Third Periodic Monitoring Report on the Status of Implementation Plans in Response to Board-Endorsed IEO Recommendations

Periodic Monitoring Reports (PMRs) were established by the Executive Board in January 2007 to ensure the systematic monitoring of those IEO recommendations that the Board has endorsed. The first PMR was discussed by the Executive Board in January 20081 and the second PMR was discussed by the Evaluation Committee (EVC) in November 2008.2 This third report updates the status of the performance benchmarks related to IEO evaluations covered in the first and second PMRs and listed in Periodic Monitoring Report on the Status of Implementation Plans in Response to Board-Endorsed IEO Recommendations, Table 5. It also updates the implementation status of the management implementation plan (MIP) for Board-endorsed recommendations stemming from the IEO evaluation of "Structural Conditionality in IMF-Supported Programs."

Abstract

Periodic Monitoring Reports (PMRs) were established by the Executive Board in January 2007 to ensure the systematic monitoring of those IEO recommendations that the Board has endorsed. The first PMR was discussed by the Executive Board in January 20081 and the second PMR was discussed by the Evaluation Committee (EVC) in November 2008.2 This third report updates the status of the performance benchmarks related to IEO evaluations covered in the first and second PMRs and listed in Periodic Monitoring Report on the Status of Implementation Plans in Response to Board-Endorsed IEO Recommendations, Table 5. It also updates the implementation status of the management implementation plan (MIP) for Board-endorsed recommendations stemming from the IEO evaluation of "Structural Conditionality in IMF-Supported Programs."

I. Overview

1. Periodic Monitoring Reports (PMRs) were established by the Executive Board in January 2007 to ensure the systematic monitoring of those IEO recommendations that the Board has endorsed. The first PMR was discussed by the Executive Board in January 20081 and the second PMR was discussed by the Evaluation Committee (EVC) in November 2008.2 This third report updates the status of the performance benchmarks related to IEO evaluations covered in the first and second PMRs and listed in Periodic Monitoring Report on the Status of Implementation Plans in Response to Board-Endorsed IEO Recommendations, Table 5. It also updates the implementation status of the management implementation plan (MIP) for Board-endorsed recommendations stemming from the IEO evaluation of “Structural Conditionality in IMF-Supported Programs.”

2. The Executive Board discussed the IEO Evaluation of “IMF Involvement in International Trade Policy Issues” in June 2009. The management implementation plan related to this evaluation will be discussed by the Executive Board later in 2009 and therefore this PMR does not report on the status of implementation. The status of recommendations related to the IEO’s 2008 evaluation on IMF Corporate Governance is being handled separately.

II. Summary of Implementation Status

3. The main elements of the implementation status of the performance benchmarks are reported below. Section A describes the implementation status of the key benchmarks for the implementation plan regarding structural conditionality, while the outstanding recommendations from the second PMR are covered in Section B.

A. Structural Conditionality in IMF-Supported Programs

4. The implementation of key performance benchmarks related to the IEO Evaluation of Structural Conditionality in IMF-Supported Programs is complete:3

  • The Operational Guidance Note on Conditionality (OGN) was revised in July 2008 to emphasize the need to apply rigorously the principles of parsimony and criticality when designing conditionality in Fund arrangements (Revisions to the Operational Guidance Note on Conditionality). The revised OGN is available on the Fund’s external website. Revisions have also been made to improve program documentation to clearly establish links between program goals, strategies, and conditionality. An inter-departmental contact group established in February 2008 developed these OGN revisions. The OGN is being further revised to reflect the recent move towards a review-based structural conditionality framework.

  • The Monitoring of Fund Arrangements (MONA) database was launched on the Fund’s external web site in January 2009 (Table 1).

  • The first annual report on the application of structural conditionality, issued to the Board for information in July 2008 (Application of Structural Conditionality 2008 Annual Report) and made available on the Fund’s external website, provides new data for the period 2005–07. It found that the overall number of conditions had remained unchanged relative to the findings of the IEO evaluation. However, these conditions had become more concentrated in the IMF’s core areas of expertise (including those shared with the World Bank). The second annual report will soon be issued to the Board for information. Two recent staff papers identify a decline in the frequency of structural conditions in low-income country programs and in recent crisis programs.4

Table 1.

Structural Conditionality—Status of Key Benchmarks

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Temporarily removed from external website between May and October 2009 to allow time for the design of a better economic classification of structural conditions (see Table 2).

5. The IMF has made further important changes to the framework for structural conditionality that are not directly related to the IEO Evaluation of Structural Conditionality. In particular, the IMF no longer establishes structural performance criteria under any of its lending arrangements, nor structural assessment criteria under the Policy Support Instrument.5 The implementation of structural reforms in Fund-supported programs is now monitored through a review-based approach, and the conditionality attached to such reforms takes only the form of benchmarks (whose assessment is embedded in reviews) or prior actions.

B. Outstanding Recommendations from the Second PMR

6. Most of the outstanding recommendations noted in the previous PMR (UPeriodic Monitoring Report on the Status of Implementation Plans in Response to Board-Endorsed IEO RecommendationUs, Table 5) have been fully addressed, although actions remain to be taken on some recommendations (Table 2). Revised guidance on the operational aspects of the 2007 Surveillance Decision was issued in June 2009 and an updated Surveillance Guidance Note is expected to take effect soon and to be circulated to the Executive Board. The stability of the system of exchange rates was reviewed in an informal Board seminar in July 2009 (the underlying staff paper is expected to be published soon) and a revised classification of exchange rate arrangements is being published. As noted above, the MONA database was made available on the IMF’s external web site beginning in January 2009. In light of the wide-ranging modifications to LIC facilities carried out in July 2009, the recommendation to conduct the 2010 review of the PRGF also need not be retained as a performance benchmark. Table 2 also presents the status of those recommendations that are not yet fully implemented.

Table 2.

Outstanding Recommendations From the Second PMR

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III. Conclusions

7. All key performance benchmarks related to the MIPs covered in this report have either been met or are on track for timely completion, and no new remedial actions are proposed. There are no outstanding performance benchmarks to be reviewed in the next PMR.

Proposed Decision

The Executive Board supports the conclusions in Paragraph 7 of the Third Periodic Monitoring Report on the Implementation of Board-Endorsed IEO Recommendations (PMR)

Table A.1.

Status of Implementation Plan in Response to Board-Endorsed Recommendations on Structural Conditionality

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Note: The first three columns of this table reproduce Table 1 of “Implementation Plan in Response to Board-Endorsed Recommendations Arising from the IEO Evaluation of Structural Conditionality in IMF-Supported Programs,” omitting those recommendations that were not supported by the Executive Board.
3

Details are provided in Appendix Table A.1. The second PMR reported on the early progress toward implementation of these benchmarks; however, as it was prepared less than six months following the Board discussion of the implementation plan, this PMR provides a comprehensive report. Some actions reported here were reported in the second PMR.

5

GRA Lending Toolkit and Conditionality—Reform Proposals” March 2009, and “Modifications to the Fund’s Conditionality Framework—Application to the Policy Support Instrument” April 2009.

Third Periodic Monitoring Report on the Status of Implementation Plans in Response to Board-Endorsed IEO Recommendations
Author: International Monetary Fund