|
Reports on the Incidence of a Longer-Term Program Engagement Press Release: IMF Releasing Semiannual Reports on the Incidence of Longer-Term Program Engagement March 5, 2004 Publication of List of Members with Longer-Term Program Engagements February 25, 2004 Operational Guidance for Assessments of Countries with a Longer-Term Program Engagement August 20, 2003 Conclusions of the Task Force on Prolonged Use of Fund Resources February 4, 2003 Public Information Notice: IMF Concludes Discussion on Prolonged Use of Fund Resources April 9, 2003 Operational Guidance on the New Conditionality Guidelines May 8, 2003 Guidelines on Conditionality September 25, 2002 |
|
|
|
Report on the Incidence of a Longer-Term Program Engagement Prepared by the Policy Development and Review Department In consultation with other Departments Approved by Mark Allen February 25, 2004 1. During the discussion of the conclusions of the Task Force on Prolonged Use of Fund Resources (SM/03/46), the Executive Board instructed staff to begin undertaking ex post assessments (EPAs) for members with a longer-term program engagement.1 The assessments are intended to provide an analysis of the economic problems facing the country and a critical and frank review of progress during the period of Fund-supported programs, as the basis for a forward-looking assessment that takes into account lessons learned and a strategy for future Fund engagement, including, where appropriate, an explicit "exit strategy." The Executive Board asked for a semi-annual report on the incidence of prolonged use (BUFF/03/51), defined broadly to include all members with a longer-term program engagement.2 This, the first such report, presents information through January 2004. 2. The following criteria determine the members that are subject to EPAs. For countries that have received access to Fund financing through the GRA or a blend of GRA and PRGF/ESAF resources, an assessment is to be undertaken when the member has spent seven or more of the past ten years in arrangements, including precautionary arrangements. A member supported by concessional resources would undergo such an assessment when it has had two or more multi-year arrangements.3 For countries that switch from one category to the other, an assessment should be undertaken if required under either of these criteria. For example, if a country has undergone two ESAF/PRGFs followed by a SBA, it should be subject to an EPA even if it has not yet spent seven of the past ten years in Fund arrangements. An assessment would be undertaken prior to any proposed new arrangement, provided that the country continues to meet these criteria. |
| 3. In establishing these criteria for determining which members are subject to EPAs, the Executive Directors recognized that in some cases, longer-term financial engagement can be beneficial. In low-income countries in particular, the Directors generally accepted a longer-term role for the Fund, given the protracted nature of their balance of payments problems.4 Directors also underscored that longer-term program engagement may be beneficial in transition and emerging market countries with institution-building issues. Moreover, it was recognized that precautionary arrangements do not normally involve direct use of Fund resources, although they do provide access to those resources and put the Fund's reputation at stake; precautionary arrangements may be an effective device for facilitating the transition from sustained reliance on Fund resources. On balance, the Board decided that EPAs would be undertaken for all members with longer-term program engagement as defined above, given the desirability of reflecting on its program relations with a member country in such cases. The contents of the assessments themselves would distinguish those cases in which a longer-term engagement had been and remains beneficial from those in which it largely reflected a persistent failure to achieve program objectives. 4. Table 1 lists the members with longer-term program engagements as of end-December 2003. Table 2 lists those members for which EPAs have already been discussed at the Board; the limited number so far (four) reflects the start-up time required for the assessment process. Table 3 shows the projected schedule of EPAs over the next six months. Through end-June 2004, the Board is projected to consider EPAs for an additional 12 countries.
1The requirements for ex post assessments are discussed in a guidance note which was circulated to the Board for information (SM/03/233, Revision 1). 2The latter terminology, which includes prolonged access to Fund resources in the context of precautionary arrangements, was introduced in the guidance note on implementing the ex post assessments. The set of member countries covered in this report is the same as those for which ex post assessments are to be undertaken (SM/03/233, Revision 1). 3For arrangements under the GRA, the duration of the use of Fund resources is measured by the period of time covered by the Fund arrangement. For PRGF arrangements, all are counted even if they terminate prematurely. 4See Role of the Fund in Low-Income Member Countries over the Medium Term-Issues Paper for Discussion (SM/03/257). |