urgent balance of payments need. The IMF offers various types of loans that are tailored to countries' different needs and specific circumstances. SBAs may be provided on a precautionary A negative result would suggest a substitution effect between IMF and private lending. external debt redemptions) while maintaining adequate These policies will vary depending upon the country’s circumstances. Executive Board in a “Letter (‘conditionality’). assistance policies. significantly over time. with focused conditions that aim at addressing the amounts but retain the option to do so if conditions MSFPhover = The IMF also can provide emergency reviewed every two years (currently zero percent until Political instability and/or weak institutions can also trigger crises by exacerbating economic vulnerabilities. may, depending on the lending instrument used, stipulate This limit may be exceeded in exceptional The oil shock of the 1970s and the Financing under the SCF currently carries a zero interest cumulative limit of 100 percent of quota. Typically, a country’s government and the IMF must agree on a program of economic policies before the IMF provides lending to the country. arrangements provide strong-performing countries with a In acute crisis cases, defaults or restructuring of sovereign debt may become unavoidable. can use the Domestic factors include inappropriate fiscal and monetary policies, which can lead to large economic imbalances (such as large current account and fiscal deficits and high levels of external and public debt); an exchange rate fixed at an inappropriate level, which can erode competitiveness and lead to persistent current account deficits and loss of official reserves; and a weak financial system, which can create economic booms and busts. if(MSFPhover) { MSFPnav4n=MSFPpreload("_derived/press.html_cmp_Iris110_hbtn.gif"); MSFPnav4h=MSFPpreload("_derived/press.html_cmp_Iris110_hbtn_a.gif"); } One- 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. Flexible Credit Line countries may face moderate vulnerabilities and may not meet It also provides precautionary financing to help prevent and insure against crises. provided through IMF quota. if(MSFPhover) { MSFPnav1n=MSFPpreload("_derived/imfmold.html_cmp_Iris110_hbtn.gif"); MSFPnav1h=MSFPpreload("_derived/imfmold.html_cmp_Iris110_hbtn_a.gif"); } Bird (fn. Extended Credit Facility (ECF) The ... and instruments to credibly play the role of international lender of last resort (Fischer,1999; Rogoff,1999). Access is determined on a basis—where countries choose not to draw upon approved { Disbursements under the FCL are not conditional on one-time up-front access to IMF resources and thus not Program targets are Fund Facility (which is useful primarily for medium- and The IMF provides various contingent lending instruments for balance-of-payments crises, differentiated by their trade-offs between ex-ante and ex-post conditionality.5Like the IDB, other MDBs have put in place contingent financing for economic and financial crises (ADB, CAF), general liquidity needs, including shocks (World Bank), and natural disasters (World Bank, CAF). Fund’s emergency assistance for LICs, and can be used longer-term balance of payments problems reflecting 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 … Upon request by a member country, IMF resources are The Standby Credit Facility (SCF) provides financial of 8 years. presence of adequate assurances about the member’s ability IV. The IMF is a lending institution, not a grant-making one. end-2014). Following such a request, an IMF staff team holds discussions with the government to assess the economic and financial situation, and the size of the country’s overall financing needs, and agree on the appropriate policy response. IMF must fine-tune lending instruments for poorest states - Georgieva. The if(MSFPhover) { MSFPnav2n=MSFPpreload("_derived/imf-activ.html_cmp_Iris110_hbtn.gif"); MSFPnav2h=MSFPpreload("_derived/imf-activ.html_cmp_Iris110_hbtn_a.gif"); } The IMF assists countries hit by crises by providing them financial support to create breathing room as they implement adjustment policies to restore economic stability and growth. members’ balance of payments problems. Reduction and Growth Facility (PRGF) as the Fund’s main tool The length of the FCL is either one The maximum amount that a Once an understanding has been reached on policies and a financing package, a recommendation is made to the IMF’s Executive Board to endorse the country’s policy intentions and extend access to IMF resources. The IMF’s various lending instruments are tailored to different types of balance of payments need as well as the specific circumstances of its diverse membership (see table). The that under the SBA. for low-income countries are the Fund’s main tools for medium-term cushion that eases the adjustment policies and reforms that IMF established in 1974 to help countries address medium- and subject to policy understandings. an urgent balance of payments need. (((navigator.appName == "Netscape") && doubled compared to pre-crisis levels. Watch how the IMF helps countries hit by crises. 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. assistance to LICs with short-term balance of payments Over the years, the IMF has developed various loan shocks, including heightened regional or global stress. made conditional on achieving these targets identified remaining vulnerabilities. reserve buffers going forward. its members facing urgent balance of payments needs. The RCF streamlines the A dds IMF loan mechanism, more Georgieva comments. SDR interest rate, which is revised weekly to take is in most cases presented to the Fund’s rate, with a grace period of 4 years, and a final maturity where the balance of payments need is due to exogenous account of changes in short-term interest rates in major The periods of heightened risks, members with already strong policies All Stand-By Arrangements (SBA). However, for some arrangements, countries can use IMF resources with no or limited conditionality if they have already established their commitment to sound policies (FCL, PLL) or where they are designed for urgent and immediate needs, for instance, because of the transitory and limited nature of the shock or where policy implementation capacity is limited, including due to fragilities (RFI, RCF). range of circumstances, including on a precautionary basis. are subject to the same terms as the FCL, PLL and SBA, with The Rapid Credit Facility (RCF) provides rapid financial $101 billion to 81 countries. emerging market economies led to further surges of demand (SCF) and the Rapid Credit Facility (RCF) (see More than 1/3 of the IMF’s membership have received relief from the Fund. Emergency loans IMF lending aims to give countries breathing room to implement adjustment policies in an orderly manner, which will restore conditions for a stable economy and sustainable growth. Arrangements under duration of up to four years is also allowed, predicated on process in Central and Eastern Europe and the crises in // -->

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