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Question 9: Approval in Principle has not been used in a long time, why is the IMF putting it back on the table now?

AIP is a procedure that the IMF has used in the past in cases where there was agreement on the policies that would underlie an IMF arrangement, but where full agreement had not yet been reached between the country and its creditors on financing or debt relief. It was used a total of 19 times during the 1980’s debt crisis to help catalyze financing or debt relief in the context of IMF-supported programs for the following countries: Sudan, Ecuador, Zaire, Madagascar, Jamaica, Zambia, Côte d’Ivoire, Kenya, Somalia, Chile, Republic of Congo, Mexico, Nigeria, Argentina, Yugoslavia, and Brazil (for Sudan, Zaire and Cote D’Ivoire, the AIP procedure was used twice each).

Over time, AIP fell into disuse as it was no longer needed. This reflected in large part a new willingness by Paris Club official creditors to signal debt relief commitments in advance of a IMF arrangement. In addition, for private creditors, AIP was also no longer needed once the IMF became able to “lend into arrears”.

While the procedure has not been used recently, it can be used for cases like the one here, where there is agreement on the policies that would underlie an IMF arrangement, but where full agreement has not yet been reached between the country and its creditors on financing or debt relief, and the IMF’s role can be helpful in catalyzing financing and debt relief from creditors.