- Paolo Dudine, Sibabrata Das, Pritha Mitra, Yongzheng Yang, Eteri Kvintradze, and Nkunde Mwase
- Published Date:
- March 2010
© 2009 International Monetary Fund
Production: IMF Multimedia Services Division
Typesetting: Alicia Etchebarne-Bourdin
Creating policy space in low-income countries during the recent crises/Yongzheng Yang . . . [et al.].—Washington, D.C.: International Monetary Fund, 2009.
Includes bibliographical references.
1. Economic assistance—Developing countries. 2. International Monetary Fund—Developing countries. 3. Conditionality (International relations). 4. Monetary policy—Developing countries. 5. Fiscal policy—Developing countries. I. Yang, Yongzheng. II. International Monetary Fund. III. Title.
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Abbreviations and AcronymsCSO
Civil Society OrganizationDSA
Debt Sustainability AnalysisEFF
Extended Fund FacilityESF
Exogenous Shocks FacilityFDI
Foreign Direct InvestmentHIPC
Heavily Indebted Poor CountriesGDP
Gross Domestic ProductHAC
High-Access Component (of ESF)IEO
Independent Evaluation Office (IMF)LIC
Millennium Development GoalMDRI
Multilateral Debt Relief InitiativeMONA
Monitoring of Fund ArrangementsPFM
Public Financial ManagementPRGF
Poverty Reduction and Growth FacilityPRS
Poverty Reduction StrategyPSI
Policy Support InstrumentRAC
Rapid-Access Component (of ESF)SBA
World Economic Outlook
Low-income countries have been hit hard by the sharp increases in world food and fuel prices in 2007–08 and subsequently by the global financial crisis and ensuing recession. The International Monetary Fund (IMF) has responded quickly to the need of its low-income country members to address the impact of these global shocks. It has substantially scaled up its financial assistance to low-income countries and revamped its concessional lending facilities to make them more flexible. Together with the ongoing reforms to streamline structural conditionality, these efforts have formed an important part of the IMF’s strategy to help low-income countries address the fallout from the crises.
This Departmental Paper provides an initial empirical assessment of the outcome of these efforts and reforms. It examines the responsiveness of macroeconomic policies and structural conditionality in recent IMF-supported programs in a number of low-income countries. We hope the results of this exercise will help improve understanding of how IMF-supported programs in low-income countries have been adapted to the changing economic circumstances and which aspects of program design may need further improvement in the future.
Many people contributed to the undertaking of this exercise and to the production of this paper. Hugh Bredenkamp, Deputy Director of the Strategy, Policy, and Review Department of the IMF, and Catherine Pattillo, Advisor and Chief of the Low-Income Countries Strategy Unit of the Department, oversaw the exercise and provided invaluable guidance. The paper benefited enormously from data and comments provided by many staff, both within and outside the Strategy, Policy, and Review Department. Neri Gomes helped with administrative and editorial work, and Joanne Blake and her team helped turn the original paper into this Departmental Paper. We are grateful to all these colleagues.