Chapter

Part 1: Overview

Author(s):
International Monetary Fund
Published Date:
October 2015
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About the IMF

The International Monetary Fund is the world’s central organization for international monetary cooperation. With 188 member countries, it is an organization in which almost all of the countries in the world work together to promote the common good. The IMF, which oversees the international monetary system to ensure its effective operation, has among its key purposes to promote exchange rate stability and to facilitate the expansion and balanced growth of international trade. This enables countries (and their citizens) to buy goods and services from one another and is essential for achieving sustainable economic growth and raising living standards.

All of the IMF’s member countries are represented on its Executive Board, which discusses the national, regional, and global consequences of each member’s economic policies and decides the IMF’s lending to help member countries address temporary balance-of-payments problems, as well as capacity-building efforts. This Annual Report covers the activities of the Executive Board and IMF management and staff during the financial year May 1, 2014, through April 30, 2015. Some figures on lending to Greece were updated after the end of the financial year. The contents reflect the views and policy discussions of the IMF Executive Board, which has actively participated in preparation of this Annual Report.

The IMF’s main activities

The key roles of the IMF are to:

Provide advice to members on adopting policies that can help them achieve macroeconomic stability, thereby accelerating economic growth and alleviating poverty.

Make financing temporarily available to member countries to help them address balance-of-payments problems, that is, when they find themselves short of foreign exchange because their external payments exceed their foreign exchange earnings.

Offer technical assistance and training to countries, at their request, to help them build the expertise and institutions they need to implement sound economic policies.

The IMF is headquartered in Washington, D.C., and, reflecting its global reach and close ties with its members, also has offices around the world.

Additional information on the IMF and its member countries can be found on the IMF’s website, www.imf.org.

Message from the Managing Director

The past year has been a time of unexpected challenges for the international community. Amid the continued focus on spurring stronger and more inclusive growth and strengthening global cooperation, the IMF faced economic developments that required rapid adjustments.

First was the sudden, steep decline of oil prices. For most of our members, lower prices proved beneficial, supporting growth amid concerns about a new mediocre in the world economy. But oil producers faced difficult adjustments. These developments placed a premium on the IMF’s analytical work and policy advice.

The second challenge was posed by the Ebola pandemic in Guinea, Liberia, and Sierra Leone. This outbreak was a matter of life and death, and the IMF moved quickly to ensure the three governments could respond to the crisis and get their economies moving again. The IMF provided more than $400 million of aid and debt relief, including by redesigning our disaster-response facility.

The third challenge during the past year was to assist several member countries addressing difficult economic and financial circumstances through IMF-supported programs. The IMF remains committed to helping these countries, along with all members, through this period of turmoil.

It was a year of innovation across the institution: pilot programs aimed at embedding in our country work the research on inclusive growth and gender that has been conducted in recent years; online training courses available to both officials and the wider public; the launch of a free data initiative; and cooperation with member countries on Islamic finance.

We continued to engage with our membership to implement the 2010 IMF quota and governance reforms as soon as possible. Our members reaffirmed the importance and urgency of these reforms for the IMF’s credibility, legitimacy, and effectiveness.

The year provided an opportunity to look back to the achievements of the past 25 years in eastern and central Europe, and to the 70th anniversary of the IMF. It also was a time to plan for the future by building on the achievements of the United Nations Millennium Development Goals and supporting climate policy by getting energy prices right. In 2015 the international community will put in place the goals and policies aimed at reducing poverty and strengthening inclusive growth by 2030.

With the 2015 Annual Report, we highlight the IMF’s work in these and other areas with a new approach that blends essays and graphics. As always, the report emphasizes the work of the IMF’s Executive Board, whose policy guidance is central to the efforts to ensure global financial stability and growth.

