Rapid Credit Facility (RCF)

March 7, 2022

The Rapid Credit Facility (RCF) provides rapid concessional financial assistance to low-income countries (LICs) facing an urgent balance of payments (BoP) need with no ex post conditionality where a full-fledged economic program is neither necessary nor feasible. The RCF was created under the Poverty Reduction and Growth Trust (PRGT) as part of a broader reform to make the Fund’s financial support more flexible and better tailored to the diverse needs of LICs, including in times of crisis. There are three windows under RCF: (i) a “regular window” for urgent BoP needs caused by wide range of sources including domestic instability, emergencies and fragility; (ii) an “exogenous shock window” for urgent BoP needs caused by a sudden, exogenous shock; and (iii) a “large natural disaster window” for urgent BoP needs arising from natural disasters where damage is assessed to be equivalent to or exceed 20 percent of the member’s GDP. Access under the RCF is subject to annual and cumulative limits, with higher access limits applying for the large natural disaster window. For higher income countries that are non-PRGT eligible, a similar Rapid Financing Instrument (RFI) is available.

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Financial assistance tailored to country needs

Purpose. The RCF provides low-access, rapid, and concessional financial assistance to LICs facing an urgent BoP need, without ex post conditionality, when a full program is not deemed necessary or feasible and the need is urgent. It can provide support in a wide variety of circumstances, including shocks, natural disasters, and emergencies resulting from fragility. The RCF also provides policy support and may help catalyze foreign aid.

Eligibility. The RCF is available to PRGT-eligible members that face an urgent balance of payments need, where a full-fledged economic program is either not necessary (for instance because of the transitory and limited nature of the shock) or not feasible (for instance because of capacity constraints or domestic fragilities).

Duration and repeated use. Financial assistance under the RCF is provided as an outright loan disbursement. While RCF financing takes the form of a one-off disbursement., there is scope for repeat use. A repeat use of the RCF is possible if the balance of payments need is caused primarily by a sudden and exogenous shock or the country has established a 6-month track record of adequate macroeconomic policies prior to the request. However, no more than two disbursements may be made in any twelve-month period.  

Access. Access to RCF financing is determined on a case-by-case basis, taking into account the country’s balance of payments need, the strength of its macroeconomic policies, capacity to repay the Fund, the amount of outstanding Fund credit, and the member’s record of past use of Fund credit. In addition, RCF financing takes into account the features and magnitude of underlying shocks. Access under both regular window and exogenous shock windows are limited to 50 percent of quota per year and 100 percent of quota on a cumulative basis, with the regular window annual access subject to a norm of 25 percent of quota.

In response to members’ large and urgent Covid-19-related financing needs, access limits under the exogenous shock window and large natural disaster window were temporarily increased. Access limits under the exogenous shock window were temporarily increased from 50 to 100 percent of quota per year, and from 100 to 150 percent of quota on a cumulative basis until December 31, 2021. Access limits under the large natural disaster window were also temporarily increased from 80 to 130 percent of quota per year, and from 133.33 to 183.33 percent of quota on a cumulative basis until December 31, 2021. Since January 1, 2022, the annual access limits under the exogenous shock window and the large natural disaster window have returned to pre-pandemic levels of 50 and 80 percent of quota respectively.  The cumulative access limits of these two windows will remain at temporarily high levels of 150 and 183.33 percent of quota until June 31, 2023. 

Limited conditionality

Fund support under the RCF is provided without ex post program-based conditionality or reviews, although prior actions sometimes apply. Economic policies supported under the RCF should aim at addressing the underlying balance of payments difficulties and support the country's poverty reduction and growth objectives.

Concessional lending terms

Financing under the RCF carries a zero interest rate, has a grace period of 5½ years, and a final maturity of 10 years.