ABSTRACT
This chapter discusses the success of the cereal import facility. First, the origins, the justification and the new rules of the facility are briefly summarized. Second, the acceptance of the new rules is described and a theoretical explanation is provided as to why the use of the cereal import facility was relatively moderate. Third, impacts arising from the cereal import facility on food security are elaborated for those seven countries which made use of it in the period 1981-8. The term ‘cereal import facility’ refers to the extension of the IMF’s CFF in 1981. Besides the traditional compensation for export earnings shortfalls, the possibility of compensating for excesses in cereal import costs was added at that point in time and an amended CFF was created. A new idea in compensatory financing was implemented with this extension of the CFF. The question arises why the use of the amended CFF has been so limited since 1981.
