## _081508 - Executive Summary

## Source details

**Canonical URL:** [_081508 - Executive Summary](https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2008/_081508.pdf)

## Other formats

- [Markdown version](/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2008/_081508.pdf.md)
- [Structured JSON version](/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2008/_081508.pdf.json)

---

### Executive Summary — key findings
- This paper reviews progress under the Fund’s strengthened cooperative strategy on overdue financial obligations.
- Total arrears to the Fund declined by SDR 552 million since the last review, owing largely to the clearance of arrears by Liberia in March 2008.
- The majority of the arrears to the Fund (85 percent) were to the General Resources Account (GRA).
- Liberia cleared arrears of SDR 543 million on March 14, 2008:
  - Clearance was facilitated by an intra-day bridge loan provided by the United States.
  - 102 members contributed to the financing of the Fund’s debt relief to Liberia.
  - On March 18, Liberia reached the decision point and received interim assistance under the enhanced HIPC Initiative.
- Three members remained in protracted arrears to the Fund—Somalia, Sudan, and Zimbabwe—and remedial measures are in place for all three cases.
- All overdue financial obligations to the Fund as of end-June 2008 were protracted arrears, with Sudan accounting for 75 percent of the total.
- No changes are proposed to the Fund’s strategy on arrears.
- It is proposed that the availability of the rights approach be extended by another year, to end-August 2009. A draft decision is provided to extend the availability of the rights approach.

### Recent Developments — overview and aggregates
- As of end-June 2008:
  - Total arrears to the Fund: SDR 1,338.0.
  - End-June 2007 total arrears: SDR 1,889.5.
- Composition of arrears (end-June 2008):
  - Principal: SDR 469.5
    - GRA principal: SDR 321.1
    - PRGF-ESF Trust principal: SDR 73.9
    - Other 1/: SDR 74.5
  - Interest: SDR 868.6
    - GRA interest: SDR 817.0
    - PRGF-ESF Trust interest: SDR 14.4
    - Other 2/: SDR 37.1
- Financial cost and burden-sharing:
  - Total burden-shared deferred charges amounted to SDR 685 million as of end-June 2008, a decrease of SDR 210 million from a year ago.
  - Arrears to the Trust Fund amounted to SDR 88 million.
  - SDR 74.6 million has been drawn from the Reserve Account to repay PRGF-ESF Trust lenders due to Zimbabwe’s arrears.
- Short-term arrears during the review period:
  - Three members (three instances) incurred short-term arrears (less than six months); these were settled before remedial measures were applied.
- Arrears to other international financial institutions by the protracted arrears cases (as of end-June 2008):
  - Total across institutions: SDR 2,562.7 (Fund: SDR 1,338.0; World Bank 1/: SDR 788.7; AfDB: SDR 436.0).
  - Somalia: Fund SDR 239.8; World Bank SDR 114.1; AfDB SDR 45.5; Total SDR 399.5.
  - Sudan: Fund SDR 1,009.9; World Bank SDR 306.8; AfDB SDR 130.6; Total SDR 1,447.3.
  - Zimbabwe: Fund SDR 88.3; World Bank SDR 367.8; AfDB SDR 259.9; Total SDR 715.9.
- Overdue currency valuation adjustments:
  - Total overdue currency valuation adjustments of 14 members: SDR 1.2 billion at end-June 2008 (SDR 2.4 billion at end-June 2007).
  - Protracted arrears cases accounted for SDR 663 million, or 57 percent of the total amount.

