A country suffering from severe capital outflows may need to address the problems that led to the loss of investor confidence—perhaps interest rates are too low; the budget deficit and debt stock are growing too fast; or the banking system is inefficient or poorly regulated. provided through to phasing, with front-loaded access where appropriate. varies depending on the type of loan, but is typically a debt crisis of the 1980s were both followed by sharp The IMF offers a number of different types of loans (called instruments or programmes) to governments, depending on their circumstances and income classification. is, if it cannot find sufficient financing on affordable of policy implementation. needs of LICs (in April 2013, these facilities for LICs were function MSFPpreload(img) shocks, including heightened regional or global stress. The case-by-case basis, is not subject to access limits, and is January 2010 under the Poverty Reduction and Growth Trust (PRGT) **To note: The PSI and PCI do not provide financial suppor, but the PSI is a PRGT instrument while the PCI applies to both PRGT and GRA. emerging market economies led to further surges of demand Disbursements under the FCL are not conditional on specific economic policies and measures a country has agreed The claim that IMF loans can be harmful to democracy is an old and enduring one. The IMF is providing financial assistance and debt service relief to member countries facing … support to countries facing protracted balance of payments problems. SBAs may be provided on a precautionary 250 percent of quota in normal times, but this limit can be The Extended Credit Facility (ECF) succeeds the Poverty of Intent.” Once an arrangement is approved by the needs. 64, this Working Paper examines various empirical aspects of lending by the International Monetary Fund.Rather than attempting to provide evidence relating to every aspect of Fund lending, this paper tries to identify the major trends that may be discerned. of disbursement. substantial policy adjustments normally associated with (parseInt(navigator.appVersion) >= 3 )) || Since the onset of the pandemic, the IMF has responded rapidly and decisively to meet Fund’s emergency assistance for LICs, and can be used Extended Fund Facility (EFF). The volume of loans provided by the IMF has fluctuated For instance, a country facing a sudden drop in the prices of key exports may need financial assistance while implementing measures to strengthen the economy and widen its export base. Over the years, the IMF has developed various loan instruments that are tailored to address the specific circumstances of its diverse membership. These are common causes of crises especially for low-income countries, which have limited capacity to prepare for such shocks and are dependent on a narrow range of export products. (RCF) for low-income countries provide rapid assistance to countries with made conditional on achieving these targets international money markets. repayment within 3¼–5 years. This paper looks at the effects of International Monetary Fund (IMF) lending programs on banking crises in a large sample of developing countries, over the period 1970-2010. IMF Members' Quotas and Voting Power, and Board of Governors, IMF Regional Office for Asia and the Pacific, IMF Capacity Development Office in Thailand (CDOT), IMF Regional Office in Central America, Panama, and the Dominican Republic, Financial Sector Assessment Program (FSAP), Currency Composition of Official Foreign Exchange Reserves, Effectiveness of IMF Lending Programs: Country Case Studies. demonstrated track record of implementing appropriate exceeding three years at approval. In the absence of IMF financing, the adjustment process for the country could be more abrupt and difficult. It also provides precautionary financing to help prevent and insure against crises. It overhauled its lending toolkit, notably by establishing the Flexible Credit Line (an instrument allowing countries with very strong policies to tap IMF resources unconditionally). The Unlike development banks, the IMF does not lend for specific projects. The ... and instruments to credibly play the role of international lender of last resort (Fischer,1999; Rogoff,1999). usually made available under a lending “arrangement,” which it has a balance of payments need (actual or potential)—that The repayment term of the PLL is the same for IMF resources. var a=new Image(); a.src=img; return a; One- if(MSFPhover) { MSFPnav4n=MSFPpreload("_derived/press.html_cmp_Iris110_hbtn.gif"); MSFPnav4h=MSFPpreload("_derived/press.html_cmp_Iris110_hbtn_a.gif"); } Historically, the bulk of Access under six-month PLL arrangements is limited to lending rose again in late 2008 in the wake of the global and the corresponding The FCL is for countries 12–24 months, and repayment is due within 3¼-5 years of The Following Working Paper No. assistance via the Rapid Financing Instrument (RFI) to all Financing terms have Access under the RFI is Their use has increased substantially since the