International Monetary Fund
Published Date:
October 2015
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Impact of Falling Oil Prices on the IMF Membership

The unexpectedly steep drop in oil prices over the past year—falling by more than one-half from September 2014 to January 2015—has had a significant impact across the IMF membership. The decline, which is part of a broader trend of declining commodities prices, has provided a boost to global growth and benefited many oil importers, but it also has weighed on economic activity among oil-exporting nations.

The falling prices were driven by production increases (in members of the Organization of Petroleum Exporting Countries [OPEC] and non-OPEC countries) and a significant slowdown in the growth of global oil demand—particularly from Europe and the Asia-Pacific region.

The depth of the price decline took forecasters and markets by surprise: the October 2014 World Economic Outlook (WEO) showed the average price of oil at $99.36 a barrel in 2015 based on the assumed price on futures markets, while the April 2015 WEO showed the assumed price for 2015 at $58.14 and $65.65 in 2016. The WEO contained a detailed analysis of commodity market developments and forecasts, with a focus on investment in an era of low oil prices.

Broad implications for the IMF’s work

The impact of oil prices across the IMF’s membership had broad implications for the work of the IMF. Bilateral and multilateral surveillance activities all adjusted to the rapidly changing environment. Article IV consultations, Regional Economic Outlooks, and the IMF’s flagship publications—the WEO, Global Financial Stability Report (GFSR), and Fiscal Monitor—all devoted considerable attention to issues related to oil prices.

While the IMF assessed the overall macroeconomic impact as positive, other reports highlighted the risks. The April 2015 GFSR, for example, stated that “the speed and magnitude of the movement in oil prices raise questions about how stress can be transmitted through the financial sector.” It cited channels through which lower prices could “spawn financial vulnerabilities,” including “a self-reinforcing cycle of rising credit risk and deteriorating refinancing conditions for countries and companies, a decline in oil surplus recycling in world funding markets, and strains on the financial market infrastructure’s ability to accommodate prolonged heightened energy price volatility.”

Country-by-country trends

The IMF Executive Board has been deeply involved in reviewing the reports and documents that analyze the impact of falling oil prices. Beyond detailed discussion of the analysis contained in the flagship publications, it also has reviewed the trends on a country-by-country basis. For example, an analysis of the Executive Board’s press releases on Article IV consultations during the period January 1–March 31, 2015, showed that 58 percent of the 21 Article IV Board’s assessments contained references to the impact of lower oil prices—with a more detailed focus on the implications for oil-producing countries.

IMF Economic Counselor Olivier Blanchard and Rabah Arezki, head of the commodities team in the Research Department, posted an article on the oil price decline on iMFdirect, the IMF’s blog. The article, titled “Seven Questions about the Recent Oil Price Slump,” examined the mechanics of the oil market, the implications for various groups and for financial stability, and steps policymakers could take to address the impact on their economies. It attracted the largest readership of any item posted on the blog during the year.

Oil Prices

(U.S. dollars per barrel)

Source: Bloomberg, L.P.

WTI: West Texas Intermediate crude

Fiscal implications of falling oil prices

The fall in international oil prices also has significant implications for oil importers and exporters in terms of public finances. The April 2015 Fiscal Monitor highlighted this element of the impact of oil prices, saying that importers were likely to benefit while exporters could be hurt.

The Fiscal Monitor said: “The impact could be large, but whereas the gains will be spread across many economies, the adverse fiscal effects will be concentrated in relatively few. Although oil exporters account for a lower share of global GDP than oil importers, exporters face a much larger shock given that oil has a much bigger weight in their economies and budgets.”

For many exporters, the Fiscal Monitor said, vulnerabilities were building before prices began falling; revenues from higher prices paid for large increases in current and capital expenditures. As a result, the fiscal break-even price for oil increased in most exporting countries in the Middle East, and most exporters need prices considerably above the $58 projected for 2015 to cover budgetary spending.

A major element of the fiscal impact of falling oil prices lies in the area of fuel subsidies and the structure of energy taxation. The Monitor concluded that the higher the “pass-through” of fuel prices to consumers, the lower the fiscal savings would be. For example, oil importers that provide no subsidies but earn revenues from oil tariffs and other taxes could see revenue deterioration. On the other hand, if the entire decline in oil prices is passed on to consumers, there could be stronger aggregate demand and revenues.

IMF area departments–through Article IV consultations and regional surveillance activities—identified a window of opportunity for both importing and exporting countries to reform fuel subsidies and taxation regimes that would strengthen fiscal balances to create space for increasing priority expenditures. Public finances in many oil-importing low-income developing countries are expected to improve as declining oil prices reduce energy subsidies.

