Front Matter

Front Matter

Author(s):
Moisés Schwartz, and Shinji Takagi
Published Date:
June 2017
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    IEO

    Independent Evaluation Office

    of the International Monetary Fund

    Background Papers for

    The IMF and the Crisesin Greece, Ireland, and Portugal

    Editors

    Moisés J. Schwartz and Shinji Takagi

    © 2017 International Monetary Fund

    Cover design: IMF Multimedia Services Division

    Cataloging-in-Publication Data

    Joint Bank-Fund Library

    Names: Schwartz, Moisés J. (Moisés Jaime), 1962– | Takagi, Shinji, 1953– | International Monetary Fund. Independent Evaluation Office.

    Title: Background papers for the IMF and the crises in Greece, Ireland, and Portugal / editors Moisés J. Schwartz and Shinji Takagi.

    Other titles: Background papers for the International Monetary Fund and the crises in Greece, Ireland, and Portugal

    Description: Washington, DC : Independent Evaluation Office of the International Monetary Fund, 2017. | Includes bibliographical references.

    Identifiers: ISBN 9781475562538 (paper)

    Subjects: LCSH: Economic development—Europe. | Financial crises—Greece. | Financial crises—Ireland. | Financial crises—Portugal. | International Monetary Fund. | Global Financial Crisis, 2008–2009.

    Classification: LCC HC240.I4852 2017

    Disclaimer: The views expressed in this book are those of the authors and should not be reported as or attributed to the Independent Evaluation Office of the International Monetary Fund, the International Monetary Fund, its Executive Board, or the governments of any of its member countries.

    Publication orders may be placed online, by fax, or through the mail:

    International Monetary Fund, Publication Services

    P.O. Box 92780, Washington, DC 20090, U.S.A.

    Tel.: (202) 623-7430 Fax: (202) 623-7201

    E-mail: publications@imf.org

    Internet: www.elibrary.imf.org

    Contents

    The following conventions are used in this publication:

    • An en dash (–) between years or months (for example, 2016–17) or January–June) indicates the years or months covered, including the beginning and ending years or months).

    • n.a. means not available.

    • Billion means a thousand million; “trillion” means a thousand billion.

    • “Basis points” refers to hundredths of 1 percentage point (for example, 25 basis points are equivalent to ¼ of 1 percentage point.

    Some of the documents cited and referenced in this book were not available to the public at the time of publication of this book. Under the current policy on public access to the IMF’s archives, some of these documents will become available 3 or 5 years after their issuance. They may be referenced as EBS/YY/NN and SM/YY/NN, where EBS and SM indicate the series and YY indicates the year of issue. Certain other types of documents may become available 20 years after their issuance. For further information, see www.imf.org/external/np/arc/eng/archive.htm.

    Preface

    This book brings together nine papers that examine different aspects of the effectiveness of the IMF’s engagement in Greece, Ireland, and Portugal during 2010–14. The crises in these countries, coming so soon after the global financial and economic crisis, and occurring in a common currency area comprising highly integrated economies, posed extraordinary challenges to European and world policymakers. The IMF was called upon to provide financing and technical expertise in the management of these crises. The IMF’s role has been a subject of extensive commentary and scrutiny by experts around the world.

    The papers were prepared as background material for the IEO evaluation The IMF and the Crises in Greece, Ireland, and Portugal (2016), which asked, among other questions, whether the IMF’s crisis management was appropriate, given the exceptional circumstances; whether it compromised its best economic judgment because of the way it engaged the euro area; and what it could have done differently to achieve better outcomes. While the IEO used these background papers as inputs to help form judgments on these and other related questions, the views expressed herein remain those of the authors alone and do not necessarily represent those of the IEO, the IMF, or IMF policy.

    The evaluation concluded that the Executive Board generally played a limited role in its supervisory function, and that the IMF’s overall performance in surveillance and crisis lending was uneven. The IMF’s handling of the euro area crisis raised issues of accountability and transparency, which helped create the perception that the IMF treated Europe differently. The IMF Executive Board, when it met to discuss the evaluation report in July 2016, gave full or qualified support to the recommendations drawn from the experience to improve the IMF’s governance and operational effectiveness. The Chairman’s Summing Up of this discussion, along with the statement by the Managing Director on the evaluation, are included in Part IV of this volume.

    In March 2017, the Executive Board approved IMF management’s plan to follow up on the IEO evaluation. It reaffirmed its commitment to accountability and transparency, as well as its strong support for the role of the IEO in fostering good governance in the IMF. Under the management implementation plan, IMF staff is preparing Board papers on program design in currency union members and on IMF cooperation with regional financing arrangements. These steps should help alleviate governance and reputational risks for the IMF. Staff is working with the IEO to develop a protocol for information sharing as part of a commitment to ensure smooth collaboration between the IEO and the IMF.

    We thank Roxana Pedraglio, Franz Loyola, Chris Monasterski, Tam Nguyen, and Joshua Wojnilower for research assistance; Annette Canizares, Arun Bhatnagar, and Amy Gamulo for administrative assistance; and Rachael Weaving, Roxana Pedraglio, and Esha Ray for editorial and production management assistance.