### Developments in protracted arrears cases — country summaries
- Sudan
  - Record of cooperation on policies and payments was mixed under the 2007–08 SMP; performance was uneven.
  - Actions were taken to rein in tax exemptions, widen the tax base, and implement GFSM 2001 to improve transparency and monitoring of domestic arrears.
  - Structural public financial management reforms were delayed or not fully implemented; corrective measures recently implemented contributed to a notable reduction in domestic arrears.
  - Payments: In 2007 Sudan paid the Fund US$50.6 million (equivalent to SDR 32.8 million) compared to new obligations falling due of SDR 16.9 million and its commitment of a minimum of US$50 million.
  - Under the 18-month SMP, authorities committed to pay at least US$50 million in 2008. So far in 2008, Sudan has made four payments totaling US$24.6 million (equivalent to SDR 15.2 million).
  - Executive Board review (May 2008): Directors urged prompt actions to sustain macroeconomic stability and high growth, minimize nonconcessional borrowing; noted payments in 2007 exceeded new obligations; urged monthly payments and possible further increases in 2008; no further remedial action was taken; agreed to review again within six months.
- Zimbabwe
  - Cooperation on policies and payments remained poor; economic and social crisis deepened: shrinking economic activity, spiraling hyperinflation, virtual free fall in exchange rate, rapid depletion of international reserves.
  - Currency reform introduced (removal of ten zeros) but without supporting policies unlikely to meaningfully affect hyperinflation.
  - Payments toward PRGF-ESF arrears since last review: four payments totaling SDR 0.3 million plus Zimbabwe’s share of SDR 1 million from partial distribution of the SCA-1 balance and burden-shared deferred charges adjustments related to Liberia.
  - Executive Board review (July 2008): Board regretted lack of meaningful reduction in arrears, urged immediate action to discharge arrears, noted deepened crisis and need for drastic policy change; Directors identified necessary mutually reinforcing policy actions:
    - Exchange rate unification and removal of all restrictions on making payments and transfers for current international transactions;
    - Substantial fiscal tightening, including termination of all quasi-fiscal activities by the Reserve Bank of Zimbabwe and transferring such activities transparently to the budget;
    - Prioritizing spending to ensure adequate social safety nets;
    - Liberalization of price controls and imposition of hard budget constraints on public enterprises;
    - Establishing a strong nominal anchor;
    - Fundamental reforms for investment climate: public enterprises, civil service, public expenditure management, property rights, and governance.
  - Remedial measures imposed with respect to Zimbabwe’s arrears to the PRGF-ESF Trust were kept in place; Directors agreed to consider overdue obligations within six months.
- Somalia
  - Executive Board has postponed review of Somalia’s overdue financial obligations since October 1990.
  - No basis for assessing cooperation due to unsettled political/security situation and absence of information.
  - Transitional Federal Government formed in 2005 has been unable to restore order and lacks international recognition.
  - Fund staff continues to monitor developments and stands ready to re-engage should conditions permit.

### Progress under the Fund’s arrears strategy and extension of the rights approach
- Strategy assessment
  - No changes are proposed to the Fund’s strategy on arrears; the strategy remains broadly effective in dealing with both short-term and protracted arrears.
- Rights approach
  - The rights approach remains an important option for arrears clearance for the two members that remain eligible (Somalia and Sudan).
  - The rights approach was initiated in 1990 and was used to clear arrears of three members—Peru, Sierra Leone, and Zambia—in the 1990s.
  - Eligibility for the rights approach was restricted to the eleven members that had protracted arrears to the Fund at end-1989; of these, only Somalia and Sudan remain eligible.
  - Under this approach, an eligible member must:
    - establish a track record of cooperation on policies with the Fund by undertaking an economic program with conditionality equivalent to that of upper credit tranche Fund arrangements;
    - make payments to the Fund (and the World Bank) that, at a minimum, are sufficient to meet new obligations falling due;
    - accumulate “rights” to future drawings of Fund resources following the clearance of its arrears.
  - At the end of the rights accumulation program, bilateral creditors would provide a bridge loan to clear the member’s arrears to the Fund, followed by the member’s access to new Fund financing.
  - It is proposed that the availability of the rights approach be extended for another year, to end-August 2009.
  - Use of the rights approach is not required for eligible members, but it could provide a useful approach for arrears clearance in light of country-specific circumstances.

