IMF Executive Board Approves Proposals to Enhance the Fund’s Emergency Financing Toolkit to US$100 Billion

IMF News, April 9, 2020

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IMF Executive Board Approves Proposals to Enhance the Fund’s Emergency Financing Toolkit to US$100 Billion

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• Published: April 9, 2020

Overview

• Context: The Covid-19 pandemic is creating severe disruption in the global economic and financial system and has generated significant immediate demand for Fund resources among emerging market and developing country (EMDC) members.
• Objective: Enhance the Fund’s emergency financing toolkit to meet expected demand of about US$100 billion in financing and provide stronger support to member countries addressing the COVID-19 crisis.
• Scope: Proposals focus on the Rapid Financing Instrument (RFI), available to all members, and the Rapid Credit Facility (RCF), available only to low-income countries eligible for concessional financing. Complementary proposals accelerate Board consideration of financing requests under the RCF and RFI, and assistance under the Catastrophe Containment and Relief Trust.

Key decision: access limits and duration

• Doubling access to emergency facilities to help meet expected demand of about US$100 billion.
• Annual access limits:
  • Rising from 50 to 100 percent of quota.
• Cumulative access limits:
  • Rising from 100 to 150 percent of quota, net of scheduled repayments or repurchases, respectively.
• Temporary application:
  • New access limits apply for a temporary six‑month period, with a review of the limits as proposed.

Executive Board Assessment — findings and considerations

• Demand and utilization:
  • The Fund has received calls for emergency financing from over 90 countries so far.
• Board support and caveats:
  • Directors welcomed the timely discussion and emphasized importance of a rapid and decisive Fund response to COVID‑19.
  • Most Directors supported temporarily suspending procedures for high access RCF requests under the PRGT to facilitate urgent financing requests.
  • Directors emphasized emergency financing should be truly additional for both access to the PRGT and GRA.
  • Many Directors indicated interest in exploring how temporary relaxation in normal access limits could accommodate the surge in emergency lending.
• Fiscal and accountability concerns:
  • Directors stressed careful monitoring of implementation, including safeguards of accountability, transparency, and control where governance and corruption vulnerabilities are macro‑critical.
  • Careful consideration needed for debt sustainability issues.
• Resource implications:
  • Directors concurred that the impact of higher RFI access limits on the General Resources Account would be manageable, subject to heightened Covid‑19 uncertainties.
  • Directors recognized that higher access limits under the RCF would exacerbate growing pressures on PRGT loan resources and stressed the need for expedited and ambitious fundraising efforts.
• PRGT sustainability and future adjustments:
  • Provided sufficient resources were raised quickly, Directors looked forward to considering an increase in the overall PRGT annual normal access limit to provide additional space for PRGT financing later in the year, including blended with potential arrangements in the GRA.
  • Directors asked for close assessments of the self‑sustainability of the PRGT and looked forward to considering additional suggestions to strengthen the Fund’s efforts in the upcoming review of the Fund’s concessional financing.

Operational and procedural measures

• Complementary adoption:
  • Executive Board adopted complementary proposals to accelerate Board consideration of member financing requests under the RCF and RFI, and assistance under the Catastrophe Containment and Relief Trust.
• Streamlining procedures:
  • Related measures referenced under Streamlining Procedures for Board Consideration of the Fund’s Emergency Financing During Exceptional Circumstances Involving a Pandemic.

IMF Communications Department, April 9, 2020.

References

• https://www.imf.org/-/media/images/imf/bios/imfboard.jpg
• The Executive Board
• Press Releases
• PRESS CENTER
• Streamlining Procedures for Board Consideration of the Fund’s EmergencyFinancing During Exceptional Circumstances Involving a Pandemic
• http://www.imf.org/external/np/sec/misc/qualifiers.htm
• https://www.imf.org/en/home