Front Matter

Front Matter

Author(s):
Moisés Schwartz, and Shinji Takagi
Published Date:
June 2017
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IEO

Independent Evaluation Office

of the International Monetary Fund

Background Papers for

The IMF and the Crisesin Greece, Ireland, and Portugal

Editors

Moisés J. Schwartz and Shinji Takagi

© 2017 International Monetary Fund

Cover design: IMF Multimedia Services Division

Cataloging-in-Publication Data

Joint Bank-Fund Library

Names: Schwartz, Moisés J. (Moisés Jaime), 1962– | Takagi, Shinji, 1953– | International Monetary Fund. Independent Evaluation Office.

Title: Background papers for the IMF and the crises in Greece, Ireland, and Portugal / editors Moisés J. Schwartz and Shinji Takagi.

Other titles: Background papers for the International Monetary Fund and the crises in Greece, Ireland, and Portugal

Description: Washington, DC : Independent Evaluation Office of the International Monetary Fund, 2017. | Includes bibliographical references.

Identifiers: ISBN 9781475562538 (paper)

Subjects: LCSH: Economic development—Europe. | Financial crises—Greece. | Financial crises—Ireland. | Financial crises—Portugal. | International Monetary Fund. | Global Financial Crisis, 2008–2009.

Classification: LCC HC240.I4852 2017

Disclaimer: The views expressed in this book are those of the authors and should not be reported as or attributed to the Independent Evaluation Office of the International Monetary Fund, the International Monetary Fund, its Executive Board, or the governments of any of its member countries.

Publication orders may be placed online, by fax, or through the mail:

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P.O. Box 92780, Washington, DC 20090, U.S.A.

Tel.: (202) 623-7430 Fax: (202) 623-7201

E-mail: publications@imf.org

Internet: www.elibrary.imf.org

Contents

The following conventions are used in this publication:

  • An en dash (–) between years or months (for example, 2016–17) or January–June) indicates the years or months covered, including the beginning and ending years or months).

  • n.a. means not available.

  • Billion means a thousand million; “trillion” means a thousand billion.

  • “Basis points” refers to hundredths of 1 percentage point (for example, 25 basis points are equivalent to ¼ of 1 percentage point.

Some of the documents cited and referenced in this book were not available to the public at the time of publication of this book. Under the current policy on public access to the IMF’s archives, some of these documents will become available 3 or 5 years after their issuance. They may be referenced as EBS/YY/NN and SM/YY/NN, where EBS and SM indicate the series and YY indicates the year of issue. Certain other types of documents may become available 20 years after their issuance. For further information, see www.imf.org/external/np/arc/eng/archive.htm.

Preface

This book brings together nine papers that examine different aspects of the effectiveness of the IMF’s engagement in Greece, Ireland, and Portugal during 2010–14. The crises in these countries, coming so soon after the global financial and economic crisis, and occurring in a common currency area comprising highly integrated economies, posed extraordinary challenges to European and world policymakers. The IMF was called upon to provide financing and technical expertise in the management of these crises. The IMF’s role has been a subject of extensive commentary and scrutiny by experts around the world.

The papers were prepared as background material for the IEO evaluation The IMF and the Crises in Greece, Ireland, and Portugal (2016), which asked, among other questions, whether the IMF’s crisis management was appropriate, given the exceptional circumstances; whether it compromised its best economic judgment because of the way it engaged the euro area; and what it could have done differently to achieve better outcomes. While the IEO used these background papers as inputs to help form judgments on these and other related questions, the views expressed herein remain those of the authors alone and do not necessarily represent those of the IEO, the IMF, or IMF policy.

The evaluation concluded that the Executive Board generally played a limited role in its supervisory function, and that the IMF’s overall performance in surveillance and crisis lending was uneven. The IMF’s handling of the euro area crisis raised issues of accountability and transparency, which helped create the perception that the IMF treated Europe differently. The IMF Executive Board, when it met to discuss the evaluation report in July 2016, gave full or qualified support to the recommendations drawn from the experience to improve the IMF’s governance and operational effectiveness. The Chairman’s Summing Up of this discussion, along with the statement by the Managing Director on the evaluation, are included in Part IV of this volume.

In March 2017, the Executive Board approved IMF management’s plan to follow up on the IEO evaluation. It reaffirmed its commitment to accountability and transparency, as well as its strong support for the role of the IEO in fostering good governance in the IMF. Under the management implementation plan, IMF staff is preparing Board papers on program design in currency union members and on IMF cooperation with regional financing arrangements. These steps should help alleviate governance and reputational risks for the IMF. Staff is working with the IEO to develop a protocol for information sharing as part of a commitment to ensure smooth collaboration between the IEO and the IMF.