Yours sincerely,

Christine Lagarde

FY2015 Key IMF Activities

The IMF established a new emergency relief fund and continued to provide financial assistance to members

The Catastrophe Containment and Relief Trust (CCRT), established in response to the Ebola crisis, provides grants for debt relief to the poorest and most vulnerable countries hit by natural or public health disasters that have the potential to spread to other countries. The IMF provided $95 million in grants to Guinea, Liberia, and Sierra Leone to relieve eligible debt burdens. The IMF also augmented the program under the Extended Credit Facility for Guinea, Sierra Leone, and Liberia by $63.6 million, $111.7 million, and $48.2 million, respectively, and provided access to the Rapid Credit Facility to Guinea and Liberia in the amount of $39.8 million and $45.5 million, respectively.

Successor arrangements for Mexico and Poland under the Flexible Credit Line totaling $88 billion and for Morocco under the Precautionary Credit Line totaling $4.5 billion were approved. New arrangements were also approved for Georgia, Honduras, Kenya, Serbia, Seychelles, and Ukraine involving a resource commitment of $19.4 billion. New disbursements under the Rapid Credit Facility were approved for the Central African Republic, Gambia, Guinea, Guinea-Bissau, Liberia, Madagascar, and St. Vincent and the Grenadines, for a total of $117 million (see all support to low-income developing countries in Table 2.4). An augmentation to Bosnia and Herzegovina’s Stand-By Arrangement in the amount of $118.9 million was also approved.

Table 2.1Arrangements approved in the General Resources Account in FY2015(Millions of SDRs)
MemberType of arrangementEffective dateAmount approved
NEW ARRANGEMENTS
Georgia36-month Stand-ByJuly 30, 2014100.0
Honduras36-month Stand-ByDecember 3, 201477.7
Kenya12-month Stand-ByFebruary 2, 2015352.8
Mexico24-month Flexible Credit LineNovember 26, 201447,292.0
Morocco24-month Precautionary and Liquidity LineJuly 28, 20143,235.1
Poland, Republic of24-month Flexible Credit LineJanuary 14, 201515,500.0
Serbia, Republic of36-month Stand-ByFebruary 23, 2015935.4
Seychelles36-month Extended Fund FacilityJune 4, 201411.4
Ukraine36-month Extended Fund FacilityMarch 11, 201512,348.0
Subtotal79,852.5
AUGMENTATIONS OF ARRANGEMENTS1
Bosnia and

Herzegovina
33-month Stand-ByJune 30, 201484.6
Subtotal84.6
Total79,937.0
Source: IMF Finance Department.

For augmentation, only the amount of the increase is shown.

Source: IMF Finance Department.

For augmentation, only the amount of the increase is shown.

