Policy Papers
2015
February 1, 2015
List of IMF Member Countries with Delays in Completion of Article IV Consultations Over 18 Months or Mandatory Financial Stability Assessment Over 18 Months
Description: This Staff Report Lists IMF Member Countries with Delays in Completion of Article IV Consultations over 18 Months or Mandatory Financial Stability Assessment over 18 Months, prepared by IMF staff and completed on January 28, 2015.
January 29, 2015
Current Challenges in Revenue Mobilization - Improving Tax Compliance
Description: This paper addresses core challenges that all tax administrations face in dealing with noncompliance—which are now receiving renewed attention. Long a priority in developing countries, assuring strong compliance has acquired greater priority in countries facing intensified revenue needs, and is critical for fairness and statebuilding.
January 22, 2015
Proposal to Enhance Fund Support for Low-Income Countries Hit by Public Health Disasters
Description:
The Fund’s existing facilities for low-income countries (LICs) provide a vehicle for the speedy provision of financial assistance to member countries hit by natural disasters, either through the Rapid Credit Facility (RCF) or through augmentation of the funding already being provided through other facilities such as the Standby or Extended Credit Facilities. The quick disbursement of funds strengthens national financial capacity, including external payments capacity, to tackle relief and recovery challenges.
To address catastrophic disasters, the Fund created a mechanism in 2010 to provide additional relief to its poorest and most vulnerable member countries to help meet their exceptional balance of payments needs. Under this mechanism, the Fund can provide grants from a trust fund—the Post Catastrophe Debt Relief (PCDR) trust—that are used to pay off debt service falling due to the Fund. These grants ease pressures on the member’s balance of payments and create financial space by reducing its debt service burden.
This paper proposes reforms to this mechanism to cover situations where the member is experiencing an epidemic of an infectious disease that constitutes a significant threat to lives, economic activity, and international commerce across countries.
January 22, 2015
Proposal to Enhance Fund Support for Low-Income Countries Hit by Public Health Disasters - Proposed Decisions
Description:
This paper sets forth the proposed decisions and related legal instruments that are needed to implement the transformation of the the Post-Catastrophe Debt Relief Trust (the “PCDR Trust”) into the < the Catastrophe Containment and Relief Trust (the “CCR Trust” or “Trust”), as described in the Proposal to Enhance Fund Support for Low-Income Countries Hit by Public Health Disasters and as presented in an informal session to brief Executive Directors on January 28, 2015. The paper summarizes key aspects of the proposed decisions and related instruments, in particular the new CCR Trust Instrument.
The proposed reforms envisage the transformation of the PCDR Trust into the CCR Trust through an amendment of the PCDR Trust Instrument.
January 20, 2015
2010 Reforms and Fifteenth General Review of Quotas - Report of the Executive Board to the Board of Governors - Decision
Description: In completing the Fourteenth General Review of Quotas (hereafter the “Fourteenth Review”) and approving the Proposed Amendment on the Reform of the Executive Board (hereafter the “Board Reform Amendment”), the Board of Governors requested the Executive Board to bring forward the timetable for completion of the Fifteenth General Review of Quotas (hereafter the “Fifteenth Review”) to January 2014. The Executive Board was also requested to complete a comprehensive quota formula review by January 2013. These forward-looking elements were part of an agreed package of 2010 quota and governance reforms (hereafter the “2010 Reforms”). Each member committed to use its best efforts to complete the required steps for the effectiveness of the quota increases under the Fourteenth Review no later than the Annual Meetings in 2012.
2014
December 22, 2014
From Banking to Sovereign Stress - Implications For Public Debt
Description: This paper explores how banking sector developments and characteristics influence the propagation of risks from the banking sector to sovereign debt, including how they affect the extent of fiscal costs of banking crises when those occur. It then proposes practices and policies for the fiscal authorities to help manage the risks and enhance crisis preparedness.
