A. Risk Assessment

12. An assessment of risks is important to provide members with early warning and to promote policy response, both for purposes of prevention and contingency planning.⁹ This assessment should leverage the analysis of risks conducted at the multilateral or regional levels (World Economic Outlook (WEO)/Global Financial Stability Report (GFSR)/Regional Economic Outlooks (REOs)). As part of this assessment, staff should consider:

• Risks to the baseline. Staff reports should discuss risks around the short- and medium-term baseline scenario, and policy implications.

• Tail risks. Staff is also encouraged to explore tail risks—low-probability events with serious negative implications—even if their probability is unquantifiable. Although the authorities may be sensitive on these points, exploring tail risks with them is important, so as to draw their attention to the possible macroeconomic impact and discuss how to insure against them through adjustments in policies. In general, staff should ask themselves “what if” questions, while exercising judgment over which risks to highlight to minimize the risk of repeatedly raising false alarms.

13. Risk analysis should build on existing Fund tools and initiatives, including as relevant:

• Vulnerability assessment. This should be based on a variety of quantitative and qualitative information inputs, including from the vulnerability exercises for emerging markets (VEE) and advanced economies (VEA) and draw on the broader early warning exercise (EWE). Staff is encouraged to present alternative scenarios (stress tests) and to use the balance sheet approach.

• Debt sustainability analysis (DSA). Article IV reports should use specific DSA templates in accordance with the relevant guidance for low-income or for market-access countries.¹⁰ More comprehensive assessments of significant debt vulnerabilities (based, for example, on country-specific alternative scenarios outside the standard stress tests, e.g., to assess the long-term impact of aging) can also be useful.

B. Financial Sector Surveillance and Real-Financial Linkages¹¹

14. Financial sector surveillance is a key component of bilateral surveillance and should focus on financial sector stability and its linkages to the real economy. Article IV consultations are the Fund’s primary instrument for surveillance of the financial sector in individual countries.

15. The Financial Sector Assessment Program (FSAP) can help underpin the more continuous surveillance of Article IV consultations.¹² The FSAP provides comprehensive and in depth, but lower-frequency assessments. When available, staff should draw on the FSAPs‘ analysis, in particular as reflected in Risk Assessment Matrices, and integrate relevant findings and recommendations in Article IV discussions. When staff is of the view that a member’s participation in the FSAP would be of high priority, staff should say so in the Article IV report, irrespective of the authorities‘ intentions.¹³

16. Country teams should seek up-to-date information on the financial sector, including (i) size, structure, soundness/performance, and cross-border exposures of banks and non-bank financial institutions and financial markets, and characteristics of the investor base when relevant; and (ii) institutional, regulatory, and policy frameworks (payments and settlement system, legal, accounting and corporate governance frameworks, supervision and regulation of risk management practices, systemic liquidity arrangements, financial sector taxation, public debt or reserve management).

17. Staff reports should present a clear analysis of financial sector stability, and identify policy measures to address any related concern. The assessment of financial sector stability in Article IV consultations should focus on the stability of the system as a whole, not of individual institutions, unless they have systemic implications.¹⁴ It should pay particular attention to cross-border issues, including, where relevant, off-shore transactions.

18. The analysis should be based on an assessment of financial sector risks and vulnerabilities, subject to data availability. Staff should distinguish between potential risks to the financial system—events or developments that might trigger a crisis—and the underlying vulnerabilities that expose the system to such risks, and determine their likely impact.

19. The following questions can be useful to help identify and prioritize financial sector stability concerns. The FSSGN provides more detailed guidance.¹⁵

• What are the main sources of risk? These could emanate either in the financial system itself or in the real economy, at home or abroad.

• What is the likelihood that the identified risks materialize? This judgment can be informed, for example, by estimates of probability of default or distress; the extent of asset price misalignments; concentrated exposures; early warning models for assessing the likelihood of specific crisis events.

• What are the main vulnerabilities of the financial system and how would the system be affected by a particular event risk?

