IMF Executive Board Discusses Working Group Report Following IEO Evaluation of Fund Corporate Governance

Public Information Notice (PIN) No. 08/134
October 10, 2008

Public Information Notices (PINs) form part of the IMF's efforts to promote transparency of the IMF's views and analysis of economic developments and policies. With the consent of the country (or countries) concerned, PINs are issued after Executive Board discussions of Article IV consultations with member countries, of its surveillance of developments at the regional level, of post-program monitoring, and of ex post assessments of member countries with longer-term program engagements. PINs are also issued after Executive Board discussions of general policy matters, unless otherwise decided by the Executive Board in a particular case.

On September 29, 2008, the Executive Board of the International Monetary Fund (IMF) discussed the Report of the Executive Board Working Group on IMF Corporate Governance.

Background

A Working Group of Executive Directors was formed to follow up on the Independent Evaluation Office's study "Aspects of IMF Corporate Governance—Including the Role of the Executive Board," which was discussed by the Executive Board on May 21, 2008.

In light of the distinct nature and content of the IEO evaluation on IMF governance, the Executive Board established a Working Group of Executive Directors to prepare a work plan on how best to organize the follow-up on the IEO evaluation. The Working Group's report is designed as a first response to the IEO analysis and includes a range of follow-up recommendations. It also notes that the "follow-up discussion would require the engagement of all parties at many different levels, involving not only the Executive Board and Management, but also the Fund's membership and other stakeholders more broadly."

Executive Board Assessment

Executive Directors welcomed the Report of the Working Group on IMF Corporate Governance by the Executive Directors' Working Group chaired by Mr. Thomas Moser, which suggests the process and the work plan for following up on the recommendations of the Independent Evaluation Office without prejudging decisions on the recommendations themselves. They expressed deep appreciation to the members of the Working Group for their time and efforts over the past few months. As highlighted in the joint statement by the Executive Board and the Managing Director issued in May, many of the issues raised by the IEO report are complex and interrelated in nature, and hence will require active engagement and collaboration from all levels of the institution as well as the whole membership.

Directors supported the work plan set forth in the Attachment to the Report. They emphasized, however, the need for adequate flexibility with respect to the timing of its implementation, to take into account the Fund's overall work priorities, as well as the work on governance being undertaken in the Committee on IMF Governance Reform chaired by Mr. Trevor Manuel, Finance Minister of South Africa, and the views of civil society and external audiences.

To that end, Directors supported the establishment of a group of Executive Directors and management, to be called a joint Steering Committee, as proposed by the Managing Director. They agreed on the importance of a collaborative process involving all three tracks of the effort to reform the Fund's governance, that is, the follow-up to the work of the IEO and the Executive Directors' Working Group , the work of the Committee on IMF Governance Reform, and the work to engage civil society and other concerned external audiences. The Steering Committee will have an important monitoring and coordinating role in this respect. Building on the work plan developed by the Working Group, the Steering Committee will aim to identify issues on which we can move quickly taking into account the above considerations, and make the necessary adjustments to the timing and sequencing of the work plan activities that it considers necessary. It was noted that certain issues—for example, those related to the Board's work practices—could go forward rapidly as envisaged. Directors looked forward to developing a shared understanding on reforms that can be implemented on a fast track, and others that will require more discussion and reflection on substance. A number of Directors reiterated that further work on quota and voice reform should be an integral part of the overall Fund's governance reform.

Directors agreed that the Working Group's suggestion regarding the selection process of the General Counsel and the Secretary is substantive. It will require careful further reflection. Among other things, the Managing Director intends to consult with the World Bank and other international financial institutions regarding the approach they take in this area.

Directors underscored the importance of coherence among the ongoing initiatives. They agreed that it is important to move quickly to broaden and deepen the analysis necessary to have a productive dialogue not only among Executive Directors and management, but at many different levels. They looked forward to the recommendations of the Manuel Committee Report by spring 2009, and shared management's hope that concrete governance reform proposals can be distilled based on all the work being undertaken by the 2009 Annual Meetings.



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