Resources
Budget
Implementation of the FY 2021 budget was affected by the onset of the COVID-19 crisis following the budget’s formulation. Total net administrative expenditures were $1,126 million, or 94.9 percent, of the approved structural budget of $1,186 million. The underspending relative to the structural budget reflects the travel moratorium, the impact of lower building occupancy, and IT-related shortfalls. The bulk of travel resources were reallocated to support increased crisis staffing, with ramp up continuing into FY 2022. Executive Board approval in April 2021 of a temporary increase in the general carryforward limit from 5 percent to 8 percent made a total of $88.4 million in temporary resources available for general use to address crisis needs during the medium-term budget period.
Externally financed capacity development activities fell by $50 million in FY 2021 from FY 2020 levels, totaling $118 million relative to a $206 million limit. The underspending reflects the travel moratorium, as well as capacity constraints in recipient countries.
Income model, charges, remuneration, burden sharing, and total comprehensive income
Income model
The IMF’s income is generated primarily through its lending and investing activities (Figure 3.1). Lending income is derived from the charges levied on the use of credit from the General Resources Account (GRA), service charges, and commitment fees. In addition, the use of IMF credit is subject to surcharges under certain circumstances. The IMF income model also relies on investment income generated from assets in the Fixed-Income and Endowment Subaccounts of the IMF’s Investment Account. Given the public nature of the funds, the IMF’s investment policy includes, among other things, a careful assessment of acceptable levels of risk as well as safeguards to minimize actual or perceived conflicts of interest.
Income Model
Source: IMF, Finance Department.
Note: Green boxes represent elements that were added to the income model in 2008.
¹As of April 30, 2021, the dividend policy has not been adopted by the membership.
Charges
Reflecting the high levels of lending activities, the IMF’s main source of income continues to be charges levied on outstanding credit. The basic rate of charge (the interest rate) on IMF financing comprises the special drawing right (SDR) interest rate plus a fixed margin expressed in basis points, as discussed in Part 2. In April 2020, the Executive Board set the margin for the rate of charge at 100 basis points for the period through April 2022.
The IMF also levies surcharges on large amounts of credit. Surcharges apply to amounts of credit outstanding that exceed a defined threshold relative to a member’s quota (level-based surcharges), and they are higher when this threshold has been exceeded for a defined period of time (time-based surcharges) (see Table 2.2).
In addition to charges and surcharges, the IMF levies service charges, commitment fees, and special charges. A service charge of 0.5 percent is levied on each drawing from the GRA. A refundable commitment fee is charged at the beginning of each 12-month period on amounts available for drawing under GRA arrangements during that period. The IMF also levies special charges, on charges that are past due, for the first six months that a member is in arrears.
Remuneration and interest on borrowing
On the expenditure side, the IMF pays interest (remuneration) to members on their creditor positions in the GRA (known as remunerated reserve tranche positions). The basic rate of remuneration is equal to the SDR interest rate. The IMF also pays interest at the SDR interest rate on outstanding borrowing under the New Arrangements to Borrow (NAB; see “IMF Financing”).
Burden sharing
The rates of charge and remuneration are adjusted under a burden-sharing mechanism that distributes the cost of overdue financial obligations equally between debtor and creditor members.
Total comprehensive income
The IMF’s total comprehensive income in FY 2021 was SDR 4.8 billion ($6.9 billion), reflecting primarily income from the high levels of lending activity, endowment income, and gains stemming from the remeasurement of the IMF’s employee benefit plans’ assets and liabilities, in accordance with International Financial Reporting Standards (International Accounting Standard 19, Employee Benefits).
Arrears to the IMF
Overdue financial obligations to the IMF amounted to SDR 964.3 million at the end of April 2021 (see Table 3.1). At that time, Sudan¹ remained in protracted arrears (outstanding for more than six months) to the IMF, dating back to 1984.
Under the IMF’s strengthened cooperative strategy on arrears, remedial measures have been taken to address the protracted arrears. At the end of the financial year, Sudan remained ineligible to use IMF resources.
- Sudan cleared its arrears to the IMF on June 29, 2021 (after this report was finalized). For more information, visit www.imf.org/sudan.
Arrears to the IMF of Countries with Obligations Overdue by Six Months or More and by Type, as of April 30, 2021
(millions of SDRs)
| Country | Total | General Department | Trust Fund |
|---|---|---|---|
| Sudan | 964.3 | 880.4 | 83.9 |
| Total | 964.3 | 880.4 | 83.9 |
Sudan cleared its arrears to the IMF on June 29, 2021 (after this report was finalized).
For more information, visit www.imf.org/sudan.
Income Model
Source: IMF, Finance Department.
Note: Green boxes represent elements that were added to the income model in 2008.
¹As of April 30, 2021, the dividend policy has not been adopted by the membership.
