New commitments under PRGT-supported programs amounted to SDR 0.15 billion in 2013, while disbursements on existing arrangements amounted to about SDR 0.8 billion. However, this lower demand is expected to be temporary. New commitments are projected to rebound to about SDR 1.5 billion in 2014, similar to the level observed in 2012. These projections are subject to considerable uncertainty regarding progress on ongoing program negotiations.
Effective November 12, 2012, the Fund, as Trustee of the Poverty Reduction and Growth Trust (PRGT), entered into a borrowing agreement (the “Agreement”) with the National Bank of Belgium, by which Belgium will provide new loan resources of up to SDR 350 million (see attachment). With this Agreement, the Fund has concluded fourteen new borrowing agreements providing total resources of SDR 9,811 million in the context of fundraising under the 2009 Low-Income Countries (LICs) financing package.
This paper proposes a package of policy reforms and a funding strategy to ensure that the Fund has the capacity to respond flexibly to LICs’ needs during the pandemic and recovery. The key policy reforms proposed include: • raising the normal annual/cumulative limits on access to PRGT resources to 145/435 percent of quota, the same thresholds for normal access in the GRA; • eliminating the hard limits on exceptional access (EA) to PRGT resources for the poorest LICs, enabling them to obtain all financing on concessional terms if the EA criteria are met; • changes to the framework for blending concessional and non-concessional resources to make it more robust and less complex; • stronger safeguards to address concerns regarding debt sustainability and capacity to repay the Fund; and • retaining zero interest rates on PRGT loans, consistent with the established rules for setting these interest rates.
PRGTloanaccounts under the PRGT Instrument.
II. Principal Elements of the Borrowing Agreement
4. Amount of agreement. The maximum amount of new loan resources available under the Agreement shall be the equivalent of up to SDR 350 million.
5. Account designation. The Agreement is for the benefit of the Extended Credit Facility (ECF) Loan Account of the PRGT to finance disbursements under that facility.
6. Drawings on commitments. Drawings can be made through December 31, 2018. The notification period of the intention to draw is at least five
the Fund, as Trustee, to use investment income from the Reserve Account to subsidize PRGT lending with due regard to the primary purpose of the Reserve Account to provide protection to the lenders of the PRGTloanaccounts. The proposed amendment authorizes transfers of investment income from the Reserve Account to the General Subsidy Account when the existing balances in the general and special subsidy accounts are inadequate to subsidize the outstanding stock and projected new commitments of PRGT lending. 21 The proposed amendment requires that the Managing
earmarked Subsidy Accounts are exhausted. 5 Secondly, the SRA would also provide, as a second-line backstop, additional reserve coverage and security to PRGT creditors by authorizing the use of its resources to meet obligations to lenders to the PRGTloanaccounts (e.g., in case of arrears to the PRGT) as they come due in circumstances where the Reserve Account had been depleted. 6 , 7
It creates, within the PRGT, a second new account, the Deposit and Investment Account (DIA). The purpose of the DIA is to create a vehicle for longer-term borrowing from contributors
will be circulated separately in a supplement.
II. IMF Lending to Lics: Recent Experience
9. In the years immediately prior to the pandemic (2017–19), lending to LICs averaged some SDR 1.1 billion per annum , with concessional (PRGT) loansaccounting for about five-sixths of the total. Access levels and annual disbursements had been gradually increasing, notably in 2019, but repayments on prior loans—consistent with the revolving nature of Fund lending—meant that the (SDR) stock of credit outstanding was increasing at a modest 3 percent per annum (1 percent
, similar to that used for General Resources Account borrowing. Under such agreements, drawings are structured as the purchase of notes issued by the PRGT. These notes have the same key financial and operational terms as are applicable under PRGT loan agreements.
Since 1987, 17 member countries or their agencies have provided loan resources to the PRGT ( Table 3.7 ). As of April 30, 2016, outstanding credit to the PRGTloanaccounts was SDR 6.3 billion and SDR 6.1 billion in loan resources remained available for new lending commitments to PRGT-eligible borrowers
on the adequacy of the Reserve Account to protect claims of the creditors to the PRGTLoanAccounts.
Paragraph 3. Payments to the Reserve Account
Any repayment of principal under Trust loans, to the extent that repayment to a creditor has been made from the Reserve Account due to differences in timing between scheduled principal repayments to the creditor and principal repayments under Trust loans, any payments of overdue principal or interest or interest thereon under Trust loans, and any payments of interest under Trust loans to the extent that payment has
loan resources to the PRGT. Table 3.7 displays the cumulative commitments of lenders to the PRGTloanaccounts.
Table 3.7 Cumulative Commitments of Lenders to the Poverty Reduction and Growth Trust
(Millions of SDRs as of December 31, 2017)
National Bank of Belgium
Government of Canada
Government of China
People’s Bank of China