## ppea2024005 - conclusions in terms of the usefulness of the PMB vis‑à‑vis alternative instruments and a more

## Source details

**Canonical URL:** [ppea2024005 - conclusions in terms of the usefulness of the PMB vis‑à‑vis alternative instruments and a more](https://www.imf.org/-/media/files/publications/pp/2024/english/ppea2024005.pdf)

## Other formats

- [Markdown version](/-/media/files/publications/pp/2024/english/ppea2024005.pdf.md)
- [Structured JSON version](/-/media/files/publications/pp/2024/english/ppea2024005.pdf.json)

---

### Executive Board Assessment
- Executive Directors broadly supported maintaining the Staff‑Monitored Program with Executive Board Involvement (PMB) in the Fund’s toolkit.
- Agreement that the PMB can complement the Fund’s toolkit in well‑circumscribed circumstances; limited number of cases thus far prevents drawing firm conclusions.
- Consensus that the Staff‑Monitored Program (SMP) should continue to be the Fund’s primary instrument to build or rebuild a track record of policy implementation toward an Upper Credit Tranche (UCT)-quality program.
- Potential benefits of limited Executive Board involvement through the PMB:
  - enhancing donor coordination;
  - catalyzing additional financial support including in low‑income, fragile, and conflict‑affected countries;
  - creating an additional safeguard in cases of elevated emergency financing exposure;
  - reflecting the Board’s views on policies at an earlier stage;
  - facilitating the transition to UCT‑quality programs.
- Directors noted positive experiences of Ukraine and Malawi with PMBs; some Directors were skeptical about PMB merits relative to the regular SMP.
- Emphasis on limiting PMB access to the two use criteria to prevent encroachment on SMP use; where criteria are met, PMB should be encouraged but choice between PMB and SMP remains voluntary and at the requesting member’s discretion.
- Directors stressed communications must:
  - maintain effective differentiation of PMB from Board‑endorsed programs and SMPs;
  - clearly communicate that responsibility for PMBs rests with staff and management and that the Board has limited involvement and does not endorse a PMB;
  - include an assessment of risks and challenges in the next review as experience grows.
- Directors agreed to review the PMB in three years, with some open to an earlier review if warranted.

### Executive Summary — Key Findings and Recommendation
- Background: In September 2022 the Executive Board amended SMP policy to create the PMB to help members build or rebuild a policy implementation track record toward a UCT-quality program, allowing limited Board opining without Board endorsement.
- Review context: Heightened economic headwinds, series of shocks, and limited PMB experience (three country cases over the past sixteen months).
- Staff assessment: On balance, staff suggests keeping the PMB with a subsequent review in three years.
- Rationale:
  - The PMB has played an important niche role supporting members in circumscribed circumstances without supplanting the SMP as the primary tool for track‑record building.
  - Further experience needed to draw more definitive conclusions on the PMB’s value vis‑à‑vis alternative instruments and a more parsimonious Fund toolkit.
- Administrative note: The PMB is approved by management; the Executive Board does not endorse the program and has limited involvement to preserve the signaling strength of Board endorsements.

### PMB Purpose and Use Criteria
- PMB purpose: Help a member build or rebuild a policy implementation track record to pave the way for a Fund‑supported, UCT‑quality program.
- PMB use criteria (as circumscribed in the September 2022 amendment):
  - Member seeks to establish or re‑establish a track record for UCT‑UFR, and either:
    - (i) benefits from an ongoing concerted international effort by creditors or donors to provide substantial new financing or debt relief in support of the member’s policy program; or
    - (ii) has significant Fund credit outstanding under emergency financing (EF) instruments at the time they obtain new EF (criterion (ii) met if new EF under the RCF or RFI brings total EF credit outstanding at or above 100 percent of quota).
- Executive Board role: Management approves PMB and completion of reviews; the Executive Board may opine in summings up on policy robustness at approval and on being on‑track at reviews, but does not set conditionality or endorse the PMB.
- Communication: Press materials should indicate PMB is staff‑monitored, approved by Management, and that Board involvement is limited.

