## _062415

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### EXECUTIVE SUMMARY
- PRGT eligibility review guided by transparent, rules-based, and parsimonious framework; seeks uniformity across members while accounting for country-specific circumstances.
- Graduation policy seeks broad alignment with World Bank’s IDA graduation practices and consistency with ensuring PRGT self-sustainability.
- Reviews occur on a two-year cycle; last review conducted in April 2013.
- FY 2015 IDA operational cutoff for annual GNI per capita: US$1,215.
- Proposed enhancements:
  - Use IMF BEL database (Bonds, Equities, and Loans) to supplement World Bank’s IDS database for assessing durable and substantial market access.
  - Sharpen circumstances for application of serious short-term vulnerabilities criterion; limit its application when income exceeds the applicable income graduation threshold by 50 percent or more.
- Application outcomes (proposed):
  - Proposed for graduation: Bolivia, Nigeria, and Vietnam.
  - Mongolia’s proposed graduation depends on modification to the short-term vulnerabilities criterion.
  - Four countries proposed for graduation based on proposed changes; none qualifies for entry.
  - Eight other countries satisfy either market access or income graduation criterion but face serious short-term vulnerabilities and are therefore not proposed for graduation.
- Historical outcomes from April 2013: two countries graduated (Armenia and Georgia); three microstates added (Tuvalu, Marshall Islands, Micronesia).
- Impact on PRGT financing expected to be small; proposals aligned with maintaining PRGT self-sustaining capacity.
- Paper structure: current framework summary; proposed modifications to market access and short-term vulnerabilities criteria; application across membership; potential impact on concessional resource demand.

### CRITERIA FOR ENTRY AND GRADUATION (Box 1 highlights)
- Entry criteria (both required):
  - (i) annual per capita GNI based on latest qualifying data:
    - (a) below IDA operational cutoff; or
    - (b) less than twice the IDA operational cutoff for small countries (population below 1.5 million but not less than 200,000); or
    - (c) less than five times the IDA operational cutoff for microstates (population below 200,000); and
  - (ii) sovereign does not have capacity to access international financial markets on a durable and substantial basis (as defined).
- Entry market-access alternative test: bond issuance or commercial loan disbursements during at least two of the last five years equivalent to cumulative amount of at least 50 percent of quota.
- Graduation — Income Criterion:
  - (i) annual per capita GNI above IDA operational cutoff for at least last five years;
  - (ii) not on a declining trend in same period;
  - (iii) currently:
    - (a) at least twice the operational IDA cutoff; or
    - (b) at least three times the operational IDA cutoff for small countries; or
    - (c) at least six times the operational IDA cutoff for microstates.
- Graduation — Market Access Criterion (two alternative tests):
  - Test 1 (rules-based): public sector issuance/guaranteeing of external bonds or disbursements under public and publicly-guaranteed external commercial loans in at least three of last five years, cumulative amount equivalent to at least 100 percent of quota.
  - Test 2 (case-specific/potential access): convincing evidence that sovereign could have tapped markets on durable and substantial basis; considers recent borrowing volume/terms and sovereign credit rating.
- Safeguards for market-access graduation candidacy:
  - (a) annual per capita GNI above 100 percent of IDA operational cutoff; and
  - (b) annual per capita GNI not on declining trend over last five years.
- Absence of serious short-term vulnerabilities required in addition to meeting above criteria:
  - absence of risks of a sharp decline in income or loss of market access;
  - limited debt vulnerabilities as indicated by latest DSA;
  - confirmation that overall debt vulnerabilities remain limited.
- Key numeric thresholds preserved:
  - IDA operational cutoff: GNI per capita at $1,215 in fiscal year 2015.
  - Population thresholds: small countries below 1.5 million but not less than 200,000; microstates below 200,000.
  - Entry market-access threshold: 50 percent of quota over at least two of last five years.
  - Graduation market-access threshold (Test 1): 100 percent of quota over at least three of last five years.
  - Graduation income multiples: general twice IDA cutoff; small countries three times; microstates six times.
  - Market-access safeguard: annual per capita GNI above 100 percent of IDA cutoff and non-declining five-year trend.

### MARKET ACCESS DATA SOURCES AND TIMELINESS; BEL PROPOSAL
- Current main data source: World Bank’s IDS database, updated annually with a one year data lag.
- Market access defined as access to international markets; does not include non-resident holdings of domestic debt.
- BEL database characteristics:
  - Provides more timely information on international bond issuances and internationally contracted loans than IDS.
  - Updated weekly with a one month lag.
  - Covers countries that have issued international bonds and contracted loans internationally.
  - Contains information on international primary issuance in equities, loans, loan facilities, bonds, fixed income facilities, and other fixed income instruments.
- Implementation: include BEL with IDS for period 2010–14 for countries with non-zero BEL entries for 2014; for others, continue IDS for 2009–13 to span five-year period; use BEL where IDS not available.
- Result: with inclusion of BEL, Côte d’Ivoire now meets market access criterion.
- BEL database sources: Dealogic Loanware and Bondware, Capital Data, London, England.
- Discrepancies between BEL and IDS minor except in few cases; country teams consulted when discrepancies arise.
- Non-resident holdings of domestic government debt:
  - Staff considered but did not propose including non-resident participation in domestic sovereign securities as indicator of market access due to data limitations and reversibility concerns.
  - Staff assessed non-resident participation by questionnaire to country desks; found most PRGT-eligible members record little or no foreign participation; frontier markets show larger non-resident holdings prone to reversals.
  - Staff will continue to monitor non-resident holdings for future framework revisions.

### CONCESSIONAL FINANCING, NON-RESIDENT HOLDINGS, AND BOXED TRENDS
- Box 2 — Concessional official financing trends:
  - Group-level dependence on grants declined from around 73 percent of external financing over 2004–06 to 50 percent over 2011–13.
  - Median PRGT-eligible member depends on grants for over 90 percent of external financing; when it borrows, more than 90 percent of borrowing is ODA.
  - Five out of eight countries in a subgroup meet market access criterion; averaging around 54 percent dependence on ODA flows over 2011–13.
  - Concessional borrowing defined in IDS and under ODA as loans with at least 25 percent grant element at 10 percent discount rate.
- Box 3 — Trends in non-resident holdings of domestic government debt:
  - Portfolio flows into government securities in emerging markets increased post-crisis; LICs did not see significant rise.
  - Most LICs have shallow domestic securities markets with limited secondary markets; median PRGT-eligible country does not receive or record these flows.
  - Frontier markets have relatively larger non-resident holdings (examples: Nigeria and Ghana experienced surges).
  - Benefits: reduce crowding out, alleviate upward pressures on domestic interest rates.
  - Risks: reversibility and exposure to international market volatility; durability is challenging to evaluate.
  - Data sources: Haver, Country desk data, and IMF staff estimates.

### SERIOUS SHORT-TERM VULNERABILITIES — CURRENT ROLE AND PROPOSED MODIFICATIONS
- Current assessment requires absence of:
  - risks of sharp decline in per capita income to below applicable graduation threshold or of loss of market access; and
  - limited debt vulnerabilities per latest DSA and confirmation that overall debt vulnerabilities remain limited.
- Historical application: presence of vulnerabilities prevented graduations in prior reviews (examples: Armenia, Dominica, Georgia, Grenada, Maldives, Saint Vincent and the Grenadines).
- Proposed modifications (two main changes):
  1. Allow graduation of countries that meet income criterion by a large margin:
     - Limit role of serious short-term vulnerabilities criterion when income exceeds applicable income graduation threshold by 50 percent or more.
     - In such cases, the requirement to assess serious short-term vulnerabilities would be dropped, except for specified exceptions.
     - Rationale: minimal probability that adverse shocks would bring per capita income below threshold; financing cushion via Fund’s non-concessional resources.
     - Exception: countries classified by World Bank as "IDA-only" and receiving grant assistance warrant Executive Board assessment of short-term vulnerabilities before graduation; PRGT eligibility retained if Executive Board confirms serious short-term vulnerabilities.
     - Examples: Maldives and Mongolia have 2013 per capita GNI more than 50 percent above applicable graduation threshold; Mongolia viewed as warranting blended support, Maldives assessed as IDA-only and warrants retention due to vulnerabilities.
  2. Broaden assessment of debt vulnerabilities:
     - Include overall debt vulnerabilities (domestic and private external debt) in line with 2013 debt sustainability framework.
     - Practical implication: countries with low/moderate external debt distress risk but heightened overall debt distress due to domestic and/or private external debt would be considered as facing serious short-term vulnerabilities (except where large margin criterion met).
     - Private external debt now included in assessment.

