Policy Papers
2018
July 11, 2018
Guidance Note on IMF Engagement on Social Safeguards in Low-Income Countries
Description: This note provides operational guidance to staff on how to engage on social safeguard issues with low-income countries in both program and surveillance contexts. The note is not intended as a comprehensive guide, and should be used in conjunction with other operational guidance notes, such as those relating to conditionality and surveillance.
July 9, 2018
Review of the Fund's Strategy on Overdue Financial Obligations
Description:
This paper reviews progress under the Fund’s strengthened cooperative strategy on overdue financial obligations. The level of overdue obligations to the Fund declined and their structure has remained broadly unchanged since the last review. Total overdue obligations to the Fund at end-June 2017 amounted to SDR 1,205.7 million, a decline of about SDR 100 million from the end-June 2012 level, when the strategy was reviewed last.
All overdue obligations to the Fund at end-June 2017 were due to two protracted overdue obligations cases. Sudan accounts for the bulk of the overdue obligations to the Fund (80 percent), and Somalia for the remainder. Zimbabwe, which was in protracted overdue obligations to the PRGT at the time of the last Review, settled its overdue obligations to the PRGT on October 20, 2016.
June 28, 2018
List of IMF Member Countries with Delays in Completion of Article IV Consultations or Mandatory Financial Stability Assessments over 18 Months
Description:
In accordance with Executive Board Decision No. 15106-(12/21), the Fund
will publish on its external website a list of member countries whose
Article IV consultations or mandatory financial stability assessments have
been delayed by more than 18 months, as of June15, 2018, since the expected
deadline for conclusion.
The latest version of this list, as shown in Appendix I, will be published
on the Fund’s external website on or after June 27, 2018.
June 15, 2018
Assessing Fiscal Space: An Update and Stocktaking
Description: This paper reviews the experience with the fiscal space assessment framework that was piloted during 2017–18. In 2016, staff proposed an operational definition of fiscal space and a new four-stage framework for its assessment. These were discussed informally by the Board in June, and a Board paper “Assessing Fiscal Space: An Initial Consistent Set of Considerations” incorporating Directors’ views was published in December. Fiscal space was narrowly defined as the room for undertaking discretionary fiscal policy relative to existing plans without endangering market access and debt sustainability. The framework was developed in response to the need to provide a more systematic approach to assessing fiscal space in the Fund’s surveillance. It was designed as a tool to inform the availability of fiscal space over a 3 to 4 year horizon for discretionary action, as opposed to the optimality of its use. Indeed, it was stressed that the availability of space does not necessarily mean that it should be used or should not be further expanded. The framework was piloted in the Article IV consultations of 34 advanced economies and emerging markets, comprising almost 80 percent of global GDP in PPP terms.
June 13, 2018
How to Operationalize Inequality Issues in Country Work
Description:
Economic inclusion is the broad sharing of the benefits of, and the opportunities to participate in, economic growth. It embodies equitable outcomes related to financial well-being as well as opportunities in access to markets and resources, and protects the vulnerable.
Economic inclusion is a high priority issue for the IMF. High inequality is negatively associated with macroeconomic stability and sustainable growth—core to the Fund’s mandate in promoting systemic, balance of payments, and domestic stability. Some macroeconomic policies and reforms may have adverse distributional implications, which in turn can undermine public support for reforms. And, interest in distributional issues and inequality has grown among the membership, increasing the demand for the Fund to work in these areas. While the IMF has long recognized the importance of inequality issues, it has adopted in the recent years a more systematic and structured approach. In this regard, a pilot initiative on inequality was launched in 2015, with the third wave of countries currently participating. Once this wave is concluded, staff proposes to incorporate the analysis of inequality-related issues into broader country work where relevant.
This note provides an overview of good practices and resources available to staff. The note is consistent with the 2015 Guidance Note for Surveillance Under Article IV Consultations and draws also on the 2013 Guidance Note on Jobs and Growth Issues in Surveillance and Program Work. It provides examples of good practices with respect to coverage of inequality-related issues in country reports and lays out the resources available to country teams, both with respect to existing analytical work as well as the availability of data and tools.
Coverage of inequality issues in staff reports should be selective and calibrated to the degree of macroeconomic significance. All teams should consider whether inequality issues are relevant, taking into account also the authorities’ priorities, but with no presumption that inequality will be covered everywhere or every year and in-depth coverage anticipated in only a limited number of cases any year. Staff should point to macroeconomic significance where it exists, with analysis focused on aspects with economic implications and specific policy advice limited to areas where there is Fund expertise.
June 13, 2018
How to Operationalize Gender Issues in Country Work
Description:
Reducing gender gaps can have important economic benefits. Gender gaps remain significant on a global scale, both with respect to opportunities and outcomes. For example, gender-based legal restrictions in many parts of the world, as well as barriers in access to education, healthcare, and financial services, prevent women from fully participating in the economy. In turn, labor force participation rates are lower among women than men. Gender equality can play an important role in promoting economic stability by boosting economic productivity and growth, enhancing economic resilience, and reducing income inequality.
The Fund has begun operationalizing gender issues in its work. Staff has contributed to the economic literature through country-level and cross-country analytical studies, confirming the macro-criticality of gender issues in a broad set of circumstances. Gender issues are also increasingly becoming an integral part of capacity development though technical assistance and training. And in country work, two waves of gender pilots have been completed—encompassing both surveillance and Fund-supported programs and covering all regions of the world and all levels of income—and a third wave is under way.
