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IMF Financial Facilities

The IMF makes its financial resources available to member


countries through a variety of financial facilities. Except for the
ESAF (see below), members avail themselves of the IMF's financial
resources by purchasing (drawing) other members' currencies or
SDRs with an equivalent amount of their own currency. The IMF
levies charges on these drawings and requires that members
repurchase (repay) their own currency from the IMF over a
specified time.
IMF Financial Policies
IMF financial policies govern the modalities for the use of its
financial resources under existing IMF facilities. These include:
Reserve Tranche Policies. A member has a reserve tranche
position in the IMF to the extent that its quota exceeds the
IMF's holdings of its currency, excluding credits extended to
it by the IMF. Subject only to balance of payments need, a
member may draw up to the full amount of its reserve tranche
position at any time. This drawing does not constitute a use
of IMF credit, as its reserve position is considered part of the
member's foreign reserves, and is not subject to an obligation
to repay.
Credit Tranche Policies. Credits under regular facilities are made
available to members in tranches (segments) of 25 percent of
quota. For first credit tranche drawings, members must
demonstrate reasonable efforts to overcome their balance of
payments difficulties, and no phasing applies. Upper credit
tranche drawings (over 25 percent) are normally phased in
relation to certain conditions or "performance criteria."
Policy on Emergency Assistance. The IMF provides emergency
assistance by allowing members to make drawings to meet
balance of payments needs arising from sudden and
unforeseeable natural disasters and in postconflict situations.
Normally this takes the form of an outright purchase of up to
25 percent of quota provided that the member is cooperating
with the IMF. It does not entail performance criteria or a
phasing of drawings.
Debt and Debt-Service Reduction Policies. Part of a credit
extended to a member by the IMF under regular facilities can
be set aside to finance operations involving debt principal
and debt service reduction. The exact amount of the set-aside
is determined on a case-by-case basis; its availability is
generally tied to program performance.
 Regular IMF Facilities
Stand-by arrangements (SBA): designed to provide short-term
balance of payments assistance for deficits of a temporary or
cyclical nature, such arrangements are typically for 12 to 18
months. Drawings are phased on a quarterly basis, with their
release made conditional on meeting performance criteria and
the completion of periodic program reviews. Repurchases are
made 3¼ to 5 years after each purchase.
Extended Fund Facility (EFF): designed to support medium-term
programs that generally run for three years, the EFF aims at
overcoming balance of payments difficulties stemming from
macroeconomic and structural problems. Performance criteria
are applied, similar to those in stand-by arrangements, and
repurchases are made in 4½ to 10 years.
Concessional IMF Facility
Enhanced Structural Adjustment Facility (ESAF): established in
1987, and enlarged and extended in 1994. Designed for low-
income member countries with protracted balance of payments
problems, ESAF drawings are loans and not purchases of other
members' currencies. They are made in support of three-year
programs and carry an annual interest rate of 0.5 percent, with
a 5½-year grace period and a 10-year maturity. Quarterly
benchmarks and semiannual performance criteria apply; 80
low-income countries are currently eligible to use the ESAF.
Special IMF Facilities
Systemic Transformation Facility (STF): in effect from April 1993
to April 1995. The STF was designed to extend financial
assistance to transition economies experiencing severe
disruption in their trade and payments arrangements.
Repurchases are made over 4½ to 10 years.
Compensatory and Contingency Financing Facility (CCFF):
provides compensatory financing for members experiencing
temporary export shortfalls or excesses in cereal import costs,
as well as financial assistance for external contingencies in
Fund arrangements. Repurchases are made over 3¼ to 5 years.
Supplemental Reserve Facility (SRF): provides financial
assistance for exceptional balance of payments difficulties due
to a large short-term financing need resulting from a sudden
and disruptive loss of market confidence. Repurchases are
expected to be made within 1 to 1½ years, but can be
extended, with IMF Board approval, to 2 to 2½ years.
Excerpted from the Official IMF Website. Please visit www.imf.org
for more information.
 

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