IMF Engagement with Small Developing States

This evaluation assesses how effectively the IMF has supported its 34 Small Developing States (SDS) through its core operations: surveillance and policy advice, program support, and capacity development. SDS countries represent 18 percent of the Fund’s membership and face persistent and distinctive vulnerabilities that pose a special challenge for the IMF. The evaluation period spans from 2010 to 2020 and due attention is paid to those aspects of the Fund´s initial response to the COVID-19 pandemic, which hit SDS economies especially hard. After a thorough assessment, supported by country cases, cross-cutting thematic studies, and multiple information sources, the evaluation finds that the IMF deserves considerable credit for having substantially stepped up its engagement with SDS members over the last decade. Nevertheless, the Fund’s engagement with SDS has faced several serious challenges that have adversely affected its overall value added and traction. Difficulties in staffing SDS country teams have contributed to high rates of staff turnover and low frequency of engagement. The overall IMF financing architecture has not been especially well suited to the needs of SDS, and their use of Fund resources has been substantially less than by other emerging market and developing economies. In the area of capacity development, the main concern has been limited traction and impact, hampered by absorptive capacity constraints in many SDS and unfulfilled demand for follow up support. The report proposes four broad recommendations and a number of specific suggestions aimed at further strengthening the Fund’s engagement with its SDS members. The four recommendations cover a targeted recalibration of the overall approach to the Fund´s activities in SDS, operational steps to increase the traction of surveillance and CD work, proposals to make better use of the Fund’s lending framework to address SDS needs, and further HR and budgetary commitments to support SDS engagement.