Country Selection Process—Selection Criteria

The participation in the FSAP is voluntary, and countries routinely volunteer to partici­pate. In addition, Bank and Fund staff and management select countries for participation in FSAP (new assessment or an update) on the basis of a set of criteria and procedures (summarized here) and seek their participation in the FSAP. When warranted, the Boards of the IMF (and World Bank) may remark—in the context of the consideration of relevant country report—on the desirability of the country participating in the FSAP. The country selection criteria were discussed and agreed on by both Boards. The criteria include systemic importance of the country (regionally and globally); its external sector weakness or vulnerability; the nature of its exchange rate and monetary regime; the like­lihood, or ongoing implementation, of major reform programs with bearing on financial stability and development; and the desire to achieve a geographic balance in the countries covered.

Within any given year, higher priority is accorded to countries judged to be systemi – cally important; the length of time elapsed since the country volunteered for an FSAP is also a factor in the scheduling of FSAP work in any specific year. However, countries that face imminent financial crisis or that are in the midst of crisis are not eligible for

Figure A.1. FSAP Process: Key Steps and Outputs

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Document

Confidentiality

Publication

Aide-Memoire

Confidential

No

FSSA/FSA

Confidential or not for public use

Voluntary in the case of FSSA

ROSCs

Confidential or not for public use

Voluntary publication

FSAP Technical Notes

• Confidential

• Exception: Notes that contain sensitive institution-specific information (e. g., stress tests results) must be classified "strictly confidential"

• If part of Article IV background material, it follows publication policy on article IV and related reports (i. e., voluntary publication).

• Stress tests and individual institution information are omitted.

• If not part of Article IV background material, it follows practice applied to TA reports.

FSAP Standard and Codes Appendices

Confidential or not for public use

• Voluntary

• Follows TA publications policy

Table A.2. FSAP Confidentiality and Publication Policy at a Glance

Note: All FSAP documents prepared for countries that participated in the pilot phase of the program cannot be published.

FSAP, which is focused on crisis prevention as a purpose and is diagnostic in its approach. Country selection typically strives to achieve a balance in coverage between systemically important countries and developing countries so that development issues are adequately addressed in the program.

Key steps in country selection process are as follows:

• Bank regions and Fund area departments, in collaboration with Fund’s Monetary and Financial Systems Department and the World Bank’s Financial Sector Vice Presidency, prepare a country list that indicates priorities for participation in FSAP (high, medium, low) on the basis of agreed-upon criteria. The country list takes into account the existing pipeline of countries awaiting FSAP participation.

• FSLC coordinates the priorities between Bank and Fund and proposes a scheduling of missions.

• Bank-Fund management approves the country priority list.

• Countries are contacted, and their participation—if not yet volunteered—is sought.

• Mission schedule is periodically adjusted to take into account the response of the authorities to Bank-Fund requests for FSAP participation and the inflow of new volunteers. When a country volunteers for an update or new assessment, the rel­evant Bank region and Fund area department are consulted on priorities.

The structure of FSAP documentation, the mission procedures, and the publication policies—all facilitate the link to Article IV surveillance and World Bank operations; they also provide sufficient technical details to the authorities to help formulate priori­ties within the financial sector policy. The main steps of the FSAP process and the key documents produced at each step are shown in figure A.1. The associated publication policies in the Fund and Bank and the related confidentiality classification of documents are summarized in table A.2.

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