Policy Papers
2024
July 17, 2024
Targeted Modification Of Streamlined Procedures For Approval Of Successor Flexible Credit Line And Precautionary And Liquidity Line Arrangements
Description: The 2023 Review of the Flexible Credit Line (FCL), the Short-Term Liquidity Line (SLL), and the Precautionary and Liquidity Line (PLL) introduced a welcome streamlining of procedures. This included dropping the requirement for an informal consultation with the Executive Board for the approval of successor FCL and PLL arrangements when certain requirements were met. In implementing the new procedures, however, staff observed that, inadvertently, one requirement is at odds with the well-established practice for consecutive FCL and PLL arrangements. It is normal practice to cancel an existing arrangement shortly before expiration, while simultaneously requesting a successor arrangement to ensure seamless back-to-back arrangements. But an unintended consequence of the drafting of the new procedures is that an informal consultation with the Executive Board can be waived only when an arrangement expires—not if it were to be canceled shortly before expiration to ensure seamless back-to-back arrangements—even if all the other requirements for dropping such consultation are satisfied. This unduly constrains the reform and is at odds with the intention presented in the 2023 Review. To rectify the issue, staff proposes the adoption of a decision with a targeted modification of the FCL and PLL decisions.
June 27, 2024
2022-2023 Diversity & Inclusion Report
Description: This paper provides an update on progress towards the Fund’s FY 2025 Diversity Benchmarks, as of the end of FY 2023. The paper also includes information on action the Fund is taking to promote greater diversity and inclusion through a two-year roadmap of initiatives primarily focused on recruitment, talent development, equity and inclusion and promoting greater leadership accountability and transparency. The paper also covers plans to convene a cross-functional working group to establish the Diversity Benchmarks targets for FY 2030.
June 24, 2024
Interim Review of The Resilience and Sustainability Trust and Review of Adequacy of Resources
Description: The Resilience and Sustainability Trust (RST) provides affordable longer-term financing to help eligible IMF members address longer-term structural challenges, thereby progressing toward strengthening their prospective balance of payments stability. This paper takes stock of the initial experience with the RST—focusing on progress and challenges so far—and proposes fine-tuning RST design with a view to strengthening implementation of the Trust’s objectives. The paper also provides an assessment of the adequacy of the Trust’s resources and finds that increased near-term fundraising will be needed to meet strong demand. The Trust’s reserves remain adequate in the baseline and under a range of risk scenarios.
June 18, 2024
Statement by the Managing Director on the Independent Evaluation Office Report on the Evolving Application of the IMF’s Mandate: Executive Board Meeting, June 10, 2024
Description: This evaluation assesses the decision-making processes that guided the evolution of the application of the Fund's mandate, the criteria and principles used to operationalize engagement in newer policy areas, and the coherence of the Fund’s framework for engaging with partners. It finds that the systematic widening of the Fund’s areas of work is posing adaptation challenges, necessitating trade-offs, and overburdening staff within a context of budgetary and expertise constraints. The evaluation offers a framework for approaching these challenges that is centered on a trilemma that exposes the tension between the steady expansion of the Fund’s scope of work, its limited resources, and the need to maintain the high quality and value-added of its policy advice. It identifies several problems within this framework, including the ad hoc decision-making process for engaging in newer policy areas, which lacks a longer-term strategic anchor. Furthermore, decisions on policies, resources, and risks were taken in a piecemeal manner, without due consideration for crossed effects. It also identifies several open questions regarding the depth and frequency of the Fund’s engagement in newer policy areas and the lack of an institutional approach to Fund partnerships. The evaluation proposes classifying newer policy areas across a spectrum of recommended engagement, ranging from signaling their macrocriticality while leaving deeper assessments to other institutions, to in-depth high-frequency engagement. It also offers four main recommendations: (i) developing an inclusive Fund-wide institutional strategy for engagement in newer policy areas that better links decisions related to scope, resources, and risks; (ii) producing budget data that enables the tracking of Fund activities and operations by policy area; (iii) updating the 2022 Guidance Note for Surveillance to enhance the clarity of principles for engagement; and (iv) adopting a Board-approved high-level Statement of Principles for engagement with partners.
Notes:
The Chair’s Summing Up Independent Evaluation Office—The Evolving Application of the IMF’s Mandate: Executive Board Meeting June 10, 2024
The Evolving Application of the IMF's Mandate
June 18, 2024
The Chair’s Summing Up Independent Evaluation Office—The Evolving Application of the IMF’s Mandate: Executive Board Meeting June 10, 2024
Description: This evaluation assesses the decision-making processes that guided the evolution of the application of the Fund's mandate, the criteria and principles used to operationalize engagement in newer policy areas, and the coherence of the Fund’s framework for engaging with partners. It finds that the systematic widening of the Fund’s areas of work is posing adaptation challenges, necessitating trade-offs, and overburdening staff within a context of budgetary and expertise constraints. The evaluation offers a framework for approaching these challenges that is centered on a trilemma that exposes the tension between the steady expansion of the Fund’s scope of work, its limited resources, and the need to maintain the high quality and value-added of its policy advice. It identifies several problems within this framework, including the ad hoc decision-making process for engaging in newer policy areas, which lacks a longer-term strategic anchor. Furthermore, decisions on policies, resources, and risks were taken in a piecemeal manner, without due consideration for crossed effects. It also identifies several open questions regarding the depth and frequency of the Fund’s engagement in newer policy areas and the lack of an institutional approach to Fund partnerships. The evaluation proposes classifying newer policy areas across a spectrum of recommended engagement, ranging from signaling their macrocriticality while leaving deeper assessments to other institutions, to in-depth high-frequency engagement. It also offers four main recommendations: (i) developing an inclusive Fund-wide institutional strategy for engagement in newer policy areas that better links decisions related to scope, resources, and risks; (ii) producing budget data that enables the tracking of Fund activities and operations by policy area; (iii) updating the 2022 Guidance Note for Surveillance to enhance the clarity of principles for engagement; and (iv) adopting a Board-approved high-level Statement of Principles for engagement with partners.
