Abstract

In 2008, the IEO undertook an evaluation on the IMF governance and concluded that effectiveness had been the strongest aspect of IMF governance, while accountability and voice had been the weakest. Since then, IMF governance has been strengthened aided by quota and voice reforms to address misalignments in shares and chairs as well as numerous improvements in governance procedures and practices. The update finds that IMF governance has proven its effectiveness in supporting the Fund to fulfill its mandates, but concerns remain on voice and accountability. Challenges remain related to representation and voice, interaction between governance bodies, the selection process for management, and the role of the G20 in IMF governance. Addressing these challenges will take time and may be subject to difficult tradeoffs between governance objectives such as preserving effectiveness while ensuring appropriate representation.

Appendix 1: 2008 IEO Evaluation Recommendations: Implementation Status

A number of Directors welcomed the [International Monetary and Financial Board (IMFB)] proposal, noting that it strikes a balance between securing deeper ministerial engagement in decisions of strategic importance and preserving the role of the Executive Board in the operational work of the Fund. Most of these Directors preferred broadening further the scope of ministerial involvement to include, for instance, the accountability of the Managing Director and setting the guidelines for the Fund’s lending framework. But others considered that a more limited number of key strategic decisions, including importantly some decisions currently reserved for the Board of Governors, would be more appropriate. Finally, a few Directors saw the IMFB proposal as addressing concerns raised previously with respect to the “Council” envisaged in the Articles of Agreement. However, they were not in a position to express any firm views ahead of consensus on the scope of responsibilities that would be transferred to such a body. The process of amending the Articles of Agreement was also seen as challenging. Against this background, many Directors called for further reforms of the IMFC, including its procedures.… Other Directors agreed on the need for continuing IMFC reforms, but did not see only procedural reforms as a substitute for a more fundamental shift to a decision-making body.

The Staff Code is not viewed as legally binding; it is designed to provide general guidance and direction to staff on ethical conduct and workplace behavior. It does not have the same enforcement status as the N Rules, General Administrative Orders, Staff Bulletins, and other management directives.

Appendix 2: The Follow-Up Process for the 2008 IEO Evaluation

The follow-up process for IEO evaluations is comprised of three stages. First, a Summing Up of EDs’ views is issued by the MD, who serves as Chairman of the Board, after the Board discussion. Second, as of 2007, a Management Implementation Plan to undertake actions arising from the Board-endorsed evaluation recommendations is subsequently transmitted and discussed by the Evaluation Committee for approval by the Board. Third, the status of agreed actions is reviewed by Management in an annual Periodic Monitoring Report on the implementation of Board-endorsed IEO recommendations, which is assessed by the Board Evaluation Committee for approval by the Board.

At the time of the Board meeting, the MD did not favor issuing a Summing Up because he believed that the discussion should be viewed as only the first step in a longer process. In the event, EDs suggested that a concluding statement be issued jointly by EDs and the MD; the statement was general in nature and did not address any specific evaluation report recommendations. Further, it was agreed that it would not be appropriate to issue a Management Implementation Plan. Rather, there was a consensus among EDs that an ad hoc Working Group be established by the Dean of the Board to devise a framework for discussing the recommendations. In the view of many EDs, it was the Board that should take the lead on an implementation plan; the Working Group would focus the Board’s time on those items that could be undertaken quickly while laying the groundwork for future work as warranted.

Led by the chairman of the Board Evaluation Committee, the EDs’ Working Group met over the summer of 2008 and developed a detailed tiered work plan for consideration of nearly all the IEO evaluation report recommendations. Each recommendation was tasked to one of four simultaneous work streams and was accompanied by a comment on the status of the issue, the proposed follow-up, and the proposed time-frame for action. The EDs’ Working Group transmitted its report in advance of a Board meeting to be held on September 29, 2008.

Two weeks prior to the Board discussion of the EDs’ Working Group report, the MD announced the appointment of group of eminent persons “to assess the adequacy of the Fund’s current framework for decision making and advise on any modifications that might enable the institution to fulfill its global mandate more effectively [and] provide yet another important input to our reform efforts” (IMF, 2008b) with recommendations anticipated by the 2009 IMF Spring Meetings.1 He also announced his intention to engage civil society and other external stakeholders at a later stage.

