Q. “Rapid Financing Instrument” and “Rapid Credit Facility” are related to the provisions of lending by which one of the following?

Explanation : 

IMF’s Rapid Financing Instrument (RFI) and Rapid Credit Facility (RCF)

The “Rapid Financing Instrument” (RFI) and the “Rapid Credit Facility” (RCF) are lending mechanisms provided by the International Monetary Fund (IMF). These instruments are designed to provide rapid financial assistance to member countries facing urgent balance of payments needs, without the need to have a full-fledged program in place. They are particularly useful in addressing crises and emergencies where policy adjustments may not be immediately feasible.

The RFI is available to all member countries of the IMF and provides rapid financial assistance with limited conditionality. It is meant for situations where a full economic program is either not necessary or not feasible. The RFI can be used in a wide range of circumstances, including commodity price shocks, natural disasters, and emergencies resulting from fragility and conflict.

The RCF, on the other hand, is specifically tailored for low-income countries and provides immediate financial assistance with zero interest rates. The RCF also has limited conditionality and is designed to support countries with an urgent balance of payments need, particularly where a full-fledged economic program is not in place.

Both the RFI and RCF are part of the IMF’s broader toolkit to help member countries deal with balance of payments problems and are designed to provide rapid financial support with the aim of stabilizing the economy and restoring confidence.