Low-Income Countries
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IMF response to the coronavirus pandemic and concessional support
- The IMF provided financial support to 53 of 69 eligible low-income countries in 2020 and in the first half of 2021.
- About US$14 billion was disbursed as zero percent interest rate loans from the Poverty Reduction and Growth Trust.
- Most support was delivered through the Rapid Credit Facility (RCF) and Rapid Financing Instrument (RFI), providing immediate, one-time disbursements to countries facing urgent balance of payments needs.
- The Fund responded to a record number of requests through temporary access limit increases to the RCF and RFI, and temporary increases in the PRGT overall access limits.
- Related factsheet: Fund Concessional Support for Low-Income Countries—Responding to the Pandemic, July 2021.
Recent missions, consultations, and operational engagement
- IMF Staff Mission to Mozambique — September 18, 2026: IMF staff and the Mozambican authorities reviewed recent economic developments and discussed reforms to underpin a Fund-supported program.
- IMF Staff Concludes Visit to the Republic of the Marshall Islands — September 17, 2026: The energy shock from the war in the Middle East is weighing on economic activity and adding to cost-of-living pressures through higher fuel and electricity costs.
- IMF Staff Reaches Staff-Level Agreement with Zimbabwe on the Second Review under the Staff-Monitored Program: End-of-mission press releases convey preliminary findings; the mission will not result in a Board discussion.
- IMF Executive Board Concludes 2026 Article IV Consultation with Samoa — September 16, 2026: The authorities consented to publication of the Staff Report for this consultation.
- Statement by IMF Managing Director Kristalina Georgieva at the Conclusion of the visit of His Excellency Bassirou Diomaye Diakhar Faye, President of the Republic of Senegal — September 15, 2026.
Analytical findings and research relevant to low-income countries
- From Departure to Development: How Emigration Shapes Human Capital and Growth in Pacific Island Countries — September 11, 2026:
- Traditional emigration causes brain drain of young, highly skilled individuals, primarily to Australia and New Zealand.
- Labor mobility arrangements (LMAs) have expanded low-skilled temporary migration that often returns home, supporting near-term growth via remittances but raising concerns about children’s school dropout and long-term human capital.
- Policy implication: temporary labor mobility can be a development instrument, but complementary policies are needed to safeguard education, promote productive use of remittances, and strengthen skills development and job creation.
- The Impact of Trade Payment Restrictions and Capital Controls on External Sector Balances — September 4, 2026:
- Introducing MATR and the FinOpen index into current account models shows that tighter restrictions on trade payments of one standard deviation are associated with increases in the current account balance of about one percentage point and an appreciation of the REER, mainly by suppressing import demand and reducing domestic absorption.
- Tightening capital inflow restrictions by one standard deviation increases the current account balance by about 1.4 percentage points and depreciates the REER; outflow restrictions operate in the opposite direction.
- Mechanism: a wedge between domestic and global real interest rates affects saving and investment decisions.
- Relative Development and the Intelligence Divide: Human Capital, Technology Diffusion, and AI:
- Measured human capital explains a modest share of productivity differences but is associated with sharply different mobility regimes.
- Estimated expected time to exit the lowest-productivity state is about 65 years for economies below the estimated human-capital threshold, compared with about 25 years for those above it.
- If AI mainly augments skilled workers and capable firms, it may reinforce gaps; if it lowers learning and adaptation costs, it could promote convergence.
- Macroeconomics of War and Recovery:
- Dataset covers 194 countries, including 170 conflict onsets and 158 conflict terminations, over the period 1946–2024.
- Output losses from conflicts typically exceed those from banking, currency, and sovereign debt crises and severe natural disasters.
- External-sector dynamics are a central mechanism amplifying war shocks.
- Post-conflict recoveries are slow and uneven; sustained peace produces only gradual recoveries relative to wartime losses, with recoveries typically labor-led while capital accumulation and productivity remain subdued.
- Firm-level evidence highlights persistent financial constraints that hinder capital rebuilding during the postconflict period.
- Demand for Dollars: Evidence from Survey Expectations:
- End-user investors increase dollar purchases when expecting US dollar appreciation; investment funds and non-dealer banks adjust synthetic dollar borrowing in the FX swap market in response to expected changes in synthetic dollar funding costs.
- Predictive power of survey forecasts weakens when forecaster disagreement or uncertainty rises.
- A Model of Macroeconomic Policies with Endogenously Insurable Exchange Rates:
- Uncovered interest parity premia arise from endogenous lack of insurability of exchange rate risks due to asymmetric information about monetary policy.
- Policy responses may include delegation of monetary policy, constraints on fiscal policy, macroprudential tools, and institutions limiting asymmetric information to reduce premia.
Institutional, fiscal, and transparency developments
- The Case for A General Allocation Of SDRs during the Thirteenth Basic Period — July 2, 2026:
- On June 15, 2026, the Managing Director informed the Executive Board that she would not plan to make, by June 30 of this year, a proposal for the Thirteenth Basic Period (2027-2031), citing neither a clear economic case nor necessary support for a new allocation at present.
- The Managing Director reported her position to the Board of Governors on June 26, 2026.
- The Fund's Income Position for FY 2026 - Actual Outcome — August 21, 2026:
- Total comprehensive income of the General Department was SDR 4.8 billion (or about US$6.5 billion), comprising GRA net income (SDR 1.9 billion), retained investment income (SDR 1 billion) and remeasurement gains (SDR 1.9 billion).
- GRA net income, after placement of SDR 1.38 billion from the GRA to the Interim Placement Administered Account (IPAA), increased Fund reserves by about SDR 0.5 billion.
- Remeasurement gains contributed a further SDR 1.9 billion to reserves.
- Endowment payout of US$208 million (SDR 151 million) was made to the GRA; a net transfer of currencies equivalent to SDR 0.3 billion will be made from the Fixed-Income Subaccount (FI) of the Investment Account (IA) to the GRA during FY 2027.
- The Fund’s precautionary balances reached SDR 26.3 billion at the end of FY 2026.
- FY2026 Budget Outturn: presents highlights from the FY2026 budget and discusses outputs based on the Fund Thematic Categories and inputs.
- 2026 Guidance Note on the Fund's Transparency Policy — July 23, 2026:
- Provides updated guidance to implement the Fund’s Transparency Policy revised in November 2024; replaces the 2014 Guidance Note.
- Objective: enhance credibility, effectiveness, and traction of IMF advice by timely public availability of important documents and views, supporting surveillance and program work through scrutiny and accountability.
- Guidance Note for Addressing AML/CFT Issues in Surveillance, FSAPs, and Use of Fund Resources — July 16, 2026:
- Provides a framework to deepen integration of financial integrity and AML/CFT issues across surveillance, FSAPs, and Use of Fund Resources, updating guidance from 2012 and aligning with the 2023 Review of the Fund’s AML/CFT Strategy.
Partnerships and policy engagement
- The IMF has partnered with the UK's Foreign, Commonwealth and Development Office (FCDO) to study critical macroeconomic policy issues in low-income countries to promote sustainable and inclusive growth.
- Policy-relevant messages across research and missions emphasize:
- Rapid concessional financing for urgent balance of payments needs.
- Complementary reforms to support resilient recovery, revenue mobilization, and human capital formation.
- The importance of careful design of labor mobility policies, trade and capital flow measures, and institutional reforms to improve insurability and reduce exchange rate premia.
References