Eligibility. All Member States facing real or potential external financing needs are eligible for IMF policy SBAs. However, SBA are more often used by middle-income (and more recently advanced) Member States, as low-income countries have a number of concession instruments tailored to their needs. Service charges. For each amount drawn, a service fee of 50 basis points is charged. The IMF Confirmation Agreement is an international monetary fund (IMF) economic programme that provides financial assistance to a member state in need of financial assistance that normally results from a financial crisis. In return for aid, the economic programme provides for the necessary reforms in the recipient country, which aim to put it back on the path of financial stability and economic viability. The SBA is a subset of imf and World Bank programs for structural adjustment. Commitment fees. For appropriations committed in all SBAs, a commitment fee is levied at the beginning of each 12-month period on amounts that could be drawn during the period (15 basis points for amounts committed up to 115% of the ratio, 30 basis points for amounts committed above 115% and up to 575% of the quota and 60 basis points for amounts greater than 575% of the quota).
These royalties are reimbursed on a pro-rata basis if the amounts are deducted during the relevant period. Therefore, if the country borrows the entire amount committed under an SBA, the commitment fee is fully repaid. However, reimbursement is not made as part of a precautionary SBA under which countries do not travel. Terms of credit . Access to IMF funds under the SBAs is guided by the need for financing, repayment capacity and a balance sheet of IMF resources. Under these guidelines, the SBA provides flexibility in loan amounts and the date of disbursement. These include the credit interest rate. The loan rate includes (1) the Merchant Special Draw Interest Rate (SDR), which has a minimum floor of 5 basis points, and a margin (currently 100 basis points), known as base interest rates, and (2) mark-ups that depend on level and time pending. An increase of 200 basis points out of 187.5% of the quota is paid on the amount of the outstanding. If the credit remains above 187.5 per cent of the quota after three years, this increase will increase to 300 basis points.
These increases are intended to prevent significant and prolonged use of IMF resources. Refund. Repayment of funds borrowed under the SBA is due within 31-4-5 years of payment, i.e. each payment is repaid in eight equal quarterly tranches from 31.4 years after the date of each payment. The IMF Confirmation Agreement was established in June 1952 to finance countries in need of assistance in the event of balance-of-payments problems. The SBA has often been used by member countries and is the IMF`s dominant credit instrument, particularly for emerging countries. After a major interruption of this aid, the financial crisis that erupted in 2008 led many countries to need such financial assistance from the IMF. Financing conditions are generally more favourable than private markets.
In 2009, the IMF upgraded the SBA „to be more flexible and meet the needs of member states.“ At the same time, credit limits have been doubled and more resources have been allocated upstream.
