Previous IEO Annual Reports have identified common themes emerging from earlier evaluations. Four themes have been emphasized in particular; they are the need for:
(1) better management of institutional change at the IMF;
(2) greater clarity about the goals of various IMF initiatives and a properly aligned external communications policy;
(3) the IMF to strengthen partnerships with other international financial institutions (IFIs) and donors;
(4) clearer metrics for the assessment of the impact of IMF’s policy advice and whether the IMF is meeting its commitments to countries.
All of these themes remain relevant, and have also been central to the IEO evaluations published in the last year. A fifth theme has also become evident in the last twelve months, and which is closely related to (1), (3), and (4) above, and that is the need for the IMF to be more explicit about who is accountable for what, and to whom. The recent evaluation “Governance of the IMF” found that there is a lack of clarity on the respective roles of the different governance bodies, and that 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. The IEO’s focus is now explicitly on recognizing the different roles of shareholders and the Executive Board in setting policies, and staff in implementing them, with IMF Management as the crucial intermediary.
The theme of needing to better manage institutional change at the IMF has become more central to the findings of the IEO’s work since it was identified in a number of previous evaluations. This is one of the key messages from the recently completed evaluation on “Governance of the IMF,” which explicitly 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 evaluation 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. As outlined in Chapter 3, the report on “Governance of the IMF” makes a number of recommendations that address this critical issue of how institutional change can be better managed at the IMF.
The need for better clarity about the goals of various IMF initiatives, which was previously highlighted in a large number of evaluations, including “The IMF and Aid to Sub-Saharan Africa” and “The IMF’s Role in PRSPs and the PRGF,” was also a finding of the evaluation of “Structural Conditionality in IMF-Supported Programs,” which emphasized that IMF staff needed to do more to work with country authorities to identify clearly the main goals of each program and to set structural conditions that contribute significantly to these goals. The evaluation also noted that resistance to and stigma linked to IMF conditionality reflect in part the public’s lack of knowledge and understanding about the different sources and types of conditions. That evaluation concluded that the IMF should make a greater outreach effort to clarify these issues. This builds on the finding in the evaluation of “IMF Exchange Rate Policy Advice,” which noted the inadequate appreciation of the formal role of the IMF in exchange rate surveillance, and the deleterious effect this has had on the effectiveness of the IMF’s advice.
Previous evaluations have highlighted that the IMF needs to strengthen partnerships with other international financial institutions and donors. This was, for example, a key finding of those evaluations with implications for low-income countries, notably “Fiscal Adjustment in IMF-Supported Programs,” “The IMF’s Role in PRSPs and the PRGF,” “IMF Technical Assistance,” and “The IMF and Aid to Sub-Saharan Africa,” all of which have highlighted the importance of effective partnerships. The recently completed evaluation of “Structural Conditionality in IMF-Supported Programs” also made this point, highlighting the need for better cooperation with the World Bank. In this case, the evaluation argued that the sustainability of structural reforms and macroeconomic adjustments often depends on changes in a country’s wider public sector and on restructuring of quasi-fiscal expenditures. In setting structural conditionality in these areas the IMF should play a subsidiary role to that of the World Bank, which has primary responsibility and greater expertise in these areas. The report went on to highlight that the Management of both organizations should consider means to help country authorities to diagnose constraints and prepare homegrown strategies for reform. Explicit Board guidance would still be needed in instances in which policy changes in noncore areas are deemed critical but effective cooperation with the Bank is unlikely to crystallize in time.
The evaluation of “Structural Conditionality in IMF-Supported Programs” also argued that the assessment of whether structural conditionality in Fund arrangements was effective is complicated by the lack of an agreed framework to assess results and accountability, and the consequent lack of some of the necessary information. The evaluation called on the Fund to develop a monitoring and evaluation framework linking conditions in each program to reforms and specified goals, which would provide a more robust basis for monitoring the implementation and evaluation of programs, as well as facilitating learning on what works and what does not. These calls echoed those in previous evaluations, including those on the “IMF’s Role in PRSPs and the PRGF” and on “The IMF and Aid to Sub-Saharan Africa,” which had noted the absence of clear metrics impedes the assessment of the impact of IMF’s policy advice and whether the IMF is meeting its commitments to countries.