I. Introduction

1. The Precautionary and Liquidity Line (PLL) was introduced in the context of the Board discussion on the Fund’s Financing Role: Reform Proposals on Liquidity and Emergency Assistance in November 2011, replacing and broadening the scope of the previously established Precautionary Credit Line (PCL). The following note provides operational guidance to staff and further background information on the PLL. SPR (the Emerging Markets Division), FIN, and LEG stand ready to clarify any further questions that departments may have on the PLL.

II. Overview of the PLL

2. The PLL constitutes an additional financing tool of the Fund to meet flexibly the needs of member countries with sound economic fundamentals but with some remaining vulnerabilities that preclude them from using the Flexible Credit Line (FCL).² The PLL is established as a window in the credit tranches, permitting its use in addressing any balance-of-payments problem. It is designed as a credit line, with large and frontloaded financing available, that can be granted to a qualifying member under an arrangement (i.e., the PLL arrangement) if the member (i) has sound economic fundamentals and institutional policy frameworks, (ii) is implementing—and has a track record of implementing—sound policies, and (iii) remains committed to maintaining such policies in the future, all of which give confidence that the member will take the policy measures needed to reduce remaining vulnerabilities and will respond appropriately to the balance of payments (BoP) difficulties that it is encountering or might encounter (see The IMF’s Mandate— The Future Financing Role: Revised Reform Proposals and Revised Proposed Decisions, The Fund’s Financing Role: Reform Proposals on Liquidity and Emergency Assistance, as well as the PLL Factsheet and Press Release links).

3. The PLL is designed to provide the right balance between members’ demand for a well-tailored liquidity instrument and the need to provide adequate safeguards to Fund resources in presence of remaining vulnerabilities. To this purpose, two windows are available under the PLL: (i) a standard window under which financing is provided through a PLL arrangement with duration of one to two years and available to PLL qualifying members with either actual or potential BOP needs; or (ii) a short-term liquidity window under which financing is provided through a PLL arrangement of a six-month duration, available to qualifying members that have an actual or potential short-term balance of payments need such that they can be generally expected to make credible progress in addressing their vulnerabilities during the six-month duration of the arrangement. The specific design features of PLL support under the two windows is summarized below, with further discussion of the approval process, access considerations, ex-ante and ex-post conditionality, and reviews in the following sections.

III. Approval Process

4. A PLL arrangement may be approved following a request from a member (PLL decision, paragraph 2). There is no list of members that pre-qualify for the PLL. If a country expresses an interest in a PLL arrangement, staff will conduct a confidential preliminary assessment of the qualification criteria set forth in paragraph 2 of the PLL Decision to determine whether the member might qualify (see Section V). If management, based on staff’s preliminary assessment, decides that access to Fund resources under the PLL may be appropriate, management will promptly consult with the Executive Board at an informal meeting, with a view to allow early engagement of the Board regarding staff’s preliminary assessment of the member’s PLL qualification. To this purpose, staff will provide a concise note including a preliminary assessment of qualification, an initial discussion of the key macro-critical areas where conditionality might be sought, and an assessment of the member’s actual or potential need for Fund resources and repayment capacity.⁵ To the extent that access under the PLL is to exceed the normal GRA limits (including outstanding holdings of a member’s currency arising from previous GRA purchases), the procedural and substantive requirements under the Fund’s exceptional access policy would also apply.⁶ Following the informal Board meeting and once staff has reached understandings with the authorities on the policy actions under the program to be supported by the PLL arrangement, a decision approving the PLL arrangement is proposed for adoption by the Executive Board at a subsequent meeting on the basis of (i) the member’s concise written communication outlining its policy goals and strategies for at least the duration of the arrangement , as well as measures aimed at addressing its remaining vulnerabilities, together with a quantified macroeconomic framework; and (ii) an assessment in the staff report of the member’s qualification, the policy program’s objectives and ex post conditionality, as applicable, and proposed access under the PLL arrangement. Additional consultations with Executive Directors between the initial informal meeting and the Board’s consideration of the member’s request would also be expected to take place, as needed, to provide any additional information and updates on the program discussions, including qualification and program design issues. The specific procedural and substantive requirements for approval of a PLL request are described below.

5. If a member wishes to approach the Fund for a PLL arrangement, the process is as follows:

• Initial steps. The member should approach staff or management expressing its interest in a PLL arrangement (e.g. through an email or other written communication with the mission chief or area department head). Staff should encourage members to express interest on a confidential, and possibly informal, basis, as failure to qualify under the instrument, if publicly disclosed, could have negative effects on market sentiment. Similarly, Fund staff would be expected to treat the authorities’ request with the necessary confidentiality.

