International Monetary Fund. External Relations Dept.
Following is the text of the communiqué issued by the finance ministers and central bank governors of the Intergovernmental Group of 24 on International Monetary Affairs and Development on September 20.
The IMF, an international organization of currently 184 member countries, was established in 1946 to promote international monetary cooperation, exchange stability, and orderly exchange arrangements; to provide temporary financial assistance to countries with balance of payments difficulties; and to foster economic growth and high levels of employment. To achieve these objectives, the IMF carries out three types of operational activities: surveillance, financial assistance, and technical assistance.
The IMF Research Bulletin, a quarterly publication, selectively summarizes research and analytical work done by various departments at the IMF, and also provides a listing of research documents and other research-related activities, including conferences and seminars. The Bulletin is intended to serve as a summary guide to research done at the IMF on various topics, and to provide a better perspective on the analytical underpinnings of the IMF’s operational work.
The IMF began to provide technical assistance to its member countries in the early 1960s in response to requests from newly independent nations in Africa and Asia. By the mid-1980s, resources devoted to technical assistance had nearly doubled. As a result of the expansion of the IMF’s membership and the adoption of market-oriented economies by a large number of countries worldwide, IMF TA activities grew even more rapidly in the early 1990s. The demand increased further in the late 1990s as significant TA resources had to be directed to countries hit by financial crisis. In addition, in recent years, the IMF has had to mount significant efforts to provide prompt policy advice and operational assistance to countries emerging from conflict situations. In fiscal year 2006 the IMF devoted 429 person years to TA activities—a 13 percent increase from FY2005 and almost 130 person years more than a decade ago.5 The delivery of IMF technical assistance over the period FY2000–FY2006 is shown in Figure 1.
This paper examines how military spending has been affected by Fund-supported programs. It looks at the changes in military expenditure as a share of gross domestic product (MIL/GDP) and of total expenditure (MIL/EX) for two subsamples of Fund-supported programs, broadly divided into fiscal tightening and fiscal accommodating. Under fiscal tightening, the evidence suggests that MIL/GDP decreases during Fund-supported programs, but that MIL/EX increases, revealing resilience to budgetary adjustments. Under fiscal accommodation, as total government expenditure tends to increase, so does military expenditure; however, the ratio MIL/EX declines, as fewer additional resources are allocated to the military.
Mr. Philippe Beaugrand, Mr. Montfort Mlachila, and Mr. Boileau Loko
The paper reviews the principles and practical considerations involved in the choice between foreign and domestic financing of fiscal deficits, and derives a series of recommendations broadly applicable to Central and West African countries. The paper develops a simple analytical framework and shows that highly concessional external debt is usually a superior choice to domestic debt in terms of financial costs and risks, even in the face of a probable devaluation. The paper stresses the importance of the availability and terms of financing, and of overall long-term debt sustainability. It concludes that these countries need to take a gradual approach to domestic debt financing, beginning with the issuance of short-term bills, and ensure a solid track record of meeting their debt-service obligations.
Japan has provided grant contributions to support the IMF’s technical assistance to member countries since 1990. In 1997, the scope of the administered account was widened to allow for the financing of other IMF activities in Asia and the Pacific, carried out through the IMF Regional Office for Asia and the Pacific in Tokyo.
This chapter focuses on IMF’s technical assistance (TA) activities and describes Japan Administered Account for Selected Fund Activities (JSA) including its objectives, size, scope, and use, as well as assessments of its activities, with focus on fiscal year. Activities to be funded from the JSA, as well as all other IMF TA activities, are planned each year. Reflecting greater global financial stability and fewer conflict situations over the past two years, FY2006 saw a reduction in JSA allocations for crisis prevention and the rehabilitation of economic and financial institutions in post-conflict countries, and an increase in JSA allocations for sustainable debt management and poverty reduction efforts. The distribution of the commitment of JSA funds among the subject areas has broadly reflected the foregoing distribution in the overall use of IMF resources for technical assistance. Japan also provides financial support for a scholarship program for qualified Asian nationals who want to study economics at the doctoral level at one of the leading universities in North America to pursue a career at the IMF or in their home country governments. The program covers tuition and reasonable costs for two years of study; scholars are expected to cover the remaining years of study, typically through additional funding from their universities.
In 1990, Japan agreed to provide financial support for the IMF’s technical assistance to its member countries to strengthen their capacity to formulate, implement, and maintain macroeconomic and structural adjustment programs. Since then, Japan has been, and continues to be, the largest contributor to the IMF’s technical assistance (TA) activities.1 Japan’s contributions are provided through the Japan Administered Account for Selected Fund Activities (JSA).2 In addition, Japan also finances two scholarship programs—one under the JSA and the other under a separate account, the Subaccount for Japan Advanced Scholarship Program.
The COVID-19 pandemic has caused a uniquely severe synchronized shock across the global economy, in turn leading numerous member countries to request substantial financial assistance from the Fund. The Executive Board responded to members’ needs by increasing the access limits under the Fund’s emergency financing instruments by 50 percent of quota for a period of 6 months (until October 5, 2020), subject to a possible extension by the Executive Board.