In his statement prepared for the Board discussion of the EDs’ Working Group report, the MD further proposed to establish a joint task force of Management and EDs to be co-chaired by an ED and Deputy Managing Director. He called for the task force to build from the road map set forth by the EDs’ Working Group to put in motion issues that could be considered quickly; but for matters requiring substantive consideration he suggested the task force wait until the issuance of the eminent persons group report and wider consultation, all with the aim of distilling concrete proposals by the 2009 IMF Annual Meetings. He also suggested that the task force could call for analysis from IMF staff as needed.

Directors supported the EDs’ Working Group work plan laid out to respond to the evaluation recommendations at a September 29, 2008 Board meeting.2 During the discussion, the EDs’ Working Group highlighted the importance of monitoring the implementation of the work plan. In their view, the dedicated monitoring report should not only report on the status of implementation of recommendations endorsed by respective relevant bodies but should also put on record which recommendations were not endorsed and for what reasons. They believed doing so would inform future discussions on governance and help to avoid “reinventing the wheel;” and they proposed that the Working Group would present a monitoring report to the Board one year later.

During the Board discussion, some EDs sought clarity on the modalities of the ED-Management task force, henceforth known as the Joint Steering Committee, while others also were not convinced on the approach. In their view, reidentifying the sequencing of attention to issues and reopening the recommendations of the EDs’ Working Group was an unnecessary duplication of efforts and could possibly create the impression that the Fund was reluctant to deal with some of the IEO evaluation recommendations. Nonetheless, the MD noted that the Joint Steering Committee would take on both the coordinating and monitoring role. Some Directors additionally reiterated that further work on quota and voice should be an integral part of the Fund’s overall governance reform.

The second Periodic Monitoring Report (PMR) on implementation of Board-endorsed IEO recommendations did not discuss the governance evaluation. In its assessment of the PMR, the Board Evaluation Committee noted that the 2008 evaluation recommendations would be further discussed in the context of the Joint Steering Committee which was tasked with ensuring a collaborative process involving all the streams of the reform effort. The assessment was endorsed by the Board.

While the Joint Steering Committee met twice in early 2009 and circulated status reports at the time, it did not issue a one-year implementation report as originally envisioned. In its January 2010 assessment of the Third PMR, the Board Evaluation Committee noted that the Joint Steering Committee should produce a monitoring report. Some EDs continued well into 2010 to call for the issuance of a Joint Steering Committee report, but this did not transpire.

In early January 2011, the Dean of the Board dissolved the Joint Steering Committee, stating that it had completed its mission. He noted that while the quota and voice reform package was awaiting approval by the IMF Board of Governors, any follow-up and further issues on governance would be taken up by the whole Board. He also noted that the Working Group on the Performance Feedback Exercise Between the Executive Board and the MD had concluded its work in the Fall of 2010 and recommended that the Working Group be reconvened on an ad hoc basis.

Appendix 3 Executive Board Indicators

Board meeting activity. There has been some moderation in Board meeting activity in recent years (Figure A3.1, left panel).1 Continuing the trend described in the 2008 evaluation, the annual number of hours of Board meetings has declined, albeit not monotonically, by 11 percent from 2010 to 2017. As the number of meetings followed a similar declining trend, the average duration of meetings has remained broadly constant at around 60 minutes.

Figure A3.1.
Figure A3.1.

Board Activity Indicators

Source: IEO estimates based on internal IMF data.

Board documents. The number of staff papers presented to the Board has also decreased by 19 percent during the period, reflecting to some extent a greater use of informal sessions where no Board documents are provided (see below). Country staff reports are subject to a 5,000- to 9,500-word limit. Policy documents are limited to 12,500 words, with exemptions for flagship reports, the Low-Income Developing Country report, Regional Economic Outlooks, Staff Working Papers, and Staff Discussion Notes. Policy papers exceeding the word limit may include one or more background papers which would also be limited in the aggregate to 12,500 words.

Use of Grays. EDs have increased the use of written statements (“Grays”) in advance of Board meetings. Grays are intended to allow EDs to place country/constituency views on the record, while freeing up Board time for more focused discussion of issues. The use of Grays by Directors has increased by 11 percent over the 2010–17 period, to a record average of 20 Grays per meeting in 2017 (Figure A3.1, right panel). Given that Grays are normally not issued for informal or committee meetings, this would suggest that their issuance has become a standardized practice for all formal meetings. On the negative side, the perception that there is an expectation to issue a Gray for all formal meetings may place a burden on OEDs’ time, especially in those offices that receive limited support from their capital. At the same time, a Gray written with input dictated from capitals may reduce EDs’ autonomy and room for consensus building, eroding the Board’s dynamism. This risk is aggravated by a perceived tendency of SEC, as mentioned by some EDs, to heavily rely on preliminary Grays for preparing Summings Up. In some cases, groups of constituencies issue joint Grays, an efficient practice that has picked up recently.

