Low-Income Countries
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.
The IMF Executive Board approved a new 36-month precautionary Stand-By Arrangement (SBA) for Barbados in the amount of SDR 189 million (equivalent to US$257 million, or 200 percent of quota). The Executive Board’s decision allows the authorities immediate access to SDR 47 million (equivalent to US$64 million).
Economic growth picked up slightly in 2025, driven by the hydrocarbon sector. Turkmenistan’s key policy challenge remains the translation of hydrocarbon wealth into more diversified, inclusive, and sustainable growth.
IMF staff and the São Toméan authorities have reached a staff-level agreement on the third review of the economic policies underpinned by the 52-month program supported by the Extended Credit Facility (ECF). Subject to the completion of the agreed prior actions and approval by the IMF’s Executive Board, São Tomé and Príncipe would have access to about SDR 4.4 million (US$6.1 million). Most quantitative targets for the third review have been met, and significant progress was made on a range of macro-structural issues.
June 22, 2026 – Washington, DC: A Staff team from the International Monetary Fund (IMF), led by Mercedes Vera Martin, IMF Mission Chief for Senegal, visited Senegal during June 15-19 to assess recent macroeconomic developments and outlook, and held discussions with the Senegalese authorities on their plans to navigate the challenges ahead.
IMF Executive Board Concludes 2026 Article IV Consultation with the Republic of Uzbekistan
Sierra Leone: IMF Executive Board Approves Arrangement Under the Resilience and Sustainability Facility and Completes Third Review Under the Extended Credit Facility
New policy tracker shows many governments pursuing costly responses to fuel and food price hikes, leaving less room to address future challenges
An overall resilient world economy masks significant differences among countries and regions. Energy importers and countries with limited policy space are most vulnerable
Economic thinking must evolve to account for a shift in how nations pursue security, growth, and influence
As governments intervene more, evidence shows that the benefits are modest and depend on thoughtful design
The region’s central banks have built significant credibility over two decades, anchoring price expectations and bolstering resilience against external shocks
Governments can protect vulnerable households, keep businesses open, and preserve price signals without straining public finances
I welcome the IEO’s comprehensive evaluation, which finds that the Fund’s work on climate has had high value for our members. The report provides a well-structured assessment of the Fund’s climate-related engagement across surveillance, lending, and capacity development, highlighting how this work has been anchored in members’ macroeconomic and financial frameworks. To follow up on the IEO’s three main recommendations—which I support, with some qualifications—a Management Implementation Plan (MIP) will be developed, consistent with resource constraints and closely aligned with existing workstreams, including the ongoing CSR, ROC, and FSAP reviews.
Executive Directors welcomed the report of the Independent Evaluation Office (IEO) on the IMF and Climate Change and its well-structured assessment of the Fund’s engagement across surveillance, lending, and capacity development. Most Directors concurred with the report’s positive assessment that the Fund’s work on climate, anchored in members’ macroeconomic and financial frameworks, has provided high value for the membership and the Global Climate Architecture. They noted that the initial phase of implementation involved upfront investment costs and significant institutional learning, with efficiency improving over time as capabilities, organization, and coordination strengthened. Most Directors agreed with the evaluation’s assessment that there is scope to further strengthen the application of the new climate approach, and supported the IEO’s key recommendations for improvement with some qualifications regarding specific suggestions. Noting that some of the challenges are common to many workstreams, Directors stressed the need for close alignment with current and upcoming workstreams, including the Comprehensive Surveillance Review (CSR), Review of Program Design and Conditionality, Financial Sector Assessment Program Review, and Review of the Resilience and Sustainability Trust (RST). Directors emphasized the need to take into consideration resource constraints and highlighted the resulting need for prioritization. While a few Directors considered that the climate strategy might have crowded out the Fund’s core work and the evaluation should have assessed its consistency with the Fund’s mandate, most Directors stressed the need for sustained institutional support to preserve the progress achieved with the new approach.
At the time of the 2005 Review of the Fund’s Transparency Policy, the Executive Board requested regular updates on trends in implementing the transparency policy. This report provides an overview of recent developments in implementation of the policy, reflecting information on documents considered by the Board in 2023 and updating the previous annual report on Key Trends issued in July 2024. Deeper analysis of these trends is undertaken in the context of periodic reviews of the Fund’s Transparency Policy.
On May 8, 2026, the IMF’s Executive Board approved another six-month extension of the period to consent to the quota increase and to the New Arrangements to Borrow (NAB) rollback under the Sixteenth General Review of Quotas (GRQ), through November 15, 2026. Such extension also extends the period of consent for quota increases under the Fourteenth GRQ. The previous deadline was due to expire on May 15, 2026. However, the Board of Governors Resolution No. 79-1 provides that the Executive Board may extend the period for consent as it may determine.
This paper updates the projections of the Fund’s income position for FY 2026 and FY 2027–2028 and proposes related decisions for the current and the following financial years. The paper includes proposed decisions to transfer SDR 1.38 billion of GRA resources to the Interim Placement Administered Account and to transfer estimated Fixed Income income and a payout from the Endowment Subaccount to help meet administrative expenses. It also includes a proposed decision to keep the margin for the rate of charge unchanged at 60 basis points for FY 2027–2028. The Fund’s total comprehensive income for FY 2026 is projected at about SDR 3.8 billion; reflecting an estimated pension-related remeasurement gain and retained income in the Investment Account. The Executive Board approved these decisions on April 28; 2026.
The global economic and financial environment is characterized by profound transformation and heightened uncertainty, including that stemming from the war in the Middle East. In this context, demand for Fund engagement is expected to remain strong, continuing to require difficult trade-offs within a real flat budget. The FY27-29 budget maintains a longstanding emphasis on discipline, focus, and agility in line with the evolving needs of the membership. Implementation of a Fund-wide streamlining exercise is reinforcing ongoing department-level prioritization to create space for the highest priority needs, relieve staff work pressures, and maintain capacity for unforeseen demands.
