Review of the Policy on Debt Limits in Fund-Supported Programs

Policy Papers, March 1, 2013

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Review of the Policy on Debt Limits in Fund-Supported Programs

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Bibliographic details

• Published: March 1, 2013
• Series: Policy Papers

Overview

• This review examines the experience with the policy on debt limits in Fund-supported programs across the membership and proposes possible reforms to strengthen the policy.
• The policy was last reformed in 2009 with a view to adapting it to the changing circumstances in low-income countries (LICs).
• Given its primary focus on LICs, the 2009 reform left the policy applying to the rest of the membership broadly unchanged.
• Publication date: March 1, 2013.
• Format: Chicago. Citation provided in source: Review of the Policy on Debt Limits in Fund-Supported Programs, (USA: International Monetary Fund, 0) accessed 9/16/2026.

Historical background

• The Fund’s debt limits policy has been in place since the 1960s.
• From the policy’s inception, concessional flows have been excluded from debt limits under the presumption that such financing was critical for LICs and posed only limited risks to debt sustainability.
• Over time, the exclusion of concessional flows has led to a bifurcation in the policy, with one branch focusing on members to whom concessional financing is normally available, and the other on those to whom it is not.
• In practical terms, that distinction has involved differentiating between LICs and non-LICs.

Key findings and analysis

• Exclusion of concessional flows:
  • Concessional financing has been treated as outside debt limits since the policy’s inception.
  • The presumption: concessional financing is critical for LICs and poses only limited risks to debt sustainability.
• Policy bifurcation:
  • The exclusion has produced a bifurcated policy framework with distinct treatment for members that typically receive concessional financing versus those that do not.
  • The practical manifestation of this bifurcation is a differentiation between LICs and non-LICs.
• Reform focus:
  • The 2009 reform adapted the policy mainly to the changing circumstances in LICs while leaving policy for the remainder of members broadly unchanged.
• Purpose of the review:
  • To examine experience across the membership with the existing debt limits policy.
  • To propose possible reforms to strengthen the policy.

Subjects covered

• Developed countries
• External debt
• Fund policies
• Fund-supported adjustment programs
• Low-income developing countries

Access and publication context

• The IMF eLibrary offers over 25,000 IMF publications in multiple formats (as noted on the source page).
• The source page includes a downloadable PDF link and sharing options (as presented on the landing page).

Source: Review of the Policy on Debt Limits in Fund-Supported Programs (March 1, 2013).

Content in this bundle

• Review of the Policy on debt Limits in Fund-Supported Programs; IMF Policy Paper; March 1, 2013
  • Review of the Policy on debt Limits in Fund-Supported Programs; IMF Policy Paper; March 1, 2013 (Markdown version)
  • Review of the Policy on debt Limits in Fund-Supported Programs; IMF Policy Paper; March 1, 2013 (PDF)