Governance of the IMF : An Evaluation

Front Matter

Front Matter

International Monetary Fund. Independent Evaluation Office
Published Date:
September 2008
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    Established in July 2001, the Independent Evaluation Office (IEO) provides objective and independent evaluation on issues related to the IMF. The IEO operates independently of IMF management and at arm’s length from the IMF’s Executive Board. Its goals are to enhance the learning culture within the IMF, strengthen the IMF’s external credibility, promote greater understanding of the work of the IMF throughout the membership, and support the Executive Board’s institutional governance and oversight responsibilities. For further information on the IEO and its work program, please see its website ( or contact the IEO at +1-202-623-7312 or at

    This is the typeset version of the paper that was presented to the IMF’s Executive Board with the title “Aspects of IMF Corporate Governance—Including the Role of the Executive Board.”

    © 2008 International Monetary Fund

    Production: IMF Multimedia Services Division

    Cover design: Andrew Sylvester

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    Governance of the International Monetary Fund : an evaluation / [prepared by an IEO team headed by Ruben Lamdany] – Washington, D.C. : International Monetary Fund, 2008.

    p. cm. – (Evaluation report)

    Includes bibliographical references.

    ISBN 1589067493

    1. International Monetary Fund – Evaluation. 2. International Monetary Fund. Executive Board – Evaluation. 3. International Monetary Fund – Management – Evaluation. 4. Corporate governance. I. Lamdany, Ruben, 1954- II. International Monetary Fund. Independent Evaluation Office. III. Evaluation report (International Monetary Fund. Independent Evaluation Office) HG3881.5.I58 G684 2008

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    The following are included in the accompanying CD-ROM and are also available on the IEO website at

    Main Report (Arabic, Chinese, English, French, Japanese, Portuguese, Russian, and Spanish)

    Background Documents (English)

    Statements and Comments from IMF Management and Staff and the External Audit Committee (English, French, and Spanish)

    Joint Statement by the Executive Board and the IMF Managing Director (English, French, and Spanish)

    The following conventions are used in this publication:

    • In tables, a blank cell indicates “not applicable,” ellipsis points (. . .) indicate “not available,” and 0 or 0.0 indicates “zero” or “negligible.” Minor discrepancies between sums of constituent figures and totals are due to rounding.

    • An en dash (–) between years or months (for example, 2005–06 or January–June) indicates the years or months covered, including the beginning and ending years or months; a slash or virgule (/) between years or months (for example, 2005/06) indicates a fiscal or financial year, as does the abbreviation FY (for example, FY2006).

    • “Billion” means a thousand million.

    • “Basis points” refer to hundredths of 1 percentage point (for example, 25 basis points are equivalent to ¼ of 1 percentage point).

    • As used in this publication, the term “country” does not in all cases refer to a territorial entity that is a state as understood by international law and practice. As used here, the term also covers some territorial entities that are not states but for which statistical data are maintained on a separate and independent basis.

    • Some of the documents cited and referenced in this report were not available to the public at the time of publication of this report. Under the current policy on public access to the IMF’s archives, some of these documents will become available five years after their issuance. They may be referenced as EBS/YY/NN and SM/YY/NN, where EBS and SM indicate the series and YY indicates the year of issue. Certain other documents are to become available 10 to 20 years after their issuance, depending on the series.


    This evaluation report calls for major changes in the governance of the Fund to strengthen its relevance and accountability and allow it to continue to play a central role in global financial and monetary matters into the future. It is an unusual evaluation for the IEO in many ways. It examines the quality of the Fund’s overall governance arrangements, rather than the quality of its outputs or of specific processes within the organization as is the case in other evaluations. The main focus of this evaluation is the IMFC, the Board and Management, and not Management and Staff as is usually the case. As a consequence, follow up for this evaluation requires a different process, in particular it requires the active involvement of the Fund’s political masters. While the Board and Management can undertake some changes, the main decisions and the bulk of the effort would fall on Ministers and Governors, as direct representatives of the membership.

    Improving its governance is widely recognized as a critical element in enhancing the Fund’s relevance, legitimacy, and effectiveness. The Fund started some 60 years ago as the guardian of the par value system, with 44 member countries and 12 Executive Directors. Today, the par value system is long gone, and the Fund has 185 member countries and 24 Executive Directors. While roles have evolved over time, in many ways the formal structure and many practices remain largely untouched; and the evaluation found that reforms have not kept pace with changes in the membership and in the environment in which it operates.

    This report has four main recommendations and includes a series of detailed measures specific to each of the main governance bodies. First, it found that greater clarity is needed in the respective roles of the main governance bodies to minimize overlaps and to address possible gaps. Second, it identified the need for more systematic ministerial involvement and calls for the activation of the Council of Ministers, provided for in the Articles of Agreement, as the ultimate decision-making body for the institution. Third, it recommends reorienting the Executive Board’s activities away from executive day-today operational activities towards a supervisory role—thereby enabling the Board to play a more effective role in formulating strategy, monitoring policy implementation to ensure timely corrective action, and exercising effective oversight of Management. Finally, a framework needs to be in place to hold management accountable for its performance. Many of these issues are complex, interrelated, and need to be discussed holistically.

