Policy-Support-Instrument-PSI

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The Policy Support Instrument (PSI) is a non-financing instrument for low-income countries that do not want—or need—IMF financial assistance.
The PSI enables countries to secure IMF advice and support to design programs that deliver signals to donors, multilateral development banks, and markets of the strength of the country’s economic policies.
The last update was in April 2023.
On October 4, 2023, the Executive Board of the IMF endorsed the proposal to eliminate the PSI.

Provide IMF advice and support without financial assistance.
Signal the strength of a country’s economic policies to donors, multilateral development banks, and markets.

Targeted at low-income countries that do not want—or need—IMF financial assistance.

For PSIs with an initial duration exceeding two years, a Poverty Reduction and Growth Strategy (PRGS) should be issued to the IMF Executive Board for completion of the second and subsequent reviews.
The PRGS describes countries’ macroeconomic, structural, and social policies in support of growth and poverty reduction, as well as associated external financing needs and major sources of financing.

If performance is not sufficiently strong a review would not be completed.
Bringing a PSI-supported program back on track would require corrective actions and completion of the next scheduled review.
The noncompletion of two consecutive scheduled reviews would signify the lack of Board endorsement of the member’s policies, and the PSI would automatically lapse.
The PSI does not involve a review-based monitoring of program targets and waivers for nonobservance must be requested to the Board for missed targets.
Waivers of applicability are not possible under a PSI.

The PSI is explicitly a non-financing instrument; interaction with IMF financial instruments is governed by the PSI’s non-financing status.