Policy Papers

August 5, 2024

Debt for Development Swaps: An Approach Framework

Description: The aim of this note is to help stakeholders optimize their decision-making on when, where, and how to use debt-for-development swaps (“debt swaps”), ensuring they bring the intended benefits to all parties involved. It also proposes new approaches to structure these mechanisms, making them less transaction-heavy and more sustainable while maintaining accountability for fulfilling policy and spending commitments. Debt swaps are agreements between a government and one or more of its creditors to replace existing sovereign debt with one or more liabilities1 that include a spending commitment towards a specific development goal. These goals may include nature conservation, climate action, education, nutrition, support for refugees, among others. The spending commitment is often associated with the country's decision to pursue an important development policy.

August 2, 2024

2024 Revised Basel Core Principles for Effective Banking Supervision

Description: The Basel Committee on Banking Supervision (BCBS) recently revised the Basel Core Principles for Effective Banking Supervision (BCP). The BCP are the de facto minimum standards for the sound prudential regulation and supervision of banks and banking systems and are universally applicable. This comprehensive update, the first since 2012, reflects the evolving financial landscape and incorporates feedback from a wide range of stakeholders including BCBS members, nonmember countries, the IMF, and the WBG. After extensive consultation, the revised BCP were approved by the BCBS in February 2024, and endorsed by the International Conference of Banking Supervisors in April 2024. The revised BCP document is a response to regulatory developments and structural changes within the banking industry over the last decade. It addresses the lessons learned over the last 10 years, including from the pandemic and the March 2023 banking turmoil; key findings from assessments under the Financial Sector Assessment Program (FSAP); and new challenges posed by ongoing structural transformations, notably digitalization and climate change. The revisions emphasize the importance of operational resilience, systemic risk management, and the adoption of a proportional approach to supervision, catering to the global diversity of banks and banking system.

July 29, 2024

Key Trends In Implementing The Fund's Transparency Policy

Description: At the time of the 2005 Review of the Fund’s Transparency Policy, the Executive Board requested regular updates on trends in implementing the transparency policy. This report provides an overview of recent developments, reflecting information on documents considered by the Board in 2022 and updating the previous annual report on Key Trends. Deeper analysis of these trends is undertaken in the context of periodic reviews of the Fund’s Transparency Policy.

July 25, 2024

List Of IMF Member Countries With Delays In Completion Of Article Iv Consultations Or Mandatory Financial Stability Assessments Over 18 Months

Description: In line with the framework for addressing excessive delays in the completion of Article IV consultations, the following table lists the IMF members for whom the Article IV consultation has been delayed by more than 18 months as of June 15, 2024.

July 25, 2024

2024 Staff Guidance Note On The IMF’s Engagement With Small Developing States

Description: This guidance note provides operational guidance on the Fund’s engagement with small developing states (SDS). It highlights the unique economic characteristics and constraints facing SDS, notably in a more shock-prone world. Building on advice that applies to the full membership, the note explains how the characteristics of SDS shape Fund surveillance, financial support and program design, capacity development (CD), and collaboration with other institutions and donors. The note updates the previous version that was published in December 2017.

July 17, 2024

Targeted Modification Of Streamlined Procedures For Approval Of Successor Flexible Credit Line And Precautionary And Liquidity Line Arrangements

Description: The 2023 Review of the Flexible Credit Line (FCL), the Short-Term Liquidity Line (SLL), and the Precautionary and Liquidity Line (PLL) introduced a welcome streamlining of procedures. This included dropping the requirement for an informal consultation with the Executive Board for the approval of successor FCL and PLL arrangements when certain requirements were met. In implementing the new procedures, however, staff observed that, inadvertently, one requirement is at odds with the well-established practice for consecutive FCL and PLL arrangements. It is normal practice to cancel an existing arrangement shortly before expiration, while simultaneously requesting a successor arrangement to ensure seamless back-to-back arrangements. But an unintended consequence of the drafting of the new procedures is that an informal consultation with the Executive Board can be waived only when an arrangement expires—not if it were to be canceled shortly before expiration to ensure seamless back-to-back arrangements—even if all the other requirements for dropping such consultation are satisfied. This unduly constrains the reform and is at odds with the intention presented in the 2023 Review. To rectify the issue, staff proposes the adoption of a decision with a targeted modification of the FCL and PLL decisions.

June 27, 2024

2022-2023 Diversity & Inclusion Report

Description: This paper provides an update on progress towards the Fund’s FY 2025 Diversity Benchmarks, as of the end of FY 2023. The paper also includes information on action the Fund is taking to promote greater diversity and inclusion through a two-year roadmap of initiatives primarily focused on recruitment, talent development, equity and inclusion and promoting greater leadership accountability and transparency. The paper also covers plans to convene a cross-functional working group to establish the Diversity Benchmarks targets for FY 2030.

