Rapid Credit Facility (RCF)

October 4, 2022

The Rapid Credit Facility (RCF) provides rapid concessional financial assistance to low-income countries (LICs) facing an urgent balance of payments need with no ex-post conditionality where a full-fledged economic program is neither necessary nor feasible. The RCF was created under the Poverty Reduction and Growth Trust (PRGT) as part of a broader reform to make the Fund’s financial support more flexible and better tailored to the diverse needs of LICs, including in times of crisis.

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Concessional emergency financing to meet urgent needs

Purpose. The RCF provides concessional, rapid, and low-access financial assistance to qualifying LICs facing an urgent balance of payments need, without ex post conditionality. It can provide support in a wide variety of circumstances, including external shocks, natural disasters, and emergencies resulting from fragility. The RCF also provides policy support and may help catalyze foreign aid.

Qualification. The RCF is available to PRGT-eligible member country that faces an urgent balance of payments need. The RCF is designed for situations where a full-fledged economic program is either not necessary because of the transitory and limited nature of the shock, or not feasible because of capacity constraints or domestic fragilities. For higher income countries that are non-PRGT eligible, a similar Rapid Financing Instrument (RFI) is available.

Windows. There are four windows under the RCF:

  • Regular window: for urgent BoP needs caused by wide range of sources including domestic instability, emergencies, and fragility. Access up to 50 percent of quota per year and 100 percent of quota on a cumulative basis, with the annual access subject to a norm of 25 percent of quota. There is also a per disbursement limit of 25 percent of quota.
  • Exogenous shock window: for urgent BoP needs caused by a sudden, exogenous shock. Access up to 50 percent of quota per year and 150 percent of quota on a cumulative basis. A higher cumulative access limit (175 percent of quota) would be applied if the food shock window is used (see below).
  • Large natural disaster window: for urgent BoP needs arising from natural disasters where damage is assessed to be equivalent to or exceed 20 percent of the member’s GDP. Access up to 80 percent of quota per year and 183.33 percent of quota on a cumulative basis.
  • Food shock window: available through September 29, 2023, for urgent BoP needs due to acute food insecurity, a sharp increase in the food import bill, or a shock to cereal exports. Access up to 50 percent of quota during the 12-month period from September 30, 2022 to September 29, 2023. Access under the food shock window will be additional to the annual access limits of other windows.

Access to RCF financing is determined on a case-by-case basis, considering the country’s balance of payments need, the strength of its macroeconomic policies, capacity to repay the Fund, the amount of outstanding Fund credit, and the member’s record of past use of Fund credit. In addition, RCF financing considers the features and magnitude of underlying shocks.

Access under the RCF is subject to annual and cumulative limits, with higher access limits applying for the large natural disaster window.

While RCF financing takes the form of a one-off disbursement, there is scope for repeat use. A repeat use of the RCF within any three-year period is possible if the balance of payments need is caused primarily by a sudden and exogenous shock or the country has established a 6-month track record of adequate macroeconomic policies, including through a Staff Monitored Program, prior to the request. However, no more than two disbursements may be made in any twelve-month period. Disbursements under the food shock window do not count towards the two-disbursement limit.

The current cumulative access limits of the exogenous shock window and large natural disaster window, which remain at the level temporarily raised in response to members’ large and urgent COVID-19-related financing needs, will be reviewed by June 2023. A review of the food shock window will also conducted be by the end of June 2023.

Limited conditionality

Fund support under the RCF is provided without ex-post program-based conditionality or reviews, although prior actions sometimes apply. Economic policies supported under the RCF should aim at addressing the underlying balance of payments difficulties and support the country's poverty reduction and growth objectives.

Concessional lending terms

Financing under the RCF currently carries a zero-interest rate, has a grace period of 5½ years, and a final maturity of 10 years.