Notes:
Statement by the Managing Director on the Independent Evaluation Office Report on the Evolving Application of the IMF’s Mandate: Executive Board Meeting June 10, 2024
The Evolving Application of the IMF's Mandate
May 29, 2024
Poverty Reduction and Growth Trust: 2024 Borrowing Agreements with Belgium, Denmark, France, Japan, Korea, And Qatar
Description: This paper presents the last six borrowing agreements that were concluded between October 2023 and February 2024 to provide new loan resources to the Poverty Reduction and Growth Trust (PRGT) as part of the loan mobilization round launched in July 2021 to support low-income countries (LICs) during the pandemic and beyond. Five of the six agreements use SDRs in the context of SDR channeling. Together these borrowing agreements provide a total amount of SDR 3.9 billion in new PRGT loan resources. The 2021 loan fundraising campaign was concluded successfully. It mobilized total contributions of SDR 14.65 billion from 17 PRGT lenders, well exceeding the SDR 12.6 billion loan target.
May 29, 2024
Gender Diversity in The Executive Board: 2024 Report to The Board Of Governors
Description: The benefits of gender diversity are well known – it increases effectiveness and efficiency and strengthens decision-making. Yet, the IMF Executive Board continues to fall short of reaching gender balance, with women constituting a small minority of the Executive Directors and Alternate Executive Directors. There is a clear need for change. The IMFC has called on the membership to take action, including by introducing voluntary medium-term objectives to raise the number of women holding leadership positions at the Board. This report summarizes the Executive Board’s recommendations for these targets and lays out proposals for concerted actions that can be taken by individual countries and constituencies
May 17, 2024
Development Committee: The Managing Director's Written Statement April 2024
Description: The global economy has been resilient and appears headed for a soft landing. Inflation continues to recede and risks have become more balanced globally. Nonetheless, medium-term growth prospects remain at the lowest level in decades and a smooth completion of the disinflation process should not be taken for granted. While the outlook for low-income developing countries (LIDCs) is improving, risks are tilted to the downside. The pace of convergence toward higher living standards has slowed, making it increasingly challenging to achieve the Sustainable Development Goals (SDGs). In the last mile of disinflation, central banks should ensure that inflation moves durably to target: they should neither ease policies prematurely nor delay too long and risk causing target undershoot. Fiscal policies need to rebuild budgetary room and ensure debt sustainability. Fostering faster productivity growth and facilitating the green transition are keys to improving long-term growth prospects. Multilateral cooperation is key to enhancing the resilience of the global economy in a more shock-prone world.
May 15, 2024
Use of SDRs in the Acquisition of Hybrid Capital Instruments of the Prescribed Holders
Description: On May 10, 2024, the IMF’s Executive Board approved the use of Special Drawing Rights (SDRs) for the acquisition of hybrid capital instruments issued by prescribed holders. This new use of SDRs, which adds to seven already authorized prescribed SDR operations, is subject to a cumulative limit of SDR 15 billion to minimize liquidity risks. The Executive Board also established a strong expectation that contributors channeling SDRs to prescribed holders under such capital contributions have Voluntary Trading Arrangements (VTAs) in place to ensure sufficient liquidity and equitable distribution of potential SDR exchanges into currencies. A review of the proposed use is expected to be conducted when cumulative hybrid capital contributions surpass SDR 10 billion or two years after the authorization, whichever comes first.
May 10, 2024
FY2025–FY2027 Medium-Term Budget
Description: The Executive Board of the International Monetary Fund approved the 2025-27 financial years (FY25-27) medium-term budget. While the global economy has shown resilience to successive adverse shocks, the overall global economic context remains complex with slow and uneven growth, increased fragmentation, deepening divergence, and still high interest rates despite easing inflationary pressures. Against this backdrop, the FY25-27 budget continues to be guided by principles of agility and budget discipline, reinforced by ongoing reprioritization and savings capture. It also builds on strong cooperation with other institutions, ensuring the Fund continues to focus on areas within its mandate, even as it addresses new demands. Work to strengthen internal operations also continue, focusing on both efficiency and effectiveness in meeting changing needs in the post-pandemic workplace, where rapid technological changes are underway. With significant demands within a constrained budget environment, the budget reflects difficult tradeoffs.