This paper sets out initial options for access limits. The subsequent paper GRA Lending Toolkit and Conditionality Reform Proposals (03/24/09) identifies specific proposes reforms. Substantial differences between this paper and the subsequent paper are highlighted in the text.
This paper was prepared by Wes McGrew, Apinait Amranand (both PDR), Michele Shannon, Michael Pedroni, Claudio Visconti, and Thomas Shuster (all FIN) under the guidance of Alan MacArthur (PDR) and Miguel Savastano (FIN).
IMF Executive Board Concludes Review of Access Policy in the Credit Tranches and Under the Extended Fund Facility and the Poverty Reduction and Growth Facility, and Exceptional Access Policy, March 7, 2008. Most Directors agreed that the next review of access policy would take place by 2013, as scheduled, or earlier if suggested by the circumstances. In this regard, Directors noted that access policy is linked to broader Fund policy issues such as charges and maturities, including surcharges, quotas and voice reform, and the possible establishment of a new liquidity instrument.
A change in access limits requires a majority of the votes cast.
The Fund arrangement for Liberia under the PRGF was combined with 265 percent of quota in frontloaded financing under the EFF to allow for the repayment of a bridging loan that had been used to settle arrears to the Fund (see IMF Executive Board Fully Restores Liberia's IMF Status, Approves Financial Support Amounting to US$952 Million and HIPC Decision Point Designation, March 14, 2008).
The purpose of access limits is discussed in Review of Access Policy in the Credit Tranches and Under the Extended Fund Facility, August 8, 2001.
Surcharges on high levels of outstanding credit are not formally linked to access limits. The surcharge on credit outstanding under Stand-by Arrangements and the Extended Fund Facility is 100 basis points above the rate of charge for credit over 200 percent of quota and 200 basis points above the rate of charge for credit over 300 percent of quota. Under the SRF, which is not subject to access limits, a time-based surcharge of 300 basis points is applied, increasing by 50 basis points after one year and every six months thereafter up to 500 basis points. As noted, a separate paper on charges and maturities will be presented for Board consideration shortly.
In capital account cases, the exceptional access framework requires that the four substantive criteria be met, while in non-capital account cases, the framework does not require that the four substantive criteria be met. In the latter cases, requests for exceptional access need to be justified in light of the four substantive criteria. See 2008 Access Policy Review.
For a history of access limits, see Review of Access Policy in the Credit Tranches and Under the Extended Fund Facility—Background Paper, August 9, 2001.
During the 1980s, the Fund adopted a complex system of annual, triennial, and cumulative access limits, as well as dual limits. In 1992, following the Ninth Review, the system was simplified to comprise only one annual and one cumulative limit.
The current access limits in the credit tranches and under the EFF were established in 1994. The current overall or “global” limits on access to GRA resources were established in 2002 (and incorporated into Decision No. 13462-(05/32), adopted April 1, 2005).
GDP is defined as nominal GDP at market rates; trade is defined as exports plus imports of goods and services; capital flows (discussed below) are measured as the sum of foreign direct investment in the reporting economy, portfolio investment liabilities, and other investment liabilities. All data are from the April 2008 World Economic Outlook for the current membership, converted to SDRs, and based on centered three-year averages, including projections for 2008 and 2009.
The Fund’s satisfactory liquidity position was key to the recommendation in both the 12th and 13th General Quota Reviews to maintain quotas at existing levels. These decisions did not reflect an assessment that the potential needs of individual members facing balance of payments pressures had declined relative to the global economy.
1998 is used as a base to take account of the last general quota increase under the 11th Review, which as noted above restored absolute access limits close to levels prevailing in the early 1980s relative to GDP and trade. Access relative to capital flows is also considered for the period 1998-2008, given their increased relevance to members’ potential needs. While it is clear that the growth of capital flows has substantially exceeded that of absolute access, the broad measure used here (financial account inflows) should be viewed as indicative given the range of options for measuring such flows, year-to-year variations (including low base period effects for EMDCs), and the fact that these increases are, in part, the counterpart to rapid reserve accumulation by some emerging market members.
These issues are also reviewed in The Thirteenth General Review of Quotas—Assessing the Adequacy of Fund Resources, November 27, 2007 and the 2008 Access Policy Review.
In the February discussion, a few Directors suggested considering an increase in access limits of at least 50 percent, with others proposing an increase in the cumulative access limit to 500 percent (67 percent).
See, for example, IMF Concludes Discussion on Access Policy in the Context of Capital Account Crises; and Review of Access Policies in the Credit Tranches and the Extended Fund Facility, March 21, 2003; IMF Executive Board Concludes Review of Policy on Exceptional Access to Fund Resources, May 13, 2004; and IMF Executive Board Concludes Review of Access Policy in the Credit Tranches, the Extended Fund Facility and under the Poverty Reduction and Growth Facility, and Review of Exceptional Access Policy, May 4, 2005.