Housing affordability is high on the economic, social, and political agenda in Europe. While the economic literature has mostly analyzed the drivers of housing unaffordability, this paper focuses on its consequences, quantifying, at the EU level, its impact on individuals’ well-being as well as its economic and demographic impact. We find that the impact of an increase in housing cost burden is large on housing adequacy as well as on poverty and health. It is somewhat smaller on fertility and labor force participation.
How does informality shape the impact of minimum wage policy? We study this question using evidence from Mexico’s 145% real increase in the minimum wage since 2016, together with a general equilibrium model featuring endogenous informality and household heterogeneity. Reduced-form estimates of the implemented increases indicate limited effects on employment and formalization, alongside modest wage gains at the bottom of the formal wage distribution that arguably reflect incomplete enforcement. The calibrated model reproduces these patterns but predicts that, under full enforcement, higher wage floors generate nonlinear effects: the share of firms reallocating toward informality rises sharply, lowering productivity and aggregate welfare. These losses fall disproportionately on low-skill households, who bear the brunt of the reduction in transfers caused by lower tax revenue yet, as predominantly informal workers, gain little directly from the minimum wage. The minimum wage’s effectiveness as a redistributive tool is therefore limited.
In a series of declarations throughout 2025 and into 2026, the United States announced higher tariffs on nearly all imports from most countries. The countries that make up the CAPDR region (Costa Rica, Dominican Republic, Guatemala, Honduras, Nicaragua, Panama and El Salvador) are affected through sizeable direct trade linkages with the United States, and through indirect trade linkages with third countries. This paper explores the potential long-term economic effects of these tariff increases on CAPDR using a multi-region multi-industry model of the global economy. The modelling exercises suggest that CAPDR member countries will experience falls in real GDP to varying degrees, with the severity of the effect closely linked to direct export exposure to the United States. The most vulnerable industries are heavily trade-exposed manufactures, although exemptions – most importantly for textiles & apparel – may provide some scope for trade diversion to offset some of the GDP losses. Although ongoing legal challenges have introduced additional uncertainty regarding the ultimate extent of tariff changes, the results in this paper will remain broadly valid providing the tariffs remain in place.
This paper examines the short- and medium-term effects of the 2018–19 China-U.S. tariff increases on the trade and investment flows of ASEAN member economies. Using granular trade data, we demonstrate that several ASEAN countries experienced a disproportionate growth in exports of products that were targeted by these tariffs. To further explore the dynamic and often immediate responses of international capital flows to these trade policy shifts, we leverage a novel firm-level FDI database that allows us to identify surges in sectoral investment inflows. Among ASEAN countries, Vietnam stands out as the one where FDI in targeted sectors grew notably faster during 2018–19, likely contributing to its observed export gains over the medium term. At the same time, our analysis reveals that trade gains in targeted products have not universally translated into stronger overall export performance across ASEAN. More generally, while trade reallocation may yield short- and medium-term gains, these gains can be offset over time by the higher long-term aggregate losses associated with trade fragmentation.
We quantify barriers to cross-border banking within the euro area and their consequences for credit allocation and output. Using loan-level data from the European credit registry (AnaCredit) and group structures (RIAD), we estimate barriers to relationship formation, loan pricing, and banks’ branching decisions at the country-pair level. We find that barriers to cross-border relationships between banks and firms and cross-border bank entry are large while wedges on interest rates and loan quantities are comparatively small. The estimated edges are strongly associated with differences in national banking regulations, measured using a novel dataset on regulatory distances. We embed our estimates into a quantitative spatial general equilibrium model with heterogeneous banks and firms subject to cross-border frictions in relationship formation, loan pricing, and bank entry. Partially relaxing frictions predicts sizable and heterogeneous output gains across euro area countries. These gains are primarily driven by increases in capital and labor rather than improvements in allocative efficiency.
This paper examines the drivers of wage growth in Europe and assesses whether the 2022–23 inflation surge has altered wage-setting dynamics, using cross-country macro evidence for 26 European economies, agreement-level collective bargaining data for Spain, and estimates of minimum and public sector wage spillovers. We find that the slope of the wage Phillips curve has not materially changed since the pandemic—labor market slack continues exerting a restraining influence on wage growth. However, postpandemic wage growth was higher than predicted by historical relationships, reflecting the outsized inflation shock and a higher sensitivity of wages to past inflation. Wage-setting is found to differ markedly across regions. In Central, Eastern, and Southeastern European Economies (CESEE), wage formation remains more backward-looking, with past inflation playing a dominant role, whereas in Advanced Economies (AEs) inflation expectations are more important. In AEs, the recent wage response followed a sequential pattern: the wage drift rose early as employers granted ad hoc increases, while negotiated wages adjusted with a lag as collective agreements were renewed and workers recouped accumulated real wage losses. Micro evidence from Spain shows that institutional features of collective bargaining conditionally amplify inflation pass-through: CPI indexation clauses, sector-level bargaining, and shorter contract duration are each associated with stronger wage responses to past inflation. In parallel, minimum wage pass-through has strengthened markedly in CESEE since 2015, while public sector wages dampened aggregate wage growth in AEs but amplified it in CESEE during 2022–24. Taken together, these findings suggest that while the core Phillips curve mechanism remains intact, future inflation shocks could generate more persistent wage pressures where wage-setting is more backward-looking, inflation compensation becomes institutionalized (including through indexation that interacts with downward nominal rigidity), or discretionary minimum and public sector wage policies add impetus.
