{ "title": "The IMF Approves Policy Reforms and Funding Package to Better Support the Recovery of Low Income Countries From the Pandemic", "publication": "IMF News, July 22, 2021", "sourceUrl": "https://www.imf.org/en/news/articles/2021/07/22/pr21222-imf-approves-policy-reforms-funding-package-support-low-income-countries-from-pandemic", "canonical": "https://www.imf.org/en/news/articles/2021/07/22/pr21222-imf-approves-policy-reforms-funding-package-support-low-income-countries-from-pandemic", "overlayPath": "/en/news/articles/2021/07/22/pr21222-imf-approves-policy-reforms-funding-package-support-low-income-countries-from-pandemic/index.md", "summary": "Press Release No. PR21/222; Washington, DC – July 22, 2021.", "publishDate": "2021-07-22", "sections": [ { "heading": "Overview", "content": "- Press Release No. PR21/222; Washington, DC – July 22, 2021.\n- Executive Board approved on July 14, 2021 reforms to concessional lending facilities and an associated two-stage funding strategy to support Low Income Countries (LICs) during the pandemic and recovery.\n- Fund lending to LICs increased dramatically in 2020—an eightfold increase from average lending levels in 2017–2019—and is projected to continue at elevated levels for several years.\n- Majority of future assistance expected through multi-year lending arrangements rather than emergency financing facilities." }, { "heading": "Key Policy Reforms (centerpiece and operational changes)", "content": "- 45 percent increase in the normal limits on access to concessional financing.\n- Elimination of hard limits on access for the poorest countries provided their economic programs meet the requirements for obtaining above-normal access.\n- Simplification of access norms while preserving case-by-case assessment applying established access criteria (balance of payments needs, strength of economic program, capacity to repay).\n- Alignment of PRGT exceptional access criteria with Policy Safeguards on High Combined Credit, retaining the feature that only poorer LICs are eligible for exceptional access.\n- Extension of temporary increases to PRGT access thresholds that trigger procedural safeguards for high access until the next comprehensive review of facilities for LICs.\n- Interest rates on all loans provided through PRGT facilities will remain at zero until the next review of the interest rate structure, to occur by end-July 2023.\n- Proposed adjustment of the income threshold for blending concessional (PRGT) and non-concessional General Resources Account (GRA) resources; simplification of the role of debt vulnerabilities in determining blend status.\n- Exploration of allowing all PRGT‑eligible countries to meet financing needs through PRGT facilities combined with introduction of a dual interest rate mechanism in the PRGT (noting divergent Director views and resource constraints)." }, { "heading": "Funding Strategy to Support the PRGT (two-stage)", "content": "- First stage aims to secure:\n - SDR 2.8 billion in subsidy resources (to support zero interest rates).\n - SDR 12.6 billion in PRGT loan resources, which could be facilitated by “channeling” existing and new SDRs.\n- Proposal to increase the PRGT cumulative borrowing limit to SDR 68 billion to allow mobilization of loan resources.\n- Subsidy resources to be generated by:\n - Suspension of PRGT reimbursement to the GRA for administrative expenses through FY2026.\n - Mobilizing SDR 2.3 billion via a broad burden-shared bilateral fundraising campaign.\n- Proposal to create two new PRGT accounts:\n - “Subsidy Reserve Account” (SRA).\n - “Deposit and Investment Account” (DIA).\n- Second stage (set for 2024–25) to seek a lasting solution to financing the Fund concessional lending model informed by updated assessment of likely LIC demand." }, { "heading": "Executive Board Assessment — Findings, Concerns, and Guidance", "content": "- Broad support for the reform package to better position the Fund to respond to LIC needs; recognition that LICs have been particularly hard hit by COVID-19 and face significant challenges to achieve sustainable inclusive growth.\n- Agreement that higher access limits provide flexibility to increase concessional support to countries with strong reform programs; access levels should remain based on established case-by-case criteria.\n- Concerns raised by some Directors about entirely removing hard caps on PRGT exceptional access for poorer LICs; some suggested a sunset clause timed with the next full review.