### Member Experiences and Key Figures
- PMB use to date: three members—Malawi, Ukraine, and South Sudan.
- Malawi:
  - PMB approval: Oct 2022
  - Duration (months): 12
  - EF access (percent of quota): 50
  - Criteria for PMB: concerted effort / EF credit>=100% of quota
  - Program review: 1st review completed in July 2023; PMB 2nd review completed in October 2023 and ECF approved in November 2023.
  - Outcome: ECF arrangement approved on November 15, 2023 with access equivalent to SDR132 million or 95 percent of quota; Fund contribution to external financing gap over the program period about 11 percent.
- Ukraine:
  - PMB approval: Dec 2022
  - Duration (months): 4
  - EF access (percent of quota): 50
  - Criteria for PMB: concerted effort / EF credit>=100% of quota
  - Program review: 1st and final review completed in March 2023; EFF approved.
  - Outcome: Board approved a 4‑year extended arrangement with access equivalent to SDR 11.6 billion (577 percent of quota or about US$15.6 billion) in March 2023 as part of a US$115 billion total support package for Ukraine.
- South Sudan:
  - PMB approval: Feb 2023
  - Duration (months): 12
  - EF access (percent of quota): 35
  - Criteria for PMB: EF credit>=100% of quota
  - Program review: 1st and 2nd reviews underway; extended by three months, through February 15, 2024.
  - Notes: Received disbursement equivalent to SDR 86.1 million or 35 percent of quota under the FSW of the RCF in March 2023, raising total EF credit outstanding to 100 percent of quota; PMB built on a previous SMP.
- Staff outreach conclusion: PMB useful in specific and narrow circumstances; traditional SMP should remain primary tool for building or rebuilding a track record toward UCT-quality programs.

### Program Design, Modalities, and Operational Guidance
- PMB is guided by the SMP policy and the 2022 SMP Updated Operational Guidance Note (GN).
- Key features reiterated:
  - Role of Executive Board limited to opining in summings up at approval and reviews; Board does not endorse or set conditionality.
  - PMB use restricted to members seeking UCT‑UFR track records and meeting criterion (i) or (ii).
  - Voluntary but encouraged where criteria met; ultimate choice between PMB and SMP remains with the member.
  - Clear communications required to distinguish PMB from SMP and PCI.
- Comparative modalities (select points):
  - SMP without Board involvement: Track-record building; available to all non-UCT members; Management approval; generally 9–18 months.
  - SMP with Board involvement (PMB): Track-record building; all members but in narrow circumstances*; Management approval with limited Board involvement; generally 9–18 months.
  - EF (RCF/RFI): Financing instrument; no ex post conditionality; requires financing assurances; Executive Board involvement.
  - UCT programs including PCI: UCT-quality conditionality; ex post conditionality; financing assurances required; Executive Board involvement.
  - *Narrow circumstances defined as (i) ongoing concerted international effort by creditors or donors to provide substantial new financing or debt relief in support of the member’s policy program or (ii) significant outstanding Fund credit under emergency financing (EF) instruments at the time new EF is obtained.

### Recent Experience — Application of the Two PMB Use Criteria
- Criterion (i) — concerted international financing or debt relief:
  - PMBs of Ukraine and Malawi explicitly intended to catalyze donor support to secure sufficient external financing.
  - Ukraine: PMB launch helped mobilize near-term concessional financing commitments from the G7, the EU, and other donors; these commitments were building blocks for the extended arrangement approved in March 2023, which required large-scale financing commitments and assurances to underpin the US$115 billion package (about 75 percent of Ukraine’s 2023 GDP).
  - Both Ukraine and Malawi required strong stakeholder engagement to secure financing assurances, mitigate elevated capacity to repay risks, and/or facilitate debt restructuring processes.
- Criterion (ii) — elevated EF exposure:
  - All three PMB cases involved elevated EF exposure.
  - EF financing does not involve ex post conditionality; the PMBs allowed for limited and early Board involvement not present under a traditional SMP.
  - Malawi: Directors emphasized limited Board involvement was essential given Malawi’s significant outstanding Fund credit under EF instruments.
  - South Sudan: a transparency measure for the use of EF funds was incorporated as a structural benchmark.
- Example of instrument choice flexibility:
  - Haiti: an SMP was approved in June 2022. In January 2023, Haiti received a disbursement of 50 percent of quota under the FSW of the RCF, raising Haiti’s exposure under Fund’s EF to 115 percent of quota. After satisfactorily concluding the SMP, Haitian authorities opted for a successor SMP in June 2023 despite eligibility for a PMB (criterion (ii)), reflecting a preference to maintain the same engagement form given capacity constraints and limited prospects for additional donor support.

