Chapter 10. Internal Organization and Financing
- Parmeshwar Ramlogan, and Bernhard Fritz-Krockow
- Published Date:
- April 2007
The present chapter provides a brief overview of the internal organization of the IMF. In addition, the chapter discusses the structure of the IMF’s income, making particular reference to the ongoing efforts to remedy the operational deficit and restructure the income sources and position of the IMF.
Office of the Managing Director
At the apex of the IMF’s internal structure is the office of the Managing Director, which includes the offices of the Deputy Managing Directors. The Managing Director’s office has four units, which oversee pension fund investments, budget and planning, internal audit and inspection, and technical assistance management. The rest of the IMF comprises the area departments, functional and special services departments, information and liaison department and offices, and support departments. Each department and each unit in the Managing Director’s Office is headed by a Director who reports to the Managing Director.
Manages the assets of the Staff Retirement Plan and the Retired Staff Benefits Investment Account.
Office of Budget and Planning
Prepares the medium-term budget to help deliver the IMF’s strategy.
Issues guidelines to departments and offices for the preparation of their budgets and business plans.
Monitors and controls expenditures within the overall budget.
Coordinates budget policy and administrative issues with Senior Budget Managers and the Board’s Committee on the Budget.
Plays a lead role in developing a system of performance indicators for the IMF.
Office of Internal Audit and Inspection
Performs independent and objective audits and reviews of the effectiveness of the accounting and financial controls, and administrative processes of the IMF, and presents analyses and advice to IMF management and staff for improvement.
Provides advisory services for business processes and work practices to help ensure that they are structured and conducted in a manner that enables the IMF to fulfill its objectives.
Conducts internal investigations requested by the Managing Director.
Assists the external audit process and supports the activities of the External Audit Committee.
Office of Technical Assistance Management
Oversees technical assistance policy development, implementation, and reporting.
Assesses the adequacy and the appropriate allocation of technical assistance resources, and mobilizes technical assistance resources.
Promotes interdepartmental cooperation and coordination in the planning and delivery of technical assistance, and manages, with the relevant area department, the IMF’s six regional technical assistance centers.
Oversees the IMF’s cooperation with all sources of external technical assistance financing.
Currently there are five area departments, with responsibilities divided roughly along geographical lines: the African Department, Asia and Pacific Department, European Department, Middle East and Central Asia Department, and Western Hemisphere Department. These, along with the functional and special services departments described below, are the core operational departments of the IMF. The area departments are the focal points for relations with member countries, and the IMF’s economic policy discussions and lending operations with member countries are conducted primarily by these departments. The area departments:
Execute the IMF’s bilateral and regional surveillance functions, and assist in the preparation of multilateral surveillance reports;
Negotiate lending programs with member countries and monitor implementation of these programs;
Help arrange financing packages when members’ financing needs cannot be met by the IMF alone;
Report to, and seek guidance from, management and the Executive Board on discussions with member countries;
Liaise closely with the World Bank and other donors on economic policy advice and financial assistance to member countries;
Maintain resident representative offices in many countries that have IMF-supported economic programs or that are of systemic importance; and
Maintain regional technical assistance centers to enhance the provision of technical assistance.
Functional and Special Services Departments
The nine functional and special services departments are primarily responsible for the IMF’s work in the areas of policy design and development, strengthening the international monetary system, technical assistance, multilateral surveillance, and financial transactions with member countries. Their core functions are summarized below.
Policy Development and Review Department
Oversees the design, implementation, and evaluation of the IMF’s general policies related to surveillance and the use of IMF resources, strengthening the international monetary system, the role of the IMF in low-income countries, and IMF-World Bank collaboration, and works closely with other departments to this end.
Through the internal review of country work—that is, by providing comments on briefing papers for management approval or staff reports for Board approval—aims at ensuring an even-handed application of IMF policies and practices across the entire membership and staff recommendations that conform to established policies and practices.
