; the linkage may be indirect given RCF’s focus on urgent balance of payments needs (e.g., via macroeconomic stability). - Any RCF financing request must be accompanied by a statement, normally in the LOI or MEFP, of how RCF-supported policies advance the country’s poverty reduction and growth objectives; where a relevant PRS document exists, the LOI/MEFP description could cross-reference it. - PRS documents are not required for RCF disbursements; when future ECF- or PSI-supported programs are considered, staff should inform authorities early about EDD requirements and timelines. - Social and other priority spending should be safeguarded and, whenever appropriate, increased under RCF-supported policies. - When LOI/MEFP includes indicative targets (e.g., to establish a track record), these should include a floor on social and other priority spending whenever possible; where tracking is not feasible, RCF documentation should report measures to develop a tracking system and staff should monitor progress, with structural measures included if appropriate. ### Debt sustainability analysis (DSA) requirements (paragraphs 212–214) - RCF-supported policies should be underpinned by a thorough DSA to inform medium-term debt strategies and fiscal frameworks. - Country teams should engage authorities in DSA preparation, discuss results, and share final files; DSAs for LICs should be prepared jointly with the World Bank and involve other relevant MDBs. - Joint DSAs are required for all PRGT-eligible I countries that also have access to IDA resources. - General rule: a DSA should be produced at least once every calendar year. - A fully elaborated DSA is required at least once every three years, or whenever circumstances have changed significantly since the previous DSA; shorter annual updates possible in interim years. - Full DSAs should be prepared in periods of heightened domestic, external, or global risk; timing may be driven by other IMF policy requirements. - DSA results inform determination of access to the Fund’s concessional resources; a DSA may be needed for higher access financing requests. - DSAs for LICs should be presented as self-contained documents and normally prepared using the LIC DSF; for countries with durable and substantial access to market financing, the market-access template can be used instead. - The LIC DSF analysis includes: - a forward-looking analysis (20-year projection) of debt and debt-service dynamics under baseline, alternative scenarios, and standardized stress tests; - an explicit rating of the risk of external debt distress (low, moderate, high, or in debt distress) based on indicative country-specific debt-burden thresholds and an assessment of overall risk of debt distress; - recommendations on borrowing (and lending) strategy and other macro policies to limit risk of debt distress while maximizing resources to achieve development objectives. ### Collaboration with the World Bank and development partners (paragraph 215) - Fund staff should consult closely with all major development partners active in the country when designing and monitoring RCF-supported policies. - The JMAP calls on Bank and Fund country teams to consult at least once a year to identify key macroeconomic and structural reform challenges and coordinate work plans. ### Conditionality under the RCF (paragraphs 216–217) - Conditionality is intended to ensure Fund resources support the member’s policy objectives with adequate safeguards to Fund resources. - Conditions normally consist of macroeconomic variables and structural measures reasonably within the member’s direct or indirect control and that are: - (i) of critical importance for achieving program goals or monitoring implementation, or - (ii) necessary for implementing specific provisions of the IMF Articles of Agreement or policies adopted under them. - In some cases, conditions may be outside the Fund’s core expertise, requiring detailed explanation of their critical importance. - The RCF does not require a UCT-quality economic program, and does not involve ex post conditionality (i.e., quantitative or continuous performance criteria), a time-bound arrangement, or formal program reviews. - The RCF provides outright disbursements based on a number of ex ante policy undertakings. *Source: _022216a - 202.* ### 218. Prior actions could be specified if necessary, but this would be expected only in exceptional ### _022216a - 218. Prior actions could be specified if necessary, but this would be expected only in exceptional ### Prior actions and timing - Prior actions could be specified only in exceptional circumstances when it is critical for addressing the urgent balance of payments need effectively that a measure be taken prior to the financial assistance provided under the RCF. - Prior actions could be appropriate when the RCF is used after severe policy slippages that call into question authorities’ capacity and commitment to implement policies that would not compound the balance of payments difficulties. - Prior actions should be implemented no later than five working days before the Board discussion. - Prior actions should be defined in the LOI/MEFP and cross-referenced in the Board Decision approving the disbursements. ### Monitoring policies and flexibility of the RCF - RCF disbursements do not require understandings on a program of economic policies other than general ex ante policy undertakings, including the commitment to cooperate with the Fund and not to introduce measures that would compound the country’s balance of payments difficulties. - The RCF can: - provide general policy support; - establish a track record of economic performance (similar to an SMP); - help monitor the implementation of UCT-quality economic policies in some cases. - RCF support can be provided together with any combination of: - staff recommendations on macroeconomic policies; - monitoring of economic performance; - specific policy commitments and indicative targets. ### Design of monitoring, indicators, and track records - For RCF-supported track records, the LOI/MEFP for a disbursement request would typically set out agreed monitorable quantitative and structural indicators (indicative targets or benchmarks), based on specific test dates and deadlines. - Monitoring design is flexible, could mirror SMPs or past EPCAs, and does not require specification of a time-bound program period. - Targets under the RCF do not have the status of PCs; waivers are not required if they are missed, and program adjustors would not be needed. - Examples of quantitative periodic indicative targets: - measures of net international reserves; - central bank domestic assets; - domestic and fiscal balances or financing; - external debt; - social and other priority spending where possible; - any other relevant macro-critical indicators. - Continuous measures could include commitments related to: - non-introduction of certain exchange restrictions and multiple currency practices; - non-accumulation of external arrears. - RCF-supported policy track records could include an agenda for macro-critical structural reforms with flexibility on timing. - Structural benchmarks: - should be critical measures serving as clear markers of progress; - should be used parsimoniously and their macro-criticality explicitly justified in program documents; - do not require a specific target date but should give an indication of the envisaged time frame. ### Misreporting and noncomplying disbursements - Misreporting in the RCF context can only occur with respect to prior actions (if applicable), i.e., when: - the Fund makes a disbursement on the basis of a finding that all prior actions for that disbursement have been observed, and - that finding later proves to be incorrect. - Upon evidence that a member may have received a noncomplying disbursement: - the MD shall inform the member promptly; - after consultation, if the MD determines the member did receive a noncomplying disbursement, the MD shall promptly notify the member and submit a report to the Executive Board with recommendations. - The Executive Board may decide either: - that the member shall be expected to repurchase/repay the disbursed amount, or - that the nonobservance will be waived. - Waivers will normally be granted only when: - the deviation from the relevant condition was minor or temporary, or - subsequent to the disbursement, the member had adopted additional measures appropriate to achieve the objectives supported by the relevant decision on the disbursement. - Whenever the Executive Board finds that a noncomplying disbursement has been made but that the nonobservance was de minimis misreporting, a waiver for nonobservance shall be granted by the Executive Board. - De minimis misreporting will not be published in a staff report. ### Track records for repeated RCF disbursements - The RCF can be used to build a track record of policy performance to enable repeated disbursements and support a transition to a UCT-quality arrangement. - There is no pre-determined phasing of disbursements or test dates for indicative targets under the RCF. - Test dates for quantitative targets can be set on a monthly, quarterly, semi-annual, or annual basis, or any combination thereof. - A track record is required for an RCF disbursement when the member has already received RCF financing in the past three years and does not qualify under the shocks window. - Such a track record would normally cover at least six months immediately prior to the disbursement. - The staff report should provide an assessment of past policy performance against any previously specified policy objectives and targets. - The track record period should start no earlier than the first time substantive policy discussions on near-term macroeconomic targets started between the country team and the authorities, and no later than the time ad referendum understandings were reached on such targets. - Approval of a repeated disbursement would be based on a finding that the member’s overall policy performance was adequate, taking into consideration the severity of the economic situation and the member’s capacity. - In exceptional cases where no relevant pre-determined monitorable objectives exist at the time a repeated RCF disbursement is requested, the track record could be based on the Fund’s assessment that macroeconomic policies have been adequate at least over the most recent six-month period. ### Other relevant policies and modalities - Ex Post Peer Review Assessments: Access to resources under the RCF does not count toward the policy on LTPE or the requirement to conduct an Ex Post Peer Reviewed assessment. - PPM: Outstanding RCF credit will be subject to PPM. Normally, members with outstanding credit from the Fund in the GRA and/or PRGT exceeding 100 percent of quota after the expiry of their arrangements are expected, upon the recommendation of the MD, to engage with the Fund in PPM of their economic developments and policies (unless the member is implementing a Fund-supported program or SMP). - Article IV cycle: RCF support does not alter the regular (typically 12-month) cycle for Article IV consultations. - Exchange System and Data Provision obligations: Requirements under Article VIII Sections 2, 3, 4 and Article XIV are discussed in IMF (2006d). The Fund may require members to furnish it with such information as it deems necessary for its activities, including program monitoring. - HIPC: A period of performance under a monitorable track record supported by the RCF can count toward a track record of strong policy performance required for the HIPC decision point. The minimum required track record for the decision point is six months. - Side letters: The use of side letters in LIC programs has been extremely rare; they may be used when release of information on policy understandings at the time of a program request or review would cause adverse market reaction or undermine the authorities’ efforts to prepare the domestic groundwork for a measure. *Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2016/_022216a.pdf* ### 231. A PSI is available to any member that meets the criteria set out in the PSI policy, including ### 231. A PSI is available to any member that meets the criteria set out in the PSI policy, including ### Qualification and assessment - PSI available to any member that meets criteria in the PSI policy, including those with a good track record of macroeconomic management and institutions of sufficient quality to support continued good performance, including in responding to shocks. - Assessment of institutional quality takes into account track record of macroeconomic policy implementation and qualitative indicators of capacity. - Board finding required that the member seeks to maintain a close policy dialogue with the Fund through endorsement and assessment of its economic and financial policies under a PSI. - Staff will assess PSI qualification using two groups of indicators: - Macroeconomic performance indicators: GDP growth, inflation, reserve adequacy, fiscal and current account balances, and an indicator of debt sustainability. - Quality of policies and institutions: past program performance (last three years) based on conditionality met/not met, delayed and combined reviews, and implementation of structural reforms; or, for countries without recent Fund-supported programs, assessment based on recent Article IV staff reports. - Minimum CPIA threshold score of 3.25 will be used to assess whether institutions are of sufficient quality to support continued good performance (i.e., the minimum cut-off level needed to attain the “medium institutional capacity” category used in the LIC DSA). - Countries with a significant decline in CPIA score over the last three years will not normally be expected to meet PSI approval standards. - Countries with both indicator groups above benchmarks are potentially eligible; final staff assessment will take country-specific circumstances into account. - Countries below benchmarks on either indicator group may make a case for qualification if they demonstrate a strong program to support growth and poverty reduction and capacity to implement it. - Countries not currently meeting PSI qualification requirements can build a track record through an SMP or, in urgent financing needs, the RCF (assuming applicable policy commitments are in place). ### Duration, extensions, cancellations, and repeated use - Initial PSI duration: can be approved for an initial duration of one to four years, from the date of the Board decision approving the PSI, and may be later extended. - Default/normal approval practice: requests for three-year PSIs have been the norm and are expected to remain the default length for medium-term PSIs at approval. - Rationale for longer initial duration: to align PSI with PRSP cycle when needed. - Overall maximum duration: five years (a PSI may be extended, including multiple times, subject to an overall maximum duration of five years). - Successor PSIs: after expiration, cancellation, or termination of a PSI, a successor PSI may be approved if relevant qualification criteria are met; there is no limit on the number of successor PSIs that can be approved. - Extensions involving new test dates and reviews: - Normally approved by the Board on the basis of an LOI and in the context of a program review where review conclusion demonstrates program is on track. - May be approved outside review context in exceptional circumstances (e.g., severe natural disaster) provided authorities and staff have understandings documented by a letter from the authorities and supported by a staff report discussing reasons, program status, and policy understandings. - Short-term (“technical”) extensions: - For cases not involving additional test dates/reviews where extra time is needed to complete final review before PSI expiration. - Can be granted for a few weeks or months outside the context of a review, with Board approval via a short staff paper and LOT Board decision. - Cancellation: a PSI may be cancelled by the authorities at any time (e.g., when financing/adjustment needs extend beyond short term, capacity/commitment to implement program lapses, objectives/modalities of policies change substantially, or authorities no longer seek Fund support). - Automatic termination of a PSI occurs upon: - noncompletion of two consecutive PSI scheduled reviews (or, if concurrent with the SCF, if no scheduled review is completed within 12 months of the completion of the last scheduled review), - the member incurring overdue financial obligations to the GRA or PRGT, - approval of an ECF arrangement for that member. ### Concurrent use - PSI cannot be used concurrently with an ECF arrangement. - Countries with an approved PSI can receive financial support under the SCF or RCF without cancelling the PSI. - SCF qualification and PSI: - Qualification for an SCF arrangement is presumed for countries with an on-track PSI that experience a balance of payments need, provided SCF qualification requirements are met. - SCF use may be for present, prospective, or potential balance of payments needs; PSI users can request precautionary SCF support in periods of increased uncertainty or risk. - An on-track PSI with UCT-conditionality standard reduces time to design an SCF-supported program. - If PSI-supported program is off track, SCF approval typically occurs only when corrective actions have been taken. - Modalities for concurrent PSI and SCF use: - Program documentation and targets based on a single set of program conditions, schedule of reviews, and other requirements mirroring stand-alone SCF or PSI arrangements. - Key differences: - SCF qualification requirements must be met at SCF approval, including existence of a present, prospective, or potential balance of payments need. - Use of the SCF is normally limited to 2.5 years out of any 5-year period, assessed on a rolling basis, with exceptions for precautionary SCF arrangements and SCF arrangements for which the Fund assesses the member does not have an actual BoP need. - Choice of SCF duration: between 12 and 24 months; not necessarily tied to PSI period. - If SCF expiration comes after PSI expiration, approval of a new PSI would normally take place only after expiration or cancellation of the SCF arrangement, since PSI qualification requires a broadly stable and sustainable macroeconomic position (implying no IMF financing is needed) at PSI approval. Exceptions: when authorities intend to treat SCF as precautionary or short PSI extension to complete final review. - SCF arrangements do not require PRS-related document issuance; such a document must exist by the time of completion of the first and subsequent reviews under a PSI or requirement otherwise met. - PSI review schedule could remain on the “fixed review cycle” or be aligned to the more flexible SCF review cycle. - Access to RCF support is presumed for PSI users that experience an urgent balance of payments need, subject to RCF qualification requirements. - Blending presumption: - Countries meeting criteria for presumption of blending would be expected to receive assistance through blended GRA and PRGT resources if they experience a balance of payments need during a PSI-supported program. - PRGT-eligible countries, including those qualifying for SCF or RCF financing during a PSI, should typically use either fully concessional or blended resources rather than GRA-only financing, though they remain eligible for general resources if policies are met. - Track record building: Members may use an SMP (or, for urgent financing needs and assuming applicable policy commitments are in place, the RCF) to establish a track record for a