Financial Risk in the Fund and the Level of Precautionary Balances

Approved by Eduard Brau

February 03, 2004

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1. Introduction
2. Fund Financial Operations and Policies on Use of Fund Resources and Mitigating Risk
   1. The Fund's Financial Structure
   2. Fund Lending Policies
   3. Ensuring Adequate Liquidity and Buffers Against Risk
3. Fund Financial Risk and Developments in Fund Exposure
   1. Evaluating Fund Financial Risk
   2. Developments in Fund Exposure and Credit Concentration
4. The Level of Precautionary Balances
5. Conclusions
6. Issues for Discussion

Text Figures
1. Developments in Fund Credit in the GRA, 1980–2003
2. Five Largest Borrowers
3. Credit Outstanding for the Top 5 Debtors—IMF and other IFIs
4. Top Five Borrowers, 1980–2003
5. IMF One-Year Forward Commitment Capacity, 1990–2003
6. Precautionary Balances as a Percentage of Credit Outstanding—IMF and other IFIs

Text Boxes
1. The Fund's Preferred Creditor Status
2. The Financial Transactions Plan and Members' Reserve Positions in the Fund: Liquid and Riskless Claims
3. The Purposes of Precautionary Balances
4. Financial Implications of Protracted Arrears
5. Accumulating Precautionary Balances

Text Tables
1. Balance Sheet of the General Resources Account, as of October 31, 2003
2. Repurchase Expectations and Obligations
3. Charges on Use of GRA Resources
4. The Fund's Precautionary Balances in the GRA, 1990–2003

Annexes
I. International Financial Reporting Standards
II. Comparing Surcharge Income Under Credit Tranche and SRF Terms