Part Three Who we are
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income model; capacity development effort; IMF community; enterprise risk; corporate social responsibility program; Credit; External audit; Income; Internal audit; Auditing; Global
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Abstract

The Annual Report of the Executive Board 2022

The IMF has a management team and 18 departments that carry out its country, policy, analytical, and technical work. A list of the institutions’ senior officers can be found on page 60, and the organization chart can be found here:

In January 2022, IMF management announced the creation of the Office of Transformation Management. The new office came into existence on March 1, 2022, and brings together under one umbrella the existing functions of corporate project management, innovation and change management, and knowledge management. The office will oversee the IMF’s ongoing modernization agenda, ensuring that the IMF can continue to serve its membership effectively in the years ahead.

Executive Directors

As of April 30, 2022

The Executive Board is responsible for conducting the IMF’s day-to-day business. It is composed of 24 Executive Directors, who are elected by member countries or by groups of countries, and the Managing Director, who serves as its Chair.

All IMF member countries are represented on its Executive Board, which discusses the national, regional, and global consequences of each member’s economic policies and approves IMF financing to help member countries address temporary balance of payments problems, as well as overseeing the IMF’s capacity development efforts.

Executive Directors and Alternates

As of April 30, 2022

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Note: The Republica Bolivariana de Venezuela did not participate in the 2020 regular election of Executive Directors and is not represented at the Executive Board during the current Board term (2020–2022).
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Managing Director Kristalina Georgieva
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First Deputy Managing Director Gita Gopinath
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Deputy Managing Director Kenji Okamura

Management Team

The IMF has a Managing Director, who is head of the staff and Chair of the Executive Board. The Managing Director is assisted by a First Deputy Managing Director and three other Deputy Managing Directors.

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Deputy Managing Director Antoinette Sayeh
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Deputy Managing Director Bo Li

Senior Officials

As of April 30, 2022

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Resources

Budget

In April 2021, the IMF Executive Board authorized a net administrative budget for FY2022 of $1,214 million, along with indicative budgets for FY2023 and FY2024. Reflecting a long-standing tradition of fiscal prudence, this was the 10th year in a row that the IMF’s budget remained flat on a real basis, with new activities absorbed through continued reprioritization and savings. The Board also approved a limit on gross expenditures of $1,460 million, which included $210 million in external reimbursements for capacity development activities. Additionally, the Board approved a temporary increase in the carry-forward of unspent FY 2021 resources in the amount of $102 million for possible spending in FY2022, recognizing crisis-related needs. Capital funding of $79 million was approved for use over three years for building facilities and information technology capital projects.

The budget for FY2022 supported the IMF’s efforts to address continued crisis needs and address long-term drivers of global change, as well as a shift to a hybrid work model and broader modernization of the organization. Savings from internal reprioritization and the pandemic-related moratorium on travel allowed resources to be repurposed toward crisis needs. While engagement with authorities remained largely virtual, demand for lending shifted from emergency to medium-term operations, with some members facing complex debt challenges; financial system stability assessments under the FSAP and Article IV consultations fully resumed; and the volume of capacity development delivery returned to levels closer to those before the pandemic. The Executive Board approved the IMF’s strategies in the areas of climate change, digital money, and fragile and conflict-affected states, as well as a historic SDR allocation of $650 billion, as previously noted.

Actual administrative expenditures in FY2022 totaled $1,180 million, or 97 percent of the approved net budget. Capital expenditures in FY 2022 totaled $90 million, including use of previously approved funding. Of this, $21 million was for direct capita spending on facilities, $60 million for information-technology-related expenditures, and $9 million for cloud-related licenses.

Table 3.1

Budget by Major Expenditure Category, FY 2021–24

(millions of US dollars)

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Source: IMF, Office of Budget and Planning. Note: Figures in columns may not sum exactly to column totals because of rounding.

Includes donor-financed activities, cost-sharing arrangements with the World Bank, sales of publications, parking, and other miscellaneous revenue.

Resources are carried forward from the previous year under established rules.

Facilities and information technology budget appropriations can be spent over three years. The “Budget” column represents the annua appropriation, whereas the “Outturn” column includes spending from appropriations of previous years.

