18. The IMF SupplementalReserve Facility (SRF)
On December 17, 1997, the InternationalMonetary Fund (IMF) Board approved the establishment of the SupplementalReserve Facility (SRF), the principal features of which are outlinedbelow.
| Purpose | SRF has been put in place to provide financial assistance to a member country experiencing exceptional balance of payments difficulties due to a large short-term financing need resulting from a sudden and disruptive loss of market confidence reflected in pressure on the capital account and the member's reserves. When approving a request for the SRF, the IMF will take into account the financing provided by other creditors. In order to minimize moral hazard, a member using IMF resources under the SRF would be encouraged to seek to maintain participation of creditors, both official and private. |
| Relation to Conventional Facilities | Financing under the SRF will be available in the form of additional resources under a Stand-By or Extended Arrangement. |
| Assistance Amount | The amount of assistance is determined taking into account the need and the IMF's liquidity, and is not subject to the access limits as in the case of conventional assistance. |
| Period of Commitment | The assistance will be committed for up to one year. It is normally available in two or more tranches. The first tranche will be available immediately upon approval of the assistance. |
| Repayment | Borrowers are expected to repay within one year to 18 months of each disbursement. This period can be extended for a maximum of one year by decision of the IMF Board. |
| Fees: (Interest) | During the first 12 months after approval of assistance, the borrowers will pay a surcharge of 300bp above the rate of charge on regular IMF loans. Thereafter, the fee is increased by 50 bp at the end of first 12 months and every six months thereafter, up to a maximum of + 500 bp. Note: Average fee for regular IMF loans during 1997 was approximately 4.7%. |
Reference: On December 17, 1997,South Korea altered its previous request and asked to make disbursementsbetween December 18, 1997 and December 17, 1998, under the termsof the SRF instead of the SBA. The IMF Board approved this inits meeting on December 18, 1997. As a result, South Korea willreceive an assistance of 9.95 billion SDR ($13.5 billion) underthe SRF.