The Executive Board of the International Monetary Fund (IMF) has approved temporary modifications to the modalities for its Post Programme Monitoring (PPM) until end-2022.
According to a press statement, 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 programme 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 Programme Monitoring (PPM) to Post Financing Assessment (PFA) to better reflect its coverage, which includes not only outstanding credit from IMF-supported programmes but also credit from outright purchases from the General Resources Account or disbursements from the Poverty Reduction and Growth Trust under emergency financing instruments.
The executive directors welcomed the opportunity to discuss the proposals for temporarily modifying the modalities for PPM in response to the challenges posed by the pandemic.
They emphasised 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.
The 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.
The directors generally agreed that temporarily streamlining the implementation modalities of the PPM framework is warranted to address the aforementioned constraints.
They stressed, however, that the objective of PPM to safeguard Fund resources and members’ capacity to repay should be maintained..— TLTP