Selected Decisions and Selected Documents of the IMF, Thirty- Eighth Issue -- Eligibility to Use the Fund’s Facilities for Concessional Financing—PRGT Eligibility Criteria

Prepared by the Legal Department of the IMF
As updated as of February 29, 2016

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ARTICLE V, SECTION 12(f)
Special Disbursement Account

ELIGIBILITY TO USE THE FUND’S FACILITIES FOR CONCESSIONAL FINANCING—PRGT ELIGIBILITY CRITERIA

  • 1. The following criteria for entry and graduation shall, respectively, guide Executive Board decisions to add members to, and remove members from, the list annexed to Decision No. 8240-(86/56) SAF, as amended (the “PRGT-eligibility list”):

    • (A) Criteria for entry: A member will be added to the PRGT-eligibility list if (i) its annual per capita gross national income (“GNI”), based on the latest available qualifying data, is (a) below the International Development Association (“IDA”) operational cut-off; or (b) less than twice the IDA operational cut-off if the member qualifies as a “small country” under the definition set forth in subparagraph (D); or (c) less than five times the IDA operational cut-off if the member qualifies as a “microstate” under the definition set forth in subparagraph (D); and (ii) the sovereign does not have capacity to access international financial markets on a durable and substantial basis as defined in subparagraph (C).

    • (B) Criteria for graduation: A member will be removed from the PRGT-eligibility list if it meets either or both the income and market access criteria specified in (1) and (2) below, and does not face serious short-term vulnerabilities as specified in (3) below:

      • (1) Income Criterion: the member’s annual per capita GNI (i) has been above the IDA operational cut-off for at least the last five years for which qualifying data are available; (ii) has not been on a declining trend over the same period, comparing the first and last relevant annual data; and (iii) based on the latest qualifying annual data, is (a) at least twice the IDA operational cut-off; or (b) at least three times the IDA operational cut-off if the member qualifies as a “small country” under the definition set forth in subparagraph (D); or (c) at least six times the IDA operational cut-off if the member qualifies as a “microstate” under the definition set forth in subparagraph (D).

      • (2) Market Access Criterion: (i) the sovereign has the capacity to access international financial markets on a durable and substantial basis as defined in subparagraph (C); (ii) the member’s annual per capita GNI is above 100 percent of the IDA operational cut-off based on the latest qualifying annual data; and (iii) the member’s annual per capital GNI has not been on a declining trend over the last five years for which qualifying data are available, comparing the first and last relevant annual data.

      • (3) Absence of serious short-term vulnerabilities: the member does not face serious short-term vulnerabilities, which shall require in particular (i) the absence of risks of a sharp decline in the member’s income, or of a loss of its market access (where relevant); (ii) limited debt vulnerabilities as indicated by the most recent debt sustainability analysis, including, for members whose debt has been assessed under the Debt Sustainability Framework for Low-Income Countries, an external debt distress classification of moderate or less and does not face a heightened overall risk of debt distress reflecting significant vulnerabilities related to domestic debt and/or private external debt; and (iii) confirmation that overall debt vulnerabilities remain limited, taking into account developments and prospects since the most recent debt sustainability analysis. For a member whose annual per capita GNI exceeds the applicable income graduation threshold in (1) above by 50 percent or more, graduation from PRGT eligibility will not be subject to the assessment of serious short-term vulnerabilities defined in this subparagraph (3). Such an assessment by the Executive Board will however be required if the member has an “IDA-grant only” or “IDA loan-grant mix” status at the World Bank, in which case graduation will depend on an assessment that the member does not have such serious short-term vulnerabilities.

    • (C) For the purposes of subparagraphs (A) and (B)(2), the sovereign’s capacity to access international financial markets on a durable and substantial basis shall be evidenced by either of the following:

      • (1) The issuance or guarantee by a public debtor of external bonds in international markets, or disbursements under external commercial loans contracted or guaranteed by a public debtor in international markets that (i) for the purposes of subparagraph (A) occurred during at least two of the last five years for which qualifying data are available, and has been in a cumulative amount equivalent to at least fifty percent of the member’s quota in the Fund at the time of the assessment, provided that if the member’s quota increase under the Fourteenth General Review of Quotas has become effective, the cumulative amount shall be equivalent to at least 25 percent of the member’s quota or (ii) for the purposes of paragraph (B)(2), occurred during at least three of the last five years for which qualifying data are available, and has been in a cumulative amount equivalent to at least one hundred percent of the member’s quota in the Fund at the time of the assessment, provided that if the member’s quota increase under the Fourteenth General Review of Quotas has become effective, the cumulative amount shall be equivalent to at least 50 percent of the member’s quota, or

      • (2) The existence of convincing evidence that the sovereign could have tapped international markets as specified under (1) above, even though the actual issuance or guarantee by a public debtor of external bonds in international markets, or actual disbursements under external commercial loans contracted or guaranteed by a public debtor in international markets, fell short of the duration and scale thresholds specified under (1) above. Determinations under this paragraph shall be a case-specific assessment that takes into account relevant factors, including the volume and terms of recent external borrowing or guaranteeing of external borrowing in international markets, and the sovereign credit rating where one exists.

