CHAPTER IV: RAPID CREDIT FACILITY

Abstract

CHAPTER IV: RAPID CREDIT FACILITY

Contents

  • CHAPTER IV: RAPID CREDIT FACILITY

  • A. Objectives and Qualification

  • B. Repeated Use

  • C. Concurrent Use and Blending

  • D. Access

  • E. Financing Terms

  • F. Financing Assurances, Arrears, and Safeguards

  • G. Policy Objectives and Design

  • H. Conditionality

  • I. Track Records

  • J. Other Relevant Policies

  • BOX

  • 4. Food Shock Window Under Emergency Financing Instruments

Chapter IV: Rapid Credit Facility

The RCF provides low-access concessional financing with limited conditionality to LICs facing urgent balance of payments needs.172

A. Objectives and Qualification

Purpose and Objective

175. The RCF provides rapid concessional financial assistance as outright disbursements to LICs facing urgent balance of payments needs. These financing needs include those caused by exogenous shocks, natural disasters, and emergence from conflict, as well as other factors such as domestic instability, emergencies, and fragility. The RCF is designed for situations where a multi-year UCT-quality Fund-supported program is either not necessary (e.g., due to the transitory nature of the adjustment need and the financing) or not feasible (e.g., due to the member's limited capacity, including in post-conflict, disaster, or other fragile situations or when more time is needed to design a multiyear program). In the latter case, the member country would typically be expected to make efforts to move to a UCT-quality program (typically supported under the ECF), in which case repeated use of the RCF may be warranted under certain circumstances and subject to certain limitations (see below) under the legal framework of the PRGT Instrument.

176. The purpose of RCF support is to help members address their urgent balance of payments needs and assist them in implementing economic policies that enable them to make progress towards achieving or restoring a stable and sustainable macroeconomic position consistent with strong and durable poverty reduction and growth. Such a position would be characterized by the absence of a present, prospective balance of payments need and by the domestic and external stability that is necessary to support strong and durable poverty reduction and growth. It would typically be associated with sustainable fiscal and current account balances, limited debt vulnerabilities, adequate international reserves, and sufficient policy and institutional capacity to implement appropriate macroeconomic policies. This position might still involve significant levels of donor assistance, though aid dependence would be expected to decline over time.

177. Similar to other Fund instruments, RCF financing assists countries in helping to address their balance of payments difficulties by providing temporary financial support (in this case, on a concessional basis) to smooth economic adjustment and avoid excess volatility. By meeting urgent balance of payments needs, RCF support can help replenish international reserves and loosen financing constraints for both the public and private sectors as the country aims to address its balance of payments difficulties. The RCF is also expected to provide policy support and catalyze additional financing from donors.

178. RCF support is available under different windows, based on different types of shocks leading to the urgent balance of payments needs. In addition to the regular window, which is not linked to a specific type of shock, an exogeneous shock window is available for qualifying countries where urgent balance of payments needs result primarily from a sudden and exogenous shock. A large natural disaster window is available to qualifying countries that experience urgent balance of payments needs due to a large natural disaster and where the resulting damages are equivalent to at least 20 percent of GDP. A new temporary food shock window (FSW) is available under the RCF for a period of 12 months from September 30, 2022, to qualifying countries that experience urgent balance of payments needs associated with the global food shock (see Box 4). Access limits and conditions under each of these windows vary and are discussed below.

Qualification

179. Assistance under the RCF is available to PRGT-eligible member countries that face urgent balance of payments needs unless (i) the balance of payments difficulties that underlie the financing need are predominantly caused by a withdrawal in financial support by donors or (ii) a UCT-quality program is both feasible and necessary. In this context:

  • An urgent balance of payments need is characterized by a present balance of payments need that, if not addressed, would result in immediate and severe economic disruption. Nonurgent financing needs could be met by the ECF or SCF, assuming relevant requirements are met, including the commitment and capacity to implement a UCT-quality program (see below).

  • The RCF can only be used if it is either not feasible or not necessary to implement a Fund-supported program with a UCT-quality standard; i.e., a program with the commitment and capacity by the authorities to implement a set of policies that is adequate to correct external imbalances and enable repayment to the Fund within the specified maturity period. Specifically, a member would normally only qualify for the RCF if either (i) the balance of payments need is expected to be resolved within one year and no major policy adjustments are necessary to address underlying balance of payments difficulties (as may be the case with some temporary shocks, but not for a country also facing a protracted balance of payments problem); or (ii) a UCT-quality Fund-supported program cannot be put in place owing to limited policy implementation capacity or when the urgency of the balance of payments need calls for financial assistance before a UCT-quality program can be put in place (or, where relevant, be brought back on track). For countries receiving support under the RCF that are also seeking to build a track record toward an UCT-quality program, the use of an SMP to build such a track record would normally be the preferred option. However, policy commitments in the context of a recent RCF disbursement can be used to build the policy track record required to support a repeat RCF disbursement.

  • Additional criteria apply for access to the temporary food shock window under the RCF/RFI (see Box 4).

180. Qualification also requires several ex-ante policy undertakings. The member would need to outline, in a LOI, the policies it plans to pursue, and set out any additional understandings to provide assurance that it will not introduce measures or policies that would compound its balance of payments difficulties. This would typically encompass, inter alia, a commitment not to introduce or intensify exchange and trade restrictions. Moreover, sufficient policy capacity and commitment to implement the policies must exist to safeguard Fund resources, and the Fund would need to assess that the member will cooperate with the Fund in an effort to find, where appropriate, solutions for its balance of payments difficulties. Other requirements for the approval, repeated use, and implementation of RCF support are discussed further below.

Food Shock Window under Emergency Financing Instruments

On September 30, 2022, the Board approved a new temporary food shock window (FSW) under the RFI and RCF, to address urgent BoP needs associated with rising food and fertilizer import costs, cereal export shortfalls, or acute food insecurity faced by many members, in the wake of the Russian invasion of Ukraine in February 2022. The window will be available for a period of 12 months from the date of Board approval.

Access. Access under the FSW does not exceed qualifying countries' actual BoP need and capped at 50 percent of quota. It is fully additional to the annual access limits under the RFI and RCF. Cumulative access limits under the RFI regular window and RCF exogenous shocks window will be increased to 175 percent of quota for countries accessing the FSW.1 Access also counts towards exceptional access safeguards thresholds for the GRA, PRGT, and PS-HCC. In blending cases, the RFI component counts towards the applicable RCF annual/cumulative access sub-ceilings. Outstanding disbursements from all RCF/RFI windows are included in calculating total cumulative access.

