Press Release No. 23/252

IMF Executive Board Approves an Extension of the Temporarily Higher Cumulative Access Limits under the Fund’s Emergency Financing Instruments and an Extension of the Food Shock Window

June 30, 2023

• The Executive Board of the International Monetary Fund (IMF or the Fund) approved a limited extension of the higher Cumulative Access Limits (CAL) under its emergency financing (EF) instruments, the Rapid Credit Facility and the Rapid Financing Instrument.
• The Executive Board also approved a 6-month extension of the Food Shock Window (FSW), established in September 2022, until end-March 2024.
• These two decisions will allow the Fund to continue to be able to support member countries facing urgent Balance of Payment (BOP) needs amid a challenging economic environment and ongoing global food shock.

Washington, DC: The IMF Executive Board approved on June 27, 2023 an extension of the temporarily higher Cumulative Access Limits (CALs) under the Fund’s Emergency Financing (EF) instruments, the Rapid Credit Facility (RCF) and the Rapid Financing Instrument (RFI). The temporarily higher cumulative access limits ensure the Fund will have the capacity to support countries in case of renewed emergency situations, in the period in which countries are still in the process of repaying emergency financing received during the pandemic.

The temporarily higher cumulative access limits under the RFI will be maintained until end-June 2024, when most RFI recipients will have repaid a significant part of their past emergency financing. The temporarily higher cumulative access limits under the RCF will be maintained until the completion of the 2024/25 comprehensive review of the Fund’s concessional facilities and financing, given the longer repayment schedule for RCF financing.

The Board also approved a 6-month extension of the Food Shock Window (FSW) under the RCF and RFI, until end-March 2024.The Food Shock Window was approved by the Executive Board in September 2022 for 12 months, as a complement to the tools used by the Fund to support the broader international effort to address the global food shock. The Fund has been working closely with the World Bank, the World Food Programme, the World Trade Organization and the Food and Agriculture Organization, both at headquarter and country levels, to provide a coordinated international response to the global food shock. The Fund has contributed through policy advice, technical assistance and lending. Where needed and possible, financial support to countries affected by the global food shock has been delivered by the IMF through multi-year Fund-supported programs (Upper-Credit Tranche quality programs). Since September 2022, twenty-one countries affected by the global food shock have benefited from this type of programs. The Food Shock Window complemented this support in situations where UCT-quality programs were not feasible or not necessary. The Fund disbursed in total US$1.8 billion (SDR 1.4 billion) for six countries under the Food Shock Window.

As the global food shock and associated balance of payment pressures are expected to continue throughout 2023, the 6-month extension will allow the Food Shock Window to continue serving as a contingency tool in case members affected by this shock face urgent balance of payment needs and a UCT-quality program would not be feasible or not necessary. This extension will also provide sufficient time to observe if the Food Shock Window can lapse without limiting the capacity of the Fund to support its members. To ensure sufficient borrowing space under the emergency financing limits for those countries that have received support through the Food Shock Window, the Executive Board also approved the extension of the additional 25 percent of quota added to the Cumulative Access Limit until end-2026 for countries that have accessed the Food Shock Window through the RFI and until the completion of the 2024/25 PRGT review for those that accessed the Food Shock Window through the RCF.

The Fund will continue to work closely with its partners, using the whole range of its tools, to support countries affected by the global food shock.

Executive Board Assessment[1]

Executive Directors welcomed the opportunity to review (i) the temporarily higher cumulative access limits under the Rapid Financing Instrument (RFI) and the Rapid Credit Facility (RCF) and (ii) the experience with the Food Shock Window (FSW) under the RFI and the RCF. They broadly supported a limited extension of the temporarily higher cumulative access limits under the RFI and RCF, and a six-month extension—until end-March 2024—of the FSW.

