The Precautionary and Liquidity Line (PLL) is an IMF lending instrument created in November 2011 to provide financing to member countries with sound fundamentals and policies that face actual or potential balance-of-payments needs. It replaced the earlier Precautionary Credit Line (PCL), broadening eligibility to cover short-term liquidity shocks rather than only crisis-prevention scenarios.
The PLL is designed for countries that do not fully qualify for the more stringent Flexible Credit Line (FCL) but still meet a high bar on macroeconomic and financial-sector performance. Eligibility is assessed across five areas: external position and market access, fiscal policy, monetary policy, financial-sector soundness, and data adequacy. A country must perform strongly in most areas, with no substantial weaknesses.
PLL arrangements come in two forms:
- Six-month arrangements for countries facing short-term, often externally driven liquidity needs, with access capped at 125% of quota (raised to 145% in exceptional circumstances).
- One- to two-year arrangements with access up to 250% of quota annually, cumulating to 500% over two years.
Unlike the FCL, which has no ex-post conditionality, the PLL involves limited conditionality through semi-annual reviews focused on the country's identified vulnerabilities. Drawings can be made at any time during the arrangement or treated as precautionary (undrawn insurance).
Morocco has been the most prominent and repeated user of the PLL, securing successive arrangements beginning in August 2012 and renewing them multiple times through the 2010s, using the line largely as insurance against regional shocks and commodity-price volatility. North Macedonia (then FYR Macedonia) also drew on a PLL arrangement approved in January 2011 under the precursor PCL framework.
The PLL sits within the IMF's broader toolkit alongside the FCL, Stand-By Arrangements (SBA), and the Resilience and Sustainability Facility (RSF, 2022). It is intended to reduce the stigma traditionally associated with IMF borrowing by signaling that the user country meets demanding policy standards.
Example
In July 2018, the IMF Executive Board approved a two-year PLL arrangement for Morocco worth about $2.97 billion (240% of quota), which Rabat treated as precautionary insurance.