Policy Papers
2022
May 17, 2022
Statement by the Managing Director on the Independent Evaluation Office Report on IMF Engagement with Small Developing States: Executive Board Meeting May 6, 2022
Description: The report and its recommendations should also be careful to not impinge upon areas that are still unfolding, such as the RST, crisis response, and CD provision, to avoid unnecessary duplication of efforts and ensure that a coherent and evenhanded framework is in place. I offer qualified and/or partial support to the recommendations, as discussed below, to serve better our SDS members.
Notes:
IMF Engagement with Small Developing States: Evaluation Report 2022
May 16, 2022
Review of the Method of Valuation of the SDR
Description: This paper provides the basis for the quinquennial review by the Executive Board of the method of valuation of the Special Drawing Right (SDR). The review covers the composition and weighting of the SDR currency basket, and the financial instruments used to determine the SDR interest rate. In the five-year period for this review (2017‒21), developments in key variables relevant for the SDR valuation suggest that there have been no major changes in the roles of currencies in the world economy. The countries and the currency union (euro area) whose currencies are currently included in the SDR basket remain the five largest exporters and their currencies continue to account for the majority of international financial transactions. Moreover, staff analysis finds that the COVID-19 pandemic and recent fintech developments have no systematic or material impact on the SDR valuation. The paper proposes to maintain the current composition of the SDR currency and interest rate baskets, as well as the method for determining the currency weights and currency amounts in the basket. In line with the Board-approved methodology, the paper proposes updated weights for the currencies in the SDR basket. These maintain the same ranking of the initial weights set in the 2015 review, with slightly higher weights for the U.S. dollar and the Chinese renminbi and, accordingly, somewhat lower weights for the British pound, the euro, and the Japanese yen. The paper also proposes to make explicit the treatment of data gaps in the SDR valuation framework. Findings from a survey of SDR department participants and prescribed holders are used to follow up on operational issues raised in earlier valuation reviews. The new SDR valuation and interest rate baskets are proposed to come into effect on August 1, 2022 for a period of five years.
April 26, 2022
Staff Operational Guidance on The Dissemination of Capacity Development Information
Description: The Staff Operational Guidance on Dissemination of Capacity Development Information sets forth procedures on the dissemination of capacity development information, based on the objectives of wider, more active, and timelier sharing of information while safeguarding the Fund’s candor and role as trusted advisor. The guidance draws from internal consultations and Executive Directors’ views on the Updated Framework on the Dissemination of Capacity Development Information.
Notes:
Factsheet
April 26, 2022
Making Debt Work For Development and Macroeconomic Stability
Description: The coronavirus crisis has stiffened debt and development-related headwinds that had become strong even before 2020. Sustaining development while maintaining debt sustainability has been made harder by the protracted effects of the pandemic on public finances, earnings and employment, and human capital accumulation of vulnerable populations. The fiscal support programs financed by public debt provided relief and saved lives and livelihoods. But debt-induced uncertainty can now dampen investment and growth, especially given rising global interest rates. Bigger debt servicing burdens will reduce available fiscal space for development and stabilization and growing sovereign debt financing needs can crowd out domestic investment. Over-indebtedness can adversely affect economic development through many channels—"debt overhang,” “fiscal space,” “crowding out” and increased crisis risk —making countries vulnerable to abrupt changes in market sentiment, jeopardizing both stability and growth.
April 24, 2022
Development Committee: The Managing Director's Written Statement April 2022
Description: The war in Ukraine risks derailing the global economic recovery at a time when many countries have yet to overcome the consequences of the Covid-19 pandemic. Disruptions have already a severe impact on commodity markets, trade, and financial conditions, while inflation has become a major challenge in many countries and is adding to social pressures. The combination of shocks amplifies complex policy trade-offs that require astute macroeconomic management, for Emerging Market and Developing Economies (EMDEs), this includes preparing for higher interest rates that would translate into costlier terms of borrowing. Fuel and food price increases as well as food insecurity affect vulnerable populations the most, especially in low-income developing countries (LIDCs). Moreover, many LIDCs have only minimal or no policy space to absorb the war’s economic and financial spillovers. Reallocating spending and raising more revenues is paramount, as is advancing reforms that promote resilience. However, LIDCs also need support from the international community to finance priority expenditures and deal with often elevated debt burdens. Multilateral cooperation is more important than ever, and the IMF stands ready to help its members through policy advice, capacity development, and, where needed, financial support.
April 21, 2022
2022 Review of Adequacy of Poverty Reduction and Growth Trust Finances
Description: This paper provides the first review of the adequacy of PRGT finances since the comprehensive reform of the Poverty Reduction and Growth Trust (PRGT) in July 2021. It describes the lending response to the unprecedented pandemic-related demand; updates the PRGT demand scenarios and the estimates of the longer-term PRGT resource needs; reports on progress with the first stage of the two-stage PRGT funding strategy approved in July 2021; and outlines recent developments in the various debt relief initiatives and their status.
April 20, 2022
The Managing Director’s Global Policy Agenda, Spring Meetings 2022: The Global Economy Under Stress: Repercussions, Response, and Resilience
Description: The global policy agenda that follows recalibrates priorities to meet the new reality we are facing. The IMF also continues to adjust to respond to the rapidly evolving needs of our membership. Our flexibility has been evident over the past two years of the COVID crisis: unprecedented emergency financing; a historic Special Drawing Rights (SDR) allocation; an innovative plan to end the pandemic. Now, as we face another crisis on top of a crisis, we will continue to step up and support our member countries in every way we can—with financial resources, policy advice, and capacity development—working in collaboration with our international partners.
April 19, 2022
Progress Report to The IMFC on The Activities of The Independent Evaluation Office of The IMF
Description: Since the 2021 Annual Meetings, the IEO has made considerable progress with three ongoing evaluations, while two management implementation plans (MIPs) to follow up on recommendations from previous evaluations have been approved by the Board. In addition, to mark its twentieth birthday, the IEO organized a virtual conference to reflect on experience from its second decade and consider future challenges. We have also contributed to the ongoing work on institutional integrity at the IMF, drawing on a stocktaking of material contained in past evaluations and are considering additional work on these issues as we select two new evaluation topics later this year.
April 18, 2022
Proposal To Establish A Resilience and Sustainability Trust
Description: The challenges from the pandemic, spillovers from geopolitical shocks, and long-standing structural problems pose an enormous impediment for balance of payments stability and resilient and sustainable growth, especially for low-income and vulnerable middle-income countries. The $650 billion SDR allocation in August 2021 has helped support economic stability by supplementing members’ reserves. There is scope to amplify the effect of these SDRs by channeling them from countries with strong external positions to countries where the needs are the greatest.
March 30, 2022
Review of The Institutional View on The Liberalization and Management of Capital Flows — Background Note on Capital Flows and Capital Flow Management Measures — Benefits and Costs
Description: The Fund’s Institutional View (IV) recognizes the benefits of and risks associated with capital flows. Since the IV was adopted, a growing literature has provided additional insights into the benefits and risks from capital flows. This note summarizes the insights from the recent literature and the experiences of staff since the adoption of the IV that have informed this review.