Back Matter

Back Matter

International Monetary Fund. Independent Evaluation Office
Published Date:
August 2013
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    This figure excludes the 5 percent carry-over of the FY2012 budget. Appendix 1 details the IEO budget and expenditures.

    On a one-time, exceptional basis, the IEO was authorized to carry forward up to 10 percent of its FY2013 budget into FY2014, higher than the 5 percent carry forward in previous years.

    These indicative budgets were provided for information, rather than for endorsement, pending any changes needed in light of the Executive Board discussion of the External Evaluation report, which took place after the budget was approved.

    These were the first and third IEO evaluations. Issues identified in the evaluation of Capital Account Crises (IEO’s second evaluation) were re-examined in the evaluation of IMF Performance in the Run-Up to the Financial and Economic Crisis and will be further considered in the upcoming evaluations of the IMF’s response to the global financial crisis.

    During the Executive Board discussion of the 2002 evaluation, many Directors considered that prolonged use among low-income countries relying on concessional financing did not necessarily indicate a problem that needed to be corrected.

    One hundred and seven programs (of which 26 were precautionary) were approved between 2008 and 2012, compared with 66 (of which 16 were precautionary) between 2003 and 2007.

    The panel was composed of José Antonio Ocampo, former United Nations Under-Secretary-General for Economic and Social Affairs and Executive Secretary of the Economic Commission for Latin America and the Caribbean; Stephen Pickford, former Managing Director (International and Finance) at H.M. Treasury, United Kingdom, and former IMF Executive Director; and Cyrus Rustomjee, Director of Economic Affairs at the Commonwealth Secretariat and former IMF Executive Director. Mr. Ocampo chaired the group.

    The full report, along with the Summing Up of the Board discussion, is available on the IEO website,

    This paper was prepared by David Peretz. The author would like to acknowledge the advice and comments of David Goldsbrough, the main author of the 2002 Evaluation of Prolonged Use of IMF Resources, and to thank Alisa Abrams for her assistance and support.

    These considerations notwithstanding, during the Executive Board discussion of the 2002 evaluation, some Directors considered that prolonged use was not, per se, a problem that needed to be corrected, particularly among low-income countries relying on concessional financing.

    One hundred and seven programs (of which 26 were precautionary) were approved between 2008 and 2012, compared with 66 (of which 16 were precautionary) between 2003 and 2007.

    This note assesses the findings and recommendations of the IEO evaluation and not those of the task force, treating the latter as providing an action plan in response to the evaluation.

    This review, however, did not benefit from discussion with country authorities. Overall, the resources and time devoted to the preparation of this review were considerably less than those devoted to the 2002 evaluation.

    A further example was countries seeking a Fund “seal of approval” to assist the process of accession to the European Union.

    This review also uses the terms “prolonged use” and “prolonged users” to refer to “LTPE” and “LTPE countries,” in part to facilitate references to the 2002 evaluation.

    As explained in the notes to Table 1, in May 2006, there was an important change in the definition of LTPE which led to the removal of 22 countries from the LTPE list. This largely accounts for the change in the LTPE figures between 2003 and 2006. As shown in Table 1, the reduction in the incidence of LTPE occurred after 2006.

    This difference is significant, since during the Executive Board discussion of the 2002 evaluation, most Directors did not consider the relatively high incidence of prolonged use in LICs relying on concessional financing administered by the Fund as necessarily indicating a problem that needed to be corrected (IMF, 2002).

    While the IEO evaluation identified program design and insufficient Fund attention to ownership and implementation capacity as factors that had played a major role in successive program failure leading to prolonged use, the subsequent staff task force (mentioned in the next section) saw the main cause as being weak commitment and implementation on the part of program countries. The two diagnoses are not inconsistent, but the difference in emphasis is important. Evidence collected in the course of this review reinforces the 2002 evaluation finding that a range of factors sometimes has led staff to support programs where commitment and implementation capacity were weak.

    One hundred and seven programs (of which 26 were precautionary) were approved between 2008 and 2012, compared with 66 (of which 16 were precautionary) between 2003 and 2007.

