Copyright Page

IMF POLICY PAPER

POST-PROGRAM MONITORING DURING THE PANDEMIC: PROPOSAL FOR TEMPORARY STREAMLINING OF PROCEDURES AND RENAMING OF THE POLICY

May 14, 2021

IMF staff regularly produces papers proposing new IMF policies, exploring options for reform, or reviewing existing IMF policies and operations. The following documents have been released and are included in this package:

  • The Staff Report, prepared by IMF staff and completed on April 23, 2021 for the Executive Board’s consideration on May 07, 2021.

The IMF’s transparency policy allows for the deletion of market-sensitive information and premature disclosure of the authorities’ policy intentions in published staff reports and other documents.

Electronic copies of IMF Policy Papers are available to the public from http://0-www-imf-org.library.svsu.edu/external/pp/ppindex.aspx

International Monetary Fund

Washington, D.C.

© 2021 International Monetary Fund

Press Release

PR21/131

IMF Executive Board Approves Temporary Streamlining of Procedures for Post Program Monitoring During the Pandemic and Renaming of the Policy to Post Financing Assessment

FOR IMMEDIATE RELEASE

Washington, DCMay 14, 2021: On May 7, 2021, the Executive Board of the International Monetary Fund (IMF) approved temporary modifications to the modalities for its Post Program Monitoring (PPM) until end-2022. The increase in IMF lending, including in the aftermath of the COVID-19 pandemic, has led to an unprecedented amount of credit outstanding, underscoring the need for appropriate safeguards to the IMF’s balance sheet. PPM is one such safeguard, providing a framework for deeper and closer engagement with members that have substantial outstanding IMF credit but are not in a program relationship. However, the ongoing pandemic is straining the capacity as well as resources for members and the Fund, given the need to focus efforts on immediate crisis-related work.

In view of these challenges, the Board decided to temporarily modify the implementation modalities for PPM by suspending the annual standalone PPM report and conducting the PPM discussions at the time of the Article IV consultation. As such, the Article IV report for members subject to PPM will also include all the elements of the PPM discussion. These streamlined processes will apply to all members subject to PPM until end-2022, after which the standard modalities, including the standalone PPM report will resume. The Board also renamed the policy from Post Program Monitoring (PPM) to Post Financing Assessment (PFA) to better reflect its coverage, which includes not only outstanding credit from IMF-supported programs but also credit from outright purchases from the General Resources Account or disbursements from the Poverty Reduction and Growth Trust under emergency financing instruments.

Executive Board Assessment1

Executive Directors welcomed the opportunity to discuss the proposals for temporarily modifying the modalities for Post Program Monitoring (PPM) in response to the challenges posed by the pandemic. They emphasized that the increase in Fund lending, including due to emergency assistance, and the corresponding higher risks to the Fund underscore the importance of maintaining appropriate safeguards to the Fund’s balance sheet, of which PPM policy is a central element. Directors broadly acknowledged, however, that in the current circumstances, it remains difficult to undertake frequent engagements with the authorities of member countries under PPM due to ongoing constraints in both the Fund and the countries concerned.

Directors generally agreed that temporarily streamlining the implementation modalities of the PPM framework is warranted to address the abovementioned constraints. They stressed, however, that the objective of PPM to safeguard Fund resources and members’ capacity to repay should be maintained. Thus, Directors reaffirmed that the existing PPM application criteria with respect to the absolute and quota-based thresholds, as well as the broad coverage under PPM of all financing instruments, remain appropriate.

Directors generally supported the proposal to temporarily suspend annual standalone PPM reports and to conduct PPM discussions at the time of the Article IV consultation, with the Article IV Consultation staff report also to include all the elements of the PPM discussion under the title of the Article IV report. A few Directors would prefer that these joint reports not be considered by the Board on a lapse of time basis. Given the temporary streamlined modalities, Directors emphasized the need to undertake timely Article IV consultations to preserve the objectives of the PPM policy, and for staff to maintain close communication with members under PPM during the period between Article IV consultations. They requested that the Board be informed in a timely manner should concerns with the capacity to repay of a country under PPM arise in between reports or should there be slippages in the timetable of Article IV consultations with these members. Directors also requested that the Board be updated in a timely manner on developments in countries where a successor program is under consideration. They agreed that the streamlined modalities will apply to all existing and future members subject to PPM until end-2022, after which the standard modalities would resume, including the stand-alone PPM report.

