## _092107

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### Executive summary — context, problem statement, and overall approach
- Considerable debate about the Fund’s role in helping low-income (LIC) members reduce poverty and reach the Millennium Development Goals (MDGs); criticisms include extending beyond core competencies, overemphasis on macro stability at expense of growth/poverty reduction, and insufficient role in mobilizing additional aid.
- The Medium-Term Strategy (MTS) calls for refocusing Fund work in LICs on macroeconomically critical and financial sector issues and on areas of comparative advantage, while enhancing collaboration with the World Bank and other institutions.
- Operationalization proposed by:
  - Defining the Fund’s responsibility and accountability in the PRSP and donor collaboration processes.
  - Intensifying existing work and extending it to all LICs as appropriate.
- Resource implication headline: Fully implementing proposed steps could require additional resources estimated to be in the range of some six staff-years.

### Major proposals for refocusing and intensifying Fund activities
- Macroeconomic policy analysis and advice:
  - Step-up work on alternative macroeconomic scenarios, particularly around scaled-up resource flows.
  - Deepen advice on coordinating fiscal, monetary and exchange rate policies to manage macro impact of scaled-up aid inflows.
  - Point out where more aid could be accommodated without endangering macroeconomic stability and debt sustainability, and where current levels strain capacity.
  - Continue annual debt sustainability analyses in line with the revised joint debt sustainability framework and medium-term debt management strategies.
  - Deepen analysis of macroeconomically critical structural and financial sector issues.
- PRS process and MDGs:
  - Align PRGF and other operational cycles in-country as closely as possible to PRSP and budget cycles.
  - Report on consistency of MDG cost estimates with macroeconomic stability and, in summary form, on annual progress toward the MDGs.
  - Report on use of resources directed toward poverty reduction.
  - Increase public outreach and discussion on macroeconomic and financial issues.
- Collaboration with donors:
  - Inform donors of key concerns, mission results, and staff assessments of macroeconomic performance and prospects.
  - Discuss implications of projected aid flows for stability and debt sustainability; encourage donors to adapt planned support as appropriate.

### Effective implementation of MTS principles in LIC work — priorities and scope
- Three good-practice areas: macroeconomic policy analysis and advice (including capacity building); engaging in the PRS process and supporting the MDGs; interacting with key stakeholders.
- Distinct roles:
  - Fund staff provide policy advice in core or shared areas of responsibility.
  - Conditionality under Fund-supported programs is limited to reforms critical for achieving program goals or monitoring program implementation (per Conditionality Guidelines).
- Operational guidance:
  - Fund staff to assist authorities in preparing alternative scaling-up scenarios that are:
    - consistent with macroeconomic stability and debt sustainability;
    - able to reconcile realistic macro frameworks with demonstrations of how MDG efforts could accelerate with additional resources.
  - Fund will not estimate MDG costs as the basis for scenarios nor assess reliability of such external estimates.
  - PRGF-supported programs remain articulated around a baseline macroeconomic framework; deviations addressed via program adjusters, waivers, and revisions during reviews.

### Illustrative country experience and growth analysis role
- Example countries where alternative scaling-up scenarios were prepared: Ethiopia, Rwanda, Zambia, Sierra Leone, Mozambique, Tanzania.
  - Approaches used include: illustrative assumptions (e.g., a doubling of aid flows as a percent of GDP where MDG costings were absent); relying on lower-bound public sector cost estimates informed by World Bank models (MAMS); front-loading infrastructure investments consistent with authorities’ strategies.
- Fund role on growth analysis:
  - Take account of relevant analysis of sources of growth and constraints, particularly when aid-financed public investment and poverty-reducing expenditures are anticipated.
  - Not expected to undertake microeconomic or sector-specific growth analysis; will draw on analysis by others.
  - Discuss with World Bank and partners coordination of support, identify macroeconomically critical sectoral issues, agree lead responsibilities, and indicate input requirements.

### Program design, conditionality, and fragile states
- Tailor Fund-supported program design to country circumstances.
- In countries with good implementation track records, conditionality to reflect authorities’ structural reform priorities and within sustainable outcome ranges their preferences for some quantitative macro targets.
- For fragile states, consider approaches with large technical assistance components and more focused conditionality; staff preparing a review of Fund support for post-conflict and fragile states.

### Debt sustainability, MTDS, and fiscal implications of aid
- Fund and World Bank to encourage and support use of the new forward–looking debt sustainability framework (DSF) for LICs to analyze sustainable new debt accumulation and assess implications of alternative aid scenarios.
- When DSA shows unsustainable debt paths, staff would:
  - encourage donors to provide a greater share of assistance as grants;
  - explore scope for increasing domestic revenues or other non-debt financing.
- Staff will:
  - report to the Board on debt management discussions with countries and donors/creditors and on trends in poverty-reducing spending in the context of HIPC and MDRI debt relief;
  - encourage and assist LIC members in developing medium-term debt management strategies (MTDS) that draw on the DSF;
  - assess longer-term budgetary consequences of aid-financed spending increases early in PRS or aid commitment cycles.

### Managing aid inflows and macroeconomic coordination
- Fund’s central role: help countries ensure macroeconomic policies are consistent with expected aid flows (including debt relief), changes in composition or terms of aid, or shifts in public expenditure levels.
- Potential challenges from aid surges:
  - debt sustainability;
  - impact on the real exchange rate, external competitiveness and growth;
  - appropriate mix of absorption and spending of the aid.
- Staff to deepen policy dialogue to coordinate monetary, fiscal, and exchange rate policies; assess:
  - impact of aid on monetary aggregates;
  - consistency of central bank monetary policy with fiscal policy;
  - appropriate policy response to temporary aid fluctuations.
- Emphasis on collaboration with World Bank and others for sectoral and public expenditure composition analysis.
- Policy and program design principles:
  - Weigh scaling up expenditures carefully when aid flows are volatile or long-term commitments are absent.
  - Baseline projections of aid inflows should represent staff’s best estimate and be consistent with debt sustainability.
  - Programs should generally support full spending and absorption of aid identified in baseline projections, provided macroeconomic stability is maintained.

### Aid mobilization, absorptive capacity, and technical assistance (paras. 26–28)
- Fund staff role in aid mobilization:
  - Point out whether a country’s macroeconomic policies and institutions would enable it to receive more aid effectively without endangering macroeconomic stability and debt sustainability.
  - Limited to making a general case for more assistance to donors; not expected to: judge how much aid a country should receive; advocate specific aid levels for MDGs; press individual donors for increased contributions; evaluate a country’s overall absorptive capacity.
  - Continue to encourage timely and early donor commitments over the medium to long term.
- On adverse macro or debt consequences:
  - Point out when the volume and composition of aid received or projected strain capacity to maintain macro and fiscal sustainability.
  - Do not monitor effectiveness of specific aid-financed projects or programs.
  - Discuss with authorities and partners steps to improve management of higher inflows, different disbursement patterns, or temporary holding of part of the aid in reserves.
- Technical assistance priorities:
  - Strengthen public financial management (PFM) and statistical systems to enhance formulation, implementation, and monitoring of spending and tracking poverty-reducing spending.
  - Work with authorities and World Bank to strengthen systems to monitor commitment and flow of aid; capacity to handle anticipated aid increases through PFM; integration of aid flows into medium-term expenditure frameworks and annual budgets.
  - Ensure TA priorities are consistent with country capacity-building priorities and coordinated with other TA providers to avoid duplication.