Qualification criteria. Standard qualification criteria for access to emergency financing apply. Additionally, a requesting member must fulfil at least one of the food shock impact criteria, i.e., it needs to experience an urgent BoP need associated with:2

  • (i) a situation of acute food insecurity that is inflicting serious economic disruption within the member on such a scale as to warrant a concerted international effort to support the member,3

  • (ii) an increase in food or fertilizer import costs, that adversely impact member's current account, where such negative impact is at least 0.3 percent of GDP over a 12-month period, and/or

  • (iii) a shortfall in cereal exports, where the projected negative shock to cereal exports, benchmarked against the previous year, is larger than 0.8 percent of projected GDP for the compensable year, except if due to own ban or restrictions on cereal exports.

Safeguards. Access under the FSW is subject to debt sustainability and adequate capacity to repay requirements. Members are expected to commit to measures to ensure transparency and accountability in the use of emergency resources. In addition, as with other emergency financing, the timing and modalities of the safeguards assessment would be determined on a case-by-case basis. Normally, the safeguards assessment would need to have been completed before Executive Board approval of any subsequent arrangement to which the Fund's safeguards policy applies; however, an updated safeguards assessment is not required if one has been completed within 18 months of Board approval of the subsequent arrangement; or if the central bank is considered to have a strong track record and an assessment was completed within four years of Board approval of the new arrangement.

Other design features and terms. Disbursements under the FSW do not count towards the limit of two-disbursements within a 12-month period under the RCF. Financial assistance through the FSW under the RFI and RCF should be repaid within 31/4 to 5 years, and 51/2 to 10 years, respectively, as is the case for financing under other windows of the RFI and RCF. Concurrent use of the FSW with an SMP/PMB can be considered when a country needs to build a track record towards a UCT-quality program, with the PMB being available in narrowly tailored circumstances.4

Documentation. The PN/SR requesting access under the FSW should include a clear explanation for how the member meets the FSW qualifying criteria and a justification for the requested access level The letter of intent requesting FSW support should also discuss the general policies that the member plans to pursue to address its BoP difficulties, how the member's policies advance its poverty reduction and growth objectives (the latter is required for the RCF), and the member's intention not to introduce measures or policies that would compound its BoP difficulties. The member should also include relevant commitments for safeguards assessment policy requirements. Transparency and accountability measures should be tailored to country-specific circumstances. Prior actions should be set only exceptionally, where critical that some measures be adopted upfront. If a UCT-quality program is necessary but not feasible (i.e. due to the urgency of the BoP need or because of the member's limited policy implementation capacity), the FSW PN/SR should describe the authorities' transition strategy. If financing under the FSW is combined with an SMP or PMB, the PN/ SR should follow the standard requirements for the latter. Finally, PN/SRs for FSW assistance must include standard capacity to repay and DSA analyses. For countries using the joint IMF-World Bank LIC-DSA, an agreement with the World Bank on the DSA is also required.5

1 Cumulative access limits under other windows of the RFI and RCF would not be affected.2 For details see Proposal for a Food Shock Window Under the Rapid Financing Instrument and Rapid Credit Facility (IMF, 2022e).3 Definitions of acute food insecurity by the Food and Agriculture Organization (FAO) and World Food Program (WFP), or of major food crisis as per the UN Global Report on Food Crisis (UNGRFC) will be taken into account.4 For details see Proposal for a Staff-Monitored Program with Executive Board Involvement (IMF, 2022f).5 Under certain circumstances, the PN preparation could be streamlined. The DSA write-up could be streamlined if the latest DSA was published within the last 12 months and circumstances have not changed significantly, consistent with paragraph 16 in the LIC DSF guidance note. For countries using the MAC SRDSF, no write-up is required under the new framework—only focused comments should be added in the MAC SRDSF output tables.

B. Repeated Use

181. RCF resources are provided as outright loan disbursements and not phased under an arrangement. Support under the RCF can either be on a one-off basis (e.g., in case of shocks) or can be provided under repeated RCF disbursements over a (limited) period in case of recurring or ongoing urgent financing needs, although each disbursement would be requested and approved separately. In the latter case, the policy commitments under the RCF should typically be used (similar to an SMP) to facilitate an eventual transition to a UCT-quality program, normally to be supported under an ECF arrangement. The use of the RCF in post-conflict and similar situations of instability and limited capacity would be similar to the use of the RFI (previously Emergency Post-Conflict Assistance (EPCA)).173 In cases where a country seeks to build a track record for a UCT-quality program and faces urgent financing needs, use of an SMP to build such a track record concurrently with the RCF would normally be the preferred option. However, the RCF, with appropriate policy understandings can also be used to build the policy track record. (see Appendix III).

182. To help ensure that the RCF does not support continued weak policies or create moral hazard, RCF financing is subject to limitations on repeat use. As discussed below, there are also sub-ceilings on access to avoid supporting weak policies or moral hazard. Specifically, a member may not receive more than two RCF disbursements in any 12-month period and can only receive more than one RCF disbursement in any three-year period if:

  • the balance of payments need was caused primarily by a sudden, exogenous shock, in which case a member qualifies under the “exogenous shocks” window or under the “large natural disaster” window for natural disasters where damage is assessed to be equivalent to or exceed 20 percent of the member's GDP174 (see below); or

  • the member country has established a track record of adequate macroeconomic policies for a period of at least six months prior to the request (see below).

C. Concurrent Use and Blending

Concurrent Use

183. A member will generally not obtain RCF financing if a UCT-quality Fund supported program (e.g., under the ECF or SCF) is in place, on track, and remains feasible. Should additional balance of payments needs arise during an ECF or SCF arrangement, an augmentation of access under this arrangement would typically be the appropriate response. RCF financing during an ECF or SCF arrangement can be provided only when (i) disbursements under the ECF or SCF arrangement are not possible, for instance due to policy slippages or delays in program discussions, (ii) qualification requirements for the RCF are met, including the existence of an urgent balance of payments need and relevant policy commitments, and (iii) the balance of payments need giving rise to the request for financing under the RCF is primarily caused by a sudden exogenous shock. When access under the RCF exceeds 25 percent of quota by using the “exogenous shocks” window or the “large natural disasters” window, existing and prospective policies should be sufficiently strong to address the shock. In addition, RCF-supported polices could serve as a track record to bring the ECF- or SCF-supported program back on track. The RCF can be used concurrently with GRA financing under certain circumstances (see below).

