Policy Papers
2017
April 10, 2017
Making Trade an Engine of Growth for All: The Case for Trade and for Policies to Facilitate Adjustment
Description:
The role of trade in the global economy is at a critical juncture. Increased trade integration helped to drive economic growth in advanced and developing economies in the latter part of the 20th century. Since the early 2000’s, however, a slowdown in the pace of trade reform, a post-crisis uptick in protectionism, and risk of further reversals have been a drag on trade, productivity, and income growth. At the same time, trade is leaving too many individuals and communities behind, notably also in advanced economies. To be sure, job losses in certain sectors or regions in advanced economies have resulted to a large extent from technological changes rather than from trade. But adjustment to trade can bring a human and economic downside that is frequently concentrated, sometimes harsh, and has too often become prolonged. It need not be that way. With the right policies, countries can benefit from the great opportunities that trade brings and lift up those who have been left behind. Those polices ease adjustment to trade, as well as strengthen overall economic flexibility and performance.
Notes: Prepared by Staff of the IMF, the World Bank Group, and the World Trade Organization
April 6, 2017
Update on the Standard Template to Collect Data on Government Revenues from Natural Resources
Description:
The paper presents an update on the status of the standard template to collect data on government revenues from natural resources, originally presented to the Executive Board in January 2014. The paper discusses: (i) the field-testing of the standard template in six countries, which confirmed the feasibility of applying it more broadly; (ii) the final version of the template based on outcomes of consultation with the international community and the field-testing visits; and (iii) the adoption of the template by the Extractive Industries Transparency Initiative (EITI) International Secretariat as a mandatory reporting requirement for its member countries. The standard template serves as a companion to the Guide to Analyze Natural Resources in the National Accounts.
The standard template was developed to support fiscal policy formulation and analysis in resource-rich economies, which constitute about one third of the Fund’s membership. The standard template is based on the revenue classification of the Government Finance Statistics Manual 2014, thereby facilitating the collection of resource revenue data in methodologically sound, analytically relevant, and cross-country comparable format.
March 28, 2017
Approaches to Macrofinancial Surveillance in Article IV Reports; IMF Policy Paper
Description:
The Fund has made good progress over the past two years in integrating macrofinancial analysis into Article IV surveillance for a wide range of members. Building on past work to enhance financial sector analysis, Fund staff has sought to develop a consistent and forward-looking view on how the financial sector affects each member’s economic outlook with the aim of strengthening staff’s capacity to provide advice on macro-critical questions.
The focus has been on developing a fuller understanding of macrofinancial linkages, and applying this analysis to inform policy advice. Staff has sought to articulate the role of the financial sector in the macroeconomic baseline, and to integrate the financial sector into the risk assessment, taking into account both the impact of macro shocks on the financial sector as well as the effect of financial shocks on macroeconomic stability. Strengthening the analytical foundations of this work has helped staff provide advice in all policy areas, including financial sector policies.
Staff has tailored macrofinancial analysis to the circumstances of a diverse set of economies. Area departments have taken the lead in selecting 66 economies for enhanced macrofinancial coverage and in identifying topics, drawing on targeted support from functional departments. The choice of coverage has included legacies from the global financial crisis—such as deleveraging and stretched balance sheets in advanced economies and some emerging markets—and more recent challenges such as commodity price shocks, especially in low income countries, and the risks of housing booms. The financial sector’s contribution to growth and inclusion has become an important question in countries across all income groups.
Staff sees benefits in mainstreaming this approach across the membership, while continuing to address analytical gaps and adapting to new challenges. The work of the past two years has underscored the criticality of macrofinancial analysis for a diverse range of members, and laid the basis for progressively mainstreaming macrofinancial surveillance across the membership. Building on this progress, staff sees scope for the Fund to deepen its understanding of the macroeconomic effects of financial shocks, to better adapt microprudential and macroprudential policy advice with an assessment of macro-critical risks including systemic risk, and to deepen the analysis of outward spillovers. Staff will also need to continue to adapt the focus of analysis and tools, and seek relevant data, as economic challenges evolve.
March 27, 2017
High Level Status Report to the IEO Evaluation of Fund's Recurring Issues
Description:
This is a high-level report on progress in addressing recurring issues identified by the Independent Evaluation Office (IEO). The Board endorsed the proposal in the Chairman’s Summing Up for the Independent Evaluation Office Report on Recurring Issues from a Decade of Evaluation – Lessons for the IMF (BUFF/14/58, 6/11/14) that staff prepare a separate high-level report on the status of initiatives that address the recurring issues identified by the IEO, noting that the first staff report could be prepared within two years, followed by similar reports every five years thereafter. The September 2015 Management Implementation Plan set out the actions management would take to follow-up on the Board-endorsed recommendation. The IEO’s 2014 evaluation of Recurring Issues from a Decade of Evaluation: Lessons for the IMF identified five recurring issues: a) Executive Board guidance and oversight; b) Organizational silos; c) Attention to risks and uncertainty; d) Country and institutional context; and e) Evenhandedness. This high-level report provides a broad account of actions taken to address these recurring issues since the publication of the 2014 IEO report; it is not intended as an exhaustive account of initiatives undertaken.
Takeaways. The report concludes that the Fund has made progress in addressing the recurring issues identified by the IEO, and acknowledges the need for taking actions on an ongoing basis to achieve the related objectives. The discussion of the Management Implementation Plan (MIP) left open the question of whether subsequent reports should be prepared, perhaps every five years. The Evaluation Committee concluded that the forthcoming external evaluation of the IEO could look at the monitoring mechanisms more holistically, to provide further input into considering whether or not to continue the preparation every five years of this high-level report.
