## The global economy is going through a period of unprecedented financial instability.

## Source details

**Canonical URL:** [The global economy is going through a period of unprecedented financial instability.](https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2008/_112408.pdf)

## Other formats

- [Markdown version](/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2008/_112408.pdf.md)
- [Structured JSON version](/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2008/_112408.pdf.json)

---

### I. Restoring global financial stability — Fund programs and lending
- Emergency financing
  - The Fund will deploy its lending resources "in substantial amounts both rapidly and flexibly, with conditionality tailored on the priorities to address the crisis."
  - Emergency procedures will be activated, as warranted, to allow requests for use of Fund resources to be considered by the Board "in a matter of days."
- Reforming instruments and workstreams
  - A road map was agreed to review aspects of the Fund’s lending role; an expedited timeline was requested by the IMFC where there is strong consensus and urgency.
  - A new Short-Term Liquidity Facility (SLF) has been established to help countries cope with very short-term and self-correcting external liquidity pressures arising from external market developments despite strong underlying fundamentals and domestic policies.
  - Papers for Board consideration before the turn of the year include: Access Limits (A.1) and Charges and Maturities (A.2).
  - Additional workstreams: Analytical Considerations (A.3); a paper on Conditionality (A.4); and a Stock-Taking paper (A.5) to be drawn together before the next Annual Meetings.
  - Consultations will be broad and inclusive, with seminars planned involving internal and external participants.

### II. The path out of the crisis — analysis, architecture, and monitoring
- Understanding causes and lessons
  - RES, the Macro-Financial Unit in RES, SPR, MCM and FAD were requested to provide an analysis titled Causes of the Crisis and Lessons for Macroeconomic Policy and Regulation (B.1).
  - A Board seminar on the Fiscal Implications of the Financial Crisis (B.2) will contribute to understanding crisis repercussions.
- Foundations of a new financial architecture
  - The Managing Director will participate in the G-20 emergency summit meeting of leaders set for November 15.
  - The Fund is to help coordinate international reflection on a possible new architecture ("Bretton Woods II"), drawing on expertise of others and providing "machinery for consultation and collaboration" as set out in the Fund’s Articles of Agreement.
  - The Board will be engaged early; embedding initiatives into a unified framework to safeguard global macroeconomic and financial stability is the larger challenge.
- Getting ahead of the curve — staff monitoring and outputs (B.3–B.7)
  - Timely integrated updates: trial Area Department Updates (B.3); better integration of country-level analysis in WEMD Board presentations of MCM and RES (B.4).
  - Early warning: priority for sharing key elements of work on Early Warning Systems; an informal briefing on Progress with Early Warnings (B.5).
  - Other emerging issues: staff work (including with the World Bank) on crisis management and bank insolvency frameworks, treatment of non-depository institutions, insolvency issues involving derivatives, cross-border bank insolvency legal/regulatory frameworks, and capital adequacy issues arising from recapitalizations and equity investments. Findings will be presented to the Executive Board in a seminar (B.6).
  - Impact on LICs: staff will monitor effects of overlapping shocks (financial crisis, high food and fuel prices) on LICs; a staff paper will review actual and potential impacts on macroeconomic stability, growth, balance of payments positions, and financial sector soundness (B.7). Close monitoring of macroeconomic impact of higher food and fuel prices will continue.

### III. Quota, voice, and the new income model
- The IMFC called on all members to work urgently toward early completion of domestic legislative steps required to make effective the quota and voice reforms and the Fund’s new income model.
- Timely action by members will enhance the Fund’s legitimacy, credibility, and effectiveness.

### IV. Continuing work of the Fund — priorities and surveillance
- Further prioritization
  - The work program will be prioritized with higher priority items described in the text and a comprehensive listing provided in the Attachment.
- Advancing surveillance priorities (Statement of Surveillance Priorities for 2008–11)
  - Four economic priorities for 2008–11: (i) resolving financial market distress; (ii) strengthening the global financial system; (iii) adjusting to sharp changes in commodity prices; and (iv) promoting the orderly reduction of global imbalances.
- Implications for outputs
  - GFSR will focus on implications of the de-leveraging process for credit creation and cross-institution/country linkages; contribute to early warning methodologies.
  - WEO analytical chapters will study conditions for economic recovery from financial stress in advanced economies, transmission of financial stress to emerging and developing economies, and policy implications.
  - Consideration of a joint "global outlook" statement synthesizing the GFSR and WEO.
  - A special Review of the Stability of the Global Exchange Rate System (the first since 1999) will examine the role of reserve currencies and implications of exchange rate regime choices.
- Operational priorities for 2008–11
  - Four operational priorities: (i) risk assessment; (ii) financial sector surveillance and real-financial linkages; (iii) multilateral perspective; and (iv) analysis of exchange rates and external stability risks.
  - Outcomes: revised Surveillance Guidance Note and a Financial Sector Surveillance Guidance Note to be circulated for information.
  - A Review of the Financial Sector Assessment Program (FSAP), jointly with the World Bank, will reassess FSAP adaptation; planned analytical and empirical work to begin in early 2009.

