ISLAMABAD: The International Monetary Fund (IMF) is set to introduce a new grouping of countries to be known as ‘Low Income Developing Countries’ (LIDC) to facilitate enhanced coverage of low income country issues in IMF reports.

At the same time, the new category will serve as a standardised definition of the ‘low income country’ universe in the analytical work to be carried out by IMF staff.

The new category proposed in IMF policy paper has been submitted to the executive board for approval. Pakistan, India and the Philippines have not been included in the LIDC grouping, given that they are typically viewed as ‘emerging market economies’ rather than LIDCs, by market analysts.

Also read: IMF lifts growth forecast for Pakistan

These countries which met the income level criterion for categorisation as a LIDC are not poverty reduction and growth trust (PRGT)-eligible because they were deemed to have significant access to international financial markets.

A core group of sixty countries as LIDC has been identified on the basis of two criteria that these countries were designated PRGT-eligible in the 2013 PRGT eligibility exercise; and had a level of per capita gross national income (GNI) less than the PRGT income graduation level for non-small states.

It has been decided that the membership of the LIDC grouping will be re-examined on a regular basis based on the evolution of income levels and the conclusions of PRGT-eligibility.

In conclusion, the IMF policy paper says that the one country whose income level exceeded the chosen LIDC income cut-off level that had important LIDC-like development characteristics was Angola, where the legacy of civil war and the dominant role of oil have produced a sharp dichotomy between income level and key development indicators.

The world economic outlook country classification system designates 34 member countries of IMF as advanced countries; the remaining 154 member countries are labelled “Emerging Market and Developing Economies”.

Published in Dawn, September 12th, 2014