The different forms of IMF assistance are given below. Identify the one which is mainly meant for Less Developed Countries (LDCs)
Structural Adjustment Facility
The IMF provides finance through several windows that differ in purpose, terms and eligible members.
Credit tranche drawings are the regular use of Fund resources open to all members, with conditions stiffening in the upper tranches. They are not reserved for any group of countries.
The Extended Fund Facility (1974) gives larger finance, repayable over a longer period, to any member with structural balance of payments problems; it is on non-concessional terms and open to all members.
The Compensatory Financing Facility (1963) helped any member facing a temporary shortfall in export earnings (and later a rise in cereal import costs) for reasons beyond its control. Primary-producing developing countries used it often, but it was open to all members on ordinary terms and was not designed only for poorer countries.
The Structural Adjustment Facility (1986) was created to give concessional loans, at 0.5% interest with long repayment periods, only to low-income developing members eligible for IDA assistance, in support of medium-term structural adjustment programmes. It was later followed by the Enhanced SAF (1987), the Poverty Reduction and Growth Facility (PRGF, 1999) and the Extended Credit Facility (2010). Being meant for the poorest members, it is the facility mainly meant for LDCs.
Hence, Structural Adjustment Facility.
Similar Questions
Any country consistently facing balance of payment deficiency can approach :
The instrument chosen for enhancement of international liquidity is :
Assertion (A) : The member nations, consistently finding balance of payments crisis, may approach the World Bank seeking financial accommodation to mitigate the cirsis.
Reasoning (R) : The member nations facing balance of payments crisis can approach the IMF seeking redressal of the BOP crisis.
Codes :
Important Questions from IMF
- IMF provides __________ assistance to correct the Balance of payment disequilibrium of member countries.
- Which one among the following is not correct ?
- Statement (I) : Developing countries can borrow more than their quota under Extended Fund Facility (EFF) of IMF.
Statement (II) : The Extended Fund Facility (EFF) was created in 1984 to help the developing countries over longer period upto 3 years. Match the items of List – I with those of List – II with regard to international monetary fund’s various schemes :
List – I List – II a. Extended Fund Facility (EFF) i. Repayment period 4 to 10 years b. Stan Arrangements ii. Repayment period 3 to 5 years c. Supplemented Reserve Fund (SRF) iii. Repayment period 2 to 5 years d. Poverty Reduction and Growth Facility (PRGF) iv. Repayment period 10 years Codes :
Any country consistently facing balance of payment deficiency can approach :