### Fund engagement in the PRS process and public outreach (paras. 29–39)
- Observed practice:
  - Fund interaction in PRS process has varied; staff typically interact on macroeconomic framework and some early outreach but seldom pursue active policy debate with non-government stakeholders or design participatory processes.
- Good-practice examples: Mozambique, Vietnam, Ghana—examples of alignment, resident representative engagement, and participation in donor group processes.
- Staff actions to improve PRSP treatment:
  - Encourage more detailed macroeconomic treatment in PRSPs and progress reports.
  - Support elaboration and presentation of consistent alternative macro frameworks in PRS updates and revisions.
  - Seek to align Fund operational cycles with domestic PRS and budget cycles; plan mission work to feed into budget formulation and PRS implementation reviews.
- Public outreach:
  - Maintain appropriate open discussions with parliaments, business, academia, trade unions, CSOs, and the press to explain macro constraints and tradeoffs, help feed macro considerations into PRS design, and build consensus.
  - Dialogue to be separate from program negotiations and handle sensitive issues (exchange rates, interest rates) only in general terms.

### Recommendations (paras. 40)
- Beyond routine macro advice and TA, staff expected to:
  - Assist authorities in preparing alternative macro scenarios drawing on existing growth analysis.
  - Assess scope for sustainable new debt accumulation using the DSF; encourage MTDS development; assess longer-term budgetary consequences of aid-financed spending increases.
  - Help manage macroeconomic impact of increased aid or persistent aid volatility; indicate to donors when additional aid would not endanger stability and sustainability, without advocating specific aid levels or mobilizing donor commitments; signal when aid volume/composition would pose problems.
  - Push for detailed macroeconomic treatment in PRSPs and engage early and openly with key domestic stakeholders.
  - Report on consistency of MDG cost estimates with projected aid flows, macro stability, and debt sustainability; and report on country progress toward the MDGs.

### Interaction with development partners, donor collaboration, and resident representative role (para. 41 and related)
- Three elements of Fund–donor interaction: flow of information (Fund→donors; donors→Fund), coordinated capacity-building/TA, and enhancing aid effectiveness via predictable commitments and macro management.
- Changing donor landscape:
  - Decision-making devolving to field representatives; partnership agreements rising; the locus of interaction shifting to the field.
  - Implications: mission chiefs and resident representatives take larger roles; HQ-centered model faces challenges where no resident office exists.
  - Fund staff should keep donors informed of mission timing, objectives, and results; attend/support joint donor meetings; time macro assessments to feed into joint donor evaluation processes.
- New donor types (emerging providers, vertical funds) increase need for Fund assessment of debt and fiscal implications.
- Resident representative role:
  - Tailor engagement to country circumstances; area departments to assess required engagement and adjust terms of reference.
  - Enhanced outreach may require different skills, more HQ support (particularly EXR), and additional costs; possible financing via increased LIC resources, reprioritization, or external financing (e.g., AFR model with externally financed local consultants).

### Resource implications, implementation scope, and timing
- Full implementation across the low-income membership could require additional resources "in range of some 6 staff years."
  - Earlier referenced gross requirements: 10 additional staff years for LIC work for the MTS; a 2005 staff survey estimated 7 staff-years.
- Activities not expected each year in each country; assumed to be undertaken as appropriate over a "three- to four-year period" (consistent with PRSP/PRGF cycle).
- Only a few activities (e.g., DSA updates) need annual execution.
- Resource estimates refer only to country work of area departments and associated review/support by functional departments; exclude other activities such as TA, management/EXR outreach, or staff participation in international efforts.
- Given declining budgets, mobilizing additional internal resources will be difficult; area departments will face trade-offs and require clear Board guidance.

### Options to limit resource costs and further cut-back measures (para. 60 and Appendix summaries)
- Cost-limiting options:
  - Undertake alternative macroeconomic scenario work in only about half of PRGF-eligible countries (i.e., biennially).
  - Limit additional outreach, monitoring of poverty-reducing expenditures, and intensive field donor involvement to most “urgent” cases (about 10 percent of countries in any given year).
- Possible reductions in existing activities:
  - Reduce number of background notes, less frequent engagement with CSOs/private sector/academia, reduce resident representative involvement in coordinating TA/training, cut frequency/scope of non-core research.
- Resident representative constraints:
  - Cannot consistently take on extra responsibilities without additional resources or cutting other activities; area departments should review resident terms of reference.
- Key numeric resource summaries (from Appendix II and Table 2):
  - Aggregate estimate in main text: around 6 staff-years in extra resources required.
  - Appendix-derived net additional resource estimate (mid-point of low/high ranges): 6.3 staff years.
  - 1. Net Resource Needs -- Total: 3.0 3.6 1.3 1.5 1.2 2.1 5.5 7.2 6.3 (In staff years)
  - 1a. Additional Resource Needs for PRGF-eligible countries: 7.5 10.2 1.8 2.3 1.9 3.4 11.3 15.9 13.6 (In staff years)
  - A. By topics area (All PRGF-eligible): 7.5 10.2 1.8 2.3 1.9 3.4 11.3 15.9 13.6 (In staff years)
    - Macroeconomic analysis and advice: 6.0 7.5 1.5 1.8 1.1 1.9 8.7 11.2 10.0 (In staff years)
    - PRS process and MDGs: 0.9 1.6 0.2 0.3 0.5 0.9 1.6 2.8 2.2 (In staff years)
    - Engagement with donors: 0.4 0.6 0.1 0.1 0.2 0.4 0.6 1.1 0.9 (In staff years)
    - Outreach on macroeconomic issues: 0.2 0.4 0.0 0.1 0.1 0.2 0.4 0.7 0.6 (In staff years)
  - B. By priority area (All PRGF-eligible):
    - Mandatory (partly under way) activities (M): 6.6 8.5 1.4 1.7 1.4 2.5 9.4 12.7 11.0 (In staff years)
    - Other priority activities (P): 0.7 1.2 0.3 0.4 0.4 0.7 1.4 2.3 1.9 (In staff years)
    - Potential new activities (N): 0.3 0.5 0.1 0.1 0.2 0.3 0.5 0.9 0.7 (In staff years)
  - 1b. Reduction in Resource Needs: 4.5 6.6 0.6 0.7 0.8 1.3 5.8 8.7 7.2 (In staff years)
    - Reducing frequency of Ex-post Assessments: 3.1 4.2 0.0 0.0 0.0 0.0 3.1 4.2 3.6 (In staff years)
    - Reducing Selected Issues and Statistical Appendixes: 0.7 1.2 0.1 0.2 0.4 0.7 1.2 2.1 1.7 (In staff years)
    - Reducing work on non-core structural issues: 0.7 1.2 0.4 0.5 0.4 0.7 1.5 2.4 2.0 (In staff years)
- Possible additional savings if resources insufficient (Table 3):
  - Less resource increase for scaling up related work: 2 (In staff-years, for all countries)
  - Less resource increase for alternative macro scenarios: 2 (In staff-years, for all countries)
  - Less resource increase for outreach on macro issues: 2 (In staff-years, for all countries)
  - Reducing activities already undertaken: total 6 (In staff-years, for all countries)
    - Reducing background notes: 2 (In staff-years, for all countries)
    - Less engagement with CSO, less TA coordination: 2 (In staff-years, for all countries)
    - Less work on non-core areas: 2 (In staff-years, for all countries)

