Policy Papers
2017
October 10, 2017
Progress Report to the IMFC on the Activities of the Independent Evaluation Office of the IMF
Description: Since the April 2017 report to the IMFC, the IEO has completed its evaluation on social protection, continued work on evaluations on fragile states and financial surveillance, initiated a new evaluation on advice on unconventional monetary policy, and advanced two updates.
October 2, 2017
Review of the Debt Sustainability Framework for Low Income Countries: Proposed Reforms
Description:
The Debt Sustainability Framework for Low-income Countries (LIC DSF) has been the cornerstone of assessments of risks to debt sustainability in LICs. The framework classifies countries based on their assessed debt-carrying capacity, estimates threshold levels for selected debt burden indicators, evaluates baseline projections and stress test scenarios relative to these thresholds, and then combines indicative rules and staff judgment to assign risk ratings of external debt distress.
The framework has demonstrated its operational value since the last review was conducted in 2012, but there are areas where new features can be introduced to enhance its performance in assessing risks. Against the backdrop of the evolving nature of risks facing LICs, both staff analysis and stakeholder feedback suggest gaps in the framework to be addressed. Complexity and lack of transparency have also been highlighted as causes for concern.
This paper proposes a set of reforms to enhance the value of the LIC DSF for all users. In developing these reforms, staff has been guided by two over-arching principles: a) the core architecture of the DSF—model-based results complemented by judgment—remains appropriate; and b) reforms should ensure that the DSF maintains an appropriate balance by providing countries with early warnings of potential debt distress without unnecessarily constraining their borrowing for development.
September 20, 2017
Poverty Reduction and Growth Trust―2017 Borrowing Agreements with the National Bank Of Belgium and the Swiss National Bank
Description: The Fund, as Trustee of the Poverty Reduction and Growth Trust (PRGT or Trust), has entered into new borrowing agreements with the National Bank of Belgium (Belgium) and the Swiss National Bank (Switzerland), effective on August 30, 2017. These new borrowing agreements with Belgium and Switzerland provide new resources equivalent to SDR 350 million and SDR 500 million, respectively, for a total amount equivalent to SDR 850 million in new PRGT lending resources.
September 15, 2017
Heavily Indebted Poor Countries (HIPC) Initiative and Multilateral Debt Relief Initiative (MDRI)—Statistical Update
Description:
The HIPC Initiative and MDRI are nearly complete, with 36 countries having reached the completion point under the HIPC Initiative. Debt relief under the Initiative has alleviated debt burdens substantially in recipient countries and has enabled them to increase their poverty-reducing expenditure by over one and a half percentage points of GDP between 2001 and 2015.
Creditor participation in the HIPC Initiative has been strong amongst the multilateral and Paris Club creditors; however participation from 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$76.9 billion, while the costs to the four multilateral creditors providing relief under the MDRI is estimated at US$42.4 billion in end-2015 present value terms.
September 13, 2017
Increasing Resilience to Large and Volatile Capital Flows: The Role of Macroprudential Policies - Case Studies
September 7, 2017
Guidance for the Investment of Temporary Resources to Generate Income to Contribute to PRG, PRG-HIPC, and CCR Trusts
Description: On July 28, 2017, the Executive Board approved the following decision on the Investment of Temporary Resources to Generate Income to Contribute to PRG, PRG-HIPC, and CCR Trusts. This decision references the Guidelines for Investing PRG, PRG-HIPC, and CCR Trust Assets, which were adopted by the Executive Board on March 22, 2017. These Guidelines are also available to the public.
September 7, 2017
Guidelines for Investing PRG, PRG-HIPC, and CCR Trusts Assets
Description: On March 22, 2017, the Executive Board adopted the Guidelines for Investing PRG, PRG-HIPC, and CCR Trust Assets (the “Guidelines”) to establish the investment objectives and policies to guide the investment of assets of the PRG, PRG-HIPC, and CCR Trusts (the“Trusts”) which are available for investment under the Trusts’ instruments. These Guidelines are included in this document.
August 7, 2017
FY2017--Output Cost Estimates and Budget Outturn Paper
Description:
With continued efforts to maximize the use of available resources, the FY 17 outturn represents a small increase in spending within a largely flat budget envelope. Reallocations from lower priority areas and efficiency gains, along with flexibility provided by carry forward resources enabled the Fund to deliver on the initiatives and priorities in the Global Policy Agenda and Management’s Key Goals.
In terms of outputs, there was a small shift in spending from country and regional work to policy work. Within the former, spending moved from lending activities towards bilateral surveillance and capacity development. In terms of inputs, the structural budget was almost fully utilized.
Highlights are presented followed by a discussion of the outputs and inputs. Details on capacity development are presented in the Annex.
August 3, 2017
The 2017 Joint Review of the Standards and Codes Initiative
Description: The standards and codes (S&C) initiative was launched in the aftermath of the emerging market crises of the 1990s as part of efforts to strengthen the international financial architecture, with a focus on emerging markets. The initiative has aimed at promoting international standards and codes to improve economic and financial resilience by assisting countries in strengthening their economic institutions and informing World Bank and IMF work. The four previous reviews confirmed a fairly high appreciation of the overall initiative, while also raising questions about the initiative’s link to surveillance and capacity development efforts, weak uptake by market participants, as well as a need to improve traction with policy makers. This review reaffirms the country authorities’ appreciation for S&C work, and its focus and scope are guided by the February 2017 paper.
August 3, 2017
Negative Interest Rate Policies—Initial Experiences and Assessments
Description:
The depth of the crisis and the weakness of the ensuing recovery led to new ways
to implement monetary policy. At the onset of the crisis, central banks in several
advanced economies quickly moved policy rates to zero and initiated large-scale asset
purchases. In more recent years, with inflation still below target and limited support
from fiscal policy, several central banks lowered their policy rates below the previous
zero lower bound, embarking on so-called negative interest rate policies (NIRPs).
This paper explores the implications of NIRPs for monetary policy transmission
and banks’ behavior. It considers potential differences between interest rate cuts in
positive versus negative territory on deposit and lending rates, as well as banks’ interest
rate margins and profitability, and market functioning. The paper focuses on the bank
transmission channel, where differences between positive and negative policy rates
could arise. Finally, the paper reviews cross-country experiences through case studies.