{
  "title": "A Review of IMF-Supported Lending Programs",
  "publication": "IMF Blog, May 20, 2019",
  "sourceUrl": "https://www.imf.org/en/blogs/articles/2019/05/20/a-review-of-imf-supported-lending-programs",
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  "overlayPath": "/en/blogs/articles/2019/05/20/a-review-of-imf-supported-lending-programs/index.md",
  "summary": "Authors: Petya Koeva Brooks, Martin Mühleisen, Chad Steinberg",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Authors: Petya Koeva Brooks, Martin Mühleisen, Chad Steinberg\n- Date: May 20, 2019\n- Scope: Review of 133 IMF-supported lending programs in operation between September 2011 and December 2017.\n- Context: First major stocktaking of IMF programs since the Global Financial Crisis, a period of unexpectedly slow economic growth."
    },
    {
      "heading": "Programs as shock absorbers",
      "content": "- Primary role: Enable countries to meet immediate financial needs and cushion economic distress.\n- Catalytic effect: Programs help catalyze additional financing from markets, other official lenders, and donors, protecting economies from greater disruption.\n- Performance:\n  - Three-quarters of IMF programs were successful or partially successful in achieving their objectives (examples: resolving balance of payment problems, fostering economic growth).\n  - Social spending was generally protected as a share of GDP.\n  - Over a third of IMF programs, mostly in low-income countries, targeted fiscal expansion to support growth and poverty reduction."
    },
    {
      "heading": "Lessons learned and way forward",
      "content": "- Forecasting and contingency planning:\n  - Overoptimistic economic forecasts reduced a program’s chances of success.\n  - Recommendation: Use a more conservative approach to economic forecasts and provide deeper analyses of the impact that policies under the program could have on economic growth.\n  - Recommendation: Include more extensive contingency planning when designing programs.\n- Public debt and debt sustainability:\n  - Debt sustainability improved in most cases where debt vulnerabilities started out high.\n  - In some programs, debt exceeded the Fund’s initial projection by considerable margins.\n  - Recommendation: Apply more careful diagnosis and develop sharper tools for the IMF’s debt sustainability analysis to reduce any bias in judgement when assessing debt.\n  - Note: Fund policies are already in place to deal with unsustainable debt in Fund-supported programs; debt restructuring should be considered on a case-by-case basis.\n- Fiscal composition and growth:\n  - Many programs applied fiscal adjustments that were less growth-friendly than initially envisaged.\n  - Fiscal adjustment tended to be achieved by cutting public investment rather than by lowering current spending or raising revenue.\n  - Recommendation: Set more granular fiscal targets in programs (for example, a floor for critical public investments) to better guide government fiscal policy."
    },
    {
      "heading": "Tackling structural challenges to bolster growth prospects",
      "content": "- Conditionality focus:\n  - Programs generally kept closer to reforms within the Fund’s traditional areas of expertise.\n  - Conditionality in fragile and small states should be better tailored to these countries’ specific challenges.\n- Expanding scope and expertise:\n  - Where critical for achieving program goals, conditionality may need to go beyond traditional domains such as fiscal and monetary policy (examples: labor and product market reforms).\n  - Recommendation: Build more expertise in these areas and continue collaboration with partner institutions where the Fund lacks expertise.\n- Program duration consideration:\n  - Some reforms may take longer to implement and yield results.\n  - Recommendation: Consider extending the program duration of arrangements under the Extended Fund Facility in exceptional cases to five years, alongside appropriate safeguards."
    },
    {
      "heading": "The importance of ownership",
      "content": "- Ownership and success:\n  - Programs tended to be most successful when country authorities had strong ownership of the specified course of action.\n- Recommendations to strengthen ownership:\n  - IMF should better understand domestic institutional and political capacities to avoid unrealistic targets.\n  - Tie programs to national reform plans to facilitate sustained commitment by authorities and citizens.\n  - Improve public information and engagement—effective communication is underappreciated but important for program implementation.\n  - If a program goes off-track, the Fund should strive to remain involved (for instance, by encouraging countries to use Staff-Monitored Programs to help maintain the country’s track record with the Fund)."
    },
    {
      "heading": "Implementation and institutional learning",
      "content": "- Institutional response:\n  - In line with its commitment to be a learning institution, the Fund will draw on the lessons of the review to improve program design in the future.\n  - The Fund will continue to conduct regular reviews of its conditionality.\n\nSource: A Review of IMF-Supported Lending Programs (IMF blog page, May 20, 2019).\n\n---\n\n\n References\n\n- Review of Program Design and Conditionality\n\nSource: https://www.imf.org/en/blogs/articles/2019/05/20/a-review-of-imf-supported-lending-programs"
    }
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    "Authors: Petya Koeva Brooks, Martin Mhleisen, Chad Steinberg",
    "Published: May 20, 2019",
    "Authors: Petya Koeva Brooks, Martin Mühleisen, Chad Steinberg",
    "Date: May 20, 2019",
    "Scope: Review of 133 IMF-supported lending programs in operation between September 2011 and December 2017.",
    "Context: First major stocktaking of IMF programs since the Global Financial Crisis, a period of unexpectedly slow economic growth.",
    "Primary role: Enable countries to meet immediate financial needs and cushion economic distress.",
    "Catalytic effect: Programs help catalyze additional financing from markets, other official lenders, and donors, protecting economies from greater disruption.",
    "Performance:",
    "Forecasting and contingency planning:",
    "Public debt and debt sustainability:",
    "Fiscal composition and growth:",
    "Conditionality focus:",
    "Expanding scope and expertise:",
    "Program duration consideration:",
    "Ownership and success:",
    "Recommendations to strengthen ownership:",
    "Institutional response:",
    "[Review of Program Design and Conditionality](https://www.imf.org/en/Publications/Policy-Papers/Issues/2019/05/20/2018-Review-of-Program-Design-and-Conditionality-46910)"
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