June 24, 2024

Interim Review of The Resilience and Sustainability Trust and Review of Adequacy of Resources

Description: The Resilience and Sustainability Trust (RST) provides affordable longer-term financing to help eligible IMF members address longer-term structural challenges, thereby progressing toward strengthening their prospective balance of payments stability. This paper takes stock of the initial experience with the RST—focusing on progress and challenges so far—and proposes fine-tuning RST design with a view to strengthening implementation of the Trust’s objectives. The paper also provides an assessment of the adequacy of the Trust’s resources and finds that increased near-term fundraising will be needed to meet strong demand. The Trust’s reserves remain adequate in the baseline and under a range of risk scenarios.

June 18, 2024

Statement by the Managing Director on the Independent Evaluation Office Report on the Evolving Application of the IMF’s Mandate: Executive Board Meeting, June 10, 2024

Description: This evaluation assesses the decision-making processes that guided the evolution of the application of the Fund's mandate, the criteria and principles used to operationalize engagement in newer policy areas, and the coherence of the Fund’s framework for engaging with partners. It finds that the systematic widening of the Fund’s areas of work is posing adaptation challenges, necessitating trade-offs, and overburdening staff within a context of budgetary and expertise constraints. The evaluation offers a framework for approaching these challenges that is centered on a trilemma that exposes the tension between the steady expansion of the Fund’s scope of work, its limited resources, and the need to maintain the high quality and value-added of its policy advice. It identifies several problems within this framework, including the ad hoc decision-making process for engaging in newer policy areas, which lacks a longer-term strategic anchor. Furthermore, decisions on policies, resources, and risks were taken in a piecemeal manner, without due consideration for crossed effects. It also identifies several open questions regarding the depth and frequency of the Fund’s engagement in newer policy areas and the lack of an institutional approach to Fund partnerships. The evaluation proposes classifying newer policy areas across a spectrum of recommended engagement, ranging from signaling their macrocriticality while leaving deeper assessments to other institutions, to in-depth high-frequency engagement. It also offers four main recommendations: (i) developing an inclusive Fund-wide institutional strategy for engagement in newer policy areas that better links decisions related to scope, resources, and risks; (ii) producing budget data that enables the tracking of Fund activities and operations by policy area; (iii) updating the 2022 Guidance Note for Surveillance to enhance the clarity of principles for engagement; and (iv) adopting a Board-approved high-level Statement of Principles for engagement with partners.

Notes: The Chair’s Summing Up Independent Evaluation Office—The Evolving Application of the IMF’s Mandate: Executive Board Meeting June 10, 2024

The Evolving Application of the IMF's Mandate

June 18, 2024

The Chair’s Summing Up Independent Evaluation Office—The Evolving Application of the IMF’s Mandate: Executive Board Meeting June 10, 2024

Description: This evaluation assesses the decision-making processes that guided the evolution of the application of the Fund's mandate, the criteria and principles used to operationalize engagement in newer policy areas, and the coherence of the Fund’s framework for engaging with partners. It finds that the systematic widening of the Fund’s areas of work is posing adaptation challenges, necessitating trade-offs, and overburdening staff within a context of budgetary and expertise constraints. The evaluation offers a framework for approaching these challenges that is centered on a trilemma that exposes the tension between the steady expansion of the Fund’s scope of work, its limited resources, and the need to maintain the high quality and value-added of its policy advice. It identifies several problems within this framework, including the ad hoc decision-making process for engaging in newer policy areas, which lacks a longer-term strategic anchor. Furthermore, decisions on policies, resources, and risks were taken in a piecemeal manner, without due consideration for crossed effects. It also identifies several open questions regarding the depth and frequency of the Fund’s engagement in newer policy areas and the lack of an institutional approach to Fund partnerships. The evaluation proposes classifying newer policy areas across a spectrum of recommended engagement, ranging from signaling their macrocriticality while leaving deeper assessments to other institutions, to in-depth high-frequency engagement. It also offers four main recommendations: (i) developing an inclusive Fund-wide institutional strategy for engagement in newer policy areas that better links decisions related to scope, resources, and risks; (ii) producing budget data that enables the tracking of Fund activities and operations by policy area; (iii) updating the 2022 Guidance Note for Surveillance to enhance the clarity of principles for engagement; and (iv) adopting a Board-approved high-level Statement of Principles for engagement with partners.

Notes: Statement by the Managing Director on the Independent Evaluation Office Report on the Evolving Application of the IMF’s Mandate: Executive Board Meeting June 10, 2024

The Evolving Application of the IMF's Mandate