Factual Statements

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• Authors: Credit Facility

IMF Surveillance (Article IV)

• Under Article IV of its Articles of Agreement, the IMF has a mandate to exercise surveillance over the economic, financial and exchange rate policies of its members to ensure the effective operation of the international monetary system.
• IMF appraisal involves a comprehensive analysis of the general economic situation and policy strategy of each member country.
• IMF economists visit the member country, usually once a year, to collect and analyze data and hold discussions with government and central bank officials.
• Upon return, the staff submits a report to the IMF’s Executive Board for discussion. The Board’s views are subsequently summarized and transmitted to the country authorities.

Financial Sector Assessment Program (FSAP)

• The Financial Sector Assessment Program (FSAP), established in 1999, is a comprehensive and in-depth assessment of a country’s financial sector.
• Key findings of an FSAP are summarized in a report called the Financial System Stability Assessment (FSSA), which is discussed by the IMF Executive Board.
• When an FSSA is discussed outside the context of an Article IV consultation, the Chairperson of the Board summarizes the views of Executive Directors at the conclusion of the discussion and this summary is transmitted to the country’s authorities.

Use of Fund Resources (UFR) — Facilities Overview

• The Use of Fund Resources (UFR) provides temporary financial assistance to member countries facing balance of payments (BOP) difficulties, helping them restore economic stability and growth.
• Countries can access support through different facilities, depending on their income and specific needs.

Facilities and key characteristics:

• Stand-By Arrangement (SBA)
  • Provides short-term financial assistance to advanced and emerging market economies facing acute or potential BOP problems.
  • Typically covers a period of 12–24 months, but not more than 36 months.
• Extended Fund Facility (EFF)
  • Provides financial assistance to advanced and emerging market economies facing serious medium-term BOP problems because of structural weaknesses.
  • Typically covers a period of 3 years but may be approved for periods as long as 4 years to implement deep and sustained structural reforms.
• Rapid Financing Instrument (RFI)
  • Provides prompt financial assistance to any Fund member facing urgent BOP need, including in times of crisis (e.g., natural disasters).
  • It is for single disbursement.
• Flexible Credit Line (FCL)
  • Designed for crisis-prevention and crisis-mitigation lending for countries with very strong policy frameworks and sustained policy track record.
  • Meets actual or potential BOP needs and boosts market confidence during a period of heightened risks.
  • It is a renewable credit line, initially for one or two years.
• Precautionary and Liquidity Line (PLL)
  • Provides financial support to meet actual or potential BOP needs of countries with sound policies that may have some remaining vulnerabilities.
  • It is renewable and initially approved for six months, one year and two years.
• Short-term Liquidity Line (SLL)
  • Provides a liquidity backstop for members with very strong policy frameworks and fundamentals facing potential, moderate, short-term BOP needs related to capital account pressures from external developments.
  • Aims to minimize the risk of shocks evolving into deeper crises and spilling over to other countries.
• Extended Credit Facility (ECF)
  • Provides medium-term financing to low-income countries with protracted BOP problems to implement economic programs that make significant progress toward a stable and sustainable macroeconomic position consistent with strong and durable poverty reduction and growth.
  • It is typically approved for 3-5 years, with an overall maximum duration of 5 years.
• Stand-By Credit Facility (SCF)
  • Provides financial assistance to low-income countries (LICs) that have reached broadly sustained macroeconomic positions but may experience episodic, short-term financing and adjustment needs, including those caused by shocks.
  • Duration of this facility is 12 – 36 months.
• Rapid Credit Facility (RCF)
  • Provides fast concessional financial assistance to low-income countries (LICs) facing urgent BOP need, tailored to diverse needs of LICs, including in crisis time (e.g., large natural disasters, sudden exogenous shocks).
  • It is for single disbursement.
• Resilience and Sustainability Facility (RSF)
  • Financed from the Resilience Sustainability Trust (RST) Fund.
  • Provides affordable longer-term financing to support low-income countries and vulnerable middle-income countries undertaking macro-critical reforms to reduce risks to prospective BOP stability, including those related to climate change and pandemic preparedness.
  • Expected to coincide with the remaining duration of the accompanying upper credit tranche (UCT) program.
  • Minimum duration is 18 months.
  • RSF automatically ends upon the termination, cancellation, or expiration of the concurrent IMF-supported program. It also expires when all amounts available are disbursed.

Policy Coordination Instrument and Program Monitoring

• Policy Coordination Instrument (PCI)
  • A non-financing instrument open to all IMF member countries designed to assist countries in formulating and implementing a macroeconomic policy program to enhance macroeconomic stability and address macroeconomic imbalances, facilitating access to financing from official creditors.
  • A PCI can be used concurrently with emergency financing under the Rapid Financing Instrument or Rapid Credit Facility or with a financial arrangement under the Stand-By-Arrangement, Stand-By Credit Facility or Resilience and Sustainability Facility.
  • It is typically approved for 2-3 years but can be approved for a minimum of six months and up to four years.
  • There is no limit on the number of successor PCIs.
• Staff Monitored Program (SMP)
  • An informal agreement between an IMF member country and IMF staff to monitor the member country’s economic program.
  • SMPs do not entail endorsement by the IMF Executive Board.
  • Used to help a country establish a track record of policy implementation when not yet able to implement an IMF-supported program.
  • SMPs last for a minimum of six months and are not expected to exceed 18 months.
• Staff Monitored Program with Board Involvement (PMB)
  • Designed to help countries considering an SMP establish a policy track record for an IMF-supported program.
  • PMBs allow for limited Executive Board involvement in opining on the robustness of a member’s policies to meet stated objectives under an SMP and in monitoring its implementation.
  • Can benefit countries subject to an ongoing concerted international effort by creditors or donors to provide substantial new financing or debt relief or that have significant outstanding IMF credit under emergency financing instruments.

Evaluations and Post-Program Monitoring

• Ex-Post Evaluations (EPE)
  • In 2002, the IMF Executive Board decided to conduct Ex-Post Evaluations (EPE) of arrangements involving exceptional access to the Fund’s General Resource Account.
  • Purpose: to provide a critical and frank discussion of whether justifications presented at the outset of the arrangement—including the justification for exceptional access—were consistent with Fund policies and to review performance under the Fund supported program.
  • These evaluations have to be completed within one year of the end of the arrangement.
  • A staff team prepares a report that is discussed with the country’s authorities and presented to the Executive Board for discussion.
• Post-Financing Assessments (PFA)
  • Provide for closer monitoring of the circumstances and policies of members whose Fund-supported program has expired but that continue to have significant Fund credit outstanding.
  • Intended to provide an early warning of policies which could call into question a member’s continued progress toward external viability and thus could imperil Fund resources, and a mechanism for bringing this to the attention of the country’s authorities and the Executive Board and stimulating action to improve the situation.
  • IMF economists visit the member country, usually twice a year, to collect and analyze data and hold discussions with government and central bank officials.
  • Upon return, the staff submits a report to the IMF’s Executive Board for discussion. The Board’s views are subsequently summarized and transmitted to the country's authorities.