Income model, charges, remuneration, burden sharing, and total comprehensive income

Income Model

The IMF generates income primarily through its lending and investing activities (see Figure 3.1). Lending income is derived from the charges levied on the use of credit from the GRA, service charges, and commitment fees. In addition, the use of IMF credit is subject to surcharges under certain circumstances, as noted in Part 2. The IMF’s income model also relies on investment income generated from assets in the Fixed-Income and Endowment Subaccounts of the IMF’s Investment Account. Given the public nature of the funds, the IMF’s investment policy includes, among other things, a careful assessment of acceptable levels of risk, as well as safeguards to minimize actual or perceived conflicts of interest. In January 2022, the Executive Board approved an updated investment strategy, which includes responsible investing principles related to environmental, social, and governance considerations. These will be implemented starting in FY2023.

Figure 3.1
Figure 3.1

Income Model

Source: IMF, Finance Department.Note: Green lines represent elements added to the income model in 2008.1 As of April 29, 2022, the membership had not adopted the dividend policy.

Charges

Reflecting high levels of lending activity, the IMF’s main source of income continues to be charges levied on outstanding credit. The basic rate of charge (that is, the interest rate) on IMF financing comprises the SDR interest rate plus a fixed margin expressed in basis points, as discussed in Part 2. In April 2022, the Executive Board set the margin for the rate of charge at 100 basis points for the period through April 2024.

The IMF also levies surcharges on large amounts of credit. Surcharges apply to credit outstanding that exceeds a defined threshold relative to a member’s quota (level-based surcharges), and they are higher when this threshold has been exceeded for a defined period of time (time-based surcharges) (see Table 2.1).

In addition to charges and surcharges, the IMF levies service charges, commitment fees, and special charges. A service charge of 0.5 percent is levied on each drawing from the GRA. A refundable commitment fee is charged at the beginning of each 12-month period on amounts available for drawing under GRA arrangements (except for the Short-Term Liquidity Line) during that period. The IMF also levies special charges on charges that are past due, for the first six months a member is in arrears.

Remuneration and Interest on Borrowing

On the expenditure side, the IMF pays interest (remuneration) to members on their creditor positions in the GRA (known as “remunerated reserve tranche positions”). The basic rate of remuneration is equal to the SDR interest rate. The IMF also pays interest at the SDR interest rate on outstanding borrowing under the New Arrangements to Borrow (NAB; see the “IMF Financing” section).

Burden Sharing

The rates of charge and remuneration are adjusted under a burden-sharing mechanism that distributes the cost of overdue financial obligations equally between debtor and creditor members.

Total Comprehensive Income

The IMF’s total comprehensive income in FY 2022 was SDR 3.085 billion ($4,147 billion), reflecting primarily income from the high levels of lending activity, endowment income, and gains stemming from the remeasurement of the assets and liabilities of the IMF’s employee benefit plans, in accordance with International Financial Reporting Standards (International Accounting Standard 19, Employee Benefits).

Arrears to the IMF

Sudan, the last member country with arrears, cleared its protracted arrears (outstanding for more than six months) to the IMF on June 29, 2021, and reached its HIPC Initiative decision point. At the end of April 2022, the IMF had no remaining arrears cases. The IMF has in place a strengthened cooperative strategy on arrears, based on a set of increasingly severe remedial measures to prevent the resurgence of protracted arrears.

Financing

The IMF provides financing to its members through three channels, all of which serve the common purpose of transferring reserve currencies to member countries: regular (nonconcessional) lending from the GRAand concessional lending from the PRGT(both discussed in Part 2), as well as the SDR Department. The most salient feature of the IMF’s financial structure is that it is continuously evolving. The IMF has introduced and refined a variety of lending facilities and policies over the years to address changing conditions in the global economy or the specific needs and circumstances of its members. The RST will be an additional channel for lending once lending starts (which is expected to take place later in 2022).

Quotas: Where the IMF Gets its Money

The IMF’s 190 member countries provide resources for loans primarily through their payment of quotas, which also set their voting rights. Multilateral borrowing and bilateral borrowing serve as second and third lines of defense in times of crisis. These resources give the IMF access to about $1 trillion in nonconcessional lending firepower to support members. Concessional lending and debt relief for low-income countries are financed through separate contribution-based trust funds.

