Extended Fund Facility

When a country faces serious medium-term balance of payments problems because of structural weaknesses that require time to address, the IMF can assist through an Extended Fund Facility (EFF). Compared to assistance provided under the Stand-by Arrangement, assistance under an extended arrangement features longer program engagement—to help countries implement medium-term structural reforms—and a longer repayment period.

The EFF was established to provide assistance to countries experiencing serious payment imbalances because of structural impediments or slow growth and an inherently weak balance-of-payments position. An EFF provides support for comprehensive programs including the policies needed to correct structural imbalances over an extended period.

As structural reforms to correct deep-rooted weaknesses often take time to implement and bear fruit, EFF engagement and repayment cover longer periods than most Fund arrangements. Extended arrangements are typically approved for periods of three years, but may be approved for periods as long as 4 years to implement deep and sustained structural reforms. Amounts drawn under an EFF are to be repaid over 4½–10 years in 12 equal semiannual installments. By contrast, credits under a Stand-By Arrangement (SBA) are repaid over 3¼–5 years.

When a country borrows from the IMF, it commits to undertake policies to overcome economic and structural problems. Under an EFF, these commitments, including specific conditions, are expected to have a strong focus on structural reforms to address institutional or economic weaknesses, in addition to policies to maintain macroeconomic stability. The IMF’s Executive Board regularly assesses program performance and can adjust the program to adapt to economic developments.

As with other IMF lending, the size of borrowing under an EFF is guided by a country’s financing needs, capacity to repay, and track record with past use of IMF resources.

The EFF is one of several lending facilities under the IMF’s General Resource Account (GRA). Access to GRA resources is subject to the normal limit of 145 percent annually of a country’s IMF quota [1] (temporarily increased to 245 per cent of quota through end 2021 as part of the Fund’s COVID-19 response), and a cumulative limit in all outstanding exposure to the GRA over the life of the program of 435 percent of its quota, net of scheduled repayments. IMF quota broadly reflects a country’s position in the global economy.

Access above normal limits is decided on a case-by-case basis under the IMF’s Exceptional Access policy. EFFs generally are not formulated on a precautionary basis in anticipation of a future balance of payments problem.

IMF