### Communication, Signaling, and Enterprise Risks
- Communication and signaling:
  - Proper communication is key to avoid diluting the UCT signaling effect of the Executive Board.
  - PMB does not entail Board endorsement; PMB use is carefully circumscribed.
  - Press releases accompanying PMB approvals or reviews should detail:
    1. the use criteria under which the PMB is employed to (re)establish a track-record toward UCT-UFR;
    2. the nature of the PMB, including that it is approved by Management and monitored by staff;
    3. the Board’s limited involvement, reflected in a summing up that (i) at management approval opines on the strength of policies to achieve PMB objectives and (ii) in reviews indicates whether the Board agrees with staff that the member is on track.
  - The November 22, 2022 press release for Malawi’s PMB and FSW disbursement is cited as an example.
- Enterprise risks (ERM-aligned assessment):
  - Potential reputational risks if PMB criteria are not well-understood or if the instrument is perceived as tailored to specific cases, raising evenhandedness concerns.
  - Operational/communication risks: limited Board involvement could be misconstrued as endorsement of UCT-quality.
  - Mitigations: PMB modalities and communication strategies manage these risks; circumscribed nature of PMB and established SMP guidance reduce operational risks.
  - Risks of not having PMB: business risk of not offering an appropriate instrument for members needing limited Board involvement; potential increase in credit risks for the Fund absent monitoring via limited Board involvement for members with significant EF outstanding.

### Staff Proposal, Review Timeline, and Issues for Discussion
- Staff proposal:
  - Keep the PMB instrument in the Fund toolkit and review the instrument in three years from the date of the Board’s completion of the current review.
- Rationale:
  - PMB useful where authorities seek to build/rebuild a track record for UCT-UFR and where limited Board assessment would be beneficial (either to catalyze additional financing or debt relief, or for members with high EF exposures to transition to UCT-UFR).
  - Limited PMB experience; further experience is needed to draw more definitive conclusions on PMB value relative to alternatives and a more parsimonious toolkit.
  - Proposed review will cover experience with all PMB cases since inception of the instrument.
- Issue for Executive Directors:
  - Do Directors agree with the proposal to keep the PMB in the toolkit as a subset of SMPs for members that meet the narrowly circumscribed criteria set forth in the PMB policy approved by the Board and to conduct a review in three years?

*Source: ppea2024005 - conclusions in terms of the usefulness of the PMB vis‑à‑vis alternative instruments and a more (IMF).*

### conclusions in terms of the usefulness of the PMB vis-à-vis alternative instruments and a more

### ppea2024005 - conclusions in terms of the usefulness of the PMB vis-à-vis alternative instruments and a more

### Executive Board Assessment
- Executive Directors broadly supported maintaining the Staff‑Monitored Program with Executive Board Involvement (PMB) in the Fund’s toolkit.
- Agreement that the PMB can complement the Fund’s toolkit in well‑circumscribed circumstances; limited number of cases thus far prevents drawing firm conclusions.
- Consensus that the Staff‑Monitored Program (SMP) should continue to be the Fund’s primary instrument to build or rebuild a track record of policy implementation toward a Fund arrangement that supports an Upper Credit Tranche (UCT)-quality program.
- Potential benefits of limited Executive Board involvement through the PMB:
  - enhancing donor coordination;
  - catalyzing additional financial support including in low‑income, fragile, and conflict‑affected countries;
  - creating an additional safeguard in cases of elevated emergency financing exposure;
  - reflecting the Board’s views on policies at an earlier stage;
  - facilitating the transition to UCT‑quality programs.
- Directors noted positive experiences of Ukraine and Malawi with PMBs.
- Some Directors skeptical about merits of PMB relative to the regular SMP.
- Directors emphasized limiting PMB access to the two use criteria to prevent encroachment on SMP use; where criteria are met, PMB should be encouraged but choice between PMB and SMP remains voluntary and at the requesting member’s discretion.
- Directors stressed importance of mitigating risks of blurring lines between Board‑endorsed programs and SMPs by:
  - maintaining effective communication regarding the nature and purpose of the PMB;
  - clearly communicating that responsibility for PMBs rests with staff and management and that the Board has limited involvement and does not endorse a PMB;
  - including an assessment of risks and challenges in the next review as experience grows.
- Directors agreed to review the PMB in three years, with a number open to an earlier review if warranted.