The Response to Ebola Emergency Funding and a New Instrument

“Our membership has demonstrated great commitment in coming together to respond to the Ebola crisis. I am particularly gratified at the support for approving the new Catastrophe Containment and Relief Trust, which will make a difference to the people of Guinea, Liberia, and Sierra Leone—and other countries in the future.”

IMF Managing Director Christine Lagarde, February 5, 2015

IMF responds rapidly to emerging crisis

Sources: World Health Organization, IMF Finance Department.

The Ebola outbreak in West Africa presented the international community with an unprecedented public health crisis. The spread of the pandemic through Guinea, Liberia, and Sierra Leone infected nearly 26,000 people and killed more than 10,600. It brought economic activity in the three countries virtually to a halt and raised the specter of a broader crisis.

The IMF response was rapid and flexible, committing about $404 million of financing that went directly to the governments of the three countries to meet the many new financing demands posed by Ebola. Emergency assistance was first provided on an accelerated basis in September 2014. Then, as the scale of the disaster became clear, the IMF augmented its assistance in early 2015 with additional financing under the Poverty Reduction and Growth Trust and debt relief under a new Catastrophe Containment and Relief Trust (CCRT).

Managing Director Christine Lagarde announced the additional financing in a proposal to the G20 Heads of State at their November 2014 Summit in Brisbane, Australia. By following up on the Brisbane proposal, the IMF became the first multilateral institution to deliver on 100 percent of its commitments to the Ebola-stricken countries.

The financial assistance to combat the epidemic fits within the IMF’s mandate to support its member countries with balance-of-payments support in times of economic and social stress. Each step of the response was carefully considered by the Executive Board, which approved all requests for financing and the creation of the CCRT by reforming the Post-Catastrophe Debt Relief Trust.

Concessional lending: The IMF provided $309 million of expedited assistance at zero interest rates to the three Ebola-stricken countries. The lending was provided under the Rapid Credit Facility and Extended Credit Facility. The money was disbursed immediately, providing the countries with urgently needed resources to help tackle the crisis.

Debt relief: A unique feature of the IMF response was the decision to create the CCRT. The three Ebola-affected countries (Guinea, Liberia, and Sierra Leone) were provided with $95 million in grants for debt relief in FY2015 to ease pressures on their balance of payments.

Policy advice: After the epidemic hit, GDP contracted in all three countries. A key element of IMF policy advice was to support expansionary macroeconomic policies—including budget deficits to fight the epidemic and avoid an even larger recession. IMF staff interaction with the authorities of each country was maintained throughout the pandemic, and as the crisis began to abate, discussions turned to the longer-term challenge of rapidly restoring growth.

IMF support to Ebola-afflicted countries: $404 million

IMF financing (in millions of U.S. dollars)

Source: IMF Finance Department.

The Catastrophe Containment and Relief Trust

In February 2015 the IMF established a Catastrophe Containment and Relief Trust (CCRT). This instrument allows the IMF to provide grants for debt relief to the poorest and most vulnerable countries hit by catastrophic natural disasters or public health disasters, including epidemics. The new trust is intended to complement donor financing and the IMF’s concessional lending. The relief on debt service payments frees up additional resources to meet exceptional balance-of-payments needs created by the disaster, and for containment and recovery efforts.

The CCRT was created by transforming the Post-Catastrophe Debt Relief Trust, which was established in 2010 following the terrible earthquake in Haiti. The CCRT has two windows: (1) a Post-Catastrophe Relief window, to provide exceptional assistance in the wake of a natural disaster such as an earthquake or typhoon; and (2) a Catastrophe Containment window, to provide assistance in containing the spread of a public health disaster.

The introduction of a Catastrophe Containment window acknowledges that poor countries with weak health systems have limited capacity to contain the wider threat posed by a public health disaster, and that the international community has a strong interest in providing extensive support to such countries. Eligible low-income countries that are hit by public health disasters would receive up-front grants to immediately pay off upcoming debt service to the IMF. The amount of grant support is capped at 20 percent of a country’s quota, with additional debt relief possible under exceptional circumstances.

Assistance through the CCRT is available to 38 low-income developing countries that are eligible for concessional borrowing and that also have either a per capita income below $1,215 or, for small states with a population below 1.5 million, a per capita income below $2,430.

The Two Windows of CCRT
Post-Catastrophe Relief WindowCatastrophe Containment Window
Provides exceptional assistance in the wake of a natural disaster like an earthquake or typhoon.Provides assistance in containing the spread of a public health disaster.

