When a member country borrows money from the IMF, its
policies come under closer scrutiny. Once a country has
completed its lending program, it may enter into a process
known as Post-Program Monitoring (PPM). This process is
presumed for all member countries that have substantial IMF
credit outstanding following the expiration of their
programs. The enhanced monitoring is intended to ensure the
continued viability of a country's economic framework and
provide early warning of policies that could jeopardize the
country's external viability and, hence, its capacity to
repay the IMF. Should it become necessary, IMF staff will
advise on policy actions to correct macroeconomic
imbalances.
IMF financing provides member countries with the breathing space
they need to correct balance of payments problems. A policy
program supported by financing is designed by the national
authorities in close cooperation with the IMF. Continued
financial support during the program is conditional on the
effective implementation of the policies. A country’s return to
economic and financial health during the program and in the
medium term ensures that IMF funds are repaid, and can be made
available to other member countries. Post-program monitoring is
intended to help ensure the continued viability of a country’s
economy after its IMF-supported program has expired.
Criteria
for conducting post-program monitoring
It is presumed that a member country will engage in
post-program monitoring with the IMF after its program has
expired when its outstanding credit exceeds 200 percent of its
quota, and when it no longer has program involvement of any kind
with the IMF.
In some cases, post-program monitoring may not be needed even
if the country’s outstanding credit exceeds 200 percent of
quota. This applies when a successor borrowing arrangement or a
staff-monitored program is expected to be in place within six
months of the expiration of the current program, or when the
policies and external position of the member country are deemed
to be strong.
In other cases, post-program monitoring may be required even
if the country’s outstanding credit is below 200 percent of its
quota. This occurs if economic developments call into question
the country’s progress toward external viability.
Timetable
The IMF’s 24-member Executive Board can decide on
post-program monitoring for a country at any time during the
program or after the program expires. However, the decision is
normally taken at the time of the last program review when the
country’s outstanding credit is expected to exceed the threshold
of 200 percent of quota.
How post-program monitoring works
Under post-program monitoring, countries undertake more
frequent formal consultations with the IMF than in the case
under the IMF’s normal surveillance, with a particular focus on
macroeconomic and structural policies that have implications for
external viability. There are normally two post-program
monitoring Board consultations during a twelve-month period.
Post-program monitoring remains in effect until outstanding
credit falls below the threshold of 200 percent of quota.
Nonetheless, the IMF’s Executive Board could agree to
discontinue the monitoring―even before outstanding credit falls
below the threshold―if strong policies are in place and the
external position is sound. In cases where post-program
monitoring is found to be required even though outstanding
credit is below 200 percent of quota, the monitoring will
normally be carried out for one year.
