School children in Kampong Tralach village, Cambodia: IMF measures will help expand loan resources available to low-income countries (photo: Michael Nolan/Robert Harding World Imagery/Corbis)
The measures were outlined in a speech by IMF Managing Director Christine Lagarde at the Brookings Institution on July 8, and will be discussed further next week in Addis Ababa during the Third International Conference on Financing for Development (FfD).
Many of the key issues under discussion at the conference are already at the core of the IMF’s mandate. These include national policy issues such as domestic revenue mobilization, expenditure efficiency and effectiveness, attracting and managing capital flows, prudent expansion of public investment and international policy issues such as maintaining global financial stability and international tax cooperation.
The IMF Executive Board on July 1 also approved the following changes to further bolster the IMF’s commitment to low-income countries:
• Expanding access to all of its concessional facilities by 50 percent, which means making more money available for eligible low-income countries;
• Targeting that concessional financing further towards the poorest and most vulnerable countries; and
• Setting the interest rate at zero for all loans extended under the Rapid Credit Facility, which is targeted at countries hit by natural disasters and fragile/post-conflict states.
The IMF and the Post-2015 Agenda
The year 2015 marks the start of a new global partnership for development. This page provides an overview of the financing, policy advice, technical assistance and capacity building initiatives produced by the Fund as the world embarks on the post-2015 agenda.
The Financing for Development Conference in July in Addis Ababa, the Sustainable Development Goals summit in New York in September and the United Nations Conference on Climate Change in Paris in December together will provide the framework for ending poverty, transforming all lives and protecting the environment for the next 15 years and beyond.
The IMF, with its global membership and mandate to promote balanced economic growth and economic and financial stability, is well positioned to contribute to this agenda.
“We have the opportunity to make a positive difference in the lives of billions of people in the world, especially the poorest,” said IMF Deputy Managing Director Min Zhu, who is overseeing the Fund’s work on Financing for Development. “To achieve this, the IMF is delivering enhanced technical assistance, surveillance and lending.”
The 2015 Global Development Agenda
The Financing for Development Conference is one of three major international events—including the Sustainable Development Goals summit in New York in September, and the United Nations Conference on Climate Change in Paris in December—that collectively make 2015 a pivotal year for global development.
The FfD Conference is intended to produce a shared understanding on how the financing needed to achieve the Sustainable Development Goals (SDGs) will be mobilized. The SDGs, set to be formally adopted at the summit in September, replace the Millennium Development Goals which expire this year. The SDGs now include 17 distinct goals focused on ending poverty, transforming all lives and protecting the planet by 2030.
The first United Nations Financing for Development Conference took place in 2002 in Monterrey, Mexico; the concluding document of that conference is known as the Monterrey Consensus. As in 2002, the Fund is expected to play a key role in contributing to this year’s conference.
“The IMF, with its global membership and mandate to promote economic growth and stability, is well positioned to contribute to the post-2015 development agenda,” said Sean Nolan, Deputy Director of the IMF’s Strategy, Policy and Review Department and the lead author of this effort. “We have looked at our loan facilities and our advisory and capacity-building services through the lens of the post-2015 development agenda and identified a number of areas where we believe that we can enhance our current contribution. Our Board has approved the proposed initiatives, including the increased access to IMF resources for low-income countries.”
Helping low-income countries build economic resilience
Beyond offering increased access and extended concessional terms for low-income countries, one of the biggest contributions the IMF will make will be in the form of increased policy advice, technical assistance and capacity building to help countries build economic resilience and meet their individual responsibilities for financing their development and achieving the Sustainable Development Goals.
Expanded policy advice and analytical work will include issues related to poverty, equity and inclusion, where macro-economically relevant, with the aim of integrating this into IMF operational work, and collaborating across the membership and drawing on the expertise and experience of other relevant international institutions.
The IMF will also continue its work on energy pricing and environmental tax issues and will seek to provide technical assistance to help developing countries design easy-to-administer carbon pricing schemes.
As part of its Financing for Development initiatives, the IMF will expand its support for developing countries seeking to build domestic capacity in tax policy and administration, while also increasing engagement on international tax issues of special relevance for developing countries.
The IMF already allocates one-fifth of capacity building efforts to providing tax policy and tax administration assistance, and further resources will be allocated under the new measures.
The IMF also plans to help countries address large infrastructure gaps more efficiently and sustainably by providing advice and technical assistance in key areas of public investment management needed for effective infrastructure spending. The IMF is to deepen its analysis of the relationships between public investment, growth and debt sustainability to help identify the appropriate pace for scaling up infrastructure spending.
Fragile and conflict-affected states
The IMF will intensify its engagement with fragile and conflict-affected states, both in terms of operational work and in supporting capacity building over the medium term. Work on capacity building will need to be embedded in a strategy that is closely coordinated with lead development partners and aligned with the government’s own priorities. IMF concessional financing will also target the poorest countries, and the IMF will maintain the zero percent interest rate for loans under the Rapid Credit Facility.