### Payment attribution, de-escalation, and related work program
- Executive Directors called for modification of the de-escalation policy to reduce the financial cost of burden-sharing for deferred charges.
- Directors noted strain on the burden-sharing mechanism with the sharp decline in Fund credit and supported consideration of a modification to the Fund’s de-escalation policy for members with overdue financial obligations—to make remaining current on new obligations falling due a firm test of cooperation with the Fund.
- A separate paper on this issue will be prepared for the Board’s consideration after the 2008 Annual Meetings in line with the Managing Director’s work program.

### Proposed Executive Board decision
- Proposed decision (to be adopted by a majority of votes cast):
  - “The Fund has reviewed progress under the strengthened cooperative strategy with respect to overdue financial obligations to the Fund as described in EBS/08/96. The Fund reaffirms its support for the strengthened cooperative strategy and agrees to extend the availability of the rights approach until end-August 2009.”

### Remedial measures and timetables (Annex I and Annex II — key actions and timing)
- General Department and SDR Department timetable (Annex I) — selected actions and timings:
  - Immediately: Staff sends a cable urging payment; member not permitted use of Fund resources nor any request placed before Executive Board until arrears are cleared.
  - 2 weeks: Management communicates to the Governor stressing seriousness and urging settlement.
  - 1 month: Managing Director notifies the Executive Board that an obligation is overdue.
  - 6 weeks: Managing Director notifies member that a complaint will be issued unless settled; may recommend communications to selected/all Fund Governors.
  - 2 months: Complaint issued by the Managing Director to the Executive Board.
  - 3 months: A brief factual statement is posted on the Fund’s external website; complaint receives substantive consideration by Executive Board; Board usually limits member’s use of general resources and, if overdue SDR obligations involved, suspends right to use SDRs; press release issued following Board decision.
  - 6–12 months: Executive Board will review its decision on limitation within three months, with possibility of a second review; declaration of ineligibility may be considered to take effect not more than twelve months after emergence of arrears; communications to all Fund Governors and heads of selected international financial institutions to be considered.
  - Up to 15 months: Declaration of noncooperation considered within three months after dispatch of communications; upon declaration technical assistance will be suspended unless Board decides otherwise.
  - Up to 18 months: Decision on suspension of voting and representation rights considered within three months after declaration of noncooperation.
  - Up to 24 months: Procedure on compulsory withdrawal will be initiated within six months after decision on suspension.
- PRGF-ESF Trust timetable (Annex II) — selected actions and timings:
  - Immediately: Staff sends a cable urging payment; member’s access to Fund resources, including Trust resources, is suspended.
  - 2 weeks: Management communicates to the Governor stressing seriousness and urging settlement.
  - 1 month: Managing Director notifies the Executive Board that an obligation to the Trust is overdue.
  - 6 weeks: Managing Director notifies member that a report concerning the arrears to the Trust will be issued to the Executive Board unless settled; may recommend communications to selected/all Fund Governors.
  - 2 months: A report is issued by the Managing Director to the Executive Board requesting limitation of the member’s use of PRGF-ESF Trust Resources.
  - 3 months: Report given substantive consideration; factual statement posted on member’s country-specific page; press release issued following Board decision to limit Trust resource use.
  - 6 months: Executive Board reviews its decision on limitation and may remove member from the list of PRGF-ESF-eligible countries; reinstatement requires a new Board decision; press releases issued on removal or reinstatement.
  - 12 months: A declaration of noncooperation with the PRGF-ESF Trust may be issued by the Executive Board depending on assessment; upon declaration the Fund could suspend provision of technical assistance; Managing Director may limit technical assistance if not contributing adequately to resolution of arrears.

