Watchdog Releases Report on IMF Corporate governance

• Author: Gita Bhatt
• Position: IMF External Relations Department
• Pages: 98-99

Page 98

The IMF's Independent Evaluation Office (IEO) released on May 28 a report assessing the governance of the institution.

The report calls for changes in the IMF's governance, including clarifying the respective roles of various bodies within the institution and reorienting the job of the Executive Board. In the following interview, IEO Director Tom Bernes elaborates on the report's findings.

IMF Survey: This IEO report was an unusual topic for an evaluation. Most IEO assessments have been on Fund policies and their implementation. This is the first time that the IEO has assessed the Executive Board. What challenges did this bring out?

Bernes: As you suggest, this evaluation differs from our earlier ones, which often start with a Board policy decision and go on to evaluate how it has been implemented and whether it's been effective or not.

In this case, we looked at the entire governance structure of the Fund, focusing on the three most important elements-the IMFC [the International Monetary and Financial Committee], the Executive Board, and Management. We started with the formal structure of the IMF, which is set out in the Articles of Agreement, but then we also had to understand how that operated in real life because in any organization you have both the formal set of rules and the informal ways of working. To provide benchmarks and comparisons, we looked at other multilateral institutions, as well as relevant best practice in the public and private sectors.

IMF Survey: What were the main findings?

Bernes: The study found that some of the structures and practices that had served the Fund well had become obsolete in our view, both because the Fund had changed and because of changes in the environment in which it operates.

Over 60 years, a lot has changed. Still, the Fund remains relatively effective, especially compared with other international organizations with almost universal membership. However, we did find a lack of clarity on the respective roles of the IMFC, the Board, and Management.

The IMFC often operates as the main channel for ministers to provide guidance, even though formally it is only an advisory group. We believe that a more active and transparent role for ministers is needed to strengthen both accountability and legitimacy.

Executive Board practices have evolved over time gradually, particularly from the time when it started, when there were 12 directors representing 44 countries. We now...