Financial term of the Week

A staff monitored programme (SMP) is an informal agreement between the International Monetary Fund (IMF) and a member country to monitor the country’s economic programme.

SMPs are used when a country is not yet ready for an IMF-supported financial arrangement, such as a stand-by arrangement or extended fund facility.

SMPs are typically used in cases where a country has limited institutional capacity to implement policies.

They are designed to help countries achieve their economic and financial goals by providing them with close monitoring and technical assistance from IMF staff.

SMPs are typically monitored on a quarterly basis, and IMF staff provide regular feedback to the country’s authorities on their economic performance and progress in implementing their programme.

SMPs do not entail any financial assistance from the IMF, but they can be helpful for countries that are seeking to rebuild their economies and regain the confidence of international investors.

A successful SMP can pave the way for a country to enter into an IMF-supported financial arrangement or to obtain debt relief or other financial assistance.

There are several examples of how SMPs have been used in recent years. In 2019, Zimbabwe entered into an SMP with the IMF to help the country implement its economic reform agenda and rebuild its economy.

In 2021, the Comoros entered into an SMP with the IMF to help the country recover from the Covid-19 pandemic and implement reforms to boost inclusive growth and limit risks.

In 2022, the IMF approved a proposal to allow for limited executive board involvement in SMPs.

This would allow the board to opine on the robustness of a country’s policies to meet its stated objectives under an SMP and monitoring its implementation.

SMPs can be a valuable tool for countries that are seeking to improve their economic performance and regain the confidence of international investors.