Review Of Charges And The Surcharge Policy—Reform Proposals

Policy Papers, October 21, 2024

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On October 11, 2024, the IMF’s Executive Board concluded the Review of Charges and the Surcharge Policy.
The review is part of a broader ongoing effort to ensure that the IMF’s lending policies remain fit for purpose to meet the evolving needs of the membership.
Charges and surcharges are described as important elements of the IMF’s cooperative lending and risk-management framework, covering lending intermediation expenses, helping accumulate reserves to protect against financial risks, and providing incentives for prudent and temporary borrowing.
The series of three papers informed the Executive Board’s first and second informal engagements (July and September 2024) and the formal meeting (October 2024) on this review.

The Executive Board reached consensus on a comprehensive package of reforms that substantially reduces the cost of borrowing for members while safeguarding the IMF's financial capacity to support countries in need.
The approved measures will lower IMF borrowing costs by about US$1.2 billion annually.
The measures will reduce payments on the margin of the rate of charge as well as surcharges on average by 36 percent.
The number of countries subject to surcharges in fiscal year 2026 is expected to fall from 20 to 13.

Reduction in the margin for the rate of charge.
Increase in the threshold for level-based surcharges.
Reduction in 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.

Reforms were agreed against the backdrop of a challenging economic environment and high global interest rates.
Objective: substantially reduce the cost of borrowing for members while safeguarding IMF financial capacity to extend balance of payments support on affordable terms.