Section Notes

Finances, Organization, and Accountability

In FY2015, the IMF operated within an unchanged budget envelope in real terms. This was the third year in row. Greater utilization and reallocation of the budget enabled the IMF to meet new demands. The IMF’s income is generated primarily through its lending and investment activities. The IMF has in place a comprehensive audit framework, which comprises complementary, yet distinct, roles of the external audit, internal audit, and External Audit Committee. The IMF’s staff of 2,611 come from 147 countries.

Budget and Income

Medium-term budget

In April 2014, in the context of the FY2015 –17 medium-term budget, the Executive Board authorized a total net administrative budget appropriation for FY2015 of $1,027 million. The Board also approved a limit on gross expenditures of $1,265 million, including up to $42 million in carry-forward of unspent FY2014 resources for possible spending in FY2015 (Table 3.1). It also approved capital expenditures of $52 million for building facilities and information technology capital projects.

The IMF work during the year continued to focus on supporting the still-weak global recovery in a sustainable way, a membership-wide priority covering advanced economies, particularly in Europe, emerging markets, and low-income developing countries. Actual administrative expenditures in FY2015 totaled $1,010 million, $17 million below the total net budget. The “underspend” continued the downward trend from the prior year and reflected greater utilization of the available budget. With vacancies declining, staffing expenses rose; separately the operating costs for the Annual and Spring Meetings increased due in part to the HQ1 building renovation; and physical security at overseas offices and information technology security costs grew.

Capital budget expenditures for facilities and information technology totaled $136 million, including amounts appropriated in prior years. Information technology spending totaled $29 million for core infrastructure replacements and upgrades, data management projects, and IT security. Progress continued on the multiyear HQ1 Renewal program, an occupied renovation in the construction phase.

For financial reporting purposes, the IMF administrative expenditures are accounted for on an accrual basis in accordance with International Financial Reporting Standards (IFRS). Those standards require accounting on an accrual basis and the recording and amortizing of employee benefit costs based on actuarial valuations. Table 3.2 provides a detailed reconciliation between the FY2015 net administrative budget outturn of $1,010 million and the IFRS-based administrative expenses of $1,262 million (SDR 857 million) reported in the IMF’s audited financial statements for the year.

In April 2015, the Board approved a budget for FY2016, including net administrative expenditures of $1,052 million and a limit on gross expenditures of $1,290 million, including up to $43 million in carry-forward of unspent FY2015 resources. Indicative budgets for FY2017 and FY2018 were also presented to the Board. For the fourth year in a row, the limit on net administrative expenditures, excluding the carry-forward, remained unchanged in real terms relative to the prior year. The capital budget was set at $42 million, comprising $28 million for information technology and $14 million for building facilities projects. Budget formulation emphasized organizational efficiency as a means of accommodating new and ongoing strategic priorities. Departments stepped up efforts to reallocate resources away from lower priority activities and to achieve efficiency gains to help meet, within a flat budget envelope, the new priorities highlighted in the Global Policy Agenda.

Income, charges, remuneration, burden sharing, and a review of the IMF's charges and maturities

Income model

Since its establishment, the IMF’s financing has relied primarily on its lending activities but has in recent years diversified its sources of income. Beginning in 2006, the IMF has invested its reserves to generate additional income. In 2008, the IMF Executive Board endorsed the new income model that includes the establishment of an endowment funded from the profits from the sale of a limited portion of the institution’s gold holdings. As the Fifth Amendment of the IMF’s Articles of Agreement, another key element of the new income model became effective in February 2011, the IMF’s investment authority was also broadened enabling the IMF to adapt its investment strategy over time and to enhance the expected return on its investments.


Reflecting the high levels of lending activities, the IMF’s main source of income continues to come from charges levied on the outstanding use of credit. However, the relative contribution to the IMF’s income from investment earnings, and in particular earnings on the investment of resources held in the endowment, which will be phased over a three-year period (funding to the endowment’s strategic asset allocation started in March 2014), will increase over time. The basic rate of charge (the interest rate) on IMF nonconcessional financing comprises the SDR interest rate plus a margin expressed in basis points. For FY2015 and FY2016, the Executive Board agreed to keep the margin for the rate of charge at 100 basis points. Under the rule adopted by the Executive Board in December 2011, the margin is set so as to cover the IMF’s lending-related intermediation costs and allow for a buildup of its reserves. In addition, the rule includes a cross-check to ensure that the rate of charge maintains a reasonable alignment against long-term credit market conditions.

Surcharges of 200 basis points are levied on the use of large amounts of credit (above 300 percent of a member’s quota) in the credit tranches* and under Extended Fund Facility Arrangements; these are referred to as level-based surcharges. The IMF also levies time-based surcharges of 100 basis points on the use of large amounts of credit (with the same threshold as above) that remains outstanding for more than 36 months.

In addition to basic charges and surcharges, the IMF also levies service charges, commitment fees, and special charges. A service charge of 0.5 percent is levied on each drawing, except for reserve tranche drawings, from the General Resources Account (GRA). A refundable commitment fee is charged on amounts available under GRA arrangements, such as Stand-By Arrangements, as well as Extended, Flexible Credit Line, and Precautionary Liquidity Line Arrangements, during each 12-month period. Commitment fees are levied at 15 basis points on amounts available for drawing up to 200 percent of quota, 30 basis points on amounts in excess of 200 percent and up to 1,000 percent of quota, and 60 basis points on amounts over 1,000 percent of quota. The fees are refunded when the arrangement is drawn upon, in proportion to the drawings made. The IMF also levies special charges on overdue principal payments and on charges that are past due by less than six months.

* Credit tranches refer to the size of a member’s purchases (disbursements) in proportion to its quota in the IMF. Disbursements up to 25 percent of a member’s quota are disbursements under the first credit tranche and require members to demonstrate reasonable efforts to overcome their balance-ofpayments problems. Disbursements above 25 percent of quota are referred to as upper-credit-tranche drawings; they are made in installments, as the borrower meets certain established performance targets. Such disbursements are normally associated with Stand-By or Extended Arrangements (and also the new Flexible Credit Line). Access to IMF resources outside an arrangement is rare and expected to remain so.

Remuneration and interest

On the expenditure side, the IMF pays interest (remuneration) to members on their creditor positions in the GRA (known as reserve tranche positions). The Articles of Agreement provide that the rate of remuneration shall be not more than the SDR interest rate, or less than 80 percent of that rate. The rate of remuneration is currently set at the SDR interest rate. The IMF also pays interest, at the SDR interest rate, on its outstanding borrowings under the bilateral loans and note purchase agreements, and the enlarged and expanded New Arrangements to Borrow.

Burden sharing

The rates of charge and remuneration are adjusted under a burden-sharing mechanism that distributes the cost of overdue financial obligations equally between debtor and creditor members. Income loss due to unpaid interest charges that are overdue for six months or more is recovered via burden sharