Government requests assistance from IMF

As the country continues to recover following the December 2013 floods, the Government continues to look for ways to fund the process.

Prime Minister Dr Ralph Gonsalves, at a press conference yesterday, said earlier that morning, a letter had been sent {{more}} to the managing director of the International Monetary Fund (IMF),Christine Lagarde, to seek assistance which will “meet the urgent foreign exchange needs stemming from the disaster and ease the pressure of our balance of payments.”

Gonsalves indicated that the Government will be requesting funds through the use of the Rapid Credit Facility (RCF) and Rapid Financing Institution (RFI).

“I’m making a request for emergency financing from the IMF, amounting to 4.15 million dollars SDR – which is the special drawing rights, which we have equivalent to US$6.4 million and I’m asking for 25 per cent of our quota under the Rapid Credit Facility, which is 10 year monies, the grace period of just over five years at zero interest and the purchase of 25 per cent of our quota under the Rapid Finance Instrument which is five years with a three and a quarter year grace period at 1.13 per cent interest,” he explained.

The Prime Minister indicated that the Government had previously made use of the RCF in February and June 2011, when the country was affected by Hurricane Tomas and the April floods respectively. At the time, a request of 85 per cent of the quota was made.

“Because we have drawn a certain amount already, there is a limit on which we can draw from the RCF. This is why we are taking 25 per cent from the RCF and we are taking also from the RFI,” Gonsalves said.

According to the fact sheet on imf.org, the RCF provides low access, rapid, and concessional financial assistance to low income countries facing an urgent balance of payments need, without the need for program-based conditionality. It can provide flexible support in a wide variety of circumstances, including shocks, natural disasters, and emergencies resulting from fragility.

The fact sheet also indicates that an RFI provides rapid and low-access financial assistance to member countries facing an urgent balance of payments need, without the need to have a full-fledged program in place. It can provide support to meet a broad range of urgent needs, including those arising from commodity price shocks, natural disasters, post-conflict situations and emergencies resulting from fragility. As a single, flexible mechanism with a broad coverage, the RFI replaced the IMF’s previous policy that covered Emergency Natural Disaster Assistance (ENDA) and Emergency Post-Conflict Assistance (EPCA).