### V. Fund support for low-income countries (LICs)
- Policy and financial support
  - Engagement will be adapted and tailored to LICs’ evolving needs.
  - Planned analytical studies on capital flows, robust medium-term public debt management strategies, financial market development, and design of monetary regimes.
  - Review of Fund policies on external financing in light of changed LIC financing patterns; implications for program conditionality.
  - Assessment of adequacy of instruments for supporting LICs (including potential new instruments and streamlining), review of concessional financing framework, and assessment of the role of the PSI based on experience under the instrument.
  - Revisit approach to supporting fragile states; LIC Unit in SPR will coordinate this agenda.
- Capacity building
  - Regular Board updates on technical assistance (TA) reforms and fundraising.
  - Enhancements underway: TA performance measurement system (results-focused management); improved costing for TA; a new country contribution policy to be introduced in May 2009.
  - A guidance note to operationalize wider dissemination of TA information, effective January 1, 2009, will be sent to the Board for information.
  - Staff will submit a proposal for a new framework instrument for external financing to provide more flexibility and broader coverage.
  - Requests to open multi-donor subaccounts for: a new regional TA center in Central America; a new trust fund on AML/CFT; and a framework agreement with the European Commission will be submitted.

### VI. Modernizing the Fund — governance, income, and budget reform
- Governance
  - A joint Steering Committee of Executive Directors and management will be operational shortly to coordinate and monitor IMF governance reform work and facilitate dialogue within the Fund and with external parties.
  - The Committee’s timing will take account of the report of Trevor Manuel’s Committee on IMF Governance Reform, expected by next April.
- Income model and budget reform
  - Preparations will continue to implement the new income model once the legal basis is secured.
  - The Board will discuss adequacy of the Fund’s precautionary balances under the new income model and a paper seeks Directors’ views on broad outlines of a possible new framework for reserve accumulation and dividend payments.
  - Later this year the Board will explore considerations for broadening the Fund’s investment mandate and examine performance of potential alternative asset classes.
  - Emphasis on better costing of key outputs and closer alignment of departmental business plans with strategic priorities.
  - Proposals for the Committee on the Budget include introduction of activity-based costing supported by greater detail in staff costs, and the carry forward of unspent budget allocations.

### Reporting to the IMFC — Managing Director’s Statement and Reporting Modality
- Replace the “umbrella report” with a short, focused Managing Director’s Statement to the IMFC on the IMF’s Policy Agenda that lays out a forward-looking agenda.
- Circulate a table of key Fund outputs over the previous six months to brief the IMFC on progress since its last meeting.
- Format noted as "well received" and "more accessible to Fund Governors."

### I. Restoring Global Financial Stability — Work Program Highlights (select items and timing)
- A. Fund Programs and Lending (selected)
  - A.1 Limits on Access for Use of Fund Resources.
    - Type: DIS; Dept.: SPR/FIN; Date: Nov. 2008.
  - A.2 Review of Surcharges and Maturities under the New Income Model.
    - Type: DIS; Dept.: SPR/FIN; Date: Nov. 2008.
  - A.3 Review of the Fund's Financing Role in Member Countries—Analytical Considerations.
    - Type: DIS; Dept.: RES/SPR/MCM; Date: TB2.
  - A.4 Review of the Fund’s Lending Role in Member Countries, Re-examining Conditionality.
    - Type: DIS; Dept.: SPR/LEG; Date: TB2.
  - A.5 Stock-Taking on Reforming the Fund's Financing Instruments and Policies.
    - Type: DIS; Dept.: SPR; Date: TB3.
- B. The Path Out of the Crisis (selected)
  - B.1 Causes of the Crisis and Lessons for Macroeconomic Policy and Regulation.
    - Type: DIS; Dept.: RES/MCM/SPR; Date: TB1/TB2.
  - B.2 Fiscal Implications of the Financial Crisis.
    - Type: SEM; Dept.: FAD; Date: TB1/TB2.
  - B.3 Area Department Updates.
    - Type: IB; Dept.: Area Departments; Date: TB1/TB2/TB3.
  - B.4 GFSR Market Update/WEMD/WEO Quarterly Update.
    - Type: ISEM; Dept.: MCM/RES; Date: TB1/TB2/TB3.
  - B.5 Progress with Early Warnings.
    - Type: IB; Dept.: RES/SPR; Date: TB2.
  - B.6 Legal and Regulatory Frameworks for Bank Insolvency.
    - Type: ISEM; Dept.: LEG/MCM; Date: TB1.
  - B.7 The Impact of the Global Financial Crisis on Low-Income Countries.
    - Type: IB; Dept.: SRP; Date: TB1.
- Abbreviation and Time-Band Notes
  - DIS: discussion; IB: informal briefing; SEM: seminar; ISEM: informal seminar.
  - Departments: FIN; LEG; MCM; SPR; RES; FAD.
  - Time band 1 (TB1): now through January 2009.
  - Time band 2 (TB2): February–April 2009.
  - Time band 3 (TB3): After April 2009.

