(Ecofin Agency) – Since 1997, the IMF has imposed additional fees on countries that exceed the thresholds set for outstanding loans or the repayment period of loans. This mechanism has been widely criticized by economists and developing countries because of its contribution to increasing the debt burden.
The International Monetary Fund (IMF) announced, on Friday, October 11, the completion of a review of its policy on commissions and additional commissions, which will reduce the rates applied to loans and allow eight countries, including Benin , Ivory Coast, Senegal and Gabon, to no longer pay additional costs linked to exceeding their quota from next November.
The IMF applies two types of additional fees, also called surcharges, to countries that exceed the thresholds set for the outstanding credits or the repayment period of their loans. These are additional commissions based on the quota when the sum of credits granted to a State exceeds 187.5% of the quota and surcharges applied to loans from a country exceeding 187.5% of the quota. -share, not repaid after 36 months or 51 months, depending on the type of credit granted by the IMF.
Commitment fees are also levied at the start of each 12-month period on the amounts that can be drawn during the period (15 basis points on the amounts committed up to 115% of the quota, 30 basis points on the amounts committed up to 115% of the quota, 30 basis points on basis on commitments between 115% and 575% of the quota and 60 basis points on amounts exceeding 575% of the quota). These commissions are refunded pro rata if the amounts are drawn during the period in question. If a country borrows the entire amount, the commission is fully refunded. This system thus increases the burden of debt payments.
The Fund specified in an explanatory note that the reforms adopted following the review of its policy on commissions and additional commissions relate to the reduction of the interest rate on special drawing rights (SDR) to 60 basis points against 100 basis points currently, the increase in the threshold from which commissions based on the amount of the loan apply to 300% of the quota against 187.5% currently, the lowering of surcharges based on exceeding the repayment period at 75 basis points compared to 100 basis points currently and the increase in the commitment commission threshold to 200% of the annual quota and 600% of the cumulative quota compared to 115% and 575 % of quota currently.
The institution also indicated that of the 52 countries which currently have access to the IMF’s general resources account (CRG), 19 are subject to additional fees. When the new reforms come into force on November 1, 2024, the number of countries paying additional taxes will fall from 19 to 11. Eight countries will not be subject to surcharges, because their outstanding credits will be below the new threshold (300% of quota): Benin, Ivory Coast, Gabon, Senegal, Georgia, Moldova, Sri Lanka and Suriname.
For fiscal year 2026, the IMF forecasts that 20 countries would have been subject to surcharges before this revision. With the new reforms approved, the number of countries paying additional fees is expected to drop to 13.
“In a challenging global environment and at a time of high interest rates, our member countries have reached consensus on a comprehensive set of measures that both significantly reduce the cost of borrowing and preserve the financial capacity of the IMF to help countries in need. The approved measures will reduce member countries’ borrowing costs from the IMF by 36%, or an amount of approximately $1.2 billion per year.commented the General Director of the Fund, Kristalina Georgieva (photo), in a statement published following the completion of the reform. And to add: “Although they have been significantly reduced, additional fees and charges remain an essential part of the IMF’s cooperative lending and risk management framework, under which all member countries must contribute and can benefit from support in case of need ».
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