    This analysis recognizes that not all changes made were attributable to the evaluation recommendations.

    The initial requirement was that LTPE reports be prepared semiannually. This was done through June 2008, at which time it was agreed by the Executive Board that the frequency be shifted to annual. Additionally, a temporary suspension of the Ex Post Assessment (EPA) requirement was requested by staff in June 2009 and agreed in the context of Executive Board consideration of the 2009 Omnibus Paper on Easing Work Requirements. The suspension was lifted end-August 2010.

    In 2003, the Executive Board agreed to discontinue the use of Staff Monitored Programs (SMPs) to convey signals on a member’s policies to official and/or private creditors because relatively lax performance reporting standards had allowed members to use the positive signal of initiating an SMP without adequate follow-up on implementation (IMF, 2003b).

    The PSI supports low-income countries that do not want or need Fund financial assistance but seek to consolidate their economic performance with IMF monitoring and support. This support also delivers signals to donors, creditors, and the general public on the strength of a country’s policies.

    The seven countries that have, or have had, a PSI are: Cape Verde, Mozambique, Nigeria, Rwanda, Senegal, Tanzania, and Uganda. Except for Cape Verde, all have been classified as prolonged users at some point; Rwanda remained on the LTPE list as of June 2012.

    PSIs become clearly off track as soon as a benchmark or policy condition is missed, whereas in a precautionary program the program review can be delayed.

    In one of the country cases reviewed, Uruguay, there was a significant amount of political economy analysis in staff reports, especially in anticipation of a change in government. Fund staff worked with the authorities to consider best ways to engage all candidates to ensure protection of core program elements and the continuity of policies during the transition and beyond. Directors appreciated staff’s report on the institutional and political contexts.

    According to the guidance note on the Fund’s transparency policy, staff should avoid politically sensitive language (IMF, 2010b).

    An EPA report is to be prepared the first time a member is assessed to have a longer-term program engagement. Subsequent assessments are to take the form of an EPA Update, which is expected to be more streamlined. For countries that graduate from Fund-supported programs within the five-year period after completing an EPA, a new EPA is not required. A new EPA report, rather than an EPA Update, is required however if during the period relevant for the update a program has been cancelled or interrupted for more than six months.

    This review was prepared by Sanjay Dhar. The author would like to acknowledge the advice and inputs of Marcelo Selowsky, the main author of the 2003 evaluation on Fiscal Adjustment, and of Andrew Martinez and Roxana Pedraglio.

    The 2003 evaluation examined program documents of 13 countries that had undergone IMF-supported programs (mainly Stand-By/Extended Fund Facility Arrangements) during 1994–2000. Its selection of countries was to some extent restricted by parallel work on IEO evaluations addressing capital account crises and low-income countries. In both the 2003 evaluation and the present review, the term “program document” refers to the initial request for a program as presented to the IMF Executive Board.

    All nonprecautionary SBAs during 2005–10 that had been completed by mid-2012 were considered. The SBAs selected for review were: Dominican Republic (2005), Turkey (2005), Uruguay (2005), Georgia (2008), Hungary (2008), Pakistan (2008), Ukraine (2008), Angola (2009), Dominican Republic (2009), Mongolia (2009), Romania (2009), Sri Lanka (2009), and Jamaica (2010). There was little discretion in the choice of countries selected given the above criteria and our exclusion of precautionary programs, advanced economies, and Latvia from the sample. Advanced economies were excluded to maintain comparability with the earlier sample; Latvia was excluded due to the extent of unanticipated output decline.

    Fiscal strategy briefs originated as internal notes prepared by FAD to aid in the prioritization of technical assistance.

    The reforms were grouped into nine categories: tax policy; tax administration; wage bill and civil service reforms; social sector spending; other spending issues; public enterprise reform, privatization, and private sector development; social security and pensions; organizational reform; and pricing policy of public utilities.

    This is corroborated by the work of others such as Clements, Gupta, and Nowzaki (2011).

    An exception is the 2009 Dominican Republic program, for which increased coverage of the conditional cash transfer program to families in extreme poverty was included as a structural benchmark.

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