### II. Continuing Work — Surveillance, LICs, Modernization, and Budget (selected items)
- C. Advancing Surveillance Priorities (selected)
  - C.1 GFSR/World Economic Outlook/WEMD.
    - Type: DIS; Dept.: MCM/RES; Date: TB2.
  - C.2 Seventh Review of Data Standards Initiatives.
    - Type: DIS; Dept.: STA; Date: Dec. 2008.
  - C.3 Classification of Exchange Rate Arrangements.
    - Type: Info; Dept.: MCM; Date: TB1.
  - C.4 Review of Stability of System of Exchange Rates.
    - Type: ISEM; Dept.: RES/SPR; Date: TB2.
  - C.5 FSAP Review.
    - Type: DIS; Dept.: MCM/SPR; Date: TB3.
  - C.6 AML/CFT—Review of the Effectiveness and Plans for the Program.
    - Type: DIS; Dept.: LEG; Date: TB3.
- D. Fund Support For Low-Income Countries (selected)
  - D.1 External Financing Issues Facing Low-Income Countries.
    - Type: DIS; Dept.: SPR; Date: TB2.
  - D.2 Debt Management for Low- and Middle-Income Countries: Results from the Pilot Program.
    - Type: DIS; Dept.: MCM; Date: TB2.
  - D.3 The Fund's Lending Role and Facilities for Low-Income Countries.
    - Type: DIS; Dept.: SPR/FIN; Date: TB2.
  - D.4 Review of the Policy Support Instrument.
    - Type: DIS; Dept.: SPR; Date: TB2.
- E. Modernizing the Fund — Governance, Budget, HR, Risk, and IEO Matters (selected)
  - E.1 Briefing from the External Audit Committee.
    - Type: IB; Dept.: EAC; Date: Jan. 2009.
  - E.2 FY2009 Report on Risk Management.
    - Type: DIS; Dept.: ACRM/OIA/FIN/SPR; Date: TB1.
  - E.5 Review the Fund's Transparency Policy.
    - Type: DIS; Dept.: SPR; Date: TB3.
  - Budget and Income Reform items (selected)
    - E.6 Review of the Role and Adequacy of the Fund's Precautionary Balances.
      - Type: DIS; Dept.: FIN; Date: TB1.
    - E.7 Broadening the Fund's Investment Mandate—Initial Considerations.
      - Type: DIS; Dept.: FIN; Date: TB2.
    - E.8 Budget Reforms: Activity-Based Costing, Fungibility, Carry Forward, and Standard Costs.
      - Type: DIS (COB); Dept.: OBP; Date: TB1.
    - E.9 The Medium-term Income and Expenditure Framework.
      - Type: DIS (COB); Dept.: FIN/OBP; Date: TB1.
    - E.10 Preliminary FY10-12 MTB.
      - Type: DIS (COB); Dept.: OBP; Date: TB2.
    - E.11 Review of the Fund's Income Position for FY2009 and FY2010.
      - Type: DIS; Dept.: FIN; Date: TB2.
    - E.12 FY2010-12 Medium-Term Administrative, Restructuring and Capital Budgets.
      - Type: DIS; Dept.: OBP; Date: TB2.
  - Human Resource Policies (selected)
    - E.13 Staff Compensation—Interim Report.
      - Type: DIS; Dept.: HRD; Date: Jan. 2009.
    - E.14 Staff Compensation—2009 Review.
      - Type: DIS; Dept.: HRD; Date: Mar. 2009.
    - E.15 Medical Benefits Plan—Contribution Framework and Increase.
      - Type: DIS; Dept.: HRD; Date: Mar. 2009.
  - Fund Programs and Policy Reviews (selected)
    - E.16 Review of the Fund's De-escalation Policy.
      - Type: DIS; Dept.: FIN; Date: TB3.
    - E.17 Review of the Safeguards Assessment Policy.
      - Type: DIS; Dept.: FIN; Date: TB3.
  - IEO Matters (selected)
    - E.18 Periodic Monitoring Report.
      - Type: LOT; Dept.: SPR; Date: TB1.
    - E.19 IMF’s Approach to International Trade Policy Issues.
      - Type: DIS; Dept.: IEO; Date: TB2.
    - E.20 Management Implementation Plan for Board-endorsed IEO Recommendations on the IMF’s Approach to International Trade Policy.
      - Type: DIS; Dept.: SPR; Date: TB3.
    - E.21 IMF’s Interactions with its Member Countries.
      - Type: DIS; Dept.: IEO; Date: TB3.
- Abbreviations and Time-Band Notes (as used in this section)
  - DIS: discussion; Info: for information; ISEM: informal seminar; COB: Committee on the Budget; LOT: lapse of time.
  - Departments include: FAD; LEG; MCM; RES; SPR; STA; HRD; OBP; OIA; EAC; ACRM.
  - Time band 1 (TB1): now through January 2009.
  - Time band 2 (TB2): February–April 2009.
  - Time band 3 (TB3): After April 2009.

### Statement by the Managing Director on the Work Program — Implications of the G-20 Summit (November 24, 2008)
- Key managerial framing
  - G-20 declaration emphasized the central role of the Fund as a crisis responder and as a developer of ideas for reform of the global financial architecture.
  - Specific G-20 expectations broadly align with guidance from the IMFC and are incorporated into the Managing Director’s statement on the work program.
  - Notable tasks include: drawing lessons of the crisis and recommending responses; ensuring flexibility in Fund instruments and facilities; developing an early warning system.
- Process and prioritization notes
  - Some planned outputs may be modified or brought forward in time (e.g., recommendations to mitigate procyclicality will require more detailed analysis and closer collaboration with the expanded FSF).
  - Early warning work is being intensified; planned Board briefing will be upgraded to a more substantive paper on key elements.
  - Modalities for strengthened collaboration with the expanded FSF will be explored.
  - Effort will be made to respect circulation periods and avoid bunching, while acknowledging a smaller staff complement and an ambitious work agenda in a compressed time span.