IMF Support for Ukraine

On March 11, 2015, the IMF Executive Board approved a four-year, $17.5 billion Extended Fund Facility (EFF) arrangement for Ukraine, with immediate disbursement of about $5 billion.

The program has challenging goals: to put the economy on the path to recovery, restore external sustainability, strengthen public finances, support economic growth by advancing structural and governance reforms, and protect the country’s most vulnerable citizens.

After independence in 1991, Ukraine entered into several IMF-supported programs—including after the 2008 financial crisis—but none achieved the objective of prompting sustained reform. The 2010 program ended unsuccessfully, and Ukraine’s macroeconomic problems intensified. Wages and production costs rose, but productivity did not. Eventually competitiveness slipped so much that the economy stopped growing and exports stagnated.

Rapid deterioration in 2014

The new government that took office in February 2014 embarked on a program to secure macroeconomic and financial stability. However, the situation deteriorated rapidly after the armed conflict in the East intensified. In the fourth quarter of 2014, GDP contracted 14.8 percent from the year before, and additional financing needs surged. The foreign exchange market was destabilized, and banks came under stress.

The government responded with a more ambitious and comprehensive program supported by substantial new financing from the international community, including the IMF. The first step of the new IMF-supported program is to stabilize Ukraine’s finances. It covers Ukraine’s external financing needs, estimated at about $40 billion over 2015-18, along with other international assistance and a debt-restructuring operation. The country’s official reserves are expected to triple to about $18 billion by end-2015. Subdued by a tight monetary stance, inflation should recede toward single digits by early 2017.

Tackling deficits, protecting the vulnerable

In addition, lower deficits can help to reduce financing needs and public debt. This includes raising energy tariffs to restrain the state-owned gas monopoly’s quasi-fiscal deficit. To protect the most vulnerable from the impact of these measures and build support for the reforms, total spending on social assistance programs is targeted to reach 4.1 percent of GDP in 2015, an increase of 30 percent from 2014, with assistance for energy bills rising fourfold.

The next step is to revive growth by restoring competitiveness, starting with a flexible exchange rate. In addition, the banking system is to be brought back to health with recapitalization and liquidation efforts so that credit growth can resume.

Addressing corruption and vested interests

Equally important, decisive measures are to be taken to address structural impediments preventing sustained growth that can raise living standards to that of Ukraine’s neighbors, including deregulation and reform of tax administration, transparency, improvements in public financial management, and reforms of state-owned enterprises. Finally, corruption is targeted with strengthened legislation, measures to enhance the effectiveness of the judiciary, and steps to curb the potentially distorting influence of vested interests in Ukraine.

The Ukrainian authorities have made determined efforts in recent months to address deep-rooted problems and make a break from the unsustainable policies of the past. The IMF and the international community are supporting Ukraine’s pursuit of its reform program.

IMF Interaction with Greece during FY2015

IMF interactions with Greece continued on several fronts during FY2015, focusing on progress on implementing an economic program supported by an extended arrangement under the EFF and provision of technical assistance and training to the authorities in order to strengthen administrative capacity across a range of public functions.

In May 2014, the IMF Executive Board completed the fifth review of Greece’s performance under the extended arrangement. The completion of the review enabled the disbursement of about $4.24 billion under the arrangement, bringing total disbursements under the EFF to about $14.38 billion. In completing the review, the Executive Board approved a waiver of nonobservance of the performance criterion on domestic arrears.

As the year progressed, there were extensive interactions among the Greek authorities, senior Fund officials, and high-level representatives of euro area member governments, the European Commission, and the European Central Bank. These interactions addressed a range of issues related to the progress in reaching understandings that could pave the way to completion of the sixth review. These interactions continued after national elections in January 2015 that led to the formation of a coalition government led by the Syriza Party.

An important element of the IMF’s interaction with Greece came in the area of capacity development. The areas covered included tax administration, public financial management, regulation and supervision of the banking system, and other key areas of public administration. Policy discussions are continuing in FY2016.

After the end of FY2015, Greece went into arrears to the IMF as its economic crisis deepened. These were cleared July 20, 2015. The IMF remains committed to helping Greece through this period of economic turmoil.

Jobs and Growth

Creating jobs and fostering inclusive growth have become increasingly important themes in the work of the IMF over the past five years.

Countries are facing these challenges at a time of technological change, globalization, and shifting demographic trends—as well as macroeconomic challenges growing out of the global financial crisis of 2008-09, which caused millions of people to lose their jobs and unemployment to rise sharply.

