Navigating uncertainty
The IMF collaborates with countries in the face of multiple global economic shocks. In an uncertain, shock-prone global environment, decisive, well-calibrated, and agile policies tailored to country-specific circumstances are key to entrenching economic sustainability, safeguarding macroeconomic and global financial stability, supporting the vulnerable, and strengthening resilience.
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Reinforcing international cooperation and multilateralism is essential to bolster global growth; protect the stability of the international monetary system; address persistent health risks; and accelerate mutually reinforcing efforts toward a green, digital, and inclusive future.
In this context, the IMF continues to help member countries address these challenges through its lending.
Lending
The IMF has stepped up its lending to countries and continues to reassess its lending toolkit to ensure its responsiveness and adaptiveness to emerging needs.
Since Russia’s invasion of Ukraine, the IMF has approved 41 requests from 38 member countries for SDR 95.2 billion ($128 billion) in new financing commitments, bringing total support since the beginning of the pandemic to SDR 218 billion ($294 billion) for 96 countries.
Two new lending facilities became operational in FY 2023:
• The new Resilience and Sustainability Trust (RST) provides long-term affordable financing to help members address longer-term challenges, including climate change and pandemic preparedness.
During FY 2023, the IMF Executive Board approved five Resilience and Sustainability Facility (RSF) arrangements, for a total of about $3.4 billion, and more than 40 additional eligible countries across different regions and income groups have also expressed interest in an RSF arrangement.
• The new Food Shock Window (FSW) provides an additional channel for emergency financing to member countries that have urgent balance of payments needs due to acute food insecurity, a sharp increase in their food import bills, or a shock to their cereal exports.
Since the FSW’s approval in October 2022, six countries have accessed this financing for a total of about $1.8 billion.
In addition to the new facilities highlighted, emerging market economies have benefited from approved financing under new programs supported under the General Resources Account (GRA) through the Extended Fund Facility (EFF), Flexible Credit Line (FCL), Precautionary and Liquidity Line (PLL), and Stand-By Arrangement (SBA). Countries that received such financing include Barbados, Egypt, Sri Lanka, and Ukraine (EFF); Morocco (FCL); Jamaica and North
Several emerging market economies also continued to benefit from access to the Fund’s precautionary facilities, with currently about SDR 65.6 billion ($88 billion) committed under the FCL and PLL.
Surveillance
In FY 2023, the IMF published a number of multilateral surveillance reports, including the World Economic Outlook, Global Financial Stability Report, Fiscal Monitor, and External Sector Report.
The IMF also conducted 126 Article IV consultations and 9 Financial System Stability Assessments under the Financial Sector Assessment Program (FSAP).
The IMF is continuing to refine its bilateral surveillance activities, including refinements to take into account a wider set of macroeconomic forces.
For example, this year, climate considerations were further incorporated into IMF surveillance activities, including through the publication of Staff Climate Notes.
The IMF also adopted its first comprehensive strategy for mainstreaming gender to help its members address macroeconomically significant gender gaps.
Capacity development
Through capacity development, the IMF helps countries build strong institutions and boost skills to formulate and implement sound macroeconomic and financial policies.
In FY 2023, the IMF trained more than 15,000 country officials, conducted more than 2,000 CD visits involving more than 1,500 experts, and delivered more than 500 training courses in seven languages. The 2023 Review of the Fund’s CD
Strategy aims to follow up on a 2018 review and modernize the IMF’s management, administration, and delivery of CD.
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Ukraine’s new IMF-supported program
On March 31, 2023, the IMF’s Executive Board approved a financial arrangement for Ukraine amounting to $15.6 billion over four years through 2027.
The arrangement, under the Extended Fund Facility, is part of an international $115 billion financial package for the same four-year period, intended to support the authorities’ policies with respect to stabilizing the economy as war continues and to entrench more expansive reforms to speed recovery once the war winds down.
The newly approved arrangement under the Extended Fund Facility is the third and final stage of a strategy developed with the authorities to support Ukraine.
The first stage was emergency financing totaling $2.7 billion through the Rapid Financing Instrument in 2022.
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The second stage was a four-month Program Monitoring with Board Involvement, approved in December 2022. The authorities’ strong performance during the second stage paved the way toward the full-fledged IMF program.
Cost of living crises
Countries contend with high inflation and commodity prices, many with IMF support.
A combination of climate shocks and the pandemic disrupted food and energy production and distribution, driving up costs for people around the world.
For many member countries, Russia’s invasion of Ukraine worsened an already difficult situation by pushing the prices of energy, food, and fertilizers even higher and exacerbating energy and food shortages.
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Although global food and energy prices have fallen from their peak levels in mid-2022, domestic prices and the risks to food production remain elevated in many economies, hurting mostly poorer households.
More broadly, although inflation has been declining in response to many central banks’ interest rate hikes, most countries still face elevated headline and core inflation.
Coping with inflation
Governments have faced difficult trade-offs in tackling high food and energy prices, as well as core inflation pressures, with policy buffers reduced after years of pandemic relief spending.
Monetary policymakers should remain focused on bringing inflation down but stand ready to adjust quickly to financial developments, the April 2023 World Economic Outlook noted.
The April 2023
Fiscal Monitor assessed how fiscal policy can do its part to support monetary policy in facilitating disinflation while protecting the most vulnerable.
In October 2022, the World Economic Outlook and Fiscal Monitor highlighted key principles for formulating an appropriate fiscal response to the cost of living crisis.
These include ensuring fiscal policy does not work at cross-purposes with monetary authorities’ efforts to bring down inflation; using targeted and temporary transfers to support vulnerable households instead of price controls, untargeted subsidies, and export bans; and safeguarding investment in human capital, digitalization, green energy, and supply-chain diversification.
Food insecurity
The IMF heightened its efforts to help tackle the global food crisis. Countries in sub-Saharan Africa have been most affected, with food prices surging by an average of 24 percent in 2020–22, the largest increase since the 2008 global financial crisis.
The most vulnerable countries face severe macroeconomic challenges exacerbated by weak institutions and fragile sociopolitical environments.
IMF financing and food Shock Window Since May 2022, the IMF has approved new uppercredit-tranche-quality arrangements or augmentationsof those that already exist for eight countries facing acute food insecurity.
Seven countries have benefited from new programs (Bangladesh, Benin, Cabo Verde, Mauritania, Mozambique, Sri Lanka, Zambia), and Kenya’s program has been augmented.
The programs help countries address a broad range of balance of payments needs while strengthening social safety nets, including policies to help address the impact of the food crisis.
To provide a new channel for emergency financing to member countries that have urgent balance-ofpayments needs related to the food crisis, the Executive Board approved a new temporary FSW in September 2022. Six countries—Burkina Faso, Guinea, Haiti, Malawi, South Sudan, and Ukraine—had accessed this financing as of April 30, 2023, for a total of about SDR 1.4 billion (or $1.8 billion).
The Executive Board also amended the policy for Staff-Monitored Programs to allow Program Monitoring with Board Involvement in October 2022.
The change allows the Board to provide opinions on whether a member’s policies are sufficiently robust to meet the program’s objectives and monitor program implementation, including policies aimed at facilitating the transition to an upper-credit-tranche-quality IMFsupported program.
The IMF collaborates closely with partners to strengthen the international response to high food prices, including the Food and Agriculture Organization, World Bank, World Food Programme, and World Trade Organization.