BY BAMIDELE FAMOOFO
The International Monetary Fund has approved an 18-month extension (through end-June 2023) of the temporary increases to the cumulative access limits under its emergency financing instruments for member countries.
The approval done by the IMF’s Executive Director said the instruments cover the Rapid Financing Instrument regular window, the Rapid Credit Facility Exogenous Shock window, and the RFI’s and RCF’s Large Natural Disaster windows and allowed all other access limits that had been temporarily increased to return to their pre-pandemic levels from January 1, 2022 as scheduled.
This decision reflects the expected and ongoing gradual shift to upper-credit-tranche quality arrangements from emergency financing triggered by urgent, pandemic-related balance of payment needs.
At the same time, the decision ensures continued access by member countries to the Fund’s emergency financing, should urgent BoP needs arise when a UCT-quality arrangement is either not necessary or not feasible.
The temporary increases in access limits for the RFI regular window and the RCF Exogenous Shock window were first introduced in April 2020 and extended in September 2020, and again in March 2021. For the RFI’s and RCF’s LND windows, the temporary increases were introduced in June 2021.
The Executive Board reinstated the limit on the number of disbursements under the RCF within a 12-month period and endorsed staff’s proposal to prepare an exit strategy from the temporary increase in cumulative access limits under emergency financing instruments by end-June 2023.
Executive Directors noted that the temporarily-high access limits ensured that the Fund was able to swiftly provide adequate support to its members during the pandemic. They stressed that access limits are a key element of the Fund’s risk management framework, providing safeguards to Fund resources and preserving the revolving nature and catalytic role of Fund financing.
Returning annual access limits to lower levels while extending the cumulative access limits for emergency financing balances the need to preserve member countries’ borrowing space with safeguarding Fund resources.
