Washington, DC, December 15, 2023 – The International Monetary Fund (IMF) has taken a significant step to enhance support for its low-income member countries by temporarily increasing access limits under the Poverty Reduction and Growth Trust (PRGT).
The decision, made by the IMF Executive Board on December 7, involves raising the normal annual access limit to 200 percent of quota and the cumulative access limit to 600 percent of quota until the end of 2024.
The PRGT serves as the concessional lending arm of the IMF, providing financial assistance to low-income countries at zero percent interest rates. The move comes in response to the challenging and uncertain global economic environment, allowing greater flexibility in the Fund’s support to nations facing substantial balance of payments needs.
In March 2023, the IMF Executive Board initiated an interim review of PRGT access limits following substantial progress in achieving the first stage fundraising target for subsidy resources of Special Drawing Rights (SDR) 2.3 billion. The target was met in October 2023, thanks to contributions from over 40 countries.
The last review of PRGT access limits occurred in July 2021, setting normal annual and cumulative access limits at 145 and 435 percent of quota, respectively, aligned with General Resources Account (GRA) access limits at the time. However, the GRA access limits were temporarily raised to 200/600 in March 2023.
This temporary increase in PRGT access limits is expected to offer more room for maneuver in extending financial assistance to countries with significant balance of payments needs, enabling the implementation of robust economic programs that contribute to sustainable economic positions and inclusive growth.
The Executive Directors of the IMF welcomed the achievement of reaching the SDR 2.3 billion first-stage target for PRGT subsidy resources and approved the proposal to raise the annual and cumulative access limits temporarily until the end of 2024. The decision includes a per arrangement cap on PRGT resources under the blending policy.
The increased access limits aim to address the challenges faced by low-income countries in an uncertain global economic landscape, where policy buffers are diminished, and financing conditions are tight. The move is anticipated to meet the heightened need for concessional financial support as these countries undertake necessary macroeconomic adjustments.
While most Directors supported the temporary increase in access limits, some emphasized the importance of maintaining the catalytic role of Fund financing. Additionally, discussions touched on the alignment of PRGT and GRA access limits, with various Directors holding different perspectives on this matter.
The IMF plans to conduct a comprehensive Review of the Fund’s Concessional Facilities and Financing in the fall of 2024. This review will encompass facilities, including access limits, and PRGT financing, with a focus on ensuring the long-term financial sustainability of the trust.
In light of these changes, the IMF underscores the importance of evaluating access for individual cases based on merit, considering factors such as the strength of policies, the level of access sought, and debt sustainability. The Board will also closely monitor the impact of the increased PRGT access limits and provide safeguards to mitigate risks.
The IMF expects to present staff proposals early next year, supported by thorough analysis, to extend the temporarily higher GRA access limits through the end of 2024. This extension will allow sufficient time to develop a comprehensive review of access limits that may coincide with any quota increase approved by the Board of Governors under the Sixteenth General Review of Quotas. Some Directors emphasized the need to assess the extension of higher GRA access limits on its own merits.
