1. Exogenous Shocks Facility: A New Instrument Ousmane Dore November 23, 2005

2. Exogenous shocks are costly LICs have a higher incidence of shocks such as natural disasters, abrupt changes in terms of trade, and side effects from regional conflicts... LICs have a higher incidence of shocks such as natural disasters, abrupt changes in terms of trade, and side effects from regional conflicts... And less protection... And less protection...

3. The IMF Board has responded... ESF: ESF: concessional facility concessional facility covers a wide range of exogenous shocks covers a wide range of exogenous shocks a safety net for countries that wish to exit from continuous PRGF program engagement a safety net for countries that wish to exit from continuous PRGF program engagement

4. Key Features of ESF Qualifying events Qualifying events Economic program focus on adjustment to the shock Economic program focus on adjustment to the shock PRSP under preparation PRSP under preparation Assistance typically front-loaded Assistance typically front-loaded Link to PSI... Not automatic Link to PSI... Not automatic

5. Conclusion Research shows that external assistance can help to mitigate the effects of shocks Research shows that external assistance can help to mitigate the effects of shocks ESF is a centerpiece of efforts by the international community to assist developing countries ESF is a centerpiece of efforts by the international community to assist developing countries

6. Catalytic Role... ESF quick disbursing but... ESF quick disbursing but... Most LICs would need further and more concessional donor financing Most LICs would need further and more concessional donor financing