\n- Emphasis on careful program design given many LICs face substantial debt vulnerabilities:\n - Need for more in-depth analysis of capacity to repay the Fund.\n - Enhanced attention to debt dynamics and capacity to repay in staff analysis and program documents, per Annex VI of the Board paper.\n - Call for Fund support for capacity development in debt management.\n- Some Directors expressed concern about removing requirement that programs with countries at high risk of (or in) debt distress be linked with debt restructuring.\n- Mixed views on proposals involving gold sales or a gold pledge; some Directors recommended exploring gold sales, while a few did not support them due to complexity and potential balance sheet impacts.\n- Directors endorsed fundraising targets for first-stage: SDR 12.6 billion in loan resources and SDR 2.8 billion in new subsidy resources, and broadly supported raising the PRGT cumulative borrowing limit to SDR 68 billion.\n- Support for flexibility in donor options, timing, and mechanisms for providing subsidy contributions; acknowledgment that the Fund’s own efforts and internal resources will be essential.\n- Directors welcomed creation of SRA with a secondary purpose as a supplementary reserve account, boosting the reserve coverage ratio.\n- Directors commended exceptional donor response over the past 18 months and noted the substantial support requested, even if spread over several years.\n- Given uncertainties around demand and donor timing/scale, Directors underscored need for close monitoring of PRGT finances and supported annual reviews of PRGT resource adequacy; first annual review expected before the 2022 Spring Meetings. A number of Directors called for an update on fund-raising status after the Annual Meetings." }, { "heading": "Implementation and Next Steps", "content": "- Maintain zero interest rates on PRGT loans until end-July 2023 review.\n- Execute first-stage fundraising to secure SDR 2.8 billion in subsidy resources and SDR 12.6 billion in loan resources; explore channeling of SDRs.\n- Suspend PRGT reimbursement to the GRA for administrative expenses through FY2026 as part of subsidy generation.\n- Prepare for second-stage review and long-term financing decisions during the 2024–25 comprehensive review of concessional facilities.\n- Annual monitoring and reporting on PRGT financial adequacy, with the first annual review scheduled before the 2022 Spring Meetings.\n\nSource: IMF press release PR21/222, July 22, 2021.\n\n---\n\n\n References\n\n- Press Releases\n- PRESS CENTER\n- http://www.IMF.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2021/07/22/pr21222-imf-approves-policy-reforms-funding-package-support-low-income-countries-from-pandemic" } ], "bullets": [ "[Markdown version](/en/news/articles/2021/07/22/pr21222-imf-approves-policy-reforms-funding-package-support-low-income-countries-from-pandemic/index.md)", "[Structured JSON version](/en/news/articles/2021/07/22/pr21222-imf-approves-policy-reforms-funding-package-support-low-income-countries-from-pandemic/index.json)", "[Bundle manifest](/en/news/articles/2021/07/22/pr21222-imf-approves-policy-reforms-funding-package-support-low-income-countries-from-pandemic/bundle-manifest.json)", "Published: July 22, 2021", "Press Release No. PR21/222; Washington, DC – July 22, 2021.", "Executive Board approved on July 14, 2021 reforms to concessional lending facilities and an associated two-stage funding strategy to support Low Income Countries (LICs) during the pandemic and recovery.", "Fund lending to LICs increased dramatically in 2020—an eightfold increase from average lending levels in 2017–2019—and is projected to continue at elevated levels for several years.", "Majority of future assistance expected through multi-year lending arrangements rather than emergency financing facilities.", "45 percent increase in the normal limits on access to concessional financing.", "Elimination of hard limits on access for the poorest countries provided their economic programs meet the requirements for obtaining above-normal access.", "Simplification of access norms while preserving case-by-case assessment applying established access criteria (balance of payments needs, strength of economic program, capacity to repay).", "Alignment of PRGT exceptional access criteria with Policy Safeguards on High Combined Credit, retaining the feature that only poorer LICs are eligible for exceptional access.", "Extension of temporary increases to PRGT access thresholds that trigger procedural safeguards