“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.