Bunching of workload. The bunching ratio (defined as the average of June and July over the year average excluding those two months) has risen slightly over the period examined (Figure A3.2).

Figure A3.2.
Figure A3.2.

Bunching Ratio and Standard Deviation

Source: IEO estimates based on internal IMF data.Note: The bunching ratio is defined as the June and July average over the year average excluding June and July. The standard deviation is normalized to the mean.

LOT approvals. The use of Lapse of Time (LOT) procedures was reduced by over 7 percent overall over the period, although the number of LOT approvals increased for country items (Figure A3.3). The use of LOT procedures helps to reduce pressure on Board time but also reduces the opportunities for EDs to formally offer views, which has been a concern of chairs representing smaller member countries more often affected by LOT procedures.

Figure A3.3.
Figure A3.3.

Board Items Approved On a Lapse of Time Basis

Source: IEO estimates based on internal IMF data.

Informal meetings. The most striking shift in the use of Board time has been the more than doubling of the amount of time spent in informal sessions, jumping to 35 percent of the total Board hours during 2010–17, from 15 percent over the period examined in the 2008 evaluation (see Figure 2 in the main text). On average, policy discussions2 account for 70 percent of informal sessions (country items for 15 percent), which means that the combination of formal and informal policy meetings accounts for 36 percent of the total. At the same time, the Board time dedicated to multilateral surveillance has halved since the 2008 evaluations, most likely due not only to the reclassification of some of these meetings as informal sessions, but also to some consolidation and streamlining of multilateral surveillance products and discussions, such as the Spillover Report.

Tenure of EDs. The median tenure of EDs remained relatively stable in the early part of the last decade, at nearly 26 months, but has since declined to nearly 21 months in recent years (Figure A3.4). When including prior experience as Alternate ED, the median was somewhat higher, but still only around 25 months in recent years. High turnover may be more of an issue in multi-country constituencies with agreements to rotate the ED position among countries (often every two years). While some constituencies have alleviated this problem with a sequenced approach, by which EDs spend some time as Senior Advisor or Alternate ED before serving as ED, others have preferred to bring in senior officials who have relevant experience directly from capitals.

Figure A3.4.
Figure A3.4.

Tenure of Executive Directors

(In months, median)

Source: IEO estimates based on internal IMF data.Note: ED = Executive Director; Alt. ED = Alternate Executive Director

Cost efficiency. The Board’s cost has been broadly maintained since 2008. OEDs were run on a broadly constant budget as a share of the IMF net administrative budget between 2008–17, around 6 percent (Figure A3.5). This suggests that some governance reforms with potential resource implications were implemented in a broadly resource-neutral way through budgetary reallocation. The budget share for SEC has risen modestly since 2012. In FY2018, approximately 40 percent of SEC’s budget was devoted to Board functions, while approximately 9 percent was devoted to IMFC meetings. SEC support for secretariat services to the G24 and other related groups was less than 1 percent of the department’s budget.

Figure A3.5.
Figure A3.5.

Net Budget Envelope by Department

(Share of total IMF net administrative budget, in percent)

Sources: FACTS, ACES, and internal IMF data.Note: OED = Offices of Executive Directors; SEC = Secretary’s Department; OMD = Office of the Managing Director; ORM = Office of Risk Management. Structural budgets; does not include transitional/carryforward resources.

Program-related activity. There has been great disparity in program-related activity across constituencies since 2008. As Figure A3.6 shows, in 9 of 24 constituencies, no member country was engaged in a program relationship with the Fund during the 2008–17 period. Other constituencies, however, were engaged with the program process many times (14 times on average), which implied a heavy workload for OEDs representing them (e.g., program negotiations, periodic reviews, etc.). Moreover, program activity tended to be concentrated in constituencies made up of a high number of members, which also increased the workload associated with non-program-related activities undertaken by all OEDs (i.e. surveillance and policy-related work).

Figure A3.6.
Figure A3.6.

