## ppea2023047

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---

### Executive summary — Board reaction and MIP objectives
- Board discussion: March 13, 2023; Directors welcomed finding that the Fund "swiftly and appropriately responded to the COVID pandemic" on staff health/safety and members’ financial and economic needs.
- Board endorsed the IEO’s two main recommendations but showed less consensus on several specific suggestions; Directors:
  - Favored consultation with the Board in the early stages of future global crises.
  - Warned against overly rigid or automatic procedures; suggested a “menu of options” for Board decision in early crisis stages.
  - Supported reinforcing the Crisis Management Team (CMT) and adapting HR responses for effective redeployment of resources.
  - Supported reviewing pandemic-related lending impacts before temporary lending-framework modifications.
  - Noted no consensus for a pre-approved temporary budget-flexibility mechanism; some Directors noted the carryforward mechanism functioned well during the pandemic.
  - Supported enhancing coordination with the World Bank and other partners and exploring a “financing tracker” for major official creditors and donors.
  - Acknowledged potential usefulness of a “crisis playbook” and table-top exercises while avoiding duplication.
- MIP objectives:
  - Use pandemic response experience to improve the lending toolkit.
  - Enhance crisis preparedness by developing a crisis playbook and identifying/removing gaps.
  - Implement SMART actions to address the two Board-endorsed recommendations by end-FY25.
- Resource note: Many measures’ resource costs to be absorbed within current budgetary envelope; more ambitious actions may require additional resources.

### Recommendation 1 — Special policies and procedures during global crises (planned actions)
- Early Board engagement:
  - Management commits to early participatory consultations with the Board in an emerging global crisis; the crisis playbook will codify this commitment.
  - Legal frameworks: Managing Director may call meetings and convene fully virtual/hybrid meetings under authority granted in 2020; Managing Director required to call a meeting at the request of any Executive Director (Rules C-1 and C-2).
- Lending-toolkit crisis options (SPR to compile options to inform playbook); measures include:
  - increasing access levels;
  - introducing a restricted window within emergency financing;
  - providing IMF debt service relief;
  - suspending interest surcharges.
- HR and staff allocation enhancements (HRD responsibilities):
  - HRD to coordinate staff reallocation in crises and review operationalization (including drawing on the Talent Inventory); implement more agile recruitment procedures by end-FY25.
  - Expand the Talent Inventory to include crisis-relevant skills and program experience:
    - Inclusion of macro-financial skills as a new indicator targeted for completion "in the next few months and, in any case, by end-FY24."
    - Inclusion of program experience and potential piloting of self-reported skills to be completed "by end-FY25 depending on client-department feedback and resource availability."
- Budget response and lines of defense in crisis (OBP):
  - First-response measures used in the pandemic included overtime and decreased annual leave; objective to reduce dependence on these within existing resources using three lines of defense (all activated in 2020):
    - Identify savings opportunities or reprioritization within and across departments (Article IV consultations and program negotiations/reviews typically not in scope except in exceptional circumstances).
    - Temporary reassignment of staff from less-affected departments to higher-pressure departments (limited fungibility may constrain scope).
    - Use and allocation of most or part of the budget contingency for emergencies (0.7 percent of the net administrative budget).
  - If insufficient, seek Board approval for additional resources via a temporary increase in the carryforward limit (if underspend is available) or a supplementary budget; recent Board discussions favored a case-by-case approach rather than pre-approval mechanisms.
- Reinforcing the Crisis Management Team (CMT):
  - CMT to develop a surge-capacity strategy including:
    - Identify pre-determined functions in relevant departments to draw on in a crisis.
    - Prepare a roster of potential external expert resources (e.g., complementing expertise from the joint WBG and IMF Health and Safety Directorate).
    - Calibrate strategy for different crisis types and continue participating in crisis simulation exercises organized by the Resilience Program Team (RPT).

