POLICY SUPPORT INSTRUMENT—FRAMEWORK
1. Upon request, the Fund will be prepared to provide the technical services described in this Decision to members that are eligible for assistance under the
Poverty Reduction and Growth Trust (PRGT), i.e., included in the list of members annexed to Decision No. 8240-(85/56), as amended, and that: (a) have a policy
framework focused on consolidating macroeconomic stability and debt sustainability, while deepening structural reforms in key areas in which growth and poverty
reduction are constrained; and (b) seek to maintain a close policy dialogue with the Fund, through the Fund’s endorsement and assessment of their economic and
financial policies under a Policy Support Instrument (PSI).
2. A PSI is a decision of the Executive Board setting forth a framework for the Fund’s assessment and endorsement of a member’s economic and
financial policies. A PSI may be approved for a duration of one to four years, and may be extended up to an overall maximum period of five years.
3. Members with overdue financial obligations to either the Fund’s General Resources Account (GRA) or to the PRGF Trust are not eligible for a PSI.
The Member’s Documents
4. Program Documents. The member’s program of economic and financial policies for the period of a PSI will be described in a letter and/or memorandum
that may be accompanied by a technical memorandum (“Program Documents”). The initial Program Documents will include: (a) a macroeconomic policy
framework, including a quantified framework for at least the first 12 months under the PSI, with quantitative targets set at regular intervals, and proposed assessment
criteria for the first twelve months, and (b) key structural measures that are needed to meet the objectives of the program. The Program Documents will be updated from
time to time, as appropriate, in the context of reviews under the PSI.
5. Poverty Reduction Strategy (PRS) Documents. The member’s program will be based on the member’s poverty reduction strategy, which will be set
forth in a Poverty Reduction Strategy Paper (“PRSP”), PRSP Preparation Status Report, Interim PRSP (“I-PRSP”), or Annual Progress Report
6. A member’s request for a PSI may be approved only if the Fund is satisfied that: (a) the policies set forth in the member’s Program Documents
meet the standards of upper credit tranche conditionality; and (b) the member’s program will be carried out, and in particular, that the member is sufficiently
committed to implement the program.
7. A member may be expected to adopt measures prior to the Executive Board’s approval of a PSI when it is critical for the successful implementation of
the program that such actions be taken.
8. The implementation of the member’s program under a PSI will be assessed through program reviews, scheduled normally at regular intervals no more than
six months apart. A review can be completed only if the Executive Board is satisfied that the member’s program is on track and that the conditions for the
approval of a PSI, noted in paragraph 6, above, continue to be met. Having conducted, but not completed, a scheduled review, the Executive Board may subsequently
return to that review, unless the previous scheduled review was not completed. Documentation supporting a return to the uncompleted review must be issued to the
Executive Board prior to the earliest test date of the periodic quantitative assessment criteria linked to the next scheduled review, except for the staff report which
may be issued up to one month after the earliest test date of the periodic quantitative assessment criteria linked to the next scheduled review. In addition, the
second and subsequent reviews under a PSI can be completed only if the Executive Board is satisfied that the member concerned (i) has a poverty reduction strategy
evidenced by a PRS Document that has been issued to the Executive Board normally within the previous 18 months and the PRS Document has been the subject of a staff
analysis, including in the staff report on a request for a PSI or a review under a PSI or (ii) has a poverty reduction strategy set out in a PRSP that has been issued
to the Executive Board and which covers a period of twelve months from the date of the completion of the relevant review and the member’s program documents
describe how the current fiscal budget, the upcoming fiscal budget when available, and planned structural reforms advance PRS implementation.
9. Implementation of the program will be monitored, in particular, on the basis of assessment criteria, indicative targets, structural benchmarks and prior
(a) Assessment criteria.
(i) For the purposes of each review, the Fund shall establish assessment criteria, which may include: (a) assessment criteria linked to that review; and (b)
assessment criteria that will apply on a continuous basis. Assessment criteria will apply to clearly-specified quantitative variables or structural measures that can
be objectively monitored and are critical for the achievement of program goals or for monitoring implementation and whose nonobservance would normally signify that the
program is off-track. Documentation with respect to the conduct of a scheduled review would normally be issued to the Executive Board within 4 months of the earliest
test date for the periodic quantitative assessment criteria linked to that review and shall in any event be issued before the earliest test date of the periodic
quantitative assessment criteria linked to the next scheduled review.
(ii) A review will not be completed unless each assessment criterion related to that review is observed or a waiver for the non-observance is granted. A review
will not be completed where the member does not provide information necessary for the Fund to conclude that: (a) an assessment criterion related to that review is
observed, or (b) a waiver of nonobservance is warranted. The Fund will grant a waiver for the nonobservance of an assessment criterion only if it is satisfied that,
notwithstanding the nonobservance, the program will be successfully implemented, either because of the minor or temporary nature of the nonobservance or because of
corrective actions taken by the authorities.
(iii) In order to complete a review, assessment criteria must be established for the shorter of: (a) the next two scheduled reviews, or (b) the remaining period
of the PSI.
(b) Indicative targets and structural benchmarks. Variables and measures may also be established as quantitative indicative targets or structural benchmarks
that will be examined in a review’s assessment of program performance.
(c) Prior actions. A member may be expected to adopt measures prior to the Executive Board’s completion of a review.