• What policies are needed to address these concerns? In this context, Article IV reports should also indicate, when relevant, staff’s views on priority areas for standards assessments, independently of the authorities‘ perceived willingness to volunteer for an FSAP.

• Do the authorities have adequate safety net and crisis management capacity?

20. The analysis of real-financial linkages should focus on whether the financial sector is a potential source or amplifier of domestic or external instability. The following questions can help staff think through these issues:

• What are the critical channels of interaction between the macroeconomy and financial markets and financial institutions? Data permitting, staff should seek to integrate balance-sheet effects and stress testing in macroeconomic scenarios to help assess the impact of the scenarios on financial solvency and viability.

• How do changes in financial conditions affect economic activity?

• How does the financial sector affect the conduct of macroeconomic policies? For example, the role of the financial sector in the monetary transmission mechanism, the composition of the investor base and its implications for public debt management, the risks of contingent liabilities.

• How might problems in the financial sector potentially cause or amplify external instability? (For example, by triggering a reversal in capital flows and a balance of payments crisis).

• For countries with important financial sector links to other countries, what are potential spillovers from real or financial sector developments and policies?

Financial sector development

21. Financial sector development issues should be covered in Article IV consultations when relevant for domestic or external stability. Financial development may matter for stability directly, e.g., by strengthening the transmission channels of macroeconomic policy tools (e.g., monetary policy), or indirectly, by promoting sustainable economic growth which can be important for stability.¹⁶ Financial sector development is more likely to be relevant in low-income countries.

C. Multilateral Perspective

22. The Fund’s almost universal membership gives it an advantage to bring a multilateral perspective in its economic analyses. The authorities and the Board value this type of work and would like to see more of it. Bilateral surveillance can incorporate a multilateral perspective in two ways: (i) assessments of linkages and spillovers; and (ii) drawing lessons from cross-country experiences.

Economic and financial linkages and spillovers across countries

23. Surveillance should assess how a country is or might be affected by developments and policy actions in other countries. Where the effects are significant, staff reports should discuss (i) the role of spillovers in recent developments; (ii) the spillover effects in the baseline scenario; and (iii) the possible impact of the materialization of risks identified in other countries or globally. Mission teams should leverage the findings of the WEO, GFSR, Fiscal Monitor, REO and EWE.

24. Staff reports for members whose economies have substantial impact on other countries need also to discuss the most significant outward spillovers. The aim is to draw out the implications of the country’s developments, policies, and vulnerabilities for the international community, thus providing a basis for discussion among members.

25. The following questions can help staff think through these issues.

• For the most important spillover effects, what are the transmission channels? An examination of the underlying drivers of critical balance of payments flows, and how they might be influenced by the global environment and the risks identified in the GFSR and WEO or by developments in specific other countries, may be helpful.

• How might the effects transmit themselves to the domestic economy and affect domestic and external stability? Given the challenges in gathering reliable data and analyzing different channels, rigorous quantitative analysis may be difficult. Nevertheless, even qualitatively tracing out these linkages can be helpful (see the section on real-financial linkages).

• What are the policy implications of the analysis of spillovers? How is policy flexibility affected” What are the policy options to reduce risks and mitigate their impact?

Distilling lessons from cross-country experience

26. The other component of a multilateral perspective is to highlight lessons from similar experiences in other countries, in support of clear and concrete policy conclusions. This can include comparison with peers, quantitative analysis, and qualitative case studies. SPR strives to help choose appropriate topics and comparators by providing cross-country notes well ahead of mission in as many cases as possible. Functional departments can also help, including through maintenance of collaborative websites. In addition, country teams should make maximum use of WEO, GFSR, Fiscal Monitor, REOs and EWE’s cross-country analyses in discussions with the authorities and, where useful to back an argument, reference them in the staff report.