Table 2.2Financial terms under IMF General Resources Account creditThis table shows major nonconcessional lending facilities. Stand-By Arrangements have long been the core lending instrument of the institution. In the wake of the 2007–09 global financial crisis, the IMF strengthened its lending toolkit. A major aim was to enhance crisis-prevention instruments through the creation of the Flexible Credit Line (FCL), the Precautionary and Liquidity Line (PLL), and the Rapid Financing Instrument (RFI).
Credit facility (year adopted)1PurposeConditionsPhasing and monitoringAccess limits1Charges2Repayment schedule (years)Installments
CREDIT TRANCHES AND EXTENDED FUND FACILITY3
Stand-By Arrangements (SBAs) (1952)Short- to medium-term assistance for countries with short-term balance-of-payments difficultiesAdopt policies that provide confidence that the member’s balance of payments difficulties will be resolved within a reasonable periodGenerally quarterly purchases (disbursements) contingent on observance of performance criteria and other conditionsAnnual: 200% of quota; cumulative: 600% of quotaRate of charge plus surcharge (200 basis points on amounts above 300% of quota; additional 100 basis points when outstanding credit remains above 300% of quota for more than 3 years)43¼–5Quarterly
Extended Fund Facility (EFF) (1974) (Extended Arrangements)Longer-term assistance to support members’ structural reforms to address long-term balance-of-payments difficultiesAdopt up to 4-year program, with structural agenda and annual detailed statement of policies for the next 12 monthsQuarterly or semiannual purchases (disbursements) contingent on observance of performance criteria and other conditionsAnnual: 200% of quota; cumulative: 600% of quotaRate of charge plus surcharge (200 basis points on amounts above 300% of quota; additional 100 basis points when outstanding credit remains above 300% of quota for more than 3 years)44½–10Semiannual
Flexible Credit Line (FCL) (2009)Flexible instrument in the credit tranches to address all balance-of-payments needs, potential or actualVery strong ex ante macroeconomic fundamentals, economic policy framework, and policy track recordApproved access available up front throughout the arrangement period, subject to a midterm review after 1 yearNo preset limitRate of charge plus surcharge (200 basis points on amounts above 300% of quota; additional 100 basis points when outstanding credit remains above 300% of quota for more than 3 years)43¼–5Quarterly
Precautionary and Liquidity Line (PLL) (2011)Instrument for countries with sound economic fundamentals and policiesSound policy frameworks, external position, and market access, including financial sector soundnessLarge frontloaded access, subject to semiannual reviews (for 1- to 2-year PLL)250% of quota for 6 months; 500% of quota available upon approval of 1- to 2-year arrangements; total of 1,000% of quota after 12 months of satisfactory progressRate of charge plus surcharge (200 basis points on amounts above 300% of quota; additional 100 basis points when outstanding credit remains above 300% of quota for more than 3 years)43¼–5Quarterly
SPECIAL FACILITIES
Rapid Financing Instrument (RFI) (2011)Rapid financial assistance to all member countries facing an urgent balance of payments needEfforts to solve balance of payments difficulties (may include prior actions)Outright purchases without the need for full-fledged program or reviewsAnnual: 50% of quota; cumulative: 100% of quotaRate of charge plus surcharge (200 basis points on amounts above 300% of quota; additional 100 basis points when outstanding credit remains above 300% of quota for more than 3 years)43¼–5Quarterly

The IMF’s lending through the General Resources Account (GRA) is primarily financed from the capital subscribed by member countries; each country is assigned a quota that represents its financial commitment. A member provides a portion of its quota in Special Drawing Rights (SDRs) or the currency of another member acceptable to the IMF and the remainder in its own currency. An IMF loan is disbursed or drawn by the borrower’s purchase of foreign currency assets from the IMF with its own currency. Repayment of the loan is achieved by the borrower’s repurchase of its currency from the IMF with foreign currency.

The rate of charge on funds disbursed from the GRA is set at a margin over the weekly SDR interest rate (currently 100 basis points). The rate of charge is applied to the daily balance of all outstanding GRA drawings during each IMF financial quarter. In addition, a one-time service charge of 0.5 percent is levied on each drawing of IMF resources in the GRA, other than reserve tranche drawings. An up-front commitment fee (15 basis points on committed amounts of up to 200 percent of quota; 30 basis points for amounts in excess of 200 percent and up to 1,000 percent of quota; and 60 basis points for amounts in excess of 1,000 percent of quota) applies to the amount that may be drawn during each (annual) period under a Stand-By Arrangement, Flexible Credit Line, Precautionary and Liquidity Line, or Extended Arrangement; this fee is refunded on a proportionate basis as subsequent drawings are made under the arrangement.

Credit tranches refer to the size of purchases (disbursements) as a proportion of the member’s quota in the IMF; for example, disbursements up to 25 percent of a member’s quota are disbursements under the first credit tranche and require members to demonstrate reasonable efforts to overcome their balance-of-payments problems. Requests for disbursements above 25 percent are referred to as upper-credit-tranche drawings; they are made in installments as the borrower meets certain established performance targets. Such disbursements are typically associated with a Stand-By or Extended Arrangement.

