Proposal for a Food Shock Window Under the Rapid Financing Instrument and Rapid Credit Facility
Policy Papers, October 5, 2022
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- Proposal for a Food Shock Window Under the Rapid Financing Instrument and Rapid Credit Facility
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Bibliographic details
- Published: October 5, 2022
- Series: Policy Papers
- DOI: https://doi.org/10.5089/9798400221408.007
Context and Rationale
- Russia’s war in Ukraine has exacerbated global economic pressures via a food shock.
- Spillovers include higher import prices for food and fertilizer, disruptions in supply lines for food importers, and loss of revenue for some food exporters.
- Acute food insecurity has been exacerbated, now affecting 345 million people.
- These developments add to urgent balance-of-payments (BOP) needs for many Fund members.
- While an Upper Credit Tranche-quality (UCT-quality) program is generally the best response to address BOP pressures, such a program may not be feasible in some cases or necessary in others.
Proposal: Food Shock Window — Purpose and Scope
- Establish a time-bound food shock window under the Rapid Financing Instrument (RFI) and the Rapid Credit Facility (RCF).
- Objective: provide low-access emergency financing that increases the amounts currently available under the RFI/RCF to assist members facing urgent BOP needs related to the global food shock.
- The window is intended to be temporary.
Eligibility and Qualification Criteria
- Members must demonstrate urgent balance-of-payments needs.
- Members must meet a set of qualification criteria related to the global food shock.
- Countries requesting financing under the window must also meet the standard qualification criteria under the RFI/RCF.
Design Features: Access, Duration, and Timing
- The window would provide low-access emergency financing (increasing amounts available under the RFI/RCF).
- Availability: the window would be available for 12 months from the date of Board approval of the window.
- The window is explicitly time-bound to address immediate needs stemming from the food shock.
Key Findings and Implications
- The food shock from the war and related spillovers materially increases BOP pressures for affected members.
- A targeted, temporary financing window can fill gaps where UCT-quality programs are infeasible or unnecessary.
- The measure seeks to balance rapid, low-access support with qualification criteria tied to the global food shock and existing RFI/RCF standards.
Policy Recommendations and Next Steps
- Approve a temporary food shock window under the RFI/RCF to expand low-access emergency financing.
- Require applicants to demonstrate urgent BOP needs and satisfy both food-shock-specific and standard RFI/RCF qualification criteria.
- Limit the window’s availability to a 12-month period from Board approval to ensure time-bound support.
International Monetary Fund. "Proposal for a Food Shock Window Under the Rapid Financing Instrument and Rapid Credit Facility", Policy Papers 2022, 042 (October 5, 2022).
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- Policy Paper