PSI. - Off-track PSI normal remediation: completing the next scheduled review after appropriate corrective actions, rather than an SMP. ### Financing assurances, arrears, and safeguards - Financing assurances: - PSI-supported programs require same financing assurances as Fund financial arrangements; PSIs can only be approved (and reviews completed) when program is fully financed. - Staff should confirm no unfilled financing gaps over, normally, the next 12 months immediately following PSI approval (and completion of each review) and a clear expectation program will be fully financed through the remainder of the PSI period. - When PSI support is provided alongside SCF or RCF assistance, assurances should show country has capacity to repay the Fund through medium–term balance of payments projections and the standardized table on indicators of the capacity to repay the Fund. - Arrears: - Fund policies on sovereign external arrears to official creditors apply analogously to the PSI: resolution of existing arrears to official creditors and non-accumulation of new arrears during the program period are generally called for. - PSI users generally not expected to have external arrears given qualification requirement of a broadly stable and sustainable macroeconomic position; rare cases with external arrears can be addressed depending on creditor type, with guidance from LEG and SPR. - Macroeconomic program assumptions should be consistent with expected resolution of any existing arrears to official creditors; staff should have reasonable assurances that arrears clearance understandings are realistic. - Sovereign arrears to private external creditors and non-sovereign arrears arising from exchange controls are covered by the LIA policy, which applies analogously to the PSI. - PSI-supported programs should address domestic arrears, if any, as part of overall program design; specification depends on country context and fiscal framework. - Overdue obligations to the Fund: - A member in arrears to the Fund in the GRA, or to the Fund as Trustee (including the PRGT), is not eligible for PSI support. - If a member incurs arrears into GRA or PRGT, any existing approved PSI would be terminated. - Safeguards assessments: - A safeguards assessment is not required for a PSI, but members with a PSI are encouraged to undertake such an assessment voluntarily to enhance accountability, transparency, and institutional strength of central banks and to facilitate quick access to Fund resources if needed. - Safeguards process involves document collection, discussions with authorities and external auditors, and evaluation of governance, auditing, financial reporting, control systems, and legal autonomy of central bank. - Close cooperation between FIN, other functional departments, and area departments is essential; FIN should be kept informed by area departments of safeguards issues, including timing of new arrangements and reviews. ### Program objectives and design - Overarching aim: maintain or consolidate a stable and sustainable macroeconomic position consistent with strong and durable poverty reduction and growth. - PSI-supported programs should aim to maintain or consolidate: - strong and durable poverty reduction and growth, - low or moderate inflation, - sustainable fiscal and current account balances, - limited debt vulnerabilities, - adequate international reserves, - sufficient policy and institutional capacity to implement appropriate macroeconomic policies. - Program design should align with the country’s poverty reduction and growth objectives. - Specific policy objectives to be articulated in the LOI/MEFP and staff report for a new PSI typically include: - Fiscal policies: - fiscal stance well anchored to ensure macroeconomic stability and fiscal/debt sustainability, - revenue and spending policies taking account of growth and social objectives, - budgets guided by medium-term fiscal frameworks to the extent possible. - Monetary policies consistent with inflation, exchange rate, and reserve objectives, taking cyclical considerations into account. - Exchange rate policies ensuring a unified exchange rate and a real exchange rate level broadly in line with fundamentals, supporting a stable and sustainable external position consistent with adequate growth. - Financial sector policies geared toward financial stability and deepening to foster investment and forestall financial crises. - Public financial management reforms to ensure resources are tracked, reported, and targeted appropriately (including adequate resources for social and priority spending); public debt management to support debt sustainability; revenue reforms aimed at broadening the revenue base and enhancing tax efficiencies. - Other structural reforms critical for achieving macroeconomic objectives, with focus on “second-generation reforms” to enhance growth potential and capacity to manage volatility. *Source: Excerpt from PSI policy chapter provided in the source content.* ### 256. PSI-supported programs should be aligned with the country’s own poverty reduction and ### _022216a - 256. PSI-supported programs should be aligned with the country’s own poverty reduction and ### PRS linkages and EDD requirements - New PSI requests and PSI reviews are expected to be accompanied by a statement, normally in the LOI or MEFP, of how the PSI advances the country’s poverty reduction and growth objectives. - Where a relevant PRS document exists, the LOI/MEFP description may cross-reference the PRS document; the PSI-supported program should be consistent with the objectives of the PRS in the context of maintaining a broadly stable and sustainable macroeconomic position consistent with strong and durable poverty reduction and growth. - The description is expected to be more detailed at the time of the initial request for a PSI or when a new EDD is produced. The EDD is a PRS document that meets the requirements defined in the text and in Appendix V. - The EDD may take two forms: - (i) an existing national development plan or strategy document on the country’s PRS; or - (ii) a newly prepared document on the country’s PRS. - PRSPs issued to the Board by the time of the approval of the current PRS policy (June 22, 2015) and subject to a staff analysis in a staff report of a PSI request or review would be deemed to satisfy the requirements for EDD, but remain subject to requirements on coverage and expiration of EDD. - Staff should inform authorities early about definitions and timelines for EDD requirements (Appendix V) when a PSI-supported program is under consideration. - A PRS document is not required at initial Board consideration of the PSI request, but the first (and every subsequent) review under the PSI can only be completed if: - (a) the member has a PRS that has been developed and made publicly available normally within the previous five years, but no more than six years, and covers the period leading up to and covering the date of the completion of the relevant review; and - (b) the PRS document has been issued to the Executive Board as an EDD that has been the subject of staff analysis in the staff report of a request for a PSI or a review under a PSI. - Staff views on the PRS are to be provided in program documentation; the staff report should discuss how PSI policies contribute to the member’s PRS. - A letter of assessment of the authorities’ PRS should be requested from the World Bank and is circulated to the Board at the same time as the EDD. - Staff will report to the Board on PRS implementation, with a PRS Implementation Review (PIR) by the time of the fourth review; PRS implementation is also tracked in the member’s LOI/MEFP. ### Social and priority spending - Social and other priority spending should be safeguarded and, whenever appropriate, increased under PSI-supported programs. - This objective could be monitored through explicit program targets, for instance an indicative floor on social and other priority spending. - The definition of social or other priority spending should be consistent with the authorities’ poverty reduction and growth objectives. - If such expenditures are not tracked, program documentation could report on progress in developing a tracking system. - Staff should alert authorities that the Fund’s concessional financial support generally includes conditionality related to safeguarding social and other priority spending where feasible. ### Debt sustainability analysis (DSA) - PSI-supported programs should be underpinned by a thorough DSA to inform medium-term debt strategies and fiscal frameworks. - Country teams should engage authorities in DSA preparation, discuss results, and share final files with relevant officials. - DSAs for LICs should be prepared jointly with the World Bank; country teams should involve other relevant MDBs. Joint DSAs are required for PRGT-eligible countries that also have access to IDA resources. - As a general rule, a DSA should be produced at least once every calendar year. - A fully elaborated DSA is required at least once every three years, or whenever circumstances have changed significantly since the previous DSA; shorter annual updates in interim years are possible absent significant changes. - Full DSAs should be prepared in periods of heightened domestic, external, or global risks. - The timing of a DSA may be driven by program requirements; design of debt limits in the PSI is systematically related to assessment of debt vulnerabilities (see Appendix II). - DSAs may need to be prepared for higher access financing requests when PSI support is provided alongside RCF or SCF support. - DSAs for LICs should be presented as self-contained documents and normally prepared using the LIC DSF; for countries with durable and substantial market access, the template for market access countries can be used. - The LIC DSF analysis includes three components: - A forward-looking analysis (20-year projection) of debt and debt-service dynamics under a baseline scenario, alternative scenarios, and standardized stress tests; - An explicit rating of the risk of external debt distress (low, moderate, high, or in debt distress) based on indicative country-specific debt-burden thresholds that depend on the quality of policies and institutions in the country; and an assessment of the overall risk of debt distress; - Recommendations on a borrowing (and lending) strategy to limit the risk of debt distress, while maximizing the resource envelope to achieve the country’s development objectives. ### Collaboration with development partners - Fund staff should consult closely with all major development partners active in the country when designing and monitoring a PSI-supported program. - The JMAP approved by the Boards of the World Bank and IMF calls on Bank and Fund country teams to consult at least once a year to identify the country’s key macroeconomic and structural reform challenges and coordinate work plans (see Appendix I). ### Conditionality principles - Conditionality under a PSI assesses whether a member’s policies are strong enough to meet program objectives. - Consistent with the Fund’s Guidelines on Conditionality, conditions will normally consist of macroeconomic variables and structural measures reasonably within the member’s direct control that are: - (i) of critical importance for achieving program goals or for monitoring program implementation, or - (ii) necessary for the implementation of specific provisions of the IMF Articles of Agreement or policies adopted under them. - In some cases, conditions may be outside the Fund’s core expertise; a detailed explanation of their critical importance is required. - PSI-supported programs must meet the UCT-conditionality standard, requiring commitment and capacity by the authorities to implement policies adequate to correct external imbalances and enable repayment to the Fund within the specified maturity period if Fund resources are used or credit is outstanding under the GRA or PRGT. ### Specification of program conditions - Program conditionality will include quantitative periodic and continuous ACs, typically indicative targets and structural benchmarks, and prior actions if critical (see Appendix II for quantitative guidance). - Conditionality is set at approval and updated at program reviews; conditionality should normally be set or modified by the Board before the test date. - For establishment (or modification) of post-dated ACs, program documents must be signed and circulated to the Board with the staff report before the test date; no implementation information would be available at the Board meeting. - Prior actions: - Are measures expected to be adopted prior to Fund approval of a PSI, completion of a review, or granting a waiver with respect to an AC when critical for successful program implementation. - Are applied parsimoniously and specified in clear, objective, and unambiguous terms. - Should in principle be implemented at least five working days before the Board discussion. - Should be defined in the LOI/MEFP and cross-referenced in the relevant Board Decision. - Are expected to be used less frequently than in Fund financial arrangements. - Timing and frequency of targets: - Quantitative ACs would normally be set on a semiannual basis and tied to semiannual program reviews; quantitative benchmarks (indicative targets) would normally be specified on a quarterly basis. - Review intervals may be set differently to align with a member’s budget cycle, but the interval between scheduled review dates may not exceed six months. - There should be ACs associated with each review; conditionality should cover all test dates that fall within the 12 months after the Board meeting. - At initial approval and each review, ACs must be established for the shorter of (a) the next two scheduled reviews or (b) the remaining period of the PSI. - Typical quantitative ACs include measures of net international reserves, central bank domestic assets, domestic and fiscal balances or financing, limits on external debt, and other macro-critical indicators. - ACs are usually subject to program adjustors reflecting deviations from projected external flows. - Indicative targets should include a floor on social and other priority spending where possible, and may include other indicators such as reserve money. - Continuous ACs always include commitments related to non-introduction or intensification of exchange restrictions and on non-introduction or modification of multiple currency practices; other continuous ACs typically include the non-accumulation of external payments arrears. - Public debt conditionality would normally be required when a member faces significant debt vulnerabilities or when there are merits to using debt targets instead of, or as a complement to, "above-the line" fiscal conditionality. Borrowing plans should be included in program documents as a basis to derive quantitative debt limits. - Structural reform agenda: - PSI-supported programs normally include macro-critical structural reforms, focusing on “second-generation reforms” to enhance growth potential and capacity to manage volatility. - Structural benchmarks are critical measures serving as clear markers for assessment of progress in implementing critical structural reforms in the context of a program review. - Structural benchmarks should be used parsimoniously, with macro-criticality explicitly justified in program documents. - Specific objectives should be defined for periods covered by individual reviews, with related structural benchmarks critical for achieving program objectives. - The appropriate number of structural benchmarks depends on country-specific factors; PSI-supported programs would typically contain less than five structural benchmarks per semiannual review. - The use of structural ACs was discontinued in 2009. - Delays and modifications of structural benchmarks: - If implementation is delayed beyond the test date, the measure is found not to have been met but can be proposed to the Board as a new structural benchmark linked to the next program review if still macro-critical. - If implementation as originally defined is no longer possible, a new or modified benchmark may be appropriate if critical to program goals. ### Waivers and modifications - A waiver for nonobservance of an AC may be granted if the Fund is satisfied the program will nevertheless be successfully implemented because of the minor or temporary nature of the nonobservance or remedial actions taken by authorities. - Under the PSI, a formal waiver request from the member is not required and the staff report title need not state that waivers are proposed. - Waivers for nonobservance are approved only for quantitative ACs tied to the review being completed or for continuous ACs that have been missed. - Waivers of applicability are not possible under a PSI. If authorities do not provide data enabling observance determination or a waiver assessment, the corresponding review cannot be completed; the review will nonetheless assess performance against other ACs and program elements for which data were available. - Modifications to Board-set conditionality may be appropriate when departures from ACs are expected (e.g., basic program assumptions not realized or significant unanticipated developments), provided new targets remain macro-critical. - Requests for modifications must be submitted to the Board before the relevant test date and approved by the Board before observance information is available, normally in the context of a program review. - In exceptional cases, AC modifications can be approved by the Board outside a review if authorities and staff document common understandings through a revised or new LOI with an updated AC table (and, where relevant, TMU). Such modifications outside a review could be appropriate if original targets are no longer critical due to developments beyond authorities’ control (including staff errors). Board approval requires a staff report discussing reasons for the modification, why proposed outside the review, program status, and relevant policy understandings. ### Misreporting framework - The PSI misreporting framework is simplified compared to frameworks applicable in UFR contexts, tailored to the PSI modalities and the fact that the PSI does not entail the use of Fund resources (UFR). - Article VIII, Section 5, misreporting procedures do not apply to information provided solely for purposes of a PSI; however, they apply when such information is otherwise subject under the Fund’s Articles. - Board decisions approving a PSI or completing a review are conditioned on the accuracy of information reported by the member on performance under assessment criteria (met or waived) and on implementation of prior actions specified in the Board decision. - If evidence indicates reporting was inaccurate in relation to a PSI approved or review completed within the preceding three years, the MD shall promptly inform the member concerned. - “Inaccuracy” is interpreted as in cases of misreporting under financial arrangements (e.g., reporting an AC as met when it was not). - If, after consultation, the MD finds the member reported inaccurate information, the MD shall promptly notify the member of this finding. *Source: _022216a - 256. PSI-supported programs should be aligned with the country’s own poverty reduction and (PDF chapter/section).