### Executive Summary — Key Findings and Recommendation
- Background: In September 2022 the Executive Board amended SMP policy to create the PMB to help members build or rebuild a policy implementation track record toward a UCT-quality program, allowing limited Board opining without Board endorsement.
- Review context: Heightened economic headwinds, series of shocks, and limited PMB experience (three country cases over the past sixteen months).
- Staff assessment: On balance, staff suggests keeping the PMB with a subsequent review in three years.
- Rationale:
  - The PMB has played an important niche role supporting members in circumscribed circumstances without supplanting the SMP as the primary tool for track‑record building.
  - Further experience needed to draw more definitive conclusions on the PMB’s value vis‑à‑vis alternative instruments and a more parsimonious Fund toolkit.
- Administrative note: The PMB is approved by management; the Executive Board does not endorse the program and has limited involvement to preserve the signaling strength of Board endorsements.

### Introduction and Background — Purpose and Design of the PMB
- PMB purpose: Help a member build or rebuild a policy implementation track record to pave the way for a Fund‑supported, UCT‑quality program.
- PMB use criteria (as circumscribed in the September 2022 amendment):
  - Member seeks to establish or re‑establish a track record for UCT‑UFR, and either:
    - (i) benefits from an ongoing concerted international effort by creditors or donors to provide substantial new financing or debt relief in support of the member’s policy program; or
    - (ii) has significant Fund credit outstanding under emergency financing (EF) instruments at the time they obtain new EF (criterion (ii) met if new EF under the RCF or RFI brings total EF credit outstanding at or above 100 percent of quota).
- Executive Board role: Management approves PMB and completion of reviews; the Executive Board may opine in summings up on policy robustness at approval and on being on‑track at reviews, but does not set conditionality or endorse the PMB.
- Communication: Clear differentiation between PMB, traditional SMP, and Board‑monitored non‑financing instruments (PCI) is critical; communications should indicate PMB is staff‑monitored, approved by Management, and that Board involvement is limited.

### Member Experiences So Far and Potential Usefulness of the PMB
- Overall assessment: Staff obtained views from PMB country teams and a broader set of country teams and Executive Directors; limited number of PMB cases makes assessment preliminary.
- PMB use to date: three members—Malawi, Ukraine, and South Sudan.
- Country summaries and key figures:
  - Malawi
    - PMB approval: Oct 2022
    - Duration (months): 12
    - EF access (percent of quota): 50
    - Criteria for PMB: concerted effort / EF credit>=100% of quota
    - Program review: 1st review completed in July 2023; PMB 2nd review completed in October 2023 and ECF approved in November 2023.
    - Outcome: ECF arrangement approved on November 15, 2023 with access equivalent to SDR132 million or 95 percent of quota; Fund contribution to external financing gap over the program period about 11 percent.
  - Ukraine
    - PMB approval: Dec 2022
    - Duration (months): 4
    - EF access (percent of quota): 50
    - Criteria for PMB: concerted effort / EF credit>=100% of quota
    - Program review: 1st and final review completed in March 2023; EFF approved.
    - Outcome: Board approved a 4‑year extended arrangement with access equivalent to SDR 11.6 billion (577 percent of quota or about US$15.6 billion) in March 2023 as part of a US$115 billion total support package for Ukraine.
  - South Sudan
    - PMB approval: Feb 2023
    - Duration (months): 12
    - EF access (percent of quota): 35
    - Criteria for PMB: EF credit>=100% of quota
    - Program review: 1st and 2nd reviews underway; extended by three months, through February 15, 2024.
    - Notes: Received disbursement equivalent to SDR 86.1 million or 35 percent of quota under the FSW of the RCF in March 2023, raising total EF credit outstanding to 100 percent of quota; PMB built on a previous SMP.
- Staff outreach conclusion: PMB useful in specific and narrow circumstances; traditional SMP should remain primary tool for building or rebuilding a track record toward UCT-quality programs.

