## IMF Survey: Terms of IMF Lending Seen as More Focused, Better Tailored

_IMF News, September 17, 2012_

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## Bibliographic details
- Published: September 17, 2012

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### Executive summary
- Publication date: September 17, 2012
- Main conclusion: An internal review finds the IMF has largely learned lessons from previous crises to improve lending conditionality—making it more focused, better tailored, and more flexible.
- Scope of review: Focuses on the period 2002-September 2011 and concentrates on programs approved after 2006.

### Review scope and sample
- Examined 159 IMF-supported programs.
- Of these, 95 programs were for poorer countries, often involving lending at very low interest rates (60 percent of the total).
- 64 were general lending programs.

### Key findings on program design and outcomes
- IMF-supported programs have been generally better tailored to individual country needs.
- Programs adapted flexibly to changing economic circumstances, which helped achieve program objectives and aimed to safeguard social protection and investment during crises.
- The IMF improved its analysis, internalizing lessons from previous crisis periods.
  - Example: The overshooting current account adjustments seen in some programs of the 1990s have been mostly avoided.
  - Emphasis on ample and upfront financing to create room for maneuver, particularly in capital account crisis cases.
- New challenges identified, notably in the euro area crisis:
  - Complexities due to the size of debt burdens, the systemic nature of the crisis, and the need for coordination across institutions.
  - Program design complicated where countries faced high debt burdens, sustained loss of market access, low growth, and competitiveness issues, and where the constraints of a currency union limited policy options.
  - “Debt sustainability and competitiveness problems required deep and protracted policy adjustment, combined with large-scale official financing.”

### Wider policy and social considerations
- The report urges enhancement of country ownership and transparency of lending programs through:
  - More discussion of alternative policy options.
  - Greater clarity in written assessments.
  - Tapping new avenues to collect external views.
- Social aspects of policy measures should be considered in a broader context:
  - Reforms often involve near-term costs yielding significant long-term benefits that should not be neglected.
  - Recent experience in the Middle East, Northern Africa, and Europe highlighted the need to account for employment issues and inclusive growth strategies.

### Actions already taken by the IMF
- Further efforts to streamline and focus conditionality, including follow-up to a 2007 IEO report on structural conditionality.
- Discontinuation of structural performance criteria and a shift to review-based monitoring of structural reforms as part of the 2008-09 lending reforms.
- Reform of the exceptional access policy and introduction of the Flexible Credit Line (FCL) and Precautionary Credit Line (PCL) in 2009-10 to facilitate precautionary finance and tailor conditionality to members’ fundamentals and policies.
- New lending framework for low-income countries introduced in 2009:
  - Doubled lending access norms.
  - Introduced new facilities: the Rapid Credit Facility and the Standby Credit Facility.
  - Increased program flexibility.

### Areas needing further strengthening
- While conditionality guidelines are broadly appropriate, the review finds implementation and other policies need strengthening.
- The paper organizes results and recommendations around six themes:
  - Keeping conditionality focused;
  - Enhancing risk diagnostics underpinning program design;
  - Considering macrosocial issues in IMF-supported programs;
  - Enhancing program ownership and transparency;
  - Leveraging economic surveillance to increase contingency planning; and
  - Improving partnerships with other institutions.

*Source: IMF Survey: Terms of IMF Lending Seen as More Focused, Better Tailored (September 17, 2012).*

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## References

- [https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)
- [PRESS CENTER](http://presscenter.imf.org/)
- [Policy](https://www.imf.org/en/news/search)
- [Factsheet on conditionality](http://www.imf.org/external/np/exr/facts/conditio.htm)
- [IMF reboots framework](https://www.imf.org/external/pubs/ft/survey/so/2012/POL071912A.htm)
- [IMF and Europe](https://www.imf.org/external/region/eur/index.htm)
- [review](https://www.imf.org/external/np/sec/pn/2012/pn12109.htm)
- [Conditionality](https://www.imf.org/external/np/exr/facts/conditio.htm)
- [lending reforms](https://www.imf.org/external/pubs/ft/survey/so/2009/POL041309A.htm)
- [Flexible Credit Line](https://www.imf.org/external/np/exr/facts/fcl.htm)
- [Precautionary Credit Line](https://www.imf.org/external/np/exr/facts/pll.htm)
- [lending framework](https://www.imf.org/external/pubs/ft/survey/so/2010/POL011110A.htm)
- [Rapid Credit Facility](https://www.imf.org/external/np/exr/facts/rcf.htm)
- [Standby Credit Facility](https://www.imf.org/external/np/exr/facts/scf.htm)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2015/09/28/04/53/sopol091712a_