184. Support under the RCF can be combined with programs supported under the PSI, PCI or monitored under an SMP. Satisfactory performance under a PSI, PCI or SMP for at least six months would normally satisfy the track record requirement for repeated use of the RCF, if relevant, and would facilitate rapid disbursement of RCF support. A short LOI together with a short staff paper would normally suffice for requesting an RCF loan disbursement when an urgent balance of payments need arises during an on-track PSI, PCI or SMP.

Blending

185. Please see Chapter I for a complete discussion of blending policies under the PRGT. When providing financial assistance with blended resources, RCF resources will normally be provided together with GRA resources under the RFI. Use of the RCF in conjunction with financing under GRA arrangements would only be expected in cases where the programs financed under the pre-existing SBA or extended arrangements (typically in the context of blended financial support) are off track. In this case, RCF financing would normally be blended together with RFI financing.

186. The modalities (and documentation) of blended RCF-GRA financing would be broadly the same as those applicable under a stand-alone RCF disbursement. In particular, the financing would aim to meet urgent balance of payments needs for countries where a UCT-quality program is either not needed or not feasible. The main difference is that Fund financial assistance would typically involve both RCF and GRA resources (see Section D), implying lower average concessionality of the Fund's financial support than under stand-alone RCF support. Additionally, RFI qualification requirements would have to be met when applicable.175

D. Access

187. When considering access under the RCF, area departments may wish to consult with SPR and FIN at an early stage; i.e., before a PN is circulated for formal review. Furthermore, staff reports for RCF assistance should explicitly discuss the basis on which access was determined, with reference to the main criteria and access limits discussed below.

Determination of Access—Main Criteria

188. Access under the RCF is determined on a case-by-case basis based on the following standard criteria: (i) the member's urgent balance of payments need (taking into account all balance of payments flows, including reserve accumulation and financing from other sources);176 (ii) the strength of its policies and capacity to repay the Fund (taking into account the member's policy plans, adjustment effort, commitment to implement its policy plans, institutional capacity, track record of policy implementation, and country circumstances such as vulnerabilities, imbalances, and debt sustainability);177 and (iii) the amount of outstanding Fund credit and the member's record of past use. All else being equal, higher access would generally be associated with a stronger set of policies, stronger track record, and stronger capacity to repay. In addition, access under the RCF shall also take into account the size and likely persistence of the shock where applicable.

189. The amount of any RCF disbursement may not exceed the member's balance of payments need, and would typically be less than total financing needs, keeping in mind that RCF support is expected to catalyze financing from donors and creditors. When requesting assistance under the RCF, the member will need to make a representation, normally in an LOI, that it is experiencing an urgent balance of payments need.

190. In case of repeated RCF disbursements, the timing and amounts of access178 would not be expected to mirror the projected evolution of financing needs. In particular, given the limits on the number of disbursements available in any 12-month period and the sub-ceilings on RCF access (see below), disbursements would often cover only a small part of total financing needs, with the remainder being mobilized from other sources, including development partners.

191. When urgent financing needs are projected to persist or reoccur for some time, and transition to a UCT-quality arrangement is not expected in the near term, it is important to set access such that successive disbursements could be accommodated under the applicable RCF access sub-ceilings (see below).

Access Limits

192. A member's total access under all concessional facilities in the PRGT is subject to “global” annual and cumulative limits. This includes credit outstanding and disbursements under the ECF, SCF, and RCF. Specifically, total access to financing under the PRGT should normally not exceed 145 percent of quota per year across all concessional facilities.179 Furthermore, total access to financing under the PRGT should normally not exceed 435 percent of quota cumulatively, net of scheduled repayments (see Chapter I, Section D for how to calculate annual and cumulative access consistent with PRGT normal access limits).

193. In exceptional circumstances, access above the normal global limits can be made available to PRGT-eligible countries that meet the PRGT exceptional access criteria (see Chapter I, Section D).

194. In addition to these global limits on access under all facilities under the PRGT, access to the RCF under the regular window (i.e., not the “exogenous shocks” or “large natural disasters” windows) is subject to sub-ceilings, set at 50 percent of quota per year (i.e., over any 12-month period) and 100 percent of quota on a cumulative basis (i.e., total stock of RCF credit outstanding at any point in time). Furthermore, access to the RCF under the regular window is also subject to a “per disbursement limit” of 25 percent of quota. Therefore, annual access in excess of 25 percent of quota under the regular window would require an additional RCF disbursement within the year and would, absent an exogenous shock or large natural disaster, have to be linked to a track record of adequate macroeconomic policies (e.g., through an SMP), consistent with the requirements for repeat use mentioned above.

195. Access to the RCF under the exogenous shock window is subject to a sub-ceiling of 50 percent of quota per year. On a cumulative basis, the limit is normally 100 percent of quota but, in response to the Covid-19 pandemic, was increased to 150 percent of quota until end-June 2023, after which it will revert to 100 percent of quota.180 Purchases under the RFI made after July 1, 2015 count towards the applicable RCF annual and cumulative sub-ceilings.181

196. These sub-ceilings can be exceeded under the “large natural disasters” window of the RCF, which allows access of up to 80 percent of quota per year for natural disasters where damage is assessed to be equivalent to or exceed 20 percent of the member's GDP,182 and up to 183.33 percent of quota on a cumulative basis until end-June 2023 on account of the Covid-19 pandemic, following which the cumulative limit will revert to 133.33 percent of quota.

197. RCF financing through the “exogenous shock” and “large natural disasters” windows could be made available provided that: (i) the primary cause of the balance of payments need is a sudden exogenous shock, other than a withdrawal in financial assistance by donors, or in the latter case, a natural disaster; and (ii) existing and prospective policies are sufficiently strong to address the shock. The concept of a sudden and exogenous shock mirrors that used in the past for the ESF. In particular, an exogenous shock may include both economic (e.g., terms of trade) and non-economic shocks (e.g., natural disasters) that are sudden and not related to members' policies. The amount of access provided under the “exogenous shocks” window or “large natural disasters” window cannot exceed the size of the financing need created by the shock. RCF financing through the “food shock” window is also available. Additional criteria apply for access to the temporary food shock window under the RCF (see Box 4).

