Standby Credit Facility (SCF)

January 7, 2022

The Standby Credit Facility (SCF) provides financial assistance to low-income countries (LICs) with short-term balance of payments needs. The SCF 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 shocks or crisis.

Financial assistance tailored to country needs

Purpose. The SCF supports LICs that have reached broadly sustainable macroeconomic positions, but may experience episodic, short-term financing and adjustment needs, including those caused by shocks. The SCF supports countries’ economic programs aimed at achieving, maintaining, or restoring a stable and sustainable macroeconomic position consistent with strong and durable growth and poverty reduction. It also provides policy support and may help catalyze foreign aid.

Eligibility.The SCF is available to PRGT-eligible countries facing a balance-of-payments need that is expected to be resolved within two years and in any event not more than three, thus helping to establish a sustainable macroeconomic position. A member country with a potential but not an immediate balance-of-payments need can treat SCF financing as precautionary, without drawing on it

Duration and repeated use. An SCF arrangement can range from 12 to 36 months. As the SCF is intended to address episodic short-term needs, its use is normally limited to 3 years out of any 6-year period, assessed on a rolling basis with exceptions for SCF arrangements treated as precautionary.

Access. Access to SCF financing is determined on a case-by-case basis, taking into account the country’s balance of payments need, the strength of its economic program and capacity to repay the Fund, the amount of outstanding Fund credit and the member’s record of past use of Fund credit, and is guided by access norms. The IMF’s Executive Board approved new access limits and norms in July 2021 as part of the Fund’s review of concessional financing and policies. Normal access to concessional financing under the PRGT is now limited to 145 percent of quota per year, and total outstanding concessional credit to 435 percent of quota. These limits can be exceeded in exceptional circumstances, with no hard caps on annual or cumulative access, provided the PRGT exceptional access criteria are satisfied. Access may be augmented during an arrangement if needed, subject to applicable limits.

Streamlined, focused conditionality

Under the SCF, member countries agree to implement a set of policies that will help them achieve a stable, sustainable macroeconomic position in the short term. These commitments, including specific conditions, are described in the country’s letter of intent. SCF-supported programs should be aligned with a country’s poverty reduction and growth objectives, and SCF arrangements with an initial duration exceeding two years require a Poverty Reduction and Growth Strategy (PRGS) to be made available for completion of the second and subsequent reviews. 

Structural benchmarks help monitor progress with reforms that are critical for program success. These benchmarks vary across programs but could, for example, include measures to improve financial sector operations, build up social safety nets, or strengthen public financial management.

Program reviews by the IMF’s Executive Board play a critical role in assessing performance under the program and allowing the program to adapt to economic developments. Progress of the program, in particular against quantitative conditions and structural benchmarks, is assessed in the context of reviews. Reviews are scheduled usually six months apart.

Concessional lending terms

Financing under the SCF carries a zero interest rate, with a grace period of four years and a final maturity of eight years. An availability fee is levied at 0.15 percent a year on the undrawn portion of the available amount during each six-month period. The Fund reviews the level of interest rates for concessional facilities under the PRGT every two years based on the PRGT interest rate mechanism, with the next review expected to be completed no later than end-July 2023.