IMF Executive Board Approves Temporary Extension of Cumulative Access Limits in the Fund’s Emergency Financing Instruments
IMF News, December 23, 2021
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- Published: December 23, 2021
Decision approved
- On December 20, 2021, the IMF’s Executive Board approved 18-month extensions (through end-June 2023) of the temporary increases to the cumulative access limits under the Fund’s emergency financing instruments.
- The extension applies to:
- the Rapid Financing Instrument (RFI) regular window,
- the Rapid Credit Facility (RCF) Exogenous Shock window,
- the RFI’s and RCF’s Large Natural Disaster (LND) windows.
- All other access limits that had been temporarily increased were allowed to return to their pre-pandemic levels from January 1, 2022 as scheduled.
- The Executive Board reinstated the limit on the number of disbursements under the RCF within a 12-month period.
- The Board endorsed staff’s proposal to prepare an exit strategy from the temporary increase in cumulative access limits under emergency financing instruments by end-June 2023.
Background and timing
- Temporary increases in access limits for the RFI regular window and the RCF Exogenous Shock window were first introduced in April 2020 and extended in September 2020, and again in March 2021.
- For the RFI’s and RCF’s LND windows, the temporary increases were introduced in June 2021.
- The Board’s decision reflects an expected and ongoing gradual shift to upper-credit-tranche (UCT) quality arrangements from emergency financing triggered by urgent, pandemic-related balance of payment (BoP) needs, while ensuring continued access to emergency financing if urgent BoP needs arise when a UCT-quality arrangement is either not necessary or not feasible.
Executive Board Assessment — key findings and views
- Directors noted that the temporarily-high access limits ensured the Fund was able to swiftly provide adequate support during the pandemic.
- Access limits are a key element of the Fund’s risk management framework, providing safeguards to Fund resources and preserving the revolving nature and catalytic role of Fund financing.
- Returning annual access limits to lower levels while extending the cumulative access limits for emergency financing balances the need to preserve member countries’ borrowing space with safeguarding Fund resources.
- Directors agreed with the 18-month extension of the temporarily-higher cumulative access limits for emergency financing instruments, while allowing all other temporarily-increased access limits to expire and return on January 1, 2022 to pre-pandemic levels, except for the PRGT normal annual access limit, which will become 145 percent of quota as approved in July 2021.
- Directors noted that the PRGT normal cumulative access limit was increased on a non-transitory basis to 435 percent of quota in July 2021.
- A few Directors thought the extension of the cumulative limits under the emergency financing instruments could have been shorter.
- Directors noted the further temporary extension would have a limited impact on GRA and PRGT resources.
- Directors took note that no member requested RCF disbursements in excess of the temporarily-relaxed disbursement limit during the pandemic.
- Many Directors emphasized the need for rigorous and transparent application of the qualification requirements for emergency financing, including a convincing justification if a UCT-quality program is assessed to be not feasible.
- Some Directors highlighted the importance of strong governance and robust safeguards for the use of emergency financing.
- Directors underscored that members should be encouraged to transition to tailored, UCT-quality programs when appropriate and feasible to support structural reforms to address underlying vulnerabilities and larger financing needs.
- Directors generally welcomed the staff proposal to prepare an exit strategy by end-June 2023 and asked for early Board engagement.
- Some Directors emphasized that the 18-month extension should be the last, and a few called on staff to prepare an exit strategy much earlier than proposed. A few other Directors recommended having greater flexibility.
Specific numeric limits and reinstatements
- Cumulative access limits for the regular window of the RFI and the exogenous shocks window of the RCF will remain at 150 percent of quota through end-June 2023.
- Cumulative access limits for the RFI’s and RCF’s Large Natural Disaster (LND) windows will remain at 183.33 percent of quota through end-June 2023.
- For the PRGT:
- PRGT normal annual access limit will become 145 percent of quota as approved in July 2021.
- PRGT normal cumulative access limit was increased on a non-transitory basis to 435 percent of quota in July 2021.
- The temporarily-suspended two-disbursement limit under the RCF within a 12-month period will be reinstated from January 1, 2022.
Policy implications and next steps
- The extension preserves access to emergency financing for urgent BoP needs when UCT-quality arrangements are not necessary or not feasible, while encouraging transitions to UCT-quality programs where appropriate.
- Staff to prepare an exit strategy from temporary cumulative access increases by end-June 2023, with early Board engagement requested.
- Continued monitoring urged to ensure affected countries are not unduly constrained by the return to lower annual access limits.
- Emphasis on rigorous qualification, strong governance, and robust safeguards for emergency financing use.
Press and contact details
- Press Release No. 21403
- Date: December 23, 2021
- IMF Communications Department — MEDIA RELATIONS
- PRESS OFFICER: Wafa Amr
- Phone: +1 202 623-7100
- Email: MEDIA@IMF.org
- @IMFSpokesperson
IMF Executive Board Approves Temporary Extension of Cumulative Access Limits in the Fund’s Emergency Financing Instruments