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Caribbean countries could benefit from new IMF initiative

Wednesday, April 25, 2018

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WASHINGTON, United States (CMC) — The International Monetary Fund (IMF) says it is adapting its framework for providing support to Caribbean and other low income countries (LICs) amid rising vulnerabilities.

The Washington-based financial institution in a statement Tuesday said despite a global economic upswing, many LICs continue to face difficult fiscal and external positions, aggravated by increasing debt levels and natural disasters in many countries.

It said in this context, the IMF executive board had approved in May last year, higher annual access limits under the Rapid Credit Facility (RCF) for balance of payment needs arising from large natural disasters.

It said it had also agreed to keep the list of Poverty Reduction and Growth Trust (PRGT)-eligible countries unchanged notwithstanding rising per capita income levels.

The IMF said a comprehensive review of PRGT facilities is underway to consider potential adaptations of program modalities and access policies.

PRGT demands in 2017 was above the historical average for the third year in a row and the IMF said that new commitments totalled in excess of US$1.7 billion, the highest level since the global financial crisis. “Demand is expected to moderate somewhat in 2018. Longer-term demand estimates are broadly unchanged from last year's update, and remain generally consistent with the self-sustaining PRGT financing framework adopted in 2012.”

The IMF said that loan resources have been successfully replenished, while subsidy contributions remain somewhat below pledged amounts.

“The PRGT self-sustained capacity remains intact. The PRGT's self-sustained long term average annual lending capacity is estimated at SDR 1.31 billion (US$1.44 cents) , broadly unchanged from last year' estimate. While capacity estimates are sensitive to a variety of factors, they remain relatively close to the target of SDR 1 billion under a number of shocks,” the IMF said.

It said that the Catastrophe Containment and Relief Trust (CCR Trust) remains underfunded.

“Funding is below the original targeted amount of new bilateral contributions totalling US$150 million, and the gap is more sizeable when considering the increase of members' quotas under the 14th General Review of Quotas. To meet funding needs for future qualifying catastrophe relief, it is important that countries with outstanding pledges fulfill their commitments and for additional countries to come forward.

“Additional financing would be required to provide debt relief to members with protracted arrears. Debt relief under the Heavily Indebted Poor Counties (HIPC) Initiative is winding up, with only two potentially eligible countries left with outstanding Fund credit,” the IMF added.

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