Front Matter Page
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 Decision—Overview, July 2, 2004
Biennial Review of the Implementation of the Fund's Surveillance and of the 1977 Surveillance Decision—Modalities of Surveillance, July 2, 2004
Biennial Review of the Implementation of the Fund's Surveillance and of the 1977 Surveillance Decision—Content 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.
Front Matter Page
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.
Front Matter Page
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
Front Matter Page
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
Front Matter Page
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