* ### 276. The Board’s consideration of the misreporting will normally take place at the same time as ### _022216a - 276. The Board’s consideration of the misreporting will normally take place at the same time as ### Misreporting and Board consideration - The Board’s consideration of misreporting will normally take place at the same time as the next scheduled PSI review, based on a combined misreporting/review staff report, but could take place earlier if warranted by circumstances (e.g., the review is some way off). - The Executive Board shall reassess program performance in light of the revised information associated with the misreporting. - Such a reassessment of past program performance in light of a misreporting will not lead to the Board retroactively reversing its decision completing a review, which subsequently had become associated with a misreporting. - In all cases in which the Board has determined that misreporting has occurred (except those cases found to be de minimis), relevant information on the Board decision, such as the finding of misreporting and any impact on past Board assessments under the member’s PSI, will be published. - There are no waivers in the context of the PSI misreporting framework. ### Program reviews — purpose and prerequisites - Program reviews evaluate whether the program is on track to achieve its objectives, using: - a backward-looking assessment: performance against quantitative ACs, structural and quantitative benchmarks, and prior actions; - a forward-looking assessment: prospects for successful implementation, including policy capacity and commitments to implement the UCT-quality program. - The first (and every subsequent) review can only be completed if: - (a) the member has a PRS document developed and made publicly available normally within the five previous years, but no more than six years, and covering the period leading up to and covering the date of the completion of the relevant review; and - (b) the PRS has been issued to the Executive Board as an EDD that has been the subject of staff analysis in the staff report of a request for a PSI or a review under a PSI. - Completion of a review by the Board signifies the Fund’s assessment that the program is on track; noncompletion of a scheduled review signals that the program is off track. - Noncompletion of two consecutive scheduled reviews would automatically terminate the PSI. ### Fixed review schedule and test dates - The timing of all reviews and test dates is summarized in a staff report table at PSI approval and updated as needed at reviews. - The quantitative indicator table (“AC table”) attached to the LOI/MEFP should identify ACs and indicative targets, including adjustors, for at least a 12-month period from the Board date of PSI approval or review. - The structural benchmark table should cover measures over at least a 12-month period and indicate the reviews that individual benchmarks are linked to. - The Decision attached to the staff should specify all ACs and review dates over the next 12 months from the Board date of program approval/review. - Test dates for quantitative ACs are linked to reviews that will be conducted irrespective of program implementation status; when designing test dates, alignment with the country’s budget cycle should be considered. - There is scope for flexibility in setting specific review and test dates relative to the regular cycle, provided they are scheduled at most six months apart. - The periodicity of program reviews can be timed flexibly; each review must be associated with its own set of ACs and disbursements. - Test dates must be set so that all scheduled reviews can take place before the end of the PSI period, considering reporting lags and staff report preparation/circulation periods. - All program documentation for a review should normally be issued to the Board within four months following the test date for the quantitative ACs linked to that review, and the LOI shall in any case be issued prior to the test date for the earliest periodic quantitative ACs linked to the next scheduled review. - Note: The staff report can be issued up to one month after that test date. - Board discussion of the review would normally occur two weeks after issuance of such documentation. - The program period supported by a PSI would typically start somewhat before the Board approves the PSI, and three to six months before the first test date under semiannual monitoring; the program period should normally not start more than three months prior to the Board meeting. - When a member implementing a PSI also has an SCF arrangement, program reviews under the SCF should be scheduled at the same time as PSI reviews and performance criteria under the SCF shall normally be established for the same test dates (and apply to the same variables and measures) as ACs under the PSI. - A single set of documents related to PSI and SCF reviews should normally be issued to the Board. - Shifting a PSI to the SCF review schedule would require amending the approved PSI. ### Noncompletion of reviews and restoring program track - If performance is not sufficiently strong or forward-looking elements cannot be agreed, a staff report must still be circulated to the Board normally within four months of the test date of the periodic ACs linked to that review and in any event prior to the test date linked to the next scheduled review. - The staff report will assess performance relative to program objectives, indicate areas of divergence between staff and authorities, and recommend that the review not be completed at this time. - The staff appraisal will elaborate on steps needed to bring the program back on track where possible. - The normal procedure for indicating an off-track program has been brought back on track is completion of the next scheduled review (assessment criteria are required to be set for two upcoming test dates). - Corrective action is required to bring a PSI-supported program back on track after an uncompleted review. - Staff assessment letters can be used to fill information gaps between scheduled reviews. - Returning to an uncompleted review is possible but very rare because related documentation would have to be issued to the Board prior to the test linked to the review; this option is not available if the review is the second consecutive uncompleted scheduled review. - Noncompletion of two consecutive scheduled reviews (or, if concurrent with the SCF, if no scheduled review is completed within 12 months of the completion of the last scheduled review) signifies the lack of Board endorsement and the PSI would automatically lapse as of the date of the Board’s second consecutive decision not to complete a scheduled review. - An SMP may be appropriate, in some circumstances, to reestablish a track record for a future Fund-supported program under the PSI, SCF, or (in rare cases) ECF after a PSI has terminated in this fashion. ### Other relevant policies applying to the PSI - Ex-Post Peer Review Assessments: - Engagement under the PSI does not count toward determining the policy on LTPE. - For members interested in a PSI that require an ex post peer review assessment, it is expected that the assessments would be conducted and presented to the Executive Board at the time of the request for a PSI. - PPM: - Engagement in a PSI would provide an alternative vehicle for PPM for members subject to such monitoring in light of outstanding obligations to the Fund. - Members with a PSI would be treated similarly to members with programs supported by a Fund financial arrangement or SMPs for PPM purposes. - PSI staff reports should include a section on the member’s capacity to repay the Fund in such cases. - Article IV cycle: - The 24-month cycle for Article IV consultations applies to members with a PSI. - Article IV consultations with members that have an on-track PSI would be expected to be completed within 24 months after the completion of the previous Article IV consultation. - If a program review is not completed by the date specified in the arrangement, the next Article IV consultation would be expected to be completed by the later of: - (i) six months after the scheduled review date; and - (ii) 12 months plus a grace period of three months after the previous Article IV consultation, - unless the program review has been completed prior to the later of these two dates, in which case the 24-month cycle continues to apply. - A member that has completed a PSI by completing all reviews may remain on the 24-month cycle if it does not meet any of the criteria in paragraph 2 of Decision No. 14747-(10/96): (i) the member is of systemic or regional importance; (ii) the member is perceived to be at risk, or is facing pressing policy issues of broad interest to the Fund membership; or (iii) the member has outstanding Fund credit exceeding 145 percent of quota. - At the time of the final review under the PSI, staff should assess whether the consultation cycle should be shortened back to 12 months based on these criteria; the staff report for the final review should seek the Board’s approval of such shortening when appropriate. - Where the PSI is cancelled by the member or expires with uncompleted reviews, the member will remain on the existing cycle unless the Executive Board determines otherwise based on specified criteria. - Exchange system obligations and data provision: - Requirements under Article VIII Sections 2, 3, 4, and Article XIV are discussed in IMF (2006d). - A standard continuous AC applies inter alia to the non-introduction or intensification of exchange restrictions and to the non-introduction or modification of multiple currency practices. - HIPC: - Countries with unsustainable external debt situations that qualify for HIPC debt relief would not meet the qualification standard for a PSI; PSI-supported programs are not included in the programs specified by the PRGF-HIPC Trust Instrument for establishing track records toward the HIPC decision or completion points. - Side letters: - Use of side letters in LIC programs has been extremely rare. - Side letters may be used when release of information on policy understandings at the time of a program request or review would cause adverse market reaction or undermine authorities’ efforts to prepare domestic groundwork for a measure. ### Appendix I — Documentation and review process (selected points) - All staff papers concerning the UFR, other program support (PSI and SMP) and surveillance for a particular country are prepared by area department-led mission teams. The area department and SPR have joint responsibility for clearance prior to submission to management; the review process also involves LEG and FIN. Other functional departments will review according to their internal rules and follow the review-on-demand principle. - Pre-mission: - Early consultation: mission teams are encouraged to consult informally with SPR (and if relevant FIN or LEG) at an early stage for information on policies, instrument choice, access and phasing, PRS and DSA requirements, early Board briefings, safeguards, external arrears, financing assurances, misreporting, exchange restrictions, as applicable. - Policy Note (PN): area departments will prepare a PN for policy discussions. The PN should include: - (i) background diagnostics (including recent developments), - (ii) the economic outlook, - (iii) the staff’s and the authorities’ positions on key policy issues, - (iv) program objectives and design where relevant, and - (v) risks and mitigation measures. - The PN should include the standard set of macroeconomic tables and supportive charts; divergences of views with reviewing departments should be flagged in the PN. The final PN should be sent to management for clearance. - Standard macroeconomic and program tables to be included: - (a) selected economic indicators; - (b) government accounts (in national currency and percent of GDP); - (c) monetary survey (central bank accounts and commercial bank accounts); - (d) balance of payments. - Program tables should include: - (a) a table with quantitative conditionality (the “PC table”) covering (i) previously established targets and outturns (PCs and indicative targets) over at least the past 12 months, (ii) PCs established for the next 12 months (from the expected Board date), and (iii) indicative targets through the end of the calendar year (or fiscal year) for which policies are being discussed; - (b) a structural benchmark table covering (i) implementation status of previously established benchmarks and (ii) benchmarks covering the next 12 months, highlighting timing and macro criticality; - (c) a table with the approved and proposed schedule of disbursements and reviews; - (d) financing requirements and sources; and, in the case of new financing requests or augmentations, or if the macroeconomic environment has changed significantly, - (e) the member’s capacity to repay the Fund. *POLICY SUPPORT INSTRUMENT — INTERNATIONAL MONETARY FUND* ### 5. Area departments are encouraged to attach background material in the form of concise and ### _022216a - 5. Area departments are encouraged to attach background material in the form of concise and ### Background material and attachments - Area departments are encouraged to attach background material as concise and focused appendices to the PN, including: - analytical underpinnings of program design, - exchange rate assessment, - HIPC/MDRI issues, - others as applicable. - Where a DSA is required, the DSA graph and tables should be attached to the PN. - Attaching draft staff reports is not encouraged. - Area departments can request cross-country information and analysis from functional departments; to obtain timely input they should informally contact functional departments about one to two months before the scheduled mission. ### Policy Note (PN) requirements and circulation - A full PN (typically three–four pages of text, see Section F) is required for all missions, staff visits, and authorities’ visits with substantive policy discussions that are not mostly covered in a previously cleared PN. - Shortened PN is appropriate when continuing policy discussions based on a previously cleared full PN; it should include: - a brief update on recent developments, - the status of discussions, - justification for any proposed changes to the previous PN, if relevant. - For technical or information-seeking staff visits, a short memorandum circulated for information only is sufficient provided area departments and SPR agree there is no change in policy line or economic circumstances since the last staff report and/or PN. ### Policy Consultation Meetings (PCM) and review process - A PCM should be held approximately two to three weeks prior to missions to establish the likely final PN, discuss issues, and ideally reach agreement. - Review departments should ensure appropriate representatives attend; functional departments may send technical experts (with status made clear). - All policy issues should ideally be raised at the PCM and not opened subsequently; PCM participants are encouraged to confirm shared understanding at meeting end and work interactively to finalize the PN. - Reviewing departments are encouraged to circulate cross-country and technical analyses ahead of the PCM and give an informal heads up of issues they intend to raise (avoid extensive written comments). ### Cover memorandum for PN and management clearance - The final PN should be sent to management for clearance with a cover memorandum that provides concise and candid information on: - (i) key issues—economic situation, including vulnerabilities to an external or financial crisis; - (ii) staff’s main recommendations; - (iii) main issues raised in the review process, including reconciliation of diverging departmental views as appropriate; - (iv) any controversial aspects. - The cover memorandum should clarify the requested management action. - SPR will review the cover memorandum but does not “clear it”—departmental disagreements should be fully reflected. - Appendix Table 1 indicates management clearance processes by circumstance (e.g., Systemic, vulnerable, new program, or exceptional access countries; Lapse of Time basis; Meeting with Management when major differences exist). ### On-mission documentation: LOI, MEFP, TMU, and side letters - LOI/MEFP: - Required for new financing/program requests and program reviews. - LOI must be signed by representatives responsible for formulating and implementing policy commitments in the LOI/MEFP (standard practice: minister of finance and governor of central bank, though exceptions exist). - For routine program reviews, a detailed LOI could sometimes obviate the need for an MEFP (presuming a previous MEFP covered the next 12-month period). - The LOI/MEFP should usually contain: - (i) a table with quantitative performance criteria (PCs) covering the next 12 months (from the Board date) and indicative targets extending through the end of the calendar year (or fiscal year) for which policies are discussed; - (ii) a structural benchmark table with benchmarks covering the next 12 months, highlighting timing and macro criticality.2 - LOI should include the standard consultation clause on consultations ahead of any revisions to MEFP measures. - LOI/MEFP should specify how the program advances poverty reduction and growth objectives; more detailed at initial program request or when a new EDD is transmitted to the Executive Board. - Draft LOI/MEFP should be discussed during the mission; authorities should not sign the LOI prior to management approval (understandings reached with staff are ad referendum). - Technical Memorandum of Understanding (TMU): - For new program/financing requests, the LOI/MEFP must be accompanied by a TMU that clearly and precisely defines the PCs under the program, including definitions of indicators, coverage of government and monetary authorities, exchange rate valuation for program purposes, program adjustors, data submission requirements, etc.3 - Standard language on the definition for external debt should be included.4 - Side letters: - Rare in LIC programs; may be used when release of information at time of program request or review would cause adverse market reaction or undermine authorities’ domestic groundwork.5 ### Communication outputs: Concluding Statement and Press Release - Concluding Statement: - Summarizes discussions between country authorities and IMF staff team. - Agreed by country authorities and IMF mission team. - Can be posted on the IMF website if desired by the country authorities and mission team. - Standard practice for Article IV missions is to leave a Concluding Statement with authorities recapitulating mission assessment and policy advice. - End-of-mission Press Release: - Often useful when understandings on a new financing/program request or program review are reached. - Staff should inform authorities of intention to issue a press statement. - Missions are encouraged to inform COM country press officer or Media Relations of press plans and should clear the written statement before release. - Mission should give authorities opportunity to review the draft press statement. ### Post-mission work: Back-to-Office Report and Staff Report requirements - Back-to-Office Report (BTO): - Mission chief should send a BTO to management within two working days of the mission's return to headquarters. - BTO should be short (up to two pages), mention nature of mission (with mission members listed in a footnote), and the key issues, with an attached Selected Economic Indicators table. - Staff Report: - Required for an Article IV consultation, initial program or financing request, and at each program review (includes ECF, SCF, RCF, PSI, and SMP). - Short staff reports to the Board required where program design is modified between reviews. - Staff reports should include: - (i) background diagnostics (including recent economic and political developments); - (ii) the economic outlook, including downside risks and debt vulnerabilities (referring