### Recommendation 2 — Institutional preparedness and ongoing workstreams
- Embed pandemic lessons into lending-toolkit reviews and reforms:
  - Review of precautionary instruments:
    - Informal Board July and September 2023; Formal Board October 2023.
    - Draw lessons from use of precautionary lending instruments since 2017, including during COVID-19; propose reform options to make precautionary arrangements more flexible, accessible, and attractive.
  - Review of access limits under emergency financing instruments:
    - Formal Board June 2023 discussion; staff’s proposal to temporarily further extend higher cumulative access limits for a limited period was adopted.
  - Review of the Food Shock Window (FSW) under emergency financing instruments:
    - Formal Board June 2023; FSW role underscored within broader Fund support for countries affected by the global food shock.
    - Proposed extension of the FSW by six months as a contingency instrument for situations where UCT-quality programs would not be feasible or necessary.
- Governance safeguards and implementation:
  - Review of the 2018 Framework for Enhanced Fund Engagement on Governance (Formal Board, April 2023) finds safeguards effective.
  - Final stocktaking of governance measures in pandemic-related spending (July 2023) shows significant implementation rates, including measures requiring regulatory reforms.
  - Identified actions to strengthen governance safeguards:
    - consider corruption risks arising in other emergencies beyond COVID-19;
    - further tailor governance safeguards to country circumstances;
    - provide specific capacity development (CD) to facilitate implementation;
    - foster country ownership and enhance engagement with external stakeholders, such as civil society organizations;
    - build on and bring forward countries’ preparedness of anti-corruption and governance frameworks for exogenous shocks.
- External coordination:
  - Reinforce collaboration with external partners to avoid duplication and leverage comparative advantages.
  - Recent coordination: engagement with World Bank Group, FAO, WFP, and WTO on the global food crisis.
  - As part of the 2024/25 PRGT review, staff to explore ways to further strengthen coordination with partners, especially the World Bank.
  - Staff engaged Board on broad principles for Bank-Fund-WHO coordination in RSF arrangements on pandemic preparedness.

### Crisis playbook — purpose, scope, and resources
- Proposed development: crisis playbook by end-FY25 (SPR lead, with relevant departments).
- Purpose and nature:
  - Codify Management’s commitment to early participatory consultation with the Board.
  - Succinct internal document applicable across financial, economic, and non-economic global crises; an inventory of issues and options rather than pre-determined policies.
- Contents (examples):
  - general principles of crisis response;
  - examples of flexible application: temporary modifications to the lending toolkit, conduct of surveillance, reprioritization of work, changes in resource and budget allocations.
  - comparative analysis may include peer approaches and membership needs.
- Larger-scale exercises:
  - Consider larger-scale exercises involving the Board and other financial institutions to inform the playbook, subject to resource availability.
  - Estimated resource needs for ambitious simulation exercises: in the order of 1.0-3.0 FTEs, depending on scale and scope.

### Resource implications and staffing
- Leverage existing workstreams; many deliverables are already in the Board’s Work Program and departmental plans and budgets.
- Additional resources expected where existing workstreams are insufficient:
  - Compiling crisis protocols into a playbook could fit within regular budgets; larger simulation exercises estimated at 1.0-3.0 FTEs.
  - HRD: inclusion of macro-financial skills in the Talent Inventory is part of HRD’s Accountability Framework for FY24; resources must be maintained in FY25 to add criteria such as program/surveillance experience. Operationalization review may require additional resources.
  - CMT: non-crisis resources will carry preparatory work; during a crisis additional pre-identified departmental resources will be drawn upon to form the CMT as needed.

### Enterprise risk assessment — identified risks and mitigation
- Identified risks:
  - Financial risks:
    - Increased uncertainty and more frequent global shocks raise risk that available resources will be insufficient.
    - Fund’s portfolio has high credit concentration in the GRA: "about two-thirds of credit outstanding is due from five members."
    - Increased General Resources and concessional (PRGT) lending and rising debt vulnerabilities raise borrower non-payment risk.
    - Demand for concessional lending remains elevated; PRGT resources have been stretched and need sustainable footing.
  - Reputational risks:
    - Perceived inadequate response to future crises could lead members to lose faith in the IMF or multilateralism; considered remote but significant if perceptions of uneven implementation persist.
  - Risk to staff well-being and safety:
    - Global crises may put staff well-being at risk due to extraordinary work pressures and health risks.
- Mitigation measures:
  - Financial:
    - Reviews of access levels and lending facilities to be accompanied by strong resource assessments so reforms are fully financed.
    - Higher current exposure will factor into toolkit changes alongside additional fundraising for PRGT and RST.
    - Regular updates on PRGT financing and resources; an informal Board is scheduled for September 2023 to review PRGT and RST financial situations and financing options.
    - Reviews of the toolkit, conditionality, and governance safeguards to strengthen programs and reduce borrower default risk.
  - Reputational:
    - Continued engagement with stakeholders and partners during reform development.
    - Updated guidance on governance measures and safeguards informed by pandemic experience to help maintain evenhandedness.
  - Staff well-being and safety:
    - Continue regular staff health and well-being surveys.
    - More consistent use of TRACES and recording of overtime to identify pressure points.
    - Reinforce the CMT with pre-identified expert resources to reduce pressures.

