Public Information Notices
IMF Surveillance -- A Factsheet
[Corrects and revises PIN 00/59 issued on August 7, 2000. Correction is limited to the Executive Board Assessment of the original Public Information Notice.]
IMF Executive Board Reviews Data Provision for Surveillance
Under the application of Article VIII Section 5 of the IMF's Articles of Agreement, the IMF may require members to furnish it with such information as it deems necessary for its activities, including for surveillance over member countries' economic and financial policies. Particularly in the wake of the Mexican financial crisis in 1994-95, and the turmoil in the financial markets of South East Asia in 1997, data issues have received increasing prominence in the IMF's work. In aiming to strengthen IMF surveillance, the Executive Board has emphasized the need for provision of comprehensive, timely, and accurate economic data by members both in the regular Article IV consultation process as well as between Article IV consultations. In addition, the IMF's data standards initiatives — the Special Data Dissemination Standard and the General Data Dissemination System — recognizes the importance attached to the timely provision of reliable, accessible, and comprehensive statistics to the public.
Executive Board Assessment
Executive Directors endorsed the thrust of the staff proposals to strengthen members' data provision to the Fund for surveillance purposes. They recognized that recent financial crises had reinforced the importance of accurate, comprehensive, and timely economic data, especially on international reserves and external debt, for the assessment of countries' external vulnerabilities and as an essential element for Fund surveillance. Directors welcomed the work undertaken by the staff in this area, and considered that the improvements already achieved in the provision of data have laid the groundwork for strengthened Fund surveillance.
Directors considered data issues to be of critical importance in Fund surveillance. They were therefore encouraged that a large majority of members provide data on core statistical indicators on a timely basis. However, Directors also recognized that for some countries progress in this area has been slow, owing to resource constraints and the long gestation period needed for statistical capacity building. Most Directors stressed that it would be useful if, in the future, staff reports would note and draw out the implications of data deficiencies for the macroeconomic analysis included in staff reports; a few Directors added that the Board, for its part, should also be more rigorous in its assessment of data issues. Most Directors supported the inclusion of a paragraph assessing data provision to the Fund in summings up of Executive Board discussions of Article IV consultations.
Directors agreed with the proposal to establish benchmarks for the provision of data to the Fund in the areas of reserves and foreign currency liquidity and external debt, although it was generally accepted that some elements of the benchmarks would not always be relevant for all members given countries' different circumstances and phases of development. Directors noted that the data required for adequate Fund surveillance in some cases may be more detailed and timely than implied by the benchmarks. In this sense, the benchmarks should be viewed as neither a compulsory floor nor a ceiling, but rather as a framework to help assess members' data provision to the Fund. Many Directors emphasized that staff reports should compare countries' practices with these benchmarks, indicating the reason for any differences, their significance, and, if appropriate, the member's plans for strengthening data provision in these areas. Some Directors expressed concern that the benchmarks could gradually become de facto obligatory standards, and that this would inappropriately burden already scarce resources, especially in developing countries. Most Directors agreed that the approach of using benchmarks rather than absolute standards was appropriate in view of the diversity of members' circumstances.
Directors considered that detailed specification of the benchmarks was warranted by the importance of the information in question and the need for comprehensive, timely, and comparable information. Most Directors agreed that the Special Data Dissemination Standard (SDDS) prescription for reserves and foreign currency liquidity should be adopted as the benchmark for provision of these data to the Fund. Most Directors also supported adoption of the prescribed and encouraged elements of the SDDS for external debt as the benchmark for these data. However, in commenting on the inclusion of the encouraged elements of the SDDS for these data in the benchmark, many Directors emphasized the difficulty of providing data on the debt-service schedule for the private nonbank sector for many countries, and they encouraged the staff to bear this difficulty in mind. Some Directors noted that to assess a country's vulnerability accurately, it would also be important for members to provide data on residual maturities of external debt, starting with data for the government and banking sectors.
Directors noted the increased resource costs the benchmark approach would place on the Fund and on member countries. They emphasized the need for the Fund to provide technical assistance to help countries strengthen their data systems in line with the benchmarks, with many Directors stressing that such technical assistance should not come at the expense of cutting technical assistance in other areas.
On other issues, Directors emphasized the critical importance of the Fund being provided with high-quality, accurate, and comparable fiscal data, and urged the staff to continue working on improving the provision of fiscal data to the Fund. It was generally agreed that establishing a benchmark for fiscal data similar to the ones for reserves and external debt would be a difficult task at the present time; nonetheless, many Directors underscored the importance of continuing to work expeditiously on the methodological issues related to the development of a benchmark for fiscal data. Directors also encouraged the staff to continue providing technical assistance to help member countries strengthen their fiscal data.
Directors underlined the importance of establishing a practical framework for assessing the quality of data, and welcomed the staff's intention to carry forward its work in this area.
Directors agreed that data requirements for surveillance should reflect the present data needs of the Fund. In this light, most Directors agreed that further consideration should be given to extending the coverage of Article VIII, Section 5 for this purpose. Based on the graduated and cooperative approach adopted by the Board in the past, Directors supported that further considerations on the coverage of Article VIII, Section 5 be undertaken.
Directors agreed that the next review of data provision to the Fund should take place in about one year's time to assess, inter alia, the experience with the benchmark approach and any methodological developments that may occur in the meantime.
A staff paper, Data Provision to the Fund for Surveillance Purposes is posted on the IMF's external website at http://www.imf.org/external/np/sta/data/prov/index.htm and a statement by the staff (on the meaning and application of the term "benchmark" in the paper) is also posted at http://www.imf.org/external/np/sta/data/prov/state.htm.
IMF EXTERNAL RELATIONS DEPARTMENT