CHAPTER 1 Overview of Developments in FY2009
- International Monetary Fund. Independent Evaluation Office
- Published Date:
- July 2009
The financial year 2009 saw the production of an evaluation on The IMF’s Approach to International Trade Policy Issues. The Governance of the IMF report was also discussed by the Board in FY2009, and there were discussions on follow-up to the IEO evaluation of Structural Conditionality in IMF-Supported Programs. This recently completed evaluation and follow-up to past evaluations will be discussed in Chapter 2.
Accountability: MIPs and PMR
IEO evaluations play a role in the overall accountability framework of the IMF. In response to a recommendation by the 2005 External Evaluation of the IEO, the IMF Executive Board established in January 2007 a system for tracking follow-up to and implementation of Board-endorsed IEO recommendations. (See Annual Report 2008 for details.) This system relies on Management Implementation Plans (MIPs) and Periodic Monitoring Reports (PMRs) prepared by IMF Management and staff. Management presents to the Board a MIP for each IEO evaluation, proposing how to implement each recommendation endorsed by the Board. PMRs update the Board on the implementation status of each MIP and, during a transition period, of the recommendations in reports issued before the practice of MIPs was put in place. The Board discussed the first PMR in January 2008.
The second Periodic Monitoring Report (PMR) was discussed and approved by the Executive Board in October 2008. This PMR examined in particular the implementation status of the two Management Implementation Plans (MIPs) pertaining to Board-endorsed IEO recommendations on The IMF and Aid to Sub-Saharan Africa and IMF Exchange Rate Policy Advice. It also reported on progress in implementing the outstanding recommendations from the first PMR. The second PMR also included aspects of the IEO’s evaluation of Structural Conditionality in IMF-Supported Programs that had been implemented. In fact, the discussion on structural conditionality in the PMR has been largely superseded by the changes in the Fund’s lending framework adopted in March 2009, which was partly influenced by the IEO findings.
Budget and Staffing
In FY2009 the budget was spent nearly in full (Appendix 1), with the execution rate reaching 98.1 percent of the approved budget. On March 26, 2009, the IMF’s Executive Board approved the IEO budget for FY2010 of $4.8 million, in line with the parameters agreed during the discussions on the downsizing of the IMF. This represents a 1.8 percent real decrease from the FY2009 budget. The IEO budget remains at about 0.5 percent of the total IMF budget. The Executive Board accepted the IEO’s proposal to adopt a policy of allowing a carryover equivalent to a maximum of 5 percent of the IEO FY2009 budget into FY2010 and to adopt a similar carryover for subsequent years. It has been difficult to fine-tune expenditures to ensure full budget utilization without risking overspending, and the additional flexibility is welcome.
The cumulative reduction in the IEO budget in recent years has led to a squeeze in discretionary expenditures and a reduction of one position, to only six economists. This will have implications for the work program, with some slowing in the production of evaluations. The documentation prepared for last year’s budget discussions at the Executive Board explained that this level of resources is consistent with “struggling to produce two evaluations a year.” This is what in fact we have found over the past year.
The FY2008 Annual Report highlighted changes to IEO’s human resources policies, which followed up on recommendations made by the 2005 External Evaluation of the IEO. However, high staff turnover remains a key issue. There were eleven departures over the last two years from the original seven (and more recently six) economist positions. This rapid turnover of staff complicates personnel management and imposes significant costs on the office. The IEO will be suggesting to the Executive Board proposals for changes in the terms of employment and in the incentive structures to address these challenges. This requires careful attention to the trade-offs among ensuring independence (and the perceptions of independence) of the IEO, acquiring the right mix of staff, and maximizing efficiency.
Outreach and Communication Activities
The IEO engages in external outreach activities to disseminate its evaluation findings to a wide audience. The 2005 External Evaluation of the IEO noted that “outreach is critically important not only because it is part of the IEO remit to enhance broader understanding and inform people about their analyses and findings. It is equally a necessary tool for IEO to have any impact.” 1 The IEO has continued to build on the revamped outreach and communications activities detailed in the 2008 Annual Report, including continued publication of the biannual newsletter. Appendix 2 lists events during which the work of the IEO was discussed.