Lending
IMF financing helps member countries tackle balance of payments problems, stabilize their economies, and restore sustainable economic growth. It can also be made available in response to natural disasters or pandemics. The IMF further provides precautionary financing to countries with sound policies that may have some remaining vulnerabilities to help prevent and insure against future crises, and it continues to enhance the tools available for crisis prevention.
IMF lending has traditionally fallen into two categories: GRA loans at interest rates determined by an average of those prevailing among the world’s main currencies and loans to low-income countries on concessional terms. All loans under the IMF’s Poverty Reduction and Growth Trust (PRGT) are currently provided at zero interest. With the operationalization of the RST, there is now a new third lending category, which encompasses a tiered interest rate structure differentiated across country groups, with low-income members benefiting from more favorable terms.
Brief Overview of FY 2023
Policy Initiatives
The IMF has continued to respond to economic challenges stemming from the COVID-19 pandemic and Russia’s war in Ukraine with unprecedented speed and magnitude, mostly through emergency financing and program lending.¹ These activities helped protect the lives and livelihoods of people and facilitate adjustment to shocks.
In FY 2023, many countries, especially low-income countries, continued to face a very challenging economic environment, including rising energy prices and food insecurity due to Russia’s war in Ukraine. To better support members, especially low-income countries, in coping with these headwinds, on September 30, 2022, the IMF approved a new temporary FSW under its emergency financing instruments. The new window was originally approved for 12 months and provides a new channel for emergency financing to member countries that have urgent balance of payments needs due to acute food insecurity, a sharp increase in their food import bills, or a shock to their cereal exports. Access is consistent with actual balance of payments needs and capped at 50 percent of quota; it is additional to the current annual access limits under the Rapid Credit Facility (RCF) and Rapid Financing Instrument (RFI). The cumulative access limits under the RFI regular window and the RCF exogenous shock window, which stood at 150 percent of quota, were increased to 175 percent of quota for members that borrow through the FSW.
In October 2022, the IMF also amended its policy for Staff-Monitored Programs to allow for Program Monitoring with Board Involvement, which is available only to (requesting) members that, in addition to seeking to build or rebuild a track record for (upper-credit-tranche) use of IMF resources, would benefit from targeted Executive Board involvement. Countries considering a Staff-Monitored Program are encouraged to request Program Monitoring with Board Involvement if they are the subject of an ongoing concerted international effort by creditors or donors to provide substantial new financing or debt relief or have significant outstanding IMF credit under emergency financing instruments at the time emergency financing is received.
Reflecting the difficult global environment, demand for IMF concessional financing remained high compared to pre-pandemic levels. In FY 2023, the IMF approved about $5.7 billion in new concessional lending commitments to low-income countries, about four times the pre-pandemic annual average. Of the lending commitments approved in the fiscal year for low-income countries, about $0.5 billion were under the FSW, benefiting five low-income countries.
To facilitate an effective response to increasing needs in a period of multiple global shocks, on March 6, 2023, the IMF’s Executive Board raised the GRA’s annual and cumulative access limits from 145 and 435 percent of quota, respectively, to 200 and 600 percent of quota, respectively. These temporary changes to the GRA’s access limits will be in place for 12 months and, if circumstances warrant, the Executive Board may consider extending them further before their expiration. The increase in access limits will allow member countries—particularly emerging market and developing economies—that face increased financing pressures and vulnerabilities to access higher IMF financial support without triggering the exceptional access framework.
Access limits under the PRGT, which were raised by 45 percent in 2021, will be discussed as part of the expected comprehensive review of concessional facilities in 2024/25. However, if substantial progress is made with PRGT fundraising toward the SDR 2.3 billion first-stage target for subsidy resources agreed upon in 2021 (see discussion later in this section)—with total pledges of SDR 2 billion or more—access limits under the PRGT will be reviewed at an ad hoc interim review.
