WASHINGTON: The International Monetary Fund has announced that it will extend its flexible access to emergency funding for an additional 18 months to help countries severely affected by the Covid-19 pandemic.
According to a press release, the IMF’s Executive Board approved 18-month extensions (until end-June 2023) to temporary increases in cumulative access limits under its emergency financing instruments, namely the regular window of the rapid financing instrument (IFR), the exogenous shock window of the rapid credit facility (RCF) and the large natural disaster windows (LND) of RFI and RCF and enabled all other access limits that had been temporarily increased to return to their pre-pandemic levels from January 1, 2022 as planned.
This move reflects the expected and ongoing gradual shift to Top Credit Tranche Quality (UCT) arrangements from emergency funding triggered by urgent balance of payments (BoP) needs related to a pandemic. At the same time, the decision guarantees continued access by member countries to emergency funding from the Fund, in case of urgent BoP needs when a UCT-grade deal is not needed or not possible, the statement said.
Temporary increases in access limits for the regular RFI window and the exogenous shock window of the RCF were first introduced in April 2020 and extended in September 2020, then again in March 2021. For the LND windows of the RFI and RCF, temporary increases were introduced in June. 2021.
The Board of Directors reinstated the limit on the number of FCR disbursements over a 12-month period and approved the staff proposal to prepare an exit strategy from the temporary increase in cumulative access limits under the emergency financing instruments by the end of June 2023.
In April 2020, as the world faced the first wave of coronavirus infections and deaths, the IMF made it easier to access such aid, including increasing the level of funding countries could get. The programs have already been extended twice, in September 2020 and again in March.
The board also agreed that “all other access limits” that had been temporarily increased will be reduced to their pre-pandemic levels effective January 1, 2022, as planned. “This move reflects the expected and ongoing gradual shift to higher credit tranche quality arrangements from emergency financing triggered by urgent balance of payments needs related to the pandemic,” the IMF said.
He also stressed that the decision guarantees “continued access” of member countries to emergency IMF financing in the event of urgent balance-of-payments problems.
The tools include the Quick Credit Facility, an interest-free program available to low-income countries, and the Quick Finance Instrument, which is available to all Fund members. Grants can be disbursed very quickly to help member states implement policies to deal with emergencies.