Reports on the Incidence of a Longer-Term Program Engagement

Press Release: IMF Releasing Semiannual Reports on the Incidence of Longer-Term Program Engagement
March 5, 2004

Report on the Incidence of Longer-Term Program Engagement

Prepared by the Policy Development and Review Department
In consultation with the Area Departments
Approved by Mark Allen

August 16, 2005

During the discussion of the conclusions of the Task Force on Prolonged Use of Fund Resources (SM/03/46), the Executive Board established requirements for undertaking ex post assessments (EPAs) for members with a longer-term program engagement.1 The assessments are intended to provide an analysis of the economic problems facing the member and a critical and frank review of progress during the period of Fund-supported programs, as the basis for a forward-looking assessment and strategy for future Fund engagement, including, where appropriate, an explicit "exit strategy." The Executive Board asked for a semi-annual report on the incidence of prolonged use (BUFF/03/5l), which is understood to include all members with a longer-term program engagement. The third such report was issued on March, 30, 2005 and presented information through December 2004 (SM/05/110). This fourth report provides information through June 2005.

The criteria for identifying members subject to the EPA requirement are described in Box 1. No member was either added to or removed from the list of members with longer-term program engagement between end-2004 and end-June 2005 (Table 1). At end-June 2005, EPAs had already been discussed at the Board for 30 members (Table 2). Two of the 10 EPAs expected to have been prepared for Board consideration in the first half of 2005 were not done on time, due to delays in the completion of the Article IV discussions or program reviews. These pending assessments are expected to be discussed during 2005.2 Over the second half of 2005, ex post assessments are tentatively expected for nine countries (Table 3).3

A general review of ex post assessments is planned for the second half of 2005.

Box 1 . The Criteria for Ex Post Assessments

For members that have received access to Fund financing through the GRA or a blend of GRA and PRGF/ ESAF resources, an EPA is to be undertaken when the member has spent at least 7 of the past 10 years under upper credit tranche, stand-by or extended arrangements, including precautionary arrangements, or a mix of GRA and PRGF/ESAF resources, a member would also undergo an EPA when it has had two or more multi-year PRGF/ESAF arrangements.1 For example, if a member has undergone two or more multi-year PRGF/ESAF arrangements followed by a SBA, it would be subject to an EPA even if it has not yet spent 7 of the past 10 years in Fund arrangements. An EPA would be undertaken prior to any proposed new arrangement, provided that the member continues to meet these criteria.

In establishing these criteria for determining which members are subject to EPAs, Executive Directors recognized that in some cases, longer-term financial engagement can be beneficial. In low-income countries in particular, Directors generally accepted a longer- term role for the Fund, given the protracted nature of their balance of payments problems.3 Directors also underscored that longer-term program engagement may be beneficial in transition and emerging market countries with institution-building issues. Moreover, it was recognized that precautionary arrangements may not involve direct use of Fund resources, although they do provide access to those resources and put the Fund's reputation at stake; precautionary arrangements may be an effective device for facilitating the transition from sustained reliance on Fund resources. On balance, the Board decided that EPAs would be undertaken for all members with longer-term program engagement as defined above, given the desirability of reflecting on its program relations with a member country in such cases. The contents of the assessments themselves would distinguish those cases in which a longer-term engagement had been and remains beneficial from those in which it largely reflected a persistent failure to achieve program objectives.

1For GRA resources, time spent under an arrangement is counted. For PRGF/ESAF arrangements, the period of the arrangement as approved by the Executive Board is counted, even if it is cancelled prior to expiry.
3See "Role of the Fund in Low-Income Member Countries Over the Medium Term-Issues" (SM/03/257).

