On September 19, the IMF’s Executive Board explored the determinants and prospects for the pace of capital market access for countries emerging from financial crises. They found that “past experience suggests that countries that lose market access as a result of adverse developments in global financial markets, or minor spillover from crises elsewhere, generally regain market access quickly as the effects of such developments pass.” But some Directors noted that “in view of the time lags involved, interim financing by the IMF and other IFIs [international financial institutions] is an important element to help facilitate regaining market access, in particular, by ensuring temporary financing while corrective policies are being implemented.”
The Directors agreed “that the adoption of credible corrective policies is the single most important determinant of a country’s prospects for regaining market access,” although much more research needs to be done in this area. They also agreed that “a clear indication of how a country will meet its gross financing requirements is an important factor in the restoration of market access, particularly when the country is emerging from a major crisis or relies heavily on international capital markets.”
The full text of IMF Public Information Notice No. 01/110 is available on the IMF’s website (www.imf.org).