The Precautionary and Liquidity Line (PLL)

Source details

The Precautionary and Liquidity Line (PLL) is designed to meet the liquidity needs of member countries with sound economic fundamentals but with some remaining vulnerabilities that preclude them from using the Flexible Credit Line (FCL).

Eligibility requires a sustained track record of implementing strong policies and continued commitment to maintain such policies in the future.
Qualification uses a generally positive assessment of the country’s policies in the most recent Article IV consultations and five broad qualification areas:
- External position and market access:
- Sustainable external position
- Capital account position dominated by private flows
- Track record of steady sovereign access to international capital markets at favorable terms
- If the arrangement is requested on a precautionary basis: a reserve position that remains relatively comfortable, notwithstanding potential balance of payments pressures that justify IMF assistance.
- Fiscal policy:
- Sound public finances, including a sustainable public debt position.
- Monetary policy:
- Low and stable inflation, in the context of a sound monetary and exchange rate policy framework.
- Financial sector soundness and supervision:
- Sound financial system and the absence of solvency problems that may threaten systemic stability.
- Effective financial sector supervision.
- Data adequacy:
- Data transparency and integrity.
Qualification is based on strong performance in three out of the five qualification areas.
Substantial underperformance in any area signals that the member does not qualify for a PLL.

Countries experiencing any of the following conditions at approval are not eligible:
- Sustained inability to access international capital markets
- A need for large macroeconomic or structural policy adjustment (unless such adjustment has credibly been launched before approval)
- A public debt position that is not sustainable with a high probability in the medium term
- Widespread bank insolvencies

One to two-year arrangements are monitored through six-monthly reviews by the IMF’s Executive Board.
If a country has an actual balance of payments need at the time of the arrangement, access is phased through semiannual disbursements in line with the same periodicity of reviews.

Commitment fee:
- Levied at the beginning of each 12‑month period on amounts that could be drawn in the period:
- 15 basis points for committed amounts up to 200 percent of quota
- 30 basis points on committed amounts above 200 percent and up to 600 percent of quota
- 60 basis points on amounts exceeding 600 percent of quota
- Fees are refunded pro rata if amounts are drawn during the course of the relevant period.
- If a country borrows the entire amount, the fee is fully refunded.
- No refund is made when countries do not draw.
Service charge:
- A service charge of 50 basis points is applied on each amount drawn.
Repayment:
- (Repayment modality is referenced under Terms; no additional repayment schedule detail is provided in the source content.)

PLL arrangements of one to two years are subject to an annual access limit of 300 percent of quota (net of scheduled PLL repurchases) and to a total of 600 percent of quota for the entire arrangement.
Continued access is subject to the completion of the relevant six-monthly review by the IMF Executive Board.
Access under all PLL arrangements, regardless of the length of the arrangement, shall not exceed the cumulative cap of 600 percent of quota, net of scheduled PLL repurchases.
PLL arrangements are also subject to the annual and cumulative access limits applicable to all financing under the GRA, and thus to the exceptional access policy (which is triggered by financing above either of the normal GRA access limits of 200 percent annually and 600 percent cumulatively, net of scheduled repurchases).

The Precautionary and Liquidity Line
- The Precautionary and Liquidity Line (Markdown version)
- The Precautionary and Liquidity Line (PDF)