The IMF's Financial Resources and Liquidity Position:
Explanatory Note
The financial resources covered in this note are a pool of currencies and other assets in the General Resources Account (GRA) that are built up from members' fully paid capital subscriptions in the form of quotas. These resources are used in the IMF's regular operations. They do not include resources from the Trust Fund, the ESAF Trust, the PRGF Trust, and the PRGF-HIPC Trust, which are used in the IMF's concessional lending.
- Total resources
These comprise IMF's holdings of members' currencies, SDRs, gold, "other assets" (such as receivables), and available Fund borrowings. Previous to August 2012, other assets included buildings and equipment. The IMF holds 90.5 million fine ounces of gold, valued on its balance sheet at SDR 3.2 billion on the basis of historical acquisition cost. As mandated by the IMF's Articles of Agreement, gold acquired prior to 1978 is valued at SDR 35 per ounce, the "official" price used at that time in dealings among central banks.
- Non-usable resources
Resources that are considered non-usable to finance the IMF's ongoing operations and transactions. They comprise (i) its gold holdings, (ii) the currencies of members that are using IMF resources and are therefore, by definition, in a weak balance of payments or reserve position, (iii) the currencies of other members with relatively weak external positions, and (iv) the "other assets" noted above.
The use of IMF credit by a member increases the IMF's non-usable resources and reduces its usable resources by equivalent amounts.
- Usable resources
These consist of (i) holdings of the currencies of members considered by the Executive Board to have a sufficiently strong balance of payments and reserve position for their currencies to be used in the financing of IMF transactions (see Financial Transactions), (ii) holdings of SDRs, and (iii) unused amounts, if any, under credit lines already activated, such as under the General Arrangements to Borrow and New Arrangements to Borrow (GAB/NAB) and resources available under other Fund borrowing agreements.
- Undrawn balances under arrangements
Amounts committed under arrangements but not yet disbursed. This includes amounts committed under all current GRA arrangements (see Lending Arrangements), including those considered precautionary.
- Uncommitted usable resources
Usable resources less the full amount of undrawn balances under existing GRA arrangements.
- Repurchases one-year forward
Repurchases (repayments) by member countries during the coming one-year period. These repurchases add to the supply of the IMF's usable resources.
- Repayments of borrowing due one-year forward
Repayment obligations on Fund borrowing in the coming one-year period, including drawings reaching final maturity in the next 12 months.
- Prudential balance
The prudential balance is intended to safeguard the liquidity of creditors' claims and take account of the potential erosion of the IMF's resource base. The prudential balance is set at 20 percent of the quotas of members whose currencies are used in the financing of IMF transactions and any amounts activated under the GAB or otherwise made available under bilateral borrowing agreements, including those already drawn and not yet repaid, but excluding repayments of borrowing due in the coming one-year period. The prudential balance currently does not cover the encashment needs of participants in the expanded NAB, as such resources are to be provided by setting aside a portion of the total credit arrangements under the NAB. Nor does it extend to the NAB participants’ outstanding claims under bilateral borrowing agreements that are to be folded into the NAB. The prudential balance ratio of 20 percent as decided by the IMF's Executive Board reflects historical experience and judgments on the indicative level of uncommitted usable resources that the IMF would normally not use to make financial commitments. The prudential balance does not represent a rigid minimum and the corresponding IMF resources could, on an exceptionally temporary basis, fall below this level.
- Forward commitment capacity (FCC)
A measure of the resources available for new financial commitments. The FCC is equal to uncommitted usable resources plus repurchases one-year forward less repayments of borrowing due one-year forward, and less the prudential balance. As of April 1, 2011, reflects activation of the expanded NAB for the first activation period through end-September 2011 and subsequent six-month activation periods thereafter. The FCC accounts fully for actual IMF financing commitments, including commitments under arrangements that are considered precautionary, and thus treats undrawn balances under all GRA financial arrangements in the same way. In assessing IMF liquidity on the basis of the FCC, the actual resources available for financing may be larger to the extent that commitments are not fully disbursed. The FCC has been published since December 2002.
Memorandum Items
- Credit Lines under GAB/NAB equals total amount of borrowing available under GAB/NAB. The total amount of borrowing available under the IMF's two borrowing arrangements, the GAB and the NAB, was increased from SDR 34 billion to SDR 367.5 billion as of March 11, 2011 (see Borrowing Arrangements). On November 15, 2011, the National Bank of Poland joined the NAB, bringing its total size to SDR 370.0 billion.
- Liquid liabilities consist of (i) reserve tranche positions, which a member acquires when the IMF uses the member's currency to provide credit to other members and through reserve assets paid by the member in connection with quota payments, and (ii) the amount of any outstanding borrowing by the IMF, e.g., under the GAB/NAB or other borrowing agreements.
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