Policy Papers

October 4, 2016

Progress Report to the International Monetary and Financial Committee on the Activities of the Independent Evaluation Office of the IMF

Description: This report summarizes the outcome of the IEO’s evaluation of The IMF and the Crises in Greece, Ireland, and Portugal, discussed by the Executive Board on July 19, 2016, and reports on recent follow-up and ongoing IEO work.

September 30, 2016

Post-program Monitoring - Proposed Decision on Countries

Description: On July 1, 2016 the Executive Board adopted a decision to move to a more risk-based and focused framework for Post-Program Monitoring (PPM). The revised decision on PPM, which comes into effect on September 30, 2016, specifies absolute size and quota-based thresholds for establishing expectations as to when members would engage in PPM. Under the new framework, members would be expected to engage in PPM if their credit outstanding exceeds at least one of the applicable thresholds, unless the Managing Director considers that, in her view, the member’s circumstances are such that the process is unwarranted. Against that backdrop, this paper contains proposals to operationalize the new PPM decision.

September 30, 2016

Review of the Method of Valuation of the SDR - Amendment to Rule O-1

Description: This paper seeks Executive Board approval of an amendment to Rule O-1, which specifies the currency amounts in the SDR valuation basket.

September 30, 2016

Report of the Executive Board to the Board of Governors on Progress on the Fifteenth General Review of Quotas

Description: In February 2016, the Board of Governors adopted Resolution No. 71-2 on the Fifteenth General Review of Quotas (hereafter the “Fifteenth Review”), which (i) welcomed the entry into force of the Seventh Amendment on the Reform of the Executive Board, allowing the quota increases under the Fourteenth Review to become effective; (ii) urged the members who had not yet consented to their Fourteenth Review quota increases to do so without further delay and urged the members who had consented to their quota increases to make their quota payments in a timely manner; (iii) regretted that the Fifteenth Review had not been completed by December 15, 2015, as mandated by the Articles of Agreement and as requested in Board of Governors Resolution No. 70 1, and resolved to continue the Fifteenth Review under Article III, Section 2(a) and called on the Executive Board to work expeditiously on the Fifteenth Review in line with previous Executive Board understandings, and with the aim of completing the Fifteenth Review by the 2017 Annual Meetings; and (iv) requested that the Executive Board report to the Board of Governors on progress on the Fifteenth Review by the 2016 Annual Meetings and the 2017 Spring Meetings. This report responds to that request.

September 30, 2016

Provisional Agenda for the Thirty-Fourth Meeting of the International Monetary and Financial Committee

September 26, 2016

The Managing Director's Global Policy Agenda

Description:

Full text also available in Arabic, Chinese, French, Japanese, Russian, and Spanish.

Despite signs of recovery and resilience in some economies, global growth continues to disappoint, with the expected pick-up driven primarily by emerging markets. This persistent underperformance has exposed complex underlying trends in many countries—including the difficulty for some groups to adjust to rapid changes in the global economy. Policymakers should act and use a balanced mix of all policy levers to revive demand and raise productivity, and ensure the gains from technology and globalization—which have led to unprecedented global welfare gains in recent decades—are shared more broadly. A retreat from globalization and multilateralism is a serious risk at a time when international cooperation and coordination are as critical as ever. The Fund can assist by helping policymakers in their efforts by providing advice, developing capacity, and lending to countries in need, while continuing to advocate for multilateral solutions that work for all.

September 13, 2016

Update on the Mobilization of Loan Resources for PRGT Lending, Proposed Amendment to the PRGT Instrument, and Floor for the Six-Month Derived SDR Interest Rate

Description: A Board-endorsed effort to raise SDR 11 billion in new Poverty Reduction and Growth Trust (PRGT) loan resources needed to sustain the Fund’s concessional lending operations is well underway. Staff is now engaging with 16 interested loan providers bilaterally with a view to having firm pledges in line with the target by the 2016 Annual Meetings and a critical mass of new loan agreements in place by end-2016. To date, committed new loan resources amount to half of the SDR 11 billion fundraising target.

August 26, 2016

The Fund's Income Position For FY 2016: Actual Outcome

Description: This paper reports the Fund’s income position for FY 2016 following the closing of the Fund’s accounts for the financial year and completion of the external audit. FY 2016 net income, including income from surcharges, was unchanged from the amount of SDR 998 million projected in April.  

GRA net income for FY 2016 of about SDR 1 billion has been placed to the Fund’s reserves, further strengthening the Fund’s precautionary balances, which reached SDR 15.2 billion at the end of FY 2016.  

Following the completion of the Executive Board’s review of the investment strategy for the Fixed-Income Subaccount and consistent with the discussions in April, currencies totaling about SDR 3.7 billion will be transferred to the Investment Account during September and October 2016. This comprises currencies equivalent to the net income retained in the GRA in FY 2014 (SDR 1.2 billion) and FY 2015 (SDR 1.5 billion), together with the currencies equivalent to the FY 2016 GRA net income of about SDR 1 billion.

August 24, 2016

2016 Poverty Reduction and Growth Trust - Review of Interest Rate Structure

Description: This paper reviews the interest rate structure that would apply to the PRGT in 2017–18. Based on the interest rate setting mechanism agreed in 2009, the interest rate for the Extended Credit Facility (ECF) would be zero and the rate for the Standby Credit Facility (SCF) would be 0.25 percent. The interest rate for the Rapid Credit Facility (RCF) was set permanently at zero in July 2015.

Since the current mechanism was agreed, the Executive Board has granted successive exceptional interest waivers on all outstanding Fund concessional credit, setting all interest rates charged at zero percent. These waivers have been extended three times, providing interest rate relief to many low-income countries at a time when they faced considerable headwinds from the global economic environment.

A strong case remains for maintaining zero rates on Fund concessional credit at the current global economic juncture. The global outlook for LICs has not significantly improved since the last review and downside risks remain significant. At the same time, many Directors noted at the last review in 2014 that the possibility of a prolonged period of very low interest rates warrants an early re-examination of the mechanism, including an exit strategy from repeated application of the waiver, with the objective of safeguarding the self-sustaining capacity of the PRGT.

The paper seeks to respond to this call. It proposes that the PRGT interest rate mechanism be amended to accommodate anomalies created by a prolonged period of very low interest rates. Specifically, a new threshold is proposed whereby both the ECF and the SCF rate would be set at zero when the 12-month average SDR rate is less than or equal to 0.75 percent. This proposal will likely keep all PRGT interest rates under the mechanism at zero through at least 2020 given current market expectations while incurring only minimal subsidy costs and eliminating the need for continual waivers. In addition, staff proposes to waive interest rate charges on outstanding legacy balances under the Exogenous Shocks Facility (ESF), which are not determined via the interest rate mechanism, until the next review.

August 11, 2016

Staff Guidance Note for the Conduct of Ex Post Peer Reviewed Assessments of Members with Longer-Term Program Engagement

Description: This note updates guidance on key operational aspects of the policy on Longer-Term Program Engagement (LTPE). The updated guidance reflects operational changes following the Board’s decision on April 30, 2015 to replace Ex Post Assessments (EPAs) for members with LTPEs with succinct ex post peer reviewed assessments (PRAs)1 to reflect on the lessons from the past for the design of successor arrangements or usage of the Policy Support Instrument (PSI).