Abstract
Meeting shortly after the IMF—World Bank Annual Meetings, the IMF’s Executive Board approved the Policy Support Instrument (PSI)—one of a series of steps designed to bolster the organization’s ability to support its low-income members. The PSI is intended to help countries that may not need, or want, IMF financial support but seek assistance in supporting, monitoring, and endorsing their policies. The Board welcomed the PSI as a sound approach that will help countries “design effective economic programs and provide signals to donors, the multilateral development banks, and markets.”
Board approves Policy Support Instrument
Meeting shortly after the IMF—World Bank Annual Meetings, the IMF’s Executive Board approved the Policy Support Instrument (PSI)—one of a series of steps designed to bolster the organization’s ability to support its low-income members. The PSI is intended to help countries that may not need, or want, IMF financial support but seek assistance in supporting, monitoring, and endorsing their policies. The Board welcomed the PSI as a sound approach that will help countries “design effective economic programs and provide signals to donors, the multilateral development banks, and markets.”
The Board emphasized that the PSI is conceived as, and must remain, a “voluntary, demand-driven instrument supported by strong country ownership.” It made clear that the PSI should serve as a complement to, and not as a substitute for, concessional financing available under the IMF’s Poverty Reduction and Growth Facility (PRGF).
Directors underscored their intention to turn quickly to a proposed “shocks window” within the PRGF. An on-track PSI could provide the basis for rapid access to PRGF resources in the event of a shock.