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International Monetary Fund
A Board-endorsed effort to raise SDR 11 billion in new Poverty Reduction and Growth Trust (PRGT) loan resources needed to sustain the Fund’s concessional lending operations is well underway. Staff is now engaging with 16 interested loan providers bilaterally with a view to having firm pledges in line with the target by the 2016 Annual Meetings and a critical mass of new loan agreements in place by end-2016. To date, committed new loan resources amount to half of the SDR 11 billion fundraising target.
International Monetary Fund

between making the GLA the “second line of defense” and providing PRGT lenders with greater clarity about the drawdown prospects of loan agreements to the GLA, this paper proposes to amend the PRGT Instrument. 3. This paper also sets out staff’s understandings on the implications of a negative six-month derived SDR interest rate on outstanding claims under certain PRGT Borrowing Agreements . In the view of staff, there is no basis under the current PRGT Instrument and the existing borrowing agreements to charge lenders a negative rate. Consequently, a zero percent

International Monetary Fund

2009, the PRGT has secured SDR 9.8 billion in loan resources, and SDR 214 million in new bilateral subsidy resources. Loan resources are adequate against the current demand projections through end-2015. The draw-down periods under these agreements (end-December 2018), however, will need to be extended to have funding assurances for disbursements after end-2018. The effectiveness in October 2013 of the second partial distribution of reserves linked to windfall gold sales profits provided critical resources needed for self-sustained PRGT lending . As of end

International Monetary Fund

introduction of a dual interest rate mechanism in the PRGT. They noted that this could provide benefits to LICs now required to blend while modestly reducing the cost of subsidizing PRGT lending. Some Directors did not see merit in implementing such a proposal, given the stresses it would place on reserve coverage. In general, Directors agreed that the approach would be viable only if resources were made available to ensure sufficient lending resources and an acceptable level of reserve coverage for the higher levels of PRGT lending that would occur. Directors endorsed the

International Monetary Fund

-sustained PRGT strategy and to allow the staff to negotiate new or amended borrowing agreements with PRGT lenders for new commitments beyond 2015. 2. The paper is organized as follows . Section II provides an overview of the Fund’s concessional lending instruments and the associated financing framework as well as the developments since the September 2013 Update. Section III reviews the sources of financing for PRGT operations and discusses developments in the PRGT framework. Section IV reviews the use of PRGT resources and assesses the Trust’s estimated self

International Monetary Fund. Finance Dept.

associated funding options, this review would consider the following key elements of the second stage: The appropriate longer-term lending envelope for the PRGT. While the base lending envelope of SDR 1.65 billion would help support LICs in the post-pandemic period, the review will consider the merits of a larger self-sustained PRGT lending envelope. A larger scale for the PRGT would depend, inter alia , on the evolution of Fund lending to LICs during the pandemic and its aftermath, the longer-term outlook for PRGT financing needs in the context of developments in