afrol News, 22 September - International Monetary Fund (IMF) has adopted reforms for a loan programme designed to help low-income countries cope with emergencies caused by events beyond their control.

According to a statement issued today by the body, programme aims to provide assistance more quickly, and in larger amounts, to help low-income IMF members, many of them in sub-Saharan Africa, cope with events such as commodity price changes, natural disasters and conflicts and crises in neighboring countries, which disrupt trade.

Statement shows that revamp, approved by executive board on 19 September, also streamlined conditionality, commitments that borrower governments make on their economic and financial policies, attached to Exogenous Shocks Facility (ESF).

Modifications according to report respond to request from ministers at IMF's 2008 Spring Meetings.

Review of ESF will make it easier and faster for members to receive fund's support has reportedly been accelerated in light of experience and recent worsening of global economic conditions, in particular with recent episode of surging food and fuel prices that have hit low-income countries particularly hard, an IMF spokesman said.

Reports shows that key features of modified ESF include creation of a new rapid-access component under which a country could access fairly quickly, up to 25 percent of its quota for each exogenous shock, with resources normally being provided in a single disbursement.

"This component could be used on a stand-alone basis or as a first step towards high access component, along lines of current ESF, with access up to 75 percent of quota for each arrangement in normal circumstances. Resources would be provided in multiple disbursements based on reviews. This component could be used following a rapid-access component, or on a stand-alone basis," statement says.

It further shows that conditionality and requirements for access to ESF financing have been streamlined.

"Under rapid access component, member would need only to commit to appropriate policies to address shock, and in exceptional cases, to take targeted up-front measures. Under high-access component an economic programme of upper credit tranche quality would be needed," it says.

It further indicates that programme will be able to be used more flexibly in conjunction with other fund facilities and instruments, for example, with a Policy Support Instrument (PSI).

"It will also maintain a focus on impact of shock and related policies on poor in programme design, while dropping requirement for a Poverty Reduction Strategy (PRS)," statement concludes.

ESF was established two years ago to enhance fund's ability to help low-income member countries deal with sudden and exogenous shocks.

By staff writer

© afrol News

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