• Preliminary assessment of qualification. Upon an expression of interest, the country team would begin to prepare a preliminary assessment of the member’s qualification under the PLL on a confidential basis (PLL decision, paragraph 6 (a)). Given the possibility of remaining vulnerabilities in certain qualification areas, the assessment should be conducted with a view to preliminarily identifying areas for prior actions or ex post policy conditionality, as warranted and depending on the duration of the arrangement. A mission is not required to assess PLL qualification. However, if the latest Article IV consultation discussion is more than one year old, or if warranted by circumstances (e.g. concerns about a sudden deterioration in a key qualification area), a fact-finding staff visit is recommended to provide additional input to staff’s preliminary assessment of qualification. Staff should take care to ensure that qualification is thoroughly assessed (see Section IV and Annex I) and discussed with SPR, FIN, and LEG, and other functional departments as necessary. The nature of the BoP need (including whether actual or potential), the proposed access level, and the length of the arrangement sought by the authorities should also be clarified by staff at an early stage. The authorities should be informed promptly on a confidential basis of Management’s preliminary determination of the country’s qualification. Throughout the process, staff should make clear to the authorities that any qualification assessment by staff is only preliminary, pending the Executive Board’s decision.

• Informal Board meeting and staff note. If management decides that access to Fund resources under the PLL may be appropriate, it will promptly consult the Executive Board in an informal Board meeting. For this purpose, a concise staff note should set out the basis on which approval of the PLL arrangement could be recommended, including a preliminary assessment of qualification and specification of key areas with remaining vulnerabilities, and a discussion of the appropriate duration of the arrangement and of the proposed level of access, taking into account respectively the expected time that the member would need to make credible progress in addressing its remaining vulnerabilities and the member’s capacity to repay (details on the staff note are set out in Annex III). The note should identify policy actions (including possible prior actions and/or ex post conditionality as warranted under the Decision) to address the remaining vulnerabilities. If management decides that exceptional access to Fund resources may be appropriate, the note should also include all the additional information required under the exceptional access policy, including staff’s preliminary evaluation of the four substantive criteria for exceptional access (see Annex II for a complete list). Following consultation with the Board at the informal meeting, if there are concerns about a market-sensitive leak/misinformation regarding the PLL request, a press release could be issued indicating the authorities’ interest in requesting a PLL arrangement. The press release would take care not to prejudge the Executive Board decision on a PLL arrangement. Moreover, in the context of the exceptional circumstances envisaged for six-month arrangements, any possible communication on the existence of exogenous shocks, including due to the impact of heightened regional or global stress conditions would need to be handled with extra care to not propagate further contagion (in any case, these situations would be expected to be rare). Additional consultations with the Executive Board between the initial informal meeting and the Board’s consideration of the staff report would also be expected to take place, as needed, to provide any additional information and updates on the program discussions, including qualification and program design issues, as warranted.

• Preparation of the staff report and mission requirements. Details on the content of the staff report are set out in Annex III. For six-month arrangements, a mission to discuss a PLL request is not required, although a fact-finding staff visit would be recommended in case the latest available Article IV consultation staff report is more than one year old. For one to two year PLL arrangements, a mission would be normally expected, following the informal Board meeting, to discuss the PLL request including possible prior actions for arrangement approval, and the policy program aimed at addressing the vulnerabilities identified by the preliminary qualification assessment. The internal review and management clearance procedures that apply to SBA program missions would also apply in the context of a PLL request. The tasks of the mission should include: (i) obtain information and engage in discussions to finalize the staff qualification assessment; (ii) confirm understandings on access levels and length of the requested arrangement; (iii) reach understandings on policy goals and strategies for at least the period of the requested arrangement, together with a quantified macroeconomic framework underpinned by detailed streamlined set of indicative targets for key policy variables covering at least the first year/two semi-annual reviews (including, where warranted in accordance with the Guidelines on Conditionality, understandings on semi-annual PCs and structural benchmarks); and (iv) if warranted, reach understandings on prior actions for management’s recommendation of approval. A press release will be normally issued once preliminary understandings have been reached between the authorities and Fund staff on the program.