Surcharges were introduced in November 2000. A new system of surcharges took effect August 1, 2009, replacing the previous schedule: 100 basis points above the basic rate of charge on amounts above 200 percent of quota, and 200 basis points on amounts above 300 percent of quota. A member with credit outstanding in the credit tranches or under the Extended Fund Facility on, or with an effective arrangement approved before, August 1, 2009, had the option to elect between the new and the old system of surcharges.

The IMF’s lending through the General Resources Account (GRA) is primarily financed from the capital subscribed by member countries; each country is assigned a quota that represents its financial commitment. A member provides a portion of its quota in Special Drawing Rights (SDRs) or the currency of another member acceptable to the IMF and the remainder in its own currency. An IMF loan is disbursed or drawn by the borrower’s purchase of foreign currency assets from the IMF with its own currency. Repayment of the loan is achieved by the borrower’s repurchase of its currency from the IMF with foreign currency.

The rate of charge on funds disbursed from the GRA is set at a margin over the weekly SDR interest rate (currently 100 basis points). The rate of charge is applied to the daily balance of all outstanding GRA drawings during each IMF financial quarter. In addition, a one-time service charge of 0.5 percent is levied on each drawing of IMF resources in the GRA, other than reserve tranche drawings. An up-front commitment fee (15 basis points on committed amounts of up to 200 percent of quota; 30 basis points for amounts in excess of 200 percent and up to 1,000 percent of quota; and 60 basis points for amounts in excess of 1,000 percent of quota) applies to the amount that may be drawn during each (annual) period under a Stand-By Arrangement, Flexible Credit Line, Precautionary and Liquidity Line, or Extended Arrangement; this fee is refunded on a proportionate basis as subsequent drawings are made under the arrangement.

Credit tranches refer to the size of purchases (disbursements) as a proportion of the member’s quota in the IMF; for example, disbursements up to 25 percent of a member’s quota are disbursements under the first credit tranche and require members to demonstrate reasonable efforts to overcome their balance-of-payments problems. Requests for disbursements above 25 percent are referred to as upper-credit-tranche drawings; they are made in installments as the borrower meets certain established performance targets. Such disbursements are typically associated with a Stand-By or Extended Arrangement.

Surcharges were introduced in November 2000. A new system of surcharges took effect August 1, 2009, replacing the previous schedule: 100 basis points above the basic rate of charge on amounts above 200 percent of quota, and 200 basis points on amounts above 300 percent of quota. A member with credit outstanding in the credit tranches or under the Extended Fund Facility on, or with an effective arrangement approved before, August 1, 2009, had the option to elect between the new and the old system of surcharges.

