1. As I have emphasized in my report on Implementing the Fund’s Medium-Term Strategy, we are committed to improving and strengthening the Fund. The IEO has a valuable role to play in this regard, together with all the Fund’s other checks and balances, including by strengthening the learning culture and improving the governance of the Fund. The external evaluators report contains a number of useful suggestions on improving the IEO’s contributions. However, I would like to respond to a few issues regarding coordination of work programs, evaluation of individual countries, follow-up on the IEO’s recommendations, and the IEO’s Terms of Reference.

2. The Panel’s report raises concerns about the duplication of work programs and the follow-up to IEO recommendations. The Fund work program is determined largely by the IMFC, Board requests, and Fund policy, not simply by management. The IEO may still choose to review topics that either have or are being reviewed by the staff; that is its prerogative. But, there may be some benefit to the IEO better dove-tailing its work program with that of the Fund, and the IEO can also get into issues that are not easily addressed by the staff, including those related to governance.

3. The Panel recommends that the IEO should undertake evaluations of the Fund’s performance in individual countries, whether a Fund-supported program is underway or not. This is supported by neither the current nor the proposed Terms of Reference of the IEO. Moreover, based on past experiences, any change to the TOR along these lines is likely to be costly in terms of the effectiveness of Fund assistance to a member country with an ongoing Fund-supported program. Indeed, I believe the IEO would need to have sufficient distance from current operations to be able to make a useful assessment and contribute to enhancing the quality of the Fund surveillance that the IMFC is calling for.

4. On the follow-up to the IEO’s recommendations, we note that the Board decides whether to adopt IEO recommendations based on their merit and in the context of the overall direction of the Fund’s work. If the Board endorses the IEO’s recommendations, they become Fund policy (no different from any other), and management has the responsibility to implement these recommendations. Follow-up and assessment of these policies is undertaken through periodic reviews, as with any other Fund policy.

5. Lastly, in light of the controversies generated by the publication of the Argentine and Indonesian reports, the publication policy for IEO reports needs to be revisited. Accordingly, the IEO’s Terms of Reference needs to be modified to allow the Executive Board to correct factual inaccuracies. In addition, provision needs to be made for a deletions policy (e.g., for market-sensitive information), similar to that for staff reports.