International Monetary Fund

Spring 2011

Review of Crisis Programs

Last Updated: July 28, 2017

This presentation reviews new non-concessional IMF-supported programs that were started since the global crisis began in 2008. It updates the original crisis programs review paper published in September 2009. The new update confirms the main messages of that paper regarding the original wave of countries that turned to the Fund in the heat of the crisis: the Fund took a more flexible and accommodating role to program design, responding to individual country needs and helping countries to avoid worse economic outcomes during the crisis, with higher and more frontloaded financing. This update now includes a second wave countries that adopted IMF-supported programs since the original review: while many of these countries face different and often more protracted difficulties, program design and financing appears to be responding to their individual needs within a consistent framework with the earlier programs. Nevertheless many important challenges remain to ensure a return to sustainable growth in output and employment.
For illustrative purposes, the IMF-supported programs are compared to non-program countries, those with a Flexible Credit Line, and to past crisis cases.

  • Unprecedented demand for IMF-supported programs during and since the crisis
  • Programs in initial phase of crisis helped countries weather the immediate storm
  • Newer wave of programs in wake of crisis mostly reflect more protracted challenges
  • Most programs on track
Growth and Adjustment
  • Growth is returning in almost all countries, and is better balanced than in pre-crisis boom period
  • Larger and more frontloaded official financing helped avoid the excessive external adjustment seen in some past crises
  • Programs in initial phase of crisis allowed accommodative fiscal policy to mitigate effect of shock
  • But strong consolidation needed in high debt cases to ensure sustainability, implementing long-term implementation challenges
  • Fiscal adjustment in programs responded to country circumstances
Money & Inflation
  • Exchange rate overshooting generally avoided, compared to past crises
  • Thus also avoiding spikes in inflation
  • Inflation is rising somewhat in many program cases, as with nonprogram countries
  • But monetary policy does not seem lax when cyclical conditions are taken into account
  • Conditionality in Fund programs has become more streamlined and focused
  • Implementation of structural conditions has improved
  • Both factors point to improved country ownership of program policies
Future challenges
  • Sustainability challenges for high-debt cases and associated risk of implementation fatigue
  • Lagging employment growth adding to social and economic costs
  • Managing inflation and maintaining good record on financial sector stability.
  • Continued positive signs...
  • Fund has been flexible and focused
  • Risks for the future