for high access until the next comprehensive review of facilities for LICs.", "Interest rates on all loans provided through PRGT facilities will remain at zero until the next review of the interest rate structure, to occur by end-July 2023.", "Proposed adjustment of the income threshold for blending concessional (PRGT) and non-concessional General Resources Account (GRA) resources; simplification of the role of debt vulnerabilities in determining blend status.", "Exploration of allowing all PRGT‑eligible countries to meet financing needs through PRGT facilities combined with introduction of a dual interest rate mechanism in the PRGT (noting divergent Director views and resource constraints).", "First stage aims to secure:", "Proposal to increase the PRGT cumulative borrowing limit to SDR 68 billion to allow mobilization of loan resources.", "Subsidy resources to be generated by:", "Proposal to create two new PRGT accounts:", "Second stage (set for 2024–25) to seek a lasting solution to financing the Fund concessional lending model informed by updated assessment of likely LIC demand.", "Broad support for the reform package to better position the Fund to respond to LIC needs; recognition that LICs have been particularly hard hit by COVID-19 and face significant challenges to achieve sustainable inclusive growth.", "Agreement that higher access limits provide flexibility to increase concessional support to countries with strong reform programs; access levels should remain based on established case-by-case criteria.", "Concerns raised by some Directors about entirely removing hard caps on PRGT exceptional access for poorer LICs; some suggested a sunset clause timed with the next full review.", "Emphasis on careful program design given many LICs face substantial debt vulnerabilities:", "Some Directors expressed concern about removing requirement that programs with countries at high risk of (or in) debt distress be linked with debt restructuring.", "Mixed views on proposals involving gold sales or a gold pledge; some Directors recommended exploring gold sales, while a few did not support them due to complexity and potential balance sheet impacts.", "Directors endorsed fundraising targets for first-stage: SDR 12.6 billion in loan resources and SDR 2.8 billion in new subsidy resources, and broadly supported raising the PRGT cumulative borrowing limit to SDR 68 billion.", "Support for flexibility in donor options, timing, and mechanisms for providing subsidy contributions; acknowledgment that the Fund’s own efforts and internal resources will be essential.", "Directors welcomed creation of SRA with a secondary purpose as a supplementary reserve account, boosting the reserve coverage ratio.", "Directors commended exceptional donor response over the past 18 months and noted the substantial support requested, even if spread over several years.", "Given uncertainties around demand and donor timing/scale, Directors underscored need for close monitoring of PRGT finances and supported annual reviews of PRGT resource adequacy; first annual review expected before the 2022 Spring Meetings. A number of Directors called for an update on fund-raising status after the Annual Meetings.", "Maintain zero interest rates on PRGT loans until end-July 2023 review.", "Execute first-stage fundraising to secure SDR 2.8 billion in subsidy resources and SDR 12.6 billion in loan resources; explore channeling of SDRs.", "Suspend PRGT reimbursement to the GRA for administrative expenses through FY2026 as part of subsidy generation.", "Prepare for second-stage review and long-term financing decisions during the 2024–25 comprehensive review of concessional facilities.", "Annual monitoring and reporting on PRGT financial adequacy, with the first annual review scheduled before the 2022 Spring Meetings.", "[Press Releases](https://www.imf.org/en/news/searchnews)", "[PRESS CENTER](http://presscenter.imf.org/)", "[http://www.IMF.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "alternates": { "markdown": "/en/news/articles/2021/07/22/pr21222-imf-approves-policy-reforms-funding-package-support-low-income-countries-from-pandemic/index.md", "json": "/en/news/articles/2021/07/22/pr21222-imf-approves-policy-reforms-funding-package-support-low-income-countries-from-pandemic/index.json", "bundleManifest": "/en/news/articles/2021/07/22/pr21222-imf-approves-policy-reforms-funding-package-support-low-income-countries-from-pandemic/bundle-manifest.json" }, "generatedAtUtc": "2026-09-26T00:34:14.580Z" }