198. Access under the regular window of the RCF is also subject to an annual access norm set at 25 percent of quota, or one-half of the annual access limit. As with the ECF and SCF, the norm is neither a floor nor a ceiling.183 There are no norms for access under the RCF “exogenous shocks” and “large natural disaster” windows, and the above sub-ceilings on RCF access through these windows should not be considered norms;184 individual disbursements would in most cases be below the applicable annual sub-ceilings. For instance, a disbursement of 50 percent of quota under the “exogenous shocks” window or of 80 percent of quota under the “large natural disasters” window would only be expected in cases where the financing need is very large and the economic policy context is relatively strong (including limited debt vulnerabilities).185

Access Under Blended Financial Assistance

199. When RCF disbursements are blended with concurrent GRA disbursements (see Section C on the criteria that create a presumption for blending), total access to financial assistance (e.g., RCF together with RFI) is determined based on the standard criteria (see above), implying that total access should be comparable across countries with similar balance of payments needs, strength of policies, and outstanding Fund credit, irrespective of whether the Fund's financial assistance comes in the form of blended or PRGT-only resources.

200. Analogous to financial arrangements involving blended financial assistance, access to the concessional (RCF) financing component of blended financial assistance for presumed blenders would be in a 1:2 ratio of PRGT to GRA resources, with the remainder met by GRA financing. It is important to note that any RFI access is counted towards the annual and cumulative RCF access limits, irrespective of the RCF window.

Procedural Safeguards on High Access Requests—DSAs and Informal Board Meetings

201. Financing requests are subject to procedural safeguards that apply uniformly across all concessional facilities. These safeguards are aimed at protecting PRGT-eligible members' debt sustainability and the Fund's concessional resources.186 Specifically, the staff report for any RCF disbursement should provide an up-to-date assessment of the debt vulnerabilities, with an explicit reference to the impact of new borrowing from all sources, including prospective IMF disbursements. In addition:

  • A new DSA is required for any financing requests under the PRGT if it (i) involves exceptional access to concessional resources; (ii) brings total access, i.e., cumulative disbursements, under all concessional facilities to more than 80 percent of quota, based on cumulative past and future scheduled disbursements in any 24-month period (see paragraph 14 on how to calculate access); or (iii) involves a member country with a high risk of debt distress or in debt distress. All DSAs (full DSAs and updates) should be prepared jointly by Fund and World Bank staff and must be submitted to both the IMF and IDA's Executive Boards (be it for discussion or for information).

  • An early informal Board meeting is required if a financing request under the PRGT would involve (i) exceptional access or (ii) high access to concessional financing. Chapter I Section D provides more details on PRGT exceptional access and high access, and Box 1 specifies the information required at such a meeting.

  • In addition, staff would provide early notice to the Board, for instance in an informal country matters session, of upcoming financing requests where the envisaged financing commitment, in absolute terms, would have a large impact on the Fund's overall concessional resources.

  • As an exception to these procedures, the requirement for a new DSA or a Board brief in high access cases does not apply for new financing requests of 15 percent or less of quota.

202. High combined credit. Requests for Fund support that result in combined PRGT and GRA access in excess of the GRA access limits are subject to the Policy Safeguards on High Combined Credit Exposure (PS-HCC).187 In March 2023, the PS-HCC thresholds were temporarily increased from 145/435 percent of quota to 200/600 percent of quota annually/cumulatively in line with the temporary 12-month increase in GRA annual/cumulative access limits, effective until March 4, 2024.188 The PS-HCC comprise criteria and procedural requirements. The criteria are substantively the same as those of the PRGT exceptional access framework, with the notable exception that they do not include an income threshold. The procedural requirements are similar to those of the PRGT and GRA exceptional access criteria (see Chapter I Section D and Box 2).189

E. Financing Terms

203. Repayments of RCF credit are made in 10 equal semiannual installments, subject to a 5.5-year grace period from the date of the disbursement and 10-year final maturity.190

204. Interest rate on RCF credit is set at zero percent.191

F. Financing Assurances, Arrears, and Safeguards

205. The Fund's policy on financing assurances192 requires that financial arrangements can only be approved (and reviews can only be completed) when the program is fully financed. In contrast to arrangements under the ECF and SCF, such financing assurances are not required for RCF disbursements, given that there is no underlying economic program. However, staff reports for RCF requests should provide information on projected financing gaps. Moreover, to the extent that the RCF may be used to build a track record for a UCT-quality Fund-supported program, the staff report should discuss the prospects for financing assurances that would be required for such an arrangement. Assurances should also be given that the member country has the capacity to repay the Fund based on medium-term projections of the balance of payments and the standardized table on indicators of the capacity to repay the Fund.

Arrears

206. In cases where a member has arrears to an international financial institution (i.e., an IFI), the Fund will apply either the NTP policy or the LIOA policy. Please see Section F in Chapter II for detailed information. With respect to emergency financing, in OSI cases, Fund policy provides for flexibility in extraordinary circumstances consistent with the Fund's LIOA policy, and as discussed below. Country teams should seek guidance from LEG and SPR on the application of the policy to specific creditors.

207. The Fund's policy on arrears to official bilateral creditors also remains generally applicable in the context of RCF support. Generally, the treatment of arrears to official bilateral creditors falls into two categories. First, if arrears do not require a restructuring of the underlying claim (non-OSI cases),193 the Fund maintains a policy of non-toleration. In practice, tacit approval of an official bilateral creditor's Executive Director (i.e., non-objection at the Board meeting) has been deemed sufficient to satisfy this policy. Second, if restructuring of the arrears is required under the program parameters (OSI cases). In this case, the Fund may provide financing notwithstanding those arrears only under carefully circumscribed circumstances. Country teams should seek guidance from LEG and SPR on which of these two categories are applicable to particular cases. Please also see Section F in Chapter II for more detailed information. In a small subset of emergency situations, such as in the aftermath of a natural disaster, where the extraordinary demands on the affected government are such that there is insufficient time for the debtor to undertake good faith efforts to reach agreement with its creditors, the Fund may provide financing under the RCF despite arrears owed to official bilateral creditors. However, it would be expected that the Fund's support provided to the debtor in such cases would help advance normalization of relations with official bilateral creditors and the resolution of arrears. Again, it would be important for country teams to consult with LEG and SPR as soon as possible in such cases.

