International Organizations (Part – III)

The reserve tranche represents the member's unconditional drawing right on the IMF, created by the foreign exchange portion of the quota subscription, plus increase (decrease) through the IMF's sale (repurchase) of the member's currency to meet the demand for use of IMF resources by other members in need of balance of payments financing. The reserve tranche is basically an emergency account that IMF members can access at any time without agreeing to conditions or paying a service fee. Initially, member nations' reserve tranches are normally 25% of their quota. However, their reserve tranche position (RTP) can change according to any lending that the IMF does with its holding of the member's currency. It is to be noted that prior to 1978, the reserve tranche was paid in, which was non-interest bearing and known as gold tranche.

The Rapid Credit Facility (RCF) of IMF 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 pro- gram 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.

The RFI is available to all member countries, although mem- ber countries eligible for the Poverty Reduction and Growth Trust are more likely to use the similar, concessional RCF.

'Global Financial Stability Report' is prepared by the International Monetary Fund (IMF). The report is released twice in a year in the month of April and October. The report provides an assessment of the global financial system and markets, and addresses emerging market financing in a global context. It focuses on current market conditions, highlighting systematic issues that could pose a risk to financial stability and sustained market access by emerging market borrowers.