Good governance now widely seen as essential; IMF places emphasis on prevention of corruption

• Pages: 205-207

Page 205

On February 14, the IMF's Executive Board reviewed the experience the organization had had with governance since it issued a Guidance Note on the topic in 1997. The Board discussion was based on a background paper prepared by a team of Development Issues Division staff in the IMF's Policy Development and Review Department. Louis Dicks-Mireaux, Deputy Chief of the Development Issues Division, coordinated the study and speaks here about the growing awareness of the importance of good governance for macroeconomic stability and growth and the IMF's experience with governance in the context of its work with member countries.

IMF SURVEY:What prompted the IMF to issue the Guidance Note on governance in 1997, and what did the recent review of IMF experience with governance hope to achieve?

DICKS-MIREAUX: The 1997 Guidance Note, which was preceded by a series of Executive Board discussions during 1996, stemmed from a growing recognition-both in our dialogue with countries and in empirical research-that good governance is important for macroeconomic stability and growth.We were bumping up against governance issues increasingly in our work and felt we needed a framework in which to operate.

In the early stages, we-and the rest of the international community-were feeling our way. Reflecting this, the 1997 Guidance Note was cast in fairly general terms. It called for a more comprehensive and more proactive approach to governance, but it also called for periodic reviews to evaluate our experience. The review that was completed earlier this year and discussed by the IMF's Executive Board in February was the first such review. The Executive Board endorsed what we had been doing and indicated how we should move forward.

The Board also supported the IMF's approach through initiatives that promote good governance across the membership and specific measures to address particular instances of poor governance and corruption.

In moving ahead, prevention should be at the center of the IMF's governance strategy.

In preparing the background paper for the review, staff in the IMF's Policy Development and Review Department examined governance in the context of the IMF's surveillance and program activities. In surveillance cases, we looked at the extent to which governance issues were reflected in the Board's summing-up of country economic discussions. On the program side, we looked more specifically at the use of conditionality.Overall, we found a widespread emphasis on governance issues. It had increased somewhat in the IMF's surveillance-particularly in...