D. Analysis of Exchange Rates and External Stability Risks

27. External stability is at the core of bilateral surveillance (see Section II). To ensure comprehensive coverage of the relevant issues, staff reports are expected to provide a clear assessment of (i) the current account (CA) and the exchange rate level, and (ii) risks arising from the capital and financial account, including from the composition of inflows and balance sheet mismatches. The analysis of the exchange rate, and of exchange rate policies, conducted in this context is only one part of surveillance, but it is a crucial part, as the Articles give the Fund a unique responsibility in this area. The role of the Principles for the guidance of members‘ exchange rate policies in the 2007 Decision (see Attachment I) is to undergird this analysis.¹⁷

Current account and exchange rate

28. Staff should assess whether the current account and, equivalently, the real effective exchange rate are broadly consistent with equilibrium. The current level of the real effective exchange rate (REER) should be compared to the level that would bring the “underlying” CA in line with the medium-term equilibrium CA. The “underlying” CA is the current account stripped of temporary factors, and assessed on the basis of the current REER and established domestic policies (those in place, as well as policies announced that are, to the best judgment of the team, likely to be implemented). And the equilibrium CA is one that leads the net external asset position (NEAP) to evolve in a manner consistent with the economy’s structure and fundamentals, relative to other countries, and subject to a multilateral consistency constraint.

29. If an under- or overvaluation is considered to be temporary, this should be made clear. This could happen, in particular, in the following cases: (i) if the current level of the REER is affected by temporary factors such as tight monetary policy; (ii) if the economy is considered to be in transition to a new equilibrium NEAP, so that the current account is expected to be temporarily above or below its medium-term equilibrium; and (iii) if the authorities‘ established exchange rate policies would remove the under- or overvaluation over the medium term.

30. Recognizing the inherent uncertainties in the analysis of equilibrium exchange rates, the assessments should draw on all pertinent information, including notably:

• The indicators in the 2007 Decision (see Attachment I).

• Where relevant, assessments made by the Consultative Group on Exchange Rates (CGER). The Decision and CGER use the same conceptual framework. Of CGER’s three methodologies, the macro-balance (MB) approach and external sustainability approach (both of which compare the underlying CA with a measure of medium term equilibrium CA) can be most directly related to the framework of the Decision. Especially given the uncertainties involved in establishing an equilibrium CA, CGER’s equilibrium real effective exchange rate (EREER) approach (which relates the REER directly to fundamentals) can provide helpful additional insights. Where available, CGER results are likely to provide useful input for assessing exchange rates under the Decision, including through the provision of multilaterally consistent assessments.

31. In countries with serious data limitations, the assessment may need to be largely qualitative. It may be based on a discussion of recent and prospective balance of payments developments, DSA, reserve adequacy, and other factors.

32. The following are expected of exchange rate assessments in staff reports and policy notes:

• Clear bottom line and recommendations. Policy notes should include the staff’s preliminary assessment, and staff reports a clear analysis and bottom line view (while mindful of the inherent analytical uncertainties), of whether the current account and the exchange rate are broadly in line with equilibrium. The assessment should be fully integrated into the broader assessment of external stability and the overall policy mix, and support clear policy recommendations. When there are no prima facie concerns, the discussion can be brief.

• Transparent information. Information on key assumptions should be transparently provided, and the authorities‘ views and analysis of the issue clearly presented. Where an indicator described in the Decision is relevant, it should be discussed.

Capital and Financial Account

33. Staff should assess whether developments in the capital and financial account raise concerns about external instability. This may happen even when the current account and exchange rate levels do not raise concerns. First, temporary fluctuations in the current account may cause liquidity problems, even if the current account is at a level consistent with medium-term equilibrium. Second, a country’s external financing structure may create vulnerabilities which could unwind abruptly. Frequent sources of such vulnerabilities are mismatches in the currency or maturity composition between asset and liability sides of external balance sheets, concentration risk, or reliance on short-term funding. In individual cases, concerns about instability emanating from the capital and financial account may well be much more important than any arising from an under- or overvalued exchange rate.

34. The evaluation of developments in the capital and financial account should include an assessment of: the size and sustainability of capital flows, against the background of the member’s reserves; the size and composition of external assets (other than reserves) and external liabilities; and the access to international capital markets.