*Source: Excerpts from IMF policy paper _092107 (Executive Summary; paras. 12, 26–41, 60 and Appendices).*

### Executive Summary ......................................................................................................

### Executive Summary

### Context and problem statement
- There is considerable debate about the Fund’s role and responsibilities in helping its low-income (LIC) members reduce poverty and reach the Millennium Development Goals (MDGs).
- Criticisms include: extending into areas outside core competencies; focusing too narrowly on macroeconomic stability at the expense of growth and poverty reduction; failing to identify and help mobilize additional aid necessary for more ambitious MDG efforts.
- The Medium-Term Strategy (MTS) calls for refocusing the Fund’s work in LICs on macroeconomically critical and financial sector issues and on areas of comparative advantage, while enhancing collaboration with the World Bank and other institutions.
- The paper proposes operationalizing the MTS for LICs by defining the Fund’s responsibility and accountability in the PRSP and donor collaboration processes, intensifying existing work, and extending it to all LICs as appropriate.

### Major proposals for refocusing and intensifying Fund activities
- Macroeconomic policy analysis and advice:
  - Step-up work on alternative macroeconomic scenarios, particularly articulated around scaled-up resource flows.
  - Deepen advice on coordinating fiscal, monetary and exchange rate policies to manage the macroeconomic impact of scaled-up aid inflows.
  - Point out where more aid could be accommodated without endangering macroeconomic stability and debt sustainability, or where current levels strain that capacity.
  - Continue to support annual debt sustainability analyses in line with the revised joint debt sustainability framework, and medium-term debt management strategies.
  - Deepen the analysis of macroeconomically critical structural and financial sector issues.
- PRS process and MDGs:
  - Align the Fund’s PRGF and other operational cycles in-country as closely as possible to the PRSP and budget cycles.
  - Report on the consistency of MDG cost estimates with macroeconomic stability and, in summary form, on the annual progress toward the MDGs.
  - Report on use of resources directed toward poverty reduction.
  - Increase public outreach and discussion on macroeconomic and financial issues.
- Collaboration with donors:
  - Inform donors of key concerns, the results of missions, and staff’s assessments of macroeconomic performance and prospects.
  - Discuss implications of projected aid flows for stability and debt sustainability; and encourage donors to adapt their planned support as appropriate.

### Rationale and scope
- The highlighted activities mostly reflect existing country team work; the paper recommends intensifying these activities and extending them where appropriate.
- Some other activities should be scaled back because they lie outside the Fund’s core competencies; the Fund should rely on other development partners for those areas.
- The proposals address concerns from the 2007 IEO evaluation of the IMF and Aid to Sub-Saharan Africa and the External Review Committee on Bank-Fund Collaboration by clarifying the Fund’s role in mobilizing aid and improving collaboration with donors at country level, and by delineating core responsibilities relative to the World Bank.

### Resource implications
- Fully implementing the proposed steps could require additional resources estimated to be in the range of some six staff-years.
- This estimate includes potential savings from streamlining or scaling back other activities.
- Mobilizing additional resources internally will be difficult in the present budgetary environment; area departments will face tradeoffs in setting priorities for individual countries.
- Possible implementation choices include limiting the proposals to more modest scope to contain resource costs or cutting back further on some existing activities.
- Management and staff will need clear guidance from the Board on overall institutional priorities to make these choices.

### Institutional and governance considerations
- The paper seeks to clarify what member countries, stakeholders, development partners and other observers can or cannot expect from the Fund in the macroeconomically critical aspects of the PRSP and donor collaboration processes.
- The paper complements prior work (including the recent paper on managing aid inflows) and does not cover the full range of the Fund’s role in LICs or all criticisms in IEO and other reports.
- Staff anticipate preparing a summary paper on the role of the Fund in LICs in early 2008, bringing together various strands of work.

*Source: Executive Summary*

### 12.      Effective implementation of the MTS principles in the Fund’s LIC work

### 12.      Effective implementation of the MTS principles in the Fund’s LIC work

### Overview and priorities
- Effective implementation of the MTS principles in the Fund’s LIC work requires observing good practices in three areas: macroeconomic policy analysis and advice (including capacity building); engaging in the PRS process and supporting the MDGs; and interacting with key stakeholders.
- Country teams are already engaged in a range of activities; priorities highlighted where the Fund can make the greatest effective contribution are emphasized, while other activities outside Fund core competencies could be scaled back or discontinued where covered by other development partners.
- An important distinction is made between areas for which Fund staff provide policy advice (core or shared areas of responsibility) and measures that might be subject to conditionality under a Fund-supported program. Under the Conditionality Guidelines, Fund-supported programs are generally to include as conditionality any reforms that are critical for achieving program goals or monitoring program implementation.

### Macroeconomic analysis and advice — Macroeconomic frameworks and macroeconomically critical structural reforms
- In most LICs the Fund is the primary provider of advice and inputs into the design of macroeconomic policy frameworks and related structural reforms; this role is a key contribution to countries’ efforts to reach the MDGs.
- With the PRGF, there is already an increasing degree of flexibility in the design of macroeconomic frameworks, and structural reforms are focused more on strengthening economic management and reducing financial vulnerabilities.
- Structural reforms and program conditionality are focused on macroeconomically critical issues and, wherever possible, derived from priorities identified in the country’s PRSP.
- This focus on macroeconomically critical issues and flexibility in policy advice and program design should continue, including as more countries graduate from the need for Fund financial support.
- Fund staff should be available to assist country authorities in preparing alternative scenarios of scaling up that are:
  - consistent with macroeconomic stability and debt sustainability;
  - able to reconcile realistic macroeconomic frameworks with demonstrations of how the MDG effort could be accelerated with additional resources.
- Fund staff will primarily advise on the consistency of such scenarios with macroeconomic stability, recommending necessary changes to monetary, fiscal, and exchange rate policy, and may take a more active role where country capacity is particularly weak.
- The Fund would not estimate the cost of achieving the MDGs as the basis for these scenarios, nor assess reliability of such estimates done by others.
- PRGF-supported programs will continue to be articulated around a baseline macroeconomic framework to preserve clarity of program objectives and agreements on policies.
- Deviations from program assumptions during the program period (including accommodation of additional aid inflows) would be handled through program adjusters, waivers of conditions by the Board, and revisions of program targets during reviews, as needed.
- Alternative scenarios should be formulated primarily within the context of the country’s PRSP, and presented by staff to the Board in PRS-related documents such as JSANs or in Article IV consultation staff reports; they would inform or be integrated into regular updates of the PRGF’s macroeconomic framework.

