Policy Papers
2018
February 2, 2018
Implementation Plan in Response to the Board-Endorsed Recommendations for the IEO Evaluation Report - "The IMF and Social Protection"
Description:
This paper sets out Management’s response to the Independent Evaluation Office’s (IEO) report on “The IMF and Social Protection.”
The management implementation plan (MIP) proposes specific actions to address the IEO recommendations endorsed by the Executive Board in its discussion on July 19, 2017, specifically to: (i) establish a clear strategic framework to guide Fund involvement in social protection; (ii) provide tailored advice based on in-depth analysis of the particular country situation; (iii) find more realistic and effective approaches to program design and conditionality to ensure that adverse impacts of program measures on the most vulnerable are mitigated; (iv) realistically explain in external communications the IMF’s approach to social protection issues; and (v) engage actively in inter-institutional cooperation on social protection to find ways to work constructively with development partners, particularly institutions with different mandates and policy priorities. The MIP notes that the Board underscored the need to be mindful of the Fund’s mandate to engage only in macro-critical areas while bearing in mind its resource constraints and comparative expertise in implementing these recommendations.
Implementation of some of these proposed actions is already underway. The paper also explains how implementation will be monitored and the MIP’s resource implications.
January 30, 2018
Guidance Note on Letters and Statements Assessing Members’ Economic Conditions and Policies
Description: This note provides guidance on assessment letters and statements, including identifying the circumstances in which they are called for, and outlining the content, the review process, and the ground rules for circulation to the Board and for publication. Such letters or statements may be prepared for countries with programs supported by the Fund through financial assistance, a Policy Support Instrument (PSI) or Policy Coordination Instrument (PCI), countries receiving Fund emergency assistance, countries with staff-monitored programs (SMPs), or surveillance-only cases.
January 26, 2018
2017 Staff Guidance Note on the Fund's Engagement with Small Developing States
Description:
This guidance note highlights the unique economic characteristics and constraints facing small developing states. It provides operational guidance on Fund engagement with such countries, including on how small state characteristics might shape Fund surveillance and financial support, program design, capacity building activities, and collaboration with other institutions and donors.
The note updates the previous version that was published in May 2014. It incorporates modifications resulting from Board papers and related Executive Board discussions that have taken place since the March 2013 Board papers on small states, which provided the foundations of the original guidance note.
Based on these inputs, five key thematic areas (G.R.O.W.TH.) have been identified as central to the policy dialogue:
• Growth and job creation. With small states experiencing relatively weak growth since the 1990s, Fund staff working on small states should ensure an explicit focus on growth in both surveillance and program-related work.
• Resilience to shocks. Small states experience higher macroeconomic volatility and more frequent natural disasters. Staff should be ready to advise on how to tailor macroeconomic policies to provide greater resilience to shocks and climate change.
• Overall competitiveness. Options to improve relative prices may include exchange rate adjustment (where possible) or measures supportive of internal devaluation (if not), and efforts to improve the business climate, including through regional initiatives.
• Workable fiscal and debt sustainability options. With many small states having very high debt burdens, reducing debt to manageable levels requires sustained fiscal consolidation with supporting policies and structural reforms. In cases where the amount of adjustment needed to restore debt sustainability is not feasible or adequate financing is not available, debt restructuring may be needed.
• Thin financial sectors. Developing deeper and more competitive, yet sound, financial sectors contributes to macroeconomic stability and enhances the effectiveness of policy interventions while strengthening competitiveness by improving business access to financial services.
In applying this guidance, staff should continue to tailor their engagement to specific country circumstances.
January 16, 2018
Key Trends in Implementing the Fund's Transparency Policy
January 16, 2018
The Exchange of Documents between the Fund and Regional Financing Arrangements
Description:
The changing contours of the global economy and the rapid transformation of the global financial safety net (GFSN) have strengthened the case for more structured collaboration between its different layers, particularly with Regional Financing Arrangements (RFAs). RFAs have become an important part of the GFSN, and their roles have also evolved. Over recent years, their coverage has expanded to encompass many major advanced and emerging market economies; the resources under their control has risen. Moreover, since the global financial crisis, some RFAs have become key financing counterparts of Fund-supported programs. These developments have heightened the importance of close and timely collaboration with RFAs.
However, there is currently no formal framework for an exchange of Board documents with RFAs, leaving a gap in Fund collaboration with RFAs. The Fund has a long-standing practice for collaborating and sharing documents with other international organizations, primarily under the Transmittal Policy that was amended most recently in November 2017. However, some RFAs do not meet the criteria under the Transmittal Policy and, in view of the unique and heterogeneous institutional and governance structures of RFAs, there is a need for a dedicated and coherent framework that facilitates the exchange of documents on both routine and non-routine bases.
