The IMF has acted with unprecedented speed and scale to support low-income countries during the pandemic. The Fund provided financial support to 53 of 69 eligible low-income countries in 2020 and in the first half of 2021, with about US$14 billion disbursed as zero percent interest rate loans from the Poverty Reduction and Growth Trust.
Most of this support was through the Fund’s emergency financing instruments—the Rapid Credit Facility (RCF) and Rapid Financing Instrument (RFI)—which provide immediate, one-time disbursements to countries facing urgent balance of payments needs. The Fund was able to respond to a record number of requests for financial assistance through a series of temporary access limit increases to the RCF and RFI, and temporary increases in the Poverty Reduction and Growth Trust (PRGT) overall access limits.
Support for developing countries should focus on grants and highly concessional loans for the poorest and fragile countries and helping the more advanced crowd in foreign investment and private finance
Combining overhauls in areas including business and external regulation, governance, and human development can boost output levels by 3 percent over four years.
Banking systems are largely insulated from inflation, but vulnerabilities at some banks could lead to tradeoffs between containing inflation and protecting financial stability
New accession candidates will need to undertake equally ambitious reforms to make the next expansion a comparable success
To employ a growing population, the region needs to transform informal jobs, reduce barriers to business growth, and create conditions conductive to jobs growth in higher productivity sectors—especially in fragile and low-income countries
Easing the burden on lower-income households is not only socially fair, but also economically efficient
On November 15, 2024, the IMF’s Executive Board concluded the Review of the IMF’s Transparency Policy and Open Archives Policy and approved a number of reforms. As an international institution, making important documents available to the public on timely basis enhances the IMF’s credibility, accountability, and effectiveness and is critical to fulfill its mandate of promoting global economic and financial stability. While transparency at the IMF is achieved through a range of policies and practices, the Transparency Policy and the Open Archives Policy form the core elements of the IMF’s transparency framework. The Fund has come a long way since the inception of these policies in the early nineties. Most Board documents are now published, published more quickly, and under more consistent and evenhanded application of modification rules. The information available in the Fund’s archives has increased and is more easily accessible to the public. While experience suggests that these policies are effective in delivering on their objectives, the landscape in which the Fund operates has evolved since these policies were last reviewed in 2013. In a more interconnected and shock-prone world the pace with which policymakers need to make decisions has accelerated and the expectations of stakeholders on the availability and timeliness of the Fund’s analysis and policy advice has grown. Against this backdrop, the 2024 Review of the IMF’s Transparency Policy and Open Archives Policy focuses on targeted reforms to (i) support faster publication of board documents and communications of Board’s decisions; (ii) strengthen the rules and processes to modify Board documents prior to publication; and (iii) allow faster release of some documents in the Fund’s archives accessible to the public. The reforms further clarify the scope and objectives of these policies, their implementation processes, and how to strengthen knowledge sharing. The review was supported by data analysis as well as surveys and consultations with key stakeholders, including Executive Directors, country authorities, IMF missions chiefs, and civil society organizations as detailed in the three background papers accompanying this 2024 review.
This paper reports on the Fund’s income position for FY 2024 following the closing of the Fund’s accounts for the financial year and completion of the external audit. Overall net income of the General Department was SDR 4.7 billion, about SDR 0.2 billion higher than estimated in April, mainly reflecting an increase in the remeasurement gain reported under IAS 19 (the accounting standard for employee benefits). GRA net income in FY 2024 increases the Fund’s reserves and, in accordance with decisions taken by the Executive Board in April 2024, a net transfer of currencies of SDR 3.3 billion will be made from the GRA to the Investment Account during FY 2025. The Fund’s precautionary balances, following the placement of net income to the Fund’s reserves and the pension-related adjustments for the year, reached SDR 25.1 billion at the end of FY 2024, in line with the April projection.
This paper reviews Poverty Reduction and Growth Trust (PRGT) facilities and financing. It proposes a comprehensive package of lending policy reforms and financing measures that aims to bolster the Fund’s capacity to support Low-Income Countries (LICs) in addressing their balance of payment needs, while restoring the self-sustainability of the Trust. The Review proposes a long-term self-sustained annual PRGT lending envelope of SDR 2.7 billion, more than double the PRGT envelope before the Covid-19 pandemic, consistent with the expected demand for Fund’s concessional financial support in the years ahead. The paper also proposes to introduce a new interest rate mechanism to better reflect the heterogeneity among LICs and focus further concessional resources to the poorest countries. These countries (currently 31 LICs) will continue to benefit from an interest-free lending under the PRGT, while other LICs will be charged a modest, and still concessional, interest rate. Additionally, the paper proposes to keep PRGT access limits at their current levels and to implement several reforms, including: reverting the PRGT access norm to the level prevailing before December 2023, streamlining and strengthening the PRGT safeguards, adjusting the PRGT eligibility and graduation framework and updating the list of PRGT-eligible countries, extending the temporarily higher cumulative access limits under the RCF until the end of December 2025, and implementing a targeted adjustment to the Policy Safeguards for High Combined Credit Exposure. On financing measures, the paper proposes to address the remaining gap in PRGT subsidy resources after accounting for the lending policy changes through (1) a further five-year suspension of PRGT administrative expenses reimbursement to the GRA and (2) a framework to deploy IMF internal resources to facilitate the generation of PRGT subsidy resources.