    It is a sign of institutional strength and of the Fund’s willingness to learn and improve that it has been open to an independent evaluation of its own governance. The Executive Board and Management have welcomed the IEO report as an important contribution to efforts to enhance the Fund’s relevance and legitimacy. It is now important that the IMFC and other Governors engage fully in setting the path for significant governance reform. This will not be an easy task, and we hope this volume will help inform those efforts.

    Thomas A. Bernes


    Independent Evaluation Office

    Governance of the International Monetary Fund: An Evaluation

    This report was prepared by an IEO team headed by Ruben Lamdany and which included Leonardo Martinez-Diaz, Jeff Chelsky, Alisa Abrams, Jeffrey Levine, Borislava Mircheva, and Roxana Pedraglio. The team was assisted by contributions from Markus Berndt, Biagio Bossone, Katrina Campbell, Scott Clark, Mariano Cortés, Alexander Mountford, David Peretz, Alexander Shakow, and Randall Stone. The evaluation also benefited from contributions from Marc-Antoine Autheman, Amar Bhattacharya, Jack Boorman, Bob Garratt, Joanne Salop, and Madras Sivaraman who participated in early IEO workshops or provided written comments. However, the final judgments are the responsibility of the IEO alone. Administrative assistance was provided by Jeanette Abellera, Arun Bhatnagar, and Annette Canizares. Editorial assistance was provided by Rachel Weaving. The report was approved by Thomas A. Bernes.



    African Development Bank


    Asian Development Bank


    Bank for International Settlements


    Committee on Executive Board Administrative Matters


    Chief executive officer


    Civil society organization


    Development Committee


    Deputy Managing Director


    External Audit Committee


    European Bank for Reconstruction and Development


    European Investment Bank


    First Deputy Managing Director


    Canada, France, Germany, Italy, Japan, United Kingdom, United States


    Belgium, Canada, France, Germany, Italy, Japan, Netherlands, Sweden, Switzerland, United Kingdom, United States


    A grouping composed of major industrial countries and systemically important developing and emerging market countries


    A grouping of 24 developing countries that coordinate their positions on international monetary affairs and development


    Global Environment Facility


    Heavily Indebted Poor Countries


    Human Resources Department


    Inter-American Development Bank


    Interim Committee


    Institute of Internal Auditors


    International Monetary and Financial Committee


    Managing Director, First Deputy Managing Director, and two Deputy Managing Directors


    Managing Director


    Medium-Term Strategy


    Nongovernmental organization


    Office of Executive Director


    Office of Internal Audit and Inspection


    Office of Managing Director


    Summing Up


    Technical assistance


    Use of Fund resources


    United Nations Development Program


    World Health Organization

    Executive Summary

    This evaluation assesses the degree to which Fund governance is effective and efficient, and whether it provides sufficient accountability and channels for stakeholders to have their views heard. The focus is on institutional structures as well as on the formal and informal relationships between the Fund’s main bodies of governance: the Executive Board, Management, and the International Monetary and Financial Committee (IMFC).

    For much of the past six decades, gradual reforms in its governance allowed the Fund to remain relevant in a changing world economy. But the reforms have not kept pace with changes in the environment in which it operates. Today, the institution’s legitimacy and relevance are being questioned. Much attention has recently been focused on quotas and voting power, but broader governance reform also holds the potential to strengthen the Fund’s legitimacy, accountability, and effectiveness.

    Overall, effectiveness has been the strongest aspect of Fund governance, allowing fast and consistent action particularly in times of systemic crisis. On the other hand, accountability and voice have been its weakest aspects, which if left unaddressed would likely undermine effectiveness over the medium term. The evaluation has four broad conclusions and recommendations, and it proposes a series of detailed measures specific to each of the main governance bodies.

    First, there is a lack of clarity on the respective roles of the different governance bodies, and in particular between the Board and Management. To strengthen the IMF’s effectiveness and to facilitate accountability, the roles and responsibilities of each of its governance bodies need to be clarified with a view to minimizing overlaps and addressing possible gaps.

    Second, the Fund needs more systematic ministerial involvement. The IMFC, as an advisory body, lacks a mandate for setting strategic directions and providing high-level oversight of the institution. To fulfill these functions, the evaluation calls for the activation of the Council, as contemplated in the Articles of Agreement, which should operate with a high degree of consensus, perhaps through the use of special majorities.

    Third, the Board’s effectiveness is hindered by excessive focus on executive, rather than supervisory, functions. The Board should reorient its activities towards a supervisory role, playing a more active part in formulating strategy, monitoring policy implementation to ensure timely corrective actions, and exercising effective oversight of Management. To this end, the Board would need to change many of its working practices, shifting away from executive, day-to-day operational activities, including through more delegation to committees and possibly to Management.

    Finally, a framework needs to be put in place to hold Management accountable for its performance. Work is under way to set up such a framework, which should specify criteria and a process for regular assessments.

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