to the most recent DSA); - (iii) the authorities’ policy objectives and plans; - (iv) a staff appraisal of the key policy issues. - Staff appraisals should recommend approvals where applicable (waivers of nonobservance of PCs, extension of arrangement, augmentation, rephasing, modification of existing PCs) with justification built on material in the main body. - For combined UFR and Article IV staff reports, Article IV coverage must remain comprehensive and address critical medium- or longer-term policy issues. - Staff reports for members subject to safeguards assessments and monitoring should include a summary safeguards paragraph in the main body on status and significant recommendations. - Program documents for initial requests (ECF, SCF, RCF, PSI) should set out overall program objectives and specific policy understandings, explain choice of instrument, determination and phasing of access, and design of conditionality.8 - Program staff reports should discuss key near-term policy goals and commitments (typically over the next 12 months), and program financing.9 ### Staff report tables and attachments - Macroeconomic tables required in staff reports: - (a) selected economic indicators; - (b) government accounts (in national currency and percent of GDP); - (c) monetary survey (central bank accounts and commercial bank accounts); - (d) the balance of payments. - Include a standard table on Millennium Development Goals (MDG) indicators about once a year (normally in Article IV and new Fund-supported program staff reports). - For program requests or reviews, staff report tables should also include: - (a) approved and proposed schedule of disbursements and reviews; - (b) financing requirements and sources; - (c) in case of new financing requests or augmentations, or if macroeconomic environment has changed significantly, the member’s capacity to repay the Fund.10 - In cases of significant macro-environment change, the staff report should include staff’s qualitative assessment of capacity to repay. ### LOI/MEFP tables and structural benchmarks - LOI/MEFP attached to program requests or reviews should include: - (a) a PC table that covers: - (i) previously established targets and outturns (PCs and indicative targets) over at least the past 12 months—or alternatively, reporting on past performance relative to quantitative targets can be included as a separate table in the staff report; - (ii) PCs established for the next 12 months (from the expected Board date); - (iii) indicative targets through the end of the calendar year (or fiscal year) for which policies are being discussed; - (b) a structural benchmark table covering: - (i) implementation status of previously established benchmarks—or alternatively, reporting on status can be included as a separate table in the staff report; - (ii) benchmarks covering the next 12 months, highlighting timing and macro criticality. ### Management Clearance Memo and DSA - Management Clearance Memo: - Clearance of staff reports is based on a clearance note that: - states main issues addressed, - lays out any differences in views among departments, - explains significant deviations from the PN, - highlights potentially controversial issues. - A copy of the staff report’s Executive Summary should be attached. - Debt Sustainability Analysis (DSA): - A Joint Bank-Fund low-income country DSA (LIC DSA) should be prepared once a year for PRGT-eligible countries that also have access to IDA resources.11 - A DSA (or DSA update) may be required to support proposed level of access (see Handbook Chapters on ECF, SCF, RCF). - Main conclusions of the DSA and its update should be discussed in the body of the staff report. - DSA or update is subject to the same review process as a staff report and, when finalized, if not published stand-alone, should be included as a supplement to the staff report. - Final versions of DSA files (external and fiscal templates) should be submitted to the SPR review box at the time the DSA (and staff report) is sent to the Board. ### Annexes, Summing Up, and Chairman’s Statement - Informational Annex: - Should be issued as a supplement to ECF, SCF, RCF, PSI, SMP, and Article IV reports. - Comprises Relations with the Fund and Bank-Fund Collaboration, including the JMAP matrix, and Relations with other Multilateral Institutions if applicable. - A Statistical Issues annex should be included at least for Article IV reports. - Annexes are subject to departmental review but do not require management clearance. - Annexes should not be attached to the staff report; at the time of staff report issuance to the Board, annexes should be sent to SEC and posted on the web as a supplement. - Summing Up/Chairman’s Statement: - All stand-alone UFR discussions and combined UFR with Article IV discussions require both a Summing Up and a Chairman's Statement (Table 4). - Summings Up are read out for directors' comments at Board conclusion; should summarize issues clearly, avoid overly long sentences or long lists of topics/acronyms, and include a clear forward-looking element. - Summing Up should cover: recent economic performance or performance under the program, the economic outlook, risks and challenges, and macroeconomic and structural policy issues; for program countries, include critical elements for program success. - Chairman's Statements are prepared after the Executive Board adopts a decision regarding a country's use of Fund resources or completes discussion about HIPC/PRSP matters; intended to inform the public of the Board's decision and overall policy message, conveying a few (three to four) points on which the Board placed emphasis and not attributing statements to directors. - Staff should exercise caution when referring to highly market-sensitive issues. *Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2016/_022216a.pdf* ### Appendix Table 2. Summing Up, Chairman’s Statement, and Press Release ### Appendix Table 2. Summing Up, Chairman’s Statement, and Press Release ### Document issuance matrix - Stand-alone UFR: Summing Up — Yes; Chairman's Statement — Yes; Press Release — No - Combined UFR with Article IV: Summing Up — Yes; Chairman's Statement — Yes; Press Release — Yes - Combined Ex Post Assessment/UFR: Summing Up — Yes; Chairman's Statement — Yes; Press Release — Yes - Stand-alone Post Program Monitoring or Ex Post Assessment: Summing Up — Yes; Chairman's Statement — No; Press Release — Yes *Press Release process and related notes (paragraph 25)* - COM issues Press Releases for new arrangements and reviews, containing the Chairman’s statements. - Area Departments prepare the background section, to be reviewed by SPR upon demand. - COM prepares the initial draft, including the Chairman’s statement, and requests comments from the area department, LEG, FIN, and the executive director of the country in question. - Note: Public Information Notices (PINs) ceased on July 2013 and have been consolidated into the Press Releases series. ### Staff statements and circulation (paragraph 26) - Staff statements: prepare as needed if new or additional information becomes available after submission of the staff report and before the Board meeting. - The statement must explicitly mention whether the new information changes the thrust of staff’s assessment in the staff report. - Clearance and circulation: send to SPR for clearance; send to management for their information and SEC for Board circulation at least four days before the Board meeting. ### Ex post peer review assessments and LTPE (paragraph 27) - Requirement: An Ex Post Peer Reviewed Assessment is required for all members considered as having LTPE, defined as having in place a Fund-supported financial arrangement for at least seven of the past 10 years. - Time spent under the PSI and arrangements treated as precautionary does not count towards LTPE. - For members identified as meeting LTPE and lacking an EPA or ex post peer review assessment in the past five years, an Ex post peer review assessment should be prepared if a successor arrangement is contemplated and considered by the Board at the time of a request for a new arrangement. - Timing: Staff should conduct an ex post peer review assessment at the beginning of successor program negotiation or during the Article IV consultation, whichever is earlier, and incorporate lessons into new program design. - Circulation: staff should circulate draft assessment report to departments together with the PN for discussion of a successor arrangement or Article IV consultation, whichever is earlier. - Presentation: Ex post peer review assessments should be presented to the Executive Board as part of the staff report for request of a new program (i.e., as an annex or in the main text). ### Joint Bank-Fund LIC DSA (paragraph 28) - Applicability: A Joint Bank-Fund LIC DSA should be prepared annually for PRGT-eligible countries with access to IDA resources. - Frequency and scope: - A fully elaborated DSA is required at least once every three years, or whenever circumstances have changed significantly since the previous DSA. - Shorter annual updates in interim years possible if no significant changes. - Full DSAs should be prepared in periods of heightened domestic, external, or global risk. - A DSA or DSA update may be required to support the proposed level of access. - Format and content: - DSAs should be prepared as self-contained documents, normally issued as a supplement to staff reports. - They should include a clear description of macroeconomic assumptions without referring to the Fund staff report to which they are a supplement. - Full DSAs should be concise (four to five pages, excluding figures and tables or any appendices). - LIC DSA updates (between full DSAs) are lighter exercises: very short write up covering important changes from the previous DSA and including the usual set of tables and charts. - Governance: - All DSAs must be prepared jointly by both institutions and submitted to both the IMF’s and World Bank Executive Boards (for discussion or information). ### PRS documentation (EDD) (paragraph 29) - For the ECF and PSI, an Economic Development Document (EDD) is required to be issued to the Board for completion of the first and subsequent reviews. - The PRS covered in the EDD must have been developed normally within five years but no more than six years leading up to and covering the relevant review. - An assessment of the country’s PRS must be requested from World Bank staff and circulated to the Fund Executive Board for information. ### Joint Management Action Plan (JMAP) (paragraph 30) - Purpose: Bank and Fund country teams document the results of an annual consultation in a joint memorandum for the file. - Memorandum should identify: - (i) key macroeconomic and macro-critical structural challenges facing the country; - (ii) policies and reforms to address these challenges and each institution’s priorities for supporting these reforms; - (iii) respective work plans and outputs for the next 12 to 24 months, with tentative mission schedules and delivery dates summarized in an “action matrix” appended to the memorandum; - (iv) information, analytical cross support, and other inputs (e.g., assessment letters) needed from institutional counterparts, including agreed delivery dates; - (v) any substantive disagreement on any of the above issues. - When a Fund team prepares a staff report, document Bank-Fund Collaboration in the appendix to the staff report (can be an appropriately reformatted version of the memorandum; procedural details of little interest to the Board can be deleted). ### Review of joint Fund-Bank documents (paragraph 31) - Staff of both institutions should communicate at the outset to discuss review requirements and agree on a coordinated timetable for joint documents requiring review by both institutions and consideration by their Boards. ### Assessment Letters (paragraph 32) - Typically produced in response to requests from multilateral or bilateral donors or creditors (e.g., World Bank), or sometimes from the member country. - Content requirements: - Clear and candid assessment of the member’s macroeconomic conditions and prospects, and of macroeconomic and related structural policies. - Specifically should: (i) identify existing macroeconomic imbalances and structural distortions; (ii) indicate to what extent current and planned policies are dealing with or contributing to these imbalances and distortions; (iii) highlight policy areas with major outstanding concerns. - To the extent possible, derive from and be consistent with the most recently available report (PNs, staff reports, etc.). - Include an account of the Fund’s relations with the member country, including, where relevant, program discussions. - May not include language directly encouraging or discouraging assistance from donors. - Procedures: - Subject to the same SPR review and clearance as program-related documents. - Require management approval. - Circulation to the Board for information is required at the time of external dissemination. - Publication on the IMF external website or by recipient institutions is allowed only with the consent of the authorities. ### HIPC documents (paragraph 33) - Sequence when a country requests HIPC assistance: preliminary HIPC document, decision point document, completion point document. - HIPC documents, including HIPC DSAs, are produced jointly with the Bank and reviewed by both institutions; standard Fund procedures apply for review, clearance, and submission to the Board. ### Disbursements between reviews under SCF arrangements (paragraph 34) - Conditions for a country to draw previously approved but undrawn amounts between reviews: - (i) its representation of a balance of payments need meets the requirements of the PRGT instrument; - (ii) the most recently scheduled review under the arrangement prior to the request has been completed; - (iii) available information indicates that its continuous PCs are being met. - Trust Instrument: precludes staff from challenging a member’s representation of a balance of payments need prior to providing the requested disbursement; if the Board later decides the disbursement took place in the absence of a need, it could seek repayment with interest normally within 30 days of its decision. - Procedure: Member must send a letter to the MD communicating and explaining the decision; staff will circulate a short note for information to the Board attaching the authorities’ letter; a press release is issued shortly afterwards. ### Length limits for country documents (paragraph 35) - Management-approved limits applying for notes/reports sent to management on or after September 1, 2014; documents should indicate actual word count and applicable limit in the cover note and reasons for significant deviations. - Policy notes limits (in words): - Typical surveillance and on-track programs: 2,800 - High vulnerability, G20 country and other global financial center, program request, program cases that are off-track, and combined AIV/UFR-PSI-SMP: 3,600 - Attachments (indicative limit; not for Management clearance): 6,000 (or draft staff report, consistent with limits below) - Staff Reports limits (excluding annexes): - Stand-Alone AIV: regular: 6,000 - Stand-Alone AIV: G20 and global financial center: 9,500 - Stand-Alone UFR, PSI, SMP: request: 6,000 - Stand-Alone UFR, PSI, SMP: review: 5,000 - Exceptional access UFR: 9,500 - Combined AIV/UFR-PSI-SMP: 9,500 - Annexes (indicative limit; excluding DSA, informational annex, LOI, MEFP, TMU, and proposed decision): 2,000 - Note: Limits exclude the cover page/memo, (text) tables, (text) figures, the RAM, the ESR country page, and annexes regarding follow up to previous staff AIV advice or FSAP recommendations. ### Chronological steps of mission-related work (Appendix Table 3 — selected timing and actions) - 1–2 months before mission (T-75): Preparation of policy note — team collects information, conducts policy analysis, prepares macroeconomic framework and drafts PN with full set of tables and background notes. - 3 weeks before mission (T-58): Draft policy note — at least three days before PCM, country team sends draft PN to SPR and other departments; include all relevant background materials, including a draft DSA if required. - 2–3 weeks before mission (T-54): Policy Consultation Meeting (PCM) — hold PCM; reviewing departments indicate key issues they wish to discuss approximately a day ahead. - 1.5 weeks before mission (T-50): Department review of revised policy note/PRMED revised preliminary review — circulate revised PN to SPR with cover note; allow at least 1 day for review and clearance. - 1 week before mission (T-48): Revised policy note to management — Fund management reviews and clears revised PN; allow full 3 business days for management clearance and another 1–2 days for answering questions. - (T-43) Start of Mission - (T-33) End of mission — reach understandings ad referendum on a LOI/MEFP; LOI and MEFP reviewed with the Staff Report; missions typically issue a Press Statement cleared with COM. - 2 days after return to HQ (T-31): Back-to-office (BTO) — mission chief sends BTO to management under cover from the department director; BTO is copied to reviewing departments. - (T-21) Department review of Staff Report, LOI/MEFP — area department sends Staff Report and supporting documents to departments for review; allow a full 3 business days. - (T-15) Clearance memo and Executive Summary of Staff Report to Management — management clears Staff Report and related documents; provide full 3 business days for clearance, allow 1 day for questions, 0.5 days for SEC issuance. - (T-10) Circulation of Staff Report to Board — country’s ED would need to request a waiver if the staff report is issued to the Board later than 2 weeks prior to the Board meeting (plus 1 day grace). - (T-3) Staff Statement to SPR — SPR will review and clear staff statements in one working day. - (T-2) Summing Up, Chair Statement, and PIN to SEC — SEC will pro forma clear prior to submission to management. (Note: PINs are only required for combined UFR and Article IV reports.) - (T-1) Staff Statement to SEC — SEC will circulate statements to the Board. - T Board Meeting 1/Staff Report subsequently published (given authorities' approval). ### Quantitative conditionality for LIC programs (Appendix II — periodicity and definitions) - 1. Periodicity: Quantitative performance criteria (“PCs”)—or assessment criteria (“ACs”) in the case of the PSI—shall be phased no more than six months apart. - In practice, PCs are usually set on a semiannual basis and tied to semiannual program reviews. - Quantitative benchmarks (indicative targets) are normally specified for the intervening quarters. - PCs and reviews could be at quarterly intervals when closer monitoring is helpful (e.g., significant short-term volatility and/or uncertainty). - Some flexibility exists in aligning test dates with national budget/reporting cycles, as long as deviations are minor. - 2. Coverage: Quantitative periodic conditionality should cover all test dates falling within the 12 months after the Board meeting (initial approval or review). - Under semiannual monitoring, PCs would normally be established for two future test dates at approval and at each review (except penultimate and final reviews). - The PC table attached to the LOI/MEFP should identify PCs, indicative targets, and adjustors for at least a 12-month period from the Board date. - Indicative targets should extend through the end of the calendar year (or fiscal year) for which policies are being discussed. - 3. Definitions: Precise definitions of PCs should be set out in a TMU attached to the LOI. - PCs and indicative targets