Program-Related Activity by Constituency, 2008–17

Source: IEO estimates based on internal IMF data.Note: The horizontal axis denotes constituencies represented at the IMF Board, which for purposes of the analysis are numbered 1 through 24. “Months under program” represents the total number of months that members of each constituency were engaged in IMF-supported programs during the 2008–17 period. “Number of programs” represents the total number of IMF-supported programs approved for members of each constituency during the 2008–17 period. Only lending programs are included. Calculations are based on constituency composition as of August 2018.

Board chairing practices. There has been a shift in Board chairing practices since the 2008 evaluation. There has been a sizable increase in the share of the Board meeting hours chaired by the MD since 2012 (Figure A3.7). On average, between 2008 and 2017, the MD chaired 25 percent of Board meeting hours. The share of Board hours chaired by the MD varied significantly by type of meeting and meeting item. The share of Board meeting hours on advanced country matters chaired by the MD was 28 percent, on similar order for the share for the FDMD (34 percent). The MD also chaired nearly 40 percent of non-country Board meeting hours. In contrast, Board meeting hours on low-income country matters were predominantly chaired by DMDs (90 percent of meeting hours), while the share of the MD was only 0.5 percent.

Figure A3.7.
Figure A3.7.

Share of Board Meeting Hours by Chair

(In percent)

Source: IEO estimates based on internal IMF data.Note: DMD = Deputy Managing Director; FDMD = First Deputy Managing Director; MD = Managing Director.

References

  • De Las Casas, Miguel, 2016, “The IMF Executive Board and the Euro Area Crisis— Accountability, Legitimacy, and Governance,” Independent Evaluation Office (IEO) Background Paper, No. BP/16–02/2 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Group of Twenty (G20), 2009, “G20 Working Group: Reforming the IMF—Final Report, 4 March 2009.”

  • Independent Evaluation Office of the IMF (IEO), 2008, Governance of the IMF: An Evaluation (Washington: International Monetary Fund).

  • Independent Evaluation Office of the IMF (IEO), 2011, IMF Performance in the Run-Up to the Financial and Economic Crisis: IMF Surveillance in 2004–07 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Independent Evaluation Office of the IMF (IEO), 2015, Self-Evaluation at the IMF: An IEO Assessment (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Independent Evaluation Office of the IMF (IEO), 2016, The IMF and the Crises in Greece, Ireland, and Portugal (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Independent Evaluation Office of the IMF (IEO), 2018, Structural Conditionality in IMF-Supported Programs: Evaluation Update (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund (IMF), 2008a, “Communiqué of the International Monetary and Financial Committee of the Board of Governors of the International Monetary Fund,” October (Washington).

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund (IMF), 2008b, “Managing Director Strauss-Kahn Appoints Committee on IMF Governance Reform,” IMF Press Release No. 08/200 (Washington).

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund (IMF), 2009, “Review of the Fund’s Transparency Policy—Archives Policy 14498-(09/126)” (Washington).

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund (IMF), 2010a, “IMF Executive Board Approves Major Overhaul of Quotas and Governance,” IMF Press Release No. 10/418 (Washington).

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund (IMF), 2010b, Minutes of Executive Board Meeting on IMF Governance Reform,” EBM 10/78–1 (Washington).

  • International Monetary Fund (IMF), 2016, “Gender Diversity in the Executive Board—Draft Report of the Executive Board to the Board of Governors” (Washington).

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund (IMF), 2017, “Implementation Plan in Response to the Executive Board-Endorsed Recommendations for the IEO Evaluation Report—The IMF and the Crises in Greece, Ireland, and Portugal” (Washington).

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund (IMF), 2018, “The Acting Chair’s Summing Up—External Evaluation of the Independent Evaluation Office, Executive Board Meeting 18/62, July 6, 2018” (Washington).

    • Search Google Scholar
    • Export Citation
  • Kaberuka, D., C. Der Juin, and P. Meyersson, 2018, “Time for a reboot at a critical time for multilateralism: The Third External Evaluation of the IEO” (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Kramer, Vicki, and others, 2006, “Critical Mass on Corporate Boards: Why Three or More Women Enhance Governance” (Wellesley, MA: Wellesley Centers for Women).

