IMF Executive Board Approves a Temporary Increase in Annual Access Limits to Financial Support
IMF News, July 22, 2020
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- Published: July 22, 2020
Context and Rationale
- On July 13, the Executive Board approved a temporary increase in the annual limits on overall access to resources in the General Resources Account and the Poverty Reduction and Growth Trust.
- The severe impact of the COVID-19 pandemic on global economic conditions produced an unprecedented number of member countries seeking IMF financial support.
- As of July 13, 2020, 72 countries have already received financial assistance from the IMF’s emergency financing instruments since the onset of the pandemic.
- Further requests for assistance, the majority of which are likely to be met through the IMF’s regular lending instruments, are expected in the months ahead.
Temporary Changes Approved
- Temporary increases in annual access limits remain in effect through April 6, 2021.
- The existing limits on cumulative access are unaffected by this temporary change.
- Temporary suspension of the limit on the number of disbursements under the Rapid Credit Facility (RCF) through April 6, 2021.
- This suspension allows emergency financing to the IMF’s poorest member countries to be provided more frequently over the course of a year, provided that the combined amounts of support provided under the RCF does not exceed the annual limit on access under this facility.
Specific Access Limit Adjustments
- General Resources Account (GRA) normal annual access limit increased from 145 to 245 percent of quota (temporary through April 6, 2021).
- Poverty Reduction and Growth Trust (PRGT) normal annual access limit increased from 100 percent to 150 percent of quota (temporary through April 6, 2021).
- PRGT exceptional annual access limit increased by 50 percent of quota to 183.33 percent of quota (temporary through April 6, 2021).
- Clarifications were provided on how annual access should be calculated in applying the relevant annual access limits.
Executive Board Assessment — Findings and Views
- Directors noted a uniquely severe synchronized shock across the global economy and a surge in requests for emergency financing instruments.
- Many countries seeking to contain the pandemic’s impact and lay the basis for recovery will likely need additional financial support in the coming year.
- While a few Directors would have preferred more moderate increases in access limits, many other Directors would have supported a larger increase in the normal annual access limit under the PRGT, in line with the GRA increase.
- Directors highlighted the need to secure sufficient subsidy resources to ensure the self‑sustainability of the PRGT and looked forward to discussing possible funding options in the upcoming review of concessional financing.
- Directors looked forward to the planned discussion of a policy on enhanced safeguards for high‑level access to combined GRA and PRGT resources.
- Directors agreed to suspend, temporarily, the limit on the number of disbursements under the RCF within a 12‑month period through April 6, 2021, recognizing the prior doubling of the limit on annual access to resources under the exogenous shocks window of the RCF.
- Given prevailing uncertainties, Directors agreed to review the decisions adopted before the end of 2020, taking account of the initial experience with the use of the higher access limits and of the global economic outlook at that juncture.
- Directors acknowledged that possible modifications to the cumulative limits on overall access to the GRA and the PRGT would be considered in a broader discussion of the Fund’s risk tolerance in the coming months.
- Many Directors expressed disappointment that increasing these cumulative limits was not proposed for consideration in the current context.
- Many other Directors opposed or urged caution in considering a change that could weaken safeguards and pose substantial risks to the Fund.
- Directors recognized that cumulative access limits do not set a ceiling on the amount of financing a member can obtain from the Fund but rather serve as a trigger for additional scrutiny under the exceptional access framework, with the exception of hard access caps in the PRGT.
- Directors underscored that access limits are key elements of the Fund’s risk management framework, preserving the revolving nature and catalytic role of Fund resources.
- Directors emphasized that judgment remains necessary in determining the amount of access in individual arrangements, including assessment of the member’s balance of payments need, repayment capacity, and strength of adjustment efforts.
- Directors stressed the importance of enhanced scrutiny and additional safeguards for exceptional access cases.
- Although increased access limits heighten risks to the Fund, many Directors pointed to potential risks from the failure of the Fund to provide adequate financial support to its members.
Operational Implications
- Member countries can obtain higher levels of financial support during the temporary period without triggering the application of the exceptional access framework, subject to the unchanged cumulative limits.
- The temporary suspension of the RCF disbursement limit increases flexibility in deploying emergency financing within a 12‑month period, constrained by the annual RCF access limit.
IMF Communications Department; Press Release No. 20/267; July 22, 2020.
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