Typical street scene in Santa Ana, El Salvador. (Photo: iStock)
IMF Survey: IMF Asks for Comment on Its Policy Support Instrument
November 28, 2008
- IMF asks for public comments on its Policy Support Instrument
- Comments can be sent to a mailbox:
- psireview@imf.org
- Idea of PSI is to help countries that don’t need IMF financing
The IMF has launched a review of its three-year old facility that enables low-income countries to receive the Fund’s advice and support of their policies without financial assistance.
Oil workers in Nigeria, one of six countries that have made use of the IMF’s Policy Support Instrument (PSI). (photo: AFP)
Policy review
IMF officials say it is a significant chance for the public to comment on an important part of the Fund’s work in low-income countries.
The Policy Support Instrument (PSI), introduced in October 2005, enables the IMF to support low-income countries that may not needmdashhere—or wantmdashhere—IMF financial assistance but are still interested in the Fund's advice and endorsement of their policies.
Needs of “mature stabilizers”
The PSI was designed to meet the needs of so-called “mature stabilizers”mdashhere—low-income countries that have usually achieved a reasonable growth performance, low underlying inflation, an adequate level of official international reserves, and have begun to establish external and net domestic debt sustainability.
Some of these countries no longer need IMF financial assistance and have indicated their desire to "graduate" from using the Poverty Reduction and Growth Facility (PRGF), while wishing to maintain a close relationship with the Fund, including endorsement of their policies and performance.
In addition, the PSI was designed to facilitate access to resources through the Exogenous Shocks Facility in the event that a low-income member suffers from an external shock. In sum, the PSI gives low-income countries another option for engaging with the Fund.
Six PSI countries
The PSI is available upon request to all PRGF-eligible members with a Poverty Reduction Strategy in place. So far, six countries (Cape Verde, Mozambique, Nigeria, Senegal, Tanzania, and Uganda) have had PSIs, and a number of others have expressed interest.
At the time of the approval, the Executive Board required that a review of experience with the PSI take place after three years. It is expected to be completed early next year. Its goals are to assess whether:
• the PSI is meeting stated objectives
• the rationale and objectives remain appropriate
• the PSI can be made more effective
Reaching out
The review will take a two-pronged approach: first, analysis of IMF staff reports and other documents, quantitative analysis, comparisons of macroeconomic data; second, the staff will collect the views from government officials in countries that had used or considered the PSI, and from other stakeholders, in particular the donor community. The IMF will endeavor to reach out to civil society organizations, in PSI countries in particular, and specifically nongovernmental organizations and representatives of the private sector.
The IMF hopes to receive a broad and diverse set of comments from the wider public To this end, it has published the concept note for the review and set up a mailbox to receive comments (psireview@imf.org) by December 12, 2008.
Comments on this article should be sent to imfsurvey@imf.org