Washington, DC: On May 7, 2021, the Executive Board of the International Monetary Fund (IMF) approved temporary modifications to the modalities for itsPost 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 theGeneral Resources Accountor disbursements from thePoverty Reduction and Growth Trustunder emergency financing instruments.
Executive Board Assessment[1]
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.
[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:https://www.IMF.org/external/np/sec/misc/qualifiers.htm.