IMF's Stand-By Arrangement

timer
1 min read
IMF's Stand-By Arrangement Blog Image

Overview:

The International Monetary Fund has approved an immediate disbursal of USD 1.1 billion to Pakistan as part of a bailout package supported by the IMF's Stand-By Arrangement (SBA).

About IMF's Stand-By Arrangement: 

  • The Stand-by Arrangement (SBA) provides short-term financial assistance to countries facing balance of payments problems.
  • Historically, it has been the IMF lending instrument most used by advanced and emerging market countries.
  • Eligibility: All member countries facing actual or potential external financing needs. Most often used by advanced and emerging market countries, but low-income countries sometimes use the SBA together with the Standby Credit Facility (SCF).
  • Conditionality
    • Countries’ economic policies must address the problems that led the country to seek funding. 
    • Disbursements conditional on the observance of quantitative performance criteria.
    • Progress in implementing structural measures that are critical to achieving the objectives of the program is assessed in a holistic way, including via benchmarks.
  • Duration of the assistance: Flexible. Typically covers a period of 12–24 months, but not more than 36 months.

Key facts about IMF

  • It fosters economic growth and employment by providing temporary financial assistance to countries to help ease the balance of payments adjustment and technical assistance.
  • Foundation: Formed in 1944 at the Bretton Woods Conference with the goal of reconstructing the international monetary system.
  • Important Reports: World Economic Outlook and Global Financial Stability Report
  • Headquarters: Washington, DC, USA

Q1: What is a Stand-by Credit Facility?

The Stand-by Credit Facility (SCF) provides financial assistance to low-income countries (LICs) with short-term balance of payments needs. The SCF is one of the facilities under the Poverty Reduction and Growth Trust (PRGT).

Source: IMF approves immediate disbursal of USD 1.1 billion loan tranche to Pakistan