35. The adequacy of reserves is often a critical element in the assessment of external stability. In analyzing the adequacy of reserves, staff should take into account country characteristics and vulnerabilities. Standard reserve adequacy indicators include ratios of reserves to imports, short-term external debt (remaining maturity), and broad money. Staff is also encouraged, where relevant and feasible, to explore other indicators (such as ratio of reserves to gross external liabilities) and analyze the optimal level of reserves needed to cushion the impact of a sudden stop in capital flows.¹⁸

Free Floaters, Currency Unions, and Dollarized Economies

36. Staff should assess the real exchange rate level in all cases irrespective of the exchange rate regime. Thus such assessment should also be undertaken for members who have a freely floating exchange rate (and hence no exchange rate policies), and those who do not have their own national currencies.

37. Under a floating exchange rate regime, as in other regimes, the real exchange rate can be under- or overvalued. This may happen as a result of domestic policies (e.g., a depreciation induced by large fiscal surpluses), as a result of other countries‘ policies affecting the exchange rate of the country at issue, or because of market imperfections such as a bubble (which may burst in a disorderly way). Thus, even fully market determined exchange rates can result in disruptive adjustments.

38. In currency unions, the real exchange rate and current account should be assessed both at the level of the union and at the level of individual members.

• At the level of the union. Union-level staff reports are expected to provide a clear bottom line assessment of the union’s external stability including the real exchange rate level, and associated exchange rate policies.

• At the level of the member. Staff reports for individual members are expected to present an analysis of the country’s real exchange rate and balance of payments. The discussion can be phrased in terms of external competitiveness or the real exchange rate, including whether the REER is over- or undervalued.

  • ➢Staff reports on individual members should not include statements suggesting that the nominal exchange rate is over- or undervalued (unless this is the case at the union level).

  • ➢If the real exchange rate of an individual member is found to be over-or undervalued, the staff report for that member should refer to whether the union exchange rate is considered to be over- or under-valued. This helps clarify why policy adjustment in the individual member is or is not recommended. If the misalignment at the member’s level mirrors one at the union level, policy adjustment would be recommended at the union level. Otherwise, policy adjustment would be recommended at the level of the individual member.¹⁹

39. For members that use the currency of another member as sole legal tender (“dollarized economies”), staff reports should still include a real exchange rate assessment. The exchange rate discussion can be phrased in terms of external competitiveness or real exchange rate, and it should include a bottom line assessment including whether the REER is over- or undervalued. Where this is the case, the report needs to discuss recommended adjustment in domestic policies.

Coverage of exchange rate regimes

40. Staff reports should identify the de facto and de jure exchange rate regimes. The de facto exchange regime should be understood as a backward-looking description, as assessed by staff, of the approach followed de facto by the authorities in the conduct of exchange rate policies.²⁰ The description should be as elaborate as necessary to enable the reader to understand how exchange rate policies have been conducted in practice, and should include a classification of the de facto regime using the Monetary and Capital Market Department’s definitions and categories, as used in the Annual Report on Exchange Arrangements and Exchange Restrictions (AREAER).²¹ (This does not mean that the last classification published in the AREAER should necessarily be used, as staff will take a fresh look at the issue during the Article IV consultation process and explain any difference in classification.) Staff reports should also specify the de jure regime—namely, the regime that the authorities have reported to the Fund and typically also the publicly announced regime—at least in the Appendix on Fund Relations.²² If the de facto and de jure regimes coincide, both can be referred to simply as “the exchange rate regime.” Where applicable, reports should discuss changes in the authorities‘ forward-looking policy intentions.

41. Reports should also provide a view regarding the adequacy of the de facto regime for maintaining domestic and external stability. Staff should examine the consistency of the exchange rate regime with the policy mix, which can be more important for external stability than the regime itself. This may include where relevant a discussion of the appropriateness of the fiscal stance, the monetary objectives, and the financial sector regulatory framework. Discussion of alternative regimes should reflect the authorities‘ views, and advice to alter the regime should take into account readiness and adequacy of the implementation capacity.

