IMF temporarily hikes limits on members’ annual, cumulative access to its resources

The Executive Board of the International Monetary Fund (IMF) has agreed to temporarily increase the limits on members’ annual and cumulative access to Fund resources in the General Resources Account (GRA).

“These changes are intended to better support the Fund’s members in a particularly challenging and uncertain economic environment,” the IMF said in a statement on Monday.

As per the lender, IMF’s lending is subject to both an annual and a cumulative limit on a member’s access to the Fund’s general resources. Access to resources beyond these limits is subject to the requirements of the Fund’s exceptional access framework.

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“The access limits for the GRA were last set in 2016, with an annual limit of 145% of quota and a cumulative limit of 435% of quota.

“Today’s decision raises the annual limit in the GRA to 200% of quota and the cumulative limit to 600% of quota for a period of 12 months,” said IMF.

The IMF was of the view that these changes will provide member countries—particularly emerging markets and developing economies—that face increased financing pressures and vulnerabilities to access with higher Fund financial support without triggering the exceptional access framework.

“If circumstances warrant, staff would re-engage the Executive Board before the end of the 12-month period on a proposal to maintain for longer the higher GRA access limits,” it said.

A number of developing countries including Pakistan remain engaged with the IMF for a bailout programme.

The resumption of the IMF programme is crucial for Pakistan, which is facing a balance of payment crisis. The country’s central bank foreign exchange reserves stand at a mere at $3.81 billion, not enough to cover a month of essential imports.

However, Pakistan’s IMF programme has remained stalled since last year as it moves to implement prior conditions to satisfy the Washington-based lender.

At the same time, Sri Lanka, which defaulted on its entire external debt last year in April, is also looking to jump through obstacles to a long-awaited IMF bailout.

Meanwhile, the IMF’s Executive Board also discussed possible changes in access limits under the Poverty Reduction and Growth Trust (PRGT), the Fund’s concessional financing arm.

“PRGT access limits were last raised by 45% in 2021, bringing them into alignment with GRA access limits for the first time,” said IMF, adding that the demand for PRGT resources has increased sharply and is expected to grow further given successive shocks.

“The IMF is working closely with members to fill this gap,” it said.