### PROPOSED CHANGES SUMMARIZED
- Market access criterion: supplement IDS with BEL data for entry and graduation assessments.
- Absence of short-term vulnerabilities: limit application of vulnerabilities criterion for countries exceeding income threshold by 50 percent or more, except IDA-only/grant recipients.
- Domestic debt assessment: complement DSA external debt assessment with overall debt vulnerabilities due to domestic and/or private external debt.

### APPLICATION OF PROPOSED FRAMEWORK — COUNTRIES ASSESSED AND PROPOSED GRADUATIONS
- Proposed for graduation (four countries listed in text):
  - Bolivia, Mongolia, Nigeria, and Vietnam proposed for graduation.
  - Bolivia, Mongolia, and Nigeria meet income graduation criterion.
  - Vietnam meets market access graduation criterion.
  - These countries currently do not face serious short-term vulnerabilities that could reverse graduation and reliance on concessional financing has declined significantly.
- Countries meeting a graduation criterion but not proposed for graduation (eight countries) due to serious short-term vulnerabilities:
  - Grenada: currently in debt distress.
  - Cabo Verde: significant debt vulnerabilities.
  - Ghana: significant debt vulnerabilities.
  - Guyana: meets income criterion by a small margin; large current account deficit and narrow economic base vulnerabilities.
  - Moldova: meets income criterion by small margin; vulnerable to geopolitical tensions.
  - Republic of Congo: meets both income and market access criteria; vulnerable to adverse oil price movements.
  - Côte d’Ivoire: meets market access criterion but recently emerged from conflict; political and economic recovery fragile.
  - Maldives: meets income criterion by large margin but is IDA-only receiving grant assistance and faces serious short-term vulnerabilities from elevated debt.
- Table 4 assessment values (reproduced exactly in source) include country-level fields such as:
  - Income/market criteria met, previous round status, risk of debt distress (As of March,2015), other short-term vulnerabilities (Y/N), IDA status, Distance from Income graduation threshold (percent), Distance from Market access amount threshold (percent), Market Access frequency in last five years.
  - Sample exact numeric values as reported:
    - Bolivia: Distance from Income graduation threshold (percent): 4.94; Distance from Market access amount threshold (percent): 2942/5; Market Access frequency in the last five years: 4/5; Risk of debt distress: Low; Other Short-term Vulnerabilities: N; IDA status: Blend.
    - Maldives: Distance from Income graduation threshold (percent): 53.6439; Distance from Market access amount threshold (percent): 54; Market Access frequency in the last five years: 5/5; Risk of debt distress: High; IDA status: IDA-grants; Other Short-term Vulnerabilities: Y.
    - Mongolia: Distance from Income graduation threshold (percent): 55.1418; Distance from Market access amount threshold (percent): 851/5; Market Access frequency in the last five years: 1/5; Risk of debt distress: High; IDA status: Blend; Other Short-term Vulnerabilities: Y.
    - Nigeria: Distance from Income graduation threshold (percent): 11.52; Distance from Market access amount threshold (percent): -422/5; Market Access frequency in the last five years: 2/5; Risk of debt distress: Low; IDA status: Blend; Other Short-term Vulnerabilities: N.
    - Vietnam: Distance from Income graduation threshold (percent): -28.4096; Distance from Market access amount threshold (percent): 05/5; Market Access frequency in the last five years: 5/5; Risk of debt distress: Low; IDA status: Blend; Other Short-term Vulnerabilities: N.
  - (Note: Table entries reproduced exactly as in source, including numeric formatting and field separations.)

### COUNTRY-SPECIFIC ASSESSMENTS (selected highlights from Annex II Table 2 and Annex III)
- Bolivia:
  - 2014 growth: 5.2 percent (down from 6.8 percent in 2013).
  - Inflation declined from 6.5 to 5.5 percent.
  - Current account surplus around 2.6 percent of GDP.
  - Fiscal balance: small deficit in 2014 of about 0.4 percent of GDP.
  - Public debt ~30 percent of GDP as of end-2014.
  - Reliance on concessional borrowing declined to <50 percent of total public external borrowing in 2011–13 from almost 75 percent in 2004–06.
  - IDA blender since 2002; low risk of debt distress.
  - GNI per capita 2013: US$2,550, about 5 percent above graduation threshold (US$2,430).
  - Market access: external borrowing through commercial markets amounted to 394 percent of IMF quota over 2010–14 through two bond issuances (does not meet market access criterion).
  - Staff proposes graduating Bolivia.
- Cabo Verde:
  - 2014 growth: 2.7 percent.
  - 2014 consumer prices: 0.2 percent deflation.
  - Current account deficit 7.5 percent of GDP in 2014.
  - Reserves: ~4.9 months of imports.
  - Budget deficit 8 percent of GDP in 2014.
  - Public debt 112 percent of GDP in 2014.
  - IDA blender since 2005.
  - 2013 GNI per capita: US$3,620—just below three times IDA cutoff.
  - Market access: borrowed three years in a row, cumulative access >1000 percent of quota over 2010–14.
  - Risk of external debt distress: moderate in 2014.
  - Staff proposes maintaining PRGT eligibility.
- Republic of Congo:
  - 2014 growth: 6.8 percent; inflation 0.5 percent.
  - Fiscal deficit ~8½ percent of GDP in 2014.
  - Public debt ~36 percent of GDP.
  - IDA blender; low risk of debt distress.
  - GNI per capita 2013: US$2,590, 7 percent above graduation threshold.
  - Market access: external borrowing 354 percent of quota over 2010–14 through three issuances.
  - Oil revenues ~34 percent of GDP over 2011–13; oil production projected to peak in 2018 and fall thereafter.
  - Staff projects GNI per capita to decline below graduation threshold by 19 percent by end-2015 due to oil price decline; staff proposes maintaining PRGT eligibility.
- Côte d’Ivoire:
  - 2014 GDP growth: 7.9 percent.
  - 2013 GNI per capita: US$1,450 (40 percent below relevant income threshold).
  - Market access: tapped international markets three times over 2010–14, borrowing cumulatively 156 percent of quota in 2013 (near-entirety in 2014).
  - Reserves modest ~2.6 months of imports.
  - IDA-only country.
  - Staff proposes maintaining PRGT eligibility given fragility and recent restoration of market access.
- Ghana:
  - 2014 growth: 4.2 percent; fiscal deficit 9.4 percent of GDP in 2014.
  - Public debt 65 percent of GDP in 2014.
  - Current account deficit 9 percent of GDP.
  - 2013 GNI per capita: US$1,770 (27 percent below graduation threshold).
  - Market access: 665 percent of quota during 2010–14 (Eurobond issuances).
  - Risk of external debt distress: high.
  - Staff proposes maintaining PRGT eligibility.
- Grenada:
  - 2013 GDP growth: 2.4 percent; 2014 estimated 3 percent.
  - Public debt 105 percent of GDP.
  - 2013 GNI per capita: US$7,490, about 3 percent above graduation threshold (US$7,290).
  - No international market access during 2010–14.
  - High risk of external debt distress; staff proposes maintaining PRGT eligibility.
- Guyana:
  - 2013–14 growth ~5 percent then 3.7 percent in 2014.
  - 2013 GNI per capita: US$3,750, 3 percent above graduation threshold for small countries (US$3,645).
  - No international market borrowing in last five years.
  - IDA-only; moderate risk of debt distress.
  - Staff proposes maintaining PRGT eligibility.
- Maldives:
  - 2014 growth: 6.1 percent; inflation 2.4 percent.
  - 2014 fiscal deficit estimated 11.6 percent of GDP (from 7.8 percent in 2013).
  - Public debt 75 percent of GDP.
  - GNI per capita 2013: US$5,600, about 54 percent above its graduation threshold (three times IDA cutoff).
  - Market access: contracted commercial bank loans in international markets each year during 2009–13; cumulative issuance equivalent to 527 percent of quota.
  - Serious short-term vulnerabilities: elevated debt levels, risk of reduced tourist arrivals, overall debt distress assessed high despite improvement to moderate external debt distress risk; heavy reliance on ODA; IDA-only non-gap recipient.
  - Staff proposes maintaining PRGT eligibility.
- Moldova:
  - 2013 growth ~9 percent; 2014 estimated 2 percent.
  - 2013 GNI per capita: US$2,470, 2 percent above graduation threshold (US$2,430).
  - Market access: did not meet criterion; cumulative borrowing equivalent to 12.8 percent of quota during 2010–14.
  - Serious short-term vulnerabilities: banking system governance problems, slowdown in trading partners, geopolitical tensions.
  - IDA blender; low risk of debt distress.
  - Staff proposes maintaining PRGT eligibility.
- Mongolia:
  - 2014 growth: 7.8 percent (slowed from double-digit 2011–13).
  - Inflation ~11 percent.
  - 2014 fiscal deficit widened to 11 percent of GDP.
  - Gross reserves declined to ~2 months of imports as of March 2015.
  - Estimated sub-soil mineral wealth: US$1- 3 trillion.
  - IDA blender since 2012.
  - 2013 GNI per capita: US$3,770, 55 percent above graduation threshold of US$2,430.
  - Market access: one bond issuance over last five years; 2012 sovereign Eurobond US$1.5 billion (~2000 percent of quota). DBM guarantees in 2012 and 2015.
  - Serious short-term vulnerabilities: domestic imbalances, commodity price pressures; risk of external debt distress high.
  - Staff proposes graduation of Mongolia (subject to application of large-margin rule as proposed).
- Nigeria:
  - 2014 growth: 6.3 percent; inflation eased to 8.1 percent.
  - 2014 fiscal deficit ~2.5 percent of GDP.
  - 2014 current account surplus ~1.1 percent of GDP; public debt 13.4 percent of GDP.
  - International reserves ~six months of imports.
  - GNI per capita 2013: US$2,710, about 12 percent above graduation threshold (US$2,430) after rebasing.
  - Market access: two issuances over 2010–14 with cumulative size 58 percent of quota; non-resident holdings in domestic securities ~US$16.5 billion as of end-2013 (636 percent of quota).
  - Low risk of debt distress; staff projects GNI per capita to remain above threshold, ~16 percent above by end-2015.
  - Staff proposes graduation of Nigeria.
- Vietnam:
  - 2014 growth ~6 percent; inflation ~4 percent.
  - Current account surplus ~5.4 percent of GDP.
  - Reserves ~2½ months of imports.
  - Public and publicly-guaranteed debt ~55 percent of GDP by end-2014.
  - 2013 GNI per capita: US$1,740, 28 percent below relevant graduation threshold.
  - Market access: over 2010–14 amounted to 686 percent of quota cumulatively through five issuances; meets market access test.
  - Low risk of debt distress; market access durable.
  - Staff proposes graduation of Vietnam.

