Policy Papers

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2008

July 14, 2008

Application of Structural Conditionality - 2008 Annual Report

Description: This report provides an update, based on objective indicators, of the application of structural conditionality in Fund-supported programs. Such annual reports on structural conditionality are one element of the management implementation plan (MIP) prepared in response to the Board-endorsed recommendations made in the IEO evaluation of Structural Conditionality in IMF-Supported Programs. This annual report covers Fund arrangements approved during the period 1995–2007 (and their reviews through April 30, 2008), extending therefore the dataset contained in the recent IEO report by about three years (from 2005 to 2007). In addition, this report examines experience with Policy Support Instruments (PSIs), which were introduced in October 2005, and thus not covered in the IEO evaluation.

July 10, 2008

Revisions to the Operational Guidance Note on Conditionality

Description: This note elaborates on the operational implications of the key principles that should guide the Fund in designing and setting conditionality and the 2002 conditionality guidelines. It is not intended as a comprehensive stand-alone guidance note, but rather as an aid to the implementation of the new guidelines. The operational issues covered are grouped into three areas: (i) the process of negotiation and program design; (ii) the design of conditionality; and (iii) the presentation of conditionality in Board papers for the use of Fund resources. The 2008 revisions arise from the Board-endorsed recommendations of the IEO evaluation of structural conditionality; the Board’s preferred way forward is to strengthen efforts to achieve parsimony by emphasizing criticality as well as requiring rigorous justification of conditionality.

July 3, 2008

Guidance Note on Debt Sustainability Analysis for Market Access Countries

Description: Since the endorsement by the Executive Board in June 2002 of the paper on “Assessing Sustainability” (May 28, 2002), the Fund has followed a more systematic approach to assessing public and external debt sustainability in the context of both program design and Article IV surveillance. The framework—further refined in a subsequent paper, “Sustainability Assessments—Review of Application and Methodological Refinements” (June 10, 2003)—attempts to bring a greater degree of consistency and discipline to sustainability analyses, including by laying bare the basis on which baseline projections are made and subjecting them systematically to sensitivity tests. As part of continuing efforts to improve debt sustainability analysis (DSA) and responding to the concerns of some of the shareholders as well the experience with the framework thus far, further modifications were made in July 2005 (Information Note On Modifications To The Fund’s Debt Sustainability Assessment Framework For Market Access Countries, July 1, 2005).

This note provides information on the use of the latest version of the DSA template for market access countries, that is, for countries not included in the low-income (PRGF-eligible) country group.

June 30, 2008

The Balance of Payments Impact of the Food and Fuel Price Shocks on Low-Income African Countries: A Country-by-Country Assessment

Description: This note discusses the implications of the price shocks for the balance of payments of low-income countries in sub-Saharan Africa. The response by bilateral donors and multilateral institutions will, in practice, need to be country-specific. To this end, the note identifies a list of 18 countries in the region that are especially hard-hit and that consequently face a pressing need for additional balance of payments and budget support. The list reflects country circumstances and underlying assumptions as of May, and is subject to change; it is not meant to be definitive.

June 30, 2008

Food and Fuel Prices - Recent Developments, Macroeconomic Impact, and Policy Responses

Description: This report provides a first broad assessment of the impact of the surge in food and fuel prices on the balance of payments, budgets, prices, and poverty of a large sample of countries. It reviews countries’ macroeconomic policy responses to date and also discusses Fund advice for managing the price increases. Policies should (i) ensure that food and finance reaches the most affected countries as quickly as possible, (ii) include targeted and scaled-up social measures, and (iii) avoid high costs in terms of macroeconomic instability or loss in future agricultural production. Collaborating with international partners, the Fund also stands ready to provide balance of payments assistance. As the paper presents an initial assessment of a still-evolving situation, the somewhat tentative nature of the analysis should be borne in mind.

June 18, 2008

Report on the Incidence of Longer-Term Program Engagement and Request to Reduce the Frequency of Reporting

Description: Longer-term program engagement (LTPE) occurs when a member has spent at least seven of the past ten years under Fund financial arrangements.1 The Executive Board has requested semi-annual reports on the incidence of LTPE. This is the ninth such report and provides information through end-March 2008.

June 18, 2008

Statement by the Managing Director on the Work Program of the Executive Board

Description: Our work on restructuring the IMF is now well advanced, but our work on refocusing the IMF is only beginning. Over the next few months I expect to see a shift of emphasis in our work away from our internal concerns such as the size and governance structure of the IMF and toward the actions the IMF will take to help our members meet global challenges. Drawing on the ideas set out in my statement on Strategic Directions in the Medium-Term Budget, I will propose action in some of the major areas of the IMF's work. The principle guiding our work will continue to be responsiveness to our members' needs with a focus on the IMF's comparative advantage. We will aim to make substantial progress over the next few months but in a number of areas, the work will continue beyond the Annual Meetings.

June 13, 2008

The Role of the Fund in Low-Income Countries

Description: This paper takes stock of the work over the past four years on the role of the Fund in LICs, and outlines a comprehensive approach for Fund engagement. It responds to the Board’s request for a synthesis of the full range of policy decisions and developments related to the Fund’s work in LICs since 2004. A key purpose is to ensure that, as the Fund is refocusing its work, LIC-related objectives and responsibilities are well articulated and understood.

June 13, 2008

The Role of the Fund in Low-Income Countries - Background Paper

Description: This paper provides background material to the Board paper on “The Role of the Fund in Low Income Countries.” The main paper outlines a comprehensive approach for Fund engagement with Low-Income Countries (LICs) going forward. The background material in this paper provides a comprehensive stock-taking of the Fund’s involvement and policy advice in LICs since the establishment of the Poverty Reduction and Growth Facility (PRGF) in 1999.

May 21, 2008

Fiscal Risks - Sources, Disclosure, and Management

Description: A number of member countries have expressed interest in advice regarding disclosure and management of fiscal risks (defined as the possibility of deviations of fiscal outcomes from what was expected at the time of the budget or other forecast). This paper analyzes the main sources of fiscal risks and—building on an overview of existing practices in a wide range of countries—provides practical suggestions in this area, including a possible Statement of Fiscal Risks and a set of Guidelines for Fiscal Risk Disclosure and Management.

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