Review Of Charges And The Surcharge Policy— A Possible Reform Package
Policy Papers, October 21, 2024
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- Review Of Charges And The Surcharge Policy— A Possible Reform Package
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Bibliographic details
- Published: October 21, 2024
- Series: Policy Papers
- DOI: https://doi.org/10.5089/9798400290510.007
Overview and context
- On October 11, 2024, the IMF’s Executive Board concluded the Review of Charges and the Surcharge Policy.
- The review is part of an ongoing effort to ensure IMF lending policies remain fit for purpose to meet the evolving needs of the membership.
- Charges and surcharges:
- cover lending intermediation expenses,
- help accumulate reserves to protect against financial risks,
- provide incentives for prudent and temporary borrowing.
- The review was informed by a series of three papers and by Executive Board engagements in July and September 2024 (informal) and October 2024 (formal).
Key findings and fiscal impact
- The Executive Board reached consensus on a comprehensive reform package that substantially reduces the cost of borrowing for members while safeguarding the IMF's financial capacity.
- Expected fiscal impacts:
- Lower IMF borrowing costs by about US$1.2 billion annually.
- Reduce payments on the margin of the rate of charge as well as surcharges on average by 36 percent.
- Number of countries subject to surcharges in fiscal year 2026 is expected to fall from 20 to 13.
Main reforms approved
- Reduction in the margin for the rate of charge.
- Increase in the threshold for level-based surcharges.
- Reduction in the rate for time-based surcharges.
- Alignment of thresholds for commitment fees with annual and cumulative access limits for GRA lending facilities.
- Institution of regular reviews of surcharges.
Policy rationale and objectives
- Lower borrowing costs for members in a challenging economic environment and high global interest rates.
- Preserve the IMF’s financial foundation so it can extend balance of payments support on affordable terms when member countries need it.
- Balance cooperative lending objectives, risk management, and incentives for prudent borrowing.
Process and next steps
- The series of three analytical papers informed the Executive Board’s first and second informal engagements (July and September 2024) and the formal meeting (October 2024).
- Regular reviews of surcharges are to be instituted as part of the reform package.
Source: Review Of Charges And The Surcharge Policy— A Possible Reform Package, October 21, 2024.
Content in this bundle
- Policy Paper