    • Search Google Scholar
    • Export Citation
  • Lissakers, K., I. Husain, and N. Woods, 2006, “Report of the External Evaluation of the Independent Evaluation Office” (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Manuel, Trevor, and others, 2009, “Committee on IMF Governance Reform: Final Report” (Washington: International Monetary Fund).

  • New Rules for Global Finance Coalition, 2009, “Report on the Civil Society (Fourth Pillar) Consultations with the International Monetary Fund on Reform of IMF Governance” (Washington).

    • Search Google Scholar
    • Export Citation
  • Ocampo, J. A., S. Pickford, and C. Rustomjee, 2013, “External Evaluation of the Independent Evaluation Office: Report of the Panel Convened by the Executive Board” (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Peretz, David, 2009, “The Process for Selecting and Appointing the Managing Director and the First Deputy Managing Director of the IMF,” Chapter 11 in Studies of IMF Governance: A Compendium (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Torchia, Mariateresa, and others, 2010, “Critical Mass Theory and Women Directors’ Contribution to Board Strategic Tasks,” Corporate Board: Role, Duties & Composition, Vol. 6, No. 3, pp. 4251.

    • Search Google Scholar
    • Export Citation
  • Torchia, Mariateresa, and others, 2011, “Women Directors on Corporate Boards: From Tokenism to Critical Mass,” Journal of Business Ethics, Vol. 102, No. 2 (August), pp. 299317.

    • Search Google Scholar
    • Export Citation
1

The evaluation also proposed a series of detailed measures for enhancing IMF governance specific to each of the main governance bodies. See Appendix 1 for a complete list of recommendations and implementation status.

2

On the heels of the first G20 Leaders’ Summit in November 2008, the G20 announced the formation of Working Group 3: Reforming the IMF, which was tasked with advancing the actions covered in the November 2008 Leaders’ Declaration on the reform of the IMF. The agenda included numerous issues beyond supporting quota and voice reform. See the G20 Working Group 3: Reforming the IMF, Final Report, March 4, 2009.

3

Member country voting power at IMF is calculated by aggregating quota-based votes and basic votes. The total number of basic votes are divided equally among all members. Thus, the allocation of basic votes ensures a minimum voting power for all members.

4

During their 2009–10 discussions on quota and governance reforms, EDs believed that consolidating the Board to 20 chairs was unlikely to lead to efficiency gains and that any larger reductions could compromise representation. A majority also believed that there should be an amendment to the Articles of Agreement to enshrine the size of the Board at 24. In their view, this number struck the right balance between efficiency and representation while the need to vote every two years to dispense with the default size of 20 chairs as laid out in the Articles of Agreement was unhealthy for the institution. Ultimately, EDs did not recommend amending the Articles; however, Resolution 66–2 included a commitment by the membership to maintain the size of the Board at 24.

5

ED positions have been calculated taking into account rotation agreements for the position of ED within multi-country constituencies. For instance, if a member country which previously had held an ED position permanently now shares the ED position equally with another member country on a rotating basis, it is counted as having given up 0.5 ED positions.

6

The WEO currently classifies the Czech Republic, Estonia, Latvia, and Lithuania as advanced economies (in 2010, the Czech Republic was also classified as advanced, while the Baltic countries were classified as emerging market economies). Using this classification would yield a transfer of 1.33 ED positions. However, the country groupings used in quota reform discussions since the 1999 11th Review still classify the Czech Republic and the Baltic countries as EMDCs, which would yield a transfer of 1.64 ED positions.

7

The Board approves an OED budget envelope each year and allocates resources within this envelope to individual offices.

8

At a maximum, the adjustment could support the equivalent of one additional Senior Advisor and one Advisor.

9

Recommendations relative to EDs and Alternate EDs received little to no support from the Board. As for recommendations relative to Senior Advisors and Advisors, the adoption of uniform standards was viewed as difficult to implement, and there was little support for introducing a simple evaluation system that would focus on development and broad assessment. While voluntary guidelines listing the duties and responsibilities of Senior Advisors and Advisors existed at the time, the Working Group report noted that they were not well known and were rarely used.

10

The Work Program is published twice a year and sets out the Fund’s policy and administrative work to be delivered in the next 6–12 months.

11

According to the Rule of Silence, silence of an ED on an issue at a Board meeting (in a Gray or oral intervention) is normally interpreted as agreement with the thrust of the staff report appraisal or staff recommendations.