Intervention policies

42. Staff reports are expected to cover intervention activities to the extent they are important for external stability. Where relevant, coverage would normally entail a description of past intervention episodes stating their objectives and analyzing their effectiveness, including whether they were coupled with sterilization. Intervention includes outright purchases/sales of foreign exchange or foreign exchange derivatives by the central bank, the ministry of finance, or others working on behalf of these. Staff should assess in particular whether there are protracted large-scale interventions in one direction in the exchange market.

43. The analysis and policy advice on intervention policies should be tailored to country-specific circumstances and avoid an overly prescriptive approach. The assessment should be made against the background of the de facto exchange rate regime and the adequacy of the member’s reserves. Staff’s advice regarding the use of intervention to influence the exchange rate should be guided by the Principles, particularly that intervention should be used to counter disorderly conditions in the exchange market, and should not be used to manipulate the exchange rate to gain an unfair competitive advantage, nor in such a way as to result in external instability (for instance, a significantly over- or undervalued exchange rate).

A. Issues Within the Mandate of Surveillance

44. Inadequate data provision. Comprehensive, timely, and accurate data are critical for surveillance, and staff should be familiar with the Guidance Note on Data Provision.²³ Staff reports are required to identify the adequacy of data provision for surveillance purposes in a Statistical Issues Appendix. When data provision has serious shortcomings that significantly hamper surveillance, staff reports should discuss:

• Deficiencies. The nature of the deficiencies (coverage, quality, periodicity, timeliness or other aspects of data quality).

• Implications. The implications of the data shortcomings for the analysis, in particular policy conclusions that are subject to significant uncertainties.

• Remedial measures. In those cases where staff have had to construct key data based on limited information (either because of lack of, or long lags in, official data), specific and prioritized remedial measures, possibly including increased resources to ensure durable progress and proper assimilation of technical assistance.

The extent of discussion of these issues would depend upon the extent of the shortcomings.

45. Reports on the Observance of Standards and Codes (ROSCs). The Fund and the World Bank have endorsed eleven international standards and codes of good economic and financial practice in twelve areas, including anti-money laundering and combating the financing of terrorism (see guidance on AML/CFT). Staff should seek information on the observance of those standards that are relevant to country circumstances. Resources permitting, ROSCs, including those carried out in the context of FSAPs, are the preferred means of obtaining this information. The ROSCs‘ findings relevant for domestic or external stability should inform surveillance and be discussed in Article IV documents. In addition, Article IV reports should indicate when relevant staff’s views on priority areas for standard assessments, independently of the authorities‘ perceived willingness to volunteer for such ROSCs.

46. Trade issues. Coverage is only expected: (i) where serious trade distortions hamper prospects for external stability; (ii) where balance of payments are vulnerable to trade developments; or (iii) in systemically important countries when trade policies have substantial impact on others (see paragraph 24). The possible impact of trade restrictions in services (including financial services) should not be forgotten.

47. Governance issues. When relevant for domestic and external stability, staff should discuss governance issues and reforms with the authorities (see The Role of the IMF in Governance Issues).

48. Political and social developments. Article IV reports should include information on political and social developments when they are relevant for analysis of economic policies.

B. Matters Related to Article VIII and XIV

49. Article VIII and XIV issues. The Surveillance Decision provides that, in principle, Article IV consultations should include consultations under Articles VIII and XIV. Staff reports should indicate when a member has in place exchange restrictions or multiple currency practices subject to Article VIII or that are maintained under the transitional arrangements of Article XIV, Section 2. If the member does maintain such restrictions or multiple currency practices that are subject to approval under Article VIII, Section 2(a) and 3, the staff appraisal should include an explicit recommendation concerning Board approval of the restrictions.²⁴ Missions should inform members that their failure to seek the Fund approval or to notify the Fund for the imposition or the maintenance of exchange restrictions or multiple currency practices represents a breach of their obligations. Staff should encourage members who have not yet done so to accept the obligations of Article VIII, Sections 2, 3, and 4, following the relevant guidance to provide such encouragement. In addition, the appendix on Fund Relations should note any exchange restrictions imposed for security reasons and required to be notified to the Fund under Decision No. 144-(52/51).

