Policy Papers
2017
July 24, 2017
Statement by the Managing Director on the Independent Evaluation Office's Report on the IMF and Social Protection
Description: I welcome the report of the Independent Evaluation Office (IEO) on the IMF and Social Protection. This is an area in which the Fund has broadened its engagement in recent years, responding to the needs of the membership. The conclusion that I draw from the report—that the Fund has made strong progress—is therefore an encouraging one, even as I recognize that there is scope to do better. The IEO’s analysis and findings have much in common with recent work by Fund staff, while providing a broader perspective that is very valuable. Overall, I find the IEO’s recommendations for refining the Fund’s approach to social protection to be well-judged, and the proposals have my support.
July 20, 2017
Use of Supervisory Standards in the Financial Sector Assessment Program—Understandings with Standard Setting Bodies
Description:
This paper informs the Executive Board of the staff-level understandings reached with global Standard Setting Bodies (SSBs) on the use of the three financial sector supervisory standards in FSAPs:
As graded assessments of compliance with supervisory standards are voluntary, FSAPs have adopted a flexible approach to the use of supervisory standards. A standard is either assessed in full, resulting in grades, or used as the basis for a deeper analysis of selected elements of the oversight framework in a focused review, without grades. The
SSBs and Fund staff have reached understandings on a refinement of the existing flexible approach, with sets of “base principles” serving as the starting points for focused reviews.
July 20, 2017
Statement by the Managing Director on the Work Program of the Executive Board - Executive Board Meeting - June 19, 2017
Description: This Work Program (WP) translates the policy priorities and strategic directions laid out in the Spring 2017 Global Policy Agenda (GPA) and the International Monetary and Financial Committee (IMFC) Communiqué into an Executive Board agenda for the next twelve months. The Managing Director’s GPA, welcomed by the IMFC, called on members to continue using supportive policies based on a three-pronged approach to sustain the recovery, to work together within the multilateral framework toward strong and more balanced growth, and to provide economic opportunities for all. It outlined how the Fund would support the membership by promoting efforts to sustain the recovery, lift productivity and increase resilience, and by promoting sustainable policies toward a more inclusive global economy, while facilitating multilateral solutions to global challenges. Where the work extends beyond traditional areas, the WP will focus on macro-relevant issues that are systemically important or relevant for many countries and amenable to change through economic policies.
July 7, 2017
List of IMF Member Countries with Delays in Completion of Article IV Consultations or Mandatory Financial Stability Assessments over 18 Months
Description: In line with a framework introduced in 2012 for addressing excessive delays in the completion of Article IV consultations, this report lists the IMF members for which the Article IV consultation has been delayed by more than 18 months at end-May, 2017. The delay is counted past the stipulated date for the consultation plus any applicable grace period. There are no countries for which the mandatory financial stability assessments are delayed by more than 18 months at end-May, 2017.
July 7, 2017
Extension of the Periods for Consent to and Payment of Quota Increases
Description:
This paper proposes a further six-month extension of the period for members to consent to an increase in their quotas under the Fourteenth General Review of Quotas (“Fourteenth Review”) through December 29, 2017. The current deadline is due to expire on June 30, 2017. However, Board of Governors Resolution No. 66-2 provides that the Executive Board may extend the period for consent as it may determine. An extension under Resolution No. 66-2 will also extend the periods of consent for quota increases under the 2008 Reform of Quota and Voice (Resolution No. 63-2) and the Eleventh General Review of Quotas (Resolution No. 53-2).
This paper also proposes a further six-month extension of the period for payment of quota increases under the Fourteenth Review, and an extension for the payment of the quota increases under the 2008 Reform, through December 29, 2017.
July 5, 2017
Increasing Resilience to Large and Volatile Capital Flows—The Role of Macroprudential Policies
Description:
Capital flows can deliver substantial benefits for countries, but also have
the potential to contribute to a buildup of systemic financial risk.
Benefits, such as enhanced investment and consumption smoothing, tend to be
greater for countries whose financial and institutional development enables
them to intermediate capital flows safely. Macroprudential frameworks can play an important role
over the capital flow cycle, and help members harness the benefits of
capital flows. The Fund has two frameworks to help ensure that its advice on MPPs and
policies related to capital flows is consistent and tailored to country
circumstances. The frameworks (the Macroprudential framework and the
Institutional View on capital flows) are consistent in terms of key
principles, including avoiding using MPMs and capital flow management
measures (CFMs) as a substitute for necessary macroeconomic adjustment.
