October 3, 2016
When a member country borrows money from the IMF, its policies come under closer scrutiny. Once a country has completed its lending program, it may enter into a process known as Post-Program Monitoring (PPM). This process is presumed for all member countries that have substantial IMF credit outstanding following the expiration of their programs. The enhanced monitoring is intended to ensure the continued viability of a country’s economic framework and provide early warning of policies that could jeopardize the country’s capacity to repay the IMF. Should it become necessary, IMF staff will advise on policy actions to correct macroeconomic imbalances.
IMF financing provides member countries with the breathing space they need to correct balance of payments problems. A policy program supported by IMF financing is designed by the national authorities in close cooperation with the IMF. Continued financial support during the program is conditional on the effective implementation of the policies. A country’s return to economic and financial health during the program and in the medium term ensures that IMF funds are repaid, and can be made available to other member countries. Post-program monitoring is intended to help ensure the continued viability of a country’s economy after its IMF-supported program has expired.
Criteria for conducting post-program monitoring
Current policy presumes that a member country will engage in post-program monitoring with the IMF after its program has expired when its outstanding credit exceeds any of the thresholds specified below:
- 200 percent of its quota from the Fund’s General Resources Account (GRA), or from the Fund as Trustee of the Poverty Reduction and Growth Trust (PRGT), or a combination thereof; or
- an amount equivalent to SDR 1.5 billion for credit from the Fund’s GRA; or
- an amount equivalent to SDR 0.38 billion from the PRGT,
and when it no longer has program involvement of any kind with the IMF.
In some cases, post-program monitoring may not be needed even if the country meets the criteria above. This applies when a successor borrowing arrangement or a staff-monitored program is expected to be in place within six months of the expiration of the current program, or when the policies and external position of the member country are deemed to be strong.
In other cases, post-program monitoring may be required even if the country’s outstanding credit is below all of the above-specified thresholds. This occurs if economic developments call into question the country’s progress toward external viability.
The IMF’s 24-member Executive Board can decide on post-program monitoring for a country at any time during the program or after the program expires. However, the decision is normally taken at the time of the last program review when the country’s outstanding credit is expected to exceed any of the above-specified thresholds.
How post-program monitoring works
Under post-program monitoring, countries undertake more frequent formal consultations with the IMF than is the case under the IMF’s normal surveillance, with a particular focus on macroeconomic and structural policies that have implications for external viability. There is normally one standalone post-program monitoring paper issued for Board consideration in a twelve-month period.
Post-program monitoring remains in effect until outstanding credit falls below all of the applicable thresholds above. Nonetheless, the IMF’s Executive Board could agree to discontinue the monitoring―even before outstanding credit falls below the thresholds―if strong policies are in place and the external position is sound. In cases where post-program monitoring is found to be required even though outstanding credit is below the above-specified thresholds, the monitoring will normally be carried out for one year.