Advises management and prepares Board papers in the development and review of IMF policies and facilities, including on surveillance and Article IV consultation policies and procedures, on aspects of the architecture of the international monetary system, on policies for the use of IMF financial resources, and on issues related to balance of payments need, financing assurances, and external viability and capacity to repay the IMF.
Contributes to the wider dissemination of the IMF’s analyses, policies and views, and to efforts aimed at greater openness and transparency by the IMF.
Plays a central role in the IMF’s dealings with the IMFC and the Development Committee, and serves as the focal point for general collaboration with the World Bank, United Nations, other international organizations, bilateral aid agencies, and regional country groupings such as the G-10 and G-24.
Figure 10.1.IMF Oraganization Chart
1The Managing Director is the Chairman of the Board.
2Known formally as the Joint Ministerial Committee of the Boards of Governors of the Bank and the Fund on the Transfer of Real Resources to Developing Countries.
Fiscal Affairs Department
Contributes to fiscal sector surveillance and fiscal policy design in member countries, and reviews the fiscal content of IMF policy advice and IMF-supported adjustment programs.
Undertakes the IMF’s work on fiscal transparency—including the preparation of ROSCs and development of the Code of Good Practices on Fiscal Transparency and the Manual on Fiscal Transparency—and on social sector issues, public expenditure policy issues, and the environment.
Fosters work within the IMF on the integration of poverty and social impact analyses of macroeconomic and structural policies into the design of PRGF-supported programs.
Provides technical assistance to member countries on public finance issues.
Monetary and Capital Markets Department
Provides technical assistance to member countries on monetary, financial sector, exchange rate, and capital markets issues.
Conducts financial sector surveillance in close collaboration with area departments, including: assessment of financial sector soundness and stability through the Financial Sector Assessment Program (FSAP), assessment of anti-money laundering and anti terrorism financing regimes, offshore financial center assessments, and other financial-sector-related work in collaboration with the World Bank and other international agencies.
Assists in the development of internationally-recognized standards and codes in the financial sector, assesses their observance by member countries, and promotes the dissemination of good policies and best practices.
Oversees, in collaboration with the Legal Department, members’ foreign exchange arrangements and restrictions on external current payments and transfers; assists in developing international best practices in the areas of exchange arrangements, currency convertibility on both the current and capital accounts, and exchange market development and operations; and compiles and disseminates information on members’ exchange arrangements.
Monitors developments and trends in international capital markets, assesses systemic risks and policy issues arising from such developments and trends, and develops analytical and operational approaches to dealing with systemic issues in international capital markets (including capital account liberalization).
Publishes the daily Global Market Monitor and the semi-annual Global Financial Stability Report.
Serves as the IMF’s main point of contact with the official and private sector on issues relating to international capital markets, and oversees the development and implementation of the IMF’s policies on private sector involvement in the resolution of financial crises.
Supports multilateral surveillance by contributing to the preparation of the WEO, WEMD, and surveillance notes for regional groupings such as the G-7 and G-20, and advises area departments and member countries on all aspects of access to international capital markets and relations with creditors.
Develops internationally accepted methodologies and manuals for compiling macroeconomic statistics, including financial soundness indicators.
Develops and maintains standards for the dissemination of data by member countries, including the GDDS and SDDS.
Provides technical assistance and training to help member countries improve the production and dissemination of economic and financial statistics (see Chapter 6).
Maintains databases of country, regional, and global economic statistics; and disseminates such statistics through the IMF’s global statistical publications: International Financial Statistics, Government Finance Statistics Yearbook, Balance of Payments Statistics Yearbook, and Direction of Trade Statistics.
Plays the central role in the IMF’s multilateral surveillance work mainly not related to financial market developments, and assists in a broad range of bilateral surveillance activities, including monitoring exchange rates, commodity and energy markets.
Prepares the World Economic Outlook (WEO) report for meetings of the IMFC, periodic reports on World Economic and Market Developments (WEMD) for the Executive Board, surveillance notes for regional groupings such as the G-7 and G-20, and multilateral assessments of exchange rates for key advanced and emerging market economies.