### Program Design, Modalities, and Operational Guidance
- PMB is guided by the SMP policy and the 2022 SMP Updated Operational Guidance Note (GN).
- Key features reiterated (Box 1):
  - Role of Executive Board limited to opining in summings up at approval and reviews; Board does not endorse or set conditionality.
  - PMB use restricted to members seeking UCT‑UFR track records and meeting criterion (i) or (ii).
  - Voluntary but encouraged where criteria met; ultimate choice between PMB and SMP remains with the member.
  - Clear communications required to distinguish PMB from SMP and PCI.

### Review and Next Steps
- Directors agreed to review PMB experience in three years to determine whether it continues to be a valuable addition to the Fund’s toolkit; some Directors open to earlier review if warranted.
- Next review should include assessment of risks and challenges that may emerge with more PMB experience, and measures to mitigate potential blurring between PMBs and Board‑endorsed programs.

*Prepared by the Finance Department, the Legal Department, and the Strategy, Policy, and Review Department; team comprised Niamh Sheridan, Lukas Kohler, Tomohide Mineyama, Alexander Zaborovskiy, Bilal Tabti, Yinhao Sun, Toomas Orav, Gabriela Rosenberg, Gomiluk Otokwala, Jonathan Swanepoel, Jonathan Pampolina, Dalia Hakura, Natalia Aivazova, Beata Jajko, Andrew Swiston, Nelson Sobrinho; research assistance Maxwell Kushnir and Holt Williamson; administrative support Linda Bisman, Alexandra Panagiotakopoulou, Katarina Varga.*

### 7.      Recent experience illustrates application of the two PMB use criteria endorsed by the

### 7.      Recent experience illustrates application of the two PMB use criteria endorsed by the Board in September 2022

### Recent experience and application of PMB use criteria
- PMB use to date: three PMB cases (Ukraine, Malawi, South Sudan).
- Criterion (i) — concerted international financing or debt relief:
  - The PMBs of Ukraine and Malawi were explicitly intended to catalyze donor support to secure sufficient external financing (PMB criterion (i), Box 1).
  - Ukraine: the PMB launch helped mobilize near-term concessional financing commitments from the G7, the EU, and other donors; this provided a building block for the extended arrangement approved in March 2023, which required large-scale financing commitments and assurances to underpin the US$115 billion package (about 75 percent of Ukraine’s 2023 GDP).
  - Both Ukraine and Malawi required strong stakeholder engagement to secure adequate financing assurances, mitigate elevated capacity to repay risks, and/or facilitate necessary debt restructuring processes.
- Criterion (ii) — elevated EF exposure:
  - All three PMB cases involved elevated EF exposure (PMB criterion (ii), Box 1).
  - EF financing does not involve ex post conditionality; the PMBs allowed for limited and early Board involvement not present under a traditional SMP.
  - Malawi: Directors emphasized that limited Board involvement was essential given Malawi’s significant outstanding Fund credit under EF instruments (Summing Up of the relevant Board meeting).
  - South Sudan: a transparency measure for the use of EF funds was incorporated as a structural benchmark of the program.
- Example of instrument choice flexibility:
  - Haiti: an SMP was approved in June 2022. In January 2023, Haiti received a disbursement of 50 percent of quota under the FSW of the RCF, raising Haiti’s exposure under Fund’s EF to 115 percent of quota.
  - After satisfactorily concluding the SMP, Haitian authorities opted for a successor SMP in June 2023 despite eligibility for a PMB (criterion (ii), Box 1), reflecting a preference to maintain the same engagement form given capacity constraints and limited prospects for additional donor support.

### Stakeholder views and catalytic role
- Stakeholders’ observations:
  - Higher visibility and earlier Board engagement under a PMB can be beneficial to coordinate donors and help catalyze resources in contexts of unsustainable debt with complex debt profiles.
  - Both SMP and PMB can be catalytic; in some circumstances, Board engagement can create additional momentum and an organizing forum to help build or rebuild a track record toward UCT-UFR, including post-conflict situations.
  - Actual PMB benefits (including catalytic effects) depend on country context: risk profile, geopolitical conditions, and donors’ involvement on the ground.

