IMF Approves Temporary Extensions, Modification of Lending Facilities

IMF Approves Temporary Extensions, Modification of Lending Facilities

The Executive Board of the International Monetary Fund (IMF) has approved further extensions of temporary adjustments made to its lending frameworks in the early months of the pandemic.

The IMF said this in a statement it issued in Washington, D.C. on Thursday.

It said that the adjustments allow for adequate access to fund financing through emergency instruments, the General Resources Account (GRA) and the Poverty Reduction and Growth Trust (PRGT).

It added that the extensions of the measures reflect the unique circumstances created by the pandemic and would ensure that member countries continue to be able to access IMF financing.

This would be through both IMF-supported programmes and emergency financing in case of urgent balance of payments needs.

“The executive board approved an extension through end-2021 of the increases in annual and cumulative access limits that apply to the IMF’s emergency financing instruments, introduced in April 2020 and extended in October 2020.

“So far during the pandemic, 74 member countries, of which 49 low-income countries, received emergency financing through these instruments.

“The executive board also approved an extension of the increase in the annual access limit to the IMF’s GRA, introduced in July 2020, through end-2021, and an increase in both annual and cumulative access limits on concessional lending through the PRGT, through end-June 2021.”

According to it, the increase in access to PRGT financing, as interim measure for a broader assessment of the fund’s approach to concessional financing, recognises that many low-income countries have been hit particularly hard by the pandemic and have already borrowed significantly from the IMF.

The fund added that higher limits would therefore provide flexibility for poorer countries in the coming months to avoid having to request support through the fund’s general resources on non-concessional terms.

In its assessment, the board supported extending the higher access limits for the regular window of the Rapid Financing Instrument (RFI) and the exogenous shocks window of the Rapid Credit Facility (RCF).

This is with annual and cumulative access limits remaining at 100 per cent of quota and 150 per cent of quota respectively, through the end of the year.

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The statements said that they also agreed to extend through end-December the current suspension of the two-disbursement limit on disbursements under the RCF within a 12-month period.

“Directors further approved the proposals for the automatic lapsing of approved RCF disbursements and RFI purchases.

“Directors underscored their expectation that countries increasingly seek financial assistance under fund arrangements that meet upper credit tranche quality standards rather than through emergency financing instruments.

“They noted that the latter remains available when a member has an urgent balance of payments need and a fund arrangement is either not feasible or not necessary.

“Noting that some countries would not have access to these instruments for an extended period after the temporary higher access limits expire, directors welcomed the proposal to review access limits under emergency financing instruments after the 2021 Annual Meetings.”

IMF Approves Temporary Extensions, Modification of Lending Facilities