Table 1. Members with Longer-Term Program Engagement
(As at June 30, 2005)
PRGF-eligible Members1
Non-PRGF-eligible Members2
No Current
Current arrangement
No Current
Precautionary Non-Precautionary

Albania Benin Bulgaria Argentina4 Jordan4
Armenia Cambodia Croatia Uruguay4 Ukraine
Azerbaijan Cameroon Peru    
Bangladesh Cote d' Ivoire Romania    
Bolivia3 Ethiopia      
Burkina Faso Guinea      
Burundi Guinea-Bissau      
Chad Lao PDR      
Congo, Republic of Lesotho      
Gambia Macedonia, FYR      
Georgia Madagascar      
Ghana Malawi      
Guyana Mauritania      
Honduras Pakistan      
Kenya Sierra Leone      
Kyrgyz Republic Togo      
Mali Vietnam      
Sri Lanka        

Source: Fund staff.
1Countries that have had at least two ESAF/PRGF arrangements.
2Countries that have had at least seven years of Fund arrangements in the last ten years.
3Bolivia, has a stand-by arrangement.
4During the 7 years of Fund engagement, at least part of one arrangement was treated as precautionary.

Table 2. Ex-Post Assessments Considered by the Board
(As of June 30, 2005)
Country Type of discussion Date Board paper

Mozambique Article IV discussion 10-Dec-03 SM/03/375
Mali Article IV discussion 15-Dec-03 SM/03/380
Georgia Ex-post assessment 21-Jan-04 SM/03/407
Moldova Article IV discussion 26-Jan-04 SM/04/03
Honduras PRGF request 18-Feb-04 SM/04/24
Peru Article IV discussion 23-Feb-04 SM/04/37
Chad Article IV discussion 19-Mar-04 SM/04/147
Romania Ex-post assessment 12-Apr-04 SM/04/101
Zambia Ex-post assessment 7-Apr-04 SM/04/97
Bulgaria Article IV discussion 14-Jun-04 SM/04/169 
Niger Article IV discussion 28-Jun-04 SM/04/188
Kazakhstan Article IV discussion 21-Jul-04 SM/04/206
Macedonia 2nd Review under SBA 4-Aug-04 SM/04/263
Guinea Ex-post assessment 27-Aug-04 SM/04/220
Lesotho 6th Review under PRGF 10-Sep-04 SM/04/259
Cambodia Article IV discussion 13-Sep-04 SM/04/275
Ethiopia Article IV discussion 13-Sep-04 SM/04/291
Benin Article IV discussion 6-Oct-04 SM/04/313
Malawi Article IV discussion 29-Oct-04 SM/04/325
Guinea-Bissau Article IV discussion 19-Nov-04 SM/04/360
Kyrgyz Rep. Article IV discussion 19-Nov-04 SM/04/337
Vietnam Article IV discussion 22-Nov-04 SM/04/376
Armenia Article IV discussion 1-Dec-04 SM/04/386
Albania Article IV discussion 28-Feb-05 SM/05/46
Uruguay Ex-post assessment 18-Mar-05 SM/05/84
Bolivia Ex-post assessment 8-Apr-05 SM/05/99
Cameroon Article IV discussion 22-Apr-05 SM/05/113
Republic of Madagascar Article IV discussion 1-Jun-05 SM/05/159
Sierra Leone 6th Review under PRGF 1-Jun-05 SM/05/158
Azerbaijan 5th Review under PRGF 24-Jun-05 SM/05/214

Source: Fund staff.

Table 3: Ex-post Assessments Tentatively Expected for Board Discussion, July - December 20051
Côte d'Ivoire
The Gambia

Source: Fund staff.
1EPA expected to be discussed in the context of Article IV consultations or combined Article IV/program review discussions unless otherwise indicated.
2EPA expected to be discussed in the context of final program review.
3EPA expected to be discussed in a stand-alone Board meeting, together with an ex-post evaluation of program engagement supported by exceptional access.

1Operational guidance for assessments of countries with longer-term program engagement is contained in SM/03/233, Revision 1.
2Togo and Uganda. The EPA for Uganda was considered on July 8 with the fifth review of its PRGF arrangement. The EPA for Togo is expected to be considered later this year, together with the Article IV consultation which has been delayed.
3Tajikistan's arrangement has been extended until February 2006 and the EPA is now expected for Board discussion during the first quarter of 2006, concurrent with the staff report for the Article IV consultation.