‘’Rapid Financing Instrument’’ and ‘’Rapid Credit Facility’’ are related to the provisions of lending by which one of the following?

UPSC Prelims 2022 Question:

‘’Rapid Financing Instrument’’ and ‘’Rapid Credit Facility’’ are related to the provisions of lending by which one of the following?

a) Asian Development Bank

b) International Monetary Fund

c) United Nations Environment Programme Finance Initiative

d) World Bank

Correct Answer: Option b) International Monetary Fund

Let's learn more about Rapid Financing Instrument and Rapid Credit Facility given below.

Explanation:

Rapid Financing Instrument

• The Rapid Financing Instrument (RFI): It is a lending facility of the International Monetary Fund (IMF) whichprovides rapid financial assistance. It is available to all 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. The RFI replaced the IMF’s previous emergency assistance policy and can be used in a wide range of circumstances.

Rapid Credit Facility

• The Rapid Credit Facility (RCF) is a concessional policy under which the International Monetary Fund (IMF) provides financial assistance to low-income countries (LICs) facing an urgent balance of payments need 1. The RCF was introduced under the Poverty Reduction and Growth Trust (PRGT), making this facility more refined with broader coverage 1. The RCF provides financial help to its member LIC countries regarding commodity price shocks, economic disruptions, or in case of a large natural disaster . This policy is only available for the nations that come under the Poverty Reduction and Growth Trust (PRGT) . The access to RCF of any nation is decided on the basis of its economic strength, capacity to repay funds, macroeconomic policies, underlying pending payments of nations, their present economic condition, and poverty.

Therefore, option (b) is the correct answer.

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