### Selected timelines, actions, and accountabilities (Annex I highlights)
- PRGT comprehensive review of facilities and financing: by end-FY25 (FIN/LEG/SPR).
- Ad hoc interim review of PRGT access limits: by December 2023 contingent on Stage 1 fundraising (FIN/LEG/SPR).
- Informal Board update on PRGT financing and resources: next informal Board in September 2023 (FIN/SPR).
- Review of temporary increase of GRA access limits: before March 2024 if warranted; otherwise temporary increase expires in March 2024 (FIN/LEG/SPR).
- Comprehensive review of GRA access limits: following 16th quota review (FIN/LEG/SPR).
- Review of precautionary instruments: by October 2023 (FIN/LEG/SPR).
- Implementation steps from 2018 governance framework review: starting FY24; next review in 2028, with possible interim update (FAD/LEG/SPR and Area departments).
- Strengthen CMT surge strategy and prepare roster of external experts: CSF, in consultation with HRD by end-FY24.
- Include macro-financial skills in the Talent Inventory: no later than end-FY24; include program experience and review additional crisis-related skills by end-FY25 (HRD, in consultation with other departments).
- Compile crisis protocols into a crisis playbook: SPR with relevant departments by end-FY25.

*ppea2023047 - 15.      Looking forward, further enhancements to the lending toolkit will be considered,*

### EXECUTIVE SUMMARY

### EXECUTIVE SUMMARY

### Introduction and Board Reaction
- The Management Implementation Plan (MIP) responds to the Board-endorsed recommendations of the Independent Evaluation Office (IEO)’s report on the IMF’s early response to the COVID pandemic.
- The Executive Board discussed the evaluation on March 13, 2023. Directors welcomed the finding that the Fund swiftly and appropriately responded to the COVID pandemic on staff health/safety and members’ financial and economic needs.
- The Board endorsed the IEO’s two main recommendations but showed less consensus on several specific suggestions. Directors:
  - Favored consultation with the Board in the early stages of future global crises.
  - Warned against overly rigid or automatic procedures and suggested a “menu of options” for Board decision in early crisis stages.
  - Saw merit in reinforcing the Crisis Management Team (CMT) and adapting HR responses for effective redeployment of resources.
  - Supported reviewing pandemic-related lending impacts before deciding on temporary lending-framework modifications.
  - Noted no consensus for a pre-approved temporary budget-flexibility mechanism; some Directors noted the carryforward mechanism functioned well during the pandemic.
  - Supported enhancing coordination with the World Bank and other partners and exploring a “financing tracker” for major official creditors and donors.
  - Acknowledged potential usefulness of a “crisis playbook” and table-top exercises while avoiding duplication.

### IEO Recommendations (as endorsed by the Board)
- Recommendation 1: Develop special policies and procedures that could be quickly activated to address particular needs and circumstances of global crises. Possible steps include:
  - Participatory consultation with the full Board at an early stage of a global crisis.
  - Activation of temporary modifications to the lending framework to accept higher levels of risk tolerance.
  - Activation of a framework for temporary budget flexibility.
  - Steps to facilitate the HR response, including temporary recourse to a centralized mechanism for redeployment of staff resources.
  - Reinforced Crisis Management Team.
- Recommendation 2: Take steps to reinforce the IMF’s institutional preparedness to deal with global crises and other large shocks. Possible steps include:
  - Review of emergency financing policy and practice.
  - Further development of the toolkit of precautionary instruments.
  - Build on the review of the 2018 Framework for Enhanced Fund Engagement on Governance.
  - Foster more coherent strategic partnerships with the World Bank and other official institutions.
  - Develop table-top exercises and a crisis playbook.