Table 2.3Concessional lending facilitiesThree concessional lending facilities for low-income countries are available.
Extended Credit Facility (ECF)Standby Credit Facility (SCF)Rapid Credit Facility (RCF)
ObjectiveHelp low-income countries achieve and maintain a stable and sustainable macroeconomic position consistent with strong and durable poverty reduction and growthVery strong ex ante macroeconomic fundamentals, economic policy framework, and policy track recordApproved access available up front throughout the arrangement period, subject to a midterm review after 1 year
PurposeAddress protracted balance-of-payments problemsResolve short-term balance of payments needsLow-access financing to meet urgent balance-of-payments needs
SupersedesPoverty Reduction and Growth Facility (PRGF)Exogenous Shocks Facility–High- Access Component (ESF-HAC)Exogenous Shocks Facility–Rapid Access Component (ESF-RAC), subsidized Emergency Post-Conflict Assistance (EPCA), and Emergency Natural Disaster Assistance (ENDA)
EligibilityCountries eligible under the Poverty Reduction and Growth Trust (PRGT)Efforts to solve balance-of-payments difficulties (may include prior actions)Outright purchases without the need for full-fledged program or reviews
QualificationProtracted balance of payments problem; actual financing need over the course of the arrangement, though not necessarily when lending is approved or disbursedPotential (precautionary use) or actual short-term balance-of-payments need at the time of approval; actual need required for each disbursementUrgent balance-of-payments need when upper- credit-tranche (UCT) program is either not feasible or not needed1
Poverty Reduction and Growth StrategyIMF-supported program should be aligned with country-owned poverty-reduction and growth objectives and should aim to support policies that safeguard social and other priority spending
Submission of Poverty Reduction Strategy (PRS) document by second reviewSubmission of PRS document not required; if financing need persists, SCF user would request an ECF with associated PRS documentation requirementsSubmission of PRS document not required; move to ECF facilitated in cases of repeated use by preparation of a Poverty Reduction Strategy Paper (PRSP)
ConditionalityUCT; flexibility on adjustment path and timingUCT; aim to resolve balance-of-payments need in the short termNo UCT and no conditionality based on ex post review; track record used to qualify for repeat use (except under shocks window)
Access policiesAnnual limit of 100% of quota; cumulative limit (net of scheduled repayments) of 300% of quota. Exceptional access: annual limit of 150% of quota; cumulative limit (net of scheduled repayments) of 450% of quota
Norms: access declines with total outstanding credit; 120% of quota if outstanding credit is less than 100% of quota; 75% of quota if outstanding credit is greater than or equal to 100% of quota; SCFs treated as precautionary annual access limit 75% of quota, average annual access limit 50% of quota2Sublimits (given lack of UCT conditionality): annual 25% of quota; 100% of quota cumulative (net of scheduled repayments); under the shocks window: 50% annual and 125% cumulative (net of scheduled repayments)
Financing terms3Interest rate: Zero Repayment terms: 5½2-10 yearsInterest rate: 0.25% Repayment terms: 4–8 years Availability fee: 0.15% on available but undrawn amounts under precautionary arrangementInterest rate: Zero Repayment terms: 5½2-10 years
BlendingBased on income per capita and market access; linked to debt vulnerability
Precautionary useNoYes, with annual access limit of 75% of quota and average annual access limit 50% of quotaNo
Length and repeated use3–4 years (extendable to 5); can be used repeatedly12–24 months; use limited to 2½ of any 5 years4Outright disbursements; repeated use possible subject to access limits and other requirements
Concurrent useGeneral Resources Account (Extended Fund Facility/Stand-By Arrangement)General Resources Account (Extended Fund Facility/Stand-By Arrangement) and Policy Support InstrumentGeneral Resources Account (Rapid Financing Instrument and Policy Support Instrument)
Source: IMF Finance Department.

UCT standard conditionality is the set of program-related conditions intended to ensure that IMF resources support the program’s objectives, with adequate safeguards to the IMF resources.

Access norms do not apply when outstanding concessional credit is above 200% of quota. In those cases, access is guided by consideration of the access limit of 300% of quota, expectation of future need for IMF support, and the repayment schedule.

The IMF reviews interest rates for all concessional facilities under the PRGT every 2 years; the next review is expected at the end of 2014. The Executive Board has approved a temporary interest waiver on concessional loans through the end of December 2014 in view of the global economic crisis (Box 3.5).

SCFs treated as precautionary do not count toward the time limits.

Source: IMF Finance Department.

UCT standard conditionality is the set of program-related conditions intended to ensure that IMF resources support the program’s objectives, with adequate safeguards to the IMF resources.

Access norms do not apply when outstanding concessional credit is above 200% of quota. In those cases, access is guided by consideration of the access limit of 300% of quota, expectation of future need for IMF support, and the repayment schedule.

The IMF reviews interest rates for all concessional facilities under the PRGT every 2 years; the next review is expected at the end of 2014. The Executive Board has approved a temporary interest waiver on concessional loans through the end of December 2014 in view of the global economic crisis (Box 3.5).

SCFs treated as precautionary do not count toward the time limits.