for main economic and financial indicators should be defined simply and clearly to facilitate quick measurement. - 4. Measurement: Quantitative periodic conditionality is normally set as cumulative flows or changes in stocks from a single reference date (normally the beginning of a calendar or fiscal year) through each test date. - The first reference date is set at approval of a new financial arrangement or PSI. *Italic: Appendix Table 2. Summing Up, Chairman’s Statement, and Press Release — content unit _022216a* ### APPENDIX II. QUANTITATIVE CONDITIONALITY ### APPENDIX II. QUANTITATIVE CONDITIONALITY ### A. General design of quantitative performance criteria (PCs) and indicative targets - Reference dates for end-quarter PCs would have to coincide with or predate the start of the program period. The reference date would usually be moved ahead by one year on an annual basis. - Certain indicative targets (for instance on monetary aggregates or international reserves) may be set as period averages (e.g., over a number of days before or after the end-quarter date). - Quantitative PCs typically include measures of: - net international reserves, - central bank domestic assets, - domestic and fiscal balances or financing, - limits on external debt, where applicable, - non-accumulation of external payments arrears, - and any other macro-critical indicators. - PCs are often subject to program adjustors that reflect deviations from projected external flows. - Indicative targets should include a floor on social and other priority spending where possible. ### B. Fiscal targets - Programs should have fiscal PCs and indicative targets based on appropriate analytical fiscal indicators and with the desired institutional coverage. - Coverage and level: - Most targets are specified at the level of the central government or the general government. - The general government is the appropriate choice where sub-national governments have major fiscal responsibilities and relevant data are available. - Fiscal PCs should generally cover both budgetary and extra-budgetary activities of the government. - The TMU should provide a clear definition of what is included in the term “government” (e.g., central, central and local, or including nonfinancial public organizations). - Choice of fiscal anchor: - The general stance of fiscal policy (the program’s near-term fiscal anchor) is normally monitored through a PC on either: - a credit aggregate (e.g., net domestic financing of the government or net banking system credit to the government), or - a deficit measure (e.g., the overall deficit or the primary deficit of the government), or - some combination of the above. - Where a program addresses broad macroeconomic concerns, a deficit measure is a more appropriate basis for a PC. - The overall deficit excluding grants often guides impact on aggregate demand and inflation; the overall deficit including grants reflects the government’s borrowing requirement and debt accumulation. - In many LICs, the near-term fiscal anchor focuses on domestic revenues and spending (excluding more volatile receipts and outlays related to donor support). - Countries with relatively high capacity may focus on the overall fiscal deficit. - Oil exporters may focus on non-oil balances. - Adjustors and alternatives: - Adjustors may be used to correct for volatile or one-off flows. - Where debt sustainability is a concern, the primary fiscal balance is sometimes used as an alternative to the overall balance. - It may be appropriate to set (typically indicative) fiscal targets on domestic revenue, domestic arrears, or on social and other priority spending. - Measurement and reconciliation: - The PC measuring the general stance of fiscal policy is often measured using “below-the-line” financing data. - Above-the-line targets have advantages for ownership and transparency, but financing data are usually available more frequently, more timely, and of better quality. - Revenue and expenditure data should be monitored to establish an above-the-line fiscal deficit that can be reconciled with below-the-line financing data. - Exceptional receipts: - Exceptional receipts (e.g., proceeds from privatization or from a petroleum fund) should normally be defined as a financing item for program purposes, though provisions may allow some or all of these resources to be spent, where appropriate. - Underlying economics should guide treatment (one-off receipts should not be used to finance permanent expenditure increases). - Social and priority spending: - Social and other priority spending should generally be safeguarded in Fund-supported programs in LICs. - This should be monitored through explicit program targets, typically an indicative floor on social and other priority spending, whenever possible. - Definitions should be consistent with the authorities’ poverty reduction and growth objectives. - Where tracking is not feasible, program documentation should report measures to develop tracking systems and staff should monitor progress; structural benchmarks may be included where appropriate. ### C. Monetary targets - Typical monetary PC: - Monetary developments are normally monitored by a PC on net domestic assets (NDA), either of the central bank or the banking system (central bank more likely in many LICs). - NDA of the central bank may be defined as reserve money minus net international reserves or reserve money minus net foreign assets. - Indicative monetary targets: - It may be appropriate to include an indicative target on reserve money, banking sector credit, or broad money when money or credit growth is of significant concern for inflation or banking system stability. - A few Fund arrangements have set a PC on reserve money instead of NDA; choice depends on program priorities, monetary regime, and trade-offs between protecting/increasing NIR and controlling inflation. - Money targets set as PCs should include an adjustor for changes in the reserve requirement, if applicable. - Monetary policy consultation clause (MPCC): - To provide flexibility and incentives for development of a coherent monetary framework, a review-based MPCC could be used in Fund-supported programs. - Suitable where countries have evolving monetary frameworks with minimal fiscal dominance, relatively low and stable inflation, good track record of implementation, and commitment to strengthening policy framework. - Under the MPCC: - Monetary conditionality includes a quantified macroeconomic framework with quarterly or semiannual monetary aggregate or inflation targets set normally within a single tolerance band, assessed during program reviews. - Deviations from the band trigger consultation with the Executive Board as part of the general review, focusing on: (i) broad assessment of monetary policy stance and program track; (ii) reasons for deviations and compensating factors; (iii) proposed remedial actions. - When consultation is triggered, access to Fund resources would be interrupted until the consultation and program review are completed. - Programs would include a NIR floor, as a PC, to maintain external sustainability and safeguard use of Fund resources. - Indicative targets related to monetary policy (e.g., on NDA or credit to the government) could be included to address country-specific risks. - If inflation is the central target variable, a narrower inner band could be used as an early warning mechanism triggering an informal consultation with Fund staff. - Monetary ceilings are not required in programs with a currency board arrangement or for countries in a monetary union, except where the rules give member countries some control over credit growth—then a monetary ceiling may be included. ### D. Targets for international reserves - Typical reserve PC: - Developments in international reserves are normally monitored by setting a floor on official (the central bank’s) net international reserves (NIR). - The PC definition should specify the precise coverage of the monetary authority, particularly where this differs from net foreign assets on the central bank balance sheet. - Composite aggregates with direct budget financing: - In programs with Fund disbursements made directly to a Treasury account at the central bank, a composite central bank–Treasury aggregate should be used. - NIR (and NDA) as PCs should combine central bank and Treasury positions to reflect that central bank gross reserves increases may coincide with increased Treasury liabilities to the Fund. - Usability and exclusions: - NIR should include only convertible, liquid, and unpledged (unencumbered) assets that constitute claims on nonresidents, net of short-term foreign liabilities that are public or publicly guaranteed. - The outstanding stock of Fund credit is netted out to ensure members cannot meet/miss a PC by purchasing/requesting loans from the Fund. - Assets that are the counterpart to foreign currency reserve requirement liabilities (foreign currency liabilities of the central bank to domestic commercial banks) are often excluded since they are not usable for balance of payments purposes or under authorities’ control. - Foreign liabilities are defined as loan, deposit, swap, and forward liabilities to residents and nonresidents whose value is guaranteed in foreign currency terms (denominated or indexed). - The TMU should specify if liabilities to participants to the SDR department are included. - Valuation effects: - Valuation effects from exchange rate changes or gold price changes should be excluded when defining NIR floors. - The set of exchange rates and gold valuation used for NIR calculation should be specified in the TMU. - Constant accounting exchange rates should be used to avoid implying forecasts; accounting exchange rates should be based on those prevailing at some recent, easily-checked date (e.g., the end of the previous year) and may be updated periodically during the life of an arrangement. - Currency board and monetary union: - For currency board arrangements, the monetary authority ensures maintenance of full foreign reserve backing for the currency board’s liabilities for the program duration; the PC definition should specify exact coverage. - Floors on international reserves are not required for a country that is a member of a monetary union. ### E. Public debt limits - Purpose and reform: - Public debt limits in Fund-supported programs and PSIs seek to prevent unsustainable debt build-up while providing flexibility to raise financing for productive investments. - The policy was last reformed in 2014 and the new guidelines became effective in June 2015. - When to include public debt conditionality: - Public debt conditionality should normally be included in Fund arrangements and PSIs when a member faces significant debt vulnerabilities, or when there are merits to using debt limits instead of, or as a complement to, "above-the-line" fiscal conditionality. - The appropriate form of debt conditionality differs between countries that normally rely on concessional external financing and those that do not. - For countries normally reliant on concessional external financing (LIC-DSF): - A Debt Sustainability Framework for Low-Income countries (LIC-DSF) assessment is typically conducted jointly by World Bank and Fund staff. - Assessment is informed by risk of external debt distress and, where relevant, overall risk of debt distress. - Policy applications by risk category: - Low risk of external debt distress: limits on external public debt would typically not be required as part of program conditionality. - Moderate risk of external debt distress: program conditionality would include a PC on the present value of new external debt. The PC would cover all forms of external debt (non-concessional and concessional) and would be specified in present value (PV) terms (except under circumstances identified in sub-sections (d) and (e) of the original policy). - High risk of external debt distress (or in debt distress): non-concessional external debt allowed only under exceptional circumstances; program conditionality would include a PC on the nominal level of non-concessional external debt, and a performance criterion or indicative limit on the level of concessional external debt. - Exceptions for weak monitoring capacity: - Where monitoring capacity is weak, pending improvements, debt conditionality would take the form of a PC specified in nominal terms on non-concessional external debt, coupled with a memorandum item on the nominal level of concessional external debt (made explicit in the conditionality table). - Exceptions for countries with significant links to international capital markets: - For moderate risk countries, there may be operational advantages to monitoring debt accumulation through a PC on total nominal public debt rather than separate limits on domestic and external debt. - For high risk countries with significant market links, limits would be set as a PC on nominal level of foreign currency non-concessional debt and a PC or IT on nominal level of foreign currency debt. - Domestic borrowing: - Debt conditionality explicitly covering domestic borrowing would be warranted where the overall risk of debt distress signals significant vulnerabilities related to domestic public debt unless accumulation is already adequately captured by fiscal conditionality. - For countries not normally reliant on concessional external financing (MAC DSA): - Debt sustainability assessments use the debt sustainability framework for market-access countries (MAC DSA). - Public debt limits for these countries would typically be established in nominal terms and could take the form of limits on total public debt or limits on sub-categories of total public debt. ### F. Definitions and coverage related to public debt limits - Public sector debt should normally cover public and publicly guaranteed debt and would typically refer to debt of the nonfinancial public sector. - The criterion to define external debt (residency or currency) depends on country circumstances: - Residency criterion appropriate for countries with relatively closed financial accounts or very limited financial integration. - Currency of denomination criterion could be used for countries with intermediate integration where residency criterion becomes problematic. - Present value calculations: - The PV of debt at the time it is contracted is calculated by discounting the borrower’s future debt service on this debt using a unified discount rate of 5 percent. - Concessional debt: - Concessional debt is defined as debt with grant element of at least 35 percent. *APPENDIX II. QUANTITATIVE CONDITIONALITY* ### 23. Under the new debt limits policy, program documents should include a borrowing plan used ### _022216a - 23. Under the new debt limits policy, program documents should include a borrowing plan used ### Borrowing plans and debt limits (paragraph 23) - Program documents should include a borrowing plan used as a basis to derive quantitative debt limits. - Borrowing plans play a role in the assessment of implementation of debt conditionality in program reviews. - Nonobservance of debt conditionality requires an assessment of the circumstances leading to it (for example, whether there was a change in the projected financing mix or the level of new borrowing accommodated under the debt limit). - Key features of a borrowing plan to be disclosed typically include the breakdown of the sources of new borrowings across: - concessionality mix; - maturity and currency composition; - uses of financing. - Where disclosure of such information could adversely affect a country’s ability to get the most favorable terms of borrowing, adequate flexibility and discretion should be exercised. - Reference to tools and examples: - For illustrative examples of summary borrowing plans see IMF (2014d) and Annex I of the DLP Guidance Note. - To calculate the present value of debt, and generate a borrowing plan for a country reliant on official external financing on concessional terms, please use PV Toolkit. - For more details on the MAC DSA framework see Staff Guidance Note for Public Debt Sustainability Analysis in Market-Access Countries (IMF, 2013i). The use of the MAC DSA to inform the use of public debt conditionality is discussed in Section III of the DLP Guidance Note. ### Payments arrears (section F, paragraph 24) - In cases of external or domestic payments arrears, quarterly indicative targets or performance criteria may be set for phased elimination. - For these purposes: - the concept of government should be clearly defined (for example, whether state-owned enterprises or the social security and pension funds are included); - the method for measuring arrears should be specified. - Domestic arrears present significant measurement and controllability problems that may preclude their use as performance criteria. - Judgment on whether limits on domestic arrears should be PCs or indicative targets should consider commitment control and measurement systems and data quality of individual countries. ### Continuous performance criteria (PCs) (section G, paragraph 25) - Continuous PCs always include, inter alia, commitments related to non-introduction of exchange restrictions and multiple currency practices. - Continuous conditionality specifically covers: - imposition or intensification of restrictions on the making of payments and transfers for current international transactions; - introduction or modification of multiple currency practices; - conclusion of bilateral payments agreements that are inconsistent with Article VIII; - imposition or intensification of import restrictions for balance of payments reasons. - Continuous PCs are always included in the text of all Fund arrangements; given their non-quantitative nature, they are usually not listed in the PC table. - Other continuous PCs typically include the non-accumulation of external payments arrears. - Where external debt ceilings are set at zero, these should also be specified as continuous PC. - In monitoring continuous PCs, staff should ascertain continuous compliance with the PC based on representation by the authorities. ### Wage bill ceilings (section H, paragraph 26) - The use of wage bill ceilings over extended periods should be avoided. - Wage bill ceilings should: - ensure flexibility in their application; - require a clear justification in program documents; - be used selectively and limited to circumstances when they are designed as short-term measures when first-best options are not available. - The use of medium-term expenditure frameworks and strengthened budget and payroll systems is preferable and expected to obviate the need for wage ceilings over time. - When countries need substantial technical assistance to develop such systems, wage ceilings may be needed in exceptional cases based on macroeconomic considerations. ### Adjustors (sections I, paragraphs 27–31) - Purpose: - Adjustors protect the program from foreseeable shocks beyond the authorities’ immediate control by pre-specifying policy responses to deviations from program assumptions without compromising PCs for Fund disbursement. - Adjustors are automatic and distinct from waivers, modifications of PCs, and adjustments during program reviews. - Design principles: - Use adjustors sparingly to limit major policy adjustments amid uncertainty and volatility of key economic variables such as export prices, foreign financing, privatization receipts, or certain policy actions (e.g., bank recapitalization or changes in reserve requirements). - Adjustors should be simple and clearly defined, including in the TMU and PC table. - Adjustors are for temporary deviations; lasting or large deviations should be addressed