The Acting Chair’s Summing Up—Review of the Flexible Credit Line, the Precautionary and Liquidity Line, and the Rapid Financing Instrument—Specific Proposals—Annex,

Executive Board Meeting 14/53, June 11, 2014

Executive Directors discussed Annex I of the May 2014 Board paper on the Review of the Flexible Credit Line, the Precautionary and Liquidity Line, and the Rapid Financing Instrument—Specific Proposals (SM/14/113 and Supplement 2). Most Directors broadly supported the presentation of the FCL and PLL Qualification Assessment Framework, as elaborated in Annex I.

Most Directors supported the presentation of indicators of institutional strength in Annex I, stressing that staff should exercise judgment when using these indicators and in consultation with authorities. A number of Directors remained unconvinced of the proposal to use additional indicators, which in their view have methodological shortcomings. Reflecting these and other concerns, and following further discussion, Directors agreed not to endorse the International Country Risk Guide indicators. Given the concern by some Directors about the placement of the indicators on fiscal and monetary policy cyclicality under the relevant qualification criteria, Directors could go along with moving these indicators to paragraph six of the Annex where the new institutional strength indicators are described.

Most Directors supported the inclusion of the metric for assessing the adequacy of reserves (ARA metric) in Annex I, acknowledging its increasing use in past documents along with other measures of reserve adequacy. A few Directors had reservations, on grounds that this addition was not explicitly discussed in the main text of the May 2014 Board paper. These Directors cautioned that the ARA metric should not substitute for an in-depth country-specific analysis of reserve adequacy.

BUFF/14/56

June 18, 2014