### FINANCING IMPLICATIONS AND DEMAND PROJECTIONS FOR PRGT RESOURCES
- Staff projections:
  - 2016–25: further 14 countries could potentially graduate.
  - Updated average demand projections for 2015–37: in range SDR 1.1–1.9 billion.
  - Updated baseline (assumes graduation of Bolivia, Nigeria, Vietnam, Mongolia in 2015):
    - 2015–25: Low-case scenario: 1.0; High-case scenario: 1.5 (billions of SDRs).
    - 2015–37: Low-case scenario: 1.1; High-case scenario: 1.9 (billions of SDRs).
  - Previous baseline (2013 review) reported:
    - 2015–25: Low-case 1.1; High-case 1.7.
    - 2015–37: Low-case 1.2; High-case 2.1.
- Scenario assumptions:
  - Low-case: about 30 percent of PRGT-eligible countries report to Fund financing in any given year.
  - High-case: 50 percent of PRGT-eligible countries request some form of Fund financial support in any given year.
  - Other methodological assumptions: apply vulnerability criterion to graduation/blending options; align graduation assumptions with two-year review cycle; for PRGT-eligible countries presumed to blend, assume half of access to Fund resources is from PRGT.
- Policy proposals to increase access limits and norms to PRGT facilities by 50 percent and shift funding mix for presumed blenders from 1:1 to 1:2 designed to be broadly neutral to PRGT loan demand.

### PROPOSED DECISIONS (EXECUTIVE BOARD ACTIONS)
- Decision I. Revise Decision No. 14521-(10/3) subparagraph B of paragraph 1 to define graduation criteria:
  - (1) Income Criterion: annual per capita GNI thresholds (twice IDA cutoff general; three times for small country; six times for microstate) plus five-year non-declining trend.
  - (2) Market Access Criterion: capacity to access international financial markets on durable and substantial basis; annual per capita GNI above 100 percent of IDA operational cutoff; five-year non-declining trend.
  - (3) Absence of serious short-term vulnerabilities: absence of risks of sharp decline in income or loss of market access; limited debt vulnerabilities per latest DSA including external debt distress classification moderate or less for DSA-LIC assessments; confirmation that overall debt vulnerabilities remain limited.
  - For members whose annual per capita GNI exceeds applicable income threshold by 50 percent or more, graduation not subject to serious short-term vulnerabilities assessment, except for members with “IDA-grant only” or “IDA loan-grant mix” status where assessment required.
- Decision II. Amend list annexed to Decision No. 8240-(86/56) SAF to remove Bolivia, Mongolia, Nigeria, and Vietnam.
  - Effective removal dates:
    - Bolivia: removal effective on October 16, 2015, or on date of termination of any PRGT arrangement for Bolivia, whichever is later.
    - Mongolia: removal effective on October 16, 2015, or on date of termination of any PRGT arrangement for Mongolia, whichever is later.
    - Nigeria: removal effective on October 16, 2015, or on date of termination of any PRGT arrangement for Nigeria, whichever is later.
    - Vietnam: removal effective on October 16, 2015, or on date of termination of any PRGT arrangement for Vietnam, whichever is later.

*International Monetary Fund, June 24, 2015*

### EXECUTIVE SUMMARY

### EXECUTIVE SUMMARY

### Overview
- The PRGT eligibility review is guided by principles of maintaining a transparent, rules-based, and parsimonious framework—ensuring uniformity of treatment across members in similar situations while taking appropriate account of country-specific circumstances.
- The graduation policy seeks broad alignment with the World Bank’s IDA graduation practices, while remaining consistent with ensuring the self-sustainability of the PRGT’s lending capacity over time.
- Reviews occur on a two-year cycle; the last review was conducted in April 2013.
- The FY 2015 IDA operational cutoff for annual GNI per capita is US$1,215.

### Key findings and proposed enhancements to the framework
- The existing framework remains broadly appropriate but could be enhanced in a few areas:
  - Make use of additional data sources, namely the IMF BEL database (Bonds, Equities, and Loans), in assessing durable and substantial market access, supplementing reliance on the World Bank’s IDS database that is produced with a significant lag.
  - Sharpen the specification of circumstances under which the presence of serious short-term vulnerabilities would justify non-graduation of a country that meets the income graduation criterion. Specifically, limit the application of the serious short-term vulnerabilities criterion for countries that exceed the applicable income graduation threshold by 50 percent or more.

### Application and specific country assessments
- Based on the proposed changes, four countries are proposed for graduation while none qualifies for entry.
  - Proposed for graduation: Bolivia, Nigeria, and Vietnam.
  - Mongolia’s proposed graduation depends on the proposed modification to the short-term vulnerabilities criterion.
- Eight other countries satisfy either the market access or income graduation criterion but face serious short-term vulnerabilities and are therefore not proposed for graduation.
- Historical outcomes from the prior cycle (April 2013):
  - Two countries graduated from PRGT eligibility: Armenia and Georgia.
  - Three microstates were added to the PRGT-eligible list: Tuvalu, Marshall Islands, and Micronesia.

