Review of Access Policy Under the Credit Tranches and the Extended Fund Facility
January 14, 2003
The Poverty Reduction and Growth Facility (PRGF)
How Does the IMF Lend?
||Report on Access to Fund Resources During 2003
Prepared by the Policy Development and Review
February 5, 2004
1. This report summarizes developments in access to Fund resources over the past year, and also briefly examines trends over the past decade. Access to resources in the General Resources Account (GRA) and under the Poverty Reduction and Growth Facility (PRGF) is discussed (see Box 1 for an overview of access policy). The report responds to the request by the Executive Board made during the most recent review of access policy under the credit tranches and the EFF (BUFF/03/28, 3/5/03). At that time, the Board decided that reviews of access policy would be done on a two-year cycle (with the next to be completed by end-2004), with a factual report in intervening years.1
II. Recent Developments
A. Number and Type of Arrangements
2. Eleven arrangements were approved under the GRA during 2003 (Table 1). This was in line with the average over the past six years (Table 2). Exceptional access above the limits applying on the credit tranches and EFF was used for Argentina (twice), and for the extension and augmentation of Brazil's stand-by arrangement (Table 3). There were four SBA arrangements that were precautionary on approval this year, and two SBA arrangements that became precautionary (Brazil and Jordan).
3. Ten arrangements were approved under the PRGF during 2003 (Table 1), in line with recent trends. The arrangements approved included those members who were using PRGF resources for the fourth or fifth time, such as Burkina Faso and Mauritania, as well as other less frequent users (Table 4). Dominica, for example, used the PRGF for the first time.
B. Average Access
4. In the General Resources Account, the trend—observed over the past few years—towards a bimodal distribution in access continued during 2003, with a larger cluster of cases centered around an average within the access limits and a small number of very large outliers well outside the limits (Figure 1). Average annual access under the credit tranches and the EFF—excluding exceptional access—was 50 percent of quota (Table 1). Two arrangements with access at or near the annual access limit (Colombia and the Dominican Republic) raised the average above that of some previous years. If exceptional access is included, average annual access under the credit tranches was 78 percent of quota.
5. Under the PRGF, average total access declined sharply during 2003 to 48 percent of quota over three years (16 percent on annual basis), well below the historical average for the period 1994 to 2002 (Table 2). This in part reflected low-access PRGF arrangements with Mauritania, Senegal, and Tanzania (Table 1). These PRGF arrangements followed the examples of Rwanda's and Uganda's PRGF arrangements in 2002, where there was concern about increasing the countries' debt burdens in the face of limited balance of payments needs, as well as significant outstanding use of Fund resources. The limited BOP needs in most cases partly reflected the fact that these countries had received substantial debt relief under the enhanced Heavily Indebted Poor Countries Initiative from the Fund (Table 7) and other creditors, and were at the same time also receiving an increased level of grants. The decline in average access under PRGF arrangements also reflects the number of repeat users of PRGF resources, implying a lower access with each subsequent arrangement.
C. Total Resources Committed
6. The total amount of resources committed under the GRA during 2003 amounted to SDR 18.3 billion. Over 80 percent of the amount committed was for Argentina, under two arrangements in which amounts committed were related to the amounts falling due, and for Brazil (an augmentation at the time its Stand-By Arrangement was extended and became precautionary (Tables 1 and 5)).
7. Under the PRGF, commitments of SDR 1.1 billion were somewhat below the average for the period 1994-2002, as the low-access trend was combined with approvals of PRGF arrangements with normal access but with relatively high quotas (Bangladesh, Ghana, and Sri Lanka).
D. Outstanding Use of Fund Resources
8. The outstanding use of Fund resources at end-December 2003 stood at SDR 71.8 billion (Table 6). Under the GRA, the credit concentration of use of Fund resources rose further. The largest five users (Brazil, Turkey, Argentina, Indonesia, and the Russian Federation) represented 86 percent of total outstanding resources at end-2003, a marked increase since 1994. Among PRGF-eligible countries, the level of concentration in the use of Fund resources was much less than under the GRA, and the concentration has declined somewhat over the past decade. The top five users (Pakistan, Zambia, Democratic Republic of Congo, Ghana, and Tanzania) represented about 38 percent of total outstanding PRGF loans at end-2003.
9. The outstanding use of Fund resources under the GRA has been increasing relatively rapidly over the past three years (over 15 percent annually). In both 2002 and 2003, the outstanding stock was higher than at the height of the Asian crisis in 1998. At the same time, the Fund's liquidity position, as measured by the Forward Commitment Capacity, remained adequate at SDR 54 billion at end-2003.2 In contrast to the GRA, under the PRGF, the rate of growth in outstanding loans has been relatively low—about 2 percent per year for the past five years—in part for reasons explained above.
10. Under the GRA, average projected Fund credit outstanding at the end of stand-by arrangements agreed during 2003 has increased to over 180 percent of quota—the highest level attained since 1997 during the Asian crisis—compared to about 110 percent of quota for stand-by arrangements approved in 2002 (Table 2). For arrangements under the PRGF, on the other hand, the long-term downward trend in projected Fund credit outstanding at the end of the arrangement continued during the year.
1A separate review of exceptional access policy is planned before the Spring Meetings.
2The changes in the Forward Commitment Capacity are driven by the Fund commitments and not by the changes in Fund credit outstanding.