Arrears to the IMF of Countries with Obligations Overdue by Six Months or More and by Type, as of April 30, 2021
(millions of SDRs)
| Country | Total | General Department | Trust Fund |
|---|---|---|---|
| Sudan | 964.3 | 880.4 | 83.9 |
| Total | 964.3 | 880.4 | 83.9 |
Sudan cleared its arrears to the IMF on June 29, 2021 (after this report was finalized).
For more information, visit www.imf.org/sudan.
IMF Financing
The IMF provides financing to its members through three channels, all of which serve the common purpose of transferring reserve currencies to member countries: regular (nonconcessional) lending from the GRA, concessional lending from the PRGT, and the SDR Department. The most salient feature of the IMF’s financial structure is that it is continuously evolving. The IMF has introduced and refined a variety of lending facilities and policies over the years to address changing conditions in the global economy or the specific needs and circumstances of its members.
Quotas: Where the IMF gets its money
The IMF’s 190 member countries provide resources for loans primarily through their payment of quotas, which also set their voting rights. Multilateral borrowing and bilateral borrowing serve as a second and third line of defense in times of crisis. These resources give the IMF access to about $1 trillion in nonconcessional lending firepower to support members. Concessional lending and debt relief for low-income countries is financed through separate contribution-based trust funds.
Each member is assigned a quota based broadly on its position in the world economy. IMF quotas total SDR 477 billion (about $685 billion). The value of the SDR, the IMF’s unit of account, is based on a basket of currencies (see “Special Drawing Right”).
IMF quotas are also reviewed regularly. The 16th General Review of Quotas, which is underway, is an opportunity to assess the overall adequacy of the quotas as well as the adequacy of their distribution among IMF member countries. It will build on governance reforms of the 2010 review, including efforts to protect quotas and voting shares of the poorest members. The current formula for determining quotas, which was agreed upon in 2008 and has been used as a guide, is also under review.
Quota payments
The conditions for implementing the quota increases agreed upon under the 14th General Quota Review were met on January 26, 2016. This resulted in a doubling of quota resources, to SDR 477 billion (about $685 billion) from about SDR 238.5 billion (about $342.5 billion). As of April 30, 2021, 185 of the 190 members had made their quota payments, accounting for more than 99 percent of the total quota increases, and total quotas stood at SDR 476 billion (about $683 billion).
Andorra becomes 190th IMF member country
The Principality of Andorra joined the IMF on October 16, 2020, at a ceremony held in Washington, DC.
Borrowing by the IMF
GRA borrowing
As noted, the IMF is a quota-based institution. However, borrowed resources continue to play a key role in supplementing quota resources through the NAB and the bilateral borrowing agreements (BBAs), serving respectively as a second and third line of defense after quotas.
The NAB are a set of credit arrangements with 38 participants and 2 prospective participants. The size of the NAB was doubled to about SDR 361 billion on January 1, 2021, and a new NAB period was set through the end of 2025. NAB resources can be activated when the IMF’s resources need to be supplemented to forestall or cope with an impairment of the international monetary system. Activation requires the consent of participants representing 85 percent of total credit arrangements of participants eligible to vote and the approval of the Executive Board. The NAB were activated 10 times between April 2011 and February 2016, the last activation.
As noted, BBAs are intended to serve as a third line of defense after quotas and the NAB. The current (2020) round of BBAs has been in effect since January 1, 2021, with an initial term through December 31, 2023, which may be extended by one more year. As of April 30, 2021, 40 bilateral creditors have committed under their 2020 BBAs to provide the IMF with a total credit amount equivalent to about SDR 135 billion. Resources under BBAs can be activated only if the amount of the IMF resources otherwise available for financing has fallen below a threshold of SDR 100 billion and either the NAB is activated or there are no available uncommitted NAB resources. Activation of BBAs requires approval by bilateral creditors representing 85 percent of the total credit amount committed.
Special Drawing Right
The special drawing right is an international reserve asset created by the IMF in 1969 to supplement its member countries’ official reserves. IMF members who are participants in the SDR Department (currently all members) may exchange SDRs for freely usable currencies. The SDR serves as the unit of account of the IMF and some other international organizations. The SDR is neither a currency nor a claim on the IMF. Rather, it is a potential claim on the freely usable currencies of IMF members. SDRs can be exchanged for these currencies.
The value of the SDR is currently based on a basket of five currencies: the US dollar, the euro, the Chinese renminbi, the Japanese yen, and the British pound. The currencies included are reviewed periodically; the next review of the valuation of the SDR basket is scheduled to occur by the end of July 2022.
As of April 30, 2021, a total of SDR 204.2 billion (equivalent to about $293.2 billion) has been allocated to members so far, including SDR 182.6 billion allocated in 2009 in the wake of the global financial crisis. At an informal meeting in March 2021, the Executive Directors conveyed broad support among IMF members for a proposal by the Managing Director for a possible new SDR allocation. Once the Executive Board concurs with the Managing Director’s proposal, the proposal is submitted to the IMF’s Board of Governors, whose decision approving an SDR allocation requires support by members representing an 85 percent majority of the total voting power.