Develops and maintains: early warning indicators of potential financial crises, macroeconomic models for use in analyzing issues in multilateral and bilateral surveillance, and the IMF’s database on commodity prices and emerging market economies.
Prepares policy papers for the Executive Board on the international monetary system, exchange rate issues, and other key issues raised by the Executive Board, the IMFC, and IMF management, or suggested by the Department’s ongoing research.
Mobilizes financial resources in the context of reviews of IMF quotas, IMF borrowing arrangements, and resources devoted for concessional support; advises management and the Executive Board on the IMF’s liquidity and income positions; invests the Fund’s assets held in trust; and monitors and assesses the financial position in the trust funds, implements the IMF’s trustee functions and investment strategy for the trust funds.
Develops policies and advises on the financial aspects of access to IMF resources and the design of IMF facilities, assesses financial risks to the IMF of large lending arrangements, and maintains the IMF’s accounts in accordance with international accounting standards.
Undertakes safeguards assessments of central banks of member countries making use of IMF resources to ensure that adequate control, reporting, and auditing systems are in place.
Conducts all financial transactions with member countries; provides comprehensive financial information on the IMF’s website; and develops and implements policies to address arrears.
Undertakes comptroller responsibilities for and administers all payments and receipts under the administrative and capital budgets and under externally provided technical assistance agreements.
Advises the Executive Board, management, and the staff on the applicable rules of law, and serves as legal counsel to the IMF in litigation and arbitration cases.
Prepares most of the decisions and other legal instruments necessary for the IMF’s activities.
Arrives at legal findings regarding IMF jurisdiction on exchange measures and restrictions, assesses the consistency of laws and regulations with selected international standards and codes, and responds to inquiries from national authorities and international organizations on the laws of the IMF.
Provides technical assistance to member countries on legislative reform.
Provides training in macroeconomic policy design and implementation for government officials of member countries.
Conducts an internal economics training program for IMF economists on policy issues of relevance to the IMF’s work.
The External Relations Department and Liaison Offices
External Relations Department
Promotes public understanding of, and support for, the work of the IMF through press and public contacts and dissemination of information about the IMF.
Advises management on the core messages on which external communications should focus, and how to deliver those messages effectively and efficiently.
Maintains the IMF’s external website and publishes the IMF Survey, Finance and Development, and the Annual Report of the IMF.
Offices in Europe
The three Offices in Europe—Office in Brussels, Office in Geneva, and Office in Paris—are managed by a single administrative entity, the Offices in Europe. The offices:
Contribute to the IMF’s bilateral, regional, and multilateral surveillance work by enhancing the monitoring of regional developments and the activities of regional governments and organizations.
Contribute to policy development and liaison with regional and international bodies that provide policy advice and set rules having a bearing on the international economic and financial system (OECD, WTO, BIS, European Union institutions, other European-based agencies).
Contribute to representation, communication, and outreach to explain IMF activities to various audiences, and to keep the IMF informed about the views of others regarding IMF policies.
Support recruitment and a broad range of other activities by other departments and offices.
Regional Office for Asia and the Pacific
Assists headquarters in monitoring and assessing economic and financial developments in the region as well as the progress in regional cooperation and integration.
Facilitates the implementation of IMF policies and initiatives in the region, and helps enhance the understanding of the IMF and its policies.
Promotes capacity building in the governments of Asia and the Pacific, through the organization of seminars and the administration of the Japan-IMF and Australia-IMF scholarship programs.
Office at the United Nations in New York
Participates in inter-governmental activities in the IMF’s capacity as permanent observer at the United Nations—follows the regular session of the General Assembly in September-December and annual session of the Economic and Social Council (ECOSOC) in June/July, and participates in the special high-level meeting between ECOSOC, the Bretton Woods Institutions, and the World Trade Organization in March/April.
Interacts with the secretariats of all UN organizations, through inter-agency coordination mechanisms and bilateral contacts.
Undertakes outreach activities through briefings for UN delegates, students, and non-government organizations.
Provides secretariat support for the IMF’s governing and advisory bodies—the Board of Governors, the Executive Board, the IMFC, and the Development Committee (jointly with the World Bank)—and makes the administrative arrangements (jointly with the World Bank) for the meetings of the Boards of Governors, the IMFC, and the Development Committee.
Manages the day-to-day work program of the Executive Board, liaises between management and staff and the Executive Board, oversees the summings up of Executive Board discussions, maintains the official records of the IMF’s governing bodies, and prepares the minutes of Executive Board meetings.
Helps prepare the communiqués of the IMFC, the G-24, or the Development Committee.
Has central responsibility for communications with the IMF’s governing bodies, printing and distribution of official documents, information security, membership matters, and administrative matters for the offices of Executive Directors.
Technology and General Services Department
The Technology and General Services Department provides services in three areas.
Administrative services: building projects, facilities management, libraries, archives and records management, procurement, transportation, field and headquarters security, information security, and executive protective services.
Information technology services: information systems, technology infrastructure, multimedia services, and document management.
Language services (i.e., translation and interpretation).
Human Resources Department
The Human Resources Department manages the human resources of the IMF in partnership with other departments, overseeing policy development and implementation with respect to recruitment, compensation and benefits, and staff development.
Financing of IMF Operations
The IMF relies primarily on the income from its lending operations to meet its operational costs. This financing model has generated adequate income in the past. However, in recent years, the substantial decline in countries experiencing balance of payments problems has led to a reduction in IMF lending activities and income (Tables 10.1).
|Fiscal year ended April 30|
|Net operational income||492,449||707,915||864,726||665,507||280,136|
|Interest and charges||2,032,921||2,295,250||2,231,678||2,270,044||1,671,502|
|Interest on SDR holdings||41,284||28,038||16,630||16,322||58,330|
|Income of the Special Disbursement Account||132,503||61,431||40,938||52,157||48,710|
|Interest on Structural Adjustment Facility Loans||1,131||0||0||0||0|
|Other charges and income||157,496||131,629||90,676||34,035||22,558|
|Allocation to the Special Contingent Account2/||94,000||0||0||0||0|
|Net operational income of the General Department comprises||492,449||707,915||864,726||665,507||280,136|
|Income of the General Resources Account||359,946||646,484||823,788||613,350||235,524|
|Income of the Special Disbursement Account||132,503||61,431||40,938||52,157||44,612|
The decline in IMF lending is a positive development, reflecting the strength of the global economy and the IMF’s success in assisting its members to resolve and prevent balance of payments difficulties through the promotion of sound macroeconomic policies. The IMF’s balance sheet is strong and the current level of precautionary reserves could absorb administrative deficits for a number of years. However, the declining net interest revenue stream does require the IMF to find the means to close the gap between its income and its running costs and, more fundamentally, to review its structure and sources of revenue and find a financing model that more appropriately reflects the IMF’s role in a changing global economy, compared to the present financing model that relies primarily on income generated by lending activities.
As noted in the Managing Director’s Review of the IMF’s Medium Term Strategy (MTS), the IMF must secure a predictable and stable source of income to finance its central role in the global financial system, including its surveillance activities and provision of technical assistance. However, the IMF is restricted in its financing activities by the Articles of Agreement, which limit the use of its quota resources to balance of payments adjustment credit and limit the use of its substantial gold holdings. The IMF is currently pursuing a range of options to address this challenge:
As a first step, in May 2006 the Executive Board approved the establishment of an investment account to generate additional income, which was funded by the IMF’s reserves of US$8.7 billion at the time. A similar structure was maintained between 1956 and 1972, initially to meet a temporary income deficit, and subsequently to build up a special reserve. The Executive Board also decided to suspend the accumulation of additional precautionary balances, to use the IMF’s existing reserves to meet any income shortfall, and to continue a tight budgetary stance.
The second and more critical long-term aspect of the strategy is to ensure a lasting and sustainable solution to the IMF’s income needs. For this purpose, the Managing Director has appointed an external Committee of Eminent Persons to advise on a lasting solution to the issue of the financing of the IMF’s running costs in the future.