Review of Facilities for Low-Income Countries - Supplement 1

Policy Papers, July 26, 2012

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Review of Facilities for Low-Income Countries - Supplement 1

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Bibliographic details

• Published: July 26, 2012
• Series: Policy Papers

Overview

• Publication date: July 26, 2012
• Purpose: Assess the economic impact of the Fund’s support through its facilities for low-income countries (LICs).
• Analytical approach: Two complementary econometric analyses examining medium-term Fund engagement and shock-related financing.

Empirical approach

• Analysis 1:
  • Focus: Longer-term impact of Fund engagement—primarily through successive medium-term programs under the Extended Credit Facility (ECF) and its predecessors, and more recently the Policy Support Instrument (PSI).
  • Outcomes examined: Economic growth and a range of other indicators and socio-economic outcomes.
• Analysis 2:
  • Focus: Role of IMF shock-related financing—through augmentations of ECF arrangements and short-term and emergency financing instruments.
  • Outcomes examined: Short-term macroeconomic performance.

Key findings

• Two channels through which Fund facilities helped LICs respond to the global financial crisis:
  • (i) By supporting a gradual buildup of macroeconomic buffers in the decades prior to the crisis.
  • (ii) By providing liquidity support at the height of the crisis.
• Combined effect:
  • The combination of strong pre-crisis buffers and crisis financing allowed LICs to pursue counter-cyclical policy responses that preserved spending and facilitated a rapid recovery.

Policy implications and relevance

• Medium-term Fund engagement (ECF and predecessors, PSI) can contribute to stronger macroeconomic buffers over time.
• Shock-related IMF financing (augmentations of ECF arrangements and short-term and emergency instruments) plays a key role in providing liquidity during crises.
• Policy emphasis:
  • Preserve and build macroeconomic buffers in good times to enable counter-cyclical policy during shocks.
  • Ensure timely access to liquidity-support instruments to stabilize short-term macroeconomic performance and protect spending.

Subject areas covered

• Access to Fund general resources
• Concessional aid
• Conditionality
• Emergency assistance
• Exogenous Shocks Facility
• Extended Credit Facility
• Extended Fund Facility
• Fund facilities
• General Resources Account
• Low-income developing countries
• Policy Support Instrument
• Precautionary and Liquidity Line
• Rapid Credit Facility
• Staff-monitored programs
• Stand-by arrangements
• Standby Credit Facility
• Use of Fund resources

Review of Facilities for Low-Income Countries - Supplement 1, (USA: International Monetary Fund, 0) accessed 9/18/2026

Content in this bundle

• Review of Facilities for Low-Income Countries—Supplement 1; IMF Policy Paper; July 27, 2012
  • Review of Facilities for Low-Income Countries—Supplement 1; IMF Policy Paper; July 27, 2012 (Markdown version)
  • Review of Facilities for Low-Income Countries—Supplement 1; IMF Policy Paper; July 27, 2012 (PDF)