      • For purposes of this subparagraph (C): (i) a “public debtor” shall include the sovereign (national government) as well as other public borrowers (including political subdivisions, agencies of the national government or of political subdivisions, autonomous public bodies and public corporations) whose ability to borrow in international markets is assessed to be an indicator of the sovereign’s creditworthiness; (ii) “external bonds” are those issued in international capital markets and “external commercial loans” are commercial loans contracted in international markets by residents of a member with nonresidents, provided that bonds issued and loans contracted in markets that are not integrated with broader international markets shall not qualify; and (iii) bonds and commercial loans guaranteed by a public debtor shall be obligations of a private debtor whose repayment is guaranteed by a public debtor.

    • (D) For the purposes of the criteria set forth in this paragraph 1, a member will be considered a “small country” if it has a population below 1.5 million, and a “microstate” if it has a population below 200,000.

    • (E) For the purposes of the criteria set forth in this paragraph 1, assessments of per capita GNI will normally be based on World Bank data using the ATLAS methodology, but other data sources may be used in exceptional circumstances, including data estimated by Fund staff in the absence of World Bank data. Qualifying data for the purposes of the criteria set forth in this paragraph 1 shall be data in respect of which the most recent observation relates to a calendar year that is not more than 30 months in the past at the time of the assessment.

  • 2. Executive Board decisions to remove a member from the PRGT-eligibility list pursuant to the graduation criteria set forth in paragraph 1 of this decision shall become effective three months after their adoption, provided that such decisions in respect of members that have an existing arrangement under the Poverty Reduction and Growth Trust established pursuant to Decision No. 8759-(87/176) ESAF, adopted December 18, 1987, as amended (“PRGT”), or that have a program subject to assessment and endorsement by the Fund under an existing policy support instrument, shall become effective upon the expiration or other termination of such arrangement or policy support instrument, respectively.

  • 3. Notwithstanding the entry into effect of a decision to remove a member from the PRGT-eligibility list in accordance with this decision, any outstanding PRGT resources disbursed to such member prior to the effectiveness of the decision shall remain subject to the terms of the PRGT. In Section II, paragraph 4(c) of the PRGT, the reference to “as such list may be amended from time to time,” shall be deleted.

  • 4. The term “eligible recipients” under paragraph 7(a) of Decision No. 12481-(01/45) governing subsidies for post conflict and natural disaster purchases of PRGT-eligible members shall be understood to include members that, at the time of their removal from the PRGT-eligibility list pursuant to this decision, have outstanding post conflict or natural disaster purchases in respect of which subsidies may be provided under Decision No. 12481-(01/45), for as long as such purchases remain outstanding. In subparagraph 7(d) of Decision No. 12481-(01/45), as amended, the references to “qualifying PRGT-eligible members” shall be replaced with references to “PRGT-eligible members,” and the second sentence shall be deleted.

  • 5. It is expected that the criteria for entry and graduation set forth in this decision shall be reviewed every two years.1 It is also expected that the PRGT-eligibility list shall be reviewed and updated every two years on the basis of the then applicable criteria for entry and graduation, provided however that (i) decisions on entry onto the PRGT-eligibility list of members that meet the entry criteria specified in paragraph 1 above may also be adopted in the interim period between reviews; (ii) notwithstanding paragraph 1 above, decisions may be adopted in the interim period between reviews in respect of the re-entry onto the PRGT-eligibility list of members that had previously been removed from such list as a sanction for overdue obligations, so long as such a member at the time of re-entry does not meet the criteria for graduation specified in subparagraph 1(B) above; and (iii) decisions may be adopted in the interim period between reviews in respect of the graduation from the PRGT-­eligibility list of members that meet the criteria for graduation specified in subparagraph 1(B) above, at the request of such a member. (SM/09/288, Sup. 1, Rev. 1, 1/11/10) (SM/09/288, 12/11/09)

Decision No. 14521-(10/3),

January 11, 2010,

as amended by Decision Nos. 15105-(12/17), February 17, 2012,

15350-(13/32), April 8, 2013, and

15834-(15/73), July 17, 2015

1 Ed. Note: At the 2012 review of eligibility to use the Fund’s facilities for concessional financing, the next review was scheduled to take place in 2013, a year ahead of schedule. See the next document below.

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