A. Consultation Cycles²⁸

54. Consultations in countries that do not have an arrangement (other than FCL or PCL) or a PSI with the Fund are normally expected to take place annually (with a three-month grace period).²⁹, ³⁰ The Executive Board may decide to place a member that is not under a Fund arrangement or a PSI on a longer cycle, not exceeding 24 months, unless the member: (i) is of systemic or regional importance; (ii) is perceived to be at risk, or is facing pressing policy issues of broad interest to the Fund membership; or (iii) has outstanding Fund credit exceeding 200 percent of quota. The Fund may only place a member on a longer cycle with its consent and after consulting with its Executive Director. To enhance the Fund’s policy dialogue with a broad range of economic stakeholders, Article IV consultation cycles should be tailored to national policy timetables, such as budget cycles, to the extent feasible.

55. Members that are granted a Fund arrangement or a PSI, with the exception of FCL or PCL arrangements, are automatically placed on a 24-month consultation cycle. In cases where a program review under an arrangement is not completed by the date specified in the arrangement, the next Article IV consultation should be completed by the later of (i) 6 months after the date specified in the arrangement for completion of the review, and (ii) 12 months, plus the 3-month grace period after date of completion of the previous Article IV consultation, unless a review is completed before the later of these dates, in which case the consultation reverts to a 24-month cycle (i.e., should be completed within 24 months of the previous consultation).

56. Except for FCL or PCL arrangements, members that have completed a Fund arrangement or a PSI (i.e., the arrangement or PSI ended “on track”) may remain on the 24-month cycle if they do not meet any of the criteria described in ¶54 above. At the time of the final review under the arrangement or PSI, staff should assess whether the consultation cycle should be shortened back to 12 months, based on the above criteria. When this is the case, the staff report for the final review should seek the Board’s approval of such shortening of the cycle through a recommendation in the staff appraisal (to be reflected in the summing up).³¹ If an arrangement expires with undrawn amounts or is cancelled by the member, or if a PSI expires with uncompleted reviews, is terminated, or is cancelled by the member, the member will remain on the cycle it was on, unless the Board determines that a different cycle should apply (which could be done through an ad-hoc decision that the Board could consider on a lapse-of-time basis).³²

57. Members that are granted an FCL or a PCL arrangement are automatically placed on the standard 12-month consultation cycle. For members that, prior to the approval of an arrangement were on a cycle longer than the standard 12 months, the first Article IV consultation following the approval of the arrangement is expected to be completed by the later of (i) 6 months following the approval of the arrangement, or (ii) 12 months plus a grace period of 3 months, after the date of completion of the previous Article IV consultation. At the end of an FCL or a PCL arrangement, that member will re main on the 12-month cycle, unless the Executive Board determined that a different cycle should apply (which could be done through an ad-hoc decision that the Board could consider on a lapse-of-time basis).

B. Consultations with Members of Currency Unions³³

58. Consultations for members of currency unions should comprise the following:

• Individual members. The frequency of Article IV consultations for individual members is determined by individual country circumstances (e.g. whether or not they currently have a program or PSI in place).

• Discussions with regional institutions. Yearly staff discussions should be held with regional institutions responsible for common policies in the currency unions. The discussions are held separately from the discussions with the individual member countries of the currency unions, but are considered an integral part of the Article IV process for each member. These discussions focus on policies under the aegis of the regional institutions and, as relevant, other policies of regional importance.

• Reports and summing ups at the union level. An annual staff report on the discussions with the regional institutions is prepared followed by a Board discussion, which are both considered an integral part of the Article IV consultations with individual member countries. Each union level summing up should include language to the effect that the views expressed by Directors in that union level summing up will form part of their discussions in the context of the Article IV consultations for individual currency union members that take place before the next annual Board discussion for the currency union.

