As the COVID-19 crisis continues to unfold, uncertainty remains exceptionally high. The Fund has provided extraordinary financial support as well as timely analysis and policy advice during the first phase of the crisis, but additional efforts are needed to help members secure a durable exit, minimize long-term scarring, and build a more sustainable and resilient economy. Against this backdrop, and in line with the strategic directions laid out in the Fall 2020 Global Policy Agenda and the International Monetary and Financial Committee (IMFC) Communiqué, this Work Program puts forward a prioritized Board agenda for December 2020 to June 2021, focused on activities of most critical importance to our members.
Policymakers often face difficult tradeoffs in pursuing domestic and external stabilization objectives. The paper reflects staff’s work to advance the understanding of the policy options and tradeoffs available to policymakers in a systematic and analytical way.
The paper recognizes that the optimal path of the IPF tools depends on structural characteristics and fiscal policies. The operational implications of IPF findings require careful consideration. Developing safeguards to minimize the risk of inappropriate use of IPF policies will be essential. Staff remains guided by the Fund’s Institutional View (IV) on the Liberalization and Management of Capital Flows.
As noted in the report, the adoption of the IV represented a major advance in the IMF’s
policy framework to provide advice on capital account liberalization and the management
of capital flows. Before the adoption of the IV, there was no consistent framework to guide
policy advice on these areas. The IV was a major step towards filling the gap existing at the
time. It welcomed the economic benefits of capital flows while recognizing the risks
associated with capital flow volatility, developed a playbook for safe capital account
liberalization, and incorporated capital flow management measures (CFMs) into the policy
toolkit. It also noted the importance of international cooperation on capital flow policies in
allowing countries to harness the benefits of capital flows safely, while minimizing
negative spillovers. It was a demonstration of the institution’s flexibility and willingness to
embrace theoretical advances and lessons from experience.
International cooperation, economic and financial integration, and technological progress have delivered enormous benefits across the globe during the past decades. Yet, in many countries, these benefits have not been shared adequately to prevent eroding trust in institutions and weakening support for the global system that has made these gains possible.