dyton mupawaenda
The International Monetary Fund’s internal watchdog has criticised the lender’s process for granting unusually large loans to troubled borrowers such as Argentina and Egypt, according to people familiar with the matter.
The fund’s Independent Evaluation Office studied roughly 20 years of lending under the so-called Exceptional Access Policy and prepared a set of recommendations, said the people, who asked not to be identified because the report is not public.
The Washington-based fund’s executive board is scheduled to discuss the findings on Thursday.
The report criticised a lack of consistency in lending policy for being modified on a country-by-country basis, and not as a result of regular reviews, the people added.
The auditor also determined that the loans weren’t effective at catalysing private sources of financing for the borrowers, one of the primary reasons for a country with troubled finances to seek assistance from the IMF.
The IMF declined to comment. An official at the IEO said they plan to publish the document next week.
The fund has carried out a comprehensive review of the policy only once before, in 2004, though it has been modified three times after that.
The policy, adopted in 2002 for countries with large borrowing needs, allows countries to access funding well beyond their IMF “quota,” which represents both their voting share as well as the resources they are allowed to tap.
The category now allows a country to receive financing for more than 200 percent of its allowance in a single year, and sets a cumulative access limit at 600 percent of its quota.
The report recommended the fund set clearer expectations for country programs where debt falls into the so-called “gray zone,” which refers to debt considered sustainable but not with high probability. – Bloomberg
Online Reporter