• The authorities’ concise written communication requesting a PLL arrangement should describe macroeconomic conditions and the authorities’ policy goals and strategies for at least the term of the arrangement, the policy actions aimed at addressing the member’s remaining vulnerabilities (PLL decision, paragraph 9), as well as the reasons inducing the member to request Fund assistance under the PLL. The authorities would also need to specify the nature of the BoP need and whether they intend to treat their access request on a precautionary basis. The authorities’ request should refer to their commitment to maintain sound economic policies and to respond appropriately to any shocks that may arise (with special attention to the member’s ability to make credible progress in addressing its vulnerabilities during the arrangement period in six-month duration requests). In this context, members requesting a one to two year PLL arrangement could add a reference to their exit expectations in their written communication.⁷ Cross referencing material published separately by the authorities would be appropriate to provide additional support for the Fund’s assessment of qualification for the PLL. The request should include a standard consultation clause and the authorities’ commitment to provide the Fund with all the needed information to monitor the program under the PLL arrangement. For arrangements of one to two years, this written communication provides a basis for monitoring the authorities’ policy commitments in program reviews under the PLL arrangement: to this purpose, the authorities’ request should also include an annex with a detailed quantitative macroeconomic framework according to the understandings reached with staff, including semi-annual indicative targets (and non-standard PCs where warranted in accordance with the Guidelines on Conditionality,) for key policy variables for at least the first year of the requested arrangement. It should also include, where warranted under the Guidelines on Conditionality, any prior actions and structural benchmarks identified under the program with the specified timing for implementation (PLL decision, paragraph 9). Where semi-annual PCs are warranted in accordance with the Guidelines on Conditionality, the proposed test dates should be set with the aim of ensuring data availability by the time of the completion of the semi-annual reviews (and avoid the need for waivers of applicability). If applicable, the annex will also present the definitions of the variables included as semi-annual targets, the data reporting requirements and deadlines, and any other information requirements needed to ensure adequate monitoring of economic and financial developments.

• Safeguards assessment. A member requesting a one-to-two year PLL arrangement is subject to the Fund’s general safeguards assessment policy that applies to Fund arrangements, including the requirement that a safeguards assessment be completed at least by the time of the first review under the arrangement.⁸ For six-month PLL arrangements, the member shall commit to undergo a safeguards assessment, provide staff with access to its central bank’s most recently completed external audit reports and authorize its external auditors to hold discussions with Fund staff. Although the timing and modalities for the safeguards assessment for members with a six-month PLL arrangement are determined on a case-by-case basis, the safeguards assessment would normally need to be completed before the Executive Board approves any subsequent arrangement to which the Fund’s safeguards assessments policy applies.

• Circulation periods. Normal circulation periods apply to any staff report for a request for the PLL arrangement. However, where needed, expedited procedures for the approval of the arrangement under the Emergency Financing Mechanism (EFM) could be applied. If the PLL arrangement is approved under the EFM procedures, a special review of the members’ initial policy response to the emergency and the market reactions would be required within one to two months after the approval of the PLL arrangement in line with the EFM procedures. However, the normal general expectation of prior actions as called for under the EFM procedures would not apply in the context of PLL arrangements. Prior actions for the approval of the PLL arrangement would be established where warranted in accordance with the Guidelines on Conditionality.

• Formal Executive Board meeting. The Executive Board considers a PLL arrangement based on the request set forth in the member’s written communication, as outlined above, and the recommendation contained in the relevant staff report. As for other Executive Board meetings on the use of Fund resources, staff should prepare a Summing Up (for internal use) and a Chairman’s Statement (for publication).

• Transparency. The Managing Director will generally not recommend that the Executive Board approve a request for a PLL arrangement or the completion of a review, if applicable, that would result in the member obtaining exceptional access unless the member consents to the publication of the associated documents. More generally, it would be normally expected that the staff report, as well as the authorities’ written communication requesting a PLL arrangement, or the completion of a review, and outlining the member’s policy goals, will be published shortly after the Board’s approval of the arrangement or completion of a review. The authorities are generally expected to consent (ideally in writing) to publish the documents before the discussions on the request for the use of Fund resources under the PLL are concluded with staff.⁹ The Fund’s Transparency Policy including the rules on corrections and deletions applies.