Directors welcomed the strong transition from pandemic-related emergency financing under the RCF and the RFI to upper credit tranche (UCT) quality programs since 2021. They considered that the past two years have demonstrated that the qualification requirements for RCF and RFI financing ensure that these instruments are only used when a UCT-quality program is either not feasible or not necessary. At the same time, Directors considered that the continued challenging global economic environment, which has left many countries with depleted macroeconomic buffers, calls for maintaining some borrowing space under the Fund’s emergency financing instruments.

Directors noted that many countries that used the RFI and/or the RCF during the pandemic would be left with little or no borrowing space under these emergency financing instruments if their cumulative access limits were to return to pre-pandemic levels at the end of June 2023. Against this backdrop, most Directors supported an extension of the temporarily higher cumulative access limits for the RFI (150 percent of quota for the regular window and 183.33 percent of quota for the Large Natural Disaster (LND) window) until the end of June 2024; with a few of these Directors noting that they would have preferred an even longer extension, while another view raised concerns about the extension’s potential impact on countries’ transition to UCT-quality programs. Directors also supported extending the temporarily higher cumulative access limits for the RCF (150 percent of quota for the exogeneous shock window and 183.33 percent of quota for the LND window) until the date of the Board completion of the comprehensive review of the Poverty Reduction and Growth Trust (PRGT) facilities planned for 2024/25. Directors noted that these temporary extensions in cumulative access limits for the RFI and RCF will enable the Fund to continue to provide support to members that experience urgent Balance of Payment needs where a UCT-quality program is not feasible or not necessary.

Directors welcomed the opportunity to discuss the Fund’s response to the global food shock and the experience with the FSW that was established in September 2022 for a period of 12 months. They agreed that the food shock is still ongoing, and that the Fund should continue its effort to support countries, working with partners. While noting that the Fund should endeavor to deliver financial support through UCT-quality program in most cases, they broadly agreed that it would be prudent to extend the availability of the FSW as a contingency tool to support members strongly affected by the ongoing food shock in situations where a UCT-quality program is not feasible or not necessary. Directors concurred that extending the availability of the window would also allow a longer period for observing demand developments and provide confidence that the window could then lapse without limiting the Fund’s ability to support its members.

Against this backdrop, Directors supported extending the availability of the FSW under the RFI and the RCF for an additional 6 months—until March 31, 2024. Most Directors preferred the FSW to automatically expire at that time unless demand developments warrant another Board discussion before such date. A number of Directors requested, however, that the Executive Board decide on the FSW’s expiration rather than letting it elapse automatically. A few other Directors would have preferred extending the FSW for a longer period, whereas another view favored a shorter extension.

Directors also agreed to extend the application of an additional 25 percent of quota to cumulative access limits until end-2026 for countries that have accessed the FSW through the RFI, and until the completion of the comprehensive review of PRGT facilities planned for 2024/25 for those countries that have received FSW support under the RCF. A number of Directors emphasized that RCF-eligible countries should not be placed at a disadvantage as an outcome of the different timelines and the PRGT facilities review.

Many Directors reiterated their support for the combination of a FSW with a Staff Monitored Program or a Program Monitoring with Board Involvement, which can help countries building a track record of policy implementation. A number of Directors also highlighted that appropriate governance safeguards for FSW financing, tailored to country circumstances, remain essential to ensure transparency and accountability in the spending of these emergency resources. Directors called for effectively communicating the Fund's role and policies to address the global food shock, and in particular the role of the FSW. Many Directors noted the limited uptake of the FSW relative to their initial expectation and expressed concerns on potential evenhandedness issues. Some Directors also considered that the design of the FSW may not have sufficiently reflected the full range of circumstances of all eligible countries. In this context, a few Directors called for an ex-post evaluation of the FSW experience after the expiration of the window.

Directors noted staff’s assessment that the further temporary extension of the higher cumulative access limits for emergency financing instruments and the extension of the FSW would have a limited impact on the General Resources Account and PRGT resources. Some Directors considered that concluding the 16 ^th General Review of Quotas with a quota increase would help ensure members’ access to adequate Fund financing.