Policy Papers

October 19, 2016

Method of Collecting Exchange Rates for the Calculation of the Value of the SDR for the purposes of Rule 0-2(a)

Description: This paper proposes modifications to the method of collecting exchange rates for the calculation of the value of the SDR for the purposes of Rule O-2(a). The value of the SDR in terms of the U.S. dollar is determined daily as the sum of the equivalents in U. S. dollar values of the amounts of the currencies that comprise the SDR valuation basket (as provided in Rule O-1), calculated on the basis of exchange rates established in accordance with procedures decided from time to time by the Fund.1 The current procedures are set out in Decision No. 6709-(80/189) S, as amended by Decision No. 12157-(00/24) S, March 9, 2000 (see Annex), which specifies the method for collecting exchange rates for this purpose. Under these procedures, the relevant currency amounts are converted into U.S. dollars using daily exchange rates that are provided to the Fund by the Bank of England (BoE). If rates cannot be obtained from the BoE, they are provided by the Federal Reserve Bank of New York (FRBNY) and, if not available there, by the European Central Bank (ECB). The BoE, FRBNY, and ECB intend to rely on a new, more robust methodology to provide exchange rates to the Fund after November 1, 2016, and the proposed modifications reflect these changes.

October 12, 2016

Key Trends in Implementing the Fund's Transparency Policy

Description: At the time of the 2005 Review of the Fund’s Transparency Policy, the Executive Board requested regular updates on trends in implementing the transparency policy. The tables in this report provide an overview of recent developments, reflecting information on documents considered by the Board in 2016 and updating the previous annual report on Key Trends. Deeper analysis of these trends is undertaken in the context of periodic reviews of the Fund’s Transparency Policy.

October 12, 2016

Tax Policy, Leverage and Macroeconomic Stability

Description: Risks to macroeconomic stability posed by excessive private leverage are significantly amplified by tax distortions. ‘Debt bias’ (tax provisions favoring finance by debt rather than equity) has increased leverage in both the household and corporate sectors, and is now widely recognized as a significant macroeconomic concern.

This paper presents new evidence of the extent of debt bias, including estimates for banks and non-bank financial institutions both before and after the global financial crisis. It presents policy options to alleviate debt bias, and assesses their effectiveness. The paper finds that thin capitalization rules restricting interest deductibility have only partially been able to address debt bias, but that an allowance for corporate equity has generally proved effective. The paper concludes that debt bias should feature prominently in countries’ tax reform plans in the coming years.

October 4, 2016

Progress Report to the International Monetary and Financial Committee on the Activities of the Independent Evaluation Office of the IMF

Description: This report summarizes the outcome of the IEO’s evaluation of The IMF and the Crises in Greece, Ireland, and Portugal, discussed by the Executive Board on July 19, 2016, and reports on recent follow-up and ongoing IEO work.

September 30, 2016

Post-program Monitoring - Proposed Decision on Countries

Description: On July 1, 2016 the Executive Board adopted a decision to move to a more risk-based and focused framework for Post-Program Monitoring (PPM). The revised decision on PPM, which comes into effect on September 30, 2016, specifies absolute size and quota-based thresholds for establishing expectations as to when members would engage in PPM. Under the new framework, members would be expected to engage in PPM if their credit outstanding exceeds at least one of the applicable thresholds, unless the Managing Director considers that, in her view, the member’s circumstances are such that the process is unwarranted. Against that backdrop, this paper contains proposals to operationalize the new PPM decision.

September 30, 2016

Review of the Method of Valuation of the SDR - Amendment to Rule O-1

Description: This paper seeks Executive Board approval of an amendment to Rule O-1, which specifies the currency amounts in the SDR valuation basket.

September 30, 2016

Report of the Executive Board to the Board of Governors on Progress on the Fifteenth General Review of Quotas

Description: In February 2016, the Board of Governors adopted Resolution No. 71-2 on the Fifteenth General Review of Quotas (hereafter the “Fifteenth Review”), which (i) welcomed the entry into force of the Seventh Amendment on the Reform of the Executive Board, allowing the quota increases under the Fourteenth Review to become effective; (ii) urged the members who had not yet consented to their Fourteenth Review quota increases to do so without further delay and urged the members who had consented to their quota increases to make their quota payments in a timely manner; (iii) regretted that the Fifteenth Review had not been completed by December 15, 2015, as mandated by the Articles of Agreement and as requested in Board of Governors Resolution No. 70 1, and resolved to continue the Fifteenth Review under Article III, Section 2(a) and called on the Executive Board to work expeditiously on the Fifteenth Review in line with previous Executive Board understandings, and with the aim of completing the Fifteenth Review by the 2017 Annual Meetings; and (iv) requested that the Executive Board report to the Board of Governors on progress on the Fifteenth Review by the 2016 Annual Meetings and the 2017 Spring Meetings. This report responds to that request.

September 30, 2016

Provisional Agenda for the Thirty-Fourth Meeting of the International Monetary and Financial Committee

September 26, 2016

The Managing Director's Global Policy Agenda

Description:

Full text also available in Arabic, Chinese, French, Japanese, Russian, and Spanish.

Despite signs of recovery and resilience in some economies, global growth continues to disappoint, with the expected pick-up driven primarily by emerging markets. This persistent underperformance has exposed complex underlying trends in many countries—including the difficulty for some groups to adjust to rapid changes in the global economy. Policymakers should act and use a balanced mix of all policy levers to revive demand and raise productivity, and ensure the gains from technology and globalization—which have led to unprecedented global welfare gains in recent decades—are shared more broadly. A retreat from globalization and multilateralism is a serious risk at a time when international cooperation and coordination are as critical as ever. The Fund can assist by helping policymakers in their efforts by providing advice, developing capacity, and lending to countries in need, while continuing to advocate for multilateral solutions that work for all.

September 13, 2016

Update on the Mobilization of Loan Resources for PRGT Lending, Proposed Amendment to the PRGT Instrument, and Floor for the Six-Month Derived SDR Interest Rate

Description: A Board-endorsed effort to raise SDR 11 billion in new Poverty Reduction and Growth Trust (PRGT) loan resources needed to sustain the Fund’s concessional lending operations is well underway. Staff is now engaging with 16 interested loan providers bilaterally with a view to having firm pledges in line with the target by the 2016 Annual Meetings and a critical mass of new loan agreements in place by end-2016. To date, committed new loan resources amount to half of the SDR 11 billion fundraising target.