PLL (Precautionary and Liquidity Line)

The Precautionary and Liquidity Line (PLL) is a crisis-prevention and crisis-resolution lending facility created by the International Monetary Fund in November 2011, replacing the earlier Precautionary Credit Line (PCL) established in 2010. It is designed for member countries with generally strong economic policies and fundamentals that nonetheless retain some moderate vulnerabilities preventing them from qualifying for the more stringent Flexible Credit Line (FCL).

Eligibility is assessed across five areas: external position and market access, fiscal policy, monetary policy, financial sector soundness and supervision, and data adequacy. A country must perform strongly in most of these areas, though not necessarily all, distinguishing the PLL from the FCL, which requires very strong performance across the board.

The PLL can be arranged on either a six-month basis (to address short-term liquidity needs, with access up to 250% of quota) or a one-to-two-year basis (with cumulative access typically up to 500% of quota, exceptionally higher). Funds may be drawn upon request or treated as precautionary. Unlike standard Stand-By Arrangements, the PLL involves ex post conditionality that is lighter and more focused, reflecting the borrower's underlying strength.

The instrument sits within the IMF's broader post-2008 effort to build a flexible crisis toolkit alongside the FCL, the Rapid Financing Instrument (RFI), and the Short-Term Liquidity Line (SLL, introduced 2020).

Notable users include:

• Morocco, which used successive PLL arrangements between 2012 and 2020, treating them as insurance against external shocks without drawing funds.
• North Macedonia (FYR Macedonia), which accessed a PLL in 2011.

The PLL has been criticised for limited uptake, with researchers noting that some eligible emerging markets avoid it due to perceived stigma attached to any IMF program, even precautionary ones.