Abstract
Reforming the Fund's Policy on Non-Toleration of Arrears to Official Creditors
Rationale for the change
In light of questions received from Executive Directors, staff has concluded that the original language1 used to define financing contributions (such as in Paragraph 3 of Annex 1 of Supplement 1) was unnecessarily complex. The new language below captures the intended concept in simpler and clearer terms.
Proposed language
“First, an agreement will be considered “adequately representative” when it provides a majority of total financing contributions required from official bilateral creditors over the program period. “Contribution” here comprises, and is limited to, debt relief and any new financing (e.g. loans, bond financing, guarantees, and grants).”
“First, an agreement will be considered “adequately representative” when it covers a majority of total financing contributions from official bilateral creditors over the program period. These contributions would comprise, and be limited to, debt service claims falling due—which represent potential debt relief—and any new financing (e.g. loans, bond financing, guarantees and grants) over and above the amount needed to service such claims. If, in a particular case, it is evident that the program parameters require less than full rescheduling of debt service coming due during the program period, this calculation could be adjusted accordingly.”