### G-20 Action Plan — selected mappings to IMF work program (selected items and timing)
- Procyclicality and regulatory responses
  - [Immediate Actions by March 31, 2009] The IMF, expanded FSF, and other regulators should develop recommendations to mitigate pro-cyclicality.
    - Fund response: "Lessons" paper to touch on issues related to pro-cyclicality (¶5). MCM to prepare a staff report in coordination with FSF (TB2).
- FSAP and assessments
  - All G-20 members commit to undertake an FSAP report and support transparent assessments of national regulatory systems.
    - Fund response: Requires consultations with authorities and World Bank counterparts. Board to be informed (TB1).
- Strengthened collaboration and early warning
  - [Immediate Actions by March 31, 2009] The IMF and the expanded FSF should strengthen collaboration, integrate regulatory and supervisory responses into a macro-prudential policy framework and conduct early warning exercises.
    - Fund response: Planned Board briefing on progress with early warnings will be expanded to Board paper prepared jointly by MCM/RES/SPR, (TB1/TB2).
- IMF resource adequacy
  - [Immediate Actions by March 31, 2009] Review the adequacy of the resources of the IMF, the World Bank Group and other multilateral development banks and stand ready to increase them where necessary.
    - Fund response: A paper will be prepared to examine IMF resource needs and options for supplementing those needs, including the recent offer by Japan (TB1/TB2).
- Lending instruments and facilities
  - [Immediate Actions by March 31, 2009] The IFIs should continue to review and adapt their lending instruments to adequately meet their members' needs.
    - Fund response: Already addressed in work program (¶4): Review of Facilities, (TB1/TB2).
- Governance reform and voice
  - Bretton Woods Institutions must be comprehensively reformed to better reflect changing economic weights; emerging and developing economies should have greater voice and representation.
    - Fund response: First stage of reform already approved by Board; domestic legislative actions by national authorities are pending (¶8). Additional work on governance reform is in train (¶14).
- Surveillance and financial sector integration
  - IMF should conduct vigorous and even-handed surveillance reviews, give greater attention to financial sectors, and better integrate reviews with joint IMF/World Bank FSAPs.
    - Fund response: Informal Board seminar on integrating financial sector issues into surveillance will be added (TB1/TB2).

*Source: Statement by the Managing Director on the Work Program of the Executive Board—Implications of the G-20 Summit; November 24, 2008.*

### 1.      The global economy is going through a period of unprecedented financial instability.

### 1.      The global economy is going through a period of unprecedented financial instability.

### I. Restoring global financial stability — Fund programs and lending
- Emergency financing
  - The Fund will deploy its lending resources "in substantial amounts both rapidly and flexibly, with conditionality tailored on the priorities to address the crisis."
  - Emergency procedures will be activated, as warranted, to allow requests for use of Fund resources to be considered by the Board "in a matter of days."  
- Reforming instruments
  - A road map was agreed to review aspects of the Fund’s lending role; an expedited timeline was requested by the IMFC where there is strong consensus and urgency.
  - A new Short-Term Liquidity Facility (SLF) has been established to help countries cope with very short-term and self-correcting external liquidity pressures arising from external market developments despite strong underlying fundamentals and domestic policies.
  - Papers for Board consideration before the turn of the year include: Access Limits (A.1) and Charges and Maturities (A.2).
  - Additional workstreams: Analytical Considerations (A.3) on the Fund’s lending role and scope for innovation/streamlining; a paper on Conditionality (A.4); and a Stock-Taking paper (A.5) to be drawn together before the next Annual Meetings.
  - Consultations will be broad and inclusive, with seminars planned involving internal and external participants.

### II. The path out of the crisis — analysis, architecture, and monitoring
- Understanding causes and lessons
  - RES, the Macro-Financial Unit in RES, SPR, MCM and FAD were requested to provide an analysis titled Causes of the Crisis and Lessons for Macroeconomic Policy and Regulation (B.1) as a key input for future work and the next IMFC meeting.
  - A Board seminar on the Fiscal Implications of the Financial Crisis (B.2) will contribute to understanding crisis repercussions.
- Foundations of a new financial architecture
  - The Managing Director will participate in the G-20 emergency summit meeting of leaders set for November 15 to discuss the financial crisis.
  - The Fund is to help coordinate international reflection on a possible new architecture ("Bretton Woods II"), drawing on expertise of others and providing "machinery for consultation and collaboration" as set out in the Fund’s Articles of Agreement.
  - The Board will be engaged early; the larger challenge is embedding initiatives into a unified framework to safeguard global macroeconomic and financial stability.
- Getting ahead of the curve — staff monitoring and outputs (B.3–B.7)
  - Timely integrated updates: trial Area Department Updates (B.3) to provide cross-country and regional perspectives; better integration of country-level analysis in WEMD Board presentations of MCM and RES (B.4).
  - Early warning: priority for sharing key elements of work on Early Warning Systems and advanced country vulnerabilities; an informal briefing on Progress with Early Warnings (B.5).
  - Other emerging issues: extensive staff work (including with the World Bank) on crisis management and bank insolvency frameworks, treatment of non-depository institutions, insolvency issues involving derivatives, cross-border bank insolvency legal/regulatory frameworks, and capital adequacy issues arising from recapitalizations and equity investments (government and private). Findings will be presented to the Executive Board in a seminar (B.6).
  - Impact on LICs: staff will monitor effects of overlapping shocks (financial crisis, high food and fuel prices) on LICs; a staff paper will review actual and potential impacts on macroeconomic stability, growth, balance of payments positions, and financial sector soundness (B.7). Close monitoring of macroeconomic impact of higher food and fuel prices will continue.

### III. Quota, voice, and the new income model
- The IMFC called on all members to work urgently toward early completion of domestic legislative steps required to make effective the quota and voice reforms and the Fund’s new income model.
- Timely action by members will enhance the Fund’s legitimacy, credibility, and effectiveness.

