INTERNATIONAL MONETARY FUND (IMF)of its debt to the Internaonal Monetary Fund (IMF) four years early, with a total of 3.5 billion euros ($3.9 billion), according to media reports

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INTERNATIONALMONETARYFUND(IMF)

Presentedby: KellyLauSereneTsangTiffanyChauShirleySzeto

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ORIGINALAIMS▪  PromoteinternaOonalmonetarycooperaOon;

▪  FacilitatetheexpansionandbalancedgrowthofinternaOonaltrade;

▪  Promoteexchangestability;

▪  AssistintheestablishmentofamulOlateralsystemofpayments;and

▪  Makeresourcesavailable(withadequatesafeguards)tomembersexperiencingbalanceofpaymentsdifficulOes.

BackgroundInformaOon CaseStudy

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PURPOSE

ToensurethestabilityoftheinternaOonalmonetarysystem—thesystemofexchangerates

andinternaOonalpaymentsthatenablescountriestotransactwitheachother.


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BASICFACTSHeadquarters:Washington,D.C.ExecuOveBoard:24DirectorseachrepresenOngasinglecountryorgroupsofcountriesStaff:Approximately2,700from148countriesMembers:189countries


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BASICFACTSHeadquarters:Washington,D.C.Execu9veBoard:24Directorseachrepresen9ngasinglecountryorgroupsofcountriesStaff:Approximately2,700from148countriesMembers:189countries


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MEMBERCOUNTRIESBelgiumBoliviaCanadaChinaColombiaCzechoslovakiaEgyptEthiopiaFranceGreeceHonduras

Only7non-membercountriesand11non-sovereigncountries

Now

Achievedalmostuniversalmembership

1990s

Startedwith29originalmembers

1945

IcelandIndiaIraqLuxembourgNetherlandsNorwayPhilippinesSouthAfricaUnitedKingdomUnitedStateYugoslavia

DominicanRepublicEcuadorGuatemalaParaguayIranIslamicRepublicof(Iran)ChileMexicoPeru


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MEMBERCOUNTRIES

▪  1991:FalloftheSovietUnion▪  Dissolveofcommunistbloc▪  AlliancesjoinedIMF

Only7non-membercountriesand11non-sovereigncountries

Now


1990s


1945


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MEMBERCOUNTRIES

Non-membercountries Only7

non-membercountriesand11non-sovereigncountries

Now


1990s


1945


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MEMBERCOUNTRIES

Non-sovereignmembers Only7

non-membercountriesand11non-sovereigncountries

Now


1990s


1945


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SERVICES–THEBIGTHREE

Surveillance

Lending

CapacityDevelopment

PromotesGlobalEconomicStability


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SURVEILLANCE Surveillance

Lending

CapacityDevelopment

•  TheIMFengagesinsurveillancesinofeconomicandfinancialpoliciesonanaOonal,regionalandglobalbasis.

•  TheIMFhighlightspossibleriskstostabilityandadvisesonneededpolicyadjustments.

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SURVEILLANCE-NATIONAL Surveillance

Lending

CapacityDevelopment

NaOonalBasis

Globalbasis

•  AnnualconsultaOons•  evaluatethecountry’seconomic

policiesandoutlook •  124surveillanceconsultaOonin2015

SURVEILLANCE-GLOBAL Surveillance

Lending

CapacityDevelopment

NaOonalBasis

Globalbasis

PublicaOons:•  WorldEconomicOutlook(WEO)•  GlobalFinancialStabilityReport(GFSR)•  FiscalMonitor•  RegionalEconomicOutlookreports•  PilotExternalSectorReports•  GlobalPolicyAgenda

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LENDING Surveillance

Lending

CapacityDevelopment

•  EnablescountriestorebuildtheirinternaOonalreserves,stabilizetheircurrencies,conOnuepayingforimports,andrestorecondiOonsforstrongeconomicgrowth

•  Madeavailableunderalending“arrangement”

LENDING-HISTORY Surveillance

Lending

CapacityDevelopment

Biggestborrowers:

Portugal,Greece,Ukraine,Pakistan

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LENDING-HISTORY Surveillance

Lending

CapacityDevelopment

BiggestprecauOonaryloans:

