What Is A Stand By Agreement

15/10/2021

Loan interest rate. The loan interest rate consists of (1) the market interest rate for Special Drawing Rights (SDRs) – which has a minimum limit of 5 basis points – and a margin (currently 100 basis points), collectively referred to as the base rate, and (2) surcharges, which depend on the amount and timing of the outstanding loan. A surcharge of 200 basis points will be paid on the outstanding loan amount of 187.5% of the quota. If the loan remains above 187.5% of the quota after three years, this surcharge increases to 300 basis points. These surcharges are intended to prevent significant and prolonged use of IMF funds. Structural adjustment programmes have long been criticised for making excessive savings demands in the recipient country in exchange for financial aid.

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