Box (illustrative country experience)
- Fund staff have prepared alternative scaling-up of aid scenarios for several African countries (Ethiopia, Rwanda, Zambia, Sierra Leone, Mozambique, Tanzania), using approaches such as:
  - illustrative assumptions (e.g., a doubling of aid flows as a percent of GDP where MDG costings were absent);
  - drawing on lower-bound estimates of public sector costs for reaching the MDG developed by authorities with external help and informed by World Bank models (MAMS);
  - front-loading infrastructure investments consistent with authorities’ strategies;
  - presenting policy challenges of managing assumed scaling up of aid.

- Extending work to define consistent macroeconomic frameworks around scaled-up aid and intensified MDG efforts may require considerable additional resources, at least initially.

### Macroeconomic analysis and advice — Growth analysis, division of labor, and collaboration
- Fund policy advice on macroeconomic frameworks and alternative scenarios is expected to take account of relevant analysis of sources of growth and related constraints, particularly where increases in aid-financed public investment and poverty-reducing expenditures are anticipated.
- Fund staff are not expected to undertake microeconomic or sector-specific analyses of sources of growth, but will draw on such work done by others.
- Fund staff should discuss with the World Bank and other development partners at the country level the coordination of support for the development effort (including growth analysis, fiscal policy, the financial sector, and the trade regime) to:
  - identify macroeconomically critical sectoral issues;
  - agree on lead responsibilities;
  - highlight gaps or overlaps in analysis or support for PRS priorities; and
  - indicate input requirements of each institution.
- The Fund will encourage other development partners to take the lead in macroeconomically critical non-core areas where the Fund is not engaged.
- Country-level coordination of work programs should be led by country authorities; staff will encourage authorities to lead.
- Fund and Bank staff recently launched an initiative to strengthen collaboration in Sub-Saharan Africa focusing on public financial management, financial sector, and management of non-renewable natural resources, with pilot participants where Fund and Bank involvement is close and authorities have high ownership of the reforms. The initiative aims to:
  - achieve better outcomes in Africa by drawing lessons about effective support of authorities’ goals; and
  - foster greater coherence and coordination between the Bank and the Fund (and other donors).

### Program design, conditionality, and fragile states
- Staff will continue to tailor the design of Fund-supported programs to country-specific circumstances.
- Program conditionality in countries with a good track record of policy implementation would closely reflect authorities’ structural reform priorities and, within the range of stable and sustainable outcomes, their preferences for some quantitative macroeconomic targets.
- A different approach (large element of technical assistance with more focused conditionality) might be followed for fragile states, with important resource implications; staff are preparing a review of Fund support for post-conflict and fragile states.

### Debt and fiscal sustainability analysis
- The Fund and the World Bank will encourage and support the use of the new forward–looking debt sustainability framework (DSF) for LICs to:
  - analyze the scope for sustainable new debt accumulation in individual countries; and
  - assess implications of alternative aid scenarios on debt sustainability.
- When the DSA reveals an unsustainable path of debt accumulation, staff would:
  - encourage donors to provide a greater share of their assistance in the form of grants;
  - explore with authorities the scope for increasing domestic revenues or other non-debt forms of financing.
- Staff will report to the Board on debt management discussions with countries and their donors/creditors, and on trends in overall poverty-reducing spending in the context of HIPC and MDRI debt relief.
- Fund staff would encourage and assist LIC members in developing medium-term debt management strategies (MTDS) that draw on the DSF to guide management of new borrowing (including after debt relief), especially important where private capital flows and lending by new creditors are increasing.
- Fund staff will continue to assess longer-term budgetary consequences of aid-financed spending increases early in PRS or aid commitment cycles as part of the DSF.
- The Fund will be pro-active in ensuring scaled-up expenditures based on predictable medium-term donor commitments are accommodated, and will analyze with authorities implications for future spending of donor-financed investment expenditures or new poverty-reducing programs.
- Staff will monitor mobilization of domestic revenues in the face of rising aid, pointing out consequences for capacity to finance future expenditures from own resources.

### Managing aid inflows
- The Fund will have a central role in helping countries ensure macroeconomic policies are consistent with expected aid flows (including debt relief), changes in composition or terms of aid, or shifts in public expenditure levels.
- Aid surges envisaged in some cases may pose challenges in:
  - debt sustainability;
  - managing the potential impact on the real exchange rate and external competitiveness and growth; and
  - achieving the appropriate mix of absorption and spending of the aid.
- Staff will deepen policy dialogue with recipients of scaled-up aid to coordinate monetary, fiscal, and exchange rate policies to avoid suboptimal macroeconomic and growth outcomes. This includes assessing:
  - impact of aid on monetary aggregates;
  - consistency of central bank monetary policy with fiscal policy; and
  - appropriate policy response to temporary fluctuations in aid levels.
- Assessment of macroeconomic impact of increased aid inflows requires sectoral and public expenditure composition analysis by the World Bank and others, underscoring need for close collaboration among Fund, Bank, and other donors in advising LICs on use of scaled-up aid to meet the MDGs.
- Policy advice and program design will continue to help countries deal with volatility of aid disbursements:
  - Decisions on scaling up expenditures must be carefully weighed when aid flows are volatile or when reliable long-term aid commitments are absent.
  - Baseline projections of aid inflows should represent staff’s best estimate based on all available information and be consistent with debt sustainability.
  - Programs should generally support full spending and absorption of aid identified in baseline projections, provided macroeconomic stability is maintained.

*Source: _092107 - 12.      Effective implementation of the MTS principles in the Fund’s LIC work*

### 26.      Fund staff would point out if a country’s macroeconomic policies and

### 26.      Fund staff would point out if a country’s macroeconomic policies and institutions would enable it to receive more aid effectively without endangering macroeconomic stability and debt sustainability.

