April 11, 2016
IMF COMMUNICATIONS DEPARTMENT |
| Media Relations |
|---|
| E-mail: media@imf.org |
| Phone: 202-623-7100 |
On February 17, 2016, the Executive Board of the International Monetary Fund (IMF) concluded a review of access limits, surcharge policies, and other quota-related policies. This review took place in response to the effectiveness of the quota increases under the 14th General Review of Quotas, which doubled members’ quotas on average.
A number of Fund policies have thresholds set as a percentage of members’ quotas. These include, in particular, limits on members’ normal access to Fund resources in the General Resources Account (GRA), and thresholds for surcharges1 on high levels of outstanding Fund credit, and commitment fees. With quotas doubling on average and absent policy change, quota-based limits and thresholds would also have doubled in SDR terms. This would have eroded critical elements of the Fund’s risk management framework, as it would have doubled, on average, access to Fund resources in the GRA without triggering safeguards under the exceptional access framework and SDR amounts on which surcharges do not apply, reducing the incentives for timely repayments. Inaction would also have resulted in a further slowing of the pace of accumulating precautionary balances. At the same time, the Board saw the need to maintain access relative to economic developments and metrics since the last review of access, in 2009, which called for some increase in limits and thresholds in SDR terms.
Executive Board Decisions
To reflect these considerations and ensure that no member’s access to GRA resources declined in SDR terms (even those with low quota increases), the Executive Board decided to adjust annual and cumulative access limits to 145 and 435 percent of new quota, respectively from 200 and 600 percent, respectively, resulting in an average increase of 45 percent on average in the SDR terms. Also, specific access limits applicable to the Precautionary Liquidity Line (PLL) were halved to reflect the doubling of quotas on average.
The Executive Board decided to lower the threshold for level-based surcharges from 300 percent of quota to 187.5 percent. The Board also extended the trigger for time-based surcharges on credit outstanding under the Extended Fund Facility from 36 months to 51 months to better align this trigger with the repayment schedule under this facility.
Commitment fee thresholds were also lowered to reflect the doubling of quotas on average.2 With the new thresholds, a 15 basis points fee will be charged on committed amounts of up to 115 percent (from 200 percent) of quota over a twelve month period; 30 basis points
will be charged on committed amounts between 115 percent and 575 percent (from 1,000 percent) of quota; and 60 basis points will be charged on amounts exceeding 575 percent of quota.
The Executive Board also decided to adjust the quota-based threshold below which a member may be placed on an extended Article IV consultation cycle from 200 percent of quota to 145 percent of quota, consistent with its decision on access limits. The threshold for determining expected Post Program Monitoring (PPM) participation was halved to 100 percent of quota, as a transitory measure pending Board discussion of a forthcoming paper on the PPM framework.
To ensure no member is made worse off by the changes to access, level-based surcharge and commitment fee policies, the Executive Board approved a limited grandfathering for affected members.
1 Surcharges, which depend on the amount and time credit is outstanding, are designed to generate income to allow the Fund to accumulate precautionary balances and to discourage large and prolonged use of IMF resources. A rate of 200 basis points is paid on the amount of credit outstanding above 187.5 percent of quota. If credit remains above 187.5 percent of quota after three years, this surcharge rises to 300 basis points.
2 Commitment fees are intended to compensate the Fund if financial commitments are not drawn and to provide an incentive against unnecessarily high precautionary access. They are refunded pro rata if the amounts are drawn.
