Match the following pairs with reference to International Monetary Fund (IMF):
IMF Instrument Purpose
A. Stand-By Arrangement 1. Support for low-income countries
B. Extended Fund Facility 2. Address medium-term balance issues
C. Rapid Financing Instrument 3. Provide quick assistance
D. Extended Credit Facility 4. Short-term financial support
Select the correct answer using the code given below:
(a) A-4, B-2, C-3, D-1
(b) A-3, B-1, C-2, D-4
(c) A-1, B-4, C-2, D-3
(d) A-2, B-3, C-1, D-4
Explanation
1. Stand-By Arrangement (SBA) provides short-term financial assistance to countries facing balance of payments problems. Historically, it has been the IMF lending instrument most used by advanced and emerging market countries. Through the years, the SBA has been upgraded to be more flexible and responsive to countries’ needs, and can also serve as a precautionary arrangement.
2. Extended Fund Facility provides financial assistance to countries facing serious medium-term balance of payments problems because of structural weaknesses that require time to address. To help countries implement medium-term structural reforms, the EFF offers longer program engagement and a longer repayment period.Extended Credit Facility: Support for low-income countries.
3. Rapid Financing Instrument provides prompt financial assistance to any IMF member country facing an urgent balance of payments need. The RFI is one of the facilities under the General Resources Account (GRA) that provide financial support to countries, including in times of crisis.
4. Extended Credit Facility provides medium-term financial assistance to low-income countries (LICs) with protracted balance of payments problems. The ECF is one of the facilities under the Poverty Reduction and Growth Trust (PRGT).
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