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Policy Coordination Instrument (PCI)

July 28, 2022

The Policy Coordination Instrument (PCI) is a non-financing instrument open to all members of the International Monetary Fund (IMF). It was established in the context of strengthening the global financial safety net, allowing users to signal commitment to reforms and catalyze financing from other sources

Purpose and Objectives

The PCI is designed to assist countries in formulating and implementing a macroeconomic policy program, signaling commitment to an economic reform agenda, and possibly help  unlock financing from official creditors (e.g., Regional Financing Arrangements) or private investors. 

The PCI would enable a closer policy dialogue with countries, regular monitoring of economic developments and policies, and the endorsement of those policies by the IMF’s Executive Board. It aims to help countries formulate and implement a macroeconomic policy agenda to: 

  1. prevent crises and build buffers against external shocks;

  2. enhance macroeconomic stability; and

  3. address macroeconomic imbalances.

Eligibility. The PCI is available to all IMF members that do not require IMF financing at the time of PCI approval and do not have overdue financial obligations to the IMF.

Duration and repeated use. The PCI is generally meant to have a duration of two to three years, but could be approved for a minimum of six months and up to four years. This ensures sufficient flexibility to meet the varying needs of countries’ reform agendas. There is no limit on the number of successor PCIs.

Conditionality. Although the PCI involves no use of Fund resources, policies supported under the instrument would be required to meet the same standard as those required under a standard IMF loan.

Program reviews. Reviews occur on a fixed schedule, normally every six months, to provide regular feedback on program performance. Delays in the completion of reviews under the PCI are possible for a three-month buffer period to allow the authorities to implement overdue policies, take corrective actions, or mobilize necessary financing to close the financing gap. If a review is delayed beyond the three-month buffer period, it can no longer be completed by the Executive Board, and IMF staff would provide an interim performance update to the Board for information. Non-completion of a review for a twelve-month period would result in an automatic termination of the PCI. In addition, the PCI has a review-based approach to monitoring program targets, which eliminates the need to request waivers for missed targets.

Use with financial instruments. An on-track PCI could facilitate access to Fund resources should the member experience a balance of payments need. An on-track PCI could be used concurrently with emergency financing under the RFI/RCF or with a financial arrangement under the SBA/SCF or the RSF. Concurrent use with the ECF/EFF would not be possible.

Charging. The PCI is a form of technical assistance (TA) and as such its costs are aligned with IMF TA policy, which currently requires only advanced economies to pay for the associated administrative costs.