The work program of the IMF’s Executive Board over the coming year has among its key priorities making the institution’s medium-term strategy operational, strengthening the effectiveness of its surveillance and crisis prevention efforts, refining its role in low-income countries, and reviewing its instruments, IMF Managing Director Rodrigo de Rato said in a statement released on June 22. These priorities, which reflect the guidance of the International Monetary and Financial Committee (IMFC) at its April 16 meeting, were confirmed by the Executive Board when it discussed the Managing Director’s statement. On June 22, the Board agreed that the work program will be modified to allow consideration of the Group of Eight debt relief proposal (see page 188).
Fleshing out a medium-term strategy. The IMF, de Rato said, is working to reach understandings on a medium-term strategy paper that incorporates the priorities, organizational implications, and potential trade-offs among the IMF’s major activities over the next few years. In the next stage, the IMF will focus on enhancing the effectiveness of surveillance; intensifying work on financial sector and capital account issues; the planning, prioritization, and integration of technical assistance activities; calibrating the intensity of future work on standards and codes; refining instruments for supporting low-income countries; and the prioritization, efficiency, and allocation of resources in the IMF’s operations. A comprehensive Board discussion of the Fund’s medium-term strategy is planned for September. De Rato added that as deliberations on the medium-term strategy are completed, it will be “important to turn more intensively to issues related to the longer-term evolution of the international monetary system and the role of the Fund.”
Surveillance and crisis prevention. Effective IMF surveillance of country, regional, and global developments remains “central,” de Rato noted, to the IMF’s role in supporting the stability of the international financial system. In keeping with the 2004 biennial review of surveillance, the IMF will concentrate on sharpening the focus of surveillance, deepening its treatment of exchange rate issues, enhancing its oversight of the financial sector, improving analysis of debt sustainability and balance sheet vulnerabilities, strengthening attention to regional and global spillovers in country surveillance, and reflecting on how surveillance takes place in low-income countries. Progress in assessing the effectiveness of surveillance is another priority. Implementation of these priorities will be assisted by an evaluation of the Financial Sector Assessment Program, and reviews of the Standards and Codes Initiative and IMF transparency.
Supporting low-income members
The IMF, as the IMFC reaffirmed, has a critical role in supporting low-income countries. To ensure its effectiveness, the IMF will review the modalities of IMF support; bolster IMF assistance to countries seeking to achieve the Millennium Development Goals (MDGs); and, before the UN Summit on the MDGs in September, build a “better understanding within the international community of the IMF’s role in this area,” de Rato said.
On modalities, the work program highlights the importance of addressing “both the need for additional instruments and the design of existing facilities.” There will be a review of the design of programs supported by the Poverty Reduction and Growth Facility (PRGF), and in response to the IMFC, the Executive Board will also discuss proposals for Program Support Arrangements, intended to enhance the IMF’s signaling role for countries that do not need or want financing, and for a “shocks” facility within the PRGF. Discussions on strengthening the IMF’s role in low-income countries will focus on its work in the field in supporting members’ poverty reduction strategies.
IMF resources and instruments. Lending, de Rato noted, “remains a central pillar” of the IMF’s mandate, with its effectiveness relying on country ownership of programs and strong supporting institutions. Recent reviews of the design of IMF-supported programs (see IMF Survey, June 20, pp. 180-82) and guidelines for the conditionality attached to IMF loans provide valuable lessons that will inform continuing reviews and assessments of financing instruments and policies.
Other work in prospect. Other issues to receive attention include capacity building, crisis resolution initiatives, and institutional effectiveness, including issues of voice, quotas, and participation.