IMF Executive Board Extends Temporary Increase in Access Limits Under the General Resources Account
IMF News, March 11, 2024
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- Published: March 11, 2024
Summary of decision
- The Executive Board approved on March 4, 2024 an extension until end of 2024 of the temporary increase in normal limits on members’ annual and cumulative access to Fund resources in the General Resources Account (GRA) to 200 and 600 percent of quota respectively.
- The increase was initially approved in March 2023 for a period of 12 months, ending on March 5, 2024.
- Press Release No. 24/82; published March 11, 2024.
Context and rationale
- Extension made in the context of a still uncertain global economic environment and the need for a smooth transition to the comprehensive review of the GRA access limits planned for the second half of 2024.
- The temporary raise in March 2023 reflected the challenging economic environment and uncertain prospects faced by emerging markets and developing economies.
- The last comprehensive review of access limits in the Fund’s GRA occurred in 2016, establishing an annual limit of 145 percent and a cumulative limit of 435 percent of quota.
Intended effects and operational implications
- The extension will allow member countries facing large shocks and increased financing pressures to access higher levels of financial support in the GRA without triggering the exceptional access framework.
- It will avoid possible fluctuation in GRA normal access limits between March 2024 and the comprehensive review planned for later in 2024, providing more predictability in the Fund’s lending toolkit.
- Access beyond normal limits remains subject to the Fund’s exceptional access framework requirements.
Executive Board Assessment — key points and safeguards
- Annual access limit will continue to be set at 200 percent of a member’s quota; cumulative access limit will continue to be set at 600 percent of quota.
- Directors noted economic recovery continued and inflation receded in some countries, but the global outlook remains weak and uncertain, with risks especially elevated for vulnerable emerging market economies.
- Access limits are key elements of the Fund’s risk management framework and provide an important safeguard to Fund resources.
- Increased access limits do not automatically imply higher access for a member; access will continue to be determined by rigorous assessments informed by standard access policy criteria, including:
- the size of the balance of payments need,
- the strength of program policies,
- the country’s record of using Fund resources,
- debt sustainability, and
- capacity to repay the Fund,
- as well as the catalytic role of Fund financing.
- Directors emphasized the importance of enhanced scrutiny and additional safeguards for exceptional access cases.
- Most Directors considered maintaining higher limits through end‑2024 would help avoid large swings in SDR nominal values of access limits in the context of their erosion against key metrics, pending the comprehensive review.
- Directors noted the impact of the proposed extension on the Fund’s liquidity and on the demand for Fund resources is expected to be limited, although subject to uncertainty, and recommended close monitoring of liquidity and credit developments and the impact on the Fund’s precautionary balances.
- Directors concurred with the proposed transitional rules for exceptional access and for the High Combined GRA and PRGT (Poverty Reduction and Growth Trust) credit exposure policy safeguards (PS‑HCC) in case access limits, and hence the PS‑HCC thresholds, were to revert to lower levels after 2024.
- Views on Fund risk tolerance varied: a few Directors cautioned that the Fund’s risk tolerance should not be tightening when some members face significant challenges; a few other Directors did not share that view and emphasized that normal access limits should be set to appropriately safeguard Fund resources.
- Directors stressed that today’s decision should not prejudge the outcome of the forthcoming comprehensive review.
Next steps and review
- A comprehensive review of access limits is expected to be completed in the second half of 2024; it will reassess the adequacy of access limits in light of their erosion against key metrics, taking into account the outcomes of the 16th General Review of Quotas and other factors, including the need to safeguard Fund resources.
- The comprehensive review will evaluate developments with respect to access limits vis‑à‑vis relevant macroeconomic aggregates and consider GRA access limits and other access‑related policies in the context of the 16th General Review of Quotas.
Source: IMF Press Release No. 24/82, March 11, 2024.