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Rapid Financing Instrument

Published on April 20, 2022
Current Context: Sri Lanka has approached the IMF facing a BoP Crisis under a window called Rapid Financing Instrument.
Rapid Financing Instrument
  • Sri Lanka is facing a Balance of Payment crisis. The situation is said to have been even worse because of the government's policy of phasing out fertilizer-based farming and completely shifting to organic. Opaque borrowing under the BRI of China is one of the major factors for her default on international import obligations.
  • The Government of Sri Lanka is seeking the assistance of 4 bn USD. India has not only provided a 1 bn USD credit line, but it has also raised the former’s cause at the IMF as the Indian Finance Minister met the IMF chief. India pursues the policy of SAGAR (Security and Growth for All in the Region).
  • What is RFI?
    • The Rapid Financing Instrument is a window of the International Monetary Fund (IMF) that allows member countries to borrow, in case of a BoP crisis. The money borrowed has to be paid back within 3.25 years to 5 years.
    • RFI has replaced earlier available windows
    • 1.1 Emergency Natural Disaster Assistance (ENDA)
    • 1.2 Emergency Post Conflict Assistance (EPCA)
  • Note:- Like RFI similar mechanisms namely Flexible Credit Line (FCL), Precautionary & Liquidity Line (PLL), and Stand By Arrangement exist under the IMF.


Q.1 Under which window has Sri Lanka approached the IMF to borrow 4 bn USD?
a. Stand By Arrangement
b. Emergency Natural Disaster Assistance (ENDA)
c. Rapid Financial Instrument
d. None of the above
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