12

The 2008 evaluation noted the need to better reflect minority views in SUs. An EDs’ Working Group on SUs was established in March 2012 as part of the MIP in response to the 2011 IEO evaluation report on the IMF’s Performance in the Run-Up to the Financial and Economic Crisis (IEO, 2011), which reiterated that the issue still warranted attention.

13

Decision No. 14498-(09/126), adopted December 17, 2009; effective March 17, 2010.

14

The policy related to Fund documents classified as “Secret” or “Strictly Confidential” as of the date of the Decision was not changed. In publishing the Decision, the Fund noted that this consent would be granted in all instances except where it was determined that the material remained highly confidential or sensitive (IMF, 2009), although the classification criteria have not been made public as called for by the 2008 evaluation.

15

As noted in IEO (2015), EDs expressed skepticism at the time about formal Board self-assessment. Many EDs believed that any such assessment should be narrowly constructed and carried out by the Agenda and Procedures Committee. Some questioned the need for self-evaluation by the Board—and whether it is appropriate—given that Directors are accountable to country authorities. Nonetheless, they expressed interest in practices at other IFIs (IEO, 2015). Following discussion of the IEO Self-Evaluation report, in 2015, a Working Group for the Performance Feedback Exercise between the Executive Board and the Managing Director recommended that the Board carry out a self-evaluation on a pilot basis starting in 2016.

16

Since 2016, the performance feedback exercise between the Board and the MD has included four elements: an assessment of the MD by the Board, the MD’s views regarding the performance of the Board, a self-assessment by the MD of her performance as chief of the operating staff, and a self-evaluation by the Board.

17

Since the founding of the Bretton Woods institutions in 1944, the MD of the IMF has always been from an advanced European country, while the President of the World Bank has always been a U.S. national.

18

In September 2009, Directors reaffirmed their view that the selection should be open, transparent, and without regard to nationality. They also recognized that changing the prevailing arrangement at the IMF might necessarily involve reform of the selection of the heads of all international financial institutions (IFIs). At a September 2009 summit, the G20 Leaders also called for an open, transparent, and merit-based process for selecting heads and senior leadership of all IFIs. In October 2009, the IMFC announced its intention to adopt such a process at its next meeting.

19

The selection of the MD is overseen by the Board. The process and terms of selection followed since 2011 have been incorporated in the Compendium of Executive Board Work Procedures.

20

For comparison, Mr. Strauss-Kahn was selected in 2007 from a list of two nominees, one from an EMDC; Mr. de Rato in 2004 from five nominees, including three non-Europeans; and Mr. Kohler in 2000 from three nominees, including two non-Europeans (see Peretz, 2009, for more detail).

21

The First DMD (the sole DMD position before 1994) has always come from the United States; there have been four successive DMDs from Japan since 1994 and two successive DMDs from China since 2011. Other DMDs have come from a broader range of EMDCs (including Brazil, Chile, Côte d’Ivoire, India, and Mexico).

22

The Dean of the Board, in consultation with EDs, has established a small Working Group to conduct the performance feedback exercise. As discussed above, in keeping with the changes made in 2015, the accountability framework for the MD was modified in 2016 to include the Board self-evaluation component.

23

The first two IMFC Chairs were advanced economy finance ministers whose terms could continue to the end of their national term of office.

24

Response rates were: 29 percent (59 responses) for OEDs (henceforth “Board survey respondents,” that is, EDs, Alternate EDs, Senior Advisors, and Advisors); 39 percent (137 responses) for senior staff (B1–B5 levels); and 17 percent (77 responses) for country authorities. The complete set of survey results can be found at IEO-IMF.org.

25

Currently, the two African chairs at the IMF Board represent 46 countries.

26

The spectrum of authorities’ views about representation seems to be broad. Some authorities believed the legitimacy of the Fund would be strengthened if a representation system closer to that of the United Nations (i.e., based on the principle of one country, one vote) were to replace the current quota-based system, while others believed that it is appropriate for creditor countries, who provide most of the financing for the IMF, to have a greater say.

27

Some EDs pointed to the European Central Bank representative’s observer status in Board meetings as an example of preferential treatment.

28

Specific examples cited by many EDs where EMDC chairs had played a significant role included Board discussions on the governance and anti-corruption framework and IMF debt limits policy.

29

In the words of a former ED, the Board’s approval or endorsement transforms staff’s analytical work on policy, surveillance, and lending operations into an official position taken by the international community.