Table 2.4Arrangements approved and augmented under the Poverty Reduction and Growth Trust in FY2015(Millions of SDRs)
MemberEffective dateAmount approved
NEW THREE-YEAR EXTENDED CREDIT FACILITY1 ARRANGEMENTS
ChadAugust 1, 201479.9
GhanaApril 3, 2015664.2
GrenadaJune 26, 201414.0
Kyrgyz RepublicApril 8, 201566.6
YemenSeptember 2, 2014365.3
Subtotal1,190.0
AUGMENTATIONS OF EXTENDED CREDIT FACILITY ARRANGEMENTS2
BurundiMarch 23, 201510.0
ChadApril 27, 201526.6
Côte d’IvoireDecember 5, 2014130.1
GuineaFebruary 11, 201545.1
LiberiaSeptember 26, 201432.3
Sierra LeoneSeptember 26, 201425.9
Sierra LeoneMarch 2, 201551.9
Subtotal321.9
NEW STANDBY CREDIT FACILITY ARRANGEMENTS
HondurasDecember 3, 201451.8
KenyaFebruary 2, 2015135.7
Subtotal187.5
DISBURSEMENTS UNDER RAPID CREDIT FACILITY
Central African RepublicMay 14, 20148.4
Central African RepublicMarch 18, 20155.6
GambiaApril 2, 20157.8
GuineaSeptember 26, 201426.8
Guinea-BissauNovember 3, 20143.6
LiberiaFebruary 23, 201532.3
MadagascarJune 18, 201430.6
St. Vincent and the GrenadinesAugust 1, 20142.1
Subtotal117.0
TOTAL1,816.4
Source: IMF Finance Department.

Previously Poverty Reduction Growth Facility.

For augmentation, only the amount of the increase is shown.

Source: IMF Finance Department.

Previously Poverty Reduction Growth Facility.

For augmentation, only the amount of the increase is shown.

A number of major policy reviews were completed

Follow-up work to the 2014 Triennial Surveillance Review (TSR) is under way. The Managing Director’s action plan covers all core operational areas of surveillance, including risks and spillovers, and macro-financial and macrocritical structural issues.

A review of the Financial Sector Assessment Program found that reforms implemented in 2009 had strengthened the focus, effectiveness, and traction of the assessments.

Reforms to the IMF’s Debt Limit Policy were adopted. The new policies, effective end-June 2015, provide countries with more flexibility to finance productive investments while containing risks to medium-term sustainability.

Following the Independent Evaluation Office’s (IEO’s) recommendation, a review of the IMF’s work on trade issues was completed. The assessment covered macrocritical trade issues underlying a work agenda for the IMF for the next five years.

Staff published guidance notes to strengthen the IMF’s advice on macroprudential policy in surveillance. The notes factor the work of international standard setters and evolving country experiences with macroprudential policy—that is, government policies designed to ensure the health and soundness of a financial system.

In response to the IEO’s suggestion and building on previous work, a new framework for determining the appropriate level of international reserves held by member countries has been developed that is more country-specific than previous methods of assessing reserve adequacy.

Activities summarized from the Managing Director’s Global Policy Agenda. See end Notes for details.

Analytical and policy work focused on challenges facing the membership

Work on underlying macrocritical issues covered topics such as productivity-enhancing reforms in advanced economies, female labor force participation, drivers of income inequality, economic diversification in the Gulf Cooperation Countries, and youth unemployment in European advanced economies. Analysis of monetary and financial sector policies focused on the role of exchange rate interventions, and implications of Islamic finance. Policy and analytic work on fiscal issues included revenue mobilization and tax compliance, and public investment efficiency in the Middle East and North Africa and Caucasus and Central Asia oil-exporting countries.

Intensive capacity development continued through technical assistance and training

Capacity building—helping countries develop more effective institutions, legal frameworks, and policies to promote economic stability and inclusive growth—focused on low-income developing countries. The regional technical assistance office in Thailand also was pivotal in rapidly responding to demand for technical assistance and training in Myanmar and Lao P.D.R. Other highlights included the creation of the Somalia Trust Fund for Capacity Development and the official launch of the IMF–Middle East Center for Economics and Finance in Kuwait, the IMF’s first regional training institute in the Middle East. Two new massive open online courses on debt sustainability analysis and energy subsidy reform further extended the reach of IMF training.

