Policy Papers
2023
March 17, 2023
Changes to the Fund’s Financing Assurances Policy in the Context Of Fund Upper Credit Tranche (UCT) Financing Under Exceptionally High Uncertainty
Description: The Executive Board of the International Monetary Fund (IMF) approved changes to the Fund’s financing assurances policy. The changes apply in situations of exceptionally high uncertainty, involving exogenous shocks that are beyond the control of country authorities and the reach of their economic policies, and which generate larger than usual tail risks. The changes adopted could enable the design of a Fund Upper Credit Tranche (UCT) program in situations of exceptionally high uncertainty, in particular by modifying the Fund’s financing assurances policies in two ways. The first change allows official bilateral creditors to provide an upfront credible assurance about delivering debt relief and/or financing with the delivery of a contingent second-stage element of debt relief and/or financing once the exceptionally high uncertainty has been resolved. This would help establish that medium-term viability is being restored. The second change extends the use of a capacity-to-repay assurances from official bilateral creditors/donors from emergency financing to a UCT arrangement context. This would help establish adequate safeguards. These changes and their application to any specific country case in a situation of exceptionally high uncertainty would require the Fund to weigh whether it is prepared to accept the enterprise risks that such arrangement would entail.
March 15, 2023
The Central Bank Transparency Code—Findings Of The Pilot Reviews
Description: This paper reports to the Executive Board on the outcomes of the Central Bank Transparency Code (CBT) pilot reviews. The pilot CBT reviews helped central banks evaluate their transparency practices and strengthen dialogue with external stakeholders. The CBT pilots provided valuable information on the resources required for the reviews going forward. Staff will continue to offer CBT reviews to the rest of the membership. The staff will report back to the Board in FY2026 on the progress of the CBT reviews and an update to the Code following five years of implementation.
March 10, 2023
Temporary Modifications to The Fund’s Annual and Cumulative Access Limits
Description: In light of current elevated uncertainty and challenges in the global economy, the IMF has temporarily increased the limits on access in the Fund’s General Resources Account (GRA) to 200 percent of a member’s quota annually and 600 percent of quota cumulatively (from 145 and 435 percent of quota previously, respectively, last set in 2016). These changes will be in place for 12 months and, if circumstances warrant, the Executive Board may consider extending them further before their expiration. Regarding the Poverty Reduction and Growth Trust (PRGT), the paper proposes that the Executive Board reviews PRGT access limits once sufficient subsidy resources have been pledged to the PRGT. The impact on GRA resources and risks to the Fund from the proposed changes are expected to be manageable.
February 23, 2023
Elements of Effective Policies for Crypto Assets
Description: This paper aims to address questions by Fund members on how to respond to the rise of crypto assets and the associated risks. To frame the discussion, the paper defines and classifies crypto assets based on their underlying features and describes their purported benefits and potential risks. The paper presents a policy framework for crypto assets that aims to achieve key policy objectives such as macroeconomic stability, financial stability, consumer protection, and market and financial integrity. The framework outlines key elements that are necessary to ensure that these objectives are met. However, such a framework will not fix any underlying crypto design flaws (for instance, the lack of a credible nominal anchor, payments finality, or scalability).
February 23, 2023
Resilience And Sustainability Trust―2022 Contribution Agreements with Australia, Canada, China, Germany, Japan, And Spain
Description: This paper presents the first set of contribution agreements that had been finalized with contributors by the time of the operationalization of the Resilience and Sustainability Trust (RST) on October 12, 2022. The six finalized agreements provide for contributions in a total amount of about SDR 15.3 billion across the three RST accounts – the loan account, deposit account, and reserve account. These six finalized agreements deliver critical resources for the operationalization of the RST and represent an important step towards its adequate funding.
February 21, 2023
Applications To Become Holders of SDRS
Description: The International Monetary Fund (IMF) approved on February 8, 2023 the applications of the Caribbean Development Bank (CDB), the Development Bank of Latin America (known as Corporacion Andina de Fomento or CAF), the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), and the Inter-American Development Bank (IADB) to become prescribed holders of Special Drawings Rights (SDRs). The SDR is an international reserve asset created by the IMF to supplement the reserves of IMF members that participate in the SDR Department. The IMF’s Articles of Agreement authorize the IMF to prescribe (i.e., approve) as holders of SDRs (i) non-members, (ii) members that are not participants in the SDR Department; (iii) institutions that perform functions of a central bank for one or more IMF member countries, and (iv) other official entities (which all five entities approved on February 8 are). Prescribed holders may acquire, hold and use SDRs in transactions by agreement and in operations. Approval of these five institutions brings the number of prescribed holders to twenty.
February 6, 2023
International Corporate Tax Reform
Description: To relieve the pressure on the outdated international corporate tax system, an ambitious reform was agreed at the Inclusive Framework (IF) on Base Erosion and Profit Shifting in 2021, with now 138 jurisdictions joining. It complements previous efforts to mitigate profit shifting by addressing the challenges of the digitalization of the economy through a new allocation of taxing rights to market economies (Pillar 1) and tax competition through a global minimum corporate tax (Pillar 2). This paper concludes that the agreement makes the international tax system more robust to tax spillovers, better equipped to address digitalization, and modestly raises global tax revenues.
2022
December 20, 2022
The Managing Director’s Update on the FY 2023 Work Program of the Executive Board
Description: The membership is facing significant challenges, including high inflation, rising food and energy insecurity, elevated debt levels, tightening financial conditions, volatile capital flows and exchange rates, and intensifying geopolitical fragmentation. To this end, the Executive Board Work Program focuses on policy responses and bilateral and multilateral advice to stabilize the global economy and build resilience, critical financial assistance to those countries most affected by these shocks, and capacity development support to help implement policy advice. More than ever, the Fund has a key role to play in promoting international cooperation and collaborative solutions to shared challenges, including those related to climate, digitalization, and inclusion.
December 20, 2022
Review Of The Adequacy Of The Fund’s Precautionary Balances
Description: On December 12, 2022, the IMF’s Executive Board reviewed the adequacy of the Fund’s precautionary balances. The review took place on the standard two-year cycle, after an interim review in December 2021. Precautionary balances comprise the Fund’s general and special reserves. They are a key element of the IMF’s multi-layered framework for managing financial risks. Precautionary balances provide a buffer to protect the Fund against potential losses, resulting from credit, income, and other financial risks. In conducting the review, the Executive Board applied the rules-based framework agreed in 2010. Precautionary balances have risen further since the 2021 interim review and coverage metrics have strengthened. At the same, credit and other financial risks have also increased. The pace of reserve accumulation is expected to remain adequate. Against this background, Executive Directors endorsed staff’s proposal to retain the current medium-term target of SDR 25 billion and the minimum floor of SDR 15 billion. The Board also discussed the role of surcharges, which are primarily a component of the Fund’s risk management framework but also contribute to reserves accumulation.
December 19, 2022
List of IMF Member Countries With Delays In Completion of Article IV Consultations or Mandatory Financial Stability Assessments over 18 Months
Description: List of IMF Member Countries With Delays In Completion of Article IV Consultations or Mandatory Financial Stability Assessments over 18 Months