Mexico,Poland,Colombia,Morocco

LENDING-INSTRUMENTS

Non-consensuallending

▪  loansprovidedatmarket-relatedinterestrates

ConsensualLending

▪  Loansprovidedatloworevenzerointerestrates

Surveillance

Lending

CapacityDevelopment

Stand-ByArrangements(SBAs)ExtendedFundFacility(EFF)FlexibleCreditLine(FCL)

PrecauOonaryandLiquidityLine(PLL)RapidFinancingInstrument(RFI):

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LENDING-INSTRUMENTS

Non-consensuallending

▪  loansprovidedatmarket-relatedinterestrates

ConsensualLending

▪  Loansprovidedatloworevenzerointerestrates

Surveillance

Lending

CapacityDevelopment

TheExtendedCreditFacility(ECF)CreditFacility(SCF)TheRapidCreditFacility(RCF)

CAPACITYDEVELOPMENT Surveillance

Lending

CapacityDevelopment•  StrengthenscountriesinsOtuOonalcapacity

andskills•  Consistsof:

•  Training•  Technicalassistance(TA)

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CAPACITYDEVELOPMENT-TRAINING

Surveillance

Lending

CapacityDevelopment

EmergingmarketcountriesreceivedthelargestshareofIMFtraining

TrainingParOcipaOonbyIncomeGroup

CAPACITYDEVELOPMENT-TECHNICALASSISTANCE

Surveillance

Lending

CapacityDevelopment

low-incomeanddevelopingcountriesreceivedabouthalfofallIMFTA

TechnicalAssistanceDeliverybyIncomeGroup

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WHEREDOESTHEMONEYSCOMEFROM?


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Thirdlineofdefense

Bilateralborrowingarrangements

Secondlineofdefense

MulOlateralborrowingarrangements

FirstlineofdefenseQuota

$210b

$316b

$447b

TheIMFisabletolendalmost$1trillion



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ThirdlineofdefenseBilateralborrowingarrangements

SecondlineofdefenseMulOlateralborrowingarrangements


•  QuotasubscripOons(determinedbythecountry’ssizeofeconomy

•  InformofSpecialDrawingRights(SDRs)•  Notacurrency•  InternaOonalreserveasset•  Definedbyaweightedcurrency

basketoffourmajorcurrencies

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•  TheNewArrangementstoBorrow(NAB)•  TheGeneralAgreementstoBorrow(GAB)



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•  Firstenteredin2009-2010•  Thenin2012， euroareacrisis•  NewimprovedframeworkunOlatleastthe

endof2019

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CASESTUDYEvaluaOononEffecOveness

CASESTUDY:EVALUATIONONEFFECTIVENESS▪  Judgingcriteria:▪  1.TargetAccomplishment

▪  2.DebtSustainability

▪  3.EconomicPerformance

▪  CaseStudy:IrelandandGreece

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CASESTUDY:IRELAND▪  Background:

▪  In2010,theIrishGovernmentrequestedathree-yearextendedarrangementfromtheIMFinanamountofaboutUS$30billion

▪  Theloan,agreedwithinthetroikaframework,waspartofapackagetotalingroughlyUS$75billionthatincludedsupportfromtheEuropeanFinancialStabilizaOonMechanism(EFSM)/EuropeanFinancialStabilityFacility(EFSF)andbilateralpartners


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CASESTUDY:IRELAND▪  Mee9ngtargets?

▪  NearlyallfiscalandstructuraltargetsweremetinaOmelymanner,

▪  exceptforadelayintacklingtheproblemofmortgagearrearsandtheassociatedreformofthepersonalinsolvencyregime


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CASESTUDY:IRELAND

▪  DebtSustainability▪  DecreaseindebttoGDPraOo▪  InJuly2015,Irelandrepaidasignificantpart

ofitsdebttotheInternaOonalMonetaryFund(IMF)fouryearsearly,withatotalof3.5billioneuros($3.9billion),accordingtomediareports.Friday’spaymentcomesshortlyaqeritpaid9billioneuros($10billion)inDec2014.