### Key statistics and country-specific figures (selected tables and balances)
- Countries with protracted overdue financial obligations (Table 7) — end-June 2008 (SDR millions):
  - Somalia: Total Indebtedness 239.8; Overdue Principal 112.0; Interest 127.8; Total 239.8.
  - Sudan: Total Indebtedness 1,009.9; Overdue Principal 283.6; Interest 726.3; Total 1,009.9.
  - Zimbabwe: Total Indebtedness 88.3; Overdue Principal 73.9; Interest 14.4; Total 88.3.
  - Total (Somalia + Sudan + Zimbabwe): 1,338.0; Net SDR Charges and Assessments 469.5; Overdue Principal and Interest 868.6; Total 1,338.0.
- Deferred GRA charges for countries with protracted arrears (Table 9; balances as of Apr. 30 and Jun. 30; SDR millions):
  - Somalia balances:
    - Apr. 30, 2004: 95.9; Net deferrals 3.0
    - Apr. 30, 2005: 98.9; Net deferrals 4.0
    - Apr. 30, 2006: 102.9; Net deferrals 5.1
    - Apr. 30, 2007: 108.0; Net deferrals 3.6
    - Apr. 30, 2008: 111.6; Net deferrals 1.0
    - Jun. 30, 2008: 112.6
  - Sudan balances:
    - Apr. 30, 2004: 655.4; Net deferrals 10.2
    - Apr. 30, 2005: 665.6; Net deferrals 12.5
    - Apr. 30, 2006: 678.1; Net deferrals 14.9
    - Apr. 30, 2007: 693.0; Net deferrals 10.0
    - Apr. 30, 2008: 703.0; Net deferrals 2.3
    - Jun. 30, 2008: 705.3
  - Zimbabwe:
    - Apr. 30, 2004: 10.8; Net deferrals 3.6
    - Apr. 30, 2005: 14.3; subsequent years: no balances shown through Jun. 30, 2008
  - Total deferred charges:
    - Apr. 30, 2004 Balance 762.0; Net deferrals 16.8
    - Apr. 30, 2005 Balance 778.8; Net deferrals 16.5
    - Apr. 30, 2006 Balance 781.0; Net deferrals 20.0
    - Apr. 30, 2007 Balance 801.0; Net deferrals 13.6
    - Apr. 30, 2008 Balance 814.6; Net deferrals 3.3
    - Jun. 30, 2008 Balance 817.9
- Overdue currency valuation adjustments (Table 10; as of end-June 2008; SDR millions):
  - Afghanistan, Islamic Republic of: 6.9
  - Angola: 227.7
  - Congo, Dem. Rep. of: 87.9
  - Grenada: 0.5
  - Iran: 68.0
  - Marshall Islands: 0.3
  - Micronesia: 0.4
  - Palau: 0.4
  - Samoa: 0.3
  - Somalia: 120.1
  - Sudan: 543.0
  - Suriname: 74.9
  - Syrian Arab Republic: 13.3
  - Zambia: 10.4
  - Total: 1,154.1
- Number of members with late payments during the twelve months to June 30, 2008:
  - Number of members with obligations falling due during the period: 293.
  - Number of members with late payments during the period: 87.
  - Number of members with late payments during the twelve months to June 30, 2008: 163.

*Source: Executive Summary (content unit _081508 - Executive Summary) as provided.*

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

### _081508 - Executive Summary ......................................................................................................

