Press Release: IMF Executive Board Reviews Access Limits, Surcharge Policies, and Other Quota-Related Policies

IMF News, April 11, 2016

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Canonical URL: Press Release: IMF Executive Board Reviews Access Limits, Surcharge Policies, and Other Quota-Related Policies

Date: April 11, 2016
Context: Review concluded by the Executive Board on February 17, 2016, in response to the effectiveness of the quota increases under the 14th General Review of Quotas, which "doubled members’ quotas on average."
Rationale:
- Many Fund policy thresholds are set as a percentage of members’ quotas (e.g., limits on normal access to General Resources Account (GRA) resources, thresholds for surcharges on high levels of outstanding Fund credit, and commitment fees).
- Absent policy changes, doubling quotas would have doubled quota-based limits and thresholds in SDR terms, eroding elements of the Fund’s risk management framework by:
- Doubling, on average, access to Fund resources in the GRA without triggering safeguards under the exceptional access framework.
- Doubling SDR amounts on which surcharges do not apply, reducing incentives for timely repayments.
- Further slowing the pace of accumulating precautionary balances.
- The Board also recognized the need to maintain access relative to economic developments and metrics since the last review of access in 2009, which warranted some increase in limits and thresholds in SDR terms.

Annual and cumulative access limits were adjusted to reflect changes in quota levels:
- Annual access limit: 145 percent of new quota (from 200 percent).
- Cumulative access limit: 435 percent of new quota (from 600 percent).
- Result: "an average increase of 45 percent on average in the SDR terms."
Specific access limits for the Precautionary Liquidity Line (PLL) were halved to reflect the doubling of quotas on average.
To ensure no member’s access to GRA resources declined in SDR terms (including those with low quota increases), adjustments were calibrated accordingly.

Level-based surcharge threshold:
- Lowered from 300 percent of quota to 187.5 percent of quota.
- Footnote on surcharges: "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."
Time-based surcharge trigger under the Extended Fund Facility:
- Extended from 36 months to 51 months to better align with the repayment schedule under this facility.

Commitment fee thresholds adjusted to reflect doubling of quotas on average:
- 15 basis points fee: charged on committed amounts of up to 115 percent of quota (from 200 percent) over a twelve month period.
- 30 basis points fee: charged on committed amounts between 115 percent and 575 percent of quota (from 1,000 percent).
- 60 basis points fee: charged on amounts exceeding 575 percent of quota.
- Footnote on commitment fees: "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."
Extended Article IV consultation cycle threshold:
- Adjusted from 200 percent of quota to 145 percent of quota, consistent with access limit decisions.
Expected Post Program Monitoring (PPM) participation threshold:
- Halved to 100 percent of quota as a transitory measure pending Board discussion of a forthcoming paper on the PPM framework.

Grandfathering:
- The Executive Board approved a limited grandfathering for affected members "to ensure no member is made worse off by the changes to access, level-based surcharge and commitment fee policies."

Quota increase under 14th Review: "doubled members’ quotas on average"
Annual access limit: 145 percent of new quota (from 200 percent)
Cumulative access limit: 435 percent of new quota (from 600 percent)
Average increase in SDR terms: "45 percent on average"
PLL specific access limits: halved
Level-based surcharge threshold: 187.5 percent of quota (from 300 percent)
Time-based surcharge trigger under EFF: 51 months (from 36 months)
Surcharge rates: 200 basis points above 187.5 percent; rises to 300 basis points if above 187.5 percent "after three years"
Commitment fee bands and rates:
- Up to 115 percent of quota: 15 basis points (from 200 percent)
- 115 percent to 575 percent of quota: 30 basis points (from 1,000 percent)
- Above 575 percent of quota: 60 basis points
Extended Article IV consultation threshold: 145 percent of quota (from 200 percent)
Transitory PPM threshold: 100 percent of quota

Preserve the Fund’s risk management framework and incentives for timely repayment in the wake of quota changes.
Ensure accumulation of precautionary balances is not further slowed by higher undisturbed surcharge-exempt SDR amounts.
Maintain access relative to economic developments and metrics since the prior review in 2009, while preventing untriggered expansions of access and safeguards.

Press Release No. 16/166 — International Monetary Fund. Media Relations: E-mail: media@imf.org; Phone: 202-623-7100