Each member is assigned a quota based broadly on its position in the world economy. IMF quotas total SDR 476 billion (about $639.9 billion).6 The value of the SDR, the IMF’s unit of account, is based on a basket of currencies (see the “Special Drawing Right” section).

IMF quotas are also reviewed regularly. The 16th General Review of Quotas, which is currently underway and is expected to be completed no later than December 15, 2023, offers an opportunity to assess the overall adequacy of quotas as well as the adequacy of their distribution among IMF member countries. The Executive Board issued two progress reports to the Board of Governors on the 16th General Review during FY 2022, reporting on ongoing discussions. The review is building on the governance reforms of the 2010 review (14th Genera Review of Quotas), including efforts to protect quotas and voting shares of the poorest members. The current formula for determining quotas, which was approved in 2008 and has been used as a guide, is also under review.

Quota Payments

The conditions for implementing the quota increases approved under the 14th General Review were met on January 26, 2016. This resulted in a doubling of quota resources, to SDR 477 billion (about $641.2 billion) from about SDR 238.5 billion (about $320.6 billion). As of April 30, 2022, all but 2 of the 190 members had made their quota payments, accounting for more than 99 percent of the total quota increases, and total quotas stood at SDR 476 billion (about $639.9 billion).

Borrowing by the IMF

As noted, the IMF is a quota-based institution. However, borrowed resources continue to play a key role in supplementing quota resources through the NAB and the bilateral borrowing agreements (BBAs), serving respectively as a second and third line of defense after quotas.

The NAB are a set of credit arrangements with 38 participants and 2 prospective participants. The size of the NAB was doubled to about SDR 361 billion on January 1, 2021, and a new NAB period was set through the end of 2025. NAB resources can be activated when the IMF’s resources need to be supplemented to forestall or cope with an impairment of the international monetary system. Activation requires the consent of participants representing 85 percent of total credit arrangements of participants eligible to vote, as well as the approval of the Executive Board. The NAB were activated 10 times between April 2011 and February 2016, the most recent activation.

As noted, BBAs are intended to serve as a third line of defense after quotas and the NAB. The current (2020) round of BBAs has been in effect since January 1, 2021, with an initial term through December 31,

2023, which may be extended by one more year. As of April 30, 2022, 42 bilateral creditors had committed under their 2020 BBAs to provide the IMF with a total credit amount equivalent to about SDR 138 billion. Resources under BBAs can be activated only if the amount of the IMF resources otherwise available for financing has fallen below a threshold of SDR 100 billion and either the NAB has been activated or there are no available uncommitted NAB resources. Activation of BBAs requires approval by bilateral creditors representing 85 percent of the total credit amount committed.

Special Drawing Right

The SDR is an international reserve asset the IMF created in 1 969 to supplement its member countries’ official reserves. It serves as the unit of account of the IMF and some other international organizations. The SDR is neither a currency nor a claim on the IMF. Rather, it is a potential claim on the freely usable currencies of IMF members. IMF members who are participants in the SDR Department (currently all members) may exchange SDRs for freely usable currencies.

The SDR’s value is currently based on a basket of five currencies: the US dollar, the euro, the Chinese renminbi, the Japanese yen, and the British pound. The currencies included are reviewed periodically; the most recent review of the valuation of the SDR basket occurred in July 2022.

As of April 30, 2022, a total of SDR 660.7 billion (equivalent to about $888 billion) had been allocated to members, including the August 2021 allocation of SDR 456.5 billion, the largest allocation of SDRs in history, in the context of the ongoing pandemic. This SDR allocation provided additional liquidity to the global economic system-supplementing countries’ foreign exchange reserves and reducing their reliance on more expensive domestic or external debt. Countries were able to use the space provided by the SDR allocation to support their economies and step up the fight against the crisis.

To amplify the benefits of this allocation, the IMF is encouraging voluntary channeling of SDRs from countries with strong external positions to

countries most in need. Some members have already pledged to lend their SDRs to the PRGT, which provides concessional loans to low-income countries. Furthermore, the recently established RST will use channeled SDRs to provide affordable longer-term financing to support countries undertaking reforms to reduce risks, including those related to climate change, and for pandemic preparedness.