IMF Policy Priorities in 2015

Priorities set out in the Managing Director’s

Global Policy Agenda were:

Members

Euro area

Provide effective demand support

Implement labor and product market reforms

United States

Ensure smooth monetary normalization

Establish medium-term fiscal consolidation plan

Japan

Implement fiscal and structural reforms

Enhance monetary policy transmission

China

Manage demand rebalancing

Address vulnerabilities in overinvested sectors

Emerging market economies

Address external vulnerabilities

Lift potential growth

Low-income developing countries

Strengthen policy frameworks

Rebuild fiscal and external buffers

IMF

Monetary policy

Assess impact of policy divergence

Analyze monetary policy and financial stability links

Financial sector policies

Deepen macro-financial analysis

Provide guidance on macroprudential policy

Fiscal policy

Examine how policy can boost long-term growth

Strengthen advice on frameworks and institutions

Structural reforms

Bolster advice on structural reforms

Advise on measures to improve investment efficiency

The Global Policy Agenda

The Managing Director’s Global Policy Agenda (GPA) is a document presented twice a year to the International Monetary and Financial Committee (IMFC), which is the IMF’s policy-guiding body. The GPA identifies the policy challenges faced by the IMF membership, assesses progress since the previous GPA, outlines the policy responses needed at the global and country levels, and lays out how the IMF can support those policy responses.

The GPA is regarded as an important blueprint for the IMF and its membership. It is also a key element of the IMF’s multilateral surveillance work—as highlighted in the 2014 Triennial Surveillance Review (TSR) and the Managing Director’s Action Plan for Strengthening Surveillance, which was issued along with the TSR. The GPA is discussed by the members of the IMF Executive Board in an informal session.

The April 2015 GPA—Confront Global Challenges Together—states: “Promoting balanced, sustained growth requires an integrated policy package that bolsters today’s actual and tomorrow’s potential output, diminishes risks, and confronts emerging global challenges.”

Among the report’s recommendations:

Lifting today’s growth: Boosting growth and jobs requires continued monetary accommodation and supportive fiscal policies, where appropriate. But improving policy effectiveness and securing financial stability is crucial. This includes tackling debt overhang and encouraging productive investment rather than excessive financial risk-taking. The approaching increase in U.S. interest rates and large currency movements call for proactive policies to manage risks and growing leverage. Stronger fiscal frameworks can make revenue and spending more growth-friendly and contain fiscal risks.

Fortifying tomorrow’s prospects: Structural reforms are lagging compared with other areas of the GPA. Targeted structural reforms can boost investment and productivity. While bottlenecks vary, priorities include advancing energy subsidy reforms to take advantage of lower oil prices, financial deepening, upgrading infrastructure, increasing employment, removing distortions in product markets, and improving the business environment. Trade reforms in traditional areas and emerging ones such as services and regulations can complement and augment other structural reforms.

Working together for the future: The impact of asynchronous monetary policies on currencies and capital flows underscores the need to make the international monetary system more resilient, promote the continuing integration of dynamic emerging economies, and ensure an adequate and cohesive global safety net. Anchored by three major international conferences, 2015 marks an unprecedented opportunity for the world to chart the course for sustainable development for the next decade and a half, and beyond (see Part 2).

What the IMF will do: The GPA states that the IMF will help members deliver on the policy agenda by providing flexible financing arrangements to members facing pressing challenges. It also committed the IMF to closely link policy advice and capacity development, highlight priorities such as implementing growth-friendly fiscal policies and macrocritical financial and structural reforms, and address debt overhang. The GPA also states that the IMF will take stock of challenges facing the international monetary system, embrace the 2015 global development agenda, and tailor its work to meet members’ evolving needs.

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