IV. Access, Phasing, and Purchases

6. Access justification. Consistently with general Fund policy, access to Fund resources under a PLL arrangement in individual country cases will be based on: (i) the member’s actual or potential need for Fund resources taking into account other sources of financing¹⁰ and the desirability of maintaining a reasonable level of reserves (further details on determining the BoP need are covered in Annex II of GRA Lending Toolkit and Conditionality—Reform Proposals); (ii) the member’s capacity to repay the Fund, which takes into account the strength of its adjustment program including the extent to which it will lead to a strengthening of the member’s BoP by the time that repurchases begin to fall due; and (iii) the amount of the member’s outstanding Fund credit and its record in using Fund resources in the past. Under the exceptional circumstances envisaged for six-month PLL arrangements (and discussed in Section II), key factors for consideration in determining individual countries’ access levels should include, apart from the country-specific considerations, the potential for contagion to exacerbate funding strains. This is in line with the six-month PLL arrangements’ potential role to act as a conduit for the Fund to respond to events of widespread stress, providing liquidity to crisis bystanders and helping mitigate contagion. SPR reviewers and the Emerging Markets Division can provide further guidance as needed.¹¹

7. Phasing. Subject to the access limits under the PLL decision, phasing in PLL arrangements varies depending on the duration of the arrangement and the nature of the member’s balance of payment need at the time of approval of the arrangement. Specifically,

• For six-month PLL arrangements, whether approved in the presence of actual or potential BOP needs, no phasing is envisaged, with the entire amount of access made available upon approval and remaining available throughout the arrangement period. Upon emergence of an actual BOP need, the member has the option of drawing in one or multiple purchases up to the amount available under the PLL arrangement at any time during the term of the arrangement, subject to the provisions of the PLL decision.

• For one-year PLL arrangements approved for members having, at the time of approval of the arrangement, a potential BoP need, the entire amount of approved access will be made available upon approval and will remain available throughout the arrangement period, subject to completion of a semi-annual review.

• For PLL arrangements with one to two year duration, approved for members having, at the time of approval of the arrangement, a potential BoP need, an initial amount of up to 500 percent of quota is made available upon approval for the first year, with the remaining amount made available at the beginning of the second year of the arrangement, all subject to completion of the relevant semi-annual reviews. Upon emergence of an actual BOP need, the member has the option of drawing in one or multiple purchases up to the amount available under the PLL arrangement at any time during the term of the arrangement, subject to the provisions of the PLL decision. Phasing of one to two year arrangements approved on a precautionary basis will remain on an annual basis following the emergence of an actual BoP need and the resulting purchase (see also paragraph 8 below).

• For PLL arrangements with one to two year duration, approved for members having, at the time of approval of the arrangement, an actual BoP need, purchases are phased, with an initial amount being available upon approval of the arrangement and the remaining amounts being made available at semi-annual intervals, subject to the completion of the relevant semi-annual reviews and commensurate with the member’s projected level of actual BoP needs. It is expected that there would usually be a total of three purchases in a one-year arrangement and five purchases in a two-year arrangement (including the purchase made available upon approval), with all purchases other than the one available upon approval being subject to a review.

8. Purchases. To make actual purchases under the PLL arrangement, FIN would need to receive official communication from the authorities requesting a purchase under the PLL arrangement as is the case with any purchases under the IMF’s General Resources Account, specifying the amount of the purchase, subject to access and phasing limits as applicable, and representing a commensurate actual BoP need.¹² FIN would immediately contact the authorities to determine the earliest possible value date, the currency composition of the purchase, and other operational details in line with established guidelines and procedures. Information about any purchases by the member under the PLL arrangement is routinely made public by the Fund on its external webpage (on financial transactions with member countries). If the PLL arrangement was requested on a precautionary basis upon approval, Executive Directors would be normally informed of a member’s request to draw under the PLL arrangement in the context of an informal Executive Board meeting soon after this has taken place. To this purpose, staff will be expected to prepare a concise note discussing the latest developments leading to the actual BoP need and corresponding purchase and the outlook ahead. For PLL arrangements of one to two years, an updated financing needs and sources table will be included in the note, presenting the semi-annual BoP need projections by the team for the remainder of the arrangement period, as well as an updated capacity to repay table.¹³ Although future purchases during the year will be expected to be commensurate to the actual BoP need projected by staff, phasing of arrangements approved on a precautionary basis will remain on an annual basis. A press release announcing the first purchase could be issued if deemed warranted following such an informal Board meeting.

9. Financial terms. As a window in the credit tranches, use of Fund resources under PLL arrangements is subject to the same financial terms (repurchase period, surcharges, and charges) as other arrangements within the credit tranches such as FCL arrangements and SBAs. For PLL arrangements approved on a precautionary basis, a commitment fee is payable annually on the amounts made available for purchase, but is refundable proportionally to the extent that purchases are made.¹⁴ Prior to approval of any PLL arrangement on a precautionary basis, FIN will need to receive authorization from the authorities to debit the member’s SDR account for payment of the commitment fee.