The Executive Board’s temporary increases to the cumulative access limits under its emergency financing instruments, the RCF and RFI, approved in FY 2022, were set to expire at the end of June 2023 (see Tables 2.1 and 2.2).²
¹ Including pre-pandemic commitments, as of April 28, 2023, total undisbursed lending commitments and credit outstanding under the GRA were about SDR 194.1 billion; the corresponding total under the PRGT was about SDR 21.2 billion.
² In FY 2022, the Board also endorsed the staff’s proposal to prepare an exit strategy from the temporary increase in cumulative access limits under emergency financing instruments by the end of June 2023.
On March 17, 2023, the IMF approved changes to its financing assurances policy. The changes apply in situations of exceptionally high uncertainty, involving exogenous shocks that are beyond the control of country authorities and the reach of their economic policies and generate larger-than-usual tail risks. In situations of exceptionally high uncertainty, the IMF can provide emergency financing to meet members’ urgent balance of payments needs, provided certain safeguards are met. It is more challenging to provide support through an upper-credit-tranche arrangement, which requires an IMF-supported program that resolves balance of payments problems, restores external viability over the medium term, and provides adequate safeguards. An SDR 11.6 billion 48-month EFF for Ukraine, approved in March 2023, was the first application of the IMF’s new financing assurances policy.
The changes adopted address key barriers to designing an upper-credit-tranche IMF program in situations of exceptionally high uncertainty, in particular by modifying the Fund’s financing assurances policies in two ways. The first change allows official bilateral creditors to provide up-front credible assurance about delivering debt relief, debt financing, or both with the delivery of a contingent second-stage element of debt relief, debt financing, or both once the exceptionally high uncertainty has been resolved. This helps establish that medium-term viability is being restored. The second change extends, from emergency financing to an upper-credit-tranche-arrangement context, the use of capacity-to-repay assurances from official bilateral creditors and donors. This helps establish adequate safeguards for the IMF’s finances.
On April 6, 2023, the IMF’s Executive Board concluded the combined annual review of the adequacy of the resources of the PRGT; debt relief trusts, including the Catastrophe Containment and Relief Trust (CCRT) and the Heavily Indebted Poor Countries (HIPC) Initiatives; and the RST. The PRGT review found PRGT finances to be under strain owing to substantially stronger demand for PRGT loans and sharply higher interest rates than previously envisioned; since the pandemic began and through the end of April 2023 the IMF has supported more than 50 low-income countries with approval of about SDR 17.3 billion (about $24 billion) in interest-free loans. The PRGT was found to face a shortfall of SDR 1.2 billion (about $1.6 billion) in pledges for subsidy resources and SDR 3.5 billion (about $4.7 billion) for loan resources to complete the first stage of the 2021 funding strategy. Given these circumstances, a multipronged strategy was proposed to strengthen the PRGT’s finances through a concerted push to mobilize broad-based contributions to address gaps in subsidy and loan resources before the Annual Meetings in Marrakech, coupled with further steps during the 2024/25 comprehensive PRGT review to put the PRGT on a sustainable footing to deliver sufficient long-term support to low-income countries.
With regard to the RST, the review found demand for RST financing to be strong and front-loaded, highlighting the need for timely delivery of existing pledges as well as additional pledges to reach the fundraising target of SDR 33 billion. Also, in view of increases in the SDR interest rate, the review assessed the implications of adopting an interest rate cap of 2.25 percent for the lowest income group eligible for RST borrowing. The review concluded that the introduction of such a cap would still enable adequate reserve accumulation, while periodic or ad hoc reviews could adopt corrective action measures if needed.¹
The review found that the CCRT, which provides grants for debt relief for the poorest and most vulnerable low-income countries hit by catastrophic natural disasters or public health disasters, remains critically underfunded. It has insufficient resources to provide significant relief in the event of a further qualifying disaster.