• Informal reports at the union level. A second round of staff discussion with the regional institutions and an informal report to the Board may be needed to provide adequate context for bilateral consultations with the currency union member countries that do not coincide broadly with the annual Board discussion on the currency union’s policies.

• Clustering. To the extent possible, Board discussions for the Article IV with individual member countries should be clustered around the regional Board discussions. Such clustering helps ensure better integration of the issues discussed at the regional level in the consultations with individual member countries.

C. Process and Documentation

59. The documentation requirements and review process for Article IV consultations are set out below.

• Policy Note. This note (3-4 pages, plus charts and tables) should be prepared ahead of the consultation to lay out the key diagnostics and proposed focus of the consultation and policy advice. It should include background; macroeconomic outlook; policy line on key issues, including surveillance priorities; supportive charts and tables; and note any divergences of views among departments that arose from the policy consultation meeting (see below).

• Policy Consultation Meeting. This meeting between the area department and reviewing departments should be held 2 to 3 weeks before the mission to discuss and agree on the content of the Policy Note, before it is sent to management for clearance.

• Board discussion. Article IV staff reports are expected to be discussed by the Executive Board within 65 days of the end of the discussions for most countries, and within three months for PRGT-eligible countries. These should be understood as outer limits as staff is expected to finalize staff reports as quickly as possible after the end of discussions.

• Staff report requirements. The requirements for staff reports, including word limits, are listed in Attachment II.

• Background documentation. Background documentation for Article IV staff reports may be produced, in the form of papers covering selected issues and statistical annexes, i.e. comprehensive sets of historical data tables. The choice of selected issues papers (SIPs) should be guided by their centrality to the discussion, and each SIP should begin with a description of how the papers fit in the consultation discussions. Staff has great discretion on whether or not to produce comprehensive statistical annexes and is expected to make this decision in consultation with country authorities. Statistical annexes need not be produced when data are freely available from other sources, which is increasingly the case.

• Summing Up. With the exception of when Article IV reports are considered on a lapse-of-time basis (see below), the Executive Board’s conclusion of an Article IV consultation will be reflected in a Chairman’s Summing Up of the discussion, which will be communicated to the member concerned.

• Lapse-of-time procedure. The lapse-of-time (LOT) procedure will be proposed for Article IV consultations where the following conditions apply: (i) there are no acute or significant risks, or general policy issues requiring Board discussion; (ii) policies or circumstances are unlikely to have significant regional or global impact; (iii) in the event a parallel program review is being completed, it is also being completed on a LOT basis; and (iv) the use of Fund resources is not under discussion or anticipated. The LOT procedure should not be used when: (i) the last Article IV consultation was concluded on a LOT basis; (ii) more than 24 months have elapsed since Board discussion of an Article IV consultation; or (iii) the member is on a 24-month consultation cycle. On the basis of these eligibility criteria, the Managing Director, with the approval of the Executive Director for the member concerned, would propose completion of an Article IV consultation on a LOT basis at the time the staff paper is circulated to the Executive Board. The Executive Director for the member concerned may also propose the completion of an Article IV consultation by LOT no more than two business days after the staff paper is circulated to the Executive Board, and preferably as soon as possible after the staff paper is circulated.³⁴

• Combining reports. There is usually scope for combining Article IV and UFR papers (requests and reviews), though some may prefer to follow a “two-papers” approach. Under either approach, it is critical that the Article IV coverage remain comprehensive and deal with all relevant issues.

60. Informal country matters sessions offer opportunities to inform the Board about significant developments between Article IV consultations. Where warranted, the Board may also be kept apprised of economic developments in a member and of staff’s assessment of these developments through issuance of a report in between Article IV consultations (e.g., following a staff visit). Regular provision to creditors or donors of staff assessments of a member’s policies can be done through assessment letters, which are delivered upon request.³⁵