### Executive Summary

- This paper reviews progress under the Fund’s strengthened cooperative strategy on overdue financial obligations.
- Total arrears to the Fund declined by SDR 552 million since the last review, owing largely to the clearance of arrears by Liberia in March 2008.
- The majority of the arrears to the Fund (85 percent) were to the General Resources Account (GRA).
- Liberia cleared arrears of SDR 543 million on March 14, 2008:
  - Clearance was facilitated by an intra-day bridge loan provided by the United States.
  - 102 members contributed to the financing of the Fund’s debt relief to Liberia.
  - On March 18, Liberia reached the decision point and received interim assistance under the enhanced HIPC Initiative.
- Three members remained in protracted arrears to the Fund—Somalia, Sudan, and Zimbabwe—and remedial measures are in place for all three cases.
- All overdue financial obligations to the Fund as of end-June 2008 were protracted arrears, with Sudan accounting for 75 percent of the total.
- The record of cooperation with the Fund on policies and payments by the current protracted cases varied widely:
  - Somalia: The Transitional Federal Government lacks international recognition and has not been able to restore order; absence of official information precludes a full assessment of cooperation.
  - Sudan: Payments have continued to exceed new obligations falling due, but policy performance under the 2007–08 staff-monitored program (SMP) has been uneven; corrective actions were taken recently allowing staff to complete the first assessment of the SMP.
  - Zimbabwe: Cooperation has remained poor; arrears to the PRGF-ESF Trust have increased; economic and social crisis has intensified, making comprehensive macroeconomic stabilization and structural reform critical.
- No changes are proposed to the Fund’s strategy on arrears.
- It is proposed that the availability of the rights approach be extended by another year, to end-August 2009. A draft decision is provided to extend the availability of the rights approach.

### Recent Developments — Overview

- As of end-June 2008:
  - Total arrears to the Fund: SDR 1,338.0.
  - End-June 2007 total arrears: SDR 1,889.5.
- Composition of arrears (end-June 2008):
  - Principal: SDR 469.5
    - GRA principal: SDR 321.1
    - PRGF-ESF Trust principal: SDR 73.9
    - Other 1/: SDR 74.5
  - Interest: SDR 868.6
    - GRA interest: SDR 817.0
    - PRGF-ESF Trust interest: SDR 14.4
    - Other 2/: SDR 37.1
  - (Table 1 headings preserved as in source.)
- Overdue financial obligations to the Fund continue to impose a significant financial cost:
  - Total burden-shared deferred charges amounted to SDR 685 million as of end-June 2008, a decrease of SDR 210 million from a year ago.
  - Arrears to the Trust Fund amounted to SDR 88 million.
  - SDR 74.6 million has been drawn from the Reserve Account to repay PRGF-ESF Trust lenders due to Zimbabwe’s arrears.
- Short-term arrears during the review period:
  - Three members (three instances) incurred short-term arrears (less than six months); these were settled before remedial measures were applied.
- Arrears to other international financial institutions by the protracted arrears cases (as of end-June 2008; Table 2):
  - Total across institutions: SDR 2,562.7 (Fund: SDR 1,338.0; World Bank 1/: SDR 788.7; AfDB: SDR 436.0).
  - Somalia: Fund SDR 239.8; World Bank SDR 114.1; AfDB SDR 45.5; Total SDR 399.5.
  - Sudan: Fund SDR 1,009.9; World Bank SDR 306.8; AfDB SDR 130.6; Total SDR 1,447.3.
  - Zimbabwe: Fund SDR 88.3; World Bank SDR 367.8; AfDB SDR 259.9; Total SDR 715.9.
- Overdue currency valuation adjustments:
  - Total overdue currency valuation adjustments of 14 members: SDR 1.2 billion at end-June 2008 (SDR 2.4 billion at end-June 2007).
  - Protracted arrears cases accounted for SDR 663 million, or 57 percent of the total amount.