### IV. Continuing work of the Fund — priorities and surveillance
- Further prioritization
  - The work program will be prioritized with higher priority items described in the text and a comprehensive listing provided in the Attachment.
- Advancing surveillance priorities (Statement of Surveillance Priorities for 2008–11)
  - Four economic priorities for 2008–11: (i) resolving financial market distress; (ii) strengthening the global financial system; (iii) adjusting to sharp changes in commodity prices; and (iv) promoting the orderly reduction of global imbalances.
  - Implications for outputs:
    - GFSR will focus on implications of the de-leveraging process for credit creation and cross-institution/country linkages; contribute to early warning methodologies by examining fundamentals of affected institutions, indicators of market stress, counter-party linkages, and global financial conditions.
    - WEO analytical chapters will study conditions for economic recovery from financial stress in advanced economies, transmission of financial stress to emerging and developing economies, and policy implications.
    - Consideration of a joint "global outlook" statement synthesizing the GFSR and WEO.
    - A special Review of the Stability of the Global Exchange Rate System (the first since 1999) will examine the role of reserve currencies and implications of exchange rate regime choices.
- Operational priorities for 2008–11
  - Four operational priorities: (i) risk assessment; (ii) financial sector surveillance and real-financial linkages; (iii) multilateral perspective; and (iv) analysis of exchange rates and external stability risks.
  - Outcomes: revised Surveillance Guidance Note and a Financial Sector Surveillance Guidance Note to be circulated for information.
  - A Review of the Financial Sector Assessment Program (FSAP), jointly with the World Bank, will reassess FSAP adaptation in light of lessons from the financial crisis and evolving ideas on global financial architecture; planned analytical and empirical work (including outreach and fact-gathering with members) to begin in early 2009.

### V. Fund support for low-income countries (LICs)
- Policy and financial support
  - Engagement will be adapted and tailored to LICs’ evolving needs.
  - Planned analytical studies on capital flows, robust medium-term public debt management strategies, financial market development, and design of monetary regimes.
  - Review of Fund policies on external financing in light of changed LIC financing patterns; implications for program conditionality.
  - Assessment of adequacy of instruments for supporting LICs (including potential new instruments and streamlining), review of concessional financing framework, and assessment of the role of the PSI based on experience under the instrument.
  - Revisit approach to supporting fragile states; LIC Unit in SPR will coordinate this agenda.
- Capacity building
  - Regular Board updates on technical assistance (TA) reforms and fundraising.
  - Enhancements underway: TA performance measurement system (results-focused management); improved costing for TA; a new country contribution policy to be introduced in May 2009.
  - A guidance note to operationalize wider dissemination of TA information, effective January 1, 2009, will be sent to the Board for information.
  - Staff will submit a proposal for a new framework instrument for external financing to provide more flexibility and broader coverage.
  - Requests to open multi-donor subaccounts for: a new regional TA center in Central America; a new trust fund on AML/CFT; and a framework agreement with the European Commission will be submitted.

### VI. Modernizing the Fund — governance, income, and budget reform
- Governance
  - A joint Steering Committee of Executive Directors and management will be operational shortly to coordinate and monitor IMF governance reform work and facilitate dialogue within the Fund and with external parties.
  - The Committee’s timing will take account of the report of Trevor Manuel’s Committee on IMF Governance Reform, expected by next April.
- Income model
  - Preparations will continue to implement the new income model once the legal basis is secured.
  - The Board will discuss adequacy of the Fund’s precautionary balances under the new income model and a paper seeks Directors’ views on broad outlines of a possible new framework for reserve accumulation and dividend payments.
  - Later this year the Board will explore considerations for broadening the Fund’s investment mandate and examine performance of potential alternative asset classes.
- Budget reform
  - Emphasis on better costing of key outputs and closer alignment of departmental business plans with strategic priorities.
  - Proposals for the Committee on the Budget include introduction of activity-based costing supported by greater detail in staff costs, and the carry forward of unspent budget allocations.

*Source: _112408 - 1.      The global economy is going through a period of unprecedented financial instability.*

### 17.      Reporting to the IMFC

### 17. Reporting to the IMFC

### Managing Director’s Statement and IMFC Reporting Modality
- Replace the “umbrella report” with a short, focused Managing Director’s Statement to the IMFC on the IMF’s Policy Agenda that lays out a forward-looking agenda.
- Circulate a table of key Fund outputs over the previous six months (under the same modalities as the “umbrella report”) to brief the IMFC on progress since its last meeting.
- Format noted as "well received" and "more accessible to Fund Governors."

### I. Restoring Global Financial Stability — Work Program Highlights
- A. Fund Programs and Lending
  - A.1 Limits on Access for Use of Fund Resources.
    - Type: DIS
    - Description: Examines the case for increasing access limits.
    - Dept.: SPR/FIN
    - Date: Nov. 2008
  - A.2 Review of Surcharges and Maturities under the New Income Model.
    - Type: DIS
    - Description: Considers proposals to reform surcharges and eliminate time-based repurchase expectations.
    - Dept.: SPR/FIN
    - Date: Nov. 2008
  - A.3 Review of the Fund's Financing Role in Member Countries—Analytical Considerations.
    - Type: DIS
    - Description: Examines a range of issues such as markets gaps, the coherence of the Fund's lending framework, and the balance of payments criterion for lending, as well as the scope for innovation in instruments (including the case for a crisis prevention instrument) and their streamlining.
    - Dept.: RES/SPR/MCM
    - Date: TB2
  - A.4 Review of the Fund’s Lending Role in Member Countries, Re-examining Conditionality
    - Type: DIS
    - Description: Explores new approaches to conditionality while still providing adequate safeguards for Fund resources.
    - Dept.: SPR/LEG
    - Date: TB2
  - A.5 Stock-Taking on Reforming the Fund's Financing Instruments and Policies.
    - Type: DIS
    - Description: Pulls together building blocks from earlier papers on Review of the Fund's Lending Role in Member Countries to set the stage for decisions before the 2009 Annual Meetings.
    - Dept.: SPR
    - Date: TB3

