Front Matter Page
IMF POLICY PAPER
THE ROLE OF THE FUND IN GOVERNANCE ISSUES – REVIEW OF THE GUIDANCE NOTE – PRELIMINARY CONSIDERATIONS – BACKGROUND NOTES
August 2017
IMF staff regularly produces papers proposing new IMF policies, exploring options for reform, or reviewing existing IMF policies and operations. The following documents have been released and are included in this package:
A Staff Supplement.
The IMF’s transparency policy allows for the deletion of market-sensitive information and premature disclosure of the authorities’ policy intentions in published staff reports and other documents.
Electronic copies of IMF Policy Papers are available to the public from http://www.imf.org/external/pp/ppindex.aspx
International Monetary Fund
Washington, D.C.
© 20[xx] International Monetary Fund
Front Matter Page
THE ROLE OF THE FUND IN GOVERNANCE ISSUES—REVIEW OF THE GUIDANCE NOTE—PRELIMINARY CONSIDERATIONS—BACKGROUND NOTES
June 21, 2017
Executive Summary
The Background Notes in this Supplement provide essential context and analysis needed to understand the problem of governance and corruption, its impact on the economies of Fund members, and the history and nature of Fund engagement on these issues. They also seek to support the assessment of the Fund’s overall approach to promoting good governance and reducing corruption—including through the lenses of key stakeholders— with a view to identifying strength and closing any remaining gaps.
Note I provides a framework for understanding the concepts of governance, good governance and corruption, elaborates on the Fund’s role in addressing these issues where they are relevant to its mandate, and describes the evolution of these concepts in other international organizations. The international community attaches much importance to promoting good governance and tackling corruption and the Fund’s work on governance and corruption has progressed in tandem with initiatives undertaken by other international and regional organizations and international fora. Note II summarizes some of these initiatives and outlines ongoing work.
Note III discusses the use of third-party governance indicators (i.e., comparative indicators developed by external organizations) in Fund surveillance and the use of Fund resources. It covers the characteristics of available indicators, discusses Fund’s practice, and outlines areas for future work. Detailed background on some indicators are also provided.
Note IV discusses the long history at the Fund of groundbreaking analytical work to investigate the problem of governance and corruption. It also discusses outreach activities to disseminate the Fund’s view on the importance of strengthening governance and reducing corruption as a means to improve a country’s prospects for overall economic development.
Inputs from country authorities, Fund mission chiefs, and Civil Society Organizations, which help enrich the Board paper, are summarized in Notes V, VI, and VII, respectively. These notes provide background information and more detailed results from questionnaires, which sought to bring out stakeholders’ views on the various aspects of Fund work. Among the aspects covered are the overall approach and appropriateness of Fund engagement on corruption; candor, evenhandedness and effectiveness of Fund engagement; the usefulness of third-party indicators in Fund surveillance; and collaboration with stakeholders.
Approved By
Sean Hagan and Seán Nolan
Prepared by an inter-departmental team consisting of Julianne Ams, Paul Ashin, Chady El Khoury, Kyung Kwak, Cecilia Marian, Ana Obiang, Jonathan Pampolina, Sebastiaan Pompe, and Concha Verdugo Yepes (all LEG), Ashvin Ahuja, Jung Yeon Kim, Murna Morgan, Zsuzsa Munkacsi, and Haimanot Teferra (all SPR) under the supervision of Ceda Ogada (LEG) and Peter Allum (SPR). Technical and administrative support was provided by Suryanarayana Gopavajhala (LEG), Chengyu Huang, Joy Kazadi, Seetha Milton, and Joanna Zaffaroni (all SPR).
Contents
NOTE I. DISTINGUISHING GOVERNANCE, GOOD GOVERNANCE, AND CORRUPTION
A. Overview of Terms
B. Governance
C. Good Governance
D. Corruption
E. The Fund’s Focus
ANNEX
I. Evolution of the Concept of Good Governance
Bibliography
NOTE II. GOVERNANCE AND ANTI-CORRUPTION INITIATIVES IN INTERNATIONAL, REGIONAL, AND OTHER FORA
A. Overview
B. Key Initiatives
C. Role of Multilateral and Civil Society Organizations
D. Parallel and Complementary Work of Sectoral Networks
E. Broad Conclusions
ANNEX
I. Compendium of Key Initiatives
NOTE III. FUND USE OF THIRD-PARTY CORRUPTION INDICATORS
A. Introduction
B. Characteristics of Third-Party Indicators
C. Use of Governance Indicators by Fund Staff
D. Correlation Between Fund Engagement and Third-Party Indicator Rankings
E. Parallel Fund Work on the Use of Third-Party Indicators
BOX
1. Methodology for Measuring the Degree of Fund Attention to Corruption Issues
FIGURE
1. WGI – Control of Corruption Index by Region, 1998 vs. 2015
TABLES
1. Description of Selected Third-Party Indicators
2. Correlation Matrix for Third-Party Corruption Indicators (2012–15)
3. Third-Party Indicators of Corruption Used in Fund Documents (2005–2016)
4. Correlation Matrix of Country Ranking Based on References in Fund Documents
5. Correlation of Country Ranking Based on References in Fund Documents with Third-Party Indicators
6. Correlation Matrix: Third Party Indicators of Corruption and Word Count in Fund Documents (2012–2015)
ANNEXES
I. External Sources of Measurements on Corruption
II. Methodology: External Governance/Corruption Measures
III. Average Historical Global Percentile Rankings of Countries by Indicator
NOTE IV. ANALYTICAL WORK OF THE FUND ON GOVERNANCE AND CORRUPTION
A. Analysis and Research
B. The Fund’s Flagship Publications
C. Outreach
D. Conclusion
BIBLIOGRAPHY
NOTE V. THE ROLE OF THE FUND IN GOVERNANCE AND CORRUPTION: VIEWS OF COUNTRY AUTHORITIES
NOTE VI. SURVEY OF MISSION CHIEFS ON THE ROLE OF THE FUND IN GOVERNANCE ISSUES—A SUMMARY OF RESULTS
A. Background
FIGURES
1. Responses by Mission Chiefs (MC): Basic Information
2. Areas/Sectors Characterized by Widespread Corruption
3. Country-Specific Factors Rendering the Country More Prone to Corruption
4. Direct Discussions with the Authorities on Corruption Issues
5. Indirect Discussions with the Authorities on Corruption Issues
6. Reasons for not Discussing Corruption Issues with the Authorities
7. Ease of Discussing Corruption Issues with the Authorities
8. What Helps You Decide Whether to Engage with the Authorities on Corruption?
9. Governance/Corruption Indicators
10. The Biggest Challenges to the Use of External Indicators of Corruption
11. Frequency of Consultation with the World Bank
12. Frequency of Consultation with Other Organizations
13. Most Effective Approach to Tackling Corruption in Art. IV Advice or Program Conditionality
14. Evenhandedness on Corruption Issues
15. Group of Countries Treated not Evenhandedly
16. Do You Think that the Fund’s Involvement in Governance and Corruption Issues has a Positive Impact on Your Country?
17. Need for an Updated Guidance Note
18. Top Priorities in an Updated Guidance Note
NOTE VII. THE FUND’S ENGAGEMENT ON GOVERNANCE—CSO PERSPECTIVES