“Rapid Financing Instrument” and “Rapid Credit Facility” are related to the provisions of lending by which one of the following?

[UPSC Civil Services Exam – 2022 Prelims]

(a) Asian Development Bank

(b) International Monetary Fund

(c) United Nations Environment Programme Finance Initiative

(d) World Bank

Answer: (b)        

Explanation:

Rapid Financing Instrument (RFI):

• Provides quick financial assistance to member countries facing urgent balance of payments needs.
• Created as part of a broader IMF reform to make financial support more flexible for diverse member country needs.
• Replaced the IMF’s previous emergency assistance policy.
• Can be used in a wide range of circumstances.

Rapid Credit Facility (RCF):

• Provides rapid concessional financial assistance to low-income countries (LICs) facing urgent balance of payments needs.
• Created under the Poverty Reduction and Growth Trust (PRGT) as part of a broader IMF reform to make financial support more flexible for diverse LIC needs, including during crises.
• No ex-post conditionality is required where a full-fledged economic program is neither necessary nor feasible for LICs.