- B. The Path Out of the Crisis
  - B.1 Causes of the Crisis and Lessons for Macroeconomic Policy and Regulation
    - Type: DIS
    - Description: Analyzes the complex chain of causes and effects that led to the financial crisis.
    - Dept.: RES/MCM/SPR
    - Date: TB1/TB2
  - B.2 Fiscal Implications of the Financial Crisis.
    - Type: SEM
    - Description: Examines the implications of fiscal policy for fiscal sustainability and government’s contingent liabilities.
    - Dept.: FAD
    - Date: TB1/TB2
  - B.3 Area Department Updates
    - Type: IB
    - Description: Communicates staff assessments of developments and necessary policies in countries.
    - Dept.: Area Departments
    - Date: TB1/TB2/TB3
  - B.4 GFSR Market Update/WEMD/WEO Quarterly Update.
    - Type: ISEM
    - Description: Presents the evolution of risks to global financial stability and progress in resolving financial crisis; the WEO quarterly note will update forecasts for key countries.
    - Dept.: MCM/RES
    - Date: TB1/TB2/TB3
  - B.5 Progress with Early Warnings.
    - Type: IB
    - Description: Provide a snapshot of cross-country findings from the vulnerability exercise, and progress report on vulnerability exercise for advanced economies.
    - Dept.: RES/SPR
    - Date: TB2
  - B.6 Legal and Regulatory Frameworks for Bank Insolvency.
    - Type: ISEM
    - Description: Reviews best practices in designing legal and regulatory frameworks for bank insolvency.
    - Dept.: LEG/MCM
    - Date: TB1
  - B.7 The Impact of the Global Financial Crisis on Low-Income Countries.
    - Type: IB
    - Description: Discusses the actual or potential impact of the financial crisis on LIC economies, including prospects for their growth, balance of payments positions, and financial stability, as background (inter alia) to the review of LIC facilities.
    - Dept.: SRP
    - Date: TB1

- Abbreviation and Time-Band Notes (as used in the schedule)
  - DIS: discussion; IB: informal briefing; SEM: seminar; ISEM: informal seminar.
  - Departments include: FIN: Finance; LEG: Legal; MCM: Monetary and Capital Markets; SPR: Strategy, Policy, and Review; RES: Research; FAD: Fiscal Affairs Department.
  - Time band 1 (TB1): now through January 2009.
  - Time band 2 (TB2): February–April 2009.
  - Time band 3 (TB3): After April 2009.

### II. The Continuing Work of the Fund — Surveillance, LICs, Modernization, and Budget
- C. Advancing Surveillance Priorities
  - C.1 GFSR/World Economic Outlook/WEMD.
    - Type: DIS
    - Description: The GFSR will continue to examine the de-leveraging process and linkages across institutions. It will study closely events that have become “systemic”, attempting to discern precursors. WEO will update economic developments and outlook, focusing on conditions for economic recovery from financial stress and implications for economic policies.
    - Dept.: MCM/RES
    - Date: TB2
  - C.2 Seventh Review of Data Standards Initiatives.
    - Type: DIS
    - Description: Reports on developments in the data standards initiatives since the Sixth Review and proposes medium-term work programs for the SDDS and GDDS.
    - Dept.: STA
    - Date: Dec. 2008
  - C.3 Classification of Exchange Rate Arrangements.
    - Type: Info
    - Description: Reviews the system and methodology used to classify member countries’ de facto exchange rate arrangements to clarify the definitions of the various categories and establish more operational and unambiguous criteria for their application.
    - Dept.: MCM
    - Date: TB1
  - C.4 Review of Stability of System of Exchange Rates.
    - Type: ISEM
    - Description: Following the IEO report on the Fund’s exchange rate policy advice and building on earlier studies undertaken in 1999 and 2003, examines members’ choice of exchange rate regime, its implications for macroeconomic performance and smooth functioning of the overall system of exchange rates, and evolving role of reserve currencies.
    - Dept.: RES/SPR
    - Date: TB2
  - C.5 FSAP Review.
    - Type: DIS
    - Description: Reassess (in collaboration with the Bank) how the FSAP will be adapted to help make financial sector surveillance more effective, including by increasing the focus on higher risk areas or grouped by countries or themes, enhancing the emphasis on cross-border spillovers and risks, and by streamlining processes.
    - Dept.: MCM/SPR
    - Date: TB3
  - C.6 Anti-Money Laundering and Combating the Financing of Terrorism—Review of the Effectiveness and Plans for the Program.
    - Type: DIS
    - Description: Examines the effectiveness of the AML/CFT program, including the role of AML/CFT in strengthening Fund surveillance and capacity building, and proposes work plans.
    - Dept.: LEG
    - Date: TB3

- D. Fund Support For Low-Income Countries
  - D.1 External Financing Issues Facing Low-Income Countries.
    - Type: DIS
    - Description: Assesses how the financing environment facing LICs has changed in recent years and draws implications for the Fund's advice and policies on debt and external financing, including possible options for change.
    - Dept.: SPR
    - Date: TB2
  - D.2 Debt Management for Low- and Middle-Income Countries: Results from the Pilot Program.
    - Type: DIS
    - Description: Reports on developments in the pilot program and proposes next steps; This joint paper will also be discussed by the World Bank’s Board.
    - Dept.: MCM
    - Date: TB2
  - D.3 The Fund's Lending Role and Facilities for Low-Income Countries.
    - Type: DIS
    - Description: Examines, as one element in the broader review of Fund facilities, whether the Fund's instruments for supporting low-income countries meet their current and prospective needs; Discusses options for potential new instruments, streamlining existing ones, and review the Fund’s concessional financing framework.
    - Dept.: SPR/FIN
    - Date: TB2
  - D.4 Review of the Policy Support Instrument.
    - Type: DIS
    - Description: Reviews experience with the Policy Support Instrument (PSI) during its first three years of operation. Raise broader PSI-related issues to be taken up in the consideration of the LIC facilities.
    - Dept.: SPR
    - Date: TB2