### Impact on PRGT financing and objectives
- The impact of the proposed graduations on demand for PRGT resources is expected to be small.
- The proposals are in line with maintaining the self-sustaining capacity of the PRGT, which is based on periodic graduation of members as their per capita incomes rise and their access to international capital markets increases.

### Structure of the paper (content covered)
- Summary of the current PRGT-eligibility framework.
- Discussion of proposed modifications to the market access criterion and the short-term vulnerabilities criterion.
- Application of the proposed framework to assess PRGT eligibility across the Fund membership.
- Discussion of the potential impact on demand for the Fund’s concessional resources.

*INTERNATIONAL MONETARY FUND, June 24, 2015*

### Box 1. Criteria for Entry and Graduation from PRGT Eligibility 1/

### Box 1. Criteria for Entry and Graduation from PRGT Eligibility

### Entry criteria
- A Fund member would be added to the list of PRGT-eligible countries if:
  - (i) its annual per capita gross national income, based on the latest available qualifying data, is:
    - (a) below the IDA operational cutoff; or
    - (b) less than twice the IDA operational cutoff for small countries (countries with population below 1.5 million but not less than 200,000); or
    - (c) less than five times the IDA operational cutoff for microstates (countries with population below 200,000); and
  - (ii) the sovereign does not have the capacity to access international financial markets on a durable and substantial basis (as defined).
- The market access criterion for entry is assessed using the same tests as for graduation except that market access under the first alternative test is present where bond issuance or disbursements under commercial loans during at least two of the last five years are equivalent to a cumulative amount of at least 50 percent of quota.

### Graduation criteria — Income Criterion
- A Fund member would graduate from the PRGT list if the country’s annual per capita GNI:
  - (i) has been above the IDA operational cutoff for at least the last five years (for which qualifying data are available);
  - (ii) has not been on a declining trend in the same period (comparing the first and the last relevant annual data); and
  - (iii) is currently:
    - (a) at least twice the operational IDA cutoff; or
    - (b) at least three times the IDA operational cutoff for small countries; or
    - (c) at least six times the IDA operational cutoff for microstates.

### Graduation criteria — Market Access Criterion
- The sovereign has the capacity to access international financial markets on a durable and substantial basis, as measured by one of two alternative tests:
  - Test 1 (rules-based): public sector issuance or guaranteeing of external bonds or disbursements under public and publicly-guaranteed external commercial loans in international markets during at least three of the last five years (for which qualifying data are available), in a cumulative amount over that period equivalent to at least 100 percent of the country’s quota at the Fund at the time of the assessment.
    - External bonds and commercial loans issued or contracted in markets that are not integrated with broader international markets do not qualify.
  - Test 2 (case-specific/potential access): convincing evidence that the sovereign could have tapped international markets on a durable and substantial basis, even though the scale or duration of actual public sector borrowing fell short of the specified thresholds. This assessment considers factors such as the volume and terms of recent actual borrowing in international markets and the sovereign credit rating.
- Both tests take into account bonds/loans issued, contracted, or guaranteed by non-sovereign public sector debtors where such a debtor’s ability to access international markets is assessed to be an indicator of the sovereign’s creditworthiness.
- As a further safeguard, countries would be considered candidates for graduation under the market access criterion only if:
  - (a) their annual per capita GNI is above 100 percent of the IDA operational cutoff (based on the latest available qualifying data); and
  - (b) their annual per capita GNI has not been on a declining trend during the last five years for which qualifying data is available (comparing the first and last relevant annual data).

### Absence of serious short-term vulnerabilities
- In addition to meeting at least one of the above criteria, the country should not face serious short-term vulnerabilities.
- The assessment requires, in particular:
  - absence of risks of a sharp decline in income, or of a loss of market access;
  - limited debt vulnerabilities, as indicated by the latest DSA; and
  - a confirmation that overall debt vulnerabilities remain limited since such analysis.

### Key numeric thresholds and operational definitions preserved from the Box
- IDA operational cutoff: defined as GNI per capita at $1,215 in fiscal year 2015.
- Population thresholds:
  - small countries: population below 1.5 million but not less than 200,000;
  - microstates: population below 200,000.
- Entry market-access threshold (alternative to full graduation tests): bond issuance or commercial loan disbursements during at least two of the last five years equivalent to a cumulative amount of at least 50 percent of quota.
- Graduation market-access thresholds:
  - Test 1: issuance/disbursements during at least three of the last five years in a cumulative amount equivalent to at least 100 percent of quota.
- Graduation income multiples:
  - general: at least twice the operational IDA cutoff;
  - small countries: at least three times the IDA operational cutoff;
  - microstates: at least six times the IDA operational cutoff.
- Safeguard for market-access graduation candidacy: annual per capita GNI above 100 percent of the IDA operational cutoff and not on a declining trend over the last five years.

*Source: Box 1. Criteria for Entry and Graduation from PRGT Eligibility (text provided).*

### 6.      As more members begin to access market financing, the data used to assess actual

### 6.      As more members begin to access market financing, the data used to assess actual 

### Market access data sources and timeliness
- The World Bank’s IDS database is the main data source used in this assessment and "is updated annually with a one year data lag."
- Consistent with the current PRGT-eligibility framework, market access is defined as access to international markets and "does not include non-resident holdings of domestic debt."
- Recent development: non-resident holdings of domestic debt "have become increasingly important for some countries in recent years."

### Proposal to use the BEL database to improve timeliness and coverage
- Staff proposes to make use of the Bonds, Equities, and Loans (BEL) database for assessing actual market access for the most recent period when IDS data are not yet available.
- Characteristics of BEL:
  - "Provides more timely information on international bond issuances and internationally contracted loans than IDS."
  - "Is updated weekly with a one month lag."
  - "Covers countries that have issued international bonds and contracted loans internationally."
- Contrast with IDS:
  - "The December 2014 IDS database has annual information until 2013 but has a broader coverage that includes commercial borrowing other than syndicated bank loans."
- Implementation details:
  - "With the inclusion of BEL data, the assessment of actual market access will be based on both IDS and BEL databases for the period 2010–14 for countries that have non-zero entries in the BEL database for 2014."
  - "For all other countries, the assessment will continue to be based on data from IDS for the period 2009–13 to ensure that the assessment of market access spans data for a five-year period for all countries in line with current policy."
  - "For years where IDS data is not available, BEL data will be used."
  - "The proposed changes will apply to both the entry and graduation criteria."
  - Result: "With the inclusion of the BEL database, Côte d’Ivoire now meets the market access criterion."
- Data reconciliation:
  - "The BEL database is based on the information provided by Dealogic Loanware and Bondware, Capital Data, London, England."
  - "The discrepancies between the BEL database and the World Bank’s IDS database are minor, with the exception of a few cases (see Annex II Table 2)."
  - "In cases of discrepancies between IDS and BEL data on bond issuances or commercial loans, country teams are consulted on data accuracy."
- BEL coverage note:
  - "The BEL database contains information on international primary issuance in numerous asset classes, such as equities, loans, loan facilities, bonds, fixed income facilities, and other fixed income instruments."

### Consideration of non-resident holdings of domestic government debt
- Staff considered using non-resident participation in domestic sovereign securities markets as a basis to assess market access, which would require modifying the PRGT-eligibility framework that currently defines market access on the basis of access to international markets only.
- Data limitations and assessment approach:
  - "In the absence of standardized published data across countries, staff assessed the extent of non-resident participation in domestic debt markets by means of a questionnaire to country desks."
- Empirical findings:
  - "In most PRGT-eligible members, foreign participation is mostly not recorded or very limited."
  - "In the case of some frontier markets, participation is more significant but in some cases prone to reversals, suggesting it may not be a good indicator of durable and sustainable market access."
  - Conclusion: "Accordingly non-resident participation in domestic sovereign securities is not proposed as an indicator of market access for this review."
- Ongoing monitoring:
  - "Staff will continue to monitor developments in non-resident holdings of domestic debt to assess the merits of including such holdings in the definition of market access in future revisions to the PRGT eligibility framework."

