Review of the Financial Sector Assessment Program—Further Adaptation to the Post-Crisis Era

Policy Papers, August 18, 2014

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The Financial Sector Assessment Program (FSAP), established in 1999, is an in-depth assessment of a country’s financial sector.
FSAP is an important element of the Fund’s surveillance and provides input to the Article IV consultations.
In developing and emerging market countries, FSAP assessments are usually conducted jointly with the World Bank and include two components:
- a financial stability assessment (the main responsibility of the Fund)
- a financial development assessment (the main responsibility of the World Bank)
Each FSAP concludes with the preparation of a Financial System Stability Assessment (FSSA), which focuses on issues of relevance to IMF surveillance and is discussed by the IMF Executive Board normally together with the country’s Article IV staff report.

Since the program’s inception, 144 member countries have requested and undergone FSAPs, most of them more than once.
In recent years, the Fund has been conducting 14–16 FSAPs per year.
In 2010, the financial stability assessment under the FSAP in 25 jurisdictions with financial sectors deemed by the Fund to be systemically important became a mandatory part of Article IV surveillance, expected to take place every five years.
The list of mandatory jurisdictions was expanded to 29 jurisdictions in 2013.
For all other jurisdictions, FSAP participation continues to be voluntary.

The Fund’s recent annual FSAP activity has operated at an annual cost of US$13–15 million.

The last review of the FSAP in 2009, in the aftermath of the global financial crisis, introduced a number of far-reaching reforms that:
- clarified the responsibilities of the Fund and the Bank in developing and emerging market countries (where assessments usually take place jointly)
- established institutional accountability
- strengthened the analytical focus and coverage of FSAPs
- introduced the option of modular assessments that afforded the Fund and national authorities greater flexibility on the scope and timing of assessments

FSAP integrates financial stability analysis into IMF surveillance through FSSAs discussed alongside Article IV staff reports.
Mandatory periodic financial stability assessments for systemically important jurisdictions (25 in 2010; 29 in 2013) institutionalize regular in-depth surveillance every five years for those jurisdictions.
Modular assessments provide flexibility for authorities and the Fund to tailor scope and timing to country needs.
The program’s scale (14–16 FSAPs per year) and budgetary implications (US$13–15 million annually) reflect continued operational commitment across a large number of member countries (144 to date).

Review of the Financial Sector Assessment Program—Further Adaptation to the Post-Crisis Era, August 18, 2014.