10. Exit strategy. For one to two year PLL arrangements, a discussion of exit prospects would be expected to be included in the initial PLL request to help promote transparency and underpin exit expectations.¹⁵ This should be supported to the extent possible, at the time of the PLL request and following semi-annual reviews by staff’s assessment of the anticipated evolution of risks over the arrangement period. This assessment could then be used to inform the discussion of the access level, in terms of the evolution of risks, if a successor one to two year PLL arrangement is eventually considered. As part of a member’s exit strategy, successor arrangements would be normally expected to involve declining access if warranted by improvements in external financing prospects. Any exit and risks discussion should be carefully crafted to avoid any risk of adverse market reaction.¹⁶

11. PLL resources and their treatment in reserves. Unpurchased amounts available under the PLL arrangement are not counted in gross reserves (as they are not yet created as an asset). However, there is a space in the Reserves Data Template filled by SDDS subscribers to announce the availability of these as yet unpurchased credit line resources.¹⁷ Once purchased, PLL resources give rise to an increase in gross reserve assets, as well as external liabilities (with maturities corresponding to the timing of repurchases).

V. Determining Qualification

12. Qualification is assessed on the basis of the following criteria and additional considerations:

• An assessment of whether the member (i) has sound economic fundamentals and institutional policy frameworks; (ii) is implementing—and has a track record of implementing—sound policies; and (iii) remains committed to maintaining such policies in the future, all of which give confidence that the member will take the policy measures needed to reduce any remaining vulnerabilities and will respond appropriately to the BoP difficulties that it is encountering or might encounter (PLL decision, paragraph 2(a)).

• A generally positive assessment by the Executive Board of the member’s policies in the context of the most recent Article IV consultations (PLL decision, paragraph 2(b)).

• To help assess qualification, the qualification areas and indicators listed in Annex I should be assessed by staff in the initial short note to the Board and the staff report on the PLL arrangement request. These qualification requirements draw on the FCL qualification criteria. Specifically, the member will be assessed against the five broad areas encompassed by the FCL’s nine specific qualification criteria. The five areas are: (i) external position and market access; (ii) fiscal policy; (iii) monetary policy; (iv) financial sector soundness and supervision; and (v) data adequacy. Nevertheless, the PLL qualification bar is lower than the FCL’s, as ex post policy conditionality will be expected to address any remaining vulnerabilities. Accordingly, the member will be expected to perform strongly in most (i.e. at least 3 out of 5) of the qualification areas with no substantial underperformance in any of them. The remaining vulnerabilities are expected to be credibly reduced during the PLL arrangement (see Annex I for further details).

• Moreover, a PLL arrangement shall not be approved for a member facing any of the following circumstances (hereafter referred to as “approval criteria”) : (i) sustained inability to access international capital markets; (ii) the need to undertake large macroeconomic or structural policy adjustments,¹⁸ unless already set credibly in train before approval of the arrangement;¹⁹ (iii) a public debt position that is not sustainable in the medium term with a high probability; or (iv) widespread bank insolvencies (PLL decision, paragraph 2(c)).

• For six-month arrangements, an explicit assessment of the member’s capacity to make credible progress in addressing its vulnerabilities during the six-month duration of the arrangement is also required.

• Finally, if the access request is above the normal GRA limits, meeting the relevant four substantive criteria for exceptional access also constitutes a necessary condition for PLL arrangement approval.²⁰

13. In circumstances where a member is assessed and judged by management not to qualify for the PLL, the request would normally remain confidential. Accordingly, the Executive Board would be notified by staff of a member’s request only in the context of an informal Board meeting when management judges that access under the PLL may be appropriate.

VI. Ex-Post Conditionality

14. PLL arrangements carry ex post conditionality, in addition to ex ante conditionality in the form of qualification criteria (PLL decision, paragraph 3). As discussed in Section II,

• Six-month arrangements are subject to the standard continuous PCs (as per footnote 5), with prior actions included in cases where the upfront adoption of measures is critical for successful program implementation.

• In addition to the standard PCs, ex-post conditionality in one-to-two-year PLL arrangements is underpinned by a quantitative macroeconomic framework with semi-annual indicative targets. It may also include other PCs, prior actions and/or structural benchmarks, if these are warranted under the Guidelines on Conditionality.²¹ In particular:

  1. Indicative targets (ITs) : Semi-annual ITs will be established as quantitative indicators to assess the member’s progress in meeting the objectives of the program in the context of semi-annual reviews.

