The G8’s Gleneagles Summit reiterated the June proposal of G8 finance ministers to cancel the multilateral debt of the Heavily Indebted Poor Countries and added an initiative to sharply increase official development assistance for low-income countries. IMF staff are assessing the various policy, legal, and financial aspects of the G8 debt relief proposal relating to the Fund. This will provide the basis for a late July Executive Board discussion.
NEWS: Bernes on IEO challenges
In June, the new head of the IMF’s Independent Evaluation Office (IEO), Canadian Thomas A. Bernes, took office. Bernes brings first-hand knowledge about the IMF to his position, having been the Fund’s Executive Director for Canada, Ireland, and the Caribbean from 1996 to 2001. Among Bernes’ priorities for the IEO, now in its fourth year of operation, are more attention to disseminating the results of IEO evaluations and following up on the changes that the office has recommended.
COUNTRY FOCUS: Armenia takes off
Over the past four years, Armenia’s economic performance has outpaced that of its neighbors and other low-income countries. Sound policies and selected structural reforms have helped Armenia achieve double-digit growth, low inflation, and rapidly falling poverty. Continued strong performance, however, will require further reforms, notably steps to strengthen certain institutions, fight corruption, and improve corporate governance.
RESEARCH: Public expenditure risks
In most industrial countries, projections of increased fiscal burdens have centered on aging populations. But age-related issues are not the only worry. Two new IMF studies argue that long-term expenditure projections are subject to considerable uncertainty. Governments, with limited scope to reduce nonage- related expenditures or raise already-high tax rates, should move soon to adopt a more ambitious fiscal policy stance that provides “space” to cope with increased demands.