208. There is also scope for flexibility in applying the Fund's LIA policy, which covers sovereign arrears to private external creditors and non-sovereign arrears that arise by virtue of the imposition of exchange controls.194 Under this policy, the Fund can lend, on a case-by-case basis, in a situation of sovereign arrears to private external creditors and only where: (i) prompt Fund support is considered essential for the successful implementation of the member's adjustment program; and (ii) the member is pursuing appropriate policies and is making a good faith effort to reach a collaborative agreement with its creditors (or to facilitate a collaborative agreement between private debtors and their creditors and good prospects exist for the removal of exchange controls). For the RCF, these conditions may not be required in all cases, in particular in the wake of a conflict or natural catastrophe, where the extraordinary demands on the affected government are such that there is insufficient time for the debtor to undertake good faith efforts to reach agreement with its creditors. However, it would be expected that the Fund's support provided to the debtor in such cases would help advance normalization of relations with private creditors and the resolution of arrears, so that the approval of any subsequent Fund arrangement for the member would again be subject to the LIA policy on lending into sovereign arrears to private creditors. Moreover, staff reports should in any event provide information on arrears to private external creditors.

Overdue Obligations to the Fund

209. Where a member is in arrears to the Fund in the GRA, the Special Disbursement Account, or the SDR Department, or to the Fund as Trustee (including the PRGT and RST), a request for IMF financing, including under the RCF, will not be approved and disbursements under an existing arrangement would be suspended.195 After one month after a financial obligation has become overdue, the MD will notify the Executive Board that an obligation is overdue. A report by the MD to the Executive Board will be issued two months after a financial obligation has become overdue, and will be given substantive consideration by the Executive Board one month later The report will request that the Executive Board limit the member's use of Trust resources. A factual statement noting the existence and amount of arrears outstanding for more than three months will be also posted on the member's country-specific page on the Fund's external website. Once the Executive Board adopts a decision to limit the member's use of the Trust resources, a press release will be issued. The MD may recommend advancing the Executive Board's consideration of the reports regarding overdue obligations but the MD may also recommend postponing for up to one-year periods the Executive Board's consideration of a report regarding a member's overdue obligations in exceptional circumstances where the MD judges that there is no basis for an earlier evaluation of the member's cooperation with the Fund. While a member is in arrears to the Fund, policy support can only be provided through surveillance, technical assistance, and, under certain circumstances, SMPs.196 Remedial measures for dealing with PRGT arrears include removal from the list of PRGT-eligible countries, declaration of noncooperation with the PRGT Trust, and suspension of technical assistance. Annual reports and financial statements will identify those members with overdue obligations to the Trust outstanding for more than six months.

Safeguards Assessments Policy

210. Under the RCF, a member's request for assistance will require a commitment to undergo a safeguards assessment and to provide Fund staff access to the central bank's most recently completed external audit reports (whether or not the audit is published); the member shall authorize its external auditors to hold discussions with staff. The commitment and authorization is to be provided at the time when the member makes a formal written request for RCF resources. The timing and modalities of the assessment will be determined on a case-by-case basis depending on the institutional and administrative capacity of the central bank. It is presumed, however, that the safeguards assessment would have been completed before Board approval of any subsequent arrangement to which the Fund's safeguards policy applies.197 The safeguards process involves a continuous analysis of information obtained primarily through the collection of documents, and discussions with the authorities and the central bank's external auditors. It entails an evaluation of the central bank's safeguards framework covering governance, auditing, financial reporting, control systems, autonomy, mandate and legal framework over the life of an arrangement and for as long as Fund credit remains outstanding. Close cooperation and coordination between FIN, other functional departments, and area departments is essential for the effective conduct of the safeguards process. It is important for FIN to be kept informed by area departments of safeguards issues, including logistical issues such as the timing of new arrangements.

G. Policy Objectives and Design

Policy Objectives

211. While the policy standard for RCF support is considerably more flexible than for UCT-quality arrangements supported under the ECF and SCF, the member's policies should not compound existing balance of payments difficulties and should in general be aimed at making progress toward achieving or restoring a stable and sustainable macroeconomic position consistent with strong and durable poverty reduction and growth (see definition in Section A). This would involve steps to address, though not necessarily resolve, the country's macroeconomic imbalances and maintain or move toward (i) strong and durable poverty reduction and growth, (ii) low or moderate inflation, (iii) sustainable fiscal and current account balances, (iv) limited debt vulnerabilities, (v) adequate international reserves, and (vi) sufficient policy and institutional capacity to implement appropriate macroeconomic policies.

212. RCF-supported policies should, to the extent possible, be aligned with the country's own poverty reduction and growth objectives (see further below). The LOI and staff report for an RCF request should discuss the current situation, including the cause of the urgent balance of payments need, and macroeconomic prospects. Near-term RCF-supported policies should be clearly articulated in the LOI and MEFP (optional) and associated staff report, and should be consistent with the country's medium- and longer-term policy objectives, which would typically include:198

  • Fiscal policies, where (i) the fiscal stance is well anchored to help ensure macroeconomic stability and fiscal/debt sustainability, (ii) revenue and spending policies take due account of the country's growth and social objectives, and (iii) budgets are guided by medium-term fiscal frameworks to the extent possible.

  • Monetary policies that are consistent with inflation, exchange rate, and reserve objectives, while taking due account of cyclical considerations.

  • Exchange rate policies that ensure a unified exchange rate and a real exchange rate level that is broadly in line with fundamentals, ensuring a stable and sustainable external position consistent with adequate growth.

  • Financial sector policies geared toward financial stability and deepening with a view to fostering investment and forestalling financial crises.

  • Public financial management reforms aimed at ensuring that resources are tracked, reported, and targeted appropriately (including by providing adequate resources for social and other priority spending), public debt management aimed at supporting debt sustainability, and revenue reforms aimed at broadening the revenue base, and enhancing tax efficiencies.

  • Other structural reforms that are critical for achieving the member's macroeconomic objectives.

Role of RCF Financial Support

213. The balance of payments support through the RCF can assist countries in smoothing the adjustment process toward a more stable and sustainable macroeconomic position.199 The Fund's financial support can be used both to replenish international reserves of the member country and to provide liquidity for making external payments. By relaxing external financing constraints, the Fund's balance of payments support in effect also loosens domestic liquidity constraints for both the public and private sector. Specifically, Fund financing reduces the need for retrenchment in the public and private savings-investment balances, thus enhancing policy options (allowing less contractionary fiscal, monetary, and exchange rate policies) and cushioning private sector adjustment (e.g., investment and import declines). The appropriate mix of financing and public/private adjustment is determined on a case-by-case basis.