  2. Prior actions (PAs): PAs (either as conditions for approval of a PLL arrangement, for completion of a review or for the granting of a waiver of nonobservance) may be established in cases where the upfront implementation of measures is critical for successful program implementation.

  3. Performance criteria (PCs) : Semi-annual PCs shall be applied to clearly specified indicators that are considered so critical for the achievement of the program goals or monitoring implementation that purchases under the PLL arrangement should be interrupted in case of non-observance. As a result, missed PCs would require waivers of non-observance for completion of reviews. Moreover, as mentioned above, where semi-annual PCs are warranted, the proposed test dates should be set with the aim of ensuring data availability by the time of the completion of the semi-annual reviews (and avoid the need for waivers of applicability).

  4. Structural benchmarks (SBs): SBs can be established to serve as clear markers in the assessment of progress in the implementation of critical structural reforms in the context of a program review.

15. Aside from prior actions for completion of the review if warranted, at the time of the final review under the PLL arrangement, staff would not be normally expected to set new ex-post conditionality given the expected expiration of the term of the arrangement. Standard continuous PCs would apply until the expiration of the arrangement.

16. Once an arrangement has expired, and in the absence of a successor arrangement, the Fund will conduct post program monitoring (PPM) if outstanding Fund credit exceeds 200 percent of quota or as warranted in accordance with the PPM policy.²² A PLL arrangement entailing exceptional access, whether on an actual or precautionary basis, would be also subject to an ex post evaluation (EPE) by staff within a year after the end of the arrangement, in accordance to the EPE policy (the EPA policy also applies to PLL arrangements).²³

VII. Reviews

17. Semi-annual reviews. For all the PLL arrangements with duration of one to two years, semi-annual reviews would be conducted. These would assess whether the country still meets the qualification requirements for the PLL, whether the program remains on track to achieve its objectives, and the policy understandings with the member for the future. The review should, to the extent possible, be scheduled with the objective of completion by the Executive Board immediately prior to the lapse of the six-month period.²⁴ Staff should prepare a staff report to inform the Executive Board about recent developments, an update on the expected evolution of risks over the remainder of the arrangement, policy performance against the program, and an update assessing the country against the qualification areas (see Annex II for a description of the review process and likely content of the report). Executive Board completion of a review could be on a lapse of time basis in accordance with the relevant policy. The reviews would assess: (i) continued adherence to the PLL qualification standard;²⁵ (ii) the authorities’ adherence to their policy intentions as conveyed to the Board in their written communication at the time of the arrangement’s approval (or previous reviews) and their policy understandings for the future; (iii) progress in meeting the indicative targets under the program’s macroeconomic framework; observance of the program’s PCs (waivers of non observance would need to be requested in order to complete the review if PCs are missed), prior actions, and structural benchmarks, as applicable. The Executive Board would set revised policy targets and other conditionality on the basis of a revised macro framework for one year ahead (or the remainder of the arrangement). Any changes in the macroeconomic framework, policy strategies, and commitments by the authorities will be presented in a new written communication from the member (any revisions to the technical annex will also be included). The staff report would be subject to the standard review process and should be circulated according to the normal circulation procedures—unless there is a case for expedited procedures under the EFM (as discussed above).

18. Ad hoc reviews. Subject to the access limits under the PLL decision, augmentations of any PLL arrangements, and rephasing of access under PLL arrangements longer than one year, are possible at any time (and not just in the context of scheduled reviews) upon completion of an ad hoc review in order to meet an unexpectedly larger (actual or potential) BoP need. The review is a key safeguard to allow a fresh stocktaking of the underlying causes for a larger BoP need and the policy responses needed. Accordingly, an ad hoc review will require an assessment of continued qualification under the PLL and policy performance in line with the overall objectives of the arrangements:

1. Performance under the program: The ad hoc review would need to assess whether: (i) the country continues to meet the PLL qualification requirements; (ii) the program remains on track to achieve its objectives, including the targets and policy measures (including any PCs) specified in the authorities’ policy framework; and (iii) policy understandings with the authorities for the future.

2. Size of balance-of-payment need: The ad hoc review would also need to assess the revised balance-of-payment need and access levels. For augmentations of six-month arrangements beyond the 250 percent of quota limit, a discussion of the exceptional circumstances motivating the request would also be required.