Reform of the Policy on Public Debt Limits in Fund-Supported Programs

Policy Papers, November 14, 2014

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Reform of the Policy on Public Debt Limits in Fund-Supported Programs

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Bibliographic details

• Published: November 14, 2014
• Series: Policy Papers

Overview and Rationale

• The reform addresses the Fund’s policy on the use of conditionality on public external debt in Fund-supported programs (the “debt limits policy”).
• Discussion of the reform has been ongoing since March 2013.
• Motivation: lower income countries seek higher public investment to close large infrastructure gaps while facing a wider range of external financing opportunities and limits on the supply of traditional concessional financing.
• The 2009 reform of the Fund’s policy on debt conditionality was a first step; experience with the 2009 reforms pointed to the need for more fundamental reforms to provide countries greater flexibility to finance productive investments while containing risks to medium-term debt sustainability.

Reform Process and Consultations

• The proposed reforms build on:
  • Board review of the debt limits policy in March 2013,
  • Informal Board discussions in January and May 2014,
  • An informal seminar in September 2014,
  • Various stakeholder consultations.
• Staff’s development approach:
  • First specify a robust set of principles to guide the use of public debt conditionality in all Fund arrangements.
  • Then examine how these principles should apply in the specific circumstances of countries that normally rely on official external concessional financing.

Objectives and Scope

• Primary objective: provide countries with greater flexibility to finance productive investments while containing risks to medium-term debt sustainability.
• Scope includes application of principles across all Fund arrangements and particular attention to low-income countries that rely on concessional external financing.

Publication Details and Subjects

• Publication date: November 14, 2014
• Subjects: Concessional aid, Conditionality, External debt, Fund policies, Fund-supported adjustment programs, Low-income developing countries, Public debt
• Availability note: Also Available in French

International Monetary Fund — Reform of the Policy on Public Debt Limits in Fund-Supported Programs (November 14, 2014).

Content in this bundle

• Reform of the Policy on Public Debt Limits in Fund-Supported Programs; December 19, 2014
  • Reform of the Policy on Public Debt Limits in Fund-Supported Programs; December 19, 2014 (Markdown version)
  • Reform of the Policy on Public Debt Limits in Fund-Supported Programs; December 19, 2014 (PDF)