On October 11, 2024, the IMF’s Executive Board concluded the Review of Charges and the Surcharge Policy. The review is part of a broader ongoing effort to ensure that the IMF’s lending policies remain fit for purpose to meet the evolving needs of the membership. Charges and surcharges are important elements of the IMF’s cooperative lending and risk-management framework, where all members contribute and all can benefit from support when needed. Together, they cover lending intermediation expenses, help accumulate reserves to protect against financial risks, and provide incentives for prudent and temporary borrowing. This provides a strong financial foundation that allows the IMF to extend vital balance of payments support on affordable terms to member countries when they need it most.
Against the backdrop of a challenging economic environment and high global interest rates, the Executive Board reached consensus on a comprehensive package of reforms that substantially reduces the cost of borrowing for members while safeguarding the IMF's financial capacity to support countries in need. The approved measures will lower IMF borrowing costs by about US$1.2 billion annually or reduce payments on the margin of the rate of charge as well as surcharges on average by 36 percent. The number of countries subject to surcharges in fiscal year 2026 is expected to fall from 20 to 13.
Key reforms include a reduction in the margin for the rate of charge, an increase in the threshold for level-based surcharges, a reduction in rate for time-based surcharges, an alignment of thresholds for commitment fees with annual and cumulative access limits for GRA lending facilities, and institution of regular reviews of surcharges.
The series of three papers informed the Executive Board’s first and second informal engagements (July and September 2024) and the formal meeting (October 2024) on this review.
On October 11, 2024, the IMF’s Executive Board concluded the Review of Charges and the Surcharge Policy. The review is part of a broader ongoing effort to ensure that the IMF’s lending policies remain fit for purpose to meet the evolving needs of the membership. Charges and surcharges are important elements of the IMF’s cooperative lending and risk-management framework, where all members contribute and all can benefit from support when needed. Together, they cover lending intermediation expenses, help accumulate reserves to protect against financial risks, and provide incentives for prudent and temporary borrowing. This provides a strong financial foundation that allows the IMF to extend vital balance of payments support on affordable terms to member countries when they need it most.
Against the backdrop of a challenging economic environment and high global interest rates, the Executive Board reached consensus on a comprehensive package of reforms that substantially reduces the cost of borrowing for members while safeguarding the IMF's financial capacity to support countries in need. The approved measures will lower IMF borrowing costs by about US$1.2 billion annually or reduce payments on the margin of the rate of charge as well as surcharges on average by 36 percent. The number of countries subject to surcharges in fiscal year 2026 is expected to fall from 20 to 13.
Key reforms include a reduction in the margin for the rate of charge, an increase in the threshold for level-based surcharges, a reduction in rate for time-based surcharges, an alignment of thresholds for commitment fees with annual and cumulative access limits for GRA lending facilities, and institution of regular reviews of surcharges.
The series of three papers informed the Executive Board’s first and second informal engagements (July and September 2024) and the formal meeting (October 2024) on this review.
On October 11, 2024, the IMF’s Executive Board concluded the Review of Charges and the Surcharge Policy. The review is part of a broader ongoing effort to ensure that the IMF’s lending policies remain fit for purpose to meet the evolving needs of the membership. Charges and surcharges are important elements of the IMF’s cooperative lending and risk-management framework, where all members contribute and all can benefit from support when needed. Together, they cover lending intermediation expenses, help accumulate reserves to protect against financial risks, and provide incentives for prudent and temporary borrowing. This provides a strong financial foundation that allows the IMF to extend vital balance of payments support on affordable terms to member countries when they need it most.
Against the backdrop of a challenging economic environment and high global interest rates, the Executive Board reached consensus on a comprehensive package of reforms that substantially reduces the cost of borrowing for members while safeguarding the IMF's financial capacity to support countries in need. The approved measures will lower IMF borrowing costs by about US$1.2 billion annually or reduce payments on the margin of the rate of charge as well as surcharges on average by 36 percent. The number of countries subject to surcharges in fiscal year 2026 is expected to fall from 20 to 13.
Key reforms include a reduction in the margin for the rate of charge, an increase in the threshold for level-based surcharges, a reduction in rate for time-based surcharges, an alignment of thresholds for commitment fees with annual and cumulative access limits for GRA lending facilities, and institution of regular reviews of surcharges.