In light of the new allocation and to enhance transparency and accountability in the use of SDRs, the IMF issued a Staff Guidance Note in August 2021 on assessing the macroeconomic implications of the new allocation, its statistical treatment and governance, and how it might affect debt sustainability. In addition, the IMF started reporting quarterly on SDR holdings, transactions, and trading and committed to issuing a follow-up report on the use of SDRs in two years.

Accountability

The IMF is accountable to its 190 member countries and has a system of checks and balances to ensure accountability-ranging from internal and external audits to risk management and evaluation of its policies and operations. Similarly, the IMF staff is expected to observe the highest ethical and workplace standards of conduct.

Checks and Balances

The IMF conducts audits of all its operations. The audit mechanisms are set up to improve governance, transparency, and accountability and include an external audit firm, an independent External Audit Committee, and the Office of Internal Audit (OIA).

The External Audit Committee is independent of the IMF and its Executive Board. The committee reports to the Board of Governors and is responsible for overseeing the IMF’s external audit, internal audit, financial accounting and reporting, risk management, and internal control functions.

The OIA is an independent assurance and advisory function designed to protect and strengthen the IMF. Its mandate is twofold: (1) assessing the effectiveness of the IMF’s governance, risk management, and internal controls and (2) acting as a consultant for improvement of the IMF’s business processes by advising on best practice. To provide for its independence, the OIA maintains a functional reporting relationship with the External Audit Committee. The OIA’s 2022 coverage encompassed several key areas, including support for the IMF’s 1 modernization programs, investment activities of the Staff Retirement Plan, and the Capital Investment ‘ Framework for information technology investments.

Managing Enterprise Risk

The IMF’s internal Office of Risk Management provides the leadership and innovation necessary to identify, assess, measure, monitor, and report IMF-wide enterprise risks. It supports an enterprise risk management framework that leverages standard practices adapted to the context of the IMF’s unique mandate and operating model. It works across all IMF departments to ensure a consistent approach to risk tolerance, governance, culture, and risk processes, supported by risk issue and action management and strong IMF-wide communication and reporting.

Learning from Experience

The Independent Evaluation Office (IEO) celebrated its 20th anniversary in 2021. It conducts independent and objective evaluations of IMF policies and activities and is fully independent of IMF management and the IMF staff, operating at arm’s length from the Executive Board. Its mission is to promote learning within the IMF, strengthen the institution’s external credibility, and support institutional governance and oversight. Recent IEO evaluations have focused on growth and adjustment in IMF-supported programs and on the IMF’s engagement with small developing states. More information about the IEO, including its terms of reference and evaluation reports, is available at https://IEO.IMF.org.

Engagement with the Public

The IMF meets regularly with political leaders and country authorities and routinely engages with a wide range of private sector representatives, the media, and nongovernment stakeholders such as the academic community, civil society organizations, parliamentarians, labor unions, and youth leaders. Opportunities for such two-way dialogue allow the IMF both to explain its approaches and to learn from others to improve its policy advice.

Ethics and Staff Conduct

The IMF’s Ethics Office, its Ombudsperson, and its Office of Internal Investigations help ensure good governance within the organization.

The Ethics Office assists the organization in maintaining high ethical standards of conduct and the reputation of the IMF and its employees for probity, integrity, and impartiality. The Ethics Advisor promotes awareness of ethics issues, provides training and education on ethics to the IMF staff, and oversees annual Ethical Conduct and Core Values Certification to support compliance with the Staff Code of Conduct, as well as an annual Financial Disclosure Program for senior staff members and staff members in specific roles. A separate Code of Conduct is in place for members of the Executive Board.

The Ombudsperson is available to provide impartial and independent assistance in resolving employment-related problems. The Office of Internal Investigations conducts inquiries and investigations into allegations of misconduct, including breaches of the Code of Conduct. The IMF Integrity Hotline, administered by an independent third party, is available for anonymous and confidential allegations of misconduct or other concerns from staff or members of the public.

