March 25, 2021

Washington, DC: The Executive Board of the International Monetary Fund (IMF) approved on March 22, 2021 further extensions of temporary adjustments made to its lending frameworks in the early months of the pandemic, allowing for adequate access to Fund financing through emergency instruments, the General Resources Account (GRA), and the Poverty Reduction and Growth Trust (PRGT). The extensions of these measures reflect the unique circumstances created by the pandemic and will ensure that member countries continue to be able to access IMF financing, through both IMF-supported programs and emergency financing in case of urgent balance of payments needs.

The IMF Executive Board approved an extension through end-2021 of the increases in annual and cumulative access limits that apply to the IMF’s emergency financing instruments, introduced in April 2020 and extended in October 2020 . So far during the pandemic, 74 member countries, of which 49 low-income countries, received emergency financing through these instruments.

The Executive Board also approved an extension of the increase in the annual access limit to the IMF’s GRA, introduced in July 2020 , through end-2021, and an increase in both annual and cumulative access limits on concessional lending through the PRGT, through end-June 2021. The increase in access to PRGT financing, as interim measure for a broader assessment of the Fund’s approach to concessional financing, recognizes that many LICs have been hit particularly hard by the pandemic and have already borrowed significantly from the IMF. Higher limits would therefore provide flexibility for poorer countries in the coming months to avoid having to request support through the Fund’s general resources on non-concessional terms.

Executive Board Assessment [1]

Executive Directors broadly agreed with the proposals to extend the temporary increases in access limits under the Fund’s emergency financing instruments and the General Resources Account (GRA), which were approved in 2020 and have boosted the Fund’s financial support in order to help member countries hit by the COVID-19 pandemic.

Directors supported extending the higher access limits for the regular window of the Rapid Financing Instrument (RFI) and the exogenous shocks window of the Rapid Credit Facility (RCF), with annual and cumulative access limits remaining at 100 percent of quota and 150 percent of quota respectively, through end-December 2021. They also agreed to extend through end-December 2021 the current suspension of the two-disbursement limit on disbursements under the RCF within a 12-month period. Directors further approved the proposals for the automatic lapsing of approved RCF disbursements and RFI purchases.

Directors underscored their expectation that countries increasingly seek financial assistance under Fund arrangements that meet upper credit tranche quality standards rather than through emergency financing instruments, but noted that the latter remains available when a member has an urgent balance of payments need and a Fund arrangement is either not feasible or not necessary. Noting that some countries would not have access to these instruments for an extended period after the temporary higher access limits expire, Directors welcomed the proposal to review access limits under emergency financing instruments after the 2021 Annual Meetings.

Directors broadly supported extending the temporary increase in the annual access limit on GRA resources through end-December 2021, which would provide flexibility to respond to still-elevated uncertainties related to the pandemic. A view was expressed that the annual access limit under GRA resources should revert to the level in place before the temporary increase, so that countries in need of high access be subject to the safeguards provided by the exceptional access policy. Directors called on staff to use Board Briefings on Country Matters to keep the Board informed of cases where elevated annual access is under consideration ahead of formal discussions with country authorities.

Directors looked forward to a broader discussion of the Fund’s lending facilities for low-income countries (LICs) and how these can be financed as part of the forthcoming Review of Concessional Financing and Policies. They also underscored that a medium-term solution to access limits under the PRGT should be adopted within this holistic review. In the interim, noting the need to sustain the Fund’s support in the uncertain environment created by the pandemic, especially for LICs, which have been severely affected and have relatively limited policy space to respond, Directors agreed to raise temporarily the existing limits on access to PRGT resources without preempting the conclusions of the broader review.

Directors supported increasing the PRGT overall Normal Annual Access Limit and Normal Cumulative Access Limit to 245 percent and 435 percent of quota respectively, and the Exceptional Annual Access Limit and Exceptional Cumulative Access Limit under all PRGT facilities to 278.33 percent of quota and 535 percent of quota respectively, through end-June 2021. Directors reiterated the need to keep the Board informed of cases where elevated annual access is under consideration ahead of formal discussions with country authorities.

Directors underscored that access limits should not be seen as targets and constitute key elements of the Fund’s risk management framework, providing safeguards to Fund resources and preserving their revolving nature and catalytic role. Directors agreed that existing safeguards are essential to manage risks and, in light of elevated debt vulnerabilities in many LICs, they supported staff’s proposals for additional safeguards related to analysis of debt vulnerabilities and Fund credit exposure, including debt-related discussions in program documents and setting clear program objectives to reduce vulnerabilities. Directors agreed that the procedures applicable to high-access financing under the PRGT remain an important safeguard and endorsed the proposal to temporarily modify the threshold levels at which they apply.