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International Monetary Fund

August 24, 2004

Biennial Review of the Fund's Surveillance—Overview; Modalities of Surveillance; Content of Surveillance; and Public Information Notice on the Executive Board Discussion

In the context of the biennial review of the Fund's Surveillance, the following documents have been published and are included in this package:

  • Biennial Review of the Implementation of the Fund's Surveillance and of the 1977 Surveillance DecisionOverview, July 2, 2004

  • Biennial Review of the Implementation of the Fund's Surveillance and of the 1977 Surveillance DecisionModalities of Surveillance, July 2, 2004

  • Biennial Review of the Implementation of the Fund's Surveillance and of the 1977 Surveillance DecisionContent of Surveillance, July 2, 2004

  • Public Information Notice summarizing the views of the Executive Board as expressed during its July 23, 2004 discussion.

The views expressed in these papers are those of the staff and do not necessarily reflect the views of the Executive Board of the IMF. The Executive Board's assessment is summarized in the Public Information Notice. Some country-specific or market-sensitive information may have been deleted, as allowed by the the IMF's publication policy.

International Monetary Fund

Washington, D.C.

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INTERNATIONAL MONETARY FUND

Biennial Review of the Implementation of the Fund’s Surveillance and of the 1977 Surveillance Decision—Overview

Prepared by the Policy Development and Review, Research, and International Capital Markets Departments

In consultation with Other Departments

Approved by Mark Allen, Gerd Häusler, and Raghuram Rajan

July 2, 2004

Contents

  • I. Introduction

  • II. Purposes and Organization of Surveillance

  • III. Objectives and Methodology of the Review

  • IV. Focus and Quality of Analysis

    • A. Focus

    • B. Quality

      • Depth of coverage

      • Freshness of perspective

  • V. Policy Dialogue

    • A. Dialogue in Bilateral Surveillance

    • B. Modalities of Surveillance in Currency Unions

  • VI. Communication and Signaling

    • A. Communication

    • B. Monitoring and Signaling

  • VII. Assessing Effectiveness

  • VIII. Use of Staff Resources

    • A. Recent Trends

    • B. Resource Implications of the Review’s Proposals

  • IX. Issues for Discussion

  • Appendix

  • 1977 Surveillance Decision

This review was coordinated in the Policy Development and Review Department. The staff team was led by Dominique Desruelle and Martine Guerguil under the guidance of John Hicklin. Primary contributors (all PDR, except as noted) to this paper and companion papers are Lynn Aylward, Nicolas Blancher, Nur Calika, Serguei Dodzin, Ioannis Halikias, Piyabha Kongsamut, Hans Peter Lankes, Ashoka Mody (RES), Christian Mumssen, Anton Op de Beke, Robert Price, Jesmin Rahman, Tania Reif, Todd Schneider, and Natalia Tamirisa. Additional contributions were received from Ales Bulir, David Hawley (EXR), Ketil Hviding, Kalpana Kochhar (RES), Ross Leckow (LEG), James Morsink (RES), David Ordoobadi (ICM), Yuri Sobolev, Nita Thacker, and Johannes Wiegand. Research and editorial assistance was provided by Evelyn Almacen, Winston Chi, Can Demir, Rosemary Gallen, and Agnes Isnawangsih. Mr. Pisit Leeatham, an external consultant and former Deputy Finance Minister of Thailand, conducted a survey of country authorities and Executive Directors. Support from OAP, EUO, ICM, EXR, and resident representatives in the organization of outreach activities or participation in these activities, as well as support from OBP in the provision of budget data and TGS in the preparation of tables, are gratefully acknowledged.

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Biennial Review of the Implementation of the Fund’s Surveillance and of the 1977 Surveillance Decision—Modalities of Surveillance

Prepared by the Policy Development and Review Department

In consultation with International Capital Markets, Research and other Departments

