1. IFAD’s engagement with Middle-Income Countries
Executive Board Informal Seminar
IFAD’s engagement with Middle-Income Countries
2nd March 2011

2. Issues raised at the December Executive Board
The December Executive Board discussed management’s paper “IFAD’s engagement with Middle-Income Countries” Issues raised :
IFAD’s approach to MICs;
Financing Modalities for MICs; and,
Approaches to graduation. 2

3. The need for differentiated services to MICs
MIC members represent a very heterogeneous group;
IFAD initiatives are country differentiated not differentiated by per capita income of country;
IFAD projects are tailored to the rural poverty and hunger situation;
MIC member countries confirm need for continued IFAD involvement to focus on rural poor;
Upper income MICs want help to in transition from receivers of aid to donor status; and,
Need for menu of options that suits the conditions of each MIC.

4. Demand-driven country-based approach
IFAD has a menu of lending and knowledge products, some of which are being developed:
Financial products and projects;
Knowledge products and services;
Policy and advocacy services and products;
Support to national agricultural and rural development strategies; and,
South-South cooperation.
All products are of interest to MICs, and to LICs.

5. Potential new Financial Products and Services
Currency options;
Different grace periods, maturities and interest rates;
Mobilisation of additional external resources.
BUT:
Need to avoid duplication and seek complementarity with financing offered by other multilaterals;
IFAD not become a bank nor issue bonds in the market.

6. Graduation
Concerns that ‘classic’ graduation system could lead to a significant decline or decrease in IFAD’s development capacity and the achievement of its objectives.
Current IFAD Graduation policy: a voluntary choice of the governments to cease borrowing E.G. Algeria & Macedonia have ‘self-graduated’;
IFAD needs own threshold definition to launch a process and a discussion for graduation and on the nature of the relationship and engagement that IFAD has with the country;
IFAD could mobilise non-replenishment funds for graduation countries.

7. Development of IFAD threshold
Option 1: Use World Bank threshold (per capita income above $6995);
Option 2: Create a unique definition for IFAD: Per capita income supplemented by other factors-
value added per worker;
crop yields per hectare;
percentage of the population who are undernourished;
the rate of agricultural growth;
changes to agricultural productivity;
the contribution of agriculture to GDP;
employment in agriculture as a percentage of all employment, and,
the percentage of the population who are rural.

8. Thank you