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How the IMF lends: Terms and conditions of financial facilities

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
August 2006
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Stand-By Arrangement and Extended Fund Facility

• Stand-By Arrangement (1952)

Addresses balance of payments difficulties that are short term; the arrangement is typically 12-18 months with a legal maximum of 3 years.

Access limits: Annual: 100 percent of quota; cumulative: 300 percent of quota for all use of IMF resources in the General Resources Account.

Maturities (expected repayment)/(obligatory repayment): 2¼ years/3¼-5 years.

Charges: Basic rate of charge + level-based surcharges of 100 basis points on amounts above 200 percent of quota and 200 basis points on 300 percent of quota.

Conditions: Member adopts policies that provide confidence that its balance of payments difficulties will be resolved within a reasonable period.

Cumulative access: Above 25 percent of quota is subject to stricter conditions (known as upper credit tranche conditionality).

Phasing and monitoring: Quarterly disbursements contingent on observance of performance criteria and other conditions.

Extended Fund Facility (1974)

Provides longer-term assistance in support of structural reforms that address longer-term balance of payments difficulties.

Access limits: Annual: 100 percent of quota; cumulative: 300 percent of quota for all use of IMF resources in the General Resources Account.

Maturities (expected repayment)/(obligatory repayment): 4½-7 years/4½-10 years.

Charges: Basic rate of charge + level-based surcharges of 100 basis points on amounts above 200 percent of quota and 200 basis points above 300 percent of quota.

Conditions: Member adopts 3-year program, with structural agenda, and provides annual detailed statement of policies for the next 12 months.

Phasing and monitoring: Quarterly or semiannual disbursements contingent on observance of performance criteria and other conditions.

Special loans

• Supplemental Reserve Facility (1997)

Provides short-term assistance to members with balance of payments difficulties related to a sudden and disruptive loss of market confidence. Available only as a supplement to a regular arrangement.

Access limits: None; this facility is available only when access under an associated regular arrangement would otherwise exceed either annual or cumulative limit.

Maturities (expected repayment)/(obligatory repayment): 2-2½ years/2½-3 years.

Charges: Basic rate of charge + 300 basis points rising to a maximum of 500 basis points after 2½ years.

Conditions: Program under an associated arrangement, with strengthened policies to address a loss of market confidence.

Phasing and monitoring: Facility available for one year; front-loaded access with two or more disbursements.

• Compensatory Financing Facility (1963)

Covers a shortfall in a member’s export earnings and services receipts or an excess in cereal import costs that is temporary and arises from events beyond the member’s control.

Access limits: Maximum 45 percent of quota for each element—export shortfall and excess cereal import costs—and a combined limit of 55 percent of quota.

Maturities (expected repayment)/(obligatory repayment): 2¼-4 years/3¼-5 years.

Charges: Basic rate of charge; not subject to surcharges.

Conditions: Usually available only when a member already has a Stand-By Arrangement or when its balance of payments position, apart from its export shortfall or import excess, is otherwise satisfactory.

Phasing and monitoring: Typically disbursed over a minimum of six months and in accordance with the phasing provisions of the arrangement.

Emergency Assistance

Natural disasters (1962): Provides quick, medium-term assistance to members with balance of payments difficulties related to natural disasters.

Postconflict (1995): Provides quick, medium-term assistance for balance of payments difficulties related to the aftermath of civil unrest or cross-border armed conflict.

Access limits: 25 percent of quota, although larger amounts can be made available in exceptional cases.

Maturities (expected repayment)(obligatory repayment): No early repayment expectation/3¼-5 years.

Charges: Basic rate of charge; not subject to surcharges; possibility of interest subsidy for low-income countries if resources are available.

Conditions: Reasonable efforts to overcome balance of payments difficulties and focus on institutional and administrative capacity building to pave the way toward an upper credit tranche arrangement or an arrangement under the Poverty Reduction and Growth Facility. The conditions for emergency postconflict assistance also include that IMF support would be part of a concerted international effort to address the aftermath of the conflict.

Phasing and monitoring: Typically none.

Loans for low-income members

Poverty Reduction and Growth Facility (PRGF)(1999)

Provides longer-term assistance for deepseated, structural balance of payments difficulties; aims at sustained, poverty-reducing growth.

Access limits: 140 percent of quota; exceptional maximum, 185 percent.

Maturities (expected repayment)/(obligatory repayment): No early repayment expectation/5½-10 years.

Charges: Concessional interest rate: ½ of 1 percent a year; not subject to surcharges.

Conditions: Based on a Poverty Reduction Strategy Paper prepared by the country in a participatory process, and integrating macroeconomic, structural, and poverty reduction policies.

Phasing and monitoring: Semiannual (or occasionally quarterly) disbursements contingent on observance of performance criteria and completion of reviews.

Exogenous Shocks Facility (ESF) (2005)

Approved but not yet fully funded. Would provide policy support and financial assistance to low-income countries facing exogenous shocks (such as commodity price changes, natural disasters, and trade disruptions caused by events in a neighboring country). Available to countries eligible for the PRGF but without a PRGF-supported program in place; ESF programs would be one to two years in length.

Access limits: 25 percent of quota; cumulative access limit of 50 percent of quota.

Maturities (expected repayment)(obligatory repayment): No early repayment expectation/5½-l0 years.

Charges: ½ of 1 percent a year; not subject to surcharges.

Conditions: Poverty reduction strategy must be in place, and comprehensive economic program must be formulated.

Phasing and monitoring: Semiannual or quarterly disbursements contingent on observance of performance criteria and, in most cases, completion of a review.

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