Targeted Modification Of Streamlined Procedures For Approval Of Successor Flexible Credit Line And Precautionary And Liquidity Line Arrangements
Policy Papers, July 17, 2024
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- Targeted Modification Of Streamlined Procedures For Approval Of Successor Flexible Credit Line And Precautionary And Liquidity Line Arrangements
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Bibliographic details
- Published: July 17, 2024
- Series: Policy Papers
- DOI: https://doi.org/10.5089/9798400283604.007
Background and context
- The 2023 Review of the Flexible Credit Line (FCL), the Short-Term Liquidity Line (SLL), and the Precautionary and Liquidity Line (PLL) introduced a streamlining of procedures.
- The streamlining included dropping the requirement for an informal consultation with the Executive Board for the approval of successor FCL and PLL arrangements when certain requirements were met.
- Normal practice for consecutive FCL and PLL arrangements is to cancel an existing arrangement shortly before expiration while simultaneously requesting a successor arrangement to ensure seamless back-to-back arrangements.
Issue identified by staff
- In implementing the new procedures, staff observed that one requirement is at odds with the well-established practice for consecutive FCL and PLL arrangements.
- The unintended consequence of the drafting of the new procedures is that an informal consultation with the Executive Board can be waived only when an arrangement expires — not if it were to be canceled shortly before expiration to ensure seamless back-to-back arrangements — even if all the other requirements for dropping such consultation are satisfied.
- This constraint is described as unduly constraining the reform and at odds with the intention presented in the 2023 Review.
Proposal and policy recommendation
- Staff proposes the adoption of a decision with a targeted modification of the FCL and PLL decisions to rectify the drafting issue.
- The proposed targeted modification is intended to allow the informal consultation requirement to be waived in the situation of cancellation shortly before expiration when all other waiver requirements are met, aligning procedures with established practice for seamless successor arrangements.
Publication and metadata
- Publication date: July 17, 2024
- Pages: 9
- Volume: 2024
- Issue: 033
- Series: Policy Paper No. 2024/033
- DOI: https://doi.org/10.5089/9798400283604.007
- Stock No: PPEA2024033
- ISBN: 9798400283604
- ISSN: 2663-3493
- Subject: Asset and liability management, Liquidity
- Keywords: fcl arrangement, fcl decision, Liquidity, predecessor fcl, successor arrangement, transparency policy, undrawn fcl
International Monetary Fund. Legal Dept., and International Monetary Fund. Strategy, Policy, & Review Department "Targeted Modification Of Streamlined Procedures For Approval Of Successor Flexible Credit Line And Precautionary And Liquidity Line Arrangements", Policy Papers 2024, 033 (2024).
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- Policy Paper