### Management Implementation Plan — Objectives and Scope
- The MIP aims to:
  - Use pandemic response experience in ongoing work to improve the lending toolkit.
  - Enhance crisis preparedness by developing a crisis playbook and identifying/removing gaps in crisis preparedness.
  - Implement SMART (specific, measurable, attainable, relevant, and timebound) actions to address the two Board-endorsed recommendations by end-FY25.
- Many measures’ resource costs will be absorbed within the current budgetary envelope; more ambitious actions may require additional resources.

### A. Special Policies and Procedures During Global Crises (Recommendation 1) — Planned Actions
- Early Board engagement:
  - Management commits to early participatory consultations with the Board in the event of an emerging global crisis; the crisis playbook will codify this commitment.
  - Legal frameworks permit the Managing Director to call meetings and convene fully virtual/hybrid meetings under authority granted in 2020; the Managing Director is required to call a meeting at the request of any Executive Director (Rules C-1 and C-2).
- Lending-toolkit crisis options:
  - SPR will compile a list of lending toolkit crisis options previously considered to inform the crisis playbook. Measures include, but are not limited to:
    - increasing access levels;
    - introducing a restricted window within emergency financing;
    - providing IMF debt service relief;
    - suspending interest surcharges.
- HR and staff allocation enhancements:
  - HRD will play a coordinating role in staff reallocation in crises and will review how to operationalize coordination (including drawing on the Talent Inventory) and implement more agile recruitment procedures by end-FY25.
  - HRD will expand the Talent Inventory to include crisis-relevant skills and program experience:
    - Inclusion of macro-financial skills as a new indicator targeted for completion in the next few months and, in any case, by end-FY24.
    - Inclusion of program experience and potential piloting of self-reported skills; this work would be completed by end-FY25 depending on client-department feedback and resource availability.
- Budget response and lines of defense in crisis (OBP):
  - First-response measures used at the pandemic onset include overtime and decreased annual leave; the Fund seeks to reduce dependence on these within the existing resources envelope using three main lines of defense (all activated in 2020):
    - Identify savings opportunities or reprioritization within and across departments (Article IV consultations and program negotiations/reviews typically not in scope except in exceptional circumstances).
    - Temporary reassignment of staff from less-affected departments to higher-pressure departments (limited fungibility may constrain scope).
    - Use and allocation of most or part of the budget contingency for emergencies (0.7 percent of the net administrative budget).
  - If insufficient, staff could seek Board approval for additional resources via a temporary increase in the carryforward limit (if underspend is available) or a supplementary budget. Recent Board discussions favored a case-by-case approach rather than pre-approval mechanisms.
- Reinforcing the Crisis Management Team (CMT):
  - CMT will develop a strategy for surge capacity, including:
    - Identify pre-determined functions in relevant departments to draw on in a crisis.
    - Prepare a roster of potential external expert resources (e.g., complementing expertise from the joint WBG and IMF Health and Safety Directorate).
    - Calibrate the strategy for different crisis types and continue participating in crisis simulation exercises organized by the Resilience Program Team (RPT).

### B. Fund’s Institutional Preparedness to Deal with Global Crises (Recommendation 2) — Ongoing and Planned Workstreams
- Embed pandemic lessons into lending-toolkit reviews and reforms:
  - Review of precautionary instruments:
    - Informal Board July and September 2023; Formal Board October 2023.
    - Draws lessons from use of precautionary lending instruments since 2017, including during COVID-19, and proposes reform options to make precautionary arrangements more flexible, accessible, and attractive, facilitating usage in crises.
  - Review of access limits under emergency financing instruments:
    - Formal Board June 2023 discussion; staff’s proposal to temporarily further extend the higher cumulative access limits for a limited period was adopted to ensure Fund capacity to support countries facing renewed emergency situations.
  - Review of the Food Shock Window (FSW) under emergency financing instruments:
    - Formal Board June 2023; underscored FSW’s role within broader Fund support for countries affected by the global food shock.
    - Recognized most countries could be supported through UCT-quality programs; proposed extension of the FSW by six months as a contingency instrument in light of the ongoing food shock and for situations where UCT-quality programs would not be feasible or necessary.

