Press Release No. 95/2

Press Release: Eritrea Now Eligible to Receive IMF ESAF Loans

January 10, 1995

The International Monetary Fund (IMF) has added Eritrea to the list of member countries eligible to borrow under the IMF's enhanced structural adjustment facility (ESAF). Eritrea shares characteristics--such as low per capita income, and eligibility for IDA--with those IMF members that are already eligible to borrow under the ESAF.

The ESAF is a concessional IMF lending facility for assisting eligible low-income developing members who are undertaking comprehensive programs of structural adjustment aimed at fostering sustainable growth and strengthening the external payments position. It allows the IMF to help eligible members both to implement comprehensive macroeconomic and structural reforms and to secure additional concessional financing. ESAF are disbursed over three years, loans carry an interest rate of 0.5 percent, and are repayable over 10 years, with a 5-1/2 -year grace period.

In order to qualify for ESAF loans, eligible members set out their medium-term economic and structural policy objectives, the strategy and policy measures to be followed, and the financing needs to support such a strategy, in a Policy Framework Paper (PFP) which is prepared by the national authorities, with assistance from the staffs of the IMF and the World Bank. The PFPs are updated yearly, and help to coordinate assistance from both institutions and to catalyze further financing from donors.

With the addition of Eritrea, 80 low-income members of the IMF are now eligible to borrow under the ESAF (see Attachment). As of the end of December 1994, 35 countries have made use of ESAF financing. Currently, 26 countries have economic programs supported by ESAF: Albania, Benin, Bolivia, Burkina Faso, Cambodia, Cote d'Ivoire, Equatorial Guinea, Guinea, Guyana, Honduras, Kyrgyz Republic, Lao P.D.R., Mali, Mauritania, Mongolia, Mozambique, Nepal, Nicaragua, Pakistan, Senegal, Sierra Leone, Sri Lanka, Togo, Uganda, Viet Nam, Zimbabwe. Total disbursements so far under ESAF amount to SDR 2.9 billion (about US$4.2 billion), and undisbursed balances under existing arrangements amount to SDR 1.9 billion (about US$2.8 billion).