The IMF Executive Board is also committed to maintaining the highest standards of governance and integrity in the organization’s data, research, and operations. In concluding its investigation into the World Bank’s 2018 Doing Business report, the Executive Board noted that it had “confidence in the impartiality and analytical excellence of IMF staff and in the IMF’s robust and effective channels for complaint, dissent, and accountability,” but it would consider “possible additional steps to ensure the strength of institutional safeguards in these areas.” In this context, in December 2021 the Executive Board announced the establishment of a steering group to lead a follow-up institutional safeguards review with the objective of helping ensure that the staff, management, and Executive Board maintain the highest possible standards around internal governance and staff voice and the integrity of data and analysis. As such, through an integrated approach involving the staff, management, Board, and an external panel of independent experts, an assessment of the robustness and effectiveness of channels for complaint, dissent, and accountability inside the IMF is being conducted. An evaluation of the overall strength of the safeguards at key nodes in the IMF’s internal review processes is also underway to ensure integrity in the organization’s data and analysis. Work on the review was completed in June 2022.7

Safeguards Assessments

When the IMF provides financing to a member country, it carries out a safeguards assessment to provide reasonable assurance that the country’s central bank can manage the IMF resources and provide reliable monetary data on the IMF-supported program.

The assessments involve an evaluation of central bank operations in five areas: (1)the external audit mechanism, (2) the legal structure and autonomy, (3) the financial reporting framework, (4) the internal audit mechanism, and (5) the system of internal controls. From 2000 to the end of April 2022, 366 assessments were conducted, covering 104 central banks; 20 of these assessments were completed in FY 2022.

The IMF also monitors progress as central banks work to improve their safeguards frameworks and address IMF recommendations in safeguards assessments. The monitoring continues for as long as IMF credit remains outstanding, and about 82

central banks are currently subject to monitoring. The monitoring activity has increased by about 20 central banks compared with the pre-pandemic levels owing to the financing extended to member countries to address the impact of the COVID-19 pandemic.

The IMF also conducts fiscal safeguards reviews of state treasuries when a member requests exceptional access to IMF resources in cases in which a substantial portion of the funds-at least 25 percent-is directed toward financing the state budget. During FY2022, one fiscal safeguards review was conducted, and a second is in progress.

Corporate Social Responsibility

Environmental sustainability and philanthropic initiatives are at the core of the IMF’s corporate social responsibility program.

Environmental Sustainability

The IMF is committed to environmentally responsible operations. Climate change is a major threat to long-term growth and prosperity and has a direct impact on the world’s economic well-being. The IMF is expanding its climate change work, supporting member countries in adopting and implementing policies designed to mitigate, contain, and reduce emissions. Similarly, as an institution, the IMF is taking steps to advance its operational environmental sustainability goals.

For more than a decade, the IMF has taken steps to reduce its impact on the environment while ensuring that it can effectively serve its global membership. To further advance this work, it established the Environmental Sustainability Council in 2021 to advise and provide directional guidance to IMF management on the operational environmental issues facing the organization. The institution has also continued to invest in and manage new building technologies to reduce energy consumption, in addition to introducing new policies for greening the IMF’s global vehicle fleet.

Even as COVID-19 pandemic restrictions were gradually eased and the IMF staff began to return to headquarters and field offices-and critical mission travel resumed to a limited degree-the Fund’s carbon footprint remained well below pre-pandemic levels (see Figure 3.2). However, as operations return to a more normal pace, there is an opportunity to make some of the pandemic-related reductions in the IMF’s carbon footprint permanent. Importantly in this regard, considerable progress has been made in developing a new hybrid work model, which promises to permanently reduce employee commuting and building-related emissions, when implemented in 2022.

Figure 3.2
Figure 3.2

The IMF’s Greenhouse Gas Emissions, Calendar Years 2012–21

(metric tons of carbon dioxide equivalent)

Source: IMF, Corporate Services and Facilities Department.

Giving Together

Giving Together, the IMF’s philanthropic program, is supported by donations from employees and retirees and funding from the IMF’s corporate giving initiatives.

The prolongation of the COVID-19 pandemic and humanitarian crises arising from conflict and the incidence of natural and climate-related disasters have continued to present overwhelming challenges for people and communities around the world. The IMF community responded to these humanitarian challenges with unprecedented support in FY 2022. Total funding from employee and retiree donations, IMF corporate matching, and Giving Together grants and donations resulted in the program’s providing more than $5.5 million to charitable causes during the financial year-more than ever before in its history (see Figure 3.3).