### Implementation Timing and Accountability
- The MIP defines actions slated to be completed by end-FY25, with some elements targeted for completion by end-FY24 (e.g., addition of macro-financial skills to the Talent Inventory).
- Responsibilities are assigned across SPR, HRD, OBP, CMT, and other departments; detailed matrix in the Annex summarizes specific actions, timing, and departmental responsibilities.

*Approved By: Ceyla Pazarbasioglu (SPR); Prepared by Gaëlle Pierre under the guidance of Atish Ghosh (SPR) with inputs from multiple departments.*

### 15.      Looking forward, further enhancements to the lending toolkit will be considered,

### ppea2023047 - 15.      Looking forward, further enhancements to the lending toolkit will be considered,

### Lending toolkit reviews and access limits
- The Board will review facilities and access limits for lending instruments.
- For the PRGT:
  - A comprehensive review of facilities and financing will be carried out in 2024/25.
  - The review will be informed by lessons from the pandemic.
  - An ad hoc interim review of PRGT access limits will be carried out once substantial progress with PRGT fundraising toward the SDR 2.3 billion first stage target for subsidy resources agreed in 2021 has been made—with total pledges of SDR 2 billion or more.
  - If progress toward the funding target is delayed, access limits would be reviewed in the context of the 2024/25 PRGT Facilities Review.
- For the GRA:
  - Following the temporary increase in GRA access limits in March 2023, a comprehensive review of access limits, tentatively planned for 2024, will assess the GRA access limits in the context of the outcome of the 16th General Review of Quotas.
  - If circumstances warrant, staff would re-engage the Executive Board before the end of the 12-month period on a proposal to maintain for longer the higher GRA access limits.
- The next review of conditionality and design of Fund-supported programs will provide another opportunity to consider toolkit adjustments.

### Governance safeguards and implementation
- IEO evaluation highlighted governance safeguards in emergency financing.
- The Review of the 2018 Framework for Enhanced Fund Engagement on Governance (Formal Board, April 2023) finds the safeguards to be a concrete example of effective Fund engagement.
- A final stocktaking of implementation of governance measures in pandemic-related spending in July 2023 shows all measures, including those that may require regulatory reforms, achieved significant implementation rates.
- Identified actions to strengthen governance safeguards going forward include:
  - considering corruption risks arising in other emergencies beyond COVID-19;
  - further tailoring governance safeguards to country circumstances;
  - providing specific CD to facilitate implementation;
  - fostering country ownership and enhancing engagement with external stakeholders, such as civil society organizations;
  - building on and bringing forward countries’ preparedness of their anti-corruption and governance frameworks for exogenous shocks.

### External coordination and crisis playbook
- Staff will reinforce collaboration with external partners to avoid duplication, leverage comparative advantages, and improve effectiveness through concerted action.
- Recent coordinated response includes engagement with World Bank Group, FAO, WFP, and WTO on the global food crisis.
- As part of the 2024/25 PRGT review, staff will explore ways to further strengthen coordination with partners, especially the World Bank.
- Staff have engaged the Board on broad principles for Bank-Fund-WHO coordination in RSF arrangements on pandemic preparedness.
- Staff propose developing a crisis playbook by end-FY25:
  - Purpose: codify Management’s commitment to early participatory consultation with the Board and serve as a compendium of issues and options for global crises.
  - Nature: succinct internal document, applicable across financial, economic, and non-economic global crises; not a pre-determined set of policies but an inventory of issues.
  - Contents: general principles of crisis response and examples of flexible application (temporary modifications to the lending toolkit, conduct of surveillance, reprioritization of work, changes in resource and budget allocations).
  - Comparative analysis: may include approaches used by peer institutions and membership needs.
  - Leadership and dissemination: SPR to take the lead in developing and disseminating the playbook in collaboration with relevant departments.
  - Larger-scale exercises involving the Board and other financial institutions could be considered to further inform the playbook, subject to availability of resources.
  - Estimated resource needs for ambitious simulation exercises: in the order of 1.0-3.0 FTEs, depending on scale and scope.