214. A member may choose to use the domestic counterpart of resources received under an RCF to finance, directly or indirectly, the budget deficit of the government. Such budget financing is consistent with the Fund's legal framework to the extent that the member has balance of payments problems and is implementing a program that will assist it in resolving such problems. Direct budget financing200 may be appropriate when (i) the policies are designed in a manner that envisages that the entire amount of the Fund's financial support is used to meet a present or prospective balance of payments need, (ii) loosening fiscal financing constraints is an important macroeconomic objective under the policies, and (iii) the central bank cannot or should not (for legal or institutional reasons) lend to the government while the domestic financial sector is too shallow (or not stable enough) to provide the necessary budget financing (or the central bank plays a largely passive domestic policy role, for instance under a currency board or in a fully dollarized economy). In these cases, staff reports should justify the use of the domestic counterpart of resources obtained from RCF support for budget financing where relevant and discuss safeguards implications, including referring to the conclusion of a memorandum of understanding between the central bank and fiscal authorities.201

Links to Poverty Reduction Strategies and Social Spending

215. RCF-supported policies should generally be aligned with the country's own poverty reduction and growth objectives. The following specific guidance applies to PRS linkages:202

  • Any financing request under the RCF must be accompanied by a statement, normally in the LOI or MEFP, of how the RCF-supported policies advance the country's poverty reduction and growth objectives—given the focus of RCF support on urgent balance of payments needs, this linkage may be indirect; e.g., primarily through efforts to bolster macroeconomic stability, which is needed to underpin poverty reduction and growth.203 In cases where a relevant PRS document exists, this description in the LOI/MEFP could cross-reference to the PRS document, and the RCF-supported policies should take into account—and to the extent possible, generally be consistent with—the objectives of the PRS in the context of promoting a stable and sustainable macroeconomic position consistent with strong and durable poverty reduction and growth.

  • PRS documents are not required for RCF disbursements, consistent with the RCF's focus on urgent balance of payments needs. Nonetheless, whenever a future ECF-, SCF-, PSI- or PCI-supported program is under consideration, staff should inform the authorities at an early stage about the relevant definitions and timelines for PRGS requirements (Appendix V) to ensure adequate time for the PRS process.

216. Social and other priority spending should be safeguarded and, whenever appropriate, increased under RCF-supported policies. Whenever the LOI/MEFP for RCF support includes indicative targets (e.g., when the authorities seek to establish a track record, including for repeated use of the RCF), these should include a floor on social and other priority spending, whenever possible. The definition of what constitutes social or other priority spending should be consistent with the authorities' poverty reduction and growth objectives. In cases where tracking of such expenditures is not feasible, the RCF documentation should report on which measures are envisaged to develop an adequate tracking system. Staff should monitor progress in establishing these tracking systems, and the program may include relevant structural measures, if appropriate.

Debt Sustainability Analysis

217. RCF-supported policies should be underpinned by a thorough DSA to inform the elaboration of medium-term debt strategies and fiscal frameworks. Country teams should engage with the authorities in the preparation of DSAs, discuss the results, and share the final files with the relevant officials. DSAs for LICs should be prepared jointly with the World Bank, and country teams should also involve other relevant MDBs in the preparation of DSAs. Joint DSAs are required for all PRGT-eligible I countries that also have access to IDA resources.

218. A full DSA should generally be produced at least once every calendar year. A new DSA should be produced for any new request for IMF financing (even when an annual DSA has already been completed).204

219. DSAs for LICs should be presented as self-contained documents (see Appendix I). They should normally be prepared using the LIC DSF.205 The LIC DSF analysis includes three components:206

  • A forward-looking analysis (20-year projection) of debt and debt-service dynamics under a baseline scenario, alternative scenarios, and standardized stress tests;

  • An explicit rating of the risk of external debt distress (low, moderate, high, or in debt distress) based on indicative country-specific debt-burden thresholds that depend on the quality of policies and institutions in the country; and an assessment of the overall risk of debt distress; and

  • Recommendations on a borrowing (and lending) strategy and other crucial macro policies to limit the risk of debt distress, while maximizing the resource envelope to achieve the country's development objectives.

Collaboration with the World Bank and Other Development Partners

220. Fund staff should consult closely with all major development partners active in the country when designing and monitoring RCF-supported policies. In addition to this routine collaboration, the JMAP207 approved by the Boards of the World Bank and IMF calls on Bank and Fund country teams to consult with each other at least once a year in order to identify the country's key macroeconomic and structural reform challenges and coordinate work plans in support of addressing these challenges (see Appendix I).

H. Conditionality

221. The RCF does not require a UCT-quality economic program, and does not involve ex post conditionality (i.e., quantitative or continuous performance criteria), a time-bound arrangement, or formal program reviews. Instead, the RCF provides for outright disbursements based on a number of ex ante policy undertakings (see Section A on Eligibility and Qualification).

Prior Actions

222. Prior actions could be specified, if necessary, but this would be expected only in exceptional circumstances, specifically when it is critical for addressing the urgent balance of payments need effectively that a measure be taken prior to the financial assistance provided under the RCF. Prior actions could be appropriate, for example, if the RCF is used (including to support building a policy track record) after severe policy slippages that could call into question the authorities' capacity and commitment to implement policies that would not compound the balance of payments difficulties (see Section A on ex ante policy undertakings). Prior actions should be implemented no later than five working days before the Board discussion. They should be defined in the LOI/MEFP and cross-referenced in the Board Decision approving the disbursements.

Monitoring Policies

223. There is considerable flexibility on how the RCF can be used to support forward-looking economic policies. In contrast to UCT-quality arrangements, RCF disbursements do not require understandings on a program of economic policies other than general ex ante policy undertakings by the authorities described in Section A, including the commitment to cooperate with the Fund and not to introduce measures that would compound the country's balance of payments difficulties. However, the policy commitments under the RCF can be used to provide general policy support, establish a track record of economic performance (similar to an SMP), and even help monitor the implementation of UCT-quality economic policies. The latter may occur, for example, when a country with a set of well-specified and sound economic policies experiences a temporary shock that creates a balance of payments need that is expected to be resolved within one year and without the need for major policy adjustments. By contrast, shocks that create more substantial or prolonged adjustment or financing needs should generally be addressed through a financial arrangement. To this end, RCF support can be provided together with staff recommendations on macroeconomic policies, monitoring of economic performance, specific policy commitments and indicative targets, or any combination of these.

224. In cases where the RCF supports a track record of policy performance, the LOI/MEFP for a disbursement request would typically set out agreed monitorable quantitative and structural indicators (which could be called indicative targets or benchmarks), based on specific test dates and deadlines. The design of monitoring could mirror that of SMPs or past practice under EPCAs, but is in general very flexible, and would not require specification of a time-bound program period. The specification of policy objectives and indicators should be aimed at supporting adequate policies to address the urgent balance of payments need and, if relevant, facilitating the member's transition to a UCT-quality program. As the targets do not have the status of PCs, waivers are not required if they are missed. Similarly, program adjustors would not be needed.