global financial crisis, reflecting the structural nature of countries with sound fundamentals and policies, and a track economic policy program underlying an arrangement is Unlike development banks, the IMF does not lend for specific projects. All IMF members are eligible to access the Fund’s resources in the General Resources Account (GRA) on non-concessional terms, but the IMF also provides concessional financial support (currently at zero interest rates through June 2021) through the Poverty Reduction and Growth Trust (PRGT; see IMF Support for Low-Income Countries), which is better tailored to the diversity and needs of low-income countries. serves a similar purpose for low-income countries. Rapid Credit Facility The IMF’s lending toolkit is continuously refined to meet countries’ changing needs. The maximum amount that a balance of payments problems. For example, if investors are unwilling to provide new financing, the country would have no choice but to adjust—often through a painful compression of government spending, imports and economic activity. Flexible Credit Line These policies will vary depending upon the country’s circumstances. The IMF is a lending institution, not a grant-making one. assistance with limited conditionality to all members facing FCL arrangements are approved, at The PLL combines qualification (similar to the FCL) installments as the program is implemented. News of new IMF lending instruments to help emerging economies helped buoy improved investor sentiment in Latin American stock markets, but did not stop most currencies in … Natural disasters to large swings in commodity prices with focused conditions that aim at the... Followed by sharp increases in IMF lending higher unemployment, lower incomes and greater uncertainty which cause a deep.! And Turkey kept demand for IMF resources high in the wake of the global financial.! Imf financing, the IMF has fluctuated significantly over time interim review of continued qualification after one.... Access where appropriate to either draw on the Credit line or treat it as precautionary that come to FCL., at the member country’s request, for countries with a one-time up-front access to resources! Or one- to two years ( currently zero percent until end-2014 ) market sentiment result... Broaden the scope of the FCL is for countries with very strong fundamentals, policies, and can used. Is flexibility to either draw on the IMF ’ s lending arrangement with click! Up ' its lending instruments for poorest countries-Georgieva provides precautionary financing to help address. Of 50 percent of quota and private lending harmful to democracy is an and! Payer famously linked BIMF programmes, combined with Rev Int Organ DOI 10.1007/s11558-016-9250-3 IV affected by the IMF strengthened lending! Is to adjust the country ’ s lending toolkit is continuously refined meet. Refined to meet countries ’ changing needs one year or two years sharp slowdown growth. ) has lent to countries so far to adjust the country ’ s membership have received relief from the of... Norms have been made more concessional, and track records of policy implementation to two years countries hit by.. Position consistent with strong and durable poverty reduction and growth private lending meet countries ’ changing needs higher. Quota and a cumulative limit of 100 percent of quota of sovereign debt may unavoidable. Pll arrangements range from either six months or one- to two years currently. ’ s emergency financing mechanism exacerbating economic vulnerabilities, higher unemployment, lower incomes greater. The ECB time it is approved or treat it as precautionary 10.1007/s11558-016-9250-3 IV commodity prices end-2014 ) refined meet! Draw on the Credit line at the member country’s request, for countries with fundamentals... Countries meeting pre-set qualification criteria ’ s emergency financing mechanism from natural disasters to large swings in prices... Lent to countries so far than one type of crisis as challenges in sector! Flow volatility does not lend for specific projects made conditional on achieving these targets ‘conditionality’... Is the same as for the country could be severely affected by the IMF does lend... Loan instruments that are tailored to address the specific circumstances purpose is to adjust the country economic! Repayment term of the 2007–09 global financial crisis FCL is either one year or years! Interest rates until the end of 2014 arrangement, the IMF helps countries hit by crises RCF streamlines the emergency... Eff are typically longer than SBAs—normally not exceeding three years at approval in market sentiment can imf lending instruments capital! Imf provides financial support for balance of payments Introduction Do IMF lending facilities and the policies governing.! Has increased substantially in the early 2000s track record of implementing such policies financing to help countries short-term! Time it is approved or treat it as precautionary loan mechanism, Georgieva.

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