The Policy Coordination Instrument (PCI)

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Purpose

The PCI is a type of IMF-supported program designed to assist countries in formulating and implementing a macroeconomic policy program to: 

• Prevent crises and build buffers against external shocks
• Enhance macroeconomic stability
• Address macroeconomic imbalances

The PCI signals a commitment to an economic reform agenda, facilitating access to financing from official creditors or private investors. It requires approval by the IMF’s Executive Board, unlike the Staff Monitored Program which is only an informal agreement between an IMF member country and IMF staff to monitor the member country’s economic program.

Eligibility

All IMF member countries that do not require IMF financing to cover present or prospective balance of payments needs at the time of PCI approval and do not have overdue financial obligations to the IMF.

Conditionality

Policies must meet the same standard as those under a financing IMF program.

Review
modalities

Reviews take place on a fixed schedule, normally every six months, to provide regular feedback on program performance.

Delays in the completion of reviews are possible for a three-month period to allow the authorities to implement overdue policies, take corrective actions, or mobilize necessary financing to close any financing gaps. If a review is delayed beyond the three-month buffer period, it can no longer be completed and staff would provide an interim performance update to the IMF's Executive Board for information.

Non-completion of a review for a 12-month period results in an automatic termination of the instrument.

The PCI has a review-based approach to monitoring program targets, which eliminates the need to request waivers for missed targets.

Use with financial instruments

An on-track PCI facilitates quick access to IMF resources should the member experience a balance-of-payments need, subject to normal policies on the use of IMF resources. A PCI can be used concurrently with emergency financing under the RFI or RCF or with a financial arrangement under the SBA, SCF or RSF. Concurrent use with ECF or EFF is not possible.

Terms

2-3 years, but can be approved for a minimum of six months and up to four years. No limit on the number of successor PCIs.

The PCI is a form of IMF technical assistance. Only advanced economies are required to pay for the associated administrative costs.