Policy Papers
2016
October 25, 2016
Financing for Development: Enhancing the Financial Safety Net for Developing Countries---Further Considerations
Description:
PRGT-eligible members make considerable use of Fund concessional financing. Since 2010, 56 percent of Fund arrangements have involved a PRGT-facility.
This paper examines a number of issues raised by Executive Directors and the International Monetary and Financial Committee (IMFC) since the issuance to the Board of the June 2015 staff paper on enhancing the financial safety net for developing countries (IMF, 2015a).
This paper concludes that there is a need to clarify guidance in some areas pertaining to PRGT policies. This will be done through an early revision of the LIC Handbook, which is already underway. The paper does not propose changes to the Fund’s concessional facilities at this juncture. A comprehensive review of PRGT (Poverty Reduction and Growth Trust) resources and facilities is planned for 2018.
October 21, 2016
New Arrangements to Borrow - Proposed Renewal of and Modifications to the NAB Decision
Description: The Fund’s decision on the New Arrangements to Borrow (the “NAB”), as amended, (the “NAB Decision”) is subject to renewals not later than 12 months before the end of each NAB period, with the current period set to expire on November 16, 2017. The NAB Decision was last renewed for a five-year period in November 2012. Pursuant to paragraph 19(a) of the NAB Decision, the Executive Board is to take a decision on the renewal no later than twelve months before the end of the NAB Decision, i.e., by November 16, 2016.1 Once a decision on renewal is taken, the new NAB period would become effective on November 17, 2017. In renewing the NAB Decision, the Fund and NAB participants are to review the functioning of the NAB Decision and, in particular, the experience with the procedures for activation. Modifications of the NAB Decision could be made at the time of renewal.
October 19, 2016
Method of Collecting Exchange Rates for the Calculation of the Value of the SDR for the purposes of Rule 0-2(a)
Description: This paper proposes modifications to the method of collecting exchange rates for the calculation of the value of the SDR for the purposes of Rule O-2(a). The value of the SDR in terms of the U.S. dollar is determined daily as the sum of the equivalents in U. S. dollar values of the amounts of the currencies that comprise the SDR valuation basket (as provided in Rule O-1), calculated on the basis of exchange rates established in accordance with procedures decided from time to time by the Fund.1 The current procedures are set out in Decision No. 6709-(80/189) S, as amended by Decision No. 12157-(00/24) S, March 9, 2000 (see Annex), which specifies the method for collecting exchange rates for this purpose. Under these procedures, the relevant currency amounts are converted into U.S. dollars using daily exchange rates that are provided to the Fund by the Bank of England (BoE). If rates cannot be obtained from the BoE, they are provided by the Federal Reserve Bank of New York (FRBNY) and, if not available there, by the European Central Bank (ECB). The BoE, FRBNY, and ECB intend to rely on a new, more robust methodology to provide exchange rates to the Fund after November 1, 2016, and the proposed modifications reflect these changes.
October 12, 2016
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. The tables in this report provide an overview of recent developments, reflecting information on documents considered by the Board in 2016 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.
October 12, 2016
Tax Policy, Leverage and Macroeconomic Stability
Description:
Risks to macroeconomic stability posed by excessive private leverage are significantly amplified by tax distortions. ‘Debt bias’ (tax provisions favoring finance by debt rather than equity) has increased leverage in both the household and corporate sectors, and is now widely recognized as a significant macroeconomic concern.
This paper presents new evidence of the extent of debt bias, including estimates for banks and non-bank financial institutions both before and after the global financial crisis. It presents policy options to alleviate debt bias, and assesses their effectiveness. The paper finds that thin capitalization rules restricting interest deductibility have only partially been able to address debt bias, but that an allowance for corporate equity has generally proved effective. The paper concludes that debt bias should feature prominently in countries’ tax reform plans in the coming years.
October 4, 2016
Progress Report to the International Monetary and Financial Committee on the Activities of the Independent Evaluation Office of the IMF
Description: This report summarizes the outcome of the IEO’s evaluation of The IMF and the Crises in Greece, Ireland, and Portugal, discussed by the Executive Board on July 19, 2016, and reports on recent follow-up and ongoing IEO work.
September 30, 2016
Post-program Monitoring - Proposed Decision on Countries
Description: On July 1, 2016 the Executive Board adopted a decision to move to a more risk-based and focused framework for Post-Program Monitoring (PPM). The revised decision on PPM, which comes into effect on September 30, 2016, specifies absolute size and quota-based thresholds for establishing expectations as to when members would engage in PPM. Under the new framework, members would be expected to engage in PPM if their credit outstanding exceeds at least one of the applicable thresholds, unless the Managing Director considers that, in her view, the member’s circumstances are such that the process is unwarranted. Against that backdrop, this paper contains proposals to operationalize the new PPM decision.
September 30, 2016
Review of the Method of Valuation of the SDR - Amendment to Rule O-1
Description: This paper seeks Executive Board approval of an amendment to Rule O-1, which specifies the currency amounts in the SDR valuation basket.
September 30, 2016
Report of the Executive Board to the Board of Governors on Progress on the Fifteenth General Review of Quotas
Description: In February 2016, the Board of Governors adopted Resolution No. 71-2 on the Fifteenth General Review of Quotas (hereafter the “Fifteenth Review”), which (i) welcomed the entry into force of the Seventh Amendment on the Reform of the Executive Board, allowing the quota increases under the Fourteenth Review to become effective; (ii) urged the members who had not yet consented to their Fourteenth Review quota increases to do so without further delay and urged the members who had consented to their quota increases to make their quota payments in a timely manner; (iii) regretted that the Fifteenth Review had not been completed by December 15, 2015, as mandated by the Articles of Agreement and as requested in Board of Governors Resolution No. 70 1, and resolved to continue the Fifteenth Review under Article III, Section 2(a) and called on the Executive Board to work expeditiously on the Fifteenth Review in line with previous Executive Board understandings, and with the aim of completing the Fifteenth Review by the 2017 Annual Meetings; and (iv) requested that the Executive Board report to the Board of Governors on progress on the Fifteenth Review by the 2016 Annual Meetings and the 2017 Spring Meetings. This report responds to that request.