### Resource implications and staffing
- The MIP aims to leverage existing workstreams; many policy deliverables are already in the Board’s Work Program and departmental plans and budgets.
- Additional resources expected where existing workstreams are insufficient:
  - Compiling crisis protocols into a playbook could fit within regular budgets; larger simulation exercises estimated at 1.0-3.0 FTEs.
  - HRD: inclusion of macro-financial skills in the Talent Inventory is part of HRD’s Accountability Framework for FY24; these resources must be maintained in FY25 to add criteria such as program/surveillance experience. Operationalization review may require additional resources.
  - CMT: non-crisis resources will carry preparatory work; during a crisis additional pre-identified departmental resources will be drawn upon to form the CMT as needed.

### Enterprise risk assessment — identification and mitigation
- Identified risks:
  - Financial risks:
    - Increased uncertainty and more frequent global shocks raise the risk that available resources will be insufficient.
    - The Fund’s portfolio has high credit concentration in the GRA: about two-thirds of credit outstanding is due from five members.
    - Increased General Resources and concessional (PRGT) lending and rising debt vulnerabilities raise the risk of borrower non-payment.
    - Demand for concessional lending remains elevated; PRGT resources have been stretched and need sustainable footing.
  - Reputational risks:
    - A perceived inadequate response to future crises could lead members to lose faith in the IMF or multilateralism, including potential withdrawal and de-globalization; this risk is considered remote but significant if perceptions of uneven implementation persist.
  - Risk to staff well-being and safety:
    - Global crises may put staff well-being at risk due to extraordinary work pressures and health risks.
- Mitigation measures:
  - Financial risks:
    - Reviews of access levels and lending facilities will be accompanied by strong resource assessments so reforms are fully financed.
    - Higher current exposure will factor into toolkit changes alongside additional fundraising for PRGT and RST.
    - Regular updates on PRGT financing and resources—an informal Board is scheduled for September 2023—allow Board review of PRGT and RST financial situations and consideration of financing options.
    - Reviews of the toolkit, conditionality, and governance safeguards aim to strengthen programs and reduce borrower default risk.
  - Reputational risks:
    - Continued engagement with stakeholders and partners during reform development.
    - Updated guidance on governance measures and safeguards, informed by pandemic experience, to help maintain evenhandedness.
  - Staff well-being and safety:
    - Continue regular staff health and well-being surveys.
    - More consistent use of TRACES and recording of overtime to identify pressure points.
    - Reinforce the CMT with pre-identified expert resources to reduce pressures.

### Selected timelines, actions, and accountabilities (from Annex I)
- PRGT comprehensive review of facilities and financing: by end-FY25 (FIN/LEG/SPR).
- Ad hoc interim review of PRGT access limits: by December 2023 contingent on Stage 1 fundraising (FIN/LEG/SPR).
- Informal Board update on PRGT financing and resources: next informal Board in September 2023 (FIN/SPR).
- Review of temporary increase of GRA access limits: before March 2024 if warranted; otherwise temporary increase expires in March 2024 (FIN/LEG/SPR).
- Comprehensive review of GRA access limits: following 16th quota review (FIN/LEG/SPR).
- Review of precautionary instruments: by October 2023 (FIN/LEG/SPR).
- Implementation steps from 2018 governance framework review: starting FY24; next review in 2028, with possible interim update (FAD/LEG/SPR and Area departments).
- Strengthen CMT surge strategy and prepare roster of external experts: CSF, in consultation with HRD by end-FY24.
- Include macro-financial skills in the Talent Inventory: no later than end-FY24; include program experience and review additional crisis-related skills by end-FY25 (HRD, in consultation with other departments).
- Compile crisis protocols into a crisis playbook: SPR with relevant departments by end-FY25.

*Italic: ppea2023047 - 15.      Looking forward, further enhancements to the lending toolkit will be considered,*

---


_Source: https://www.imf.org/-/media/files/publications/pp/2023/english/ppea2023047.pdf_