This paper proposes a policy framework for the exchange of documents between the Fund and RFAs. The proposed framework establishes a set of criteria to be met by RFAs for document exchange—based on the consideration of whether a certain entity shares common operational interest with the Fund, and provides satisfactory confidentiality and reciprocity assurances. Under routine document sharing arrangements with RFAs, Board documents would be provided after Board consideration. In cases of UFR arrangements involving current or potential co-financing by the Fund and RFAs, or Policy Coordination Instruments (PCIs) and Policy Support Instruments (PSIs) that may help unlock RFA financing to the country, staff proposes that relevant Board documents be exchanged prior to their consideration by the Board, following notification to the Board. The proposed framework builds on the principles of the Transmittal Policy and does not impact the transmittal of documents to international organizations currently governed by the Transmittal Policy.
January 10, 2018
Extension of the Periods for Consent to and Payment of Quota Increases
Description: This paper proposes a further six-month extension of the period for members to consent to an increase in their quotas under the Fourteenth General Review of Quotas (“Fourteenth Review”) through June 29, 2018. The current deadline is due to expire on December 29, 2017. However, Board of Governors Resolution No. 66-2 provides that the Executive Board may extend the period for consent as it may determine. An extension under Resolution No. 66-2 will also extend the periods of consent for quota increases under the 2008 Reform of Quota and Voice (Resolution No. 63-2) and the Eleventh General Review of Quotas (Resolution No. 53-2). This paper also proposes a further six-month extension of the period for payment of quota increases under the Fourteenth Review, and an extension for the payment of the quota increases under the 2008 Reform, through June 29, 2018.
2017
December 28, 2017
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 the date of publication, since the expected deadline for conclusion.
December 26, 2017
General Arrangements to Borrow
Description: This notification summarizes the outcome of consultations with Washington-based representatives of participants in the General Arrangements to Borrow (GAB) on a possible renewal of the GAB decision. By way of background, the GAB was established in 1962 and is a standing agreement between the Fund and 11 participants to supplement the Fund’s quota resources (see Box 1). The GAB decision stipulates that the arrangements are subject to periodic renewal, and that decisions on renewal must be taken one year prior to expiration. The last renewal became effective in December 2013. Accordingly, the Fund would need to adopt a decision on renewal not later than twelve months before the end of the current period, i.e., not later than December 25, 2017.
December 19, 2017
Adequacy of the Global Financial Safety Net—Review of the Flexible Credit Line and Precautionary and Liquidity Line, and Proposals for Toolkit Reform
Description:
Heightened and protracted global uncertainty combined with frequent episodes of capital flow volatility have intensified demand for liquidity support. In response to calls from the IMFC and the G20, the Fund has identified gaps in the global financial safety net (GFSN) and the Fund’s lending toolkit for crisis prevention, including insufficient coverage against liquidity pressures resulting from volatile capital flows. The proposals in this paper draw on the previous Fund work on the adequacy of the GFSN, the review of the Fund’s current toolkit for crisis prevention, and extensive consultations with the membership. The review of the FCL concludes that the FCL has been effective in providing precautionary support against external tail risks. Successor FCL arrangements and associated access levels have been in line with the assessment of external risks and potential balance of payments needs. However, there is scope to strengthen the transparency and predictability of the qualification framework by adding indicator-based thresholds to complement and inform judgment. To enhance crisis resilience while improving the Fund’s toolkit coherence and resource use, the paper proposes three complementary reforms: The paper also discusses possible reforms of the current commitment fee policy to promote a more balanced use of Fund resources. Possible options include increasing the commitment fee at high access levels or introducing a new time-based commitment fee.
December 19, 2017
Adequacy of the Global Financial Safety Net—Review of the Flexible Credit Line and Precautionary and Liquidity Line, and Proposals for Toolkit Reform—Revised Proposals
Description:
1. This paper is the latest in the Fund’s work stream on the Adequacy
of the Global Financial Safety Net (GFSN).
The paper follows the Executive Board’s discussion of the
Adequacy of the Global Financial Safety Net—Review of the Flexible
Credit Line and Precautionary and Liquidity Line, and Proposals for
Toolkit Reform
on June 30, 2017 (the "June paper"),1 and presents revised reform proposals
in light of Directors’ views. In the absence of sufficient Executive Board
support for a new liquidity facility, the paper proposes to retain the
Precautionary and Liquidity Line (PLL). It also proposes to introduce a
Time-Based Commitment Fee (TBCF) in light of many Directors’ support for
this feature.
2. This work is part of the Fund’s broader work stream to strengthen
the GFSN
. As such, it complements the new non-financing Policy Coordination
Instrument and operational principles and framework for future Fund
engagement with Regional Financing Arrangements.2
3. The paper is organized as follows.
Section II lays out the revised set of reform proposals. Section III sets
forth issues for discussion, and proposes decisions to (i) complete the
review of the Flexible Credit Line (FCL) and the PLL; and (ii) introduce a
TBCF. The paper also includes an Annex that describes a planned revision to
the presentation of the Fund’s Forward Commitment Capacity (FCC) to provide
a breakdown between precautionary and other Fund commitments.