Approved by Mark Allen

July 2, 2004

Contents

  • I. Introduction

  • II. Modalities to Enhance the Effectiveness of Surveillance

    • A. Introduction

    • B. Background: Purposes and Organization of Surveillance

    • C. Assessing Effectiveness in Surveillance: Methodological Issues

    • D. Analytical Quality and Focus of the Fund’s Policy Advice

      • Views of outreach participants

      • Sharpening the focus of consultations

      • Streamlining formal requirements

    • E. Quality of the Policy Dialogue with National Authorities

      • Views of outreach participants

      • Enhancing the quality of the policy dialogue

      • Managing staff turnover

    • F. Effectiveness in Communication

      • Views of outreach participants

      • Better dissemination of the findings of Article IV consultations

      • Candor and transparency

    • G. Overall Impact of Surveillance

      • Views of outreach participants

      • Assessing effectiveness of the context of individual consultations

      • The way forward

    • H. Conclusions

  • III. Modalities for More Intensive Surveillance

    • A. Experience with More Intensive Surveillance

    • B. Issues in the Design of Structured Modalities for Intensive Surveillance

  • IV. Modalities of Regional Surveillance

    • A. Surveillance of Currency Unions

      • Surveillance of the euro area

      • Surveillance of other currency unions

    • B. Other Regional Surveillance

  • V. Use of Staff Resources in Surveillance

    • A. Use of Staff Resources in Surveillance: Recent Trends

    • B. Resource Implications of the Present Review

  • Tables

  • 1. Surveillance and Related Involvement

  • 2. Staff Resources Devoted to Surveillance and Related Activities

  • 3. Estimated Staff Resource Requirements of the Proposals Included in this Review

  • 4. Total Estimated Resource Requirements

  • 5. Estimated Additional Travel Expenses

  • Boxes

  • 1 Assessment Methodologies

  • 2. Outreach on Modalities and Effectiveness of Surveillance

  • 3. Increased Media Coverage of Surveillance Documents: Recent Examples from Germany and the United States

  • 4. Diversity of Effective Surveillance: Some Country Examples

  • 5. Existing and Proposed Procedures for More Intensive Surveillance

  • FIGURES

  • 1. The Fund’s Bilateral Surveillance Process

  • 2. Average Turnover and Mission Size in Non Program Countries

  • 3. Staff Resources Devoted to Surveillance

  • 4. Distribution of Fund Employment

  • 5. Staff Years Used in Surveillance, By Country Group

  • Appendices

  • 1. The Legal Basis for Surveillance Under Article IV

  • 2. Surveys and Interviews of Outside Participants on the Effectiveness of Fund Surveillance

  • 3. Modalities of Surveillance: Results of Staff Survey and Review of Staff Reports

  • 4. Guidance Notes Pertaining to Article IV Consultations and Reports—A Synopsis

  • 5. Tables

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INTERNATIONAL MONETARY FUND

Biennial Review of the Implementation of the Fund’s Surveillance and of the 1977 Surveillance Decision—Content of Surveillance

Prepared by the Policy Development and Review Department

In consultation with the International Capital Markets, Research, and other Departments

Approved by Mark Allen

July 2, 2004

Contents

  • I. Introduction

  • II. Coverage and Content of Fund Surveillance

    • A. Introduction

    • B. Coverage

      • General considerations

      • Coverage of surveillance in program countries

      • Coverage of surveillance in low-income countries

    • C. Content

      • Financial sector issues

      • Trade policy

      • Social sector developments and policies

      • Assessing vulnerabilities

    • D. Conclusions and Recommendations

  • III. Selected Issues in Fund Surveillance

    • A. Global and Regional Spillovers

      • Global spillovers

      • Surveillance of the G-3

      • Regional spillovers

      • Conclusions and recommendations

    • B. Exchange Rate Analysis

      • Research findings

      • Board guidance

      • Review of Article IV consultation reports

      • Conclusions and recommendations

    • C. Balance Sheet Analysis

      • Review of recent Article IV staff reports

      • Conclusions and recommendations

    • D. Institutional Underpinnings of Growth

      • Introduction

      • Institutions

      • Investment climate

      • Governance

      • Conclusions and recommendations

  • References

  • Boxes

  • 1. Focused Reports, Flexible Approach—Positive Examples

  • 2. Taking Stock of Past Policy Developments in Program Countries—Positive Examples

  • 3. Examples of References to PRSPs in Article IV Reports

  • 4. Coverage of Vulnerability Assessments in Article IV Reports—Positive Examples 21

  • 5. WEO Report and GFSR Themes

  • 6. Global Impact of the Trade Policies of the “Quad”

  • 7. Regional Spillovers in the Southern Cone

  • 8. A Case Study of Coverage of Regional Spillovers—China’s Changing Role

  • 9. Coverage of Balance Sheet Issues in Article IV Reports—Positive Examples

  • 10. Selected Definitions of Institutions, Investment Climate, and Governance

  • 11. Governance in Natural Resource Exporting Countries

  • 12. Follow-up of Implementation of the OECD Anti-Foreign Bribery Convention

  • 13. Additional Analysis of the Coverage of Governance Issues in Surveillance

  • Tables

  • 1. Coverage of Specific Topics in Article IV Staff Reports for Program Countries

  • 2. Coverage of Financial Sector Issues

  • 3. Key Determinants of the Investment Climate

  • Appendix

  • Review of Article IV Consultation Documents—Country Coverage and Questionnaire

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Public Information Notice (PIN) No. 04/95

FOR IMMEDIATE RELEASE

August 24, 2004

International Monetary Fund

700 19th Street, NW

Washington, D. C. 20431 USA

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