- E. Modernizing the Fund — Governance, Budget, HR, Risk, and IEO Matters
  - E.1 Briefing from the External Audit Committee.
    - Type: IB
    - Description: Plan for the FY2009 external audit.
    - Dept.: EAC
    - Date: Jan. 2009
  - E.2 FY2009 Report on Risk Management.
    - Type: DIS
    - Description: Presents assessments of strategic, core mission, financial and operational risks for FY2009.
    - Dept.: ACRM/OIA/FIN/SPR
    - Date: TB1
  - E.3 Control and Audit Related Matters.
    - Type: IB
    - Description: Quarterly informal briefings on control and audit matters; emerging control and related issues will be assessed.
    - Dept.: FIN
    - Date: TB1/TB2/TB3
  - E.4 Control and Audit Related Matters (internal audit).
    - Type: IB
    - Description: Provides an activity report and background information on the Fund’s internal audit function.
    - Dept.: OIA
    - Date: TB3
  - E.5 Review the Fund's Transparency Policy.
    - Type: DIS
    - Description: Reviews experience with the Fund's transparency policy and proposes changes to the policy in light of the experience and the need ensure it is supportive of a modern communications strategy for the Fund.
    - Dept.: SPR
    - Date: TB3
  - Budget and Income Reform items (selected)
    - E.6 Review of the Role and Adequacy of the Fund's Precautionary Balances.
      - Type: DIS
      - Description: Assesses precautionary balances in the new income model.
      - Dept.: FIN
      - Date: TB1
    - E.7 Broadening the Fund's Investment Mandate—Initial Considerations.
      - Type: DIS
      - Description: Explores the performance of various asset classes under a broadened investment authority.
      - Dept.: FIN
      - Date: TB2
    - E.8 Budget Reforms: Activity-Based Costing, Fungibility, Carry Forward, and Standard Costs.
      - Type: DIS (COB)
      - Description: Considers changes to the administrative budget framework to support the restructuring process and the ongoing budget reform agenda.
      - Dept.: OBP
      - Date: TB1
    - E.9 The Medium-term Income and Expenditure Framework.
      - Type: DIS (COB)
      - Description: Explores the broad framework for income and the administrative and capital budgets over the FY10-12 period.
      - Dept.: FIN/OBP
      - Date: TB1
    - E.10 Preliminary FY10-12 MTB.
      - Type: DIS (COB)
      - Description: Provides more detail on the proposed allocation of budgetary resources across inputs and departments in the FY10-12 MTB.
      - Dept.: OBP
      - Date: TB2
    - E.11 Review of the Fund's Income Position for FY2009 and FY2010.
      - Type: DIS
      - Description: Updates FY2009 income projections and proposes income-related Board decisions.
      - Dept.: FIN
      - Date: TB2
    - E.12 FY2010-12 Medium-Term Administrative, Restructuring and Capital Budgets.
      - Type: DIS
      - Description: Proposes Board decisions regarding the FY10-12 Medium-term Administrative Budget and the FY10 Capital Budget, and provides an update of use of resources approved under the Restructuring Budget.
      - Dept.: OBP
      - Date: TB2

  - Human Resource Policies and Work Practices
    - E.13 Staff Compensation—Interim Report.
      - Type: DIS
      - Description: Provides an update on progress and next steps in completing the 2009 compensation review.
      - Dept.: HRD
      - Date: Jan. 2009
    - E.14 Staff Compensation—2009 Review.
      - Type: DIS
      - Description: Provides the basis for the full comparator-based review of A1–B5 compensation and the proposed salary-related Board decisions.
      - Dept.: HRD
      - Date: Mar. 2009
    - E.15 Medical Benefits Plan—Contribution Framework and Increase.
      - Type: DIS
      - Description: Presents annual actuarial assessment and proposed contribution increase for the MBP; Also, reviews RSBIA governance and subsidies for national health coverage (Medicare).
      - Dept.: HRD
      - Date: Mar. 2009

  - Fund Programs and Policy Reviews
    - E.16 Review of the Fund's De-escalation Policy.
      - Type: DIS
      - Description: Considers issues related to possible modifications of the de-escalation policy for members with overdue Fund financial obligations to make remaining current on new obligations falling due a firm test of cooperation with the Fund.
      - Dept.: FIN
      - Date: TB3
    - E.17 Review of the Safeguards Assessment Policy.
      - Type: DIS
      - Description: This periodic policy review has been delayed to take account of any changes coming out of the facilities review.
      - Dept.: FIN
      - Date: TB3

  - IEO Matters
    - E.18 Periodic Monitoring Report.
      - Type: LOT
      - Description: Provides an update on progress in the implementation of Board-endorsed IEO Recommendations.
      - Dept.: SPR
      - Date: TB1
    - E.19 IMF’s Approach to International Trade Policy Issues.
      - Type: DIS
      - Description: Evaluates the Fund’s advice on international trade policy in light of the institution’s stated purpose to facilitate the expansion and balanced growth of international trade.
      - Dept.: IEO
      - Date: TB2
    - E.20 Management Implementation Plan for Board-endorsed IEO Recommendations on the IMF’s Approach to International Trade Policy.
      - Type: DIS
      - Description: Presents management’s plan to implement the Board-endorsed recommendations.
      - Dept.: SPR
      - Date: TB3
    - E.21 IMF’s Interactions with its Member Countries.
      - Type: DIS
      - Description: Evaluates whether the interactions between the IMF and its member countries have been effective and well managed.
      - Dept.: IEO
      - Date: TB3

- Abbreviations and Time-Band Notes (as used in this section)
  - DIS: discussion; Info: for information; ISEM: informal seminar; COB: Committee on the Budget; LOT: lapse of time.
  - Departments include: FAD: Fiscal Affairs; LEG: Legal; MCM: Monetary and Capital Markets; RES: Research; SPR: Strategy, Policy, and Review; STA: Statistics; HRD: Human Resources; OBP: Office of Budget and Planning; OIA: Office of Internal Audit and Inspection; EAC: External Finance Committee; ACRM: Advisory Committee on Risk Management.
  - Time band 1 (TB1): now through January 2009.
  - Time band 2 (TB2): February–April 2009.
  - Time band 3 (TB3): After April 2009.

