ServiceConditionsMonitoring Extended Fund Facility: Longer-term assistance to support members’ structural reforms to address long-term balance of payments difficulties. At approval, adopt up to a four-year program, with a structural agenda and an annual detailed statement of policies for the subsequent 12 months. Quarterly or semiannual purchases contingent on observance of performance criteria and other conditions. Precautionary and Liquidity Line: Instrument for countries with sound economic fundamentals and policies. Sound policy frameworks, external position, and market access, including financial sector soundness. Large front-loaded access, subject to semi-annual reviews. Rapid Financing Instrument: Rapid financial assistance to all member countries facing an urgent balance of payments need. Efforts to solve balance of payments difficulties (may include prior actions). Outright purchases without the need for full-fledged programs or reviews.
U6L12: Document B Source: “Ireland: From Tiger to Phoenix,” International Monetary Fund, 2018. [In] 2006, construction accounted for more than 12 percent of [Irish] employment, the highest proportion among advanced economies. Ireland’s banks, including entrants from the UK and other EU countries, lowered their lending standards as they competed for market share. Large sums were rapidly paid out to wealthy individuals acquiring properties in Ireland and around the world... The boom ran out of steam in 2007 just as the fragilities in the global economy began to emerge. Demand for new homes and other properties cooled; prices stopped rising and then started to fall. Before long, construction was at dead halt, throwing tens of thousands of people out of work. In November 2010, the Irish government sought help from the European Union and the IMF. Together they provided loans totaling 67.5 billion euros—equal to 40 percent of Ireland’s economy—to be paid out over the next three years... “The IMF was in the mix because it had long and deep experience of these kinds of crises and these kinds of programs,” said Kevin Cardiff, the secretary general of Ireland’s Department of Finance at the time. “We wanted to take advantage of their experience and their technical knowledge.” The Fund recommended an independent assessment to determine the value of the banks’ bad loans... There were numerous complex issues, like dealing with more than 100,000 borrowers who had gone into arrears on their mortgages. The Fund brought in experts from Norway and the United States, including a bankruptcy judge from Las Vegas, to offer advice... [Following the IMF’s advice] the [Irish] government set out a detailed plan to reduce the budget deficit from 2011 to 2014. The challenge would be to do that while maintaining essential services and shielding the poor. By the end of 2012, the second year of the program, the Irish economy began to turn around. Firms started hiring and investing and unemployment slowly began to decline. U6L12: Document C Source: Independent Evaluation Office, “Evaluation of Prolonged Use of IMF Resources,” International Monetary Fund, 2002. The Philippines is probably the most extreme case of prolonged use of IMF resources, with 23 programs between 1962 and 2000 [and] credit outstanding from the IMF continuously since 1967. The IMF recognized at an early stage that the Philippines would require a relatively long time to restore sustainability, but program design remained focused on a relatively short time horizon. The short-term focus was partly a reflection of the institutional constraints requiring programs to offer evidence of concrete progress within the time frame of the program itself. For example, in 1994, the IMF was simultaneously pushing for reforms to the oil-pricing system and to tax policy, each of which required congressional approval, as prior actions for the completion of program reviews. In the view of some [IMF] staff, this may have been overambitious, exceeding the capacity of the political system to digest several major reforms at the same time... Both IMF staff and former [Filipino] officials acknowledged that such factors contributed to a tendency for the authorities to “over-promise” with regard to the timing of structural measures, even when they knew that these commitments were politically unrealistic, knowing that failure to meet their commitment would be unlikely to prompt program cancellation.
U6L12: Document D Source: IMF Monitor, data sourced from the International Monetary Fund website. *Concessional means favorable (or below market) interest rates (during the pandemic, the IMF approved a 0% interest rate on its loans). U6L12: Document E Source: Bernhard Reinsberg, “Unimplementable by Design? Understanding (Non-)Compliance with International Monetary Fund Policy Conditionality, Governance: An International Journal of Policy, Administration, and Institutions, 2021. Lack of compliance with international commitments is widespread—not only for international agreements between governments, like the Paris Agreement or human rights conventions, but also for contractual agreements between international organizations and individual states. One prominent example is implementation failure of borrowing countries with policy conditions of the International Monetary Fund (IMF), an international organization mandated to uphold global financial stability and provide loans to countries in economic trouble. The ability to tie disbursements to the fulfillment of conditions makes the IMF one of the most powerful international organizations; yet, its ability to compel actual policy reform in borrowing countries remains limited. Most IMF programs are “unimplementable” by design: they include too many and excessively complex conditions that cause compliance failures, in turn requiring the IMF to scale back on its ambitions in subsequent program reviews. Indicatively, of all 668 programs approved between 1980 and 2009, 371 programs were interrupted due to compliance problems, and 241 of these never resumed... Borrowing countries accept over-ambitious programs to obtain much-needed IMF credit, while in many cases anticipating renegotiation or forgiveness on unmet conditions. critical idea for all sources written like a 8th grader