### Box 2 — Concessional official financing trends among PRGT members (key statistics)
- Dependence on grants:
  - Group-level decline: "dependence on grants has declined from around 73 percent of external financing over 2004–06 to 50 percent over 2011–13."
  - Median PRGT-eligible member: "still depends on grants for over 90 percent of its external financing and when it borrows, more than 90 percent of its borrowing is Official Development Assistance (ODA)."
- Example: "Maldives is one case where reliance on ODA flows has increased over time..."
- Subgroup of lower ODA dependence:
  - "Five out of the eight countries meet the market access criterion (with Mongolia meeting the amount requirement, but not the frequency)."
  - "Averaging around 54 percent dependence on ODA flows over 2011–13, the group is near levels similar to recent graduates including Albania and Georgia, and well-below Armenia."
- Concessional borrowing definition: "Concessional borrowing is defined in IDS and under ODA as loans with at least 25 percent grant element at 10 percent discount rate."

### Box 3 — Trends in non-resident holdings of domestic government debt (key observations and data references)
- Post-crisis portfolio flows:
  - "Portfolio flows into government securities in emerging markets have increased significantly following the global financial crisis, but low-income countries (LICs) did not see a significant rise in such inflows."
- Market structure constraints:
  - "Most LICs have relatively shallow domestic securities markets with secondary markets limited or absent, which constrains foreign investors."
  - "The median PRGT-eligible country either does not receive or record these flows."
- Frontier markets and examples:
  - "The frontier markets within the sample have relatively larger non-resident holdings. These economies tend to have deeper and faster expanding domestic markets."
  - "Several frontier LICs have attracted non-resident flows into government domestic securities on a scale comparable to some emerging markets."
  - Examples cited: "Nigeria and Ghana have experienced a surge in these holdings as global investors search for yield."
- Risks and durability:
  - "Non-resident holdings of domestic securities present an opportunity for financing, but also pose significant challenges and risks."
  - Benefits: "help reduce crowding out of domestic private credit, and alleviate upward pressures on domestic interest rates."
  - Risks: "reversibility and increased exposure to international financial market volatility."
  - "It is challenging to evaluate the degree of durability of these flows given their strong dependence on market assessment of exchange rate risk and external monetary conditions."
- Data sources cited: "Source: Haver, Country desk data, and IMF staff estimates."

### Serious short-term vulnerabilities criterion — current role and proposed modifications
- Current policy:
  - Countries meeting one or both of the income and market access graduation criteria can graduate from PRGT eligibility provided they "do not face serious short-term vulnerabilities."
  - Assessment requires absence of:
    - "risks of a sharp decline in per capita income to a level below the applicable graduation threshold or of a loss of market access (where relevant), and"
    - "limited debt vulnerabilities as indicated by a low or medium risk of external debt distress based on the latest debt sustainability analysis (DSA), and a confirmation that overall (domestic and external) debt vulnerabilities remain limited."
- Historical application:
  - Presence of such vulnerabilities prevented graduations in prior reviews; examples: "Armenia, Dominica, Georgia, Grenada, Maldives, and Saint Vincent and the Grenadines" met income criterion in 2010 and 2012 reviews but were not proposed for graduation due to serious short-term vulnerabilities.
  - In 2013 review: "two of these countries graduated (Armenia and Georgia), one dropped below the increased income threshold for microstates (St. Vincent and the Grenadines) and the other three were deemed to face serious short-term vulnerabilities."
- Alignment with IDA practice:
  - "Retaining the presence of serious short-term vulnerabilities as a factor in assessing PRGT graduation is consistent with maintaining broad alignment with IDA graduation practices."
  - The latest IDA review supports "a flexible approach to graduation" and case-by-case evaluation.

### Proposed modifications to the assessment of serious short-term vulnerabilities
- Two main modifications proposed:
  - Allow graduation of countries that meet the income criterion by a large margin, "sufficient to ensure that there would be only a minimal risk that the member’s income would fall below the applicable income graduation threshold in the future."
  - Broaden the assessment of debt vulnerabilities to include "overall debt vulnerabilities" (domestic and private external debt) in line with the 2013 debt sustainability framework.
- Large margins against the income graduation criterion:
  - Proposal: limit the role of the serious short-term vulnerabilities criterion when "income level exceeds by 50 percent or more the applicable income graduation threshold."
  - In such cases, "the requirement to assess the possible presence of serious short-term vulnerabilities would be dropped, except where a circumstance, defined below, warranted such an assessment."
  - Rationale:
    - "Given the large margin relative to the income graduation threshold, the staff view is that there is a minimal probability that adverse shocks would bring per capita income below the applicable income graduation threshold."
    - Financing cushion: "were the economy hit by adverse shocks, any financing needs could be addressed through access to the Fund’s non-concessional resources."
  - Exception warranting assessment:
    - Countries classified by the World Bank to be "IDA-only" and "sufficiently vulnerable to justify the provision of assistance from IDA in the form of grants" would warrant an Executive Board assessment of short-term vulnerabilities before graduation.
    - "In such cases, the member’s PRGT eligibility would be retained if, following the Executive Board assessment, it is confirmed that the member has serious short-term vulnerabilities as currently defined."
- Empirical justification and expected benefits:
  - Tightening circumstances for preventing graduation of higher-income countries is argued to:
    - "better target scarce PRGT resources—countries that have relatively high per capita income levels would graduate, preserving scarce PRGT resources for remaining poorer eligible countries;"
    - "promote simplicity since it is relatively straightforward to implement."
- Examples under the proposed rule:
  - "Two PRGT-eligible members, Maldives and Mongolia, have a 2013 per capita GNI more than 50 percent above the applicable graduation threshold."
  - World Bank classification:
    - "Mongolia is viewed by the World Bank as warranting blended support—a mix of IDA (concessional) and IBRD (non-concessional) funds."
    - "Maldives is assessed by the Bank to be in a sufficiently weak economic position to warrant 'IDA-only' status. In addition to being eligible for IDA’s highly concessional loan financing (with 53 percent grant element using the Bank-Fund discount rate), the Maldives also receives grant support from the Bank."
  - Staff assessment:
    - "The Fund staff assessment of Maldives is that the country faces serious short-term vulnerabilities as defined under the current PRGT-eligibility framework—specifically that Maldives’ faces risks of a sharp decline in income and a loss of market access due to elevated debt vulnerabilities. In light of this, Maldives’ graduation from PRGT eligibility is not proposed at this time."
- Broadening assessment of debt vulnerabilities:
  - Proposal: "This proposal is a technical update to align the PRGT-eligibility framework with the 2013 debt sustainability framework."
  - Practical implication:
    - "Countries that have either low or moderate risk of external debt distress, but have a heightened risk of overall debt distress due to domestic and/or private external debt would be considered as facing serious short-term vulnerabilities, except in circumstances where they met the large margin above income graduation criterion."
    - "Specifically, consistent with the new debt sustainability framework, private external debt is now included in the assessment of debt vulnerabilities."

*Source: IMF staff paper excerpt on PRGT eligibility (text as provided).*

### 17.      The proposed changes to the framework are summarized in Table 3 below. The

### _062415 - 17.      The proposed changes to the framework are summarized in Table 3 below. The

### Proposed changes to the PRGT-Eligibility Framework
- Market access criterion (entry and graduation)
  - Current: Assessment is based on the World Bank’s International Debt Statistics (IDS) database.
  - Proposed: The IDS database will be supplemented by data from the Bonds, Equities, and Loans (BEL) database to assess actual market access.
- Absence of short-term vulnerabilities criterion (graduation)
  - Current: For graduation, a country should not face serious short-term vulnerabilities. The assessment of vulnerabilities will require, in particular, the absence of risks of a sharp decline in income or of a loss of market access where relevant, limited debt vulnerabilities based on the latest DSA, and a confirmation that overall debt vulnerabilities remain limited.
  - Proposed: Limit the application of the serious short-term vulnerabilities criterion for countries that exceed by 50 percent or more the applicable income graduation threshold provided, however, that a review of the country’s vulnerabilities would still be warranted for “IDA-only” countries receiving assistance on grant terms with incomes exceeding this threshold.
- Domestic debt assessment
  - Current: A level of domestic debt that does not give rise to serious concerns about the member’s debt sustainability based on the latest DSA.
  - Proposed: Complement the existing assessment of debt vulnerabilities with consideration of overall debt vulnerabilities due to domestic and/or private external debt based on the latest DSA.