  • Quantitative periodic indicative targets could include measures of net international reserves, central bank domestic assets, domestic and fiscal balances or financing, external debt, social and other priority spending where possible, and any other relevant macro-critical indicators. Continuous measures could include commitments related to non-introduction of certain exchange restrictions and multiple currency practices, and non-accumulation of external arrears.

  • RCF-supported policy track records could include an agenda for macro-critical structural reforms, with flexibility on the timing of the measures. Structural benchmarks could be identified, and should be critical measures that are intended to serve as clear markers in the assessment of progress in the implementation of critical structural reforms in the context of the track record. Structural benchmarks should be used as parsimoniously as possible, and their macro-criticality explicitly justified in program documents, ideally in a structural benchmark table. Structural benchmarks do not require a specific target date but should give an indication of the envisaged time frame.

Misreporting208

225. Misreporting occurs when members with a Fund-supported program obtain resources on the basis of inaccurate information regarding observance of quantitative or continuous PCs or prior actions (a “noncomplying disbursement”). As there are no PCs under the RCF, a noncomplying disbursement can only occur with respect to misreporting of prior actions (if applicable), in particular when (i) the Fund makes a disbursement on the basis of a finding that all prior actions established for that disbursement have been observed and (ii) that finding later proves to be incorrect. Upon evidence that a member may have received a noncomplying disbursement, the MD shall inform the member promptly. After consultation with the member, if the MD determines that the member did receive a noncomplying disbursement, the MD shall promptly notify the member and submit a report to the Executive Board with recommendations. The Board may decide either (a) that the member shall be expected to repurchase/repay the disbursed amount, or (b) that the nonobservance will be waived. Waivers will normally be granted only when the deviation from the relevant condition was minor or temporary, or if, subsequent to the disbursement, the member had adopted additional measures appropriate to achieve the objectives supported by the relevant decision on the disbursement. Relevant information on misreporting should be made public by including it in the documents to be published after the Board discussion, such as a press release containing the Chairman's Statement or summing up, with prior Board review of the text for publication.

226. Whenever the Executive Board finds that a noncomplying disbursement has been made but that the nonobservance of the relevant specified condition was also de minimis misreporting, a waiver for nonobservance shall be granted by the Executive Board.209 The discussion of de minimis misreporting will be included in a staff report on the member that deals with other issues but the discussion should be deleted if such a report is published.

I. Track Records

227. The RCF can be used to build a track record of policy performance to enable repeated disbursements under the RCF or to support a transition to a UCT-quality program. As the RCF involves outright disbursements without program reviews, there is no phasing of disbursements or test dates for indicative targets. As discussed in Section H, RCF-supported track records would typically include agreed monitorable quantitative and structural indicators (which could be called indicative targets or benchmarks). Test dates for quantitative targets can be set on a monthly, quarterly, semi-annual, or annual basis, including a combination thereof. Test dates should generally be set such that they provide useful information for the purpose of assessing performance in advance of potential future possible Fund support through the RCF. If a clear and explicit policy framework is needed to establish a track record for a UCT-quality program, an RCF could be used concurrently with an SMP. See Appendix III for a discussion of different types of track records.

228. A track record of adequate macroeconomic policies is required for an RCF disbursement when the member has already received RCF financing in the past three years and does not qualify under the “exogenous shocks” window or the “large natural disasters” window. Such a track record would normally cover at least six months immediately prior to the disbursement, and the staff report should provide an assessment of past policy performance against any previously specified policy objectives and targets. This is also good practice if the repeated disbursement is motivated by an exogenous shock, even though a track record is not required for the subsequent disbursement. The track record period would normally start around the time the relevant track record objectives and policies become clear. Specifically, the track record period should start no earlier than the first-time substantive policy discussions on near-term macroeconomic targets started between the country team and the authorities, and no later than the time ad referendum understandings were reached on such targets. Approval of a repeated disbursement would be based on a finding that the member's overall policy performance was adequate, taking into consideration the severity of the economic situation and the member's capacity. In exceptional cases, where no relevant pre-determined monitorable objectives exist at the time a successive RCF disbursement is requested in response to an urgent financing need (for instance because of the passage of time since the preceding disbursement), the track record could be based on the Fund's assessment that macroeconomic policies have been adequate at least over the most recent six-month period.

J. Other Relevant Policies

229. A number of additional modalities and policy requirements apply to the RCF, including the following:

  • Ex-Post Peer Review Assessments (PRAs). Access to resources under the RCF does not count toward the policy on LTPE or the requirement to conduct an Ex-Post Peer Reviewed assessment.

  • Post Financing Assessments (PFAs). Outstanding RCF credit will be subject to PFA.210 Normally, members with outstanding credit from the Fund in the GRA and/or PRGT exceeding 200 percent of quota or SDR 0.38 billion from the PRGT (and/or SDR 1.5 billion from the GRA) after the expiry of their arrangements, are expected, upon the recommendation of the MD, to engage with the Fund in PFA of their economic developments and policies. Normally one standalone PFA paper is expected to be issued for Executive Board consideration in a 12-month period.

  • Article IV consultation cycle. RCF support does not alter the regular (typically 12-month) cycle for Article IV consultations. The pre-existing consultation cycle is preserved (12 or 24 month), at the time of RCF approval, subject to other conditions/criteria as specified in the Decision No. 14747-(10/96).

  • Exchange System obligations under Articles VIII and XIV and Data Provision under Article VIII, Section 5. Requirements under Article VIII Sections 2, 3, 4 and Article XIV are discussed in IMF (2006d). The Fund may require members to furnish it with such information as it deems necessary for its activities, including program monitoring.

  • HIPC. A period of performance under a monitorable track record supported by the RCF can count toward a track record of strong policy performance required for the HIPC decision point where the SMP has been endorsed by the Executive Board as being of UCT-quality.211 The minimum required track record for the decision point is six months.

  • Side letters. The use of side letters in LIC programs and financing requests has been extremely rare. Side letters may be used when release of information on policy understandings at the time of a RCF request would cause adverse market reaction or undermine the authorities' efforts to prepare the domestic groundwork for a measure.212

172

The RCF was created on January 7, 2010, as part of a comprehensive reform of the IMF's facilities for LICs. See IMF, 2009e and 2009f, and Decision No. 14354-(09/79). Access norms and limits were raised in: (i) 2015 (see IMF, 2015c), and Decision No. 15818-(15/66); (ii) 2019 (see IMF, 2019b); and (iii) 2021 (see IMF, 2021a). Access limits for emergency financing were also temporarily increased in 2020–21 in response to the COVID-19 pandemic (see IMF, 2020b and 2021b).