### Developments in Protracted Arrears Cases

- Sudan
  - Record of cooperation on policies and payments was mixed.
  - Under the 2007–08 SMP performance was uneven; actions were taken to rein in tax exemptions, widen the tax base, and implement GFSM 2001 to improve transparency and monitoring of domestic arrears.
  - Structural public financial management reforms were delayed or not fully implemented, contributing to accumulation of domestic arrears; corrective measures recently implemented contributed to a notable reduction in domestic arrears.
  - Payments: In 2007 Sudan paid the Fund US$50.6 million (equivalent to SDR 32.8 million) compared to new obligations falling due of SDR 16.9 million and its commitment of a minimum of US$50 million.
  - Under the 18-month SMP, authorities committed to pay at least US$50 million in 2008. So far in 2008, Sudan has made four payments totaling US$24.6 million (equivalent to SDR 15.2 million).
  - Executive Board review (May 2008): Directors urged prompt actions to sustain macroeconomic stability and high growth, minimize nonconcessional borrowing; noted payments in 2007 exceeded new obligations; urged monthly payments and possible further increases in 2008; no further remedial action was taken; agreed to review again within six months.
- Zimbabwe
  - Cooperation on policies and payments remained poor; economic and social crisis deepened: shrinking economic activity, spiraling hyperinflation, virtual free fall in exchange rate, rapid depletion of international reserves.
  - Currency reform introduced (removal of ten zeros) but without supporting policies unlikely to meaningfully affect hyperinflation.
  - Payments toward PRGF-ESF arrears since last review: four payments totaling SDR 0.3 million plus Zimbabwe’s share of SDR 1 million from partial distribution of the SCA-1 balance and burden-shared deferred charges adjustments related to Liberia.
  - Executive Board review (July 2008): Board regretted lack of meaningful reduction in arrears, urged immediate action to discharge arrears, noted deepened crisis and need for drastic policy change; Directors identified necessary mutually reinforcing policy actions:
    - Exchange rate unification and removal of all restrictions on making payments and transfers for current international transactions;
    - Substantial fiscal tightening, including termination of all quasi-fiscal activities by the Reserve Bank of Zimbabwe and transferring such activities transparently to the budget;
    - Prioritizing spending to ensure adequate social safety nets;
    - Liberalization of price controls and imposition of hard budget constraints on public enterprises;
    - Establishing a strong nominal anchor;
    - Fundamental reforms for investment climate: public enterprises, civil service, public expenditure management, property rights, and governance.
  - Remedial measures imposed with respect to Zimbabwe’s arrears to the PRGF-ESF Trust were kept in place; Directors agreed to consider overdue obligations within six months.
- Somalia
  - Executive Board has postponed review of Somalia’s overdue financial obligations since October 1990.
  - No basis for assessing cooperation due to unsettled political/security situation and absence of information.
  - Transitional Federal Government formed in 2005 has been unable to restore order and lacks international recognition.
  - Fund staff continues to monitor developments and stands ready to re-engage should conditions permit.

### Progress under the Fund’s Arrears Strategy and Extension of the Rights Approach

- No changes are proposed to the Fund’s strategy on arrears; the strategy remains broadly effective in dealing with both short-term and protracted arrears.
- It is proposed that the availability of the rights approach be extended by another year, to end-August 2009.
  - The rights approach remains an important option for arrears clearance for the remaining two eligible members (Somalia and Sudan).
  - A draft decision is provided to extend the availability of the rights approach.

*Source: Executive Summary (content unit _081508 - Executive Summary) as provided.*

### 15.      The Fund’s strategy on arrears has been broadly effective in dealing with cases

### 15.      The Fund’s strategy on arrears has been broadly effective in dealing with cases

### Strategy effectiveness and elements
- The Fund’s strategy on arrears is comprised of three elements: prevention, intensified collaboration (including the rights approach), and remedial measures.
- The preventive element has generally worked well in avoiding new arrears or in bringing about the quick clearance of such arrears should they occur, thereby preventing new cases of protracted arrears.
- Timetables for remedial measures for overdue financial obligations to the Fund’s General and SDR Departments and the PRGF-ESF Trust are provided in Annexes I and II.

### Rights approach
- The rights approach remains an important option for arrears clearance for the two members that remain eligible (Somalia and Sudan).
- The rights approach was initiated in 1990 and was used to clear arrears of three members—Peru, Sierra Leone, and Zambia—in the 1990s.
- Eligibility for the rights approach was restricted to the eleven members that had protracted arrears to the Fund at end-1989; of these, only Somalia and Sudan remain eligible.
- Under this approach, an eligible member must:
  - establish a track record of cooperation on policies with the Fund by undertaking an economic program with conditionality equivalent to that of upper credit tranche Fund arrangements;
  - make payments to the Fund (and the World Bank) that, at a minimum, are sufficient to meet new obligations falling due;
  - accumulate “rights” to future drawings of Fund resources following the clearance of its arrears.
- At the end of the rights accumulation program, bilateral creditors would provide a bridge loan to clear the member’s arrears to the Fund, followed by the member’s access to new Fund financing.
- It is proposed that the availability of the rights approach be extended for another year, to end-August 2009.
- Use of the rights approach is not required for eligible members, but it could provide a useful approach for arrears clearance in light of country-specific circumstances.

