## Heartbreak and Hardship—Finding a Way Out for Fragile States

_IMF Blog, September 7, 2011_

## Source details

**Canonical URL:** [Heartbreak and Hardship—Finding a Way Out for Fragile States](https://www.imf.org/en/blogs/articles/2011/09/07/finding-a-way-out-for-fragile-states)

## Other formats

- [Markdown version](/en/blogs/articles/2011/09/07/finding-a-way-out-for-fragile-states/index.md)
- [Structured JSON version](/en/blogs/articles/2011/09/07/finding-a-way-out-for-fragile-states/index.json)
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## Bibliographic details
- Authors: Dominique Desruelle
- Published: September 7, 2011

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### Overview
- Author: Dominique Desruelle
- Date: September 7, 2011
- Context: Countries affected by war, natural disasters, and internal conflict face legacies of weakness in institutions, infrastructure, and public service delivery (examples cited: Iraq, Haiti, Sierra Leone).
- Central argument: Helping a country’s economy to work better—the IMF’s core expertise—is a central building block to move beyond fragile situations and achieve better lives for citizens.

### IMF role and recent review findings
- A recent review found that the IMF has played an important positive role in fragile states through:
  - Programs the IMF supports
  - Technical assistance
  - Training
- These contributions have helped strengthen macroeconomic policies and build institutional capacity.
- Acknowledgement that IMF engagement has not always been perfect and that there is “plenty of scope to adapt how we engage” toward “a more graduated, flexible, and longer view approach.”

### Flexibility and program design
- Priorities and constraints:
  - Promoting macroeconomic stability is a top priority.
  - Fragile countries face severe capacity constraints, requiring realistic timeframes for policy actions.
  - Emphasis on strict prioritization of policy actions.
- Incorporating “quick wins”:
  - The IMF can strive to incorporate “quick wins” identified by others (examples given: restoration of electricity services, jobs programs for unemployed youth) into sustainable medium-term macroeconomic policies.
- Use of IMF facilities:
  - Fuller use of the IMF’s Rapid Credit Facility (RCF)—described as a low conditionality, low access facility—could allow more gradual adjustment during critical initial transition stages in low-income countries.
  - Subsequent support could be provided through the IMF’s Extended Credit Facility (ECF), “which allow higher financing with tighter conditionality standards.”
  - To facilitate this sequencing, adapting some modalities of the RCF, such as financing limits, “could be considered further.”

### Financing and donor coordination
- Long-term financing needs:
  - Best served by highly concessional donor resources.
- IMF role in catalyzing donor support:
  - The IMF could seek to stimulate further support from donors for countries in fragile situations.
  - Example mechanism: promote inclusion of budget support windows in multi-donor trust funds (managed by others), with a link to IMF-supported programs or IMF monitoring.

### Technical assistance and capacity building
- Technical assistance and training are described as “crucial to success” in fragile situations.
- The IMF, in partnership with development agencies, is seeking ways to offer more on-site expertise to assist country officials with day-to-day policy implementation.

### Fragile middle-income countries
- Fragility is “not the exclusive domain of low income countries.”
- Middle-income fragile countries may have higher financial resources and higher technical capacity, but still face complex, risk-laden paths out of fragility.
- Proposal: creating an RCF-like facility—limited conditionality, low financing—could be useful to boost early IMF engagement with some fragile middle-income countries and help speed up the international community’s response.

### Next steps and planned engagement
- The IMF intends to refine the ideas presented and develop guidance to embed greater flexibility of IMF engagement into operations.
- The IMF seeks further discussions with IMF membership, development partners, and civil society.
- Public seminar:
  - Title: Fostering Engagement with Fragile States
  - Date and time: Thursday, September 22, 2011 from 10 a.m. to 11:30 a.m.
  - Location: IMF Headquarters in Washington DC
  - Note: “Proceedings of the seminar will be available after the event on the IMF’s website.”
  - Reference provided to the 2011 Annual Meetings Program of Seminars website: http://www.worldbank.org/pos/.

*Source: Heartbreak and Hardship—Finding a Way Out for Fragile States, Dominique Desruelle, September 7, 2011.*

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## Content in this bundle

- **061511a**
  - [061511a (Markdown version)](/external/np/pp/eng/2011/061511a.pdf.md){rel="alternate" type="text/markdown"}
  - [061511a (PDF)](/external/np/pp/eng/2011/061511a.pdf){rel="external" type="application/pdf"}

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## References

- [Rapid Credit Facility (RCF)](http://www.imf.org/external/np/exr/facts/rcf.htm)
- [Extended Credit Facility](http://www.imf.org/external/np/exr/facts/ecf.htm)
- [Technical assistance and training](http://www.imf.org/external/np/exr/facts/tech.htm)
- [IMF’s Annual Meetings](http://www.imf.org/external/am/2011/index.htm)

_Source: https://www.imf.org/en/blogs/articles/2011/09/07/finding-a-way-out-for-fragile-states_