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
IMF News, June 30, 2023
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- 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
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- Published: June 30, 2023
Summary of decisions
- Executive Board approved on June 27, 2023 an extension of the temporarily higher Cumulative Access Limits (CALs) under the Rapid Credit Facility (RCF) and the Rapid Financing Instrument (RFI).
- Executive Board approved a 6-month extension of the Food Shock Window (FSW), established in September 2022, until end-March 2024.
- Press Release No. 23/252.
Timelines and specific access-limit decisions
- Temporarily higher cumulative access limits under the RFI will be maintained until end-June 2024.
- 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 (PRGT review).
- FSW extension: until end-March 2024 (explicitly until March 31, 2024 in Board discussion).
- Extension of the additional 25 percent of quota added to the Cumulative Access Limit:
- Until end-2026 for countries that accessed the FSW through the RFI.
- Until the completion of the 2024/25 PRGT review for countries that accessed the FSW through the RCF.
RFI and RCF access levels preserved (as discussed by Directors)
- RFI: 150 percent of quota for the regular window and 183.33 percent of quota for the Large Natural Disaster (LND) window (extension until end-June 2024).
- RCF: 150 percent of quota for the exogenous shock window and 183.33 percent of quota for the LND window (extension until completion of the 2024/25 PRGT review).
Food Shock Window (FSW) usage and financial disbursements
- FSW was approved in September 2022 for 12 months as a complement to other IMF tools to address the global food shock.
- The Fund disbursed in total US$1.8 billion (SDR 1.4 billion) for six countries under the Food Shock Window.
- Since September 2022, twenty-one countries affected by the global food shock have benefited from multi-year Fund-supported programs (Upper-Credit Tranche quality programs).
Rationale and anticipated role
- Purpose: ensure Fund capacity to support countries facing urgent Balance of Payment (BOP) needs while countries are repaying pandemic-related emergency financing.
- FSW role: contingency tool to support members affected by the global food shock in cases where a UCT-quality program is not feasible or not necessary; allows observation of demand developments to determine whether the window can lapse without limiting Fund support.
- The Fund will continue to work with partners (World Bank, World Food Programme, World Trade Organization, Food and Agriculture Organization) to provide a coordinated international response.
Executive Board assessment and Directors’ views
- Directors broadly supported:
- Limited extension of the temporarily higher cumulative access limits for RFI and RCF.
- Six-month extension of the FSW until end-March 2024.
- Directors noted:
- Strong transition from pandemic-related emergency financing under RCF and RFI to UCT-quality programs since 2021.
- Qualification requirements for RCF and RFI ensure these instruments are used only when a UCT-quality program is not feasible or not necessary.
- Continued challenging global economic environment and depleted macroeconomic buffers justify maintaining some borrowing space under emergency financing instruments.
- Divergent views:
- Some Directors preferred a longer extension of CALs; others raised concerns about impacts on transition to UCT-quality programs.
- Most Directors preferred FSW to automatically expire at end-March 2024 unless renewed; a number requested an Executive Board decision on expiration; some preferred a longer or shorter extension.
- Governance and program design concerns:
- Calls for appropriate governance safeguards for FSW financing, tailored to country circumstances, to ensure transparency and accountability.
- Noted limited uptake of the FSW relative to initial expectations and concerns about potential evenhandedness issues.
- Some Directors suggested the FSW design may not have fully reflected the full range of circumstances of all eligible countries; a few called for an ex-post evaluation of the FSW after its expiration.
- Resource impact:
- Staff assessed that the extensions would have a limited impact on the General Resources Account and PRGT resources.
- Some Directors suggested concluding the 16th General Review of Quotas with a quota increase to help ensure members’ access to adequate Fund financing.
Policy implications and operational guidance
- Maintain temporarily higher CALs to preserve emergency lending capacity while pandemic-era repayments continue.
- Keep FSW available as a contingency instrument until end-March 2024 to respond to ongoing global food shock-related BOP needs where UCT-quality programs are infeasible or unnecessary.
- Apply additional 25 percent of quota to CALs for FSW users with staggered timelines tied to instrument (RFI: end-2026; RCF: completion of 2024/25 PRGT review).
- Continue coordination with multilateral partners and use full range of IMF tools: policy advice, technical assistance, lending, and multi-year UCT-quality programs where feasible.
- Strengthen governance safeguards and transparency for FSW disbursements; consider ex-post evaluation of FSW experience after expiration.
Source: Press Release No. 23/252, IMF Communications Department (June 30, 2023).
References
- https://www.imf.org/-/media/images/imf/bios/imfboard.jpg
- The Executive Board
- IMF Quotas -- A Factsheet
- Press Releases
- PRESS CENTER
- Rapid Credit Facility
- Rapid Financing Instrument
- approved by the Executive Board in September 2022
- http://www.IMF.org/external/np/sec/misc/qualifiers.htm
- https://www.imf.org/en/home
