Annex: Redline of Paragraphs 3(a), 3(b), 3(c) and 3(d) of Decision No. 14064-(08/18), February 22, 2008, as Amended:
“(a) The member is experiencing or has the potential to experience exceptional balance of payments pressures on the current account or the capital account, resulting in a need for Fund financing that cannot be met within the normal limits;
(b) A rigorous and systematic analysis indicates that there is a high probability that the member’s public debt is sustainable in the medium term. Where the member’s debt is assessed to be unsustainable ex ante, exceptional access will only be made available where the financing being provided from sources other than the Fund restores debt sustainability with a high probability. Where the member’s debt is considered sustainable but not with a high probability, exceptional access would be justified if financing provided from sources other than the Fund, although it may not restore sustainability with high probability, improves debt sustainability and sufficiently enhances the safeguards for Fund resources. For purposes of this criterion, financing provided from sources other than the Fund may include, inter alia, financing obtained through any intended debt restructuring. This criterion applies only to public (domestic and external) debt. However, the analysis of such public debt sustainability will incorporate any relevant contingent liabilities, including those potentially arising from private external indebtedness.
(c) The member has prospects of gaining or regaining access to private capital markets within a timeframe and on a scale that would enable the member to meet its obligations falling due to the Fund.
(d) The policy program of the member provides a reasonably strong prospect of success, including not only the member’s adjustment plans but also its institutional and political capacity to deliver that adjustment.”
Sovereign Debt Restructuring—Recent Developments and Implications for the Fund’s Legal and Policy Framework and The Fund’s Lending Framework and Sovereign Debt—Preliminary Considerations, respectively.
Decision No. 14064-(08/18), February 2, 2008, as amended.
Guidelines on Conditionality, Decision No. 12864–(02/102), September 25, 2002, as amended.
Official support here connotes direct policy lending to a member by the official sector. It excludes project lending, monetary policy support mechanisms (including in the context of currency unions), and other credible signals from policy makers aimed at anchoring market expectations (e.g., Mario Draghi’s “whatever it takes” pledge, in the context of the euro area crisis), which may nonetheless be important for supporting market access prospects.
Market access may need to be restored sooner if there are Fund obligations coming due at the beginning of the post-program period because of purchases made under an earlier arrangement.
Further to the modifications in the main paper, staff proposes a clarification to the last sentence of the second criterion to align the concepts of government and public debt.