10. Notwithstanding paragraphs 8 and 9, and subject to paragraph 20, following the approval of an arrangement under the Exogenous Shocks Facility (“ESF
arrangement”) or the Standby Credit Facility (“SCF arrangement”) for a member implementing a program under a PSI, and for as long as the ESF
arrangement or SCF arrangement remains in effect:
(a) reviews of the implementation of the member’s program under the PSI may be scheduled at such time as reviews of the member’s ESF-supported
program or SCF-supported program are scheduled;
(b) assessment criteria under the PSI shall normally be established for the same test dates and shall apply to the same variables and measures as performance
criteria under the ESF arrangement or SCF arrangement;
(c) documentation with respect to the conduct of a scheduled review under the PSI shall normally be issued to the Board at such time as documentation for a
review under the ESF-supported program or SCF-supported program is issued;
(d) in order to complete a review under the PSI, assessment criteria would be required to be established only for the next scheduled PSI review; and
(e) no reviews under the PSI could be conducted but not completed.
11. Any decision approving a PSI or completing a review will be made conditional upon the accuracy of information provided by the member regarding
implementation of prior actions or performance under related assessment criteria.
12. Whenever evidence comes to the attention of the staff indicating that the member’s reporting of information noted in paragraph 11 above was
inaccurate, the Managing Director shall promptly inform the member concerned.
13. If after consultation with the member, the Managing Director finds that, in fact, the member had reported such inaccurate information to the Fund, the
Managing Director shall promptly notify the member of this finding.
14. In any case where a PSI was approved, or a review was completed, no more than three years prior to the date on which the Managing Director informs the
member, as provided for in paragraph 12 above, the Executive Board shall decide whether misreporting has occurred and shall reassess program performance in the light
of that determination.
15. The Fund shall proceed to make relevant information public in every case following an Executive Board decision under paragraph 14 above that misreporting
has occurred, with prior Executive Board review of the text for publication.
16. For the purposes of this decision:
(a) whenever the Managing Director considers there is evidence that the member’s reporting of information noted in paragraph 11 above was inaccurate, but
the nonobservance of the relevant assessment criterion or other specified condition was de minimis in nature, as defined in paragraph 1 of Decision No. 13849, the
communication referred to in paragraph 12 may be made by a representative of the relevant Area Department;
(b) if the Managing Director determines that, in fact, a member has reported such inaccurate information to the Fund, but the nonobservance was de minimis in
nature, as defined in paragraph 1 of Decision No. 13849, the notification referred to in paragraph 13 may be made by a representative of the relevant Area Department,
and the Executive Board shall be informed of the misreporting in a staff report on a review under the relevant PSI or, if no such review is provided for, a staff
report which deals with issues other than the misreporting, and shall include a recommendation that the Executive Board find that the misreporting was de minimis in
nature and had no effect on program performance under the PSI. In those rare cases in which no review is provided for, and no other such staff report on the member is
to be issued to the Board promptly after the Managing Director concludes that misreporting has taken place, the Managing Director shall consult Executive Directors
and, if deemed appropriate by the Managing Director, a stand-alone report on the misreporting will be prepared for consideration by the Executive Board normally on a
lapse-of-time basis; and
(c) whenever the Executive Board finds that a member has misreported information referred to in paragraph 11, but that the non-observance of the relevant
assessment criterion or other specified condition was de minimis in nature as defined in paragraph 1 of Decision No. 13849: (i) the Executive Board shall also find
that the misreporting had no effect on program performance; and (ii) the fact of misreporting shall not be published by the Fund.
Applicability of Certain UFR Policies
17. The Guidelines on Conditionality (Decision No. 12864-(02/102), September 25, 2002) shall apply where relevant and except where this Decision sets forth
different or more specific provisions.
18. In addition, the Fund’s policies on the following subjects shall apply by analogy to PSIs: (a) requirement of full program financing; (b) arrears to
official sector and external private creditors; and (c) use of side letters.
Termination of a PSI
19. A member may cancel a PSI at any time by notifying the Fund of such cancellation.
20 A PSI for a member will terminate upon: (a) the relevant member incurring overdue financial obligations to the GRA or PRGT; or (b) noncompletion of two
consecutive PSI scheduled reviews; provided that, in lieu of the circumstance specified in clause (b), the PSI for a member whose program reviews are scheduled at the
same time as reviews of the member’s ESF-supported program or SCF-supported program are scheduled will terminate if no scheduled review is completed within
twelve months of the completion of the last scheduled review; or (c) the approval for the relevant member of an arrangement under the Extended Credit Facility of the
21. For purposes of this decision, the terms PRSP, PRSP Preparation Status Report, I-PRSP, and APR shall have the meaning given to each of them in Section I,
Paragraph 1 of the PRGF-HIPC Trust Instrument (Annex to Decision No. 11436-(97/10), adopted February 4, 1997, as amended).
Decision No. 13561-(05/85),
October 5, 2005, as amended by Decision Nos. 13814-(06/98),
November 15, 2006, 13849-(06/108), December 20, 2006,
14153-(08/82), September 19, 2008, effective November 24, 2008,
14253-(09/8), January 27, 2009,
14354-(09/79), July 23, 2009, effective January 7, 2010, and
April 8, 2013
1 Ed. Note: Pursuant to Decision No. 13814-(06/98), the frequency
interval of reviews is extended from three years to five years after 2008. Decision No. 14235-(09/1), December 31, 2008, provided that a review of the Policy Support
Instrument shall be completed by March 31, 2009.