The work on inequality was spurred by research conducted by the IMF Research and Fiscal Affairs Departments on the topic, including papers on “Inequality and Unsustainable Growth: Two Sides of the Same Coin?,” “Redistribution, Inequality, and Growth,” and “Income Inequality and Fiscal Policy” In February 2014, the Board discussed a paper prepared by staff on “Fiscal Policy and Income Inequality” The paper focused on fiscal policy—the primary tool that governments can use to affect income distribution. It surveyed available tax and expenditure options and how they can be designed to minimize unfavorable effects on work and income growth. The staff will continue to operationalize the IMF’s recent analytical work on inequality, including in the context of annual consultations.

A staff paper prepared for Board discussion in 2013 on “Jobs and Growth: Analytical and Operational Considerations for the IMF” discussed the role of the IMF in helping countries devise strategies to meet the job creation and inclusive growth. It concluded that there was scope to improve the analysis of trends in this area and to strengthen policy advice.

Integrating jobs and growth into IMF operations

Since publication of the 2013 Board paper, the process of integrating a focus on jobs and economic growth into operations has begun, and research has continued to expand, with guidance from an interdepartmental advisory group. Area departments have identified pilots to include the work on jobs and growth in Article IV consultations. As this Article IV work proceeds, it becomes part of the Executive Board’s assessment of the respective countries. Several country consultations are scheduled to include it in FY2016.

The 2014 Triennial Surveillance Review (TSR)—recommended further strengthening work on jobs and growth. Among its recommendations, the TSR suggested increasing attention to the impact of fiscal policy and financial sector developments on growth, expanding advice on labor market policies to support member countries’ job creation objectives, and taking into account more fully country authorities’ goals and constraints to better tailor advice to individual country circumstances. The TSR survey of Article IV consultations supported the finding that jobs and growth increasingly have entered into this area of operations. Contributing factors were the strengthening of surveillance tools, improvements in labor statistics, and training.

Research and surveillance

In the area of research, the wide range of issues where analytical work is being conducted includes:

Growth: quantifying gains from reforms to the structure of the economy, the role of access to finance in supporting growth, and the importance of economic diversification.

Jobs: youth unemployment in Europe, the role of wage moderation in the euro area, the impact of labor market reforms, and the informal sector in emerging and developing economies.

Inclusion and income distribution: enhancing the participation of women in the labor force, and evaluating the impact on income distribution of fiscal policies, labor market institutions, and capital account liberalization.

In the area of regional surveillance, the African Department’s April 2014 Regional Economic Outlook contained a chapter that looked at how economic policy efforts to promote job creation can help make growth more inclusive in sub-Saharan Africa. Those findings were presented at the Mozambique conference in May 2014, which had a major focus on employment and inclusive growth.

The May 2014 conference in Amman, Jordan, also addressed the issues of jobs and growth in the Middle East and Central Asia.

Women and work

A crucial element of jobs and inclusive growth is the role of women in the workplace. Women make up more than half the world’s population, but their contributions to measured economic activity, growth, and well-being fall far short of potential. This has serious consequences in terms of losses to an individual country’s GDP.

Despite significant progress in recent decades, labor markets across the world remain divided along gender lines, and progress toward gender equality seems to have stalled. In a speech in September 2014 on “The Economic Power of Women’s Empowerment,” IMF Managing Director Christine Lagarde described the barriers working women face worldwide: “When women do participate, they tend to be stuck in low-paying, low-status jobs. Globally, women earn only three-quarters as much as men—this is true even with the same level of education and in the same occupation.”

Building upon the 2012 IMF Working Paper “Can Women Save Japan?,” analysis on women and work has expanded rapidly. Area departments have put in place pilot assessments of the issues related to working women in the context of Article IV consultations across a range of countries, with the goal of building expertise, facilitating collaboration with other institutions, and sharing knowledge.

As the assessments have been completed, they have become part of the Executive Board discussions of the pilot countries. A cross-country study of women’s economic participation in European countries will inform Article IV consultations of some of those countries.

A Staff Discussion Note entitled “Fair Play: More Equal Laws Boost Female Labor Force Participation,” released in February 2015, examined the effect of gender-based legal restrictions and other policies, and of demographic characteristics on labor market outcomes.

IMF Training Expands through Online Courses

The IMF has entered an exciting new phase in its approach to training, with the adoption of new online learning courses designed in partnership with edX, the nonprofit online learning initiative founded by Harvard University and the Massachusetts Institute of Technology. The partnership enables the IMF to expand the reach of its training program to more member country officials and to offer the wider public audience access to its courses through so-called massive open online courses (MOOCs).

See for yourself

The free courses are online at:

The new IMF courses have achieved worldwide participation.

