The Policy Coordination Instrument (PCI)

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Purpose

The PCI is a non-financing upper-credit-tranche instrument designed to help countries demonstrate commitment to a reform agenda and unlock financing from other sources.

The PCI supports countries in:

• Designing and implementing macroeconomic policy programs to: (i) prevent crises and build buffers against external shocks; (ii) enhance macroeconomic stability; and (iii) address macroeconomic imbalances;
• Signaling commitment to an economic reform agenda; and
• Unlocking financing from official creditors (including regional financing arrangements) and/or the private sector.
  

Eligibility

All IMF member countries that do not require IMF financing to cover present, potential, or prospective balance of payments needs under the General Resources Account (GRA) or the Poverty Reduction and Growth Trust (PRGT) at the time of PCI approval, and do not have overdue financial obligations to the IMF under the GRA, PRGT, or the Resilience and Sustainability Trust (RST).

Conditionality

Policies must meet the same standard as those under programs supported by IMF financial arrangements.

Review
modalities

Reviews take place on a fixed schedule, normally every six months, to provide regular feedback on program performance.

Delays in the completion of reviews are possible for a three-month period to allow the authorities to implement overdue policies, take corrective actions, or mobilize necessary financing to close any financing gaps. If a review is delayed beyond the three-month buffer period, it can no longer be completed and staff would provide an interim performance update to the IMF's Executive Board for information.

However, when a member is transitioning from a PCI to a new IMF arrangement, a review can be completed within an additional 30-day grace period beyond the three-month buffer in limited circumstances.

For a PCI with semi-annual reviews, non-completion of a review for a 15-month period—computed from Board approval of the PCI or the scheduled review date of the last completed review—would result in the automatic termination of the PCI. For PCI programs with more frequent review schedules, the automatic termination period will be reduced proportionally (and will not be shorter than 12 months).

The PCI has a review-based approach to monitoring program targets, which eliminates the need to request waivers for missed targets.

Use with financial instruments

An on-track PCI facilitates quick access to IMF resources should the member experience a balance-of-payments need, subject to normal policies on the use of IMF resources. A PCI can be used concurrently with emergency financing under the RFI or RCF or with an SBA, SCF or RSF arrangement. The PCI cannot be used concurrently with any other financial arrangement.

Terms

2-3 years, but can be approved for a minimum of six months and up to four years. No limit on the number of successor PCIs.

The PCI is a form of IMF technical assistance. Only advanced economies are required to pay for the associated administrative costs.