Review of Facilities for Low-Income Countries

This supplement aims to assess the economic impact of the Fund’s support through its facilities for low-income countries (LICs). It relies on two complementary econometric analyses: the first investigates the longer-term impact of Fund engagement—primarily through successive medium-term programs under the Extended Credit Facility (ECF) and its predecessors (and more recently the Policy Support Instrument (PSI))—on economic growth and a range of other indicators and socio-economic outcomes; the second focuses on the role of IMF shock-related financing—through augmentations of ECF arrangements and short-term and emergency financing instruments—on short-term macroeconomic performance. The empirical results shed some light on two channels through which different Fund facilities may have helped LICs respond to the global financial crisis—(i) by supporting a gradual buildup of macroeconomic buffers in the decades prior to the crisis and (ii) by providing liquidity support at the height of the crisis. The combination of strong pre-crisis buffers and crisis financing allowed LICs to pursue counter-cyclical policy responses that preserved spending and facilitated a rapid recovery.

Download Full-text

Guidance Note on the Fund’s Transparency Policy

Policy Papers ◽

10.5089/9781498337700.007 ◽

2010 ◽

Vol 2010 (2) ◽

Author(s):

Keyword(s):

Financial Crisis ◽

Low Income ◽

Public Debt ◽

Global Financial Crisis ◽

Low Income Countries ◽

Debt Sustainability ◽

Guidance Note ◽

Fiscal Revenue ◽

Near Term ◽

The Global Financial Crisis

The global financial crisis has had a significant impact on low-income countries (LICs)’ debt vulnerabilities. Recent debt sustainability analyses (DSAs) indicate that external and fiscal financing requirements have increased. In addition, standard measures of a country’s capacity to repay debt?GDP, exports, and fiscal revenue?are expected to be permanently lower. On average, debt ratios are therefore expected to deteriorate in the near term, particularly for public debt.

Download Full-text

Guidance Note for Fund Staff on the Treatment and Use of SDR Allocations

Policy Papers ◽

10.5089/9781498335638.007 ◽

2009 ◽

Vol 09 ◽

Author(s):

Keyword(s):

Developing Countries ◽

Financial Crisis ◽

Low Income ◽

Global Financial Crisis ◽

Emerging Market ◽

Low Income Countries ◽

Guidance Note ◽

Special Drawing ◽

The Global Financial Crisis ◽

Special Drawing Rights

Against the backdrop of the global financial crisis, the IMF has decided to implement a US$250 billion general allocation of special drawing rights (SDRs). In addition, the Fourth Amendment of the Fund’s Articles of Agreement has recently become effective, and will make available to SDR Department participants a special allocation of up to an additional SDR 21.5 billion (US$33 billion). Nearly US$115 billion of these combined allocations will go to emerging market and developing countries, including about US$20 billion to low-income countries (LICs), thereby providing an important boost to the reserves of countries with the greatest needs.

Download Full-text

Public Debt Vulnerabilities in Low-Income Countries - The Evolving Landscape

Policy Papers ◽

10.5089/9781498344043.007 ◽

2015 ◽

Vol 15 (59) ◽

Author(s):

Keyword(s):

Low Income ◽

Public Debt ◽

Global Financial Crisis ◽

Low Income Countries ◽

International Capital ◽

International Capital Markets ◽

Underlying Causes ◽

The Global Financial Crisis ◽

Sustainability Framework ◽

Paris Club

This is the first joint IMF/World Bank report on public debt vulnerabilities in low income countries (LICs). It examines debt-related developments and their underlying causes since the onset of the global financial crisis. The findings will inform the upcoming review of the IMF/WB debt sustainability framework for LICs. Over this period, improved macroeconomic performance in LICs, combined with HIPC/MDRI debt relief and high demand for commodities, contributed to improved LIC creditworthiness. At the same time, new borrowing opportunities emerged as a result of the accommodative liquidity conditions in international capital markets, the deepening of domestic financial markets for some LICs, and the growing lending activities of non-Paris Club countries. These new financing possibilities helped mitigate the decline in Paris Club lending to LICs and have been associated with a shift toward greater reliance on non-concessional credit. The changing financing landscape has been most significant for frontier LICs.