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CASESTUDY:IRELAND▪  EconomicPerformance

▪  SignificantincreaseinrealGDP


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▪  Increaseininvestment

▪  Boostinconfidenceofinvestors


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▪  StockMarketbecamemoreacOve


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CASESTUDY:IRELAND▪  Economicperformance

▪  Increaseintradeingoodsandservicesfrom2010


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CASESTUDY:IRELAND▪  Economicperformance

▪  Decreaseinunemployment

ratesince2012


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CASESTUDY:IRELAND▪  TechnicalAssistance▪  IrelandreceivedverylirleTA,thoughitbenefitedfromasignificantamountoftechnicalwork(notclassifiedasTA)bytheMonetaryandCapitalMarketsDepartmentonbankingsector-relatedissues


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CASESTUDY:IRELAND▪  ThecaseofIrelandisdeemedasuccessfulone

▪  ItsuccessfullyhelpedIrelandrepayorfinancetheirmaturingdebtanddeficit

▪  ItalsoaddressedtheneedtosafeguardthestabilityoftheeuroareaortheEUasawhole


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CASESTUDY:GREECEEvaluaOononEffecOveness

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CASESTUDY:GREECEBackground:

▪  InMay2010,theIMFapproved€30billioninfinancialassistanceforGreeceunderaStand-Byarrangementtosupportthecountry’seconomicreformprogram

▪  InMarch2012,theIMFapproved€28billion(or$36.7billion)infinancialassistanceforGreeceunderanextendedarrangementtosupportthecountry’seconomicreformprogram

▪  To2016,Greecehas€21.2billioninoutstandingobligaOonstotheIMF


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CASESTUDY:GREECEMee9ngtargets?

▪  WhiletheauthoriOesachievedsubstanOalfiscaladjustment(acumulaOveimprovementof8.25percentagepointsofGDPfrom2009to2011),itsOllfellshortoftheambiOoustarget


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Ireland,PortugalandSpain:primarybalancetargetsandactualoutcomes(%GDP)

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CASESTUDY:GREECE▪  Debtsustainability▪  Arepaymentofabout€1.5billionwasduetotheIMFunderthestand-byarrangementonJune30,2015.Thatrepaymentwasnotmadewhendue

▪  Arepaymentofabout€456millionwasdueonJuly13,2015.Thatrepaymentwasalsonotmadeontheduedate


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CASESTUDY:GREECE

▪  DebtSustainability▪  IncreaseindebttoGDPraOo


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CASESTUDY:GREECE▪  EconomicPerformance

▪  ImprovementinrealGDPgrowthrate


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CASESTUDY:GREECE▪  EconomicPerformance

▪  Staggeringstockmarket


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CASESTUDY:GREECE

▪  EconomicPerformance

▪  Increasingunemploymentrate


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CASESTUDY:GREECE▪  TechnicalAssistance▪  In2010,IMFteamsprovidedGreecewithtechnicalassistancetoimproveexpenditurecontrol

▪  andhelpdesignamechanismbywhichbankswouldissuebondsguaranteedbythegovernmentandthuseligibleasECBcollateral,andusethemforaccesstoEurosystemliquidity


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CASESTUDY:GREECE▪  TechnicalAssistance▪  Challenges:▪  ThedeliverywascomplicatedbytheneedtocoordinatewiththeEUTaskForceforGreece,whichreliedonoutsideconsultantsfrommajorEUmembercountries

▪  ItwashandicappedbylackofsufficientprioriOzaOon,adhocdecisionmaking,andmovingtargetsundermulOpleiniOaOves,aswellasbyGreece’sseverelylimitedabsorpOvecapacity


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CASESTUDY:GREECE▪  TechnicalAssistance▪  CriOcism:

▪  IMFTAwascriOcizedbytheEuropeanpartnersforfocusingtoomuchonorganizaOonalandmanagerialissues,ratherthanonprovidinghands-ontraining


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CASESTUDY:GREECE▪  Challenges:▪  PerformanceundertheSBAwasiniOallystrongbutbegantosufferinlate2010

▪  Reasons:▪  StrongdomesOcopposiOon

▪  WeakadministraOvecapacity

▪  SocialandpoliOcalinstabilitythattheseverecontracOonofoutputcreated


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CASESTUDY:GREECE▪  ThecaseofGreececonsOtutesanunsuccessfulone

▪  Despiteitavertedabreakdownoftheeuroareaandawidely-fearedexitofGreecefromthesinglecurrency