Active students (light blue); students already achieving passing grade (dark blue)

The new courses—created by the Institute for Capacity Development in collaboration with other IMF departments—are designed with short video segments interspersed with quizzes and hands-on exercises, and include a discussion forum to allow participants to network and discuss course content. The use of computer grading saves on instructor time and means that the IMF can allow virtually unlimited enrollment. Since the launch of the program in late 2013, these courses—free and open to anyone with an Internet connection—have attracted more than 10,000 active participants, of whom about 6,000 earned a certificate of completion.

New opportunities for low-income developing countries

Online learning is creating training opportunities for a wider range of country officials. Forty percent of online graduates to date are government officials, boosting IMF training by four percentage points in FY2015. The most numerous recipients of this training have been officials in sub-Saharan Africa, serving to shift the distribution of training toward the region. Online training is also shifting to officials in low-income developing countries, who received almost half of it in FY2015, compared with slightly less than 40 percent of face-to-face training.

MOOCs are serving as an important channel for IMF outreach: four-fifths of participants agree that the courses have increased their understanding of the IMF and its work. The courses have been well received, with participants expressing appreciation to the IMF for making this training openly available. By engaging youth (one-quarter of participants are students) and sharing knowledge, MOOCs help a diverse global audience better understand economic policies in their own countries and around the world.

Online courses to date include the following:

Financial Programming and Policies,

Part 1: Macroeconomic Accounts and Analysis (FPP.1x) provides an introduction to financial programming, presenting the principal features of the accounts of the four main sectors that comprise the macroeconomy (real, fiscal, external, and monetary) and their interrelations.

Debt Sustainability Analysis (DSAx) gives a comprehensive overview of debt sustainability analysis and a medium-term debt management strategy framework as adopted by the IMF and the World Bank.

Energy Subsidy Reform (ESRx) builds on an extensive cross-country analysis, which is reported in the recently published IMF book Energy Subsidy Reform: Lessons and Implications, to make recommendations on how best to implement reforms aimed at reducing state subsidies on energy.

Upcoming courses include Macroeconomic Forecasting; Financial Programming and Policies, Part 2: Program Design; and Financial Market Analysis. FPP, Part 1 has already been translated into French and will be translated into Spanish and Russian during FY2016.

MOOC participation by occupation

Training of government officials, MOOC top 10 countries in FY2015

The Free Data Initiative

“The free data program will help all those who draw on our data to make better use of this vital statistical resource—from budget numbers to balance-of-payments data, debt statistics to critical global indicators.”

IMF Managing Director Christine Lagarde Second IMF Statistical Forum November 18–19, 2014

See for yourself

The free data are online at:

Accurate, timely statistics are the lifeblood of economic policymaking and analysis. Good data can help policymakers identify and manage macroeconomic and financial vulnerabilities and can greatly enhance policy transparency.

Over the years, policymakers and investors generally have had access to reliable and timely economic data, but large segments of the public in member countries have not been able to benefit from data that help identify emerging economic risks requiring policy adjustments.

Cross-country databases often have been the domain of international organizations. In many instances, these databases have been available only by subscription. That approach is now changing with a global shift toward free data.

Data free of charge for all users

In January 2015, the IMF made its online statistical data available free of charge to all users. While these data had previously been available for free to users from low-income countries, the IMF now grants everyone access to a wealth of macroeconomic data covering all economic sectors across a large part of the IMF’s membership.

During the first three months of the free data regime at the IMF, the average monthly user base rose by more than 90 percent to more than 262,000 users from 185 countries.

This generated an overall increase in monthly traffic of close to 40 percent.

The policy was introduced along with technological improvements, including a new online data portal and an enhanced dissemination platform. The platform provides greater capability for dynamic data visualization, downloading, and sharing.

The databases that were made free of charge include:

International Financial Statistics: A library of continuously updated statistics on all aspects of international and domestic finance.

Balance-of-Payments Statistics: Balance-of-payments and international investment position data of individual countries, jurisdictions, and other reporting entities, and regional and world totals for major components of the balance of payments, with history to 1960.

Government Finance Statistics: Comprehensive annual data covering various levels of government—including general, central, state, and local governments, with history to 1990.

Directions of Trade Statistics: Database of exports and imports between countries and areas with their trading partners, with history to 1980.

The databases that were made free of charge include:

IMF capacity development activities have expanded rapidly to meet demand from member countries across the globe. The maps below show the amount of technical assistance and training provided in FY2015, measured in the equivalent of a year’s worth of full-time work by one expert and a week’s worth of full-time coursework for one student, respectively.

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