Policy Papers
2014
December 18, 2014
Pan-African Banks - Opportunities and Challenges for Cross-Border Oversight
Description: There has been a rapid expansion of pan-African banks (PABs) in recent years, with seven major PABs having a presence in at least ten African countries: three of these are headquartered in Morocco, two in Togo, and one each in Nigeria and South Africa. Additional banks, primarily from Kenya, Nigeria, and South Africa, have a regional presence with operations in at least five countries. PABs have a systemic presence in around 36 countries. Overall, the PABs are now much more important in Africa than the long-established European and American banks.
December 15, 2014
The SDR Interest Rate Basket--Proposed Change of the Representative Interest Rate for the Euro and Amendment to Rule T-1(C)
Description:
The three-month Eurepo interest rate, the euro component of the SDR interest rate basket, will be discontinued as of the end of 2014. The three-month Eurepo rate, administered by the European Money Market Institute (EMMI), has been the representative interest rate instrument of the euro area in the SDR interest rate basket since 2006. However, faced with a significant shrinking in the number of banks participating in the rate-setting panel, the EMMI announced last month that the Eurepo interest rate will be discontinued after December 31, 2014.
This paper proposes to replace the three-month Eurepo rate in the SDR interest rate basket with a transactions-based three-month interest rate. Staff has consulted with the European Central Bank (ECB), which recommends to replace the Eurepo rate with a three-month spot rate derived from the secondary market yield curve covering euro area government bonds rated either investment grade or AA and above. In staff’s view, the latter option (AA and above) would be most comparable to the other instruments in the SDR interest rate basket and would have characteristics that are most consistent with previous Board guidance for selection of financial instruments in the SDR basket. The proposed change would be implemented by an amendment to Rule T-1(c), requiring a 70 percent majority of the total voting power.
December 15, 2014
Heavily Indebted Poor Countries Initiative and Multilateral Debt Relief Initiative - Statistical Update
Description:
The HIPC Initiative and MDRI are nearly complete with 35 countries having already reached the completion point under the HIPC Initiative. One country, Chad, remains in the interim phase. Debt relief under the Initiatives has substantially alleviated debt burdens in recipient countries and has enabled them to increase their poverty-reducing expenditure by two and a half percentage points between 2001 and 2013.
Creditor participation in the Initiative has been strong amongst the multilateral and Paris Club creditors; however participation from the other creditor groups still needs to be strengthened. The total cost of debt relief to creditors under the HIPC Initiative is currently estimated to be US$75.0 billion, while the costs to the four multilateral creditors providing relief under the MDRI is estimated to be US$41.1 billion in end-2013 present value terms.
December 9, 2014
Extension of the Period for Consent to Increase Quotas Under the Fourteenth General Review of Quotas, the 2008 Reform of Quota and Voice, and the Eleventh General Review of Quotas
Description: This paper proposes a further six-month extension of the period for consent to increase quotas under the Fourteenth General Review of Quotas. The current deadline is due to expire on December 31, 2014; however, Board of Governor’s 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).
November 21, 2014
2014 Triennial Surveillance Review - Managing Director’s Action Plan for Strengthening Surveillance
Description: The 2014 review of surveillance comes at a critical juncture for the Fund and its member countries. Policymakers are navigating a brittle, uneven recovery that is still marred by the lingering effects of the crisis. They are also continuing to adapt to the challenges of a highly interconnected world, shielding their economies from potential negative spillovers while also striving to harness the benefits of globalization. It is imperative that Fund surveillance is positioned to help our members best chart this course. This paper presents specific proposals in the priority areas agreed in the 2014 Triennial Surveillance Review (TSR). These actions will help ensure that surveillance meets the current and future needs of the membership, and the wider global economic community.
November 19, 2014
Poverty Reduction and Growth Trust - Review of Interest Rate Structure
Description: This paper provides the basis for the second review of the interest rate structure approved under the 2009 reforms of the Fund’s concessional lending facilities. Based on the application of the Poverty Reduction and Growth Trust (PRGT) interest rate mechanism, PRGT interest rates for 2015–16 would be zero percent for both the Extended Credit Facility (ECF) and Rapid Credit Facility (RCF), and 0.25 percent for the Stand-by Credit Facility (SCF). The interest rate on remaining balances of the Exogenous Shock Facility (ESF) is not set by the PRGT interest mechanism and it would be 0.25 percent. In accordance with the PRGT Instrument, the next review of PRGT interest rates will take place by December 31, 2016.
November 14, 2014
Reform of the Policy on Public Debt Limits in Fund-Supported Programs—Proposed Decision and Proposed New Guidelines
Description: This supplement refers to the reforms proposed in Reform of the Policy on Public Debt Limits in Fund-Supported Programs to the existing framework governing external debt limits in Fund arrangements, and presents the proposed decision that is needed to implement these reforms. The proposed new guidelines are included in the Attachment to the decision, while Annexes I and II set forth for the convenience of Executive Directors include redlined texts that show revisions against the current guidelines and to the Policy Support Instrument decision, respectively.
November 14, 2014
Reform of the Policy on Public Debt Limits in Fund-Supported Programs
Description:
The reform of the Fund’s policy on the use of conditionality on public external debt in Fund-supported programs (the “debt limits policy”) has been under discussion since March 2013. The discussion has taken place against a backdrop where lower income countries are seeking to boost growth through higher public investment levels, targeted in particular at large infrastructure gaps, while facing both a wider range of external financing opportunities and limits on the supply of traditional concessional financing. The reform of the Fund’s policy on debt conditionality in 2009 was a first step to accommodate these new realities: experience with the 2009 reforms has pointed to the need for more fundamental reforms to provide countries with greater flexibility to finance productive investments while containing risks to medium-term debt sustainability.
The reforms proposed here build on the Board review of the debt limits policy in March 2013, ensuing informal Board discussions in January and May 2014, discussions at an informal seminar in September 2014, and various stakeholder consultations. In developing this reform proposal, staff has sought to first specify a robust set of principles to guide the use of public debt conditionality in all Fund arrangements and then examine how these principles should apply in the specific circumstances of countries that normally rely on official external concessional financing.
Also Available in French
November 12, 2014
Statement by the Managing Director on the Work Program of the Executive Board - Executive Board Meeting - November 24, 2014
Description: The Managing Director’s Global Policy Agenda (GPA) presented to the IMFC in October identified a range of actions needed to prevent growth from settling into a “new mediocre” with unacceptably low job creation and inclusion. These actions included managing eventual monetary normalization in advanced economies and its effects on other economies, growth-friendly fiscal policies to enhance the quality of public expenditure and reduce distortions in revenue collection, policies to safeguard financial stability while strengthening credit transmission, structural reforms to buttress productivity and strengthen growth, and increasing investment in infrastructure. The GPA also outlined how the Fund would support the membership through assessments and policy advice provided in the context of multilateral and bilateral surveillance, capacity building, and financial support.
November 7, 2014
Key Trends in Implementing the Fund's Transparency Policy
Description: At the time of the 2005 review of the Fund’s transparency policy, it was agreed that information on key trends in implementation of the transparency policy would be circulated to the Board regularly, along with lists indicating the publication status of reports discussed by the Board. The set of tables provided in this report updates the last Key Trends with information on documents issued to the Board through December 2013.