30

Since the 2008 evaluation, the reductions in time devoted to formal discussions on policy (from 23 percent to 12 percent) and bilateral surveillance (from 23 percent to 17 percent) was also marked, again reflecting the shift to informal sessions and, in the case of country items, the increase in the use of Lapse of Time (LOT) procedures.

31

As a result of complaints that arose in the context of the approval of the IMF-supported program for Greece, the Board approved the proposal in the MIP in response to Board-endorsed recommendations for the IEO’s 2016 evaluation The IMF and the Crises in Greece, Ireland, and Portugal that transcripts of informal meetings would be made available to EDs and retained indefinitely. This change has recently been incorporated in the Compendium of Executive Board Work Procedures, which also notes that pursuant to the Fund’s Archives Policy, unless classified as Strictly Confidential, transcripts are permitted to be disclosed after 20 years.

32

In its evaluation update on structural conditionality, IEO also found that strict limits on the length of reports have at times led to EDs not being provided with essential information that they need to make decisions (see IEO, 2018).

33

A desk review of internal documents shows that most OEDs have consistently underspent their allocated budget over the past years. However, this does not necessarily mean all OEDs have sufficient capacity and resources to deliver on the work program needs of their office.

34

There was a great disparity in the distribution of programs across constituencies between 2008 and 2017. Nine out of 24 constituencies did not include any member country with an IMF-supported program. Among the remaining 15, the intensity of their engagement varied between 2 programs (or a total of 22 program months) to 53 programs (or 1,309 program months). See Appendix 3 for further details.

35

The length of EDs’ tenure is decided by the authorities of each constituency. This decision (particularly in the case of multi-country constituencies) may present a trade-of between the benefit for the membership and the Board as a whole of having experienced EDs who are well versed in the ways of the IMF and countries’ interest in having their own nationals (or specific individuals) representing them at the Board.

36

Just over half of Board survey respondents reported having attended SEC induction, while nearly one-third only received information in writing. One-third reported using the online training resources provided by SEC, while 17 percent reported that online training resources had been their primary source of training.

37

According to the Fund’s Rules and Regulations, the Board’s agenda shall include any item requested by an ED. While the Chair is required to schedule a meeting at the request of any ED, the MD, as Chair of the Board, determines when to schedule such meetings.

38

In this respect, some EDs reiterated the findings of the 2008 evaluation that the Board should play a more active role in the selection of the Secretary and the Legal Counsel, given their role in serving the Board.

39

According to the Compendium of Executive Board Work Procedures, comments and requests for changing a draft SU must be grounded in the record of the Board meeting (i.e., Grays or a meeting transcript available soon after the meeting). Requests for changes can be accommodated only to the extent that they are consistent with that record and regardless of the number of Directors supporting them. It also bears noting that the SU is the Chair’s Summing Up and is prepared under the MD’s authority.

40

Instances of these problems have previously been analyzed by the IEO, for example, in the context of decisions made during the 2010 IMF-supported program for Greece (see De Las Casas, 2016).

41

Four-fifths of Board survey respondents believed the process is not open or transparent or both, and only about one-third of authority survey respondents believed it to be open and transparent.

42

In the corporate world, the roles of Board chair and CEO have increasingly been separated. While the governance needs of corporates and public institutions are somewhat different, it is worth noting that several central banks also now prevent their governors from playing this dual role. For example, the Governor and Deputy Governors of the Bank of England have been prohibited since 2012 from chairing the Court of Directors. Similarly, the Governor of the Reserve Bank of New Zealand no longer serves as the chair of the oversight board.

43

Survey results also indicated concerns regarding the effectiveness of the accountability framework for Management. Only 17 percent of Board respondents believed that adequate mechanisms are in place and used to evaluate the performance of Management. Despite this low level, the Board’s positive perception has improved since 2008, when only 2 percent of respondents thought adequate mechanisms were in place and used.

44

Note, however, that this is not always the case, even on highly controversial issues like exchange rate policies and trade policies where subtle but significant differences in wording have emerged from two distinct drafting processes although many individuals in the room may be the same.

1

The Committee on IMF Governance Reform was chaired by Trevor Manuel and included Michel Camdessus, Kenneth Dam, Mohamed El-Erian, Sri Mulyani Indrawati, Guillermo Ortiz, Robert Rubin, Amartya Sen, and Zhou Xiaochuan.