### PMB and the IMF toolkit — role, scope, and interactions
- SMP remains the Fund’s workhorse to build/rebuild a track record toward UCT-UFR:
  - SMP is available to all members; PMB applicability is circumscribed to two specific situations.
  - SMP is inherently flexible and can be used concurrently with EF when EF qualification criteria are met.
- PMB’s niche role:
  - PMB can support greater catalytic effect and donor coordination than a standard SMP when concerted international efforts are in place (criterion (i)), and could hasten establishing a track-record for UCT-UFR.
  - Context for potential PMB use: elevated debt vulnerabilities, especially among LICs, due to increased borrowing, low growth in recent years, Covid-19 scarring, and tightening global financial conditions.
  - For criterion (ii), PMB can expand Board engagement for members with elevated EF exposure and support transition to UFR; many members are projected to have high levels of EF credit outstanding for an extended period.
- Projections and figures referenced:
  - PMB experience limited to three members so far.
  - Figure references in the source: Figure 1 (SMP/PMB Approvals 2008—2023); Figure 2 (Projected Number of Countries with EF Credit Outstanding above Thresholds 2020—2028); Figure 3 (The Role of the PMB).
- Comparative modalities (select points from Table 2 and Annex I):
  - SMP without Board involvement: Track-record building; available to all non-UCT members; Management approval; generally 9–18 months.
  - SMP with Board involvement (PMB): Track-record building; all members but in narrow circumstances*; Management approval with limited Board involvement; generally 9–18 months.
  - EF (RCF/RFI): Financing instrument; no ex post conditionality; requires financing assurances; Executive Board involvement.
  - UCT programs including PCI: UCT-quality conditionality; ex post conditionality; financing assurances required; Executive Board involvement.
  - *Narrow circumstances defined as (i) ongoing concerted international effort by creditors or donors to provide substantial new financing or debt relief in support of the member’s policy program or (ii) significant outstanding Fund credit under emergency financing (EF) instruments at the time new EF is obtained.

### Communication and signaling
- Proper communication is key to avoid diluting the UCT signaling effect of the Executive Board:
  - PMB does not entail Board endorsement (which is limited to UCT-quality programs); PMB use is carefully circumscribed.
  - Press releases accompanying PMB approvals or reviews should detail:
    1. the use criteria under which the PMB is employed to (re)establish a track-record toward UCT-UFR;
    2. the nature of the PMB, including that it is approved by Management and monitored by staff;
    3. the Board’s limited involvement, reflected in a summing up that (i) at management approval opines on the strength of policies to achieve PMB objectives and (ii) in reviews indicates whether the Board agrees with staff that the member is on track.
  - The November 22, 2022 press release for Malawi’s PMB and FSW disbursement is cited as an example of such communication.

### Enterprise risks
- ERM-aligned assessment of risks with and without the PMB:
  - Potential reputational risks if PMB criteria are not well-understood or if the instrument is perceived as tailored to specific cases, raising evenhandedness concerns.
  - Operational/communication risks: limited Board involvement could be misconstrued as endorsement of UCT-quality.
  - Mitigations: PMB modalities and communication strategies manage these risks; circumscribed nature of PMB and established SMP guidance reduce operational risks.
  - Risks of not having PMB: business risk of not offering an appropriate instrument for members needing limited Board involvement; potential increase in credit risks for the Fund absent monitoring via limited Board involvement for members with significant EF outstanding.

### Staff proposal and timeline
- Staff proposes to keep the PMB instrument in the Fund toolkit and review the instrument in three years from the date of the Board’s completion of the current review.
- Rationale:
  - PMB useful where authorities seek to build/rebuild a track record for UCT-UFR and where limited Board assessment would be beneficial (either to catalyze additional financing or debt relief, or for members with high EF exposures to transition to UCT-UFR).
  - Limited PMB experience; further experience is needed to draw more definitive conclusions on PMB value relative to alternatives and a more parsimonious toolkit.
  - Proposed review will cover experience with all PMB cases since inception of the instrument.

### Issues for discussion
- Question posed to Executive Directors:
  - Do Directors agree with the proposal to keep the PMB in the toolkit as a subset of SMPs for members that meet the narrowly circumscribed criteria set forth in the PMB policy approved by the Board and to conduct a review in three years?

*Source: ppea2024005 - 7.      Recent experience illustrates application of the two PMB use criteria endorsed by the Board in September 2022 (IMF).*

---


_Source: https://www.imf.org/-/media/files/publications/pp/2024/english/ppea2024005.pdf_