### Application of the proposed framework — countries assessed and proposed graduations
- Proposed for graduation (four countries)
  - Bolivia, Mongolia, Nigeria, and Vietnam are proposed for graduation.
  - Bolivia, Mongolia, and Nigeria meet the income graduation criterion.
  - Vietnam meets the market access graduation criterion.
  - These countries currently do not face serious short-term vulnerabilities that could reverse graduation and their reliance on concessional financing has declined significantly in recent years.
- Countries meeting a graduation criterion but not proposed for graduation (eight countries)
  - Reasons: face serious short-term vulnerabilities and incomes do not exceed the income graduation criterion by large margins.
  - Specific cases and vulnerabilities:
    - Grenada: currently in debt distress; not proposed for graduation.
    - Cabo Verde: faces significant debt vulnerabilities; not proposed for graduation.
    - Ghana: faces significant debt vulnerabilities; not proposed for graduation.
    - Guyana: meets income criterion by a small margin; vulnerabilities from a large current account deficit and a narrow economic base.
    - Moldova: meets income criterion by a small margin; vulnerable to geopolitical tensions that could markedly reduce exports and GDP.
    - Republic of Congo: meets both income and market access criteria; vulnerable to adverse oil price movements that could push income below the graduation threshold and undermine market access.
    - Côte d’Ivoire: meets market access criterion but has recently emerged from conflict and remains fragile; political and economic recovery not fully entrenched.
    - Maldives: meets income criterion by a large margin but is an IDA-only country receiving IDA grant assistance; additional scrutiny shows serious short-term vulnerabilities, risk of income decline, and loss of market access from elevated debt — graduation from PRGT eligibility is not warranted at this time.

### Key statistics and Table 4 assessment values (as reported)
- Bolivia
  - Income or market access criteria met: Income
  - Meeting income or market access criteria in the previous round: No
  - Risk of debt distress (As of March,2015): Low
  - Other Short-term Vulnerabilities: N
  - IDA status: Blend
  - Distance from Income graduation threshold (percent) 1/: 4.94
  - Distance from Market access amount threshold (percent) 2/: 2942/5
  - Market Access frequency in the last five years 2/: 4/5
- Cabo Verde
  - Market; No; Moderate; Y; Blend; -0.699; 893/5; 3/5
- Congo, Republic of
  - Income & market; No; Low; Y; Blend; 6.58; 2543/5; 3/5
- Cote d'Ivoire
  - Market; No; Moderate; Y; IDA; -40.33; 56; 3/5
- Ghana
  - Market; Yes; High; Y; IDA; -27.16; 5655/5; 5/5
- Grenada
  - Income; Yes; In debt distress; Y; Blend; 2.74; -1000/5; 0/5
- Guyana
  - Income; No; Moderate; Y; IDA; 2.88; -1000/5; 0/5
- Maldives
  - Income & market; Yes; High; 3/; Y; IDA-grants; 53.6439; 54; 5/5
- Moldova
  - Income; No; Low; Y; Blend; 1.65; -873/5; 3/5
- Mongolia
  - Income; No; High; Y; Blend; 55.1418; 851/5; 1/5
- Nigeria
  - Income; No; Low; N; Blend; 11.52; -422/5; 2/5
- Vietnam
  - Market; Yes; Low; N; Blend; -28.4096; 05/5; 5/5

(Note: Table entries reproduced exactly as in source, including numeric formatting and field separations.)

### Financing implications and demand projections for PRGT resources
- Staff projections and implications
  - Staff projections indicate that in the period 2016–25, a further 14 countries could potentially graduate from PRGT eligibility.
  - Updated projections of demand for the Fund’s concessional resources, taking into account the proposed revisions and proposed graduations, suggest overall average demand projections for 2015–37 would be in the range of SDR 1.1–1.9 billion.
  - This implies that the PRGT should have the capacity to meet the demand for IMF concessional lending under a range of plausible scenarios.
  - Proposals to increase access limits and norms to PRGT facilities by 50 percent and shift the funding mix between PRGT and GRA resources for presumed blenders from 1:1 to 1:2 are designed to be broadly neutral to PRGT loan demand and would not change this assessment.
- Table 5 — Average annual demand for access to PRGT resources (In billions of SDRs)
  - Previous baseline (2013 PRGT eligibility review) 2015–25: Low-case scenario: 1.1; High-case scenario: 1.7
  - Previous baseline (2013 PRGT eligibility review) 2015–37: Low-case scenario: 1.2; High-case scenario: 2.1
  - Updated baseline (2015 PRGT eligibility review) 2015–25 (Assumes graduation of Bolivia, Nigeria, Vietnam, and Mongolia in 2015): Low-case scenario: 1.0; High-case scenario: 1.5
  - Updated baseline (2015 PRGT eligibility review) 2015–37: Low-case scenario: 1.1; High-case scenario: 1.9
- Scenario assumptions (as reported)
  - Low-case scenario: assumes about 30 percent of PRGT-eligible countries would report to Fund financing in any given year.
  - High-case scenario: assumes 50 percent of PRGT-eligible countries request some form of Fund financial support in any given year.
  - Other methodological assumptions noted include: (i) applying the vulnerability criterion to the graduation and blending options; (ii) aligning graduation assumptions with the two-year PRGT-eligibility review cycle; and (iii) for PRGT-eligible countries presumed to blend, it is assumed that half of access to Fund resources is from the PRGT.

### Proposed Decisions (Executive Board actions as proposed)
- Decision I. Eligibility to Use the Fund's Facilities for Concessional Financing
  - Revise Subparagraph B of paragraph 1 of Decision No. 14521-(10/3) (adopted January 11, 2010, as amended) to define criteria for graduation:
    - (1) Income Criterion: annual per capita GNI conditions including thresholds of (a) at least twice the IDA operational cut-off; (b) at least three times for “small country”; (c) at least six times for “microstate”; plus five-year non-declining trend requirements.
    - (2) Market Access Criterion: capacity to access international financial markets on a durable and substantial basis; annual per capita GNI above 100 percent of the IDA operational cut-off; and five-year non-declining trend requirement.
    - (3) Absence of serious short-term vulnerabilities: absence of risks of a sharp decline in income or loss of market access; limited debt vulnerabilities per most recent DSA including external debt distress classification of moderate or less for DSA-LIC assessments; confirmation that overall debt vulnerabilities remain limited. For members whose annual per capita GNI exceeds the applicable income graduation threshold by 50 percent or more, graduation will not be subject to the serious short-term vulnerabilities assessment, except for members with “IDA-grant only” or “IDA loan-grant mix” status where the assessment is required.
- Decision II. Eligibility to Use the Fund's Facilities for Concessional Financing — List of Eligible Members and Amounts of Assistance
  - Amend the list annexed to Decision No. 8240-(86/56) SAF to remove Bolivia, Mongolia, Nigeria and Vietnam.
  - Effective dates for removals:
    - Bolivia: removal effective on October 16, 2015, or on the date of termination of any PRGT arrangement for Bolivia, whichever is later.
    - Mongolia: removal effective on October 16, 2015, or on the date of termination of any PRGT arrangement for Mongolia, whichever is later.
    - Nigeria: removal effective on October 16, 2015, or on the date of termination of any PRGT arrangement for Nigeria, whichever is later.
    - Vietnam: removal effective on October 16, 2015, or on the date of termination of any PRGT arrangement for Vietnam, whichever is later.

*Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2015/_062415.pdf*

### Annex II Table 2. Comparing BEL and IDS Data

### Annex II Table 2. Comparing BEL and IDS Data

### Bolivia
- Background:
  - Growth moderated in 2014 to 5.2 percent from 6.8 percent in 2013.
  - Inflation declined from 6.5 to 5.5 percent.
  - Current account recorded a surplus around 2.6 percent of GDP.
  - Fiscal balance estimated to have turned to a small deficit in 2014 of about 0.4 percent of GDP.
  - Public debt around 30 percent of GDP as of end-2014.
  - Reliance on concessional official borrowing declined to less than 50 percent of total public external borrowing in 2011–13 from almost 75 percent in 2004–06.
  - Bolivia has been an IDA blender since 2002 and has a low risk of debt distress.
- Assessment:
  - Staff proposes graduating Bolivia from PRGT eligibility.
- Income Criterion:
  - GNI per capita in 2013: US$2,550, about 5 percent above graduation threshold (US$2,430).
  - Per capita income has been above the operational IDA threshold for at least the last five years.
- Market Access Criterion:
  - Does not meet criterion. External borrowing through commercial markets amounted to 394 percent of Bolivia’s IMF quota over 2010–14 through two international bond issuances.
- Serious Short-Term Vulnerabilities:
  - Vulnerabilities linked to a decline in activity in trading partners and weaker hydrocarbon prices; manageable given large international reserves (50 percent of GDP as of end-June 2014) and ample government deposits.
  - Staff projections show GNI per capita remaining above the graduation threshold over the medium term; risk of falling below considered very low.

### Cabo Verde
- Background:
  - Growth recovered to 2.7 percent in 2014 from 1 percent in 2013.
  - Consumer prices: 0.2 percent deflation in 2014.
  - Current account deficit estimated widened to 7.5 percent of GDP in 2014 from 4.9 percent in 2013.
  - Reserves covering about 4.9 months of prospective imports.
  - Budget deficit high at 8 percent of GDP in 2014.
  - Public debt rose to 112 percent of GDP in 2014 from below 80 percent in 2011; more than three quarters of debt is external.
  - Has been an IDA blender since 2005.
  - Reliance on concessional official borrowing declined from 92 percent (2004–06) to 68 percent (2011–13).
- Assessment:
  - Staff proposes maintaining PRGT eligibility given serious short-term vulnerabilities; to be reassessed at next PRGT-eligibility review.
- Income Criterion:
  - Does not meet criterion. 2013 GNI per capita: US$3,620—just below three times the IDA operational cutoff.
- Market Access Criterion:
  - Meets criterion: borrowed from international market three years in a row for cumulative access of more than 1000 percent of quota over 2010–14.
- Serious Short-Term Vulnerabilities:
  - Assessed at moderate risk of external debt distress in 2014; total public debt expected to reach considerably higher levels over the medium term and subject to significant vulnerabilities.
  - Market access not viewed as sufficiently durable to support PRGT graduation.

### Republic of Congo
- Background:
  - Real GDP growth accelerated to 6.8 percent in 2014 from 3.3 percent in 2013.
  - Inflation moderated to 0.5 percent in 2014.
  - Current account deficit widened to 5.5 percent of GDP from 4.5 percent.
  - Overall fiscal deficit about 8½ percent of GDP in 2014.
  - Public debt estimated around 36 percent of GDP.
  - IDA blender with low risk of debt distress based on 2014 Article IV discussions.
  - Concessional official borrowing share declined from almost 100 percent (2004–06) to 68 percent (2011–13).
- Assessment:
  - Staff proposes maintaining PRGT eligibility given serious short-term vulnerabilities; to be reassessed at next PRGT-eligibility review.
- Income Criterion:
  - Meets criterion. GNI per capita of US$2,590 in 2013, 7 percent above the graduation threshold (US$2,430).
- Market Access Criterion:
  - Meets criterion. External borrowing through commercial markets amounted to 354 percent of IMF quota over 2010–14 through three issuances.
- Serious Short-Term Vulnerabilities:
  - Gross oil revenue averaged about 34 percent of GDP over 2011–13.
  - Oil production projected to peak in 2018 and fall gradually thereafter; non-oil exports may not fully replace oil exports.
  - International reserves about 40 percent of GDP at end 2014.
  - Staff projects GNI per capita under the Atlas Method to decline below the graduation threshold by 19 percent by end-2015 due to sharp decline in oil prices in late 2014.
  - Risk of falling below income threshold and losing market access assessed as significant; no graduation recommended.

### Côte d'Ivoire
- Background:
  - Real GDP estimated to have decelerated in 2014 to 7.9 percent from 8.7 percent in 2013.
  - Inflation moderated to 0.4 percent in 2014 from 2.6 percent.
  - Current account deficit estimated narrowed to 0.7 percent of GDP in 2014 from 1.4 percent in 2013.
  - Overall fiscal deficit around 2.3 percent of GDP.
  - Gross imputed official reserves modest at around 2.6 months of imports.
  - Public debt around 46.6 percent of GDP.
  - Remains an IDA-only country.
  - Reliance on concessional official borrowing dropped from 97 percent (2004–06) to 29 percent (2011–13).
- Assessment:
  - Staff proposes maintaining PRGT eligibility given serious short-term vulnerabilities; to be reassessed at next PRGT-eligibility review.
- Income Criterion:
  - Does not meet criterion. 2013 GNI per capita: US$1,450 (40 percent below relevant income threshold).
- Market Access Criterion:
  - Meets criterion. Tapped international markets three times over 2010–14, borrowing cumulatively 156 percent of quota in 2013.
  - Near-entirety of market access occurred in 2014.
- Serious Short-Term Vulnerabilities:
  - Recently emerged from political conflict and remains fragile.
  - Significant market access restored only in 2014; risk of loss of market access.
  - Not proposed for PRGT graduation given serious short-term vulnerabilities.

### Ghana
- Background:
  - Growth decelerated to 4.2 percent in 2014 from 7.3 percent in 2013.
  - Fiscal deficit 9.4 percent of GDP in 2014 (down from 10.4 percent in 2013).
  - Gross public debt reached 65 percent of GDP in 2014.
  - Current account deficit remained at 9 percent of GDP.
  - Double-digit inflation and rapid exchange rate depreciation observed.
  - Sovereign bond spreads widened; reduced subscription rates for Eurobond issuances in 2014.
  - One of the highest EMBIG sovereign spreads and yields among frontier markets.
  - IDA-only country.
  - Reliance on concessional official borrowing declined from 84 percent (2004–06) to 50 percent (2011–13).
- Assessment:
  - Staff proposes maintaining PRGT eligibility given serious short-term vulnerabilities; to be reassessed at next PRGT-eligibility review.
- Income Criterion:
  - Does not meet criterion. 2013 GNI per capita: US$1,770 (27 percent below graduation threshold).
- Market Access Criterion:
  - Meets criterion. Market access amounted to 665 percent of IMF quota during 2010–14, mainly reflecting Eurobond issuances.
- Serious Short-Term Vulnerabilities:
  - Elevated fiscal and external deficits have eroded buffers; classified as high risk of external debt distress.
  - Vulnerable to lower petroleum prices and regional spillovers from the ebola crisis.
  - At risk of losing market access; not recommended for PRGT graduation.

### Grenada
- Background:
  - GDP rose by 2.4 percent in 2013; growth estimated at 3 percent in 2014.
  - Consumer prices estimated to have fallen by 1 percent in 2014.
  - Budget deficit narrowed to 4.9 percent of GDP in 2014 from 7.3 percent in 2013.
  - Public debt elevated at 105 percent of GDP.
  - Current account deficit narrowed to 18 percent of GDP in 2014 from 23 percent in 2013.
  - IDA blender; reliance on concessional official borrowing increased from 55 percent (2004–06) to 93 percent (2011–13).
  - Undertaking comprehensive restructuring of public debt to reach ECCU regional public debt target.
- Assessment:
  - Staff proposes maintaining PRGT eligibility given serious short-term vulnerabilities; to be reassessed at next PRGT-eligibility review.
- Income Criterion:
  - Meets criterion. 2013 GNI per capita: US$7,490, about 3 percent above graduation threshold (US$7,290).
  - Income per capita has been over the IDA operational threshold for the last five years.
- Market Access Criterion:
  - Does not meet criterion. Did not access international markets during 2010–14.
- Serious Short-Term Vulnerabilities:
  - High risk of external debt distress and slim margin above income threshold; risk of GNI per capita falling below graduation threshold considered significant.