### Aid mobilization and absorptive capacity (paras. 26–27)
- Fund staff role:
  - Point out whether a country’s macroeconomic policies and institutions would enable it to receive more aid effectively without endangering macroeconomic stability and debt sustainability (para. 26).
  - Limited to making a general case for more assistance to donors; not expected to:
    - Judge how much aid a country should be receiving;
    - Advocate a particular level of aid as necessary for reaching the MDGs;
    - Press individual donors to increase contributions or seek specific aid commitments;
    - Evaluate a country’s overall absorptive capacity (para. 26).
  - Continue to encourage donors to make timely and early commitments of support over the medium to long term to facilitate planning and execution of scaled-up efforts to reach the MDGs (para. 26).
- On adverse macroeconomic or debt consequences:
  - Point out when the volume and composition of aid received or projected strain the country’s capacity to maintain macroeconomic stability, or have adverse consequences for debt or fiscal sustainability (para. 27).
  - Do not monitor the effectiveness of specific aid-financed projects or programs (para. 27).
  - Avoid implying that the present resource envelope is always the limit of what could be absorbed; discuss with authorities and development partners:
    - Steps to improve ability to manage higher inflows without adverse consequences;
    - A different pattern or pace of disbursements;
    - Temporarily holding part of the aid in reserves until it can be used effectively (para. 27).

### Technical assistance in support of macroeconomic management and PFM (paras. 28)
- Fund technical assistance (TA) priorities and effects:
  - Strengthening public financial management (PFM) and statistical systems enhances countries’ ability to formulate, implement, and monitor spending policies, and to track poverty-reducing spending (para. 28).
  - TA can help overcome weaknesses that hinder full absorption and spending of aid (para. 28).
  - Staff will work with authorities and the World Bank to strengthen:
    - Systems to monitor commitment and flow of aid resources;
    - Capacity to handle anticipated aid increases through PFM systems; and
    - Integration of aid flows into medium-term expenditure frameworks and annual budgets (para. 28).
  - Support should be consistent with a country’s own capacity-building priorities; staff should encourage articulation of these needs within PRSs and use PRS to gain support for costing, budgeting, funding, prioritization, and sequencing of reforms for statistical and PFM capacity building (para. 28).
  - Fund TA contributions’ priorities should be clearly set out and coordinated with other TA providers to ensure coverage and avoid duplication (para. 28).

### Fund engagement in the PRS process (paras. 29–33)
- Role and practice:
  - Fund role in PRS process has varied across countries and time; considerable interaction on macroeconomic framework and some outreach on PRS process, particularly early stages (para. 29).
  - Staff usually have not pursued active policy debate with non-government stakeholders or been involved in design of participatory processes (para. 29).
- Good-practice examples (Box 4 highlights):
  - Mozambique: PRGF objectives broadly aligned with PRSP; macroeconomic framework more flexible to accommodate aid; structural conditionality reduced; authorities provided positive feedback on discussions with Fund staff.
  - Vietnam: Close rapport between authorities and Fund resident representatives fostered trust and mutually beneficial dialogue; authorities expressed interest in Fund playing a greater role beyond traditional official contacts.
  - Ghana: Fund staff closely involved in PRSP consultations; resident representative contributed to identifying PRS priorities and allocating resources; collaboration with Multi-donor Budgetary Support (MDBS) group; Fund’s resident representative participates in MDBS and joint donor-government MDG needs assessment fora.
- Staff actions to improve PRSP treatment:
  - Encourage authorities to give more detailed treatment to macroeconomic issues and constraints in PRSPs and annual progress reports through advice and support to reduce divergence between national budgets, Fund-supported program targets, and PRSP macro-fiscal frameworks (para. 30).
  - Encourage and support elaboration and presentation of consistent alternative macroeconomic frameworks in PRS updates and full revisions (para. 30).
- Operational cycle alignment:
  - Seek to keep Fund operational cycles (including program work) closely aligned with domestic cycles, especially PRS cycle; plan mission work so macroeconomic assessment, program reviews, and projections feed into budget formulation and PRS implementation reviews (para. 31).
  - Major disruptions of basic PRGF/PSI review cycle for alignment not envisaged; alignment simpler where budget and PRS cycles are themselves aligned (para. 31).
- Collaboration with World Bank and JSAN:
  - As PRS cycle becomes entrenched, staff should focus on direct policy advice to strengthen macroeconomic framework and collaborate with World Bank and other partners to support priority structural reforms (para. 32).
  - Fund and Bank staffs will come to the Boards with concrete proposals regarding the JSAN (para. 32).
- Trade policy integration:
  - Encourage countries to integrate trade policies into PRSs and explore potential benefits to growth and poverty reduction from trade liberalization, especially nondiscriminatory (MFN) unilateral reforms or multilateral negotiations (para. 33).
  - Assist authorities in assessing economy-wide impacts including revenue effects; with World Bank, discuss timing and sequencing of trade reforms (para. 33).
  - Encourage incorporation in PRSs of recommendations from Integrated Framework Diagnostic Trade Integration Studies relevant to Fund work (para. 33).

### Fund support for the MDGs (paras. 34–37)
- Overall stance:
  - Fund remains committed to supporting country efforts to reach the MDGs and to encourage international system changes to facilitate this: increased and more effective aid; reforms to multilateral trading system; and capacity-building support (para. 34).
  - Fund’s direct contribution: help countries maintain macroeconomic stability and debt sustainability, and accelerate growth through appropriate macroeconomic and fiscal frameworks (para. 34).
- Reporting and analytical role:
  - Staff expected to report whether estimated costs of meeting the MDGs are consistent with existing or projected aid flows, macroeconomic stability, and debt sustainability (para. 35).
  - Where reliable and credible MDG resource estimates are provided by others or higher aid flows become available, Fund staff would help formulate a consistent macroeconomic framework and sustainable fiscal policies around higher aid and spending levels (para. 35).
- Role in consultative group meetings and roundtables:
  - As purpose shifts from closing financing gaps toward mobilizing commitments of longer-term MDG support, Fund staff may increasingly be called upon to assess impact of changes in volume or terms of aid on macroeconomic situation and on debt and fiscal sustainability; staff could use these events to do so (para. 36).
- Executive Board reporting:
  - Staff expected to report to the Executive Board on progress toward the MDGs in individual countries in Article IV staff reports, presenting concise summary assessments prepared by World Bank or others, plus relevant tables on key indicators (para. 37).
  - Reporting will highlight specific weaknesses and point out cases where faster progress could be made without endangering macroeconomic stability if more resources were available (para. 37).
  - Fund staff not expected to determine precisely how much more progress could be achieved per increment of resources; to analyze developments of key social indicators; or to arbitrate budget allocation decisions (para. 37).