2

One item that did not gain the support of the MD and which the Chairman of the EDs’ Working Group agreed to defer at the time was the Working Group recommendation to create a new EDs’ working group on the selection, performance assessment and dismissal of the General Counsel and proposing that as an intermediate step the MD follow the World Bank procedure to invite the Board to participate in the search and selection for the General Counsel.

1

The analysis of Board activity indicators is comprised of estimates, using SEC data. As a result of the Board efficiency reforms instituted in response to the 2008 evaluation, there were changes to the Board workload indicator data methodology. Therefore, the analysis covers 2010–17 to accurately reflect changes since the 2008 evaluation. Although the data for 2009 was compiled after the 2008 evaluation, it is based on the same methodology used for the period covered by the 2008 evaluation.

2

Broadly defined to encompass meetings not on country items or administrative issues.

Statement by the Managing Director

On The Independent Evaluation Office Report on Governance of the IMF: Evaluation Update

I would like to thank the Independent Evaluation Office (IEO) for preparing this informative update on the 2008 report on governance of the IMF. It is reassuring that the Update recognizes the significant progress made in improving efficiency, accountability, and voice of the Fund’s main governance bodies, and I concur that the remaining challenges need our continued attention and collective commitment.

Over the last decade—the period covered by the Update—the governance of the IMF has undergone major changes while supporting the institution to rise to the unprecedented challenge of responding to the global financial crisis and subsequent shocks. We have witnessed major quota and voice reforms. These reforms represented a major step forward in modernizing the Fund by better aligning quota shares with members’ relative weights in the world economy, making quotas and voting shares more responsive to future changes in economic realities, and increasing voting shares of most emerging market and low-income countries. Other governance reforms that have enhanced efficiency and accountability of Fund’s governance bodies included modifications to the practices and procedures of the Executive Board, the move to an all-elected Board, the introduction of Board self-evaluations, the creation of the Office of Risk Management, the adoption of more transparent policies for accessing Fund documents, and revisions to the Managing Director’s accountability framework, among others.

I welcome the report’s finding that the Fund remains effective in fulfilling its mandate, and the recognition of improvements in voice, efficiency, and accountability of the Fund’s main governance bodies. At the same time, the report sees a need for further accountability and voice reforms and highlights the challenges of finding an appropriate balance between achieving a strong and more representative Board and preserving Management’s operational latitude and addressing concerns related to the selection of IMF Management. The 15th General Review of Quotas provides an opportunity to make further progress on voice and representation. I look forward to further dialogue on this and other issues with the membership toward an even stronger, more representative, more accountable, effective and efficient Fund.

I would like to conclude by thanking the IEO for this informative report as a good basis to advance our dialogue.

Evaluation Update
  • De Las Casas, Miguel, 2016, “The IMF Executive Board and the Euro Area Crisis— Accountability, Legitimacy, and Governance,” Independent Evaluation Office (IEO) Background Paper, No. BP/16–02/2 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Group of Twenty (G20), 2009, “G20 Working Group: Reforming the IMF—Final Report, 4 March 2009.”

  • Independent Evaluation Office of the IMF (IEO), 2008, Governance of the IMF: An Evaluation (Washington: International Monetary Fund).

  • Independent Evaluation Office of the IMF (IEO), 2011, IMF Performance in the Run-Up to the Financial and Economic Crisis: IMF Surveillance in 2004–07 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Independent Evaluation Office of the IMF (IEO), 2015, Self-Evaluation at the IMF: An IEO Assessment (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Independent Evaluation Office of the IMF (IEO), 2016, The IMF and the Crises in Greece, Ireland, and Portugal (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Independent Evaluation Office of the IMF (IEO), 2018, Structural Conditionality in IMF-Supported Programs: Evaluation Update (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund (IMF), 2008a, “Communiqué of the International Monetary and Financial Committee of the Board of Governors of the International Monetary Fund,” October (Washington).

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund (IMF), 2008b, “Managing Director Strauss-Kahn Appoints Committee on IMF Governance Reform,” IMF Press Release No. 08/200 (Washington).

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund (IMF), 2009, “Review of the Fund’s Transparency Policy—Archives Policy 14498-(09/126)” (Washington).

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund (IMF), 2010a, “IMF Executive Board Approves Major Overhaul of Quotas and Governance,” IMF Press Release No. 10/418 (Washington).