Via IMF (Den Internationale Valutafond)

IMF Executive Board Approves Policy Safeguards for High Levels of Combined Access to Resources from the General Resources Account and the Poverty Reduction and Growth Trust







September 18, 2020















Washington, DC: The Executive Board of the International Monetary Fund (IMF) approved on
September 9 policy safeguards to apply when financing requests entail high
levels of combined access to resources from the General Resources Account
(GRA) and the Poverty Reduction and Growth Trust (PRGT). This should help
ensure a more coherent application of policy safeguards in Fund lending
across the membership.

The IMF applies heightened scrutiny to requests from member countries for
very high levels of access to Fund resources, “exceptional access.” The
criteria by which these requests for exceptional access to the Fund’s
general resources account (GRA) are assessed were established in 2002 and
have been reviewed and adjusted over time, most recently in 2016. A related
but distinct framework applicable to requests for exceptional access to the
Fund’s concessional resources, provided through the Poverty Reduction and
Growth Trust (PRGT), was introduced in 2009.

The respective policies governing exceptional access to the GRA and the
PRGT operate independently of each other. The independent
operation of the two exceptional access frameworks means that PRGT-eligible
countries can request access to a mix of resources from the GRA and PRGT at
levels that, on a combined basis, exceed the levels that constitute
exceptional access in the GRA and the PRGT, yet do not constitute
exceptional access under either the GRA or the PRGT.

[1]

Such requests, though large in scale, would not be subject to the scrutiny
of either of the exceptional access frameworks.

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The policy safeguards will apply when requests for financing entail levels
of combined access to GRA and PRGT resources in excess of specified
thresholds. These thresholds are set at the same levels that trigger
application of the GRA exceptional access framework. The safeguards are
also broadly aligned with the criteria and procedures applied in the GRA
exceptional access framework.

Executive Board Assessment

[2]

Executive Directors welcomed the opportunity to discuss new policy
safeguards to mitigate financial risks to the PRGT and to the GRA,
respectively, that arise from a member having high combined credit from
these two sources of financing. They generally agreed on the need for
appropriate scrutiny for such cases, and on ensuring a more consistent
application of policy safeguards in Fund lending.

Directors broadly supported the proposed policy safeguards, which would
apply to any Fund member with combined access to GRA and PRGT resources
that exceeds quota‑based thresholds set at the same level that triggers the
exceptional access framework of the GRA, and agreed that the assessment of
the three criteria will apply at the time of approval of financing requests
as specified in the proposed decision and at reviews in the context of
arrangements. They agreed that, by introducing new policy safeguards
requiring more scrutiny on requests for high combined access levels not
currently covered by the Fund’s exceptional access frameworks, the new
policy would help to mitigate financial risks to the PRGT and GRA,
respectively.

Some Directors highlighted that the Fund should be cautious about lending
exceptionally large amounts, in particular, when debt is already at high
risk of distress, and particularly without debt restructuring and/or debt
relief in place to restore debt sustainability. Many Directors underscored
the importance of ensuring that the Fund can adequately support
PRGT‑eligible members, including through the use of blended concessional
and non‑concessional financing, and particularly during these exceptional
times.

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A number of Directors noted that combined high access requests – like
exceptional access – are expected to be exceptional, emphasizing the
catalytic role of the Fund. They also underscored that, given the financial
benefits, staff should continue to advise PRGT‑eligible countries to use
concessional financing under the PRGT up to the applicable access limits
before accessing resources in the GRA.

Many Directors expressed concern that application of the criterion that a
member’s policy program provides a reasonably strong prospect of success
could preclude members with limited institutional capacity from accessing
Fund resources in amounts above the thresholds for high combined GRA and
PRGT credit. They underscored the importance of giving support and
attention, in particular through capacity development, to those countries
facing challenges with institutional capacity.

Some Directors emphasized the need for careful communication, which
highlights that the new safeguards are not intended to constrain access to
Fund resources.




[1]

When the PRGT exceptional access framework was introduced in 2009,
the independent operation of the two frameworks was not of
operational significance: PRGT-eligible countries obtained
financing primarily from the (concessional) PRGT facilities while
other member countries obtained financing from the GRA. This
pattern has changed over time, with more PRGT-eligible countries
obtaining a mix of financing from the PRGT and the GRA.


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