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Mr. Stéphane Cossé, Mr. Johannes Mueller, Mr. Jean Le Dem, and Mr. Jean A. P. Clément

Abstract

Developments in the countries of the CFA franc zone in the aftermath of the January 1994 devaluation of the CFA franc are reviewed in this paper. Following a summary of the new adjusment strategy, the papers describes the progress made and the difficulties encountered during 1994 and early 1995 in implementing the programs supported by use of IMF resources.

International Monetary Fund

Abstract

The financial turmoil of the late 1990s prompted a broad search for tools and techniques for detecting and preventing financial crises, and more recent episodes of instability have high lighted the importance of continuous monitoring of financial systems as a tool for preventing crises. This paper looks at the development of measures of financial sector soundness and of methods to analyze them. The authors propose two sets of financial soundness indicators that are considered useful for periodic monitoring, and for compilation and dissemination efforts by national authorities. They highlight the substantial advance made in recent years in measuring and analyzing financial soundness indicators, and specify areas where more work is needed.

Mr. Benedict J. Clements, Ms. Gabriela Inchauste, Ms. Nita Thacker, Mr. Thomas William Dorsey, Mr. Shamsuddin Tareq, Mr. Emanuele Baldacci, Mr. Sanjeev Gupta, and Mr. Mark W. Plant

Abstract

The creation of the Poverty Reduction and Growth Facility (PRGF) in late 1999 represented the culmination of more than two years of internal and external reviews and IMF policy discussions on the assessment and transformation of the Enhanced Structural Adjustment Facility (ESAF) (Box 1). At the time the PRGF was instituted, it was envisaged that there would be some far-reaching changes in the way the IMF worked to support low-income member countries. First, there would be a change in the content of IMF-supported programs in these countries—the programs would be more pro-poor and pro-growth. Second, there would be an increased emphasis on country ownership of PRGF-supported programs. And third, there would be a better definition of the IMF’s role and relationship with other agencies supporting the development efforts of low-income countries. Although much of the structure for the anticipated changes was embedded in the Poverty Reduction Strategy Paper (PRSP) process, specific expectations for PRGF-supported programs were laid out in the Key Features of Poverty Reduction and Growth Facility (PRGF)-Supported Programs document (Box 2), which was issued in August 2000 after extensive internal and external consultation.

Mr. Benedict J. Clements, Ms. Gabriela Inchauste, Ms. Nita Thacker, Mr. Thomas William Dorsey, Mr. Shamsuddin Tareq, Mr. Emanuele Baldacci, Mr. Sanjeev Gupta, and Mr. Mark W. Plant

Abstract

In reviewing the implementation of the key features, the analysis focuses on the extent to which program design in PRGF-supported programs has been consistent with these goals. Because of the early stage of the transformation from the ESAF, it is not yet possible to consider questions about how the PRGF has affected poverty and growth. The process of transformation from the ESAF to the PRGF is ongoing, and in many respects it is still at an early stage—a large majority of PRGF-supported programs in place are either new PRGF-supported arrangements that have not yet reached their first review or ESAF-supported arrangements that have been transformed into PRGF-supported arrangements in midstream.1 Nevertheless, an attempt has been made to evaluate outcomes in relation to objectives wherever data were available (mostly in the fiscal area).

Mr. Benedict J. Clements, Ms. Gabriela Inchauste, Ms. Nita Thacker, Mr. Thomas William Dorsey, Mr. Shamsuddin Tareq, Mr. Emanuele Baldacci, Mr. Sanjeev Gupta, and Mr. Mark W. Plant

Abstract

The interrelated key features 1 and 2 set out several aspects of the expected relationship between the PRGF-supported program and the PRSP. Specifically. PRGF-supported programs should be consistent with, and drawn from, the PRSP in a manner that takes into account national priorities. Further, PRGF-supported programs should concentrate on those parts of the poverty reduction strategy that are within the IMF’s areas of expertise while remaining cognizant of and consistent with those parts of the strategy that are outside the IMF’s areas of expertise.

Mr. Benedict J. Clements, Ms. Gabriela Inchauste, Ms. Nita Thacker, Mr. Thomas William Dorsey, Mr. Shamsuddin Tareq, Mr. Emanuele Baldacci, Mr. Sanjeev Gupta, and Mr. Mark W. Plant

Abstract

In late 1999 the IMF established the Poverty Reduction and Growth Facility (PRGF) to integrate the objectives of poverty reduction and growth more fully into its operations for the poorest countries, and to base these operations on national poverty reduction strategies prepared by the country with broad participation of key stakeholders. A review of the program would be conducted two years later. This paper synthesizes two papers prepared by IMF staff: Review of the Poverty Reduction and Growth Facility: Issues and Options, and Review of the Key Features of the Poverty Reduction and Growth Facility: Staff Analyses. The paper draws on a broad range of internal and external views gathered between July 2001 and February 2002, including discussions at regional forums, meetings with donor government officials and representatives of civil society organizations, and comments of key officials in member countries with PRGF arrangements.

Mr. Benedict J. Clements, Ms. Gabriela Inchauste, Ms. Nita Thacker, Mr. Thomas William Dorsey, Mr. Shamsuddin Tareq, Mr. Emanuele Baldacci, Mr. Sanjeev Gupta, and Mr. Mark W. Plant

Abstract

This key feature sets out the expectations that PRGF-supported programs increase poverty-reducing expenditures, improve the efficiency and targeting of these and other expenditures, and include tax reforms that simultaneously improve equity and efficiency.

Mr. Benedict J. Clements, Ms. Gabriela Inchauste, Ms. Nita Thacker, Mr. Thomas William Dorsey, Mr. Shamsuddin Tareq, Mr. Emanuele Baldacci, Mr. Sanjeev Gupta, and Mr. Mark W. Plant

Abstract

The need for further capacity building to develop and assess macroeconomic frameworks, analyze the dimensions and profile of poverty, and conduct poverty and social impact analysis has been noted by a wide array of internal and external commentators. This capacity building is required for governments, academics, and CSOs in PRGF countries and is seen as a key element in building greater ownership for program design and policy choices. Consistent with this perception, many people from these groups called for greater assistance by donors, the World Bank, and the IMF in helping to develop this capacity. Among the options for the IMF are continuing and strengthening macroeconomic training for civil society officials and expanding that training to CSOs in countries with PRGF-supported programs. Finally, there is scope for additional internal training of IMF staff to assist them in broadening their own capacity to incorporate poverty and social impact analysis into PRGF-supported programs.

International Monetary Fund

Abstract

Over the past two decades, Nigeria has not reaped fully the benefits of its national wealth despite its efforts at structural adjustment. This paper concludes that the facts do not justify the negative image that structural adjustment has had in Nigeria. Vigorous market reforms and tight financial policies had resulted in economic growth and employment expansion, but they were abandoned too soon to have sustained benefits.

Mr. Benedict J. Clements, Ms. Gabriela Inchauste, Ms. Nita Thacker, Mr. Thomas William Dorsey, Mr. Shamsuddin Tareq, Mr. Emanuele Baldacci, Mr. Sanjeev Gupta, and Mr. Mark W. Plant

Abstract

This key feature sets out the expectation that fiscal targets in PRGF-supported programs should be designed in a manner that allows greater flexibility in accommodating higher public expenditures and accommodating unexpected changes in revenue or financing.