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UPSC Prelims 2022

Rapid Financing Instrument (RFI) and Rapid Credit Facility (RCF) of IMF

Prelims General Studies Paper - 1

Nov 05, 2022

2 min read

Question (Prelims 2022)

‘’Rapid Financing Instrument’’ and ‘’Rapid Credit Facility’’ are related to the provisions of lending by which one of the following?

Options

A. International Monetary Fund

B. Asian Development Bank

C. United Nations Environment Programme Finance Initiative

D. World Bank

Correct Answer : A. International Monetary Fund

Explanation

The Rapid Financing Instrument (RFI) provides rapid and low-access financial assistance to any qualifying member country facing urgent balance of payments needs that, if not addressed, would result in an immediate and severe economic disruption. It can provide support to meet a broad range of needs, including those arising from commodity price shocks, natural disasters, conflict and post-conflict situations, emergencies resulting from fragility, and food shocks.

The Rapid Credit Facility (RCF) provides rapid concessional financial assistance to low-income countries (LICs) facing an urgent balance of payments need with no ex-post conditionality where a full-fledged economic program is neither necessary nor feasible. The RCF was created under the Poverty Reduction and Growth Trust (PRGT) as part of a broader reform to make the Fund’s financial support more flexible and better tailored to the diverse needs of LICs, including in times of crisis.

Source/Image: International Monetary Fund

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