Transcript of Background Briefing Conference Call on IMF Resources and the Fund’s Strategy to Help Countries Combat COVID-19
IMF News, April 1, 2020
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- Published: April 1, 2020
Overview of the IMF’s emergency financing tools and usage
- IMF has available "$50 billion for rapid emergency finance."
- Two rapid-access emergency facilities highlighted:
- General financing instrument available to all members: access of "50 percent of their quota" to extract quickly to address health- and virus-related spending; standard Fund safeguards apply (debt sustainability requirement; funds used for intended purpose).
- Rapid Credit Facility (RCF) for countries eligible for subsidized lending: also "50 percent" access; includes annual access limits; "zero interest rate and a longer repayment period."
- Poverty Reduction and Growth Trust (PRGT) finances subsidized lending for low-income members off the Fund’s regular balance sheet; gearing up to disburse "rapid and by our standards large amounts" from the PRGT through emergency windows.
- Catastrophe Containment and Relief Trust (CCRT): reform passed to help poorest members with debt payments to the Fund during the pandemic so they can repurpose repayments to fight the pandemic.
Scale of demand, commitments, and IMF capacity
- More than "80" countries have requested assistance or inquired about emergency funds.
- Reported cumulative volume of requests/inquiries is "north of $20 billion" so far.
- Managing Director referenced potential financing needs for emerging markets of around "$2.5 trillion" (noted as a hypothetical gross financing need, not equivalent to IMF demand).
- IMF lending capacity:
- Total lending capacity through quota and borrowing arrangements: "$1 trillion."
- Recent developments supporting capacity:
- Doubling of the NAB approved by the Executive Board; ratification by the United States of the doubling in their net contribution was noted.
- Executive Board approved framework for the next round of bilateral borrowing arrangements to be in place by January 1 when current arrangements expire.
- Usage to date: "We have so far committed about one fifth of those resources" and "we have roughly four fifth of that $800 million still available as it's needed."
Proposed and discussed additional instruments
- Short-term liquidity line (new facility concept):
- Intended to fill a gap to provide short-term, revolving access for members with strong policy frameworks (similar eligibility to the Flexible Credit Line, FCL).
- Access would be "much more limited" than the FCL; described access calibration example "145 percent of the quota" (as a much lower level than uncapped FCL).
- Designed to operate on a revolving basis for as long as the country qualifies, providing a smoother transition between FCL and the new facility.
- Preparatory work done; not in place now; could be implemented quickly if membership support emerges.
- SDR allocation:
- Referred to as an option (comparable to the sizeable SDR allocation in 2009); may help countries boost reserves and ease foreign exchange pressures.
- Requires broad membership consensus; "there’s no conclusion on an SDR allocation" at this time.
- Central bank swap lines and IMF role:
- Distinction made between (i) a Fund short-term liquidity facility and (ii) central bank swap lines (e.g., Federal Reserve swap lines).
- IMF can act as a facilitator in transactions combining Fund facilities and central bank operations, but such arrangements require participation and requests from central banks and countries.
Policy approach, conditionality, and operational changes
- Emergency facilities have reduced policy conditionality relative to standard programs but retain key safeguards:
- Requirement that financing be used to address underlying balance of payments needs (here: health spending and pandemic response).
- Debt sustainability must be preserved — Fund will not deviate from safeguards ensuring eventual repayment.
- Streamlining and faster processing measures:
- Internal and Executive Board process streamlining to expedite requests (shorter circulation periods, intensified internal review).
- Staff working extended hours to process high volumes of simultaneous requests; first RFI/RF-type case (Kyrgyz Republic) processed and Board-approved.
- FCL and short-term liquidity line conditionality:
- Both use ex ante conditionality (high qualification bar) rather than post-approval program conditionality; FCL is effectively "uncapped in principle," while the short-term liquidity line would be capped and revolving.
Debt relief / official creditor standstill discussions
- Proposal discussed by IMF Managing Director and World Bank President: an official bilateral creditor "standstill" to suspend debt service payments temporarily so low-income countries can repurpose resources to fight the epidemic.
- Emphasized as a temporary liquidity measure, not broad debt forgiveness.
- Modalities (role of multilateral and private creditors, sequencing, implementation steps) remain to be worked out and require discussion among creditors and membership.
- Fund has already reformed the CCRT to provide equivalent relief for IMF repayments during the pandemic.
Key operational and governance notes
- The Fund emphasized rapid response while recognizing constraints of member consensus and institutional processes when considering new instruments.
- Preparatory work and prior planning (e.g., NAB doubling, bilateral borrowing framework) put the Fund "in good shape to meet members' needs during the crisis."
- The briefing date: "April 1, 2020." Media contact: Maria Candia; Phone: "+1 202 623-7100"; Email: "MEDIA@IMF.org"; IMF Twitter: "@IMFSpokesperson."
Transcript of Background Briefing Conference Call on IMF Resources and the Fund’s Strategy to Help Countries Combat COVID-19 — April 1, 2020 — IMF Communications Department