### Engagement with key domestic stakeholders (paras. 38–39)
- Scope of engagement:
  - Staff have regular contacts with parliaments, business and private sector associations, academia, trade unions, CSOs, and the press to inform about macroeconomic developments and raise awareness of constraints and tradeoffs; frequency has increased since PRS approach introduction but constrained by mission demands and limited resident office resources (para. 38).
  - Considerable criticism exists regarding limited frequency and scope of these contacts (para. 38).
- Public outreach objectives and approach:
  - Maintain appropriate public outreach, including open discussions with key domestic stakeholders to:
    - Facilitate understanding of macroeconomic constraints and assumptions underpinning Fund policy advice;
    - Help ensure macroeconomic considerations feed into PRS design and updates;
    - Contribute to broader consensus around policy choices;
    - Facilitate discussion of alternative policy options; and
    - Use stakeholder feedback to improve Fund operations in-country (para. 39).
  - Discussions to be separate from program negotiations and handle sensitive issues (exchange rates, interest rates) only in general terms (para. 39).
  - Dialogue normally takes place within government-organized institutional framework; staff should encourage authorities to lead discussions involving resident representative and mission chief (para. 39).

### Recommendations (para. 40)
- Beyond normal macroeconomic policy advice, financial and technical assistance, Fund staff expected to:
  - Assist country authorities in preparing alternative macroeconomic scenarios, drawing on any existing in-depth analysis of sources of growth and related constraints.
  - Assess the scope for sustainable new debt accumulation using the new DSF; encourage countries to develop a medium-term debt management strategy (MTDS); and assess longer-term budgetary consequences of aid-financed spending increases.
  - Help countries manage the macroeconomic impact of increased aid or persistent aid volatility; indicate to donors when more aid would not endanger macroeconomic stability and debt sustainability, without advocating a specific level of aid or assuming responsibility for mobilizing donor commitments; and signal when the volume and composition of aid would pose problems for stability or sustainability.
  - Push for detailed treatment of macroeconomic issues and constraints in PRSPs; and engage in early and open dialogue with key domestic stakeholders on macroeconomic issues.
  - Report on the consistency of estimated costs of meeting the MDGs with projected aid flows, macroeconomic stability, and debt sustainability; and on country progress toward the MDGs.

*Source: Excerpt from the IMF policy paper (paras. 26–40).*

### 41.      The Fund’s effectiveness in helping LICs meet the MDGs depends on close

### _092107 - 41.      The Fund’s effectiveness in helping LICs meet the MDGs depends on close

### Interaction with development partners under the PRS framework
- Three elements of Fund–donor interaction are particularly relevant:
  - Flow of information: Fund → donors on macroeconomic situation and prospects; donors → Fund on their financial assistance and assessment of PRS implementation.
  - Coordinated provision of capacity-building support and technical assistance.
  - Enhancing overall aid effectiveness through predictable commitment and delivery of aid and effective macroeconomic management.
- Donors increasingly use Fund signals extensively and these signals "have an important influence on the provision of direct budget or program assistance." However, the Fund’s macroeconomic assessment is "increasingly just one of the parameters in donor disbursement decisions."

### The changing relationship with donors in the field
- Donor decision-making is being devolved to field representatives and donor collaboration through partnership agreements (especially among budget support providers) is rising.
- Implications for the Fund:
  - The locus of interaction shifts to the field, affecting the roles of mission chiefs and resident representatives.
  - Challenges arise from the Fund’s centralized, headquarters-based management model, notably where no resident representative office exists.
  - The Fund can positively encourage donor engagement where a suitable country-led institutional framework is absent.

- Operational expectations:
  - Fund staff should keep donors informed of timing, objectives, and results of missions, implying more regular HQ–field donor contacts.
  - Closer interaction may require greater time commitment by resident representatives, particularly for participation in joint donor processes.
  - Fund staff could attend or support joint donor group meetings (in-person or via video-link), provide advice in areas within the Fund’s mandate, and contribute analytical and technical assistance inputs.
  - Fund macroeconomic assessments should be timed to feed into joint donor evaluation processes when feasible.

- New donor types:
  - Rising flows from emerging, nontraditional aid providers, private sources, and vertical funds/global programs (such as UNAIDS, the GFATM) require additional Fund assessment of implications for debt and fiscal sustainability.
  - These providers often lack a significant permanent in-country presence and typically have not been closely involved in the PRS process, complicating alignment and coordination; Fund staff should make additional efforts to collect information on scope and timing of their activities.

### Elements of good practice in donor collaboration
- Donors view the Fund as the principal source of information and evaluation of macroeconomic situation and prospects; Fund staff should:
  - Provide information on key aspects of macroeconomic performance and prospects during missions and at regular intervals between missions (usually in summary form and preferably through the resident representative’s office, where one exists).
  - Seek information from donors on their programs and current and planned financial assistance, and encourage more predictability in their medium-term commitments.
  - Point out adverse impacts of aid volatility on country planning and performance; seek donors’ views on likely timing of disbursements to assess volatility risk.
- Collaboration with the World Bank and other partners:
  - Discuss support for priority structural reforms that are growth-critical and step up collaboration on diagnostic and analytical work to share assessments, minimize duplication and gaps, and collaborate on alternative scenarios for scaled-up aid.
  - Joint initiatives such as the multi-donor Public Expenditure and Financial Accountability (PEFA) Initiative exemplify productive collaboration in diagnostic work.

### Role and resourcing of the resident representative
- The resident representative’s role in donor collaboration should be tailored to country circumstances:
  - Area departments will assess the extent to which resident representative engagement is required and may adjust terms of reference accordingly.
  - Departments must balance any additional donor-collaboration responsibilities against other resident representative work.
- Implications for skills, support, and costs:
  - Enhanced outreach may require resident representatives with a different mix of skills and more support from headquarters, particularly EXR.
  - Additional activities will incur costs that could be financed by: increasing resources for LIC work; reducing existing resident representative activities; or mobilizing external financing for part of the work.
  - The African Department (AFR) model: externally financed local consultants/co-funded contractual economists in resident representative offices (Mozambique example) to coordinate donor-government-Fund work in tax and PFM reforms; AFR plans to begin a program in about 10 countries in FY2008, contingent on local market conditions and donor cost shares.

### Recommendations for Fund staff engagement with donors
- Fund staff in general should:
  - Keep donor representatives informed of key issues of concern in the Fund’s relations with a country and of the staff’s assessment of major macroeconomic developments and the results of mission discussions and other diagnostic work.
  - Discuss the implications of projected aid flows for macroeconomic stability and debt sustainability; seek information from donors on their planned support; and encourage donors to adapt the timing or terms of their assistance as appropriate.
- Participation in joint donor work may be feasible in some cases; modalities and intensity of engagement will vary by country.