in program reviews. - Adjustors should be based on realistic projections; e.g., an adjustor allowing domestic bank financing to compensate for consistent overestimation of external financing may render a program overly relaxed. - Technical points: - By convention, adjustors are applied to ceilings/floors set for the PCs rather than to actual outturns. - If several adjustors apply to the same PC (e.g., for foreign financing, privatization receipts, oil prices), they should apply to the net cumulative sum of deviations from program assumptions. - Unless the potential shock affects money demand, an adjustor on net international reserves should have a symmetric adjustor (with the opposite sign) on net domestic assets. - Distinguish between project and program financing. - Common uses: - Deviations from projected external program grants and lending lead to adjustment of the NIR floor, the NDA ceiling, and the net domestic financing of the government ceiling. - Deviations from projected external project lending lead to adjustment of the overall fiscal balance floor if applicable (no adjustor needed if the fiscal deficit concept excludes project financing and expenditures). - Deviations from projected fiscal revenues lead to (usually partial) adjustment in the overall fiscal balance floor or net domestic financing of the government ceiling. - It is often useful to apply adjustors symmetrically and apply symmetric caps. - Implementation detail: - The TMU should define the adjustors, including specification of variables subject to adjustment, explicit adjustment formulas, trigger events, caps, and thresholds. - The baseline projection for the economic indicator that gives rise to potential adjustment of PCs should be included in the PC table and a footnote should indicate the adjustor mechanism. ### Staff-Monitored Programs (SMPs) and other track records (Appendix III, sections A–B) - Purpose and nature of SMPs: - SMPs are informal agreements between national authorities and Fund staff to monitor implementation of the authorities’ economic program and to establish a track record of policy implementation that could pave the way for a new Fund financial arrangement, Fund emergency assistance, or resumption of an existing arrangement that has gone off track. - SMPs resemble Fund-supported programs in form but are not required to meet UCT conditionality standards and are not endorsed by the Fund’s Executive Board. - Typical uses of SMPs in the LIC context: - When limited institutional capacity, domestic fragility or instability, weak economic policy implementation, or absence of financing assurances raise significant doubts about the country’s capacity/commitment to implement a UCT-quality program. - When a country’s program supported by a Fund financial arrangement has gone off track and a track record is needed to provide assurances that authorities can achieve program objectives. - When a member country has overdue obligations to the Fund; careful examination of financing situation is needed in light of a probable subsequent request for a Fund arrangement or resumption of an arrangement that has gone off track. - Design and objectives: - An SMP should be designed to build a track record; policies should be sufficiently ambitious to provide a good basis for proceeding to a Fund financial arrangement. - Staff should refrain from an SMP if a consistent policy package is not in place. - For a PRGT-eligible member, the ultimate objective of an SMP is to help move to a UCT-quality program aimed at progressing toward a stable and sustainable macroeconomic position consistent with strong and durable poverty reduction and growth. - SMPs and the HIPC Initiative: - Under certain circumstances, the Board could find that an SMP may count toward the track record for moving to the decision point under the HIPC Initiative. - For such cases, staff must make an assessment supported by the Board that macroeconomic and structural reform policies under the SMP meet the policy standards associated with programs supported by arrangements in the upper credit tranches or under the ECF (“SMPs of UCT-quality policies”). - Reaching the HIPC decision point using an SMP of UCT-quality policies requires Board assessment that the member’s performance under the SMP has been satisfactory for a sufficient period of time (in practice, a minimum of six months) since the Board’s initial determination of UCT-quality policy standards. - SMPs and arrears / RAP eligibility: - For members not eligible for a Rights Accumulation Program (RAP), an SMP with UCT-quality conditionality would qualify only if members have no arrears to the Fund, and, where they have arrears to the World Bank, an agreed financing plan and timetable for normalizing relations with the Bank are in place. - RAP-eligible members would not be required to clear existing arrears to the Fund either prior to or during an SMP, but would be expected to remain current on new obligations falling due to the Fund during the SMP; they would need an agreed financing plan and timetable for normalizing relations with the World Bank in case of arrears to them. - Some RAP-eligible members emerging from conflict with severely limited payments capacity may, to the extent payments capacity requires it, be allowed to accumulate new arrears to the Fund during the SMP. - SMP form and monitoring: - SMPs should closely resemble a Fund-supported program in form, including specification of a quantified macroeconomic framework and structural reform agenda to be monitored through quantitative benchmarks (normally on a quarterly basis) and structural benchmarks. - As SMPs aim to build a track record for an eventual UCT-quality program, the choice of indicators to monitor should be similar to those appropriate under an eventual UCT-quality program. - Policy consistency and documentation: - SMP-supported policies should be consistent with the member’s poverty reduction and growth objectives. - Requests for an SMP should be accompanied by a statement, normally in the LOI or MEFP, of how the program advances the country’s poverty reduction and growth objectives, cross-referencing any existing EDD where relevant. - SMPs should include safeguards on social and other priority spending, such as an indicative floor on social and other priority spending, defined by the authorities, where possible. - If an EDD document exists, SMP-supported policies should be consistent with its objectives; if not, SMP documentation should outline the country’s medium-term poverty reduction and growth objectives and policies or refer to previous staff reports and update as necessary. - If no EDD exists and the SMP is aimed at building a track record for an ECF arrangement or PSI, staff should alert the authorities on Definitions and Timeliness for EDD Documentation requirements (Appendix V) to ensure adequate time for the EDD process. - Choice among track records (paragraphs 7–10): - Track records are used to provide additional assurances about the authorities’ capacity and commitment to implement a UCT-quality program and should not be used purely for signaling. - Track records are typically used to bring an existing ECF or SCF arrangement, or PSI, back on track or to pave the way for a prospective new ECF-, SCF- or PSI-supported program when concerns exist about capacity, commitment, or financing assurances. - Track records differ from prior actions: prior actions primarily ensure implementation of measures immediately critical to underpin upfront implementation; prior actions may be necessary for starting or continuing an SMP in some cases. - Three types of track records for PRGT-eligible members: - (i) Informal track records: time-bound near-term policy actions and targets agreed informally between staff and authorities (require interdepartmental review and management clearance, typically based on a PN). - (ii) SMPs. - (iii) RCF-supported policies: typically involve time-bound indicative targets and structural benchmarks specified at the time of the request for an RCF disbursement. - Use cases: - Informal track records: appropriate when reasonable near-term prospects exist that authorities will implement a UCT-quality program or, for an off-track program, take near-term corrective actions expected to meet original objectives. - SMPs: appropriate when significant uncertainty exists about authorities’ capacity and commitment to implement or bring back on track a UCT-quality program in the near term and there is no urgent financing need warranting RCF use. - RCF support: can build a track record when a member experiences an urgent financing need (including sudden exogenous shock causing an off-track UCT-quality program) and there are adequate safeguards to the Fund’s resources; access to RCF assistance is not possible if the member has overdue obligations to the Fund and RCF support requires a safeguards assessment and authorization for Fund staff access to the member’s safeguards information. *Source: _022216a - 23. Under the new debt limits policy, program documents should include a borrowing plan used* ### APPENDIX III. STAFF-MONITORED PROGRAMS AND OTHER TRACK RECORDS ### APPENDIX III. STAFF-MONITORED PROGRAMS AND OTHER TRACK RECORDS ### Track record period (SMP, RCF, informal track records) - A track record period in an SMP: - Normally covers a minimum of six months and two test dates. - Would not be expected to extend beyond 18 months, though longer durations are not precluded. - Track records for the RCF: - Would normally cover at least six months. - Informal track records: - Duration is more flexible and depends on country circumstances. - Start of track record periods: - Should start no earlier than the first time substantive policy discussions on near-term macroeconomic targets were held between the country team and the authorities, based on management approval of the policies and track record period (e.g., in a PN). - Should not start much later than when staff and authorities reach understandings on the specifics of the track record. ### Operational guidance - Monitoring expectations: - SMP track records should reflect the member’s past track record and the measures needed to establish a record of policy implementation. - Track record periods should align with the point at which relevant track record objectives and policies become clear. *Source: APPENDIX III. STAFF-MONITORED PROGRAMS AND OTHER TRACK RECORDS* ### APPENDIX IV. HIPC AND MDRI ### Purpose and scope of the HIPC Initiative and MDRI - The HIPC Initiative: - Launched in 1996, enhanced in 1999, and supplemented in 2005 by the MDRI. - Major international effort led by the IMF and the World Bank to provide debt relief to heavily indebted poor countries. - Ring-fencing of potentially eligible countries: - Ring-fenced in 2006 and in 2010 to comprise PRGT-eligible countries pursuing or program supported by the IMF by October 1, 1996 or having adopted such a program between October 1, 1996 and December 31, 2006, who have received or are eligible to receive assistance to the full extent available under traditional debt relief mechanisms, whose debt ratios at end-2004 and end-2010, after hypothetical application of traditional debt relief mechanisms, were assessed to have exceeded the HIPC Initiative debt thresholds. - HIPC Initiative debt threshold criteria for qualification (based on end-2004 and end-2010 data): - Present value (PV) of external public and publicly-guaranteed debt must exceed 150 percent of exports or 250 percent of revenue. - The fiscal revenue threshold applies only if exports to GDP are at least 30 percent and revenue to GDP 15 percent. ### Decision point: requirements to reach the HIPC decision point - Preconditions for issuance of a Preliminary HIPC document to the Boards: - The Preliminary HIPC document includes a streamlined debt discussion, a loan-by-loan HIPC DSA, preliminary cost and timing estimates, and broad conditionality envisaged for reaching the completion point. - Conditions to reach the decision point: - The country’s debt burden indicators must be above the HIPC Initiative debt sustainability thresholds based on the most recent data for the year immediately prior to the decision point. - Track record requirement: - While the HIPC Trust Instrument states that normally a three-year track record of policy performance under a Fund-supported program immediately preceding the decision point is needed, in practice a track record with a minimum of six months’ duration has been required. - Programs that count toward qualification include those supported by ECF, SCF, or Extended Arrangements, or on a case-by-case basis SBA, RAP, RFI, and RCF. - Under the RAP, a member in arrears to the Fund can earn rights conditioned on satisfactory performance under an adjustment program monitored by the Fund; Somalia and Sudan are the only two remaining countries eligible for the RAP. - An SMP can count toward the track record when the Executive Board agrees that its macroeconomic and structural policies meet policy standards associated with programs supported by UCT arrangements or under the PRGT; Liberia was the only country thus far to have used an SMP to reach the decision point. - PRS requirement: - A satisfactory poverty reduction strategy set out in a PRSP, I-PRSP, PRSP preparation status report or APR must be in place and must have been subject to a JSAN issued to the Executive Board. - The PRS document must have been issued to the Executive Board normally within the previous 12 months but in any case within the previous 18 months. ### Interim assistance after decision point - Interim HIPC assistance conditions: - Existence of satisfactory participation assurances from creditors (in practice, assurances from creditors jointly holding at least 70 percent of HIPC-eligible debt). - The Fund-supported program must remain on track for interim assistance to be disbursed. - Disbursement limits for interim assistance: - A country may receive up to 20 percent (in NPV terms) of total assistance committed for each 12-month period following the decision point and up to 60 percent of the total of the assistance committed prior to completion point. - In exceptional circumstances, these limits are up to 25 percent and 75 percent, respectively. ### Completion point: conditions to reach the HIPC completion point - Conditions to reach the completion point: - A track record of at least six months of policy performance under an ECF, SCF, or Extended Arrangement must have been established in the period immediately preceding the completion point. - The member has a stable macroeconomic position. - A full PRSP must have been adopted and satisfactorily implemented for at least one year preceding the completion point, evidenced by an APR issued to the Executive Board and subject to a JSAN. - The APR must have been issued normally within the previous 12 months but in any case within the previous 18 months. - The JSAN must also have been issued to the Executive Board. - All floating completion point triggers (the structural conditions set at the decision point) must have been implemented. - Satisfactory participation assurances from creditors should have been obtained (in practice, assurances from creditors jointly holding at least 80 percent of HIPC-eligible debt). ### Program documentation and preparation - Program documents should reflect HIPC progress: - Expected to contain information on status of preparation or implementation of an I-PRSP/PRSP, and implementation of completion point triggers. - Possible timing for reaching the completion point and obstacles should be documented. - Separate documents are prepared for decision point and completion point. - HIPC debt relief analysis (HIPC DRA): - Based on a loan-by-loan data reconciliation to determine the member’s current external debt situation. - Joint exercise among SPR and World Bank staff and, where appropriate, the relevant regional development bank, which dispatch a mission to perform the data reconciliation. - Entire process of conducting the HIPC DRA and preparing an HIPC document may take between 18 and 24 weeks from pre-mission preparation to Board meeting. - The HIPC DRA is distinct from the LIC DSA, which is undertaken annually and employs a different methodology. - Treatment of prospective debt relief: - May differ between the macro framework and the HIPC DRA: - The macro framework is expected to reflect realistic assumptions, including prospects for debt relief. - The HIPC DRA should reflect the legal situation regarding debt and demonstrate the unsustainable debt burden before debt relief. ### MDRI specifics - MDRI supplement (2005): - Intended to provide 100 percent debt relief on eligible debt to eligible countries, including HIPC-eligible countries that have reached the HIPC completion point and whose performance since reaching the completion point has not deteriorated substantially. - MDRI provided by four IFIs—the IMF, IDA, AfDB, and IADB. - MDRI-I Trust eligibility criteria: - PRGT-eligibility. - Annual per capita income of US$380 or less on the basis of the 2004 gross national income (Atlas method) from the World Bank’s Operational Manual as updated on July 21, 2005. - Has debt outstanding to the Fund, including to the Fund as Trustee, as of December 31, 2004. - In the case of a HIPC eligible or potentially eligible member, the member has reached the completion point under the HIPC Initiative. - Current MDRI status (as of the source text): - MDRI is no longer an active initiative as there is currently no MDRI eligible debt outstanding and the MDRI-I and MDRI-II Trusts were accordingly liquidated in 2015. - Contact: - Questions on the HIPC Initiative and the MDRI should be addressed to SPR’s Debt Policy Division. *Source: APPENDIX IV. HIPC AND MDRI* ### APPENDIX V. POVERTY REDUCTION STRATEGY ### Background and institutional context - Role of PRS: - PRS are central to Fund-supported economic and financial programs in LICs. - The HIPC Initiative introduced in 1999 the PRS approach and established documentation requirements centered on the PRSP. - PRS documentation has been required for ECF arrangements and PSIs, consistent with their medium-term time frame. - Recent institutional changes: - World Bank delinked its concessional financial support from the PRSP process in July 2014. - On June 22, 2015, the Fund Executive Board approved a new policy on PRS overhauling and streamlining PRS documentation in Fund engagement with LICs. - The new policy leaves the PRS process in the context of the HIPC Initiative unchanged but supersedes previous policies for Fund engagement in the context of the ECF and PSI. - Purpose of Appendix V: - Provides guidance on changes from the latest Board decisions in the Fund’s approach to integrating poverty reduction objectives into LIC operations, including rules and procedures for PRS documents and implications for operations under ECF, SCF, RCF, PSI, and HIPC processes. ### Pre-June 2015 policy summary (Appendix Box 1) - PRS documentation for ECF arrangements and PSIs (pre-June 2015): - The second and every subsequent review could only be completed if: - (a) the member has a PRS set out in PRS documentation issued to the Board normally within the previous 18 months and subject to staff analysis in the staff report on a new ECF arrangement or a review under an ECF arrangement; or - (b) the member has a PRS set out in a PRSP issued to the Board covering a period at least 12 months from the date of the completion of the relevant review and program documentation describes how budgets and planned reforms advance PRS implementation. - Staff assessment mechanisms (pre-June 2015): - JSANs (prepared by Bank and Fund staff) analyze strengths and