The IMF stepped up its work to help the nearly 1 billion people living in fragile and conflict-affected states, including providing financing commitments of $39.1 billion since the onset of the pandemic.² Building on a new comprehensive strategy adopted in 2022,³ the IMF distilled well-tailored advice to assist its most vulnerable members, in its “Staff Guidance Note on the Implementation of the IMF Strategy for Fragile and Conflict-Affected States”; expanded its local footprint; deployed more long-term experts; and broadened its engagement with humanitarian, development, and peace actors such as civil society, multilateral development banks, the United Nations, and the World Bank.
¹ The Executive Board approved the introduction of an interest rate cap for the RST’s lowest-income borrowers on May 18, 2023.
² Between March 2020 and April 2023.
³ See https://0-www-imf-org.library.svsu.edu/en/Topics/fragile-and-conflict-affected-states/work-on-fcs.
Financial Assistance Approved in FY 2022
As of April 30, 2022 (in millions of special drawing rights, M SDR)
Armenia
SBA
128.8
Million SDR
Bangladesh
RST
1,000
Million SDR
EFF
1,645.6
Million SDR
ECF
822.8
Million SDR
Barbados
RST
141.8
Million SDR
EFF
85.1
Million SDR
Benin
EFF
322.7
Million SDR
ECF
161.3
Million SDR
Burkina Faso
RCF
60.2
Million SDR
Cabo Verde
ECF
45
Million SDR
Central African Republic
ECF
141.7
Million SDR
Chile
SLL
2,529
Million SDR
FCL
13,954
Million SDR
Costa Rica
RST
554.1
Million SDR
Egypt
EFF
2,350.2
Million SDR
Gambia
ECF
15.6
Million SDR
Georgia
SBA
210.4
Million SDR
Guinea
RCF
53.6
Million SDR
Guinea-Bissau
ECF
28.4
Million SDR
Haiti
RCF
81.9
Million SDR
Jamaica
RST
574.4
Million SDR
PLL
727.5
Million SDR
Jordan
EFF
75.5
Million SDR
Kenya
ECF
162.8
Million SDR
Malawi
RCF
69.4
Million SDR
Mauritania
EFF
42.9
Million SDR
ECF
21.5
Million SDR
Moldova
EFF
129.5
Million SDR
ECF
64.8
Million SDR
Morocco
FCL
3,726.2
Million SDR
Mozambique
ECF
340.8
Million SDR
North Macedonia
PLL
406.9
Million SDR
Pakistan
EFF
720
Million SDR
Papua New Guinea
EFF
456.2
Million SDR
ECF
228.1
Million SDR
Peru
FCL
4,003.5
Million SDR
Rwanda
RST
240.3
Million SDR
Senegal
SBA
86.3
Million SDR
SCF
43.2
Million SDR
Serbia
SBA
1,898.9
Million SDR
South Sudan
RCF
86.1
Million SDR
Sri Lanka
EFF
2,286
Million SDR
Tanzania
ECF
795.6
Million SDR
Tonga
RCF
6.9
Million SDR
Ukraine
RFI
1,005.9
Million SDR
EFF
11,608.3
Million SDR
Zambia
ECF
978.2
Million SDR
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SDR/USD Exchange Rate
On April 29, 2022: SDR 1 = US$ 1.34430
Source: IMF, Finance Department.
Aug. = Augmentation
Country borders do not necessarily reflect the IMF's official position.
Lending map as of April 30, 2022. Visit imf.org for the latest information.
In addition, in December 2022, the Executive Board concluded a review, conducted every five years, of the safeguards assessment policy, which had been delayed on account of the pandemic. An external panel of experts provided an independent perspective on the policy’s implementation, and Executive Directors recognized the continued importance of the policy to help mitigate the risks of misreporting and misuse of IMF resources. Executive Directors found that the policy remains critical to meeting these objectives and maintaining the IMF’s reputation as a prudent lender.