March 16, 2017
Implementation Plan in Response to the Executive Board-Endorsed Recommendations for the IEO Evaluation Report—The IMF and the Crises in Greece, Ireland, and Portugal
Description:
This paper sets out Management’s response to the Independent Evaluation Office’s (IEO) report The IMF and the Crises in Greece, Ireland, and Portugal as part of the Management and staff follow-up to an IEO evaluation. The implementation plan proposes specific actions to address the recommendations endorsed by the Executive Board in its July 19, 2016 discussion. The implementation plan notes the Board’s endorsement of the principles that the IMF’s technical analysis should remain independent, that existing policies should be followed and should not be changed without careful deliberation, and that the Executive Board and Management should reaffirm their commitment to accountability and transparency, as well as the role of independent evaluation in fostering good governance. As to the IEO’s specific recommendations supported by the Board, the implementation plan proposes actions to address the need for the Fund to clarify how guidelines on program design apply to currency union members, the need for the Fund to establish a policy on cooperation with regional financing arrangements, and the need to further strengthen Fund cooperation with the IEO, including on modalities of interactions between the IEO and Fund staff and the IEO’s access to information.
The implementation of some of the proposed actions is already underway and some actions have been included in the Fall 2016 Work Program. The paper also explains how implementation will be monitored by the Executive Board.
March 2, 2017
2018 Quinquennial Review of the Funds Capacity Development Strategy: Concept Note
Description:
Capacity development (CD), including technical assistance (TA) and training, is one of the three core pillars of the Fund’s work. Its main objective is to help member countries build institutions and capacity necessary to formulate and implement sound economic and financial policies. The Institute for Capacity Development (ICD) was established in 2012 with a specific mandate to further define and develop the Fund's strategy on capacity building and provide a clear institutional framework to bring the coordination and oversight over TA and training activities under one umbrella, while building on partnerships with donors. The Fund’s capacity development strategy was last discussed by the Board in June 2013, and the Board subsequently endorsed the 2014 statement on IMF Policies and Practices on Capacity Development. The 2018 review of the CD strategy will include backward- and forward-looking components:
March 1, 2017
Poverty Reduction and Growth Trust: 2016-17 Borrowing Agreements with the Government of Canada, De Nederlandsche Bank NV, and the Bank of Korea
Description: The IMF, as Trustee of the Poverty Reduction and Growth Trust (PRGT or Trust), has entered into a new borrowing agreement with the Government of Canada (Canada), and has entered into amendments to the 2010 borrowing agreement with De Nederlandsche Bank NV (The Netherlands) and the 2011 borrowing agreement with the Bank of Korea (Korea). The new borrowing agreement with Canada and the amendments to the borrowing agreements with The Netherlands and Korea will each provide new resources of SDR 500 million to the General Loan Account of the PRGT, for a total amount of SDR 1.5 billion in new PRGT lending resources. Except for the increase in amount for drawings, all other elements of the borrowing agreements with The Netherlands and Korea remain unchanged.
February 21, 2017
Ensuring Financial Stability in Countries with Islamic Banking
February 8, 2017
Scope and Focus of the 2017 Review of the Standards and Codes Initiative
Description:
The standards and codes (S&C) initiative was launched in 1999 as part of efforts to
strengthen the international financial architecture. The initiative aims at promoting
international best practices to improve economic and financial resilience through three
intermediate objectives: assist countries in strengthening their economic institutions, inform
World Bank and IMF work, and inform market participants. The four previous reviews
confirmed a fairly high appreciation of the overall initiative. However, the related
comprehensive surveys and engagement with stakeholders raised questions about the
initiative’s link to surveillance and capacity-building efforts, as well traction with market
participants and policy makers. This paper is designed to engage with the Executive Board
on the overall scope and focus of the 2017 review of the S&C initiative.
The continuous evolution of the S&C and work under the initiative has accelerated in
several policy areas since the financial crisis. Several areas of the S&C have been
substantially reformed (fiscal and financial codes) or updated (corporate governance and
insolvency and creditor rights) to reflect evolving international best practices, while potential
changes in some others are still under consideration (data and monetary and financial policy
transparency). The overall level of assessment activity under the initiative has fallen
moderately, with a sharp drop in formal Reports on the Observance of Standards and Codes
(ROSCs) partly offset by an increase in other types of S&C based outputs, such as
evaluations. Since the 2011 review, most of the changes to individual S&C policy areas under
the initiative have involved direct Board engagement, and have aimed at improving
operational effectiveness to promote international best practice in the specific area.
The review is an opportunity to discuss how the initiative may be adapted to maintain
its relevance, and to capitalize on its achievements. The review will look at changes to the
S&C and their applications—across and within the individual policy areas—and make
recommendations on the overall initiative. This informal session to engage provides a factual
update of the S&C initiative since the last review in 2011, and proposes a strategic approach
to address gaps and weaknesses, coordinate reviews of individual policy areas and the
overall initiative, and continue to strengthen the relationship with external standard setters
and assessors.
February 3, 2017
Guidance Note on Post Program Monitoring
Description:
This note provides operational guidance to staff on the implementation of post-program monitoring (PPM). It is based on the policy paper Strengthening the Framework for Post-Program Monitoring and the related Board discussion and summing-up, and supersedes the guidance note issued in March 2010.