### Payment attribution and de-escalation of remedial measures
- Executive Directors called for modification of the de-escalation policy to reduce the financial cost of burden-sharing for deferred charges.
- Directors noted strain on the burden-sharing mechanism with the sharp decline in Fund credit and supported consideration of a modification to the Fund’s de-escalation policy for members with overdue financial obligations—to make remaining current on new obligations falling due a firm test of cooperation with the Fund.
- A separate paper on this issue will be prepared for the Board’s consideration after the 2008 Annual Meetings in line with the Managing Director’s work program.

### Proposed Executive Board decision
- Proposed decision (to be adopted by a majority of votes cast):
  - “The Fund has reviewed progress under the strengthened cooperative strategy with respect to overdue financial obligations to the Fund as described in EBS/08/96. The Fund reaffirms its support for the strengthened cooperative strategy and agrees to extend the availability of the rights approach until end-August 2009.”

### Remedial measures and timetables (Annex I and Annex II — key actions and timing)
- General Department and SDR Department timetable (Annex I):
  - Immediately: Staff sends a cable urging payment; member not permitted use of Fund resources nor any request placed before Executive Board until arrears are cleared.
  - 2 weeks: Management communicates to the Governor stressing seriousness and urging settlement.
  - 1 month: Managing Director notifies the Executive Board that an obligation is overdue.
  - 6 weeks: Managing Director notifies member that a complaint will be issued unless settled; may recommend communications to selected/all Fund Governors.
  - 2 months: Complaint issued by the Managing Director to the Executive Board.
  - 3 months: A brief factual statement is posted on the Fund’s external website; complaint receives substantive consideration by Executive Board; Board usually limits member’s use of general resources and, if overdue SDR obligations involved, suspends right to use SDRs; press release issued following Board decision.
  - 6–12 months: Executive Board will review its decision on limitation within three months, with possibility of a second review; declaration of ineligibility may be considered to take effect not more than twelve months after emergence of arrears; communications to all Fund Governors and heads of selected international financial institutions to be considered.
  - Up to 15 months: Declaration of noncooperation considered within three months after dispatch of communications; upon declaration technical assistance will be suspended unless Board decides otherwise.
  - Up to 18 months: Decision on suspension of voting and representation rights considered within three months after declaration of noncooperation.
  - Up to 24 months: Procedure on compulsory withdrawal will be initiated within six months after decision on suspension.
- PRGF-ESF Trust timetable (Annex II):
  - Immediately: Staff sends a cable urging payment; member’s access to Fund resources, including Trust resources, is suspended.
  - 2 weeks: Management communicates to the Governor stressing seriousness and urging settlement.
  - 1 month: Managing Director notifies the Executive Board that an obligation to the Trust is overdue.
  - 6 weeks: Managing Director notifies member that a report concerning the arrears to the Trust will be issued to the Executive Board unless settled; may recommend communications to selected/all Fund Governors.
  - 2 months: A report is issued by the Managing Director to the Executive Board requesting limitation of the member’s use of PRGF-ESF Trust Resources.
  - 3 months: Report given substantive consideration; factual statement posted on member’s country-specific page; press release issued following Board decision to limit Trust resource use.
  - 6 months: Executive Board reviews its decision on limitation and may remove member from the list of PRGF-ESF-eligible countries; reinstatement requires a new Board decision; press releases issued on removal or reinstatement.
  - 12 months: A declaration of noncooperation with the PRGF-ESF Trust may be issued by the Executive Board depending on assessment; upon declaration the Fund could suspend provision of technical assistance; Managing Director may limit technical assistance if not contributing adequately to resolution of arrears.