    Moisés J. Schwartz

    Shinji Takagi

    Editors

    April 2017

    Washington, D.C.

    Abbreviations

    ABIB

    Antigua and Barbuda Investment Bank

    AQR

    Asset Quality Review

    ASEAN

    Association of South East Asian Nations

    BCEAO

    Central Bank of West African States

    BEAC

    Bank of the Central African States

    BOP

    balance of payments

    BRRD

    Bank Recovery and Resolution Directive

    BSRF

    Banking Sector Reserve Fund

    CAB

    cyclically adjusted balance

    CAPB

    cyclically adjusted primary balance

    CBI

    Central Bank of Ireland

    CARICOM

    Caribbean Community

    CDS

    Credit Default Swap

    CEMAC

    Central African Economic and Monetary Community

    CMA

    common monetary area

    COBAC

    Central African Banking Commission

    CUCB

    currency union central bank

    DSA

    debt sustainability analysis

    EA

    exceptional access

    EBA

    European Banking Authority

    EBRD

    European Bank for Reconstruction and Development

    EC

    European Commission

    ECA

    European Court of Auditors

    ECCA

    East Caribbean Currency Authority

    ECCB

    Eastern Caribbean Central Bank

    ECCU

    Eastern Caribbean Currency Union

    ECB

    European Central Bank

    ECF

    Extended Credit Facility

    ECJ

    European Court of Justice

    ECOFIN

    Economic and Financial Affairs Council

    ECOWAS

    Economic Community of West African States

    EDP

    Excessive Deficit Procedure

    EFC

    Economic and Financial Committee

    EFF

    Extended Fund Facility

    EFSF

    European Financial Stability Facility

    EFSM

    European Financial Stabilization Mechanism

    EIB

    European Investment Bank

    ELA

    emergency liquidity assistance

    EMS

    European Monetary System

    EMU

    Economic and Monetary Union

    EPE

    ex post evaluation

    ERM

    Exchange Rate Mechanism

    ESA

    European System of Accounts

    ESAF

    Enhanced Structural Adjustment Facility

    ESCB

    European System of Central Banks

    ESM

    European Stability Mechanism

    EU

    European Union

    EUR

    European Department

    EWG

    European Working Group

    FAD

    Fiscal Affairs Department

    FCC

    forward-commitment capacity

    FCL

    flexible credit line

    FSF

    Financial Stability Fund

    FSSA

    Financial System Stability Assessment

    FSAP

    Financial Sector Assessment Program

    G20

    Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, United Kingdom, United States, and the European Union

    GDP

    gross domestic product

    GGBs

    Greek Government bonds

    GFSR

    Global Financial Stability Report

    GLF

    Greek Loan Facility

    GRA

    General Resources Account

    HIPC

    Heavily Indebted Poor Countries

    ICT

    information and communication technology

    IFAC

    Irish Fiscal Advisory Council

    IFC

    International Finance Corporation

    IFSC

    International Financial Services Centre

    LEG

    Legal Department

    LOLR

    lender of last resort

    IMFC

    International Monetary and Financial Committee

    LOI

    letter of intent

    LTRO

    long-term financing operation

    MD

    Managing Director

    MCM

    Monetary and Capital Markets Department

    MEFP

    Memorandum of Economic and Financial Policies

    MNB

    Hungarian Central Bank

    MONA

    Monitoring of Fund Arrangements

    MOU

    Memorandum of Understanding

    MTFS

    medium-term budget strategy

    NGO

    nongovernmental organization

    NPL

    non-performing loan

    OCA

    optimum currency area

    OECD

    Organisation for Economic Co-operation and Development

    OMT

    outright monetary transaction

    PA

    prior action

    PCAR

    Prudential Capital Asset Requirements

    PEC

    policy for early consultation

    PIN

    Public Information Notice

    PLL

    Precautionary and Liquidity Line

    PPM

    post-program monitoring

    PPP

    public-private partnership

    PRGF

    Poverty Reduction and Growth Facility

    PSI

    private sector involvement

    PTSB

    Permanent TSB

    R&D

    research and development

    RAM

    risk assessment matrix

    RFAs

    regional financing arrangements

    RCF

    Rapid Credit Facility

    RFI

    Rapid Financing Instrument

    SAF

    Structural Adjustment Facility

    SB

    structural benchmark

    SBA

    Stand-By Arrangement

    SEEs

    southeastern European economies

    SGP

    Stability and Growth Pact

    SIP

    Selected Issues Paper

    SMP

    Securities Markets Program

    SOE

    state-owned enterprise

    SPR

    Strategy, Policy, and Review Department

    SRF

    Supplemental Reserve Facility

    STA

    Statistics Department

    TA

    technical assistance

    TFEU

    Treaty on the Functioning of the European Union

    TFGR

    Task Force for Greece

    TFP

    total factor productivity

    TOR

    terms of reference

    UFR

    use of Fund resources

    ULC

    unit labor costs

    UNCTAD

    United Nations Conference on Trade and Development

    VAT

    value-added tax

    WAEMU

    West African Economic and Monetary Union

    WB

    World Bank

    WEO

    World Economic Outlook

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