IMF Standby Agreement (SBA)

May 18, 2021

In times of economic crisis, countries often need financing to help them overcome their balance of payments problems. Since its creation in June 1952, the IMF’s Stand-By Arrangement (SBA) has been the lending instrument par excellence for emerging and advanced countries. The SBA was enhanced in 2009 with the Fund’s larger toolbox to be more flexible and responsive to the needs of member countries. Conditions were streamlined and simplified, and more funds were made available from the start. The reform also allows for broader high access on a precautionary basis.

Loans tailored to the needs of member countries

The SBA framework allows the IMF to respond flexibly to countries’ external financing needs and to support their adjustment policies with short-term financing.

All member countries facing actual or potential external financing needs are eligible for SBAs subject to IMF policies. However, SBAs are more often used by middle-income (and, more recently, advanced) member countries, as low-income countries have a range of concessional instruments tailored to their needs.


The duration of an SBA is flexible and typically covers a period of 12-24 months, but no longer than 36 months.

Borrowing conditions.
Access to IMF financial resources under SBAs is guided by a member country’s financing need, repayment capacity, and track record in using IMF resources. Within these guidelines, the SBA offers flexibility in terms of amounts to lend and disbursement schedule. These include:

  • Normal access. TThe SBA is one of the Fund’s many General Resources Account (GRA) loan facilities. Access to GRA resources is subject to an annual limit of 145 percent of quota for any 12 month period (temporarythere is increased to 245% of the quota until the end of 2021 as part of the Fund’s COVID-19 response), and a cumulative limit over the life of the arrangement of up to 435% of quota, net of repayments.
  • Exceptional access. Access above normal limits is decided on a case-by-case basis under the IMF’s exceptional access policy.
  • Front access. Funds can be financed upstream when the soundness of the country’s policies and the nature of its financing needs justify it.
  • Quick access. The approval of IMF loans under the SBA can be accelerated under the emergency financing mechanism. this mechanism was used during the global financial crisis.

Precautionary access.
High Access Precautionary Agreements (HAPA) are available to countries facing very large potential financing needs that do not intend to draw on the approved amounts, but retain the option to do so if they do. need.

Fewer conditions, focus on the goals

When a country borrows from the IMF, it commits to adjusting its economic policies to overcome the problems that led it to seek financing. These commitments, including conditionality, are described in the country Letter of Intent.

Building on previous efforts, the IMF has further reformed the terms of its loans which focus on measurable, observable and regularly reviewed criteria, the frequency of which is based on the strength of the country’s policies and the nature of its loans. financing needs.:

Quantitative conditions.
The progress of member countries is monitored using quantitative program targets (quantitative performance criteria and indicative targets). Disbursements from the Fund are conditional on compliance with quantitative performance criteria, unless the Board of Directors decides to waive them. Examples include targets for international reserves and public deficits or borrowing, consistent with program targets.

Structural measures. Following the elimination of structural performance criteria, progress made in the implementation of structural measures essential to the achievement of program objectives is assessed in a holistic manner, in particular by means of benchmarks.

Loan conditions


Repayments of resources borrowed under the SBA are due within 3-5 years of disbursement, meaning that each disbursement is repaid in eight equal quarterly installments starting 3¼ years after the date of each disbursement.

Loan rate.

The lending rate consists of (1) the market-determined Special Drawing Rights (SDR) interest rate – which has a minimum floor of 5 basis points – and a margin (currently 100 basis points), together called the base commission rate, and (2) surcharges, which depend on the amount and duration of the outstanding loan. A surcharge of 200 basis points is paid on outstanding credit exceeding 187.5% of the quota. If the credit remains above 187.5% of the quota after three years, this surcharge rises to 300 basis points. These surcharges are designed to discourage large and prolonged use of IMF resources.

Commitment fees.

Resources committed under all SBAs are subject to a commitment fee collected at the start of each 12-month period on amounts that could be withdrawn during the period (15 basis points for amounts committed up to at 115% of quota, 30 basis points on amounts committed above 115 percent and up to 575 percent of quota and 60 basis points on amounts exceeding 575 percent of quota). These costs are reimbursed pro rata whether the amounts are drawn during the relevant period. As a result, if the country borrows the full amount committed under an SBA, the commitment fee is fully refunded. However, no refunds are made under a precautionary SBA under which countries do not shoot.

Service charge.
A service charge of 50 basis points is applied to each amount withdrawn.

Leave a Reply

Your email address will not be published.