Policy Papers
2010
September 7, 2010
Bhutan - Assessment Letter for the World Bank
Description: Bhutan’s growth was resilient to the financial crisis and the outlook remains positive. Containing fiscal expansion and enhancing liquidity management are necessary to avoid economic overheating. Strengthening bank supervision is also a top priority.
September 2, 2010
Fourteenth General Review of Quotas - Further Considerations
Description: This paper provides the basis for the next round of discussions on the 14th General Review of Quotas. The Committee of the Whole (COW) has so far met three times this year: in March and July to consider the realignment of quota shares, and in April for an initial discussion on the size of the overall increase. Directors also met informally with the Managing Director on July 22 to take stock of the remaining issues, keeping in mind the tight timetable for completing the review and the need for flexibility and compromise from all sides. As discussed at the informal meeting, the Board recess provided an opportunity to take stock of the different positions and seek guidance from capitals on possible ways forward, with the goal of reaching a pragmatic solution that could bridge the remaining gaps within the relatively short period of time still available.
August 31, 2010
Integrating Stability Assessments Under the Financial Sector Assessment Program into Article IV Surveillance-Background Material
Description:
This paper presents the staff analysis underpinning two central elements of the proposal to make financial stability assessments under the FSAP mandatory for members with systemically important financial sectors:
the definition of systemic importance used in the paper and the methodology for identifying members with systemically important financial sectors (Section II); and
the review of the literature and industry practices that form the basis for the staff proposal to conduct these mandatory financial stability assessments at a frequency of about three years (Section III).
August 31, 2010
Integrating Stability Assessments Under the Financial Sector Assessment Program into Article IV Surveillance - Revised Proposed Decision
Description: Recognizing the important impact that a member’s domestic economic and financial policies can have on systemic stability, Article IV of the IMF’s Articles of Agreement establishes obligations for members respecting the conduct of these policies, including their financial sector policies. An examination of members’ financial sector policies is important in all cases of bilateral surveillance, and three quarters of the Fund’s membership has already undergone a financial stability assessment. With this Decision, the Fund decides that, taking into account the framework described above and the overall purpose of surveillance, heightened scrutiny should be given in bilateral surveillance to the financial sector policies of those members whose financial sectors are systemically important, given the risk that domestic and external instability in such countries will lead to particularly disruptive exchange rate movements and undermine systemic financial and economic stability. The mandatory financial stability assessments undertaken under this Decision will consist of the following elements: a) an evaluation of the source, probability, and potential impact of the main risks to macro-financial stability in the near-term for the relevant financial sector; b) an assessment of the authorities’ financial stability policy framework; and c) an assessment of the authorities’ capacity to manage and resolve a financial crisis should the risks materialize.
August 27, 2010
Integrating Stability Assessments Under the Financial Sector Assessment Program into Article IV Surveillance
Description:
Integration of financial sector issues into bilateral surveillance has been a long-standing challenge. Financial stability is a key component of the domestic and external stability of members and is important for the promotion of the “stable system of exchange rates” envisaged under Article IV. But although financial sector issues and policies are at the core of the Fund’s surveillance mandate, their effective integration has been a challenge.
To address this challenge, it is proposed to adopt a more risk-based approach to financial sector surveillance by making FSAP stability assessments part of Article IV surveillance for members with systemically important financial sectors.
August 26, 2010
The IMF-FSB Early Warning Exercise - Design and Methodological Toolkit
Description: The Early Warning Exercise (EWE) draws together a combination of analytical techniques, practical experience, seasoned judgment and unique databases in order to assess the potential consequences associated with economic and financial tail risks. There are several key features of the exercise. First, the exercise aims to help prevent the occurrence of financial crises and to limit their potential damage, not to predict the timing of crises. Second, coverage is fairly comprehensive, including both advanced and emerging economies. Third, the EWE is based on rigorous analysis and cutting-edge techniques, but it uses a holistic approach, drawing also various other tools rather than relying on a single crisis model. Fourth, it combines empirical analysis with forward-looking thinking, based on inputs from key policymakers and academics, in-depth real-world knowledge from practitioners, and seasoned judgment from IMF experts. The primary purpose of the EWE is to identify as early as possible the buildup of underlying vulnerabilities that predispose a system to a crisis, so that corrective policies can be implemented and contingency plans put in place.
August 25, 2010
Review of the Adequacy of the Fund’s Precautionary Balances
Description: The paper reviews the adequacy of the Fund’s precautionary balances and proposes a more transparent and rules-based framework for adjusting the precautionary balance target through time. The framework seeks to provide sufficient flexibility to capture the main elements considered relevant by the Board in the past when setting the target and draws on approaches followed by other IFIs, adapted to the particular circumstances of the Fund.
August 25, 2010
The Fund’s Mandate - The Future Financing Role - Revised Reform Proposals and Revised Proposed Decisions
Description: This supplement provides clarifications and proposes revision to the reforms of the nonconcessional lending toolkit contained in the staff papers on “The Fund’s Mandate—Future Financing Role: Reform Proposals”. The focus of this supplement is on the Flexible Credit Line (FCL) and the Precautionary Credit Line (PCL), for which revised proposed decisions are attached.
August 23, 2010
Key Trends in Implementation of 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 Trends2 with information on documents published through December 2009.
August 20, 2010
Niger - 2010 Assessment Letter for the European Union and African Development Bank
Description: Niger’s macroeconomic performance and policies through end-January 2010 were assessed in the IMF Country Report No. 10/146, issued following the completion of the third program review under the arrangement under the Extended Credit Facility (ECF) from the IMF. Since the military intervention in February, the near-term growth outlook has weakened, reflecting the intensity of the food crisis and some contraction in public spending, but the outlook for 2011 is broadly favorable provided that budgetary policies remain appropriately cautious, that normal weather conditions prevail, and that donor support for Niger picks up.