### Resource implications and implementation scope
- Re-focusing the Fund’s role in LICs and intensifying certain activities will have resource costs that may be difficult to accommodate in the present budgetary environment.
- Full implementation across the entire low-income membership could require additional resources "in range of some 6 staff years."
  - These cost estimates reflect net impact after anticipated savings from cutting back staff involvement in selected activities.
  - Earlier estimates referenced: a gross requirement of 10 additional staff years for LIC work for the MTS; a 2005 staff survey produced an estimated additional requirement of 7 staff-years.
- Implementation expectations and timing:
  - Activities are not expected to be conducted each year in each country; the range of activities is assumed to be undertaken as appropriate over a "three- to four-year period" (consistent with the PRSP/PRGF cycle).
  - Only a few activities, such as the DSA updates, need to be carried out each year.
  - Resource needs will vary across countries and over time depending on country circumstances and the nature of Fund engagement.
- Scope of estimates:
  - Resource estimates refer only to country work of area departments and associated review/support by functional departments; they exclude other activities that enhance Fund effectiveness such as technical assistance, outreach by management and EXR, or staff participation in relevant international efforts.
- Given declining budgetary resources, mobilizing additional internal resources for LIC work will be difficult; area departments will face trade-offs in prioritizing activities and require clear Board guidance on institutional priorities.

*Source: IMF chapter/section content provided.*

### 60.      One choice would be to limit resources costs by implementing these activities

### One choice would be to limit resources costs by implementing these activities

### Options to limit resource costs
- Implement activities more modestly:
  - Undertake work on alternative macroeconomic scenarios in only about half of the PRGF-eligible countries (i.e. biennially).
  - Limit other activities (additional outreach on macroeconomic issues, monitoring of poverty-reducing expenditures, more intensive field involvement with donors) to only the most “urgent” cases, i.e., in about 10 percent of the countries in any given year (see Appendix II, Table 3).

### Further cut-back options on existing activities
- Possible reductions include:
  - Reducing the number of background notes on country-specific or cross-country topics.
  - Less frequent engagement with CSOs, private sector, academia and others.
  - Less involvement of resident representatives or area department staff in coordinating Fund-provided TA and training.
  - Reducing the frequency or scope of work on topics of passing interest, or research projects outside the Fund’s core areas of expertise.

### Resident representatives’ capacity constraints
- Given existing workload, resident representatives cannot consistently take on additional responsibilities unless:
  - They receive additional resources (e.g., an increase in local staff, possibly via donor-financed trust fund allocations or co-financing), or
  - Other activities are cut back.
- Area departments should review terms of reference for each resident posting to ensure an appropriate balance of activities.

### Issues for Executive Directors’ discussion
- Agreement requested on:
  - The proposed areas for more intensive engagement and their relative priorities.
  - Whether, in analyzing overall absorptive capacity or sectoral policies for growth, Fund staff should draw on relevant work done by others but not be expected to take the lead role.
  - The impact of the current limiting budgetary environment on these activities and how the costs of more intensive engagement should be met.
  - If additional resources are not provided for LIC work, which areas of existing work should be limited to allow staff to engage more intensively in priority areas.

### Informal survey of staff activities in the PRS process (Appendix I)
- Main focus in PRSP formulation: provision of policy advice and inputs on the macroeconomic framework; seldom detailed growth analyses or scaled-up alternative macroeconomic scenarios.
- Staff seldom directly drafted PRSPs but provided detailed comments on early drafts.
- Post-PRSP phase: most intensive work on updating and revising the medium-term macroeconomic framework; supporting TA-related activities; aligning PRSPs, MTEFs, and annual budgets.
- Considerable time spent engaging with donors, providing assessments of the macroeconomic situation.
- Looking forward: greatest value-added seen in additional analytical contributions (including work on alternative scenarios for scaled-up aid, preferably in cooperation with other donors); extending policy discussions beyond the annual economic program; more outreach by resident representatives to CSOs/NGOs and donors.

### Resource estimates summary (Appendix II)
- Aggregate estimate noted in main text: around 6 staff-years in extra resources required.
- The Appendix-derived net additional resource estimate: mid-point of low/high ranges provides the estimated net requirement of 6.3 staff years.
- Aggregate derivation notes:
  - All 78 PRGF-eligible countries divided into three groups: (i) 45 countries with active PRGF or PSI arrangements, or near-program status; (ii) 8 post-conflict countries; and (iii) 25 “lower-activity” countries.
  - Estimates based on a 2005 survey, follow-up questionnaires, DSF paper surveys, resource cost estimates from Ex-post Assessments, and other staff estimates.
  - High (H) resource needs correspond to an extra 24-27 staff-days; medium (M) to 14-17 staff-days; low (L) to 4-7 staff-days.
- Key numeric summaries from Table 2:
  - 1. Net Resource Needs -- Total: 3.0 3.6 1.3 1.5 1.2 2.1 5.5 7.2 6.3 (In staff years)
  - 1a. Additional Resource Needs for PRGF-eligible countries: 7.5 10.2 1.8 2.3 1.9 3.4 11.3 15.9 13.6 (In staff years)
  - A. By topics area (All PRGF-eligible): 7.5 10.2 1.8 2.3 1.9 3.4 11.3 15.9 13.6 (In staff years)
    - Macroeconomic analysis and advice: 6.0 7.5 1.5 1.8 1.1 1.9 8.7 11.2 10.0 (In staff years)
    - PRS process and MDGs: 0.9 1.6 0.2 0.3 0.5 0.9 1.6 2.8 2.2 (In staff years)
    - Engagement with donors: 0.4 0.6 0.1 0.1 0.2 0.4 0.6 1.1 0.9 (In staff years)
    - Outreach on macroeconomic issues: 0.2 0.4 0.0 0.1 0.1 0.2 0.4 0.7 0.6 (In staff years)
  - B. By priority area (All PRGF-eligible):
    - Mandatory (partly under way) activities (M): 6.6 8.5 1.4 1.7 1.4 2.5 9.4 12.7 11.0 (In staff years)
    - Other priority activities (P): 0.7 1.2 0.3 0.4 0.4 0.7 1.4 2.3 1.9 (In staff years)
    - Potential new activities (N): 0.3 0.5 0.1 0.1 0.2 0.3 0.5 0.9 0.7 (In staff years)
  - 1b. Reduction in Resource Needs: 4.5 6.6 0.6 0.7 0.8 1.3 5.8 8.7 7.2 (In staff years)
    - Reducing frequency of Ex-post Assessments: 3.1 4.2 0.0 0.0 0.0 0.0 3.1 4.2 3.6 (In staff years)
    - Reducing Selected Issues and Statistical Appendixes: 0.7 1.2 0.1 0.2 0.4 0.7 1.2 2.1 1.7 (In staff years)
    - Reducing work on non-core structural issues: 0.7 1.2 0.4 0.5 0.4 0.7 1.5 2.4 2.0 (In staff years)

