Report on the Incidence of Longer-Term Program Engagement

The assessments are intended to provide an analysis of the economic problems facing the member and a critical and frank review of progress during the period of Fund-supported programs, as the basis for a forward-looking assessment and strategy for future Fund engagement, including, where appropriate, an explicit exit strategy.

Abstract

The assessments are intended to provide an analysis of the economic problems facing the member and a critical and frank review of progress during the period of Fund-supported programs, as the basis for a forward-looking assessment and strategy for future Fund engagement, including, where appropriate, an explicit exit strategy.

1. During the discussion of the conclusions of the Task Force on Prolonged Use of Fund Resources, the Executive Board requested semi annual reports on the incidence of Longer-Term Program Engagement (LTPE).1 This is the sixth such report which provides information through June 2006.

2. On May 15, 2006 the Executive Board concluded a review of the EPAs and issues related to the policy on LTPE. On that occasion, two changes were made in the definition of LTPE. First, the definition of LTPE for PRGF-eligible countries was brought in line with that applying for other countries. All members will now be considered as having LTPE if they have spent at least seven out of the last ten years under programs supported by Fund resources. As a result, 17 PRGF-eligible countries are no longer classified as having LTPE (Table 1). Second, time spent under precautionary arrangements that remain undrawn does not count toward LTPE. This change removed five countries from the list of members with LTPE.

Table 1.

Members Dropping From LTPE List on May 15, 2006 1/

(As of May 15, 2006)

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Source: Fund staff.
1/

As a result of the changes of LTPE definition approved by the Board following the review of EPAs.

2/

Excluding Policy Support Instrument.

3. Thirty-two countries, of which 29 are PRGF-eligible, met the new LTPE definition at end-June 2006 (Table 2). By that date, EPAs had been discussed at the Board for 26 of the members that met the new LPTE definition (Table 3). Because a minimum five-year interval between EPAs for a single members was introduced in the May 15, 2006 review of EPAs, the earliest any of these countries could be required to have a second EPA would be late 2008.

Table 2.

Members with Longer-Term Program Engagement

(As of June 30, 2006)

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Source: Fund staff.
1/

Countries that have had at least seven years of Fund arrangements in the last ten years. Time spent under precautionary arrangements or the Policy Support Instrument do not count towards LTPE.

2/

Excluding Policy Support Instrument.

3/

Albania has a blend of EFF-PRGF arrangements.

4/

Member for which an EPA had not been considered by the Board at end-June 2006.

Table 3.

Ex Post Assessments Considered by the Board

(As of June 30, 2006)

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Source: Fund staff.
1/

And 6th Review under PRGF arrangement.

4. Of the six EPAs that were expected for the period March-September 2006 in the fifth semi-annual report on the incidence of LTPE, those for Tanzania and Togo were considered by the Board during the second quarter of 2006.2 No EPA is now expected for Mauritania because this member no longer qualifies as having LTPE in light of the revised definition of LTPE for PRGF-eligible members. The EPAs for Argentina and Burkina Faso are expected to be completed during the third quarter of 2006. The EPA for Guyana is now expected to be discussed by the Board during the fourth quarter, and an EPA discussion is also tentatively expected for Nicaragua in the second half of 2006 (Table 4).

Table 4:

Ex Post Assessments Tentatively Expected for Board Discussion, July-December 2006 1/

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Source: Fund staff.
1/

EPA expected to be discussed in the context of Article IV consultations or combined Article IV/program review discussions unless otherwise indicated.

2/

EPA expected to be discussed in the context of Article IV consultation, together with an ex post evaluation of program engagement under the exceptional access policy.

3/

EPA expected to coincide with the final review under the program, but depending on circumstances may need to be done on a stand-alone basis.

5. The number of EPAs to be considered at the Board in 2007 is likely to be particularly low for two reasons. First, of the 32 members that met the new LTPE definition at end-June 2006, only Ghana and Kenya are not expected to have had an EPA considered at the Board by the end of 2006. Second, among the current users of Fund resources that did not meet the new LPTE definition at end-June 2006, only Turkey appears likely to met the LTPE definition in 2007. Turkey’s current arrangement expires in 2008.

1

See “Conclusions of the Task Force on Prolonged Use of Fund Resources” (February 4, 2003) and “Operational Guidance for Assessments of Countries with Longer-Term Program Engagement” (August 20, 2003).

2

See “Report on the Incidence of Longer-Term Program Engagement”, (April 5, 2006).

Report on the Incidence of Longer-Term Program Engagement
Author: International Monetary Fund