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International Monetary Fund. Strategy, Policy, & and Review Department
This paper evaluates the IMF’s policy on the use of quantitative limits on public debt in IMF-supported programs (the “debt limits policy”) and proposes a number of modifications. The review is taking place at a time when many countries are experiencing heightened debt vulnerabilities or actual debt distress, aggravated by the COVID-19 shock, and occurring against the backdrop of a changing credit landscape in which concessional finance is scarcer relative to countries’ investment needs.
International Monetary Fund. Strategy, Policy, & and Review Department
This paper evaluates the IMF’s policy on the use of quantitative limits on public debt in IMF-supported programs (the “debt limits policy”) and proposes a number of modifications. The review is taking place at a time when many countries are experiencing heightened debt vulnerabilities or actual debt distress, aggravated by the COVID-19 shock, and occurring against the backdrop of a changing credit landscape in which concessional finance is scarcer relative to countries’ investment needs.
International Monetary Fund. Strategy, Policy, & and Review Department

International Monetary Fund Title Page 700 19 th Street NW Washington, DC 20431 USA IMF.org Title Page REFORM OF THE POLICY ON PUBLIC DEBT LIMITS IN IMF-SUPPORTED PROGRAMS October 1, 2020 Executive Summary This paper evaluates the IMF’s policy on the use of quantitative limits on public debt in IM F-supported programs (the “debt limits policy”) and proposes a number of modifications. The review is taking place at a time when many countries are experiencing heightened debt vulnerabilities or actual debt distress, aggravated by

International Monetary Fund. Strategy, Policy, & and Review Department

taking place in a context where a broad trend toward heightened debt vulnerabilities in many countries was exacerbated by the COVID-19 shock. There have also been changes in the credit landscape facing low income countries (LICs), with concessional financing becoming scarcer relative to countries’ investment needs and with an increasing number of LICs beginning to access financing from international financial markets. Against this background, the staff paper outlines a set of reform proposals that would provide countries with more flexibility while still adequately

International Monetary Fund. Middle East and Central Asia Dept.

reached an agreement that will smooth the debt repayment profile. Notwithstanding progress in cleaning up banks’ balance sheets, the financial sector remains fragile, and financial inclusion is low. Some banks have lost correspondent banking relationships (CBRs) with international banks in recent years but new CBRs have been rapidly established, hence preserving financial flows and stability. Executive Board Assessment 2 Executive Directors welcomed the strong economic growth, low inflation, and improved business environment, but noted the heightened debt

International Monetary Fund

import cover in 2017 to 1.9 months at end-2018. The outlook is clouded by the ongoing drought and heightened debt vulnerabilities. Growth is projected to slow to 2 percent in 2019, reflecting a decline in mining sector activity in an uncertain environment for mining companies and the drought’s impact on hydro power production. Absent significant policy adjustments, growth is likely to remain subdued over the medium term as expenditure arrears and an ongoing forced adjustment in response to increasing debt-related pressures weigh on the private sector. Inflation is

International Monetary Fund. African Dept.

will be able to meet all its current and future financial obligations. This assessment is subject to significant risks. Delays in fiscal consolidation, delays in structural reforms to boost exports and growth, lack of up-to-date information on arrears and a prolonged COVID-19 shock would heighten debt vulnerabilities. Burundi’s debt is especially vulnerable to exports and growth shocks. Stronger GDP growth supported by prospects of stronger low-cost donor financing and the new SDR allocation (SDR 147.6 million equivalent to 6.6 percent of GDP) mitigate debt

International Monetary Fund
The COVID-19 pandemic is taking a human toll and has unleashed a series of shocks on the Fund’s entire membership, creating severe disruption in the global economic and financial system. As a result, many emerging market and developing country (EMDC) members face urgent and unprecedented financing needs, creating significant immediate demand for Fund resources. In order to respond to members’ large and urgent financing needs, the paper proposes to enhance the Fund’s emergency financing toolkit, through a temporary increase in access limits for both the Rapid Financing Instrument (RFI), available to all members, and the Rapid Credit Facility (RCF), available to Poverty Reduction Growth Trust-eligible members only. It is proposed to increase these access limits for a proposed period of six months, which may be extended by the Executive Board. A companion Board paper sets out proposals to accelerate Board consideration of member requests for financing under the RCF and RFI, completion of reviews and requests for changes in access in existing arrangements, and requests for grant assistance under the Catastrophe Containment and Relief Trust.