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Coordination Between the International Monetary Fund and Multilateral Development Banks on Policy-Based Lending: Update on the Implementation of the G20 Principles

In March 2017, the Group of Twenty (G20) devised "Principles for effective coordination between the International Monetary Fund (IMF) and Multilateral Development Banks (MDBs) in case of countries requesting financing while facing macroeconomic vulnerabilities." The Principles drew on the stock-taking exercise presented to the G20 International Financial Architecture Working Group in February 2017 (IMF and MDBs, 2017), on the practices of coordination between MDBs and the IMF in provision of financial assistance to countries facing significant balance of payment (BoP) pressures. The Principles highlight the importance of the coordination between the institutions in the decision-making process for such financial assistance to be most effective, while clarifying that each institution should remain responsible for its lending decisions and be independent in reaching them. They also lay out recommended tasks for MDBs and the IMF to enhance coordination (Annex I). […]