Blunt Approach Does the Trick

• Author: Karin Lissakers
• Position: Advisor to George Soros on globalization issues
• Pages: 46-47

Page 46

I Was an early supporter of independent evaluation of the IMF's programs and performance. It seemed important, not just to answer outside critics who grew more vociferous during the 1990s, but also to help the institution respond to new and growing challenges posed by global financial markets.

Some Executive Directors, including me, thought at first that the ad hoc Board-guided approach we experimented with would do the job. The evaluation of the Enhanced Structural Adjustment Facility, for example, provided valuable insight. However, the superior performance of the IEO points to the wisdom of those like former Canadian Executive Director Tom Bernes, who advocated a professional standing operation. It also points to the wisdom of the choice of Montek Singh Ahluwalia to head the IEO.

The IEO's performance to date is impressive. Its reports have been thorough and blunt. The high quality of the IEO reports indicates that the IMF and its individual member governments are cooperating and giving the evaluation teams good access to information. Evaluations would not be meaningful without such cooperation. Both the Executive Board and management appear to be taking the evaluation process and recommendations to heart.

The topics chosen for evaluation in 2002-03 deserved priority attention. Fiscal adjustment under IMF programs has been more roundly criticized by outsiders than any other aspect of IMF conditionality. The 1990s capital account crises put the IMF to its biggest test, placing unprecedented demand on IMF financing and confronting staff with probably the most complex set of policy challenges it had ever faced. Perhaps the most important of the three is the study of (very) prolonged use of IMF resources by a handful of countries. Prolonged use is a mark of institutional failure. It suggests IMF resources are being used for purposes not indicated by its Articles of Agreement. Worse, prolonged use suggests either that the IMF has been giving bad advice or that countries are ignoring the advice and continuing to receive financing anyway.

Prolonged users

The individual case studies of countries that are prolonged users of IMF resources are particularly illuminating. They trace the often complex and sometimes surprising interplay of program design, country implementation, and board decisions. In Pakistan, for example, political...