IMF launches new policy support facility for Africa
WASHINGTON, Oct 15 (Reuters): The International Monetary Fund launched yesterday a new instrument for poor countries that need the IMF's endorsement of their economic policies without requiring them to borrow from the global lender.
Nigeria is likely to become the first recipient of the IMF's new Policy Support Instrument (PSI) Monday, that would make the country eligible for debt relief clearance from the Paris Club of creditors.
"The PSI will offer a sound approach for helping countries design effective economic programmes and provide signals to donors, the multilateral development banks, and markets," the Fund said in a statement.
Donors, creditors and markets generally look to the IMF to give clear signals if a country is following sound economic policies and deserves their support.
"To ensure that Fund support for low-income countries remains as effective as possible, it must adapt as members' needs evolve," the IMF said.
"In particular, as more low-income members have experienced a marked strengthening of their macro-economic situation, the perception of a need for a new, non-financial, form of fund engagement has grown," it added.
Under the new instrument, the IMF will evaluate a country's economic performance twice a year and issue assessments for donors and creditors.
The IMF's executive board said it would allow limited flexibility in the timing of the evaluations and would conduct reviews irrespective of the status of economic programmes.