December 19, 2014
Assessing Reserve Adequacy - Specific Proposals
Description:
Reserves have a central place in the policy tool kit of most economies, providing insurance against shocks. In conjunction with sound policies, they can help reduce the likelihood of balance of payment crises and preserve economic and financial stability. Reserves, however, can result from both precautionary and non-precautionary policy objectives and institutional settings. While they can bring several important benefits, reserve holdings can sometimes be costly.
This paper brings together recent Fund work on reserve adequacy issues aiming to strengthen their discussion in bilateral surveillance. Despite the ongoing debate on reserve issues, there is little consensus about how to assess reserve holdings in different economies, even though this is an important aspect of a member’s external stability assessment. The work stream of which this paper is part aims to fill this gap by outlining a framework for discussing reserve adequacy issues in different economies. In this regard, the paper also forms part of the Fund’s response to the 2012 IEO evaluation of the Fund’s advice related to international reserves, which recommended, inter alia, that assessments of international reserves in bilateral surveillance reports should be more detailed and reflect country circumstances. To this end, the paper proposes that, where warranted, individual country Article IV reports include a fuller discussion of the authorities’ stated objectives (precautionary and non-precautionary) for holding reserves, an assessment of the reserve needs for precautionary purposes, and a discussion of the cost of reserves. The aim would be to ensure evenhandedness so that countries with similar circumstances are assessed in similar ways, while allowing the depth and emphasis of this discussion to vary depending on country conditions and needs.
December 18, 2014
Pan-African Banks - Opportunities and Challenges for Cross-Border Oversight
Description: There has been a rapid expansion of pan-African banks (PABs) in recent years, with seven major PABs having a presence in at least ten African countries: three of these are headquartered in Morocco, two in Togo, and one each in Nigeria and South Africa. Additional banks, primarily from Kenya, Nigeria, and South Africa, have a regional presence with operations in at least five countries. PABs have a systemic presence in around 36 countries. Overall, the PABs are now much more important in Africa than the long-established European and American banks.
December 15, 2014
The SDR Interest Rate Basket--Proposed Change of the Representative Interest Rate for the Euro and Amendment to Rule T-1(C)
Description:
The three-month Eurepo interest rate, the euro component of the SDR interest rate basket, will be discontinued as of the end of 2014. The three-month Eurepo rate, administered by the European Money Market Institute (EMMI), has been the representative interest rate instrument of the euro area in the SDR interest rate basket since 2006. However, faced with a significant shrinking in the number of banks participating in the rate-setting panel, the EMMI announced last month that the Eurepo interest rate will be discontinued after December 31, 2014.
This paper proposes to replace the three-month Eurepo rate in the SDR interest rate basket with a transactions-based three-month interest rate. Staff has consulted with the European Central Bank (ECB), which recommends to replace the Eurepo rate with a three-month spot rate derived from the secondary market yield curve covering euro area government bonds rated either investment grade or AA and above. In staff’s view, the latter option (AA and above) would be most comparable to the other instruments in the SDR interest rate basket and would have characteristics that are most consistent with previous Board guidance for selection of financial instruments in the SDR basket. The proposed change would be implemented by an amendment to Rule T-1(c), requiring a 70 percent majority of the total voting power.
December 15, 2014
Heavily Indebted Poor Countries Initiative and Multilateral Debt Relief Initiative - Statistical Update
Description:
The HIPC Initiative and MDRI are nearly complete with 35 countries having already reached the completion point under the HIPC Initiative. One country, Chad, remains in the interim phase. Debt relief under the Initiatives has substantially alleviated debt burdens in recipient countries and has enabled them to increase their poverty-reducing expenditure by two and a half percentage points between 2001 and 2013.
Creditor participation in the Initiative has been strong amongst the multilateral and Paris Club creditors; however participation from the 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$75.0 billion, while the costs to the four multilateral creditors providing relief under the MDRI is estimated to be US$41.1 billion in end-2013 present value terms.