Unlike development banks, the IMF does not lend for specific projects. Instead, the IMF provides financial support to countries hit by crises to create breathing room as they implement policies that restore economic stability and growth.
It also provides precautionary financing to help prevent crises. IMF lending is continuously refined to meet countries’ changing needs.
Provisions of lending by the IMF
Standby Credit Facility: The Standby Credit Facility (SCF) provides financial assistance to low-income countries (LICs) with short-term balance of payments needs. The SCF was created under the Poverty Reduction and Growth Trust (PRGT) as part of a broader reform to make the Fund’s financial support more flexible and better tailored to the diverse needs of LICs, including in times of shocks or crisis.
Stand-By Arrangement (SBA): In an economic crisis, countries often need financing to help them overcome their balance of payments problems. Since its creation in June 1952, the IMF’s Stand-By Arrangement (SBA) has been the workhorse lending instrument for emerging and advanced market countries. The SBA was upgraded in 2009 along with the Fund’s broader toolkit to be more flexible and responsive to member countries’ needs. Conditions were streamlined and simplified, and more funds were made available up front. The reform also enables broader high-access on a precautionary basis.
Rapid Financing Instrument (RFI): The Rapid Financing Instrument (RFI) provides rapid financial assistance, which is available to any IMF member countries facing an urgent balance of payments need. The RFI was created as part of a broader reform to make the IMF’s financial support more flexible to address the diverse needs of member countries and can be used in a wide range of circumstances.
Extended Fund Facility (EFF): When a country faces serious medium-term balance of payments problems because of structural weaknesses that require time to address, the IMF can assist through an Extended Fund Facility (EFF). Compared to assistance provided under the Stand-by Arrangement, assistance under an extended arrangement features longer program engagement—to help countries implement medium-term structural reforms—and a longer repayment period.
Rapid Credit Facility (RCF): The Rapid Credit Facility (RCF) provides rapid concessional financial assistance to low-income countries (LICs) facing an urgent balance of payments need with no ex-post conditionality where a full-fledged economic program is neither necessary nor feasible. The RCF was created under the Poverty Reduction and Growth Trust (PRGT) as part of a broader reform to make the Fund’s financial support more flexible and better tailored to the diverse needs of LICs, including in times of crisis.
Flexible Credit Line (FCL): The Flexible Credit Line (FCL) was designed to meet the demand for crisis-prevention and crisis-mitigation lending for countries with very strong policy frameworks and track records in economic performance. This instrument was created as part of IMF reforms for lending to countries facing a cash crunch. The aim was to tailor lending to the diverse needs and circumstances of member countries. To date, five countries—Chile, Colombia, Mexico, Peru and Poland—have had FCL arrangements. The FCL has provided a valuable backstop for these countries, and helped boost market confidence during a period of heightened risks.
Short-term Liquidity Line (SLL): The Short-term Liquidity Line (SLL) is designed to be a liquidity backstop for members with very strong policy frameworks and fundamentals, who face potential, moderate, short-term liquidity needs because of external shocks that generate balance of payment difficulties.
Precautionary and Liquidity Line (PLL): The Precautionary and Liquidity Line (PLL) is designed to flexibly meet the liquidity needs of member countries with sound economic fundamentals but with some remaining vulnerabilities that preclude them from using the Flexible Credit Line (FCL). To date, three countries, the Republic of North Macedonia, Morocco, and Panama have used the PLL.
Resilience and Sustainability Facility (RSF): The Resilience and Sustainability Facility (RSF) complements the existing IMF lending toolkit by helping low-income and vulnerable middle-income countries address longer-term challenges, including those related to climate change and pandemic preparedness. The RSF was created under the Resilience and Sustainability Trust (RST)to provide policy support and affordable longer-term financing to strengthen members’ resilience and sustainability, and contribute to prospective balance of payments stability.
Policy Support Instrument: For policy advice and signaling, countries may request non financial assistance under the Policy Support Instrument (PSI), which helps LICs that are in a broadly stable macroeconomic position and thus not in need of IMF financial assistance. The PSI can expedite access to the SCF if needed.
Policy Coordination Instrument (PCI): The Policy Coordination Instrument (PCI) is a non-financing instrument open to all members of the International Monetary Fund (IMF). It was established in the context of strengthening the global financial safety net, allowing users to signal commitment to reforms and catalyze financing from other sources
