Abstract
It is proposed to extend the period of higher access limits for emergency financing for a period of six months, through April 6, 2021.
1. This supplement proposes to extend the suspension of high-access (HA) procedures for requests for financing under the Rapid Credit Facility (RCF), which is scheduled to lapse on October 5, through April 6, 2021. The HA procedures for RCF financing requests have been suspended since April 6, 2020 in the context of a broader discussion on enhancing the Fund’s emergency financing toolkit in light of the COVID-19 Pandemic.1
2. The HA procedures, requiring early consultation with the Board, provide enhanced oversight of requests for high levels of access to concessional resources.2 The procedures are triggered when i) a request for Fund financing brings total access to PRGT resources to more than 180 percent of quota over a 36-month period or ii) total outstanding credit from the PRGT exceeds or is projected, given proposed commitments, to exceed 225 percent of quota.
3. The proposed extension will support a more flexible response to the urgent needs of the membership. The temporary increase of the limit on annual access to the PRGT through April 6, 2021 and the proposed extension of the temporary increase in access limits to the RCF through the same period were intended to allow the Fund to respond flexibly to the urgent pandemic-related needs of the membership. Suspending the HA procedures during this period is aligned with the broader approach of accommodating higher access levels on a temporary basis during the pandemic period while reducing a compliance burden on the Executive Board and country teams.3
4. Staff analysis indicates that up to eight members could trigger the HA procedure thresholds during the period from October 6, 2020 to April 6, 2021—in all cases, exceeding the thresholds by margins less than 50 percent of quota. Most of these countries are expected to seek IMF financial support via Fund-supported arrangements rather than the RCF. The Executive Board has already endorsed the view that a temporary increase in the limit on annual access to the PRGT by 50 percent of quota during the pandemic period does not raise prudential concerns that cannot be addressed via the regular review process.
HA procedures require an informal Board session based on a short staff note that includes discussion of program strength, capacity to repay, and debt vulnerabilities.
Expiration of the acceleration of Board procedures for considering emergency financing requests does not impair the potential flexibility of the Fund’s response to such requests because the Executive Director has the option of requesting a shortened circulation period, a request that is typically accepted by other Directors.