Selected Decisions and Selected Documents of the IMF, Fortieth Issue -- Guidelines on Performance Criteria with Respect to Foreign Borrowing—Change in Implementation of Revised Guidelines

Prepared by the Legal Department of the IMF
As updated as of April 30, 2019

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ARTICLE V, SECTION 3(a), (b), AND (c)
Use of Fund Resources


For purposes of implementation of the Guidelines on Performance Criteria with Respect to Foreign Borrowing, as amended (Decision No. 6230-(79/140), the Executive Board endorses the revised method of calculation of the discount rate described in SM/96/86 (4/8/96).1

Decision No. 11248-(96/38), April 15, 1996,

as amended by Decision No. 15462-(13/97),

October 11, 2013


Hence, the staff proposes that under arrangements approved from May 1, 1996 onwards, the average of CIRRs over the last ten years should be used as the discount rate for assessing the concessionality of loans of a maturity of at least 15 years. One effect of this change will be that some loans from multilateral development banks and from some bilateral creditors, including OECF of Japan, will be treated as concessional and excluded from borrowing limits in Fund arrangements. This should alleviate some operational problems that have arisen in the treatment of these loans.

Similar problems of frequent classification changes arise in assessing the concessionality of loans with shorter maturities. For these loans, it is proposed that instead of current CIRRs, the average CIRRs of the preceding six-month period (February 15 to August 14 or August 15 to February 14) be used in assessing the concessionality. This approach would follow more closely that used by the OECD and would reduce the frequency of changes in assessments of concessionality.

To both the ten-year and six-month averages, the same margins for differing repayment periods as those used by the OECD would continue to be added (0.75 percent for repayment periods of less than 15 years, 1 percent for 15 to 19 years, 1.15 percent for 20 to 29 years, and 1.25 percent for 30 years or more). Table 1 shows current CIRRs, six-month average CIRRs, and the ten-year averages of CIRRs at end-1995.2

The staff proposes to follow this approach as an interim methodology to ensure that frequent changes in the assessment of concessionality are minimized and that longer term multilateral and bilateral loans are not subject to the borrowing limits in Fund arrangements in a way that was not intended by the Board. This issue would be reviewed in the context of the review of borrowing limits envisaged before the end of the year referred to above.3 Accordingly, the attached decision is proposed for adoption by the Executive Board on a lapse-of-time basis.

1 Ed. Note: Decision No. 15462-(13/97), October 11, 2013, provides that: “Decision No. 11248-(96/38), adopted April 15, 1996, shall remain applicable to any conditionality on external debt that is in place as of the date of this decision unless and until such conditionality is amended to provide for the use of the Unified Discount Rate. (SM/13/271, 10/07/13)”

2 Where a CIRR is not available for a given currency or time period, a rate based on five-year government bond yields in the currency concerned is used as a proxy in Table 1 (Ed. Note: Table 1 is not included in this volume).

3 It is intended to use the 10-year averages at end-1995 throughout 1996.

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