weaknesses of PRS and are issued to the Fund Executive Board generally within four months of transmission outside the HIPC context. - Since 2009, the link between JSANs and Fund Board decisions under the PRGT and PSI was eliminated; ECF and PSI since then require a staff analysis of PRS documents, which can be included in the staff report. - APR JSAN requirement was replaced in 2009 by an Annual Feedback Process (AFP) conducted by Fund staff, generally covering: - i) performance relative to PRS benchmarks and monitoring indicators; - ii) linkages between the PRS and national systems and processes; - iii) an overview of the coming year’s policy intentions, particularly as reflected in the budget. - The AFP draws, to the extent possible, on existing in-country mechanisms such as annual reviews of budget and consultative groups. ### New PRS policy (post-June 22, 2015): EDD-centered PRS approach - Core change: - PRS approach is now based on an EDD (Economic Development Document) as the central PRS document for Fund engagement. - Content and form of the EDD: - A member country will produce an EDD that may take two forms: - (i) an existing national development plan or strategy document on the country’s PRS; or - (ii) a newly prepared document on the country’s PRS. - Country circumstances are taken into account, but PRS documents must meet minimum standards and countries are encouraged to follow good practice guidelines. - The policy encourages but does not require participatory processes in developing EDDs (contrast with PRSP approach which required stakeholder participation). - Content is streamlined with reduced length through a focus on macro-relevant aspects of the PRS. - Time requirements for issuance of EDD: - An EDD is required to be issued to the Board for completion of the first and subsequent reviews under ECF arrangements and PSIs. - The PRS covered in the EDD would need to have been developed normally within five years but no more than six years (in exceptional cases) leading up to and covering the date of completion of the relevant review. - Where the EDD exceeds five years (but not older than six years), staff must explain why the PRS remains relevant for completing the current review, normally requiring staff assessment that the strategy for poverty reduction remains valid. - Assessment and Bank involvement: - Fund staff’s assessment of the member country’s PRS as reflected in the EDD should be provided in relevant program documents. - An assessment of the country’s PRS should also be requested from World Bank staff and circulated to the Fund Executive Board for information. - Transitional provisions: - PRSPs already issued to the Board at the time of June 22, 2015 and subject to a staff analysis in a staff report of an ECF or PSI request or review would be deemed to satisfy EDD requirements but remain subject to coverage and expiration requirements for EDD. - Administrative detail: - The time period covered by the EDD may also be specified in the authorities’ cover letter associated with the EDD. *Source: APPENDIX V. POVERTY REDUCTION STRATEGY* ### APPENDIX V. POVERTY REDUCTION STRATEGY ### APPENDIX V. POVERTY REDUCTION STRATEGY ### Modalities for PRS implementation and monitoring - The process for monitoring PRS implementation is streamlined for both countries and Fund staff. - Countries would no longer be required to produce lengthy APRs as required under the pre-June 2015 PRS policy but would document PRS implementation in their LOI/MEFP. - For Fund staff, the AFP was replaced by: - regular reporting of PRS implementation in program documents; and - a PRS Implementation Review, with the latter to be reported to the Board no later than the fourth review under an ECF arrangement or a PSI. - The newly approved policy does not modify PRS requirements under the HIPC Initiative; countries under the HIPC Initiative continue to be subject to the same PRS documentation requirements in place before June 2015 for the purposes of reaching decision and completion points. ### Linkages between concessional Fund financing and PRS - The three concessional facilities established under the PRGT (ECF, SCF, and RCF) and the PSI are designed to assist LICs in making progress toward, or in achieving, maintaining, or restoring a stable and sustainable macroeconomic position consistent with strong and durable poverty reduction and growth. - Policies supported by Fund concessional financing under all facilities or the PSI should be aligned with the country’s poverty reduction and growth objectives. - Specific documentation and reporting requirements have been established to demonstrate and monitor this alignment. ### Documentation requirements for financing requests and reviews - Any financing request under the ECF, SCF, or RCF and program reviews must be accompanied by a statement, normally in the LOI or MEFP, of how the program advances the country’s poverty reduction and growth objectives. - It is expected that the description would be more detailed at the time of the initial program request or when a new EDD is produced. - Where a relevant PRS document exists, the description in the LOI/MEFP could cross-reference the PRS document, and the policies supported by the ECF, SCF, RCF, or PSI should be consistent with the objectives of the PRS in the context of promoting a stable and sustainable macroeconomic environment consistent with strong and durable poverty reduction and growth. ### EDD timing and use for ECF arrangements and PSIs - While an EDD is not required at the time of initial Board consideration of an ECF arrangement or a PSI, the first (and every subsequent) review can only be completed if: - (a) the member has a PRS document that has been developed and made publicly available normally within the five previous years, but no more than six years, and covers the period leading up to and covering the date of the completion of the relevant review; and - (b) the PRS has been issued to the Executive Board as an EDD that has been the subject of staff analysis in the staff report of a request for an ECF arrangement or PSI, or a review under an ECF arrangement or PSI. - Where the EDD does not include a 12-month forward-looking period, the member would be expected to document in the LOI/MEFP: - (a) the procedures underway to establish a successor EDD; and - (b) the relevance of the current EDD for the coming year. ### Form and preparation of EDDs - EDDs have to meet minimum standards and can take two forms: - i) existing national development plans documenting countries’ PRS; or - ii) a new EDD focused on elements of the PRS that are macro-relevant under a Fund-supported program (around 10-15 pages). - Whenever an ECF- or PSI-supported program is under consideration (including cases where support is currently provided under an SMP, RCF, or SCF), staff should inform the authorities at an early stage about the relevant PRS and EDD requirements to ensure adequate time for the PRS process. - The EDD, whether based on an existing national PRS document or newly prepared, is to be accompanied by a cover letter from the member country to the MD, which will be deemed part of the EDD issued to the Board. The cover letter should: - (i) describe the role that the national document issued as an EDD or a new EDD plays in guiding the member’s PRS and the participatory process that may be reflected in the PRS; and - (ii) inform the date when the national document issued as the EDD was publicly announced and the period it is covering. - The cover letter may be used to update or complement a national development plan or strategy to meet minimum standards or align with good practice guidelines for EDDs. ### Minimum standards for EDDs (Appendix Box 2) An EDD or the associated cover letter to the Managing Director would include the following core elements: - Strategy or plan: describe an overall strategy or plan for poverty reduction and growth. - Specific policy elements: describe how the strategy would be pursued through specific policies, including macroeconomic and financial policies; may include specific projects, infrastructure plans, and/or goals for public expenditure prioritization. - Launch date and timeframe for implementation: define a launch date and implementation period for the overall strategy (example: "the strategy or plan became effective on July 1, 2016 and covers the period 2016–2020"). - Extent of participatory process: note whether there was a participatory process and, if so, the nature of such process. ### Good practice guidelines for EDDs (Appendix Box 3) A comprehensive and operationally relevant EDD or cover letter would include, beyond the minimum standards: - Existing poverty situation and trends: description using direct and indirect measures of poverty, including household income-expenditure surveys and indicators of health and social conditions. - Factors influencing poverty: identification of recognized determinants of poverty and known bottlenecks to poverty reduction. - Strategy for poverty reduction: focus on macro-related aspects of the PRS, including approaches to foster sustained, strong growth in national incomes and policies to ensure inclusive income growth (e.g., safety nets, better targeting of expenditures). - Specific policies: documentation of intended policies under the PRS and their targeted impact, including priorities for public spending (health, education, etc.), financial inclusion plans for households and SMEs, and steps to reduce impediments to investment and job creation; discussion of institutional capacity building and technical assistance needs; outline of donor coordination and contributions. - Fiscal and debt framework: prioritization of development spending needs based on a realistic assessment of fiscal space; use of PRS priorities to define priority social spending and set indicative targets in the LOI/MEFP of ECF/PSI-supported program documentation; discussion of how PRS financing would impact the country’s debt strategy. - Spending effectiveness: mention steps to strengthen the efficiency of public spending where relevant. - Safety nets and risk mitigation: discussion of steps to mitigate negative spillovers and risks from adjustment policies and external shocks (e.g., establishment of social safety nets, arrangements to foster food security). - Participatory process: strong encouragement for CSO inputs during preparation; authorities responsible for the level of consultation needed to ensure broad ownership. ### Treatment of insufficient EDDs and staff assistance - Where a proposed EDD falls short of the minimum standards, staff would indicate what additional content would be needed. - For a newly-drafted, streamlined EDD, the document could be modified to cover the missing content ahead of submission to the Executive Board. - If a national development plan or strategy fails to meet the minimum standards, staff could: - indicate that the national PRS document does not meet the standards required of an EDD and request a newly-prepared EDD; or - ask the member to provide the missing elements as part of the cover letter to the MD, expanded as necessary to meet the Fund’s PRS requirements. - ECF or PSI staff reports and LOIs/MEFPs should discuss how significant weaknesses in the PRS, including those identified through the PIR, have been addressed. - Staff could provide good examples of EDDs produced by other members and offer comments on authorities’ drafts, but staff should not provide drafts for the authorities. ### Participatory processes and Bank assessment letters - Participatory processes are strongly encouraged, but not required; the EDD must clarify the extent and nature of any participatory process. - An assessment letter from Bank staff must be requested when an EDD is received by IMF staff. The assessment letter: - provides Bank staff’s perspective on strengths and weaknesses of the member’s strategy and identifies priority action areas and risks; - should be requested at the time an EDD is received by IMF staff; and - following clearance by Bank Management, will be circulated to the Fund Board at the same time as the EDD to help inform the Board on the quality of the PRS. - The assessment letter provided by Bank staff will not be published by the Fund. ### Social and priority spending, publication, and procedural points - Under all Fund facilities for LICs, social and other priority spending should be safeguarded and, whenever appropriate, increased. - This should be monitored through explicit targets, typically an indicative floor on social or other priority spending, whenever possible. - Determination of what constitutes social or other priority spending should in general be based on the authorities’ PRS, or, where that does not exist, the medium-term poverty reduction and growth objectives and policies outlined by the authorities as part of program documentation. - Where tracking is not feasible, members will be encouraged to develop adequate expenditure tracking systems, which may require technical assistance. - Apart from the few HIPC initiative operations remaining, preparation of PRSPs and APRs is no longer needed for the Fund’s engagement with LICs; JSANs are no longer prepared by Bank and Fund staff outside of the HIPC Initiative. - EDDs are not distributed in paper format; they are registered by SEC as official Board documents and made available to Executive Directors via posting to IMF Connect, with email notification to Executive Directors and designated member authorities. Posting in this manner will be taken to constitute "issuance" to the IMF Board for PRS requirements for ECF arrangements and PSIs. - The publication of PRS documents and JSANs is voluntary, but presumed; a member’s consent is required for their publication. - The MD will not recommend approval of: - (i) an ECF arrangement or completion of a review under such arrangement; or - (ii) an HIPC decision point or completion point decision; or - (iii) a member’s request for initial approval or review of a PSI, if the member concerned does not explicitly consent to the publication of the PRS-related document (i.e., I-PRSP, PRSP, PRSP preparation status report, PRSP annual progress report, or EDD). - Staff should discuss publication intent during the mission and obtain explicit consent prior to submitting relevant UFR or PSI documents to management for clearance; the management clearance note should state that the authorities have consented to publication. ### Poverty Reduction Strategy Implementation Review (PIR) - Staff is expected to report to the Board on implementation of the PRS through regular reporting and a more in-depth periodic analysis. - Regular staff reports would include discussion of relevant developments in PRS implementation, such as: - prioritization of resources in the annual budget and associated budget outturns; - developments in adoption of social safety nets; and - progress in fostering growth-promoting reforms to strengthen the business climate. - The new PRS policy foresees less frequent reviews by Fund staff: the PIR is expected to be conducted by the time of the fourth review under the ECF arrangement or PSI (i.e., once for any given ECF arrangement or PSI). - The PIR is not a mandatory requirement for decisions on ECF and PSI support, but is a good practice based on informal consultations with country authorities and relevant stakeholders, including the World Bank. - The outcome of the PIR is to be documented in the staff report and is expected to cover: - (i) performance relative to PRS benchmarks and monitoring indicators; - (ii) observed linkages between the PRS and national systems and processes (e.g., budget monitoring and planning); and - (iii) the coming year’s policy intentions, particularly, but not exclusively, as reflected in the budget. - The PIR is encouraged as a "good practice" and could be conducted independent of a Fund program relationship, such as in the context of Fund surveillance activities. ### Poverty Reduction Strategy under the HIPC Initiative - For the purpose of reaching the decision or completion points under the HIPC Initiative, HIPC-eligible countries need to build a track record of satisfactory performance on the basis of programs supported by, inter alia, the ECF. - The new PRS policy applies to ECF arrangements preceding decision and completion points of the HIPC Initiative. *Source: APPENDIX V. POVERTY REDUCTION STRATEGY, _022216a - APPENDIX V. POVERTY REDUCTION STRATEGY* ### 22. However, the HIPC-Instrument has not been modified, and the remaining eligible countries ### _022216a - 22. However, the HIPC-Instrument has not been modified, and the remaining eligible countries ### HIPC Instrument and PRS documentation - The HIPC-Instrument has not been modified; remaining eligible countries under the HIPC Initiative must continue to document their PRS in line with the PRS documentation requirements under the HIPC Initiative to reach decision and completion points (Appendix Box 4). - ECF-era differences and convergence: - HIPC-eligible countries are subject to different PRS documentation requirements for ECF arrangements and for decision/completion points under the HIPC Initiative. - Comparability: PRS requirements under the HIPC Instrument and under the newly approved PRS policy are comparable. - Practical pathway: An EDD used for ECF financing could be modified with appropriate updates and confirmation of an appropriate participatory process as required for a PRSP, and reissued as a PRSP to the Board to meet the decision or completion point under the HIPC Initiative. - For the completion point, the member country must produce an APR to confirm satisfactory implementation of the PRS for at least one year by the HIPC completion point. ### PRS document types for HIPC (Appendix Box 4) - Interim Poverty Reduction Strategy Paper (I-PRSP): transitional document; precursor to a first full PRSP; use of I-PRSPs will be phased out; countries cannot have I-PRSPs subsequent to full PRSPs. - PRSP Preparation Status Report: reports updates to the preliminary poverty reduction strategy set out in an I-PRSP in anticipation of a full PRSP. - Poverty Reduction Strategy Paper (PRSP): prepared in a participatory process; sets out a comprehensive three-year poverty reduction strategy (may be extended to as much as five years); assesses nature and determinants of poverty and links between public actions and poverty outcomes; may present outcome-related goals and propose integrated multiyear institutional, structural, and sectoral interventions within a consistent macroeconomic framework. - Annual Progress Report (APR): reports on implementation of the PRSP and updates it as appropriate. ### PRS-related conditions for HIPC decision and completion points (Appendix Box 5) - Decision point: - A member shall have in place a satisfactory PRS set out in an I-PRSP, PRSP preparation status report, PRSP or APR that has been issued to the Board normally within the previous 12 months but in any case within the previous 18 months, and which has been analyzed in a JSAN that has also been issued to the Board. - Completion point: - A member shall have in place a PRSP and implemented satisfactorily the strategy therein described for at least one year by the completion point. - Evidence: an APR that has been issued to the Executive Boards normally within the previous 12 months but in any case within the previous 18 months and analyzed in a JSAN that has also been issued to the Board. ### Role and features of JSANs for HIPC purposes - JSAN purpose and scope: - JSANs retained their role for PRS documentation required to reach HIPC decision and completion points despite June 2015 PRS policy reform that eliminated JSANs outside