Download Full-text

Statement by the Managing Director on Updating the Strategic Directions in the Medium-Term Budget - Executive Board Meeting - April 20, 2011

Policy Papers ◽

10.5089/9781498339070.007 ◽

2011 ◽

Vol 2011 (26) ◽

Author(s):

Keyword(s):

Low Income ◽

Global Financial Crisis ◽

Financial Analysis ◽

Governance Structure ◽

Fund Raising ◽

Low Income Countries ◽

Reform Agenda ◽

International Linkages ◽

Cross Country ◽

The Global Financial Crisis

In early 2008, the Fund launched ambitious reforms to enhance its ability to deliver the economic and financial analysis, member support, and multilateral collaboration essential to promote global stability. The reform agenda called for: (i) stronger surveillance through sharpened multilateral and regional tools, analysis of macro-financial and international linkages, and greater use of cross-country work in bilateral surveillance; (ii) sharper policy advice for low-income countries, with emphasis on areas of core Fund expertise; (iii) improved capacity building efforts to be augmented by more external fund-raising; and (iv) a modernized governance structure to enhance the Fund’s legitimacy and better reflect its role as a universal institution capable of facilitating global cooperation and action. With the onset of the global financial crisis later in 2008, the Fund also committed to reforming its lending toolkit, including overhauling its concessional support instruments, to ensure that its facilities fully met members’ evolving needs.

Download Full-text

The Fund's Facilities and Financing Framework for Low-Income Countries

Policy Papers ◽

10.5089/9781498336260.007 ◽

2009 ◽

Vol 09 ◽

Author(s):

Keyword(s):

Low Income ◽

Global Financial Crisis ◽

Policy Support ◽

Low Income Countries ◽

Supplementary Information ◽

Executive Directors ◽

Financial Instruments ◽

Exogenous Shocks ◽

Second Stage ◽

Recent Modification

This paper assesses the adequacy of the Fund’s facilities and financing framework for low-income countries (LICs) and proposes reform options. It is part of a broader review of all Fund financial instruments and is timely given the pressure the current global financial crisis is putting on LICs. It builds on previous efforts to adapt the Fund’s toolkit to the evolving needs of its LIC members, including creation of the Policy Support Instrument (PSI) and the recent modification of the Exogenous Shocks Facility (ESF). This paper provides the basis for the first stage of the LIC-specific review, with a focus on: (i) gaps and overlaps in the facility architecture for LICs, (ii) design issues such as access, financing terms, and conditionality, and (iii) the concessional resource envelope and funding structure. Based on feedback from Executive Directors and further external consultation, more detailed reform proposals will be prepared in the second stage of the review. The Fund’s Facilities and Financing Framework for Low-Income Countries—Supplementary Information March 13, 2009

Download Full-text

The Implications of the Global Financial Crisis for Low-Income Countries—An Update

Policy Papers ◽

10.5089/9781498335416.007 ◽

2009 ◽

Vol 09 ◽

Author(s):

Keyword(s):

Financial Crisis ◽

Low Income ◽

Global Financial Crisis ◽

Low Income Countries ◽

Medium Term ◽

Fdi Inflows ◽

Donor Support ◽

World Demand ◽

The Global Financial Crisis ◽

Do So

Low-income countries are being hit hard by the global financial crisis. They are facing a sharp contraction in export growth, FDI inflows, and remittances, and lower-than-committed aid. But a marked recovery is in prospect for 2010 helped by rising world demand and supported by short-term domestic policies. Countries are using fiscal and other policies to respond to the crisis and should continue to do so, where appropriate, until the economic recovery is clearly underway. However, the risks to debt sustainability are rising and countries should begin preparing to realign policies toward medium-term sustainability once the recovery is clearly on the move. Additional highly concessional donor support is needed to ensure that countries are not forced to make these adjustments prematurely, and to facilitate a smooth return to a sustainable debt path, with strong growth, over the medium term.

Download Full-text

Policy Papers ◽

10.5089/9781498340120.007 ◽

2012 ◽

Vol 2012 (58) ◽

pp. 1

Author(s):

Keyword(s):

Financial Crisis ◽

Low Income ◽

Global Financial Crisis ◽

Low Income Countries ◽

Effective Response ◽

The Global Financial Crisis

The 2009 reforms have broadly achieved their objective of closing gaps and creating a streamlined architecture of facilities that is better tailored to the diverse needs of LICs. Supported by the financing package to boost the PRGT’s lending capacity for 2009–14 and the accompanying doubling of access, the Fund was able to mount an effective response to LICs’ needs during the global financial crisis.

Download Full-text

Creating Policy Space - Responsive Design and Streamlined Conditionality in Recent Low-Income Country Programs

Policy Papers ◽

10.5089/9781498335508.007 ◽

2009 ◽

Vol 09 ◽

Author(s):

Keyword(s):

Low Income ◽

Global Financial Crisis ◽

Low Income Countries ◽

Policy Space ◽

Price Shocks ◽

Fuel Price ◽

Low Income Country ◽

Responsive Design ◽

The Global Financial Crisis ◽

Program Engagement

An analysis of recent programs in low-income countries, covering countries with continuous program engagement with the IMF throughout the period 2007-09, shows that program design has been adapted to provide expanded policy space in response to the food and fuel price shocks of 2007-08 and to the global financial crisis that followed. The analysis also finds that structural conditionality in Fund-supported programs in low-income countries has become more streamlined, with a dominant focus on public sector resource management and accountability.

Download Full-text