Lending

IMF financing helps member countries tackle balance of payments problems, stabilize their economies, and restore sustainable economic growth. It can also be made available in response to natural disasters or pandemics. The IMF further provides precautionary financing to countries with sound policies that may have some remaining vulnerabilities to help prevent and insure against future crises, and it continues to enhance the tools available for crisis prevention.

IMF lending has traditionally fallen into two categories: GRA loans at interest rates determined by an average of those prevailing among the world’s main currencies and loans to low-income countries on concessional terms. All loans under the IMF’s Poverty Reduction and Growth Trust (PRGT) are currently provided at zero interest. With the operationalization of the RST, there is now a new third lending category, which encompasses a tiered interest rate structure differentiated across country groups, with low-income members benefiting from more favorable terms.

Brief Overview of FY 2023

Policy Initiatives

The IMF has continued to respond to economic challenges stemming from the COVID-19 pandemic and Russia’s war in Ukraine with unprecedented speed and magnitude, mostly through emergency financing and program lending.¹ These activities helped protect the lives and livelihoods of people and facilitate adjustment to shocks.

In FY 2023, many countries, especially low-income countries, continued to face a very challenging economic environment, including rising energy prices and food insecurity due to Russia’s war in Ukraine. To better support members, especially low-income countries, in coping with these headwinds, on September 30, 2022, the IMF approved a new temporary FSW under its emergency financing instruments. The new window was originally approved for 12 months and provides a new channel for emergency financing to member countries that have urgent balance of payments needs due to acute food insecurity, a sharp increase in their food import bills, or a shock to their cereal exports. Access is consistent with actual balance of payments needs and capped at 50 percent of quota; it is additional to the current annual access limits under the Rapid Credit Facility (RCF) and Rapid Financing Instrument (RFI). The cumulative access limits under the RFI regular window and the RCF exogenous shock window, which stood at 150 percent of quota, were increased to 175 percent of quota for members that borrow through the FSW.

In October 2022, the IMF also amended its policy for Staff-Monitored Programs to allow for Program Monitoring with Board Involvement, which is available only to (requesting) members that, in addition to seeking to build or rebuild a track record for (upper-credit-tranche) use of IMF resources, would benefit from targeted Executive Board involvement. Countries considering a Staff-Monitored Program are encouraged to request Program Monitoring with Board Involvement if they are the subject of an ongoing concerted international effort by creditors or donors to provide substantial new financing or debt relief or have significant outstanding IMF credit under emergency financing instruments at the time emergency financing is received.

Reflecting the difficult global environment, demand for IMF concessional financing remained high compared to pre-pandemic levels. In FY 2023, the IMF approved about $5.7 billion in new concessional lending commitments to low-income countries, about four times the pre-pandemic annual average. Of the lending commitments approved in the fiscal year for low-income countries, about $0.5 billion were under the FSW, benefiting five low-income countries.

To facilitate an effective response to increasing needs in a period of multiple global shocks, on March 6, 2023, the IMF’s Executive Board raised the GRA’s annual and cumulative access limits from 145 and 435 percent of quota, respectively, to 200 and 600 percent of quota, respectively. These temporary changes to the GRA’s access limits will be in place for 12 months and, if circumstances warrant, the Executive Board may consider extending them further before their expiration. The increase in access limits will allow member countries—particularly emerging market and developing economies—that face increased financing pressures and vulnerabilities to access higher IMF financial support without triggering the exceptional access framework.

Access limits under the PRGT, which were raised by 45 percent in 2021, will be discussed as part of the expected comprehensive review of concessional facilities in 2024/25. However, if substantial progress is made with PRGT fundraising toward the SDR 2.3 billion first-stage target for subsidy resources agreed upon in 2021 (see discussion later in this section)—with total pledges of SDR 2 billion or more—access limits under the PRGT will be reviewed at an ad hoc interim review.

The Executive Board’s temporary increases to the cumulative access limits under its emergency financing instruments, the RCF and RFI, approved in FY 2022, were set to expire at the end of June 2023 (see Tables 2.1 and 2.2).²