HIPC context. - A JSAN is prepared jointly by Bank and Fund staffs, analyzing strengths and weaknesses of the member’s PRS and identifying priority areas for strengthening during implementation. - For an I-PRSP, the JSAN should focus on the roadmap for preparing the strategy, provide advice on preparations, and consider the need for technical assistance. - Content and tone: - JSANs should provide focused, frank, and constructive feedback; identify a limited number of priority areas expected to be addressed (including in the context of existing or possible future ECF-supported programs). - JSANs should avoid normative language assessing the PRS as a whole or language suggesting the PRS meets or falls short of overall standards. - Concluding JSAN guidance: - If to be discussed, a JSAN for an I-PRSP or PRSP should end with suggested points for discussion by the Executive Boards of the Fund and the Bank, drawing attention to: (i) priority action areas for strengthening the PRS; and (ii) areas with (a) inconsistencies between the PRS and its policy framework and the analytical basis underpinning Bank- and Fund-supported programs that reflect existing analysis; or (b) areas where further analysis is needed or adjustments to the strategy are expected. - Preparation responsibilities: - Bank and Fund staffs should divide responsibilities in preparing the JSAN, contributing in their areas of primary institutional competencies and reaching a common understanding in overlapping/linkage areas. ### Circulation, Board discussion, and publication rules for PRS documents and JSANs - Circulation to the Boards: - For HIPC, PRS documents and corresponding JSANs are issued to the Executive Board in the EBD series as soon after the PRS documents are officially received (i.e., with a notification from a senior official indicating the document is final and can be issued to the Executive Boards and posted on external websites). - A PRSP or I-PRSP will be issued together with the accompanying JSAN for Board discussion when feasible. If the JSAN is not ready, issuance of the PRS document should not be held up. - JSANs can be issued for discussion or information to the IMF Executive Board. - APRs are normally issued for information of the Boards (except APRs and associated JSANs used to document one year of satisfactory implementation for HIPC completion point, which are issued for discussion). - Board discussion sequencing and circulation periods: - Executive Board discussions at Bank and Fund should preferably be scheduled within five working days of each other; the institution taking an operational decision would normally have the later Board date. - The Fund’s minimum circulation period for PRS documents and JSANs is two weeks, with an additional business day required for document dissemination. - The Bank generally requires a three week circulation period and additional time for document preparation. - Where operational decisions are being made at both institutions, sequencing of Board meetings will be made judgmentally. - Publication: - Publication of PRS documents and JSANs is voluntary, but presumed; a member’s consent is required for their publication. - The Managing Director will not recommend approval of: (i) an ECF arrangement or completion of a review under such arrangement, (ii) an HIPC decision point or completion point decision, or (iii) a member’s request for initial approval or review of a PSI, if the member does not explicitly consent to publication of the PRS-related document (I-PRSP, PRSP, PRSP preparation status report, PRSP APR, or EDD). - Staff should discuss authorities’ publication intention during the mission and obtain explicit consent to publication prior to submitting relevant UFR or PSI documents to management for clearance. - Management clearance notes should state that authorities have consented to publication to satisfy the Transparency Policy requirements. - When authorities’ consent has been received, SEC’s transmittal memo to the PRS document should indicate this; PRSPs, APRs and EDDs may be published immediately after formal transmission to the Bank and/or the Fund when circulated for information. ### PRGT eligibility framework (Appendix VI) - Review schedule: - PRGT eligibility will be reviewed by the Executive Board every two years, with the next review scheduled for 2017. Decisions regarding entry onto the PRGT-eligibility list could also be adopted between reviews. Decisions regarding graduation can be adopted in the interim period for members that request graduation and meet the criteria. - Key elements: - Entry criteria: - A Fund member will be added to the list of PRGT-eligible countries if: (i) its annual per capita gross national income is below the operational IDA cut-off (based on the latest available qualifying data)—For small and microstates, see literal c.; and (ii) the sovereign does not have capacity to access international financial markets on a durable and substantial basis as defined in the policy. - Graduation criteria: - A PRGT-eligible country will graduate if it meets either or both the income and market access criteria, and does not face serious short-term vulnerabilities: - Income: The country’s annual per capita GNI: (a) has been above the IDA operational cutoff for at least the last five years (for which qualifying data are available); (b) has not been on a declining trend in the same period (comparing the first and the last relevant annual data); and (c) based on the latest available qualifying data, is at least twice the operational IDA cutoff. - Market Access: The sovereign has the capacity to access international financial markets on a durable and substantial basis, and their annual per capita GNI is above the IDA operational cutoff (based on the latest available qualifying annual data) and has not been on a declining trend during the last five years for which qualifying data is available. - Absence of short-term vulnerabilities: In addition to meeting at least one of the above two criteria, the country must not face serious short-term vulnerabilities. This assessment requires, in particular: (i) absence of risks of a sharp decline in income or loss of market access; (ii) limited debt vulnerabilities as indicated by the most recent debt sustainability analysis, including for members assessed under the DSF for LICs, a risk of external debt distress that is moderate or less and with the member not facing a heightened overall risk of debt distress reflecting significant vulnerabilities related to domestic debt and/or private external debt; and (iii) confirmation that overall debt vulnerabilities remain limited taking into account developments and prospects since the most recent DSA. - Exception: For a member whose annual per capita GNI exceeds the applicable income graduation threshold by 50 percent or more, graduation from PRGT eligibility will not be subject to the assessment of serious short-term vulnerabilities. However, an assessment is required if the member has an “IDA-grant only” or “IDA loan-grant mix” status at the World Bank. - Market access measurement (footnote detail preserved in policy): - First test: evidenced by public sector issuance or guaranteeing of external bonds or by disbursements under public and publicly guaranteed external commercial loans in international markets during at least two and three of the last five years for entry and graduation, respectively, in a cumulative amount over that period equivalent to at least 25 and 50 percent of the country’s Fund quota, for entry and graduation, respectively, at the time of the assessment. - Alternative: country could be deemed to meet market access if convincing evidence exists that the sovereign could have tapped international markets on a durable and substantial basis though actual borrowing fell short of thresholds; case-specific assessment considers volume and terms of recent borrowing and sovereign credit rating. - Small and microstate exceptional rules (literal c): - Definitions: - Small countries: population below 1.5 million. - Microstates: population below 200,000. - Entry for small countries (microstates) not currently PRGT-eligible: - Added if: (i) the sovereign does not have capacity to access international financial markets on a durable and substantial basis; and (ii) per capita GNI is less than twice (five times) the IDA operational threshold (based on the latest available annual qualifying data). - Graduation for small countries (microstates): - Three criteria: - Income: annual per capita GNI: (i) has been above the IDA operational threshold for at least the last five years (for which qualifying data are available); (ii) has not been on a declining trend in the same period; and (iii) is currently at least three (six) times the IDA threshold (based on the latest available qualifying data). - Market access: sovereign has capacity to access international financial markets on a durable and substantial basis and annual per capita GNI is above the IDA operational cutoff and not on a declining trend during the last five years. - Absence of serious short-term vulnerabilities: small countries (microstates) meeting either income or market access criteria will graduate if they do not face serious short-term vulnerabilities as described above. - With respect to risk of a sharp decline of income, a small country (microstate) generally would not be expected to graduate if there is a serious risk of a decline in income to less than three (six) times the operational IDA cutoff. ### Key numeric thresholds and procedural timeframes (as stated) - PRS/HIPC timing and documentary windows: - PRS documents for decision or completion points should have been issued to the Board normally within the previous 12 months but in any case within the previous 18 months. - For completion point, satisfactory implementation of a full PRSP for at least one year is required, evidenced by an APR normally issued to the Board within the previous 12 months but in any case within the previous 18 months and analyzed in a JSAN. - PRGT eligibility procedural dates and thresholds: - PRGT eligibility review frequency: every two years; next review scheduled for 2017. - From July 2015, the operational cut-off for IDA eligibility is US$1,215, based on 2014 GNI income per capita. - Qualifying data rule: qualifying data is data in respect of which the most recent observation relates to a calendar year that is not more than 30 months in the past at the time of the assessment. - Small country population threshold: below 1.5 million. - Microstate population threshold: below 200,000. - Graduation income multipliers: - Standard graduation: at least twice the operational IDA cutoff. - Small country graduation: at least three times the IDA threshold. - Microstate graduation: at least six times the IDA threshold. - Exception for graduation vulnerability assessment: if annual per capita GNI exceeds the applicable income graduation threshold by 50 percent or more. - Board circulation periods: - Fund minimum circulation period for PRS documents and JSANs: two weeks, with an additional business day for dissemination. - Bank circulation period: generally three weeks and additional time for preparation. - Market-access test thresholds (public sector external borrowing over specified look-back windows): - Entry test cumulative threshold: at least 25 percent of the country’s Fund quota over at least two of the last five years (for which data are available). - Graduation test cumulative threshold: at least 50 percent of the country’s Fund quota over at least three of the last five years (for which data are available). *Source: Appendix V and Appendix VI text provided in the content unit.* ### APPENDIX VII. CATASTROPHE CONTAINMENT AND RELIEF ### APPENDIX VII. CATASTROPHE CONTAINMENT AND RELIEF ### The CCR Trust: purpose and origin - Established in 2015 to provide grants for debt relief for the poorest and most vulnerable countries hit by catastrophic natural disasters or fast-spreading public health disasters with international spillover potential. - Builds on the Post Catastrophe Debt Relief (PCDR) Trust, established in 2010 following the earthquake in Haiti. - Purpose: free resources to meet exceptional balance of payments needs created by the disaster, complementing donor financing and the Fund’s concessional lending through the PRGT. - Historical example: The PCDR Trust was used to provide assistance to Haiti in July 2010 of SDR 178 million (equivalent to US$268 million), eliminating Haiti’s entire outstanding debt to the IMF. ### Eligibility - Restricted to PRGT-eligible countries which also have either: - a per capita GNI income below the IDA operational cut-off; or - for small states, population below 1.5 million and a per capita income below twice the IDA operational cut-off. - IDA operational cut-off example: As of July 2015, this cut-off was US$1,215 for the 2014 GNI per capita. It is revised each year, typically in July. ### Structure: two windows and general conditions - Two windows: - Post-Catastrophe Relief (PCR) window — catastrophic natural disasters. - Catastrophe Containment (CC) window — fast-spreading public health disasters with international spillover potential. - Debt relief under either window is not provided on debt scheduled to be repaid with assistance of other IMF-administered debt relief trusts or via the other CCR window. - Provision of debt relief is conditional upon availability of resources in the CCR Trust at the time of the decision on the relief. ### Post-Catastrophe Relief (PCR) window — qualification and terms - Qualification criteria for a catastrophic natural disaster: - directly affected normally at least one-third of the population; and - destroyed more than one-quarter of the country’s productive capacity (as estimated by early indications such as destroyed structures and impact on key economic sectors and public institutions), or caused damage deemed to exceed 100 percent of GDP. - Assessment based on available information, including preliminary estimates. - Flow relief: - Eligible country would qualify for flow relief on IMF debt service falling due from the date of the debt relief decision to the second anniversary of the disaster. - Relief provided on debt outstanding at the time of the disaster (on which regular scheduled debt service payments were made before the disaster) plus any IMF disbursement made normally within four months following the disaster. - Debt stock relief (full cancellation) — conditions and timing: - Possible in more severe cases where recovery creates substantial and protracted balance of payments needs persisting beyond the flow relief period. - Typically considered where an updated DSA after the disaster shows high debt in relation to GDP or exports, often resulting in debt distress or high risk of debt distress. - Decision on stock relief could be made at any point in the period from six to 24 months following the disaster (subject to the track record requirement). - Required assurances and conditions for stock relief: - (i) Concerted effort within the international community as evidenced by satisfactory assurances from other official sector creditors whose debts account for at least eighty percent of the member’s total sovereign external debt outstanding to official creditors (less amounts due to the Fund) at the time of the disaster. - (ii) Member assurances to cooperate in efforts to find solutions to balance of payments problems and to refrain from inappropriate policies. - (iii) Member has established a track record of adequate macroeconomic policies, normally for at least six months immediately preceding the decision to disburse debt stock relief. - Eligible debt stock: debt outstanding on the second anniversary of the disaster or on the date of the IMF decision to disburse debt stock relief, whichever is later. ### Catastrophe Containment (CC) window — qualification and terms - Intended to provide immediate debt relief to eligible low-income members the Executive Board determines: - are experiencing a balance of payments need arising from a qualifying public health disaster, defined as a life-threatening epidemic with sustained presence and spread across several areas of the country, causing significant economic disruption and able to spread to other countries; and - have an appropriate macroeconomic policy framework and ensuing policy response to address the balance of payments need. - Economic disruption characterization (measured relative to staff estimates made prior to the disaster): - at least a cumulative loss of real GDP of 10 percent; or - a cumulative loss of revenue and increase of expenditures equivalent to at least 10 percent of GDP. - Guidance for assessing qualifying public health disasters may draw on national authorities, the World Health Organization, the World Bank, and other relevant agencies. - Application process: - Member provides a letter of intent explaining the public health disaster, balance of payments needs, and measures/policies pursued to contain the disaster (including reallocation of budgetary resources). - Where recent disbursements exist under a current arrangement or under the RCF, the member may update and refer to existing policy undertakings in the letter of intent. ### CC window assistance modalities and exceptional cases - Standard assistance: - Up-front grants to immediately pay off upcoming IMF debt service on eligible debt, up to a maximum of 20 percent of quota. - Only debt outstanding on the date of the decision, which is not in arrears, is eligible for relief. - Exceptions allowing larger support (three cases): - When IMF debt service obligations are exceptionally burdensome in the near-term external payments position, relief may be provided to eliminate the exceptional burden, but not to exceed the amount of debt service due in the period of two years since the date of the decision. - When there is a broad-based international effort by official bilateral creditors to provide debt service flow relief on similar terms and IMF assistance would be catalytic, debt relief may repay the full amount of the member’s eligible debt to the Fund falling due within the period during which bilateral creditors are expected to provide relief, up to a maximum of two years from the date of the decision. - When the country is rated at high risk of debt distress or in debt distress under the joint Bank-Fund DSF for LICs, additional assistance may be provided to prevent a significant deterioration of debt indicators (relative to pre-epidemic projections) from new debt taken to respond to the epidemic: - The debt relief would be the amount needed to ensure that eligible debt to the Fund incurred in response to the qualifying public health disaster has a grant element of 80 percent. - IMF assistance counted for this purpose is assistance committed and disbursed from the onset of the epidemic up to the date of the decision determining qualification and made available to address balance of payments needs created by the public health disaster. - Operational consultation: - When the Managing Director sees merit in providing such additional exceptional support, a consultation with the Executive Directors is required in the form of an informal meeting before the proposal is issued for Board consideration. - Historical example: - Assistance to the three Ebola-affected countries (Guinea, Liberia, and Sierra Leone) via the CC window was provided in February—March 2015 in the total amount of SDR 68 million (equivalent to US$95.5 million). *Source: APPENDIX VII. CATASTROPHE CONTAINMENT AND RELIEF, 2016 HANDBOOK OF IMF FACILITIES FOR LICS* --- _Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2016/_022216a.pdf_