### Statement by the Managing Director on the Work Program — Implications of the G-20 Summit (November 24, 2008)
- Key managerial framing
  - G-20 declaration emphasized the central role of the Fund as a crisis responder and as a developer of ideas—in conjunction with other entities—for reform of the global financial architecture.
  - Specific G-20 expectations broadly align with guidance from the IMFC and are incorporated into the Managing Director’s statement on the work program.
  - Notable tasks include: drawing lessons of the crisis and recommending responses; ensuring flexibility in Fund instruments and facilities; developing an early warning system.

- Process and prioritization notes
  - Some planned outputs may be modified or brought forward in time (e.g., recommendations to mitigate procyclicality will require more detailed analysis and closer collaboration with the expanded FSF).
  - Early warning work is being intensified; planned Board briefing will be upgraded to a more substantive paper on key elements.
  - Modalities for strengthened collaboration with the expanded FSF will be explored.
  - Effort will be made to respect circulation periods and avoid bunching, while acknowledging a smaller staff complement and an ambitious work agenda in a compressed time span.

### G-20 Action Plan — Table 1: G20 Action Plan as it Pertains to IMF and Work Program Outputs (selected mappings)
- General
  - G20 troika to establish modalities for working groups - Fund inputs to be determined, (TB2).

- Procyclicality and regulatory responses
  - [Immediate Actions by March 31, 2009] The IMF, expanded FSF, and other regulators and bodies should develop recommendations to mitigate pro-cyclicality, including the review of how valuation and leverage, bank capital, executive compensation, and provisioning practices may exacerbate cyclical trends.
    - Fund response: "Lessons" paper to touch on issues related to pro-cyclicality (¶5).
    - In addition, MCM to prepare a staff report in coordination with FSF (TB2).

- FSAP and assessments
  - ... all G-20 members commit to undertake a Financial Sector Assessment Program (FSAP) report and support the transparent assessments of countries' national regulatory systems.
    - Fund response: Requires consultations with authorities and World Bank counterparts. Board to be informed (TB1).

- Scope of regulation and systemically-important institutions
  - Review differentiated nature of regulation in banking, securities, and insurance sectors; review scope of financial regulation, unregulated institutions/instruments, and ensure systemically-important institutions are appropriately regulated.
    - Fund response: Already in work program—issues partly covered in the "lessons" paper (¶5). MCM to liaise with the FSF and G20 interlocutors on expanded paper, (TB2).

- Strengthened collaboration and early warning
  - [Immediate Actions by March 31, 2009] The IMF and the expanded FSF should strengthen collaboration, integrating regulatory and supervisory responses into a macro-prudential policy framework and conduct early warning exercises.
    - Fund response: Already in work program (¶7). Planned Board briefing on progress with early warnings will be expanded to Board paper prepared jointly by MCM/RES/SPR, (TB1/TB2).

- Drawing lessons from the crisis
  - [Immediate Actions by March 31, 2009] The IMF, given its universal membership and core macro-financial expertise, should, in close coordination with the FSF and others, take a leading role in drawing lessons from the current crisis, consistent with its mandate.
    - Fund response: Addressed in work program (¶5) by “lessons” paper, (TB1/TB2).

- IMF resource adequacy
  - [Immediate Actions by March 31, 2009] Review the adequacy of the resources of the IMF, the World Bank Group and other multilateral development banks and stand ready to increase them where necessary.
    - Fund response: A paper will be prepared to examine IMF resource needs and options for supplementing those needs, including the recent offer by Japan (TB1/TB2).

- Lending instruments and facilities
  - [Immediate Actions by March 31, 2009] The IFIs should continue to review and adapt their lending instruments to adequately meet their members' needs and revise their lending role in the light of the ongoing financial crisis.
    - Fund response: Already addressed in work program (¶4): Review of Facilities, (TB1/TB2).

- Governance reform and voice
  - Bretton Woods Institutions must be comprehensively reformed to better reflect changing economic weights; emerging and developing economies should have greater voice and representation.
    - Fund response: First stage of reform already approved by Board; domestic legislative actions by national authorities are pending (¶8). Additional work on governance reform is in train (¶14).

- Surveillance and financial sector integration
  - IMF should conduct vigorous and even-handed surveillance reviews, give greater attention to financial sectors, and better integrate reviews with joint IMF/World Bank FSAPs to strengthen macro-financial policy advice.
    - Fund response: Informal Board seminar on integrating financial sector issues into surveillance will be added (TB1/TB2). See also ¶11.

- Capacity building for regulation
  - Advanced economies, the IMF, and other international organizations should provide capacity-building programs for emerging market economies and developing countries on formulation and implementation of new major regulations consistent with international standards.
    - Fund response: New Board paper to address these issues, (TB2).

*Source: Statement by the Managing Director on the Work Program of the Executive Board—Implications of the G-20 Summit; November 24, 2008.*

---


_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2008/_112408.pdf_