### Guyana
- Background:
  - Growth about 5 percent per year between 2010 and 2013; slowed to 3.7 percent in 2014.
  - Current account deficit of 12.8 percent of GDP in 2013, projected to widen though financed by ramping up FDI.
  - Fiscal deficit rose from about 4.4 percent of GDP in 2013 to an estimated 5.8 percent of GDP in 2014.
  - Economy reliant on six commodities representing nearly 60 percent of GDP.
  - International reserves near four months of imports.
  - IDA-only country, classified at moderate risk of debt distress.
  - Relies heavily on concessional official borrowing: about 93 percent of public external borrowing in 2011–13.
- Assessment:
  - Staff proposes maintaining PRGT eligibility given serious short-term vulnerabilities; to be reassessed at next PRGT-eligibility review.
- Income Criterion:
  - Meets criterion by a slim margin. 2013 GNI per capita: US$3,750, 3 percent above graduation threshold for small countries (US$3,645).
  - Income per capita above IDA operational threshold for last five years.
- Market Access Criterion:
  - Does not meet criterion. Has not borrowed in the international market in the last five years.
- Serious Short-Term Vulnerabilities:
  - Elevated vulnerabilities from reliance on commodity exports that could reverse income gains and push GNI per capita below threshold.

### Maldives
- Background (partial):
  - Growth accelerated to 6.1 percent in 2014 from 4.7 percent in 2013.
  - Inflation moderated from 4 percent to 2.4 percent.
  - Tourism arrivals slowed in the 2015 high season and growth may slow in 2015.
  - Overall fiscal deficit estimated to have widened sharply in 2014 to 11.6 percent from 7.8 percent in 2013.
  - Current account deficit estimated to have widened from 6.5 percent to [text truncated].

*Source: Annex II Table 2 and Annex III assessments as provided in the content unit.*

### 8.4 percent of GDP. The level of public debt is elevated at 75 percent of GDP. Maldives is an IDA-only

### 8.4 percent of GDP. The level of public debt is elevated at 75 percent of GDP. Maldives is an IDA-only

### Maldives — Background and Assessment
- Reliance on concessional official borrowing increased to 87 percent of total public external borrowing in 2011–13 from 40 percent in 2004–06.
- Public debt level: 75 percent of GDP.
- GNI per capita (2013): US$5,600, about 54 percent above its graduation threshold (three times the IDA operational threshold).
- Income per capita has been above the IDA operational threshold for the last five years.
- Market access: contracted commercial bank loans in international markets each year during 2009–13, with cumulative issuance equivalent to 527 percent of quota (above the 100 percent of quota threshold).
- Serious short-term vulnerabilities cited:
  - Elevated debt levels.
  - Risk of reduced tourist arrivals.
  - Overall debt distress assessed to be high despite recent improvement to moderate external debt distress risk.
  - Heavy reliance on ODA financing as an IDA-only non-gap recipient receiving assistance entirely on concessional terms, signaling possible serious vulnerabilities.
- Staff proposal: maintain Maldives’ PRGT eligibility given the presence of serious short-term vulnerabilities, notwithstanding income per capita being more than 50 percent above the relevant income threshold. Expectation of reassessment at the time of the next PRGT-eligibility review remains.

### Moldova — Background and Assessment
- Real GDP growth: around 9 percent in 2013; estimated to have slowed sharply to 2 percent in 2014.
- Inflation (2013): 4½ percent.
- Current account deficit (2013): 5½ percent of GDP.
- Fiscal deficit (2013): about 2 percent of GDP.
- GNI per capita (2013): US$2,470, 2 percent above the relevant graduation threshold (US$2,430).
- Income per capita has trended upward over the last decade and exceeded the IDA operational threshold for the last five years.
- Market access: did not meet criterion; most recent access to international markets in 2011 and 2012, cumulative borrowing equivalent to 12.8 percent of quota during 2010–14.
- Serious short-term vulnerabilities: vulnerabilities and governance problems in the banking system, protracted slowdown in key trading partners, intensification of geopolitical tensions.
- IDA status: IDA blender; low risk of debt distress.
- Staff proposal: maintain Moldova’s PRGT eligibility given serious short-term vulnerabilities, with reassessment at next PRGT-eligibility review.

### Mongolia — Background and Assessment
- Growth slowed to 7.8 percent in 2014 after double-digit annual growth over 2011–13.
- Inflation: around 11 percent.
- Fiscal deficit (including DBM activities) widened from 9 to 11 percent of GDP in 2014.
- Current account deficit: narrowed to 8.2 percent of GDP.
- Gross reserves declined from 6.5 months of imports in 2012 to around 2 months of imports as of March 2015.
- Estimated sub-soil mineral wealth: US$1- 3 trillion.
- IDA status: IDA blender since 2012.
- Reliance on concessional official borrowing declined from 94 percent in 2004–06 to 28 percent in 2011–13.
- Income criterion: GNI per capita (2013) US$3,770, 55 percent above the graduation threshold of US$2,430; above IDA operational threshold for at least the last five years.
- Market access: only one bond issuance over last five years, but the 2012 sovereign Eurobond issuance of US$1.5 billion was equivalent to almost 2000 percent of quota. DBM issuances under government guarantee: US$580 million in 2012 and US$500 million in 2015.
- Serious short-term vulnerabilities: domestic imbalances, downward commodity price pressures, worsening debt outlook to high risk of external debt distress.
- Staff assessment: GNI per capita is very high relative to other PRGT-eligible members and exceeds the proposed income threshold; projections show GNI per capita expected to remain significantly higher than the graduation threshold over the medium term. Staff proposes the graduation of Mongolia.

### Nigeria — Background and Assessment
- Real GDP growth: estimated 6.3 percent in 2014 (up from 5.4 percent in 2013), driven by the non-oil sector.
- Inflation: eased from 8.5 percent to 8.1 percent in 2014.
- Fiscal deficit (2014): around 2.5 percent of GDP.
- Current account surplus (2014): estimated 1.1 percent of GDP (down from 3.9 percent in 2013).
- Public debt (2014): 13.4 percent of GDP.
- International reserves: about six months of imports.
- Exchange rate: naira depreciated by over 17 percent in Q1 2015.
- Reliance on concessional official borrowing declined from 72 percent in 2004–06 to 66 percent in 2011–13.
- IDA status: IDA blender; low risk of debt distress.
- Income criterion: GNI per capita estimated at US$2,710 in 2013, about 12 percent above graduation threshold (US$2,430) after rebasing.
- Market access: does not meet criterion—only two issuances on international markets over 2010–14 with cumulative size 58 percent of quota. Non-resident holdings in domestic securities market estimated at around US$16.5 billion as of end-2013 (636 percent of quota).
- Serious short-term vulnerabilities: manageable given low public debt and sizable reserves; risks include protracted weak petroleum prices, limited non-oil export base, potential decline in petroleum exports, reduced market access if investor risk aversion increases, and regional growth slowdown.
- Staff projections: GNI per capita expected to remain above the graduation threshold over the medium term, reaching around 16 percent above the IDA graduation threshold by end-2015.
- Staff proposal: graduation of Nigeria.

### Vietnam — Background and Assessment
- Growth: around 6 percent of GDP in 2014 (up from 5.4 percent in 2013).
- Inflation: around 4 percent.
- Current account: surplus of around 5.4 percent of GDP.
- Reserves: around 2½ months of imports of goods and services.
- Public and publicly-guaranteed debt: estimated to have reached 55 percent of GDP by end-2014.
- Vulnerabilities: limited external buffers, long-standing structural weaknesses in the banking system, gradual pace of bank reform heightening vulnerability.
- IDA status: IDA blender since 2010; identified by the World Bank as potentially graduating from IDA eligibility by 2017.
- Reliance on concessional official borrowing declined from 74 percent in 2004–06 to 65 percent in 2011–13.
- Income criterion: GNI per capita (2013) US$1,740, 28 percent below the relevant graduation threshold.
- Market access: meets criterion—market access over 2010–14 amounted to 686 percent of IMF quota cumulatively through five issuances (threshold: 100 percent of quota and three issuances). Strong indicators across sovereign credit ratings, EMBIG spreads, and EMBIG yields.
- Serious short-term vulnerabilities: limited external buffers and banking system weaknesses, but market access durable and low risk of GNI per capita falling below IDA operational threshold; low risk of debt distress.
- Staff proposal: graduate Vietnam from PRGT eligibility.

*International Monetary Fund — Eligibility to Use the Fund’s Facilities for Concessional Financing (excerpts).*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2015/_062415.pdf_