We thank Roxana Pedraglio, Franz Loyola, Chris Monasterski, Tam Nguyen, and Joshua Wojnilower for research assistance; Annette Canizares, Arun Bhatnagar, and Amy Gamulo for administrative assistance; and Rachael Weaving, Roxana Pedraglio, and Esha Ray for editorial and production management assistance.

Moisés J. Schwartz

Shinji Takagi

Editors

April 2017

Washington, D.C.

Abbreviations

ABIB

Antigua and Barbuda Investment Bank

AQR

Asset Quality Review

ASEAN

Association of South East Asian Nations

BCEAO

Central Bank of West African States

BEAC

Bank of the Central African States

BOP

balance of payments

BRRD

Bank Recovery and Resolution Directive

BSRF

Banking Sector Reserve Fund

CAB

cyclically adjusted balance

CAPB

cyclically adjusted primary balance

CBI

Central Bank of Ireland

CARICOM

Caribbean Community

CDS

Credit Default Swap

CEMAC

Central African Economic and Monetary Community

CMA

common monetary area

COBAC

Central African Banking Commission

CUCB

currency union central bank

DSA

debt sustainability analysis

EA

exceptional access

EBA

European Banking Authority

EBRD

European Bank for Reconstruction and Development

EC

European Commission

ECA

European Court of Auditors

ECCA

East Caribbean Currency Authority

ECCB

Eastern Caribbean Central Bank

ECCU

Eastern Caribbean Currency Union

ECB

European Central Bank

ECF

Extended Credit Facility

ECJ

European Court of Justice

ECOFIN

Economic and Financial Affairs Council

ECOWAS

Economic Community of West African States

EDP

Excessive Deficit Procedure

EFC

Economic and Financial Committee

EFF

Extended Fund Facility

EFSF

European Financial Stability Facility

EFSM

European Financial Stabilization Mechanism

EIB

European Investment Bank

ELA

emergency liquidity assistance

EMS

European Monetary System

EMU

Economic and Monetary Union

EPE

ex post evaluation

ERM

Exchange Rate Mechanism

ESA

European System of Accounts

ESAF

Enhanced Structural Adjustment Facility

ESCB

European System of Central Banks

ESM

European Stability Mechanism

EU

European Union

EUR

European Department

EWG

European Working Group

FAD

Fiscal Affairs Department

FCC

forward-commitment capacity

FCL

flexible credit line

FSF

Financial Stability Fund

FSSA

Financial System Stability Assessment

FSAP

Financial Sector Assessment Program

G20

Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, United Kingdom, United States, and the European Union

GDP

gross domestic product

GGBs

Greek Government bonds

GFSR

Global Financial Stability Report

GLF

Greek Loan Facility

GRA

General Resources Account

HIPC

Heavily Indebted Poor Countries

ICT

information and communication technology

IFAC

Irish Fiscal Advisory Council

IFC

International Finance Corporation

IFSC

International Financial Services Centre

LEG

Legal Department

LOLR

lender of last resort

IMFC

International Monetary and Financial Committee

LOI

letter of intent

LTRO

long-term financing operation

MD

Managing Director

MCM

Monetary and Capital Markets Department

MEFP

Memorandum of Economic and Financial Policies

MNB

Hungarian Central Bank

MONA

Monitoring of Fund Arrangements

MOU

Memorandum of Understanding

MTFS

medium-term budget strategy

NGO

nongovernmental organization

NPL

non-performing loan

OCA

optimum currency area

OECD

Organisation for Economic Co-operation and Development

OMT

outright monetary transaction

PA

prior action

PCAR

Prudential Capital Asset Requirements

PEC

policy for early consultation

PIN

Public Information Notice

PLL

Precautionary and Liquidity Line

PPM

post-program monitoring

PPP

public-private partnership

PRGF

Poverty Reduction and Growth Facility

PSI

private sector involvement

PTSB

Permanent TSB

R&D

research and development

RAM

risk assessment matrix

RFAs

regional financing arrangements

RCF

Rapid Credit Facility

RFI

Rapid Financing Instrument

SAF

Structural Adjustment Facility

SB

structural benchmark

SBA

Stand-By Arrangement

SEEs

southeastern European economies

SGP

Stability and Growth Pact

SIP

Selected Issues Paper

SMP

Securities Markets Program

SOE

state-owned enterprise

SPR

Strategy, Policy, and Review Department

SRF

Supplemental Reserve Facility

STA

Statistics Department

TA

technical assistance

TFEU

Treaty on the Functioning of the European Union

TFGR

Task Force for Greece

TFP

total factor productivity

TOR

terms of reference

UFR

use of Fund resources

ULC

unit labor costs

UNCTAD

United Nations Conference on Trade and Development

VAT

value-added tax

WAEMU

West African Economic and Monetary Union

WB

World Bank

WEO

World Economic Outlook

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