The review also found that the existing framework for the assessment and monitoring of central banks’ governance and control mechanisms remains broadly appropriate and proposed enhancements to the safeguards framework to keep pace with evolving developments. The refinements included establishing a stand-alone governance pillar to facilitate broader coverage and discussion of the Board’s oversight role and the division of responsibilities among key decision-making bodies to preserve accountability, modalities for fiscal safeguards reviews, deeper evaluation of central banks’ risk-management functions and issuances of central bank digital currencies and strengthened outreach to central banks.
Lending Overview
Demand for lending and support under the IMF’s precautionary facilities remained high in FY 2023. Between May 1, 2022, and April 30, 2023, new requests were approved for about SDR 55.1 billion, focused on the following areas:
Emergency financing under the RFI and RCF, including financing under the FSW: The IMF received, and the Executive Board approved, requests for emergency financing from seven countries for the amount of SDR 1.4 billion (about $1.8 billion), of which about SDR 0.4 billion ($0.5 billion) was disbursed to six low-income countries. In October 2022, Ukraine was the first member to receive emergency financing under the newly established FSW, in an amount of SDR 1 billion.
Building on existing lending arrangements: The IMF also augmented existing arrangements to accommodate urgent new financing needs in the context of ongoing policy dialogue for an amount of SDR 1.3 billion. The Executive Board approved augmentation of arrangements with six members.
New lending arrangements, including precautionary arrangements: The Executive Board approved 20 new non precautionary IMF arrangements with 16 countries. These included 10 arrangements under the Extended Credit Facility for a total of SDR 3.56 billion, 8 under the EFF for a total of SDR 18.8 billion, and 3 under the SBA for a total of SDR 2.2 billion, as well as one PLL arrangement for SDR 0.4 billion.¹ In addition, 5 precautionary arrangements—3 FCLs, 1PLLs, and 1 Short-Term Liquidity Line (SLL)—were made available to members. In May 2022, Chile was the first member to request an SLL arrangement, which was approved by the Executive Board.
In addition, the Executive Board approved requests for arrangements under the RSF focusing on climate change from five countries: Bangladesh, Barbados, Costa Rica, Jamaica, and Rwanda (totaling about SDR 2.5 billion).
Debt relief under the Heavily Indebted Poor Countries (HIPC) Initiative:² On June 17, 2022, the IMF Executive Board approved for a third time interim HIPC assistance for Somalia under the enhanced HIPC Initiative.³ The approval was in the amount of SDR 0.68 million and was augmented by SDR 0.13 million on April 5, 2023, to fully cover Somalia’s eligible financial obligations falling due to the IMF between June 17, 2022, and June 16, 2023.⁴
¹ Under the PLL arrangement approved for North Macedonia (SDR 0.4 billion), the authorities intended to draw half of the available amount (SDR 0.2 billion) and treat the rest as precautionary.
² No country requested debt relief under the Catastrophe Containment and Relief Trust during FY 2023.
³ The HIPC Initiative was launched in 1996 by the IMF and the World Bank, with the aim of ensuring that no poor country faces a debt burden it cannot manage. The initiative involves a two-step process through which countries must meet certain criteria, commit to poverty reduction through policy changes, and demonstrate a good track record over time. The IMF and World Bank Executive Boards determine that a country qualifies for debt relief under the HIPC Initiative, which is the first stage (HIPC decision point). Multilateral and official bilateral creditors may provide interim debt relief on a country’s HIPC-eligible debt in the interim period, and, when a country meets its commitments, full debt relief is provided, which is the second stage (HIPC completion point).
⁴ On March 25, 2020, following Somalia’s clearance of its arrears to the IMF, the Executive Boards of the IMF and the World Bank determined that Somalia qualified for debt relief under the enhanced HIPC Initiative and that Somalia had reached its HIPC Initiative decision point. As of April 30, 2023, Somalia had received SDR 2.601 million in interim HIPC assistance to cover 100 percent of its eligible financial obligations falling due to the IMF since the HIPC decision point.
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