### Key statistics and country-specific figures (as of end-June 2008 and related periods)
- Countries with protracted overdue financial obligations (Table 7):
  - Somalia: Total Indebtedness (SDR millions) 239.8; Of which Overdue Principal 112.0; Interest 127.8; Total 239.8.
  - Sudan: Total Indebtedness (SDR millions) 1,009.9; Of which Overdue Principal 283.6; Interest 726.3; Total 1,009.9.
  - Zimbabwe: Total Indebtedness (SDR millions) 88.3; Of which Overdue Principal 73.9; Interest 14.4; Total 88.3.
  - Total (Somalia + Sudan + Zimbabwe): 1,338.0 (SDR millions); Of which Net SDR Charges and Assessments 469.5; Overdue Principal and Interest 868.6; Total 1,338.0.
- Deferred GRA charges for countries with protracted arrears (Table 9; balances as of Apr. 30 and Jun. 30):
  - Somalia balances:
    - Apr. 30, 2004: 95.9; Net deferrals 3.0
    - Apr. 30, 2005: 98.9; Net deferrals 4.0
    - Apr. 30, 2006: 102.9; Net deferrals 5.1
    - Apr. 30, 2007: 108.0; Net deferrals 3.6
    - Apr. 30, 2008: 111.6; Net deferrals 1.0
    - Jun. 30, 2008: 112.6
  - Sudan balances:
    - Apr. 30, 2004: 655.4; Net deferrals 10.2
    - Apr. 30, 2005: 665.6; Net deferrals 12.5
    - Apr. 30, 2006: 678.1; Net deferrals 14.9
    - Apr. 30, 2007: 693.0; Net deferrals 10.0
    - Apr. 30, 2008: 703.0; Net deferrals 2.3
    - Jun. 30, 2008: 705.3
  - Zimbabwe:
    - Apr. 30, 2004: 10.8; Net deferrals 3.6
    - Apr. 30, 2005: 14.3; subsequent years: no balances shown through Jun. 30, 2008
  - Total deferred charges:
    - Apr. 30, 2004 Balance 762.0; Net deferrals 16.8
    - Apr. 30, 2005 Balance 778.8; Net deferrals 16.5
    - Apr. 30, 2006 Balance 781.0; Net deferrals 20.0
    - Apr. 30, 2007 Balance 801.0; Net deferrals 13.6
    - Apr. 30, 2008 Balance 814.6; Net deferrals 3.3
    - Jun. 30, 2008 Balance 817.9
- Overdue currency valuation adjustments (Table 10; as of end-June 2008):
  - Afghanistan, Islamic Republic of: 6.9 (SDR millions)
  - Angola: 227.7
  - Congo, Dem. Rep. of: 87.9
  - Grenada: 0.5
  - Iran: 68.0
  - Marshall Islands: 0.3
  - Micronesia: 0.4
  - Palau: 0.4
  - Samoa: 0.3
  - Somalia: 120.1
  - Sudan: 543.0
  - Suriname: 74.9
  - Syrian Arab Republic: 13.3
  - Zambia: 10.4
  - Total: 1,154.1
- Number of countries incurring late payments to the Fund, 1998–2008 (Table 6):
  - Number of members with late payments during the twelve months to June 30, 2008: 163.
  - Number of members with obligations falling due during the period: 293.
  - Number of members with late payments during the period: 87.
  - Of which protracted cases (members with arrears outstanding for six months or more at end of period): values by year shown in Table 6 (e.g., 2008: 5/ ; other annual figures listed).
- Overdue financial obligations by duration and by type are presented in Tables 4 and 5 (end-of-period amounts in millions of SDRs for 1981–2008).

*Source: Finance Department (excerpts and tables as presented in the source document).*

---


_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2008/_081508.pdf_