The appropriate classification of measures is important to ensure targeted
advice consistent with the two frameworks. The conceptual framework for the
assessment of measures laid out in this paper will assist staff in properly
identifying MPMs and measures that are designed to limit capital flows and
to reduce systemic financial risk stemming from such flows (CFM/MPMs), and
thereby ensure the appropriate application of the Fund’s frameworks, so
that staff policy advice is consistent and well targeted. The Fund will
continue to develop and share expertise in using MPMs, and integrate these
findings into its surveillance and technical assistance, which should
contribute to building international understanding and experience on these
issues.
Post-crisis reforms, including the development of macroprudential policies
(MPPs), are helping to strengthen the resilience of financial systems
including to shocks from capital flows. The Basel III process has improved
the quality and level of capital, reduced leverage, and increased liquid
asset holdings in financial systems. Drawing on and complementing such
international reforms at the national level, robust
macroprudential policy frameworks focused on mitigating systemic risk can
improve the capacity of a financial system to safely intermediate
cross-border flows.
June 23, 2017
Eighth Periodic Monitoring Report on the Status of Implementation Plans in Response to Board-Endorsed IEO Recommendations
Description:
The Eighth Periodic Monitoring Report (PMR) on the Status of Management Implementation Plans (MIPs) in Response to Board-Endorsed IEO Recommendations assesses the progress made over the last year on actions contained in the four MIPs arising from recent IEO evaluations, and another four for which individual management actions were classified as still “in progress” in the Seventh PMR. Overall, 34 of the 77 actions included in the eight MIPs covered in this PMR remain open. Progress on the actions envisaged in the management implementation plans has been somewhat uneven, with more progress being made on the most recent MIPs. Of the 19 actions that have been implemented over the past year, only three relate to the older management actions. Many of the older actions are more broadly worded, and in many instances have no clear timetable. The actions that are progressing more slowly also tend to involve fundamental changes to institutional culture and practices, and therefore require a continuous, long-term effort. In spite of the slower progress on the older actions, significant advances have been made in several key areas. These include: Fund-wide risk analysis and management; the mainstreaming of macro financial surveillance; training on financial sector topics and macro forecasting; acknowledgement, discussion, and dissemination of information on IMF forecasts; the shift towards increasing reliance on quota resources, relative to borrowing; and the approval of the new Statement of Principles and Best Practices in Self-Evaluation. In addition, the 2015 Staff Survey showed significant improvements in several indicators related to the Fund’s internal culture and institutional values.
June 14, 2017
Building Fiscal Capacity in Fragile States
Description: The paper draws on recent country experience to describe the approach to designing and implementing fiscal reforms in fragile states (FS) taken in the IMF’s technical assistance (TA). In doing so, it highlights how the TA that the IMF provides to FS differs from that of non-FS, describes the trends in and modalities of TA delivery, and draws on recent experiences to derive lessons for future work.
June 13, 2017
If Not Now, When? Energy Price Reform in Arab Countries; April 2017 Rabat, Morocco
Description: Regulating energy prices has been a common practice around the world. The objective is, generally, to facilitate access to energy products, which are central to people’s well-being and countries’ economic development. However, energy price regulation also leads to wasteful and excessive consumption, discourages investment in the energy sector, and locks in inefficient technologies. Low energy prices also result in subsidies that erode fiscal space, while benefits for the poor are limited. All these effects have been evident in Arab countries, where domestic energy prices are among the lowest in the world. The current environment of low oil prices offers a unique opportunity for change. Lessons from international experience suggest how well thought-out and sequenced reforms can be successful.
June 6, 2017
Social Safeguards and Program Design in PRGT and PSI-Supported Programs
Description:
The Fund provides considerable support to low-income countries (LICs). This includes concessional financing from the Poverty Reduction and Growth Trust (PRGT), which currently carries an interest rate of zero percent. Since 2010, over half of Fund-supported arrangements have involved a PRGT facility. Support for poverty reduction is a core objective of arrangements supported by these facilities.
This paper examines how PRGT-supported programs safeguard spending on poor and vulnerable groups within the broader framework of promoting inclusive growth. In some cases, national poverty reduction programs seek to shift expenditures toward social programs in the context of generally higher spending supported by domestic revenue mobilization, grants, or debt financing. In other cases, the goal is to safeguard poor and vulnerable groups from fiscal adjustment and reform measures that could adversely affect them by adopting countervailing policy measures to strengthen social safety nets. In discussing social safeguards, this paper focuses on how and if these objectives are reflected satisfactorily in the design of PRGT and PSI-supported programs. The effectiveness of social spending in improving social outcomes, including by durably reducing poverty, is beyond the scope of the paper.