Questions and Answers on the IMF's Strategic AgendaLast Updated: December 22, 2008
Reza Moghadam, Director of the Strategy, Policy and Review Department, gives an overview of what’s high on the Fund’s agenda and how the Fund will be working with the G-20 in the months ahead.
1. Could you give us an outline of the Fund’s priorities in the next six months?
2. How does the G-20 Action Plan fit into this agenda?
3. Can you tell us something about the further G-20 work? What role will the Fund play?
Q1. Could you give us an outline of the Fund’s priorities in the next six months?
Our immediate priority is to help our members overcome this crisis—the most serious economic dislocation since the Great Depression. And while its impact has varied across countries, no region has been immune from its effects. So finding a path out of the crisis is both complicated and our top priority.
In recent weeks, we have responded quickly and effectively as the crisis unfolded in individual countries. Emergency procedures were activated, missions were fielded rapidly, and programs were brought quickly to the Board for approval (the period from request to approval ranged from 3½ to 6 weeks). We also moved fast to set up the short-term liquidity facility, which was approved in only 2 weeks. We will continue to be quick and agile in our response, but we are also learning from the experience of the last couple of months in order to ensure we continue to improve our effectiveness.
Beyond firefighting, a second task is to understand fully what went wrong, how we got here, and what can be done to minimize the chance of such cataclysmic events occurring again. The massive scale of the crisis and its costs have taken a great many by surprise. We need to understand what happened.
Understanding the causes of the crisis and identifying key lessons for policy makers will be at the core of the Fund’s work in the next six months, as will efforts to ensure that the Fund’s own toolkit and modalities can meet the tasks at hand. These efforts will include a paper on “lessons” from the crisis, work on early warning systems, a review of Fund facilities, including new modalities for the implementation of conditionality, consideration of ways to better integrate financial sector analyses into surveillance and, importantly given their particular vulnerabilities, work on assessing the impact of the crisis on low-income countries.
A third area of work is to explore ways to reform the current financial architecture. This is an issue that is being discussed at the highest political levels in our membership, and we will be doing our bit—along with others—to build a stronger global system. The Fund is uniquely placed to be a key player in these discussions. Why? Because we have a near-universal membership, we have the macro-financial expertise that is needed, and we have the ability to deliver. On this last point, let me add that our members recognize that they can count on the Fund—and this is a testament to the staff of the institution.
This agenda is both demanding, placing as it does a significant responsibility on us to deliver, but is also potentially very rewarding, offering a tremendous opportunity for the Fund. At the same time we must not forget about our longer-term strategy, in particular our commitment to further advance the surveillance priorities endorsed by the IMFC in October and to continue modernizing the Fund—both our broader governance structure and our internal processes. The decision to adopt a new review process is one important example of this effort.
Q2. How does the G-20 Action Plan fit into this agenda?
There is a significant amount of commonality between the strategy outlined above and the G-20 Action Plan. Both are geared towards finding a way out of the crisis, identifying lessons learnt, and exploring dimensions of the new international financial architecture. Since the G-20 summit on November15, we have been working closely with the G-20 “troika” (the past (South Africa), current (Brazil), and incoming (UK) chairs) to see how the Action Plan can be synchronized with the Fund’s own work agenda. The next G-20 summit is planned for April 2 in the UK, before the next IMFC meeting (April 25)—so we are more or less on the same timetable.
Q3. Can you tell us something about the further G-20 work? What role will the Fund play?
To take forward the Action Plan that was agreed at the November 15 summit, the G-20 is working on a number of issues:
i) sound regulation and strengthening transparency—with a focus on accounting and disclosure, prudential oversight and risk management;
ii) international cooperation and promoting integrity in financial markets—with a focus on regulation and oversight of international institutions and financial markets and cross border flows;
iii) reform of the IMF—with a focus on the role, governance and resource requirements of the Fund. It will also consider the Fund’s instruments and surveillance activities; and
iv) reform of the World Bank and MDBs—which will consider similar issues as its Fund counterpart.
Fund staff will be involved in all of the issues in which the Fund has an interest, and or expertise, and we will seek to provide inputs on specific issues as requested. I expect that such inputs will draw heavily on the Fund’s own work program, in particular, papers that are circulated to the Executive Board.
For more information on the Work Program see: http://www.imf.org/external/ns/cs.aspx?id=89