IMF Staff Monitored Program (SMP)

October 4, 2022

When a country is not yet able to implement an IMF-supported program, the IMF can help the authorities build a track record of policy implementation through a Staff Monitored Program (SMP). An SMP is an informal agreement between national authorities and IMF staff to monitor the authorities’ economic program. They resemble other Fund-supported programs in form, but do not meet normal conditionality standards and are not endorsed by the IMF Executive Board. As of September 30, 2022, countries can request, under narrowly specified circumstances, Program Monitoring with Board involvement (PMB). In these cases, the Executive Board assesses the robustness of a member’s policies to meet the SMP’s stated objectives and to monitor program implementation.

What is an SMP?

SMPs are informal agreements between country national authorities and IMF staff to monitor the authorities’ economic program. As such, they do not entail endorsement by the IMF Executive Board with the exception, discussed below, of SMPs under the Heavily Indebted Poor Countries (HIPC) process. SMP staff reports are issued to the Board for information.

Purpose. SMPs are used in cases where a country is not yet able to implement a normal IMF-supported program, for reasons that may include limited institutional capacity, domestic fragility or instability, or absence of financing assurances. SMPs can help these member countries establish or reestablish a track record of policy implementation that can pave a way for an IMF financial arrangement or for the resumption of a financial arrangement that has gone off-track, and in some cases, for repeat use of emergency assistance.

SMPs are not for signaling purposes, and therefore are not used where the member does not intend to move to a financial arrangement or resume support under an off-track financial arrangement. SMPs are to help a member establish a policy implementation track record for an IMF financial arrangement or, as noted above, for repeated emergency assistance. That said, SMPs have also had a demonstrable catalytic financing effect from donors and creditors, especially in fragile and conflict-affected states (FCS), likely associated with improved macroeconomic stability and reform credibility as members progress towards an IMF financial arrangement.

Additional uses. In addition to the above objectives, SMPs can be used for additional purposes in the context of the HIPC Initiative. Specifically, they can be used to help highly indebted low-income countries reach the HIPC decision point; to that end, they require an assessment by the IMF Executive Board that the member’s policies under the SMP meet the policy standards associated with regular IMF lending programs and a six-month minimum of successful program implementation.

Duration. The duration of an SMP varies depending on a country’s past track record and the measures needed to establish an adequate record of policy implementation. SMP duration is expected for nine months, sufficient time for two reviews. Minimum duration is six months and is not expected to exceed 18 months. Repeated use of SMPs is permitted.

Formal features. Even though the strength of policies under an SMP fall short of what would be needed for IMF financial support, they should be consistent with the SMP’s goal of building a track record. SMPs closely resemble IMF-supported programs in form: they are based on a quantified macroeconomic framework (with medium-term projections for the main economic and financial variables) and include periodic quantitative and structural benchmarks on key policy targets.

Monitoring. Progress under an SMP is monitored by IMF staff on a quarterly or semi-annual basis, and periodically reported to the IMF Executive Board for information. Reporting typically occurs in the context of the IMF’s regular surveillance of a country’s economic and financial policies, also known as Article IV Consultations.

Program Monitoring with Board Involvement (PMB)

The policy for SMPs was amended by the Executive Board on September 30, 2022 to allow for Program Monitoring with Board involvement (PMB). The Executive Board’s role in a PMB is limited to assessing the robustness of the member’s economic policies to meet the program’s objectives and monitor program implementation. The PMB is intended to help countries considering a Staff Monitored Program establish a policy track record for a Fund-supported program. Countries that are the subject of an ongoing concerted international effort by creditors or donors to provide substantial new financing or debt relief or have significant outstanding Fund credit under emergency financing instruments could benefit. The PMB will be reviewed before the end of September 2023.