IMF Approves Third Annual PRGF for Albania

The International Monetary Fund (IMF) today approved the third annual arrangement for Albania under the Poverty Reduction and Growth Facility (PRGF)¹ in an amount equivalent to SDR 11.76 million (about US$ 15.7 million) to support the government's economic program. The approval included an extension of the commitment period to July 31, 2001, from the original expiration date of May 12, 2001. The first loan under the third annual arrangement, in an amount equivalent to SDR 2.35 million (about US$ 3.1 million) will be available on July 31, 2000, at the request of Albania.

The country's three-year PRGF, originally under ESAF, was first approved in May 1998 and commitments, including an augmentation approved in June 1999, now total an amount equivalent to SDR 45.04 million (about US$ 60.2 million), of which Albania has drawn SDR 33.284 million (about US$ 44.5 million).

The Executive Board approval was on a lapse of time basis, given its recent discussions on June 9, 2000 on the second review of the second annual arrangement (see News Brief No. 00/43) and the Article IV Consultation (see Public Information Notice No. 00/43).

¹On November 22, 1999, the IMF's concessional facility for low-income countries, the Enhanced Structural Adjustment Facility (ESAF), was renamed the Poverty Reduction and Growth Facility (PRGF), and its purposes were redefined. It is intended that PRGF-supported programs will in time be based on country-owned poverty reduction strategies adopted in a participatory process involving civil society and development partners, and articulated in a poverty reduction strategy paper (PRSP). This is intended to ensure that each PRGF-supported program is consistent with a comprehensive framework for macroeconomic, structural, and social policies to foster growth and reduce poverty. At this time for the Kyrgyz Republic, work is beginning on a participatory process, including a government sponsored workshop in February, and subsequent to this an interim PRSP will be developed. It is understood that all policy undertakings in the interim PRSP beyond the first year are subject to reexamination and modification in line with the strategy that is to be elaborated in the PRSP. Once completed and broadly endorsed by the Executive Boards of the IMF and World Bank, the PRSP will provide the policy framework for future reviews under this PRGF arrangement. PRGF loans carry an interest rate of 0.5 percent a year, and are repayable over 10 years with a 5 ½-year grace period on principal payments.