The series of three papers informed the Executive Board’s first and second informal engagements (July and September 2024) and the formal meeting (October 2024) on this review.
The total fertility rate—the average number of births per woman—in Europe is already at 1.46, which is significantly below the replacement rate of 2.1, where fertility compensates for mortality and thereby the population replaces itself from one generation to the next. Falling fertility rates will have far-reaching social and economic consequences, and therefore it is a critical empirical exercise to estimate the impact of below-replacement fertility on income growth and test quantitatively for the existence of mitigating factors that could inform appropriate policy responses. In this paper, I address the endogeneity bias caused by reverse causality by implementing an instrumental variable approach and use exogenous variation in the comparative abortion index as an instrument for the total fertility rate. These results show that fertility has a significant positive effect on real GDP per capita growth in a sample of 42 European countries over the period 1960–2022. This means that the downward fertility transition across Europe, accompanied by fast-aging population, is a significant drag on income per capita growth.
EU enlargement has stalled since the last member joined over ten years ago, marking the longest period without expansion since 1973. This elapsed time contrasts with the potential income gains membership promises. Drawing on the biggest EU enlargement in 2004 and employing a synthetic difference-in-difference estimator on regional data, we estimate that EU membership has increased per capita incomes by more than 30 percent. Capital accumulation and higher productivity contributed broadly equally, while employment effects were small. Gains were initially driven by the industrial sector and later by services. Despite substantial regional heterogeneity in gains—larger for those with better financial access and stronger integration in value chains prior to accession—all regions that joined the EU benefited. Moreover, existing members benefited too, with average income per capita around 10 percent higher. The estimated gains suggest that deep integration carries significant additional economic benefits beyond simple trade unions, providing valuable lessons for future EU enlargement and regional integration efforts elsewhere.
Per capita growth of the Mexican economy has lagged behind G20 peers in past decades with notable disparities between the north and south. In this paper, we build on the income convergence literature by examining the impact of domestic market integration on regional growth. To this end, we incorporate insights from the Law of One Price and construct a novel measure of the strength of domestic market integration from micro-level price data. We find that domestic market integration is strongly associated with regional growth and its spillovers, along with other structural factors such as human capital and infrastructure. Our result also indicates that neighboring states’ income level and their integration into the national economy is positively correlated with a state’s growth, suggesting cross-state spillover effects and regional clustering.
Industrial policy has gained popularity in recent years and across all regions and income levels. Consequently, it is increasingly important to understand how governments choose the sectors they target. This analysis explores the role of domestic production networks in sector targeting, while controlling for other sector and global value chain characteristics. Combining datasets on industrial policy (Global Trade Alert) and input-output linkages (ICIO, OECD) provides novel insight into the network features of industrial policy. In particular, a sector’s ‘centrality’—i.e., its degree of connectedness - within the domestic production network is an important and significant predictor of sector intervention. The results indicate that industrial policy is used differently across regions, income groups, time periods, and types of policy tools. Notably, emerging economies tend to target more central sectors, while advanced economies target less central ones, on average. However, there has been a global shift toward more central sectors over time. Lastly, subsidies are deployed on more central sectors, while tariffs are used on less central ones.
The U.S. economy has been exceeding expectations amid one of the most aggressive monetary policy tightening cycles. This paper provides firm-level evidence showing that abundant cash holdings enable firms to benefit from higher interest rates, thereby reducing net interest payments and mitigate the adverse impact from interest rate hikes to firms' investment and employment.
Previous research suggests that economy-wide poverty traps are rarely observed in the data. In this paper, we explore a related hypothesis: low-income countries rarely improve their position relative to the US. Using finite state Markov chains, we show that upwards mobility is indeed limited. Since capital-output ratios are similar across countries, and human capital is also converging, the persistence of low relative income seems to originate in the persistence of low relative TFP. We study the dynamics of relative TFP and how they interact with absolute levels of human capital, casting new light on the future of convergence.
A conversation on how sub-Saharan Africa can promote climate-resilient and green development. African Department director Abebe Aemro Selassie hosts the premiere episode of Africa Perspectives.
A discussion with University of Zambia students on how Zambia is making progress in its reform efforts to restore sustainability, invest in youth, combat corruption, and attract investment and the role of the IMF.
The conference provides an opportunity to discuss how South Asia can build on its development success in the aftermath of the COVID-19 pandemic and geopolitical tensions to achieve its potential.
A discussion on how the Resilience and Sustainability Trust fits wider climate objectives at the country and global level.
Jihad Azour, Director of the Middle East and Central Asia Department, presents the IMF’s latest economic outlook and growth projections for the MENA region
A presentation and discussion of the October 2022 Regional Economic Outlook for Sub-Saharan Africa.