Figure 3.3
Figure 3.3

Total Raised in Donations and Matching Funds, FY 2016–22

(millions of US dollars)

Source: IMF, Communications Department

Giving

The 2022 giving campaign achieved a major milestone in both participation and total dollars raised, with contributions surpassing the $3 million mark for the first time. A record-breaking number of staff members and retirees contributed to the campaign, raising more than $3.3 million in donations and matching funds to support organizations in the Washington, DC, metropolitan area and across the globe.

In addition, the IMF’s Giving Together program organized fundraisers to support relief efforts for natural disasters in the Republic of Congo, Haiti, Indonesia, and Tonga and in response to the refugee crisis in Ukraine and neighboring countries. Combined, more than $736,000 was channeled to international relief organizations providing critical aid and support to affected children and families on the ground.

In total, employee and retiree donations, plus matching funds, raised $5.2 million to support charitable causes and humanitarian relief efforts during FY 2022-exceeding the $4.1 million raised the previous year.

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From left: Village Bicycle Project. Managing Director Kristalina Georgieva delivers charitable donation to the Fund for Congolese Women in the Democratic Republic of the Congo (December 2021).

Grants

The IMF strives to help its neighbors in the Washington, DC, metropolitan area and in communities around the world emerge from poverty and crisis by supporting community initiatives through partnerships and annual monetary grants. In FY 2022, Giving Together awarded $387,000 in grants to charitable organizations worldwide. Many of the year’s grants focused on programs and services that support groups disproportionately hurt by COVID-19, particularly communities of color, women, and youth. In total, grants were awarded to 30 organizations serving disadvantaged populations in 10 countries across four continents.

Volunteerism

In the wake of the global pandemic, IMF staff members found ways to make an impact in their communities through volunteerism. Whether individually or as part of a group, IMF staff members engaged in various philanthropic activities during the year, including preparing healthy meals for hungry families, organizing collection drives for students in under resourced communities and schools, and participating in community cleanup events with local nonprofit partners working to conserve and protect the environment.

In addition, in honor of the Martin Luther King Jr. Day of Service, staff members participated in a virtual volunteering event organized by Giving Together in partnership with the Capital Area Food Bank, a DC-based organization and one of the largest nonprofits tackling hunger and food insecurity in the Washington metropolitan region.

August 1, 2022

Dear Mr. Chairman:

I have the honor to present to the Board of Governors the Annual Report of the Executive Board for the financial year ended April 30, 2022, in accordance with Article XII, Section 7(a), of the Articles of Agreement of the International Monetary Fund and Section 10 of the IMF’s By-Laws. In accordance with Section 20 of the By-Laws, the administrative and capital budgets of the IMF approved by the Executive Board for the financial year ending April 30, 2022, are presented on the Annual Report website. The audited financial statements for the year ended April 30, 2022, of the Genera Department, the SDR Department, and the accounts administered by the IMF, together with reports of the external audit firm thereon, are presented in Appendix VI, as well as at www.imf.org/AR2022. The external audit process was overseen by the External Audit Committee comprising Mr. Hage (Chair), Mr. Ethevenin and Mr. Paape, as required under Section 20(c) of the IMF’s By-Laws.

Yours truly,

Kristalina Georgieva

Managing Director and Chair of the Executive Board

6

Two member countries, Eritrea and Syria, have not yet consented to their proposed quota increases under the 14th General Review of Quotas. Once these countries consent to, and pay for, their respective quota increases, IMF quotas will total SDR 477 billion.

7

The IMF Executive Board concluded its review on June 30, 2022 (after this report was finalized). For more information, visit www.IMF.org/safeguards.

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Cover International Monetary Fund Annual Report 2022: Crisis Upon Crisis
International Monetary Fund Annual Report 2022: Crisis Upon Crisis
Author:
International Monetary Fund. Secretary's Department
ISBN:
9798400213649
ISSN:
2227-8915
Publication Date:
04 Oct 2022
Publisher:
International Monetary Fund
DOI:
https://doi.org/10.5089/9798400213649.011
Pages:
80