The finance ministry yesterday confirmed that Namibia has applied to the International Monetary Fund (IMF) for a N$4.5 billion loan, through the institution’s Rapid Financing Instrument (RFI). The IMF on Monday approved a US$4.3 billion loan for neighbouring South Africa after the institution recently made US$50 billion available to help countries tackle the Covid-19 pandemic. 

“Yes, I can confirm that we submitted an application to the IMF last week. We will assess the terms and conditions to see if they are favourable to Namibia,” said finance ministry spokesperson, Tonateni Shidhudhu. 
The IMF’s RFI provides rapid financial assistance, which is available to all member countries facing an urgent balance of payments need, and was created as part of a broader reform to make financial support more flexible to address the diverse needs of member countries. The RFI, which can be used in a wide range of circumstances, replaced the IMF’s previous emergency assistance policy. 

According to the IMF’s website, the RFI provides rapid and low-access financial assistance to member countries facing an urgent balance of payments need, without the need to have a full-fledged program in place. 

“It can provide support to meet a broad range of urgent needs, including those arising from commodity price shocks, natural disasters, conflict and post-conflict situations, and emergencies resulting from fragility,” the IMF states. 
The RFI is available to all member countries, although member countries eligible for the Poverty Reduction and Growth Trust are more likely to use the similar concessional Rapid Credit Facility (RCF). 

“The RFI is designed for situations where a full-fledged economic program is either not necessary nor feasible. The former situation may arise when the shock is transitory and limited in nature, while the latter may arise when the member’s policy design or implementation capacity is limited, including due to the urgent nature of the balance of payments need or to fragilities,” the fund explains. 
In response to members’ large and urgent Covid-19-related financing needs, the IMF has temporarily increased access limits under the regular window of the RFI from 50% to 100% of quota per year, and from 100% to 150% of quota on a cumulative basis, net of scheduled repurchases. The higher access limits will apply for an initial six-month period, from April 6, 2020 to October 5, 2020, and may be extended by the IMF’s Executive Board. 

“The access limits under the large natural disaster window remain unchanged at 80 percent of quota per year and 133.33 percent of quota on a cumulative basis, for use in cases where the damage suffered is assessed to be 20 percent of GDP or more, and the member’s existing and prospective policies are sufficiently strong to address the natural disaster shock. The level of access in individual cases depends on the country’s balance of payments need, capacity to repay, the member’s outstanding fund credit and its record of using fund resources in the past,” reads the fund’s website. 

Financial assistance provided under the RFI is subject to the same financing terms as the IMF’s Flexible Credit Line, the Precautionary and Liquidity Line and Stand-By Arrangements, and should be repaid within three and a half to five years.
The IMF further explained that while financing under the RFI is often a one-off purchase in the case of an urgent balance of payments need of limited duration, there is scope for repeated use. 

“A repeated use of the RFI within any three-year period is possible if the balance of payments need is caused primarily by an exogenous shock, or the country has established a track record of adequate macroeconomic policies, including through a staff monitored program, prior to the request,” the IMF states. 
The IMF assists countries hit by crises by providing them financial support to create breathing room as they implement adjustment policies to restore economic stability and growth. It also provides precautionary financing to help prevent and insure against crises.