Going forward, and separate from the temporary change in PPM modalities, Directors agreed to rename the policy, from Post Program Monitoring to Post Financing Assessment (PFA), to reflect more appropriately that it not only covers outstanding credit resulting from Fund-supported programs but also credit from outright purchases in the GRA or PRGT disbursements.

Post Program Monitoring During the Pandemic: Proposal for Temporary Streamlining of Procedures and Renaming of the Policy

April 23, 2021

EXECUTIVE SUMMARY

Context: The increase in Fund lending in the aftermath of the Covid-19 pandemic, including emergency financing, has led to a record number of requests for financing last year, and to an unprecedented amount of credit outstanding. This underscores the need for appropriate safeguards to the Fund’s balance sheet. Post Program Monitoring (PPM) is one such safeguard, which provides a framework for deeper and closer engagement with members that have substantial outstanding Fund credit but are not in a program relationship.

Current status: Eighteen countries are exceeding the PPM thresholds and are not in a program relationship; of these, four are already under PPM, ten are negotiating new Fund-supported programs, and four neither have nor currently expect to have a program relationship any time soon. With respect to the members currently under PPM, the pandemic has made it difficult for staff and the authorities to fully implement the PPM policy at this time, given the need to focus resources on immediate crisis-related work.

Proposal: While the risks to the Fund balance sheet have increased, it remains difficult to undertake frequent engagement with member authorities under PPM at this time. Temporary modifications to the PPM framework are warranted to ensure that the objective of PPM to safeguard Fund resources and members’ capacity to repay through closer monitoring of the circumstances and policies of members with substantial outstanding credit from the Fund are met, while taking into account the challenges posed by the pandemic until conditions normalize. Staff proposes the following:

  • Maintain the existing PPM application criteria with respect to the absolute and quota-based thresholds, as well as the broad coverage under PPM of all financing instruments;

  • Temporarily modify the specific implementation modalities of the PPM policy by suspending the annual standalone PPM report and instead, conducting the PPM discussions at the time of the Article IV consultation , with the Article IV report for members subject to PPM to include all the elements of the PPM discussion;

  • Rename the policy from Post Program Monitoring (PPM) to Post Financing Assessment (PFA);

  • Apply the new streamlined modalities in all (existing and future) PPM (PFA) cases until end-2022, after which the standard modalities, including the stand-alone report on PPM (PFA) will resume.

Approved By

Ceyla Pazarbasioglu, Bernard Lauwers, and Rhoda Weeks-Brown

Prepared by the Strategy, Policy and Review Department, Finance Department, and Legal Department. Overall guidance was provided by Guillaume Chabert. The team was led by Delia Velculescu, Olaf Unteroberdoerster, and Bernhard Steinki, and comprised Jochen Andritzky, Johanna Schauer (SPR), Mizuho Kida (FIN), Kyung Kwak, Gabriela Rosenberg, and Natalia Stetsenko (LEG). Catherine Koh (SPR) provided research assistance and Tim Rose, Merceditas San Pedro-Pribram and Phyo Zin (SPR) provided administrative support.

Contents

  • CONTEXT

  • IMPLICATIONS OF HIGHER PANDEMIC-RELATED ACCESS FOR PPM

  • SAFEGUARDING OUTSTANDING CREDIT AMID THE CONTINUED PANDEMIC

  • PROPOSAL FOR TEMPORARY STREAMLINING OF PPM PROCEDURES AND CHANGING THE NAME OF THE POLICY

  • FIGURES

  • 1. PPM Decision—Applicable Thresholds

  • 2. Fund Financial Support

  • 3. Countries Exceeding PPM Thresholds

1

At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summings up can be found here: http://0-www-IMF-org.library.svsu.edu/external/np/sec/misc/qualifiers.htm.

Post Program Monitoring During The Pandemic: Proposal For Temporary Streamlining Of Procedures And Renaming Of The Policy
Author: International Monetary Fund. Strategy, Policy, & Review Department, International Monetary Fund. Finance Dept., and International Monetary Fund. Legal Dept.