173

See IMF, 2022c, and 2023 guidance note on FCS.

174

See IMF, 2017b, and Decision No. 16182-(17/35).

175

See IMF, 2011b.

176

See Section A for definitions of balance of payments need.

177

Sufficient recovery in the balance of payments must be in prospect to provide appropriate assurance that loans can be repaid on schedule without strain.

178

In the RCF context, there is no ex ante “phasing” of disbursements, in contrast to the ECF and SCF where the amounts and timing of access are predetermined through an arrangement. Each RCF disbursement requires a separate decision of the Executive Board, evaluated on its own merits against the requirements for assistance under the RCF.

179

Annual access limits were temporarily increased to 245 percent of quota in March 2021 in response to Covid-19 and reverted to 145 percent of quota at end-December 2021. A “transition rule” applies for calculating annual access for countries that entered into a new arrangement or received an augmentation of an existing arrangement or emergency financing in the period between March 22, 2021 and end-2021. For details, see Annex III in Review of the Temporary Modifications to the Fund's Access Limits in Response to COVID-19 Pandemic (IMF, 2021b). This transition rule will no longer be applicable after end-2022.

180

Access limits for emergency financing instruments (i.e., exogenous shock and large natural disaster windows of RCF and regular and large natural disaster windows of RFI) were temporarily increased in 2020-21 in response to the Covid-19 pandemic. In November 2021, the Board decided to extend these temporarily high cumulative access limits for RCF and RFI until end-June 2023.

181

Access limits for RFI assistance are set at 50 percent of quota over any 12-month period and 100 percent of quota on a cumulative basis, net of scheduled repurchases. Access under the RFI counts toward the overall annual and cumulative GRA access limits (see Decision No. 15820-(15/66)).

182

See IMF, 2017b, and Decision No. 16182-(17/35).

183

Approved by Board as of May 24, 2019 (see IMF, 2019a, and IMF, 2019b).

184

See Appendix VIII for detail on norms.

185

In addition, as set forth in the PRGT Instrument, commitments of PRGT resources and any disbursement of such resources are subject to the availability of resources in the PRG Trust, and hence, could result in access reductions in those very specific circumstances (PRGT Instrument, Section II, paragraph 2(g) and paragraph 3(a)).

186

Endorsing the procedural safeguards for high-access financing set forth in paragraph 87 of IMF, 2009e. This paragraph updates the procedural safeguards that apply to all concessional financing instruments, elaborated in IMF, 2009d, and subsequently revised to be consistent with changes to access norms and limits in 2015 and 2019 (see Annex II in IMF, 2015c, and IMF, 2019a).

187

The PS-HCC were approved in September 2020. See Policy Safeguards for Countries Seeking Access to Fund financial Support that Would Lead to High Levels of Combined GRA-PRGT Exposure (IMF, 2020d).

189

The criteria are laid out in Box 2 and the procedural requirements in Annex I of IMF, 2020d.

190

See IMF, 2015c.

191

See IMF, 2015b, and IMF, 2015c.

192

Article V, Section 3(a) of the Fund's Articles of Agreement.

193

For example, outside the restructuring context, arrears might arise because of technical problems with payments, diplomatic disagreements, or difficulties in establishing the appropriate counterparts for payment.

194

See IMF, 1999a, and Reviews of the Fund's Sovereign Arrears Policies and Perimeter (IMF, 2022c).

195

See also Appendix II of the PRGT Instrument on the Procedures for Addressing Overdue Financial obligations to the PRGT; and RST Instrument, Section II, paragraph 2(e) and 3(e).

196

See Review of the Fund's Strategy on Overdue Financial Obligations, Annexes I and II (IMF, 2012e).

197

See IMF, 2015g, 2015h, 2015i, and 2010h.

198

For further discussion of Fund program design in LICs, see IMF, 2008b and 2007a.

199

Consistent with the Fund's unique role in LICs, it can provide moderate levels of liquidity support to help address macroeconomic imbalances, while the bulk of financial assistance is normally expected to come from donors. Fund financial support, while concessional and aimed at similar long-term goals, is distinct from development assistance provided by others (often on more concessional terms) as it provides inter-temporal smoothing of adjustment rather than a permanent resource transfer. Fund lending to LICs is generally expected to catalyze such donor support, leveraging the Fund's scarce subsidy resources. See IMF, 2009e and 2009b.

200

Direct budget financing (also known as direct budget support) refers to cases where disbursements of Fund resources are made directly to the country's treasury at the request of the member. By contrast, indirect budget financing can be provided when the Fund makes disbursements to the central bank and these help relax domestic financing constraints for the public sector as part of the broader macroeconomic program. A special case of budget financing is Fund financial support to members of a monetary union. For example, in the CFA franc zone, the regional central bank unconditionally provides credit in the (domestic currency equivalent) amount of Fund support to the relevant government. See IMF, 2010f. In cases involving budget financing, the respective roles and responsibilities for the related financial obligations to the Fund should be clarified in a framework agreement between the government and the central bank (e.g., through a Memorandum of Understanding.

201

See IMF, 2015g, 2015h, 2015i, and 2010h. A fiscal safeguards review is required if, as a result of an RCF disbursement, the criteria for conducting fiscal safeguards reviews are met during an arrangement.

202

See Appendix V for detailed guidance on poverty reduction objectives and related documents.

203

See Appendix V for a definition of an I-PRSP.

204

Article IV Consultations should be accompanied by a DSA. See Guidance Note for Surveillance Under Article IV Consultations (IMF, 2022h).

205

DSAs using the LIC-DSF template should be used for all PRGT-eligible countries that also have access to IDA resources.

206

For the details on the use of the DSF, please see IMF, 2018b.

207

See IMF, 2007c and 2010d.

208

Misreporting is distinct from members' obligations on data provision to the Fund under Article VIII, Section 5. See next footnote below for references.

209

For more details on misreporting, see Appendix I of the PRGT Instrument and (Decision No. 14354-(09/79)). Guidance Note on the Fund's Transparency Policy. Also, see IMF, 2006e.

210

See IMF, 2005a and 2010e, and Decision No. 13454-(05/26), as amended.

211

See Appendix IV for details on the HIPC Initiative.

212

For the Fund's policy on side letters, see Decision No. 12067-(99/108).