Coverage of gender issues in staff reports should be selective and calibrated to the degree of macroeconomic significance. All teams should consider whether gender issues are relevant, taking into account also the authorities’ priorities, but with no presumption that gender issues will be covered everywhere or every year and with in-depth coverage anticipated in only a limited number of cases any year. Staff should point to macroeconomic significance where it exists, with analysis focused on aspects with economic implications and specific policy advice limited to areas where there is Fund expertise. Where relevant, country teams should leverage external expertise.
This note provides an overview of good practices and resources available to staff. The note is consistent with the 2015 Guidance Note for Surveillance Under Article IV Consultations and draws also on the 2013 Guidance Note on Jobs and Growth Issues in Surveillance and Program Work. It provides examples of good practice with respect to coverage of gender issues in country reports and lays out the resources available to country teams, both with respect to existing analytical work as well as the availability of data and tools.
June 13, 2018
Review of the Fund's Income Position for FY 2018 and FY 2019-20
Description:
The Fund’s total net income for FY 2018 is projected at about SDR 0.7 billion, broadly in line with the April 2017 estimate. The projections for total lending income are broadly unchanged. Most sources of lending income are lower, reflecting a lower level of credit outstanding as a result of advance repurchases and delayed disbursements. However, projected commitment fee income is higher following the early cancellation of a large FCL arrangement in November 2017.
The paper recommends that GRA net income of SDR 0.7 billion for FY 2018 (excluding projected income of the gold sales profits-funded Endowment Subaccount) be placed to the special and general reserve. After the placement of GRA FY 2018 net income to reserves, precautionary balances are projected to reach SDR 17.4 billion at the end of FY 2018. The paper further proposes to transfer currencies equivalent to the increase in the Fund’s reserves from the GRA to the Investment Account. The paper also revisits options for the allocation of net income between the special and general reserve, and proposes that net income be allocated equally between the special and general reserve.
In line with the recent Board discussion of a framework for guiding future payouts from the Endowment Subaccount, the paper presents a detailed proposal, which includes delaying payouts for three years to protect the real value of the Endowment.
The paper also recommends that the margin for the rate of charge for the period FY 2019–2020 be kept unchanged at 100 basis points. The margin will again be set under the exceptional circumstances clause, as non-lending income continues to be constrained by the low interest rate environment and lending income will be used to finance a portion of the Fund’s non-lending activities.
The projections for FY 2019 and FY 2020 point to a net income position of SDR 0.4 billion and SDR 1 billion, respectively. These projections are subject to considerable uncertainty and are sensitive to a number of assumptions.
May 31, 2018
Pursuing Women's Economic Empowerment
Description:
The economic and social imperative for women’s economic empowerment is clear. Greater gender equality boosts economic growth and leads to better development outcomes. It contributes to reducing income inequality and boosting economic diversification and, in turn, supports economic resilience. Gender equality is one of the 17 global UN Sustainable Development Goals, which provide a roadmap for ending poverty, protecting the planet, and ensuring that all people enjoy peace and prosperity.
The G7 has emphasized the need for closing the gender gap. The Taormina Leaders’ Summit in 2017 renewed the emphasis on promoting women’s empowerment, which the leaders see as a crucial contribution to promoting sustainable development. In this regard, leaders committed to mainstreaming gender equality into all their policies. This is carried forward by Canada’s G7 Presidency.
With growing recognition that gender equality promotes economic stability and growth, the IMF has scaled up its work in this area and is committed to continue these efforts. Work by the IMF will focus on (i) deepening its understanding of the economic benefits of women’s empowerment, both in the labor market and through more equal opportunities for boys and girls, also against the background of persistent megatrends, including in an environment of rapid technological change; (ii) integrating the analysis into Fund policy dialogue with member countries; (iii) providing customized assistance, workshops, and peer-learning courses in areas such as gender budgeting; and (iv) expanding collaboration with other international institutions on the subject to benefit from complementary areas of expertise.
May 24, 2018
The Core Principles for Islamic Finance Regulations and Assessment Methodology
Description: This paper provides a proposal to incorporate the Core Principles for Islamic Finance Regulation (Banking Sector) (CPIFR) issued by the Islamic Financial Services Board (IFSB), as part of the standards used in assessing the banking regulatory and supervisory regimes of relevant member jurisdictions under the Financial Sector Assessment Program (FSAP) and the Reports on Observance of Standards and Codes (ROSCs). The CPIFR largely reflects the order of the Basel Core Principles on Effective Banking Supervision (BCP), with five additional principles that are specific to Islamic banking operations. Thus, for countries that have systemically significant Islamic banking sector, the assessment of the banking regulation and supervision regime of the jurisdiction would be against the CPIFR (for fully Islamic banking systems) or BCP and the five additional core principles under the CPIFR (for dual banking systems). The Fund staff is seeking the endorsement of the Executive Board on this proposal.
May 11, 2018
Somalia: Currency Reform Assessment Letter for the Central Bank of Somalia
Description: This letter provides IMF staff’s assessment on the readiness of the Central Bank of Somalia (CBS) to issue a new national currency under Phase I which will be limited to exchanging the counterfeit Somali shilling notes currently in circulation with new currency. Over the past two years the IMF has provided the CBS with extensive technical assistance (TA) to support the currency reform project. All preparatory measures agreed on between the authorities and IMF staff have been implemented and IMF staff views that the CBS is ready to introduce the new national currency under Phase I. This assessment letter has been requested by the CBS with the objective to share it with donors to mobilize the needed funding for the currency reform project. It is estimated by IMF staff that this project under Phase I will cost about $41 million.