Previous Year Question

The Rapid Financing Instrument—RFI and the Rapid Credit Facility—RCF are both emergency financing facilities of the International Monetary Fund—IMF. They provide quick financial assistance to countries facing an urgent Balance of Payments need.

Rapid Financing Instrument—RFI

The RFI is available under the IMF’s General Resources Account—GRA.

Its main features are:

• It is available to any eligible IMF member country.

• It addresses an urgent Balance of Payments need that is sudden and limited in duration.

• Assistance is generally provided through a single disbursement.

• A full-fledged IMF programme and regular programme reviews are not required.

• It has no ex-post programme-based conditionality, although the IMF may require certain prior actions.

• Repayment is generally due within 3¼ to 5 years.

• It is not a concessional or interest-free facility; GRA-related charges apply.

The RFI can be used in circumstances such as natural disasters, commodity-price shocks, domestic instability and other economic emergencies.

Rapid Credit Facility—RCF

The RCF is a concessional financing facility available to low-income countries through the IMF’s Poverty Reduction and Growth Trust—PRGT.

Its main features are:

• It is available only to PRGT-eligible low-income countries.

• It provides rapid concessional assistance for an urgent Balance of Payments need.

• Assistance is provided through a single disbursement.

• It also does not require regular programme reviews or ex-post programme-based conditionality.

• It has a grace period of 5½ years and a final maturity of 10 years.

• Its lending terms depend upon the PRGT interest-rate category applicable to the country.

Principal difference

Current position: According to the IMF, both the RFI and RCF remain available. Their temporary Food Shock Window expired in March 2024, but the underlying RFI and RCF facilities were not discontinued.