### Possible additional savings if resources insufficient (Table 3)
- Limiting the proposed increases to LIC work:
  - Less resource increase for scaling up related work: 2 (In staff-years, for all countries)
  - Less resource increase for alternative macro scenarios: 2 (In staff-years, for all countries)
  - Less resource increase for outreach on macro issues: 2 (In staff-years, for all countries)
- Reducing activities already undertaken: total 6 (In staff-years, for all countries)
  - Reducing background notes: 2 (In staff-years, for all countries)
  - Less engagement with CSO, less TA coordination: 2 (In staff-years, for all countries)
  - Less work on non-core areas: 2 (In staff-years, for all countries)

*Source: _092107 - 60.      One choice would be to limit resources costs by implementing these activities*

### References

### References

### External reports and working papers
- External Review Committee on Bank-Fund Collaboration, 2007, “Final Report”. Available via internet: www.imf.org/external/np/pp/eng/2007/022307.pdf.
- Heller, Peter, 2005, “Pity the Finance Minister: Issues in Managing A Substantial Scaling Up of Aid Flows”, WP/28/180, (Washington: International Monetary Fund). Available via internet: http://www.imf.org/external/pubs/ft/wp/2005/wp05180.pdf

### International Monetary Fund (IMF) — General publications and policy papers
- International Monetary Fund, 1999a, “The Poverty Reduction and Growth Facility—Operational Issues”, (Washington: International Monetary Fund). Available via internet: http://www.imf.org/external/np/pdr/prsp/poverty2.htm
- ———,1999b, “Concluding Remarks by the Chairman, Poverty Reduction Strategy Papers—Operational Issues, Poverty Reduction and Growth Facility—Operational Issues” (Washington: International Monetary Fund). Available via internet: http://www.imf.org/external/np/pdr/prsp/1999/991221.htm
- ———, 2002, “Guidelines on Conditionality”, (Washington: International Monetary Fund). Available via internet: http://www.imf.org/external/np/pdr/cond/2002/eng/guid/092302.htm
- ———, 2003a, “Aligning the Poverty Reduction and Growth Facility (PRGF) and the Poverty Reduction Strategy Paper (PRSP) Approach: Issues and Options”, (Washington: International Monetary Fund). Available via internet: http://www.imf.org/external/np/prsp/2003/eng/042503.pdf
- ———, 2003b, “The Role of the Fund in Low-Income Member Countries over the Medium Term—Issues Paper for Discussion” (Washington, International Monetary Fund). Available via internet: http://www.imf.org/external/np/pdr/sustain/2003/072103.pdf
- ———, 2003c, “Fund Assistance for Countries Facing Exogenous Shocks” (Washington, International Monetary Fund). Available via internet: http://www.imf.org/external/np/pdr/sustain/2003/080803.pdf
- ———, 2004a, “The Fund’s Support of Low-Income Member Countries – Considerations on Instruments and Financing”, (Washington: International Monetary Fund). Available via internet: http://www.imf.org/external/np/pdr/lic/2004/eng/022404.pdf
- ———, 2004b, “The Role of the Fund in Low-Income Member Countries”, (Washington: International Monetary Fund). Available via internet: http://www.imf.org/external/np/pdr/lic/2004/eng/081304.htm
- ———, 2005a, “Policy Support and Signaling in Low-Income Countries” (Washington: International Monetary Fund). Available via internet: http://www.imf.org/external/np/pp/eng/2005/061005.pdf
- ———, 2005b, “Monetary and Fiscal Policy Design in Low-Income Countries”, (Washington: International Monetary Fund). Available via internet: http://www.imf.org/external/np/pp/eng/2005/080805m.pdf
- ———, 2005c, “The Macroeconomics of Managing Increased Aid Inflows—Experiences of Low-Income Countries and Policy Implications”, (Washington: International Monetary Fund). Available via internet: http://www.imf.org/external/np/pp/eng/2005/080805a.pdf
- ———, 2005d, “Establishment of an Exogenous Shocks Facility under the Poverty Reduction and Growth Facility Trust”, (Washington: International Monetary Fund). Available via internet: http://www.imf.org/external/np/pp/eng/2005/100405.pdf
- ———, 2006a, “The Managing Director’s Report on Implementing the Fund’s Medium-Term Strategy”, (Washington: International Monetary Fund). Available via internet: http://www.imf.org/external/np/pp/eng/2006/040506.pdf
- ———, 2006b, “Implementing the Fund’s Medium-Term Strategy—Working Group Reports”, (Washington: International Monetary Fund).
- ———, 2007a, “Fiscal Policy Response to Scaled-Up Aid”, (Washington: International Monetary Fund). Available via internet: http://www.imf.org/external/np/pp/eng/2007/eng/071907.htm.
- ———, 2007b, “Aid Inflows—The Role of the Fund and Operational Issues for Program Design”, (Washington: International Monetary Fund). Available via internet: http://www.imf.org/external/np/pp/eng/2007/eng/071907.htm.
- ———, 2007c, “The Acting Chair’s Summing Up: Fiscal Policy Response to Scaled-Up Aid; Aid Inflows—The Role of the Fund and Operational Issues for Program Design”, (Washington: International Monetary Fund). Available via internet: http://www.imf.org/external/np/sec/pn/2007/pn0783.htm

### IMF Independent Evaluation Office (IEO)
- International Monetary Fund, Independent Evaluation Office (IEO), 2004, “Evaluation of the IMF’s Role in Poverty Reduction Strategy Papers (PRSPs) and the Poverty Reduction and Growth Facility (PRGF),” (Washington: International Monetary Fund). Available via internet: http://www.imf.org/external/np/ieo/2004/prspprgf/eng/report.pdf
- ———, 2007, “The IMF and Aid to Sub-Saharan Africa: An IEO Evaluation”, (Washington: International Monetary Fund). Available via internet: http://www.imf.org/external/np/ieo/2007/ssa/eng/pdf/report.pdf

### Joint IMF and World Bank (IDA) publications
- International Monetary Fund, and World Bank (IDA), 1999, “Poverty Reduction Strategy Papers—Operational Implications”, (Washington: International Monetary Fund). Available via internet: http://www.imf.org/external/np/pdr/prsp/poverty1.htm
- ———, 2005, “2005 Review of the Poverty Reduction Strategy Approach—Balancing Accountabilities and Scaling Up Results—Synthesis”; and Background Paper, (Washington: International Monetary Fund). Available via internet: http://www.imf.org/external/np/pp/eng/2005/091905s.htm and http://www.imf.org/external/np/pp/eng/2005/091905p.pdf
- ———, 2006a, “Applying the Debt Sustainability Framework for Low-Income Countries Post Debt Relief”, (Washington: International Monetary Fund and World Bank). Available via internet: http://www.imf.org/external/np/pp/eng/2006/110606.pdf.
- ———, 2006b, “Applying the Debt Sustainability Framework for Low-Income Countries Post Debt Relief”, Acting Chairman’s Summing Up”, (Washington: International Monetary Fund and World Bank). Available via internet: http://www.imf.org/external/np/sec/pn/2006/pn06136.htm

*Source: References*

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