▪  ItfailedtorestoreGreecetofinancialandmacroeconomicstability


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EVALUATIONONEFFECTIVENESS:2CASESTUDIES

TargetAccomplishment

DebtSustainability

EconomicPerformance

Ireland

Greece

INEQUALITYOFVOTINGPOWER ▪  Highestdecisionmakingbody:TheBoardofGovernors

▪  VoOngsystem:onedollaronevote

▪  determinedbytheamountofmoneythateachcountrypaysintotheIMF'squotasystem


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INEQUALITYOFVOTINGPOWER

*Importantdecisionmaking(e.g.elecOonofmanagingdirector)requires85%votes

Country Vote(%) UnitedSates 20.6% AllofEurope 30.4% EuropeanUnion 24.5% Asia 9.9% LaOnAmerica 7.2% RestoftheWorld 31.8%

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LACKOFTRANSPARENCY


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Hurtworkers Hurtthegeneralpublic Hurtenvironment

Favoursbankersandcorporates

themost

Widenthegapbetweenthe

wealthyandthepoornaOons

NEGATIVESIMPACTSBROUGHTBYCONTROVERSIALPOLICIES


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Requirescountriestoopenuptheireconomiesfor

foreigninvestments

advisecountriestoarractforeigninvestorsby

weakeningtheirlabourlaws

Hurtlocalandforeignlabours

1.WEAKENINGOFLABOURLAWS

E.g.InHaiO,thegovernmentwastoldtoeliminateastatuteintheirlaborcodethatmandatedincreasesintheminimumwagewheninflaOonexceeded10percent.



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E.g.Indevelopingcountries,children(especiallygirls)arewithdrawnfromschoolsuserfeesatpublicclinicsandhospitalsmakehealthcareunaffordabletothosewhoneeditmost.

UnderSAPs,countriesarerequiredtocut

governmentspending

Userfeesatpublicclinicsandhospitalsmakehealthcare

unaffordabletothosewhoneeditmost.

Generalpublichavetopayfortheseaspects

2.REDUCTIONINGOVERNMENTSPENDING



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E.g.TheIvoryCoast'sincreasedrelianceoncocoaexportshasledtoalossoftwo-thirdsofthecountry'sforests.

3.NEGLIGENCEOFENVIRONMENTALIMPACT


Lackofenvironmentalministriesandgroups

Exportgrowthisofthehighestpriority •  ForeigncorporaOonsshownoregardstothelocalenvironment


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E.g.Mexican1995pesocrisis:IMFbailoutWallStreetBankersbyproppingupinterestandexchangerates->encourageinvestorstoconOnuemakingrisky,speculaOvebets

4.DEREGULATIONSOFFINANCIALSYSTEM


removalofregulaOonsthat

mightlimitspeculaOon

capitalinvestmentindeveloping

countryfinancialmarkets

Favoursbankersbutposethreatsonthe

stabilityofthecountries’financial

situaOon


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E.g.TheIMFforcedHaiOtoopenitsmarkettoimported,highlysubsidizedUSriceatthesameOmeitprohibitedHaiOfromsubsidizingitsownfarmers.

5.ENCOURAGEMENTOFTRADEBYTAXBREAKSANDLOWPRICE


Countriesareencouragedtogivetaxbreaksandsubsidiestoexportindustries

PublicassetssuchasforestlandandgovernmentuOliOesaresoldofftoforeigninvestorsatrockboromprices • e.g.phone,waterandelectricitycompanies


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WIDENINGGAPBETWEENTHEWEALTHYANDPOORNATIONS

UnequalvoOngsystem

Weakeningoflabourlaws

Taxbreaksandsubsidies


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VOTE


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ISIMFGOODFORGLOBALECONOMY?


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ISIMFGOODFORDOMESTICECONOMY?


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ISIMFGOODFORYOU?


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ULTIMATEGOAL


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CRUX


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NaOon-statevsglobalinsOtuOon

Sovereigntyvsgovernance

Autonomyvssurveillance


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ANALOGY


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REALCASESTUDYJAMAICA


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GLOBALIZATION3.0


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THANKYOUFORYOURTIME

Documents

INTERNATIONAL MONETARY FUND (IMF)of its debt to the Internaonal Monetary Fund (IMF) four years early, with a total of 3.5 billion euros ($3.9 billion), according to media reports