Review Of The Adequacy Of The Fund’s Precautionary Balances
Policy Papers, December 20, 2022
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- Canonical URL
- Review Of The Adequacy Of The Fund’s Precautionary Balances
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Bibliographic details
- Published: December 20, 2022
- Series: Policy Papers
- DOI: https://doi.org/10.5089/9798400228773.007
Overview
- Review date: December 12, 2022.
- Review cycle: standard two-year cycle, after an interim review in December 2021.
- Precautionary balances comprise the Fund’s general and special reserves.
- Role: key element of the IMF’s multi-layered framework for managing financial risks; provide a buffer to protect the Fund against potential losses from credit, income, and other financial risks.
- Framework applied: rules-based framework agreed in 2010.
Key Findings and Coverage Metrics
- Precautionary balances have risen further since the 2021 interim review.
- Coverage metrics have strengthened since the 2021 interim review.
- At the same time, credit and other financial risks have increased.
- The pace of reserve accumulation is expected to remain adequate.
Executive Board Decision and Policy Position
- Executive Directors endorsed staff’s proposal to retain:
- medium-term target of SDR 25 billion, and
- minimum floor of SDR 15 billion.
- The Board discussed the role of surcharges:
- Surcharges are primarily a component of the Fund’s risk management framework but also contribute to reserves accumulation.
Subject Areas and Keywords (as listed)
- Subject: Credit, Credit ratings, Credit risk, Emergency assistance, Financial regulation and supervision, Foreign aid, Income, Monetary policy, Money, National accounts, Political economy.
- Keywords: Caribbean, concentration risk, Credit, Credit ratings, Credit risk, D. financial risks, Emergency assistance, Fund credit, fund financial risks, Global, Income, risk management framework, transparency policy, Western Hemisphere.
Content in this bundle
- Policy Paper