Policy Papers
2010
October 6, 2010
Executive Board Progress Report to the IMFC on the Fund's Mandate
Description:
This paper responds to the IMFC call to review, in light of the crisis, the Fund’s mandate over macroeconomic and financial sector policies bearing on global stability.
The crisis exposed weaknesses in economic oversight—national, regional, and global—prior to the crisis, prompting major institutional innovations to uncover risks and meet large and diverse financing needs. Despite progress, it still needs to be asked if the mandate in the Fund’s Articles is up to the challenges ahead. The Board’s deliberations, which are far from complete, have prompted it to emphasize practical steps to deliver on the Fund’s broad stability mandate, with any need to amend the Articles reconsidered in light of experience. The effectiveness of these steps will also depend on quota and governance reform, as confidence in the Fund as an impartial overseer of global stability and lender of last resort rests on its legitimacy.
October 5, 2010
Emerging from the Global Crisis - Macroeconomic Challenges Facing Low-Income Countries
Description: While the impact of the global crisis has been severe, real per capita GDP growth stayed positive in two-thirds of low-income countries (LICs), unlike in previous global downturns, and in contrast to richer countries. The crisis affected LICs not so much through the terms of trade or global interest rates, but rather through a sharp contraction in export demand, foreign direct investment, and remittances (oil exporters also suffered from a sharp fall in oil prices). LICs saw the sharpest decline in their economic growth rate over the last four decades. However, this slowdown followed a period of strong expansion, and real per capita GDP growth has generally held up in LICs, remaining well above growth in richer countries.
October 5, 2010
Fourteenth General Review of Quotas - Possible Elements of a Compromise
Description: The IMFC in its April 2010 Communiqué pledged to complete the 14th Quota Review before January 2011 in line with the parameters agreed in Istanbul. The Committee of the Whole (COW) has since continued its work aimed at developing proposals that could command broad support. At its most recent meeting in September, there was a shared commitment to reaching an agreement within the agreed timetable but views remained divided on many issues. To facilitate progress towards the agreed goal, this paper suggests possible elements that could help form the basis for an agreement. These elements seek to build on the discussions to date and balance the diverse views that have been expressed. Inevitably, they will not fully meet the preferences or priorities of any individual member, and difficult compromises will be required from all sides if an agreement is to be reached.
October 4, 2010
Understanding Financial Interconnectedness
Description: This paper seeks to advance our understanding of global financial interconnectedness by (i) mapping aspects of the architecture of global finance and (ii) investigating critical fault lines related to interconnectedness along which systemic risks were built up and shocks transmitted in the crisis. It thus takes initial steps toward operationalizing enhanced financial sector and macro-financial surveillance called for by the IMF’s Executive Board and by experts such as de Larosiere et al. (2009). Getting a better handle on interconnectedness would strengthen the Fund‘s ability, together with the Financial Stability Board, to track systemic risk concentrations. It would also inform spillover and vulnerability analyses, and sharpen bilateral and multilateral surveillance.
October 1, 2010
Reference Note on Trade Policy, Preferential Trade Agreements, and WTO Consistency
Description: This Reference Note introduces guidance on preferential trade agreements (PTAs). In so doing, it responds to the request by the Executive Board in the context of the Independent Evaluation Office (IEO) Evaluation of IMF Involvement in Trade Policy Issues. Section II provides context for the Fund’s work on trade policy, drawing upon the 2009 IEO Evaluation, the 2005 Review of Fund Work on Trade, and the discussion of the Executive Board on these occasions. Section III reflects issues presented in Preferential Trade Agreements—Issues for the Fund, discussed at an informal Board seminar in December 2006.
September 24, 2010
Framework Administered Account for Selected Fund Activities - Belgium Subaccount for Selected Fund Activities
Description: In March 2009, the Fund established a new Framework Administered Account to administer external financial resources for selected Fund Activities (the “SFA Instrument”). The financing of activities under the terms of the SFA Instrument is implemented through the establishment and operation of a subaccount within the SFA. This paper requests Executive Board approval to establish the Belgium Subaccount for Selected Fund Activities (the “Subaccount”) under the terms of the SFA instrument.
September 21, 2010
Proposed Decision on Article IV Consultation Cycles
Description: The proposed Decision seeks to implement the staff’s proposals related to Article IV consultation cycles in Review of the Fund’s Mandate—Follow-Up on Modernizing Surveillance, which were endorsed in principle by the Executive Board on September 1, 2010. The goal is to provide for greater flexibility in consultation cycles and simplify the rules governing consultation cycles for members under a Fund arrangement or Policy Support Instrument (PSI).
September 21, 2010
Update on the Financing of the Fund's Concessional Assistance and Debt Relief to Low-Income Member Countries
Description:
A new framework to facilitate mobilization of loan resources for the PRGT became effective in June 2010. It includes a voluntary encashment regime allowing claims of participating creditors to qualify as reserve assets; the issuance of PRGT notes; and a revised framework for borrowing in SDRs.
Members have responded positively to the Managing Director’s fund-raising request. Thirteen members have pledged about SDR 9.3 billion in additional loan resources, compared to the target of SDR 10.8 billion (including provision for a liquidity buffer to facilitate encashment). New loan and note purchase agreements totaling SDR 7.2 billion have been signed so far with nine lenders. Five of these borrowing agreements provide loan resources in SDRs. It remains important to mobilize additional loan resources to complete the financing package.
September 14, 2010
Heavily Indebted Countries (HIPC) Initiative and Multilateral Debt Relief Initiative (MDRI)--Status of Implementation
Description:
This report provides an update on the status of implementation, impact, and costs of the Heavily Indebted Poor Country (HIPC) Initiative and the Multilateral Debt Relief Initiative (MDRI).
Debt relief provided under the Initiatives has substantially alleviated debt burdens in recipient countries. Through the continued use by IDA and the Fund of the flexibility available in the framework governing the HIPC Initiative and the MDRI, significant progress has been achieved under the Initiatives since the last report.
September 7, 2010
Reference Note on Trade in Financial Services
Description: This note addresses key issues with respect to trade policy in financial services and its linkages to capital flows, and prudential regulations and supervision under the General Agreement on Trade in Services (GATS), preferential trade agreements (PTAs), and bilateral investment treaties (BITs). The note should help inform the advice that country teams provide on such issues in the context of surveillance, program negotiations, and technical assistance. It is a response to the Executive Board’s call for guidance in this area stemming from the 2009 IEO Evaluation of IMF Involvement in International Trade Policy Issues.