Strengthened assessments framework helps safeguard use of IMF resources

• Author: Chris Hemus
• Position: Safeguards Assessment Unit, IMF Treasurer's department
• Pages: 126-128

Page 126

In March 2000, the Executive Board of the IMF adopted a strengthened framework of measures to safeguard the use of financial resources made available to IMF member countries. These measures include safeguards assessments of member country central banks. The International Monetary and Financial Committee (IMFC), at the 2000 IMF-World Bank Annual Meetings, endorsed the new policy of safeguards assessments and stressed the "forceful application of the strengthened framework" (see IMF Survey, October 9, 2000, page 314).

The strengthened framework aims at supplementing conditionality, technical assistance, and other means that have traditionally ensured the proper use of IMF financial resources. Safeguards assessments, which became operational in July 2000, aim to provide a reasonable assurance to the IMF that a central bank's framework of reporting and controls is adequate to manage resources, including IMF disbursements. The assessments are conducted for central banks because they are typically the recipients of IMF disbursements.

Background

Several instances of misreporting and allegations of misuse of IMF resources led to a call in 1999 by the Interim Committee (now the IMFC) for the IMF to review its procedures and controls, so as to strengthen safeguards on the use of its resources. The review of the new proposals was aided by a panel of eminent outside experts, who provided the Executive Board with an independent evaluation of IMF staff proposals for the conduct of safeguards assessments. The external panel comprised six experts drawn from different geographic regions and with diverse backgrounds:

Michèle Caparello, Director of Internal Audit at the European Central Bank, who chaired the panel; Jeremy Foster,Head of Central Bank Services at PricewaterhouseCoopers; Eduardo Grinberg, President of the Court of Accounts, Province of Buenos Aires, Argentina; Suparut Kawatkul, Director General, Thailand's Ministry of Finance; M.R. Rasheed, Deputy Governor of the Central Bank of Nigeria; and Lynn Turner, Chief Accountant, U.S. Securities and Exchange Commission. The panel made a number of recommendations and unanimously concluded that the staff proposals were "an appropriate and useful framework for the strengthening of the safeguards in the use of IMF resources." Of course, safeguards assessments would not prevent misuse of resources by a willful override of controls or...