Policy Papers

March 5, 2007

The Role of Fiscal Institutions in Managing the Oil Revenue Boom

Description: This paper examines the fiscal responses of oil-producing countries (OPCs) to the oil boom through 2005 and the role of special fiscal institutions (SFIs)—oil funds, fiscal rules and fiscal responsibility legislation (FRL), and budgetary oil prices—in fiscal management in OPCs, and draws some general lessons.

March 2, 2007

Fund Financial Support and Moral Hazard - Analytics and Empirics

Description: Since Fund financial support helps reduce the expected cost of crises, members and markets might engage in greater risk-taking; in other words, moral hazard. Empirically, however, the Fund’s rate of charge has adequately reflected the default risk it faces and the high political, social, and economic costs of crises are likely to limit debtor moral hazard. As regards the design of a contingent, crisis prevention instrument, the use of qualification standards can help address issues of debtor moral hazard directly. In addition, the small amounts of Fund financial support -- in relation to a country's financial needs -- suggest that creditor moral hazard is likely to be limited. While existing empirical tests are far from definitive, the paper suggests that creditor moral hazard is less likely to be a concern after the Fund sent the signal in mid-1998 that it would interrupt support when program success is unlikely.

Notes: The views expressed in this paper are those of the staff and do not necessarily reflect the views of the Executive Board of the IMF.

February 23, 2007

Report of the External Review Committee on IMF-World Bank Collaboration

Description: The Bank and Fund are the only two international financial institutions with near universal membership. They have an important role to play in providing global public goods and in helping countries obtain the benefits of globalization, as well as handle the pressures it creates. While the Bank and Fund have separate mandates, they are inherently linked and close collaboration is vital. Indeed, the costs to members of poor collaboration would be significant. Although there are many examples of good collaboration and there have been clear improvements over the years, there is scope for further improvements in the view of the Committee.

February 14, 2007

Review of the 1977 Decision on Surveillance Over Exchange Rate Policies - Further Considerations

February 13, 2007

Further Consideration of a New Liquidity Instrument for Market Access Countries - Design Issues

Description: This paper focuses on a specific set of issues -- qualification criteria, monitoring structure, access levels and terms, links to other Fund facilities, and links to the private sector. This paper is a complement and follow-up to an earlier paper, which itself considered the broader issues involved in creating a new instrument. The paper does not put forward a concrete proposal to Directors, but seeks to achieve a further convergence of views on these key issues.

January 30, 2007

Key Trends in Implementation of the Fund's Transparency Policy -- 2007

Description: The set of tables provided in this report updates the last Key Trends with information on documents published through December 2006. Rolling updates will continue to be issued annually to the Board.

January 16, 2007

Review of Procedures on Cooperation with Investigations of Fund Activities by Auditing Institutions of Members

Description: In February 2001, the Executive Board adopted a decision (Decision No. 12424–(01/13)) regarding procedures for cooperation with investigations on the Fund and/or its activities by auditing institutions of members. In January 2004, the Executive Board reviewed the procedures without making any changes to them (Decision No. 13172–(04/6)). The 2004 review called for the procedures to be again reviewed by the Board no later than January 31, 2007. Under the procedures adopted by Decision No. 12424–(01/13), the Fund will be prepared to meet a request to cooperate with investigating agencies of members for the preparation of reports on the Fund and its activities, provided that a request is channeled through an Executive Director’s office and includes (i) a precise description of the terms of reference of the enquiry; and (ii) written assurances that: confidential information provided in the course of the enquiry will not be disclosed; management and staff will be given an opportunity to review any report resulting from the enquiry before its circulation outside the agency to ascertain that no confidential information is disclosed in the report and that the factual information is correct; and the views of management and staff will be included in the report in an acceptable manner. Before any cooperation under the procedures commences, the Executive Board must be notified of the request for cooperation. In July 2001, to guide staff in the implementation of the procedures, operational guidelines were issued.

December 22, 2006

Proposed Amendment of the Articles of Agreement Regarding Basic Votes - Preliminary Considerations

Description: Paragraph 4 of the Board of Governors Resolution on Quota and Voice Reform in the International Monetary Fund, which was adopted effective September 18, 2006 (Resolution 61-5), addresses issues relating to the reform of basic votes in the Fund. Specifically, it provides as follows:
“As an integral part of the reform program, and together with its recommendations for increases in quotas under paragraph 3, the Executive Board is requested to propose to the Board of Governors an amendment of the Fund’s Articles of Agreement that would: (a) provide for at least a doubling of the “basic” votes that each member possesses pursuant to Article XII, Section 5(a) of the Fund’s Articles of Agreement, and thereby at a minimum protect the existing voting share of low income countries as a group and (b) ensure that the ratio of the sum of the “basic” votes of all members to the sum of members’ total voting power remains constant following the increase under (a) above in the event of any subsequent changes in the total voting power of members. The Executive Board is requested to put forward a specific proposal by the Annual Meetings in 2007, and no later than the Annual Meetings in 2008.”

This paper is intended as a first step in facilitating the Executive Board’s response to the above request of the Board of Governors. Specifically, it discusses the design of an amendment of the Articles that would ensure that the ratio of the sum of the basic votes of all members to the sum of members’ total voting power remains constant, as called for in paragraph 4(b) of Resolution 61-5, and identifies implications of such an amendment.

December 21, 2006

Belize - Assessment Letter for the International Financial Community

Notes: Assessment letters or statements may be prepared for member countries with Fund-supported programs; receiving Fund emergency assistance; with staff-monitored programs; or surveillance-only cases. They are typically produced for use by the country with multilateral or bilateral donors or creditors, in particular the World Bank and other International Financial Institutions.

December 7, 2006

The Fund's Income Position for FY2007 - Midyear Review

Description: In March and April this year, Executive Directors had wide-ranging discussions on the Fund’s income outlook, which has changed significantly following the recent sharp decline in credit outstanding. Directors supported the proposal for a two-pronged strategy that would involve, first, immediate steps to address the projected income shortfall in FY2007 under current policies and within the framework of the FY2007 budget and, second, development of a broader work plan on the options to ensure a stable and sustainable income base.