IMF is reshaping its framework for economic monitoring

• Author: Lynn Aylward
• Position: IMF Policy Development and Review Department
• Pages: 94-95

Page 94

The IMF is modernizing its framework for monitoring and advising its 185 member countries on their economic and financial policies, a core activity that it calls surveillance. The goal of surveillance is to promote healthy national economies and a stable international financial system.

In his medium-term strategy for reforming the IMF, Managing Director Rodrigo de Rato emphasized the critical role surveillance plays in helping the IMF adapt to the challenges posed by globalization.

To serve this purpose effectively, surveillance must meet several criteria: it should be focused, candid, transparent, evenhanded, and accountable, and it should take into account cross-country spillovers-an area where the IMF is uniquely placed to give advice because of its near-universal membership.

Consistent with this strategy, the IMF has launched a number of initiatives to improve the implementation of surveillance.

Some of these initiatives seek to improve the institution's analytical tools; others relate to procedures (see Box 1). Another set of more abstract-but very important-reforms aims at reviewing and, if necessary, modernizing the framework for surveillance. These reforms are the focus of this article.

Box 1 Improving surveillance implementation: a snapshot

Innovations to improve the implementation of surveillance are under way, complementing the work on updating the legal framework. Some of this work is still at the experimental stage. Multilateral consultations are a new vehicle that allows the IMF to take up issues of shared concern with several member countries at the same time, with a view to promoting collaborative solutions. The first consultation of this type focuses on how to resolve global payments imbalances while maintaining global growth.

Another initiative involves sharpening the focus of the IMF's dialogue with member countries to concentrate on the most important issues, such as through streamlined consultations with selected countries. The IMF is also strengthening the global and regional perspective of surveillance and is enhancing its exchange rate analysis and its financial and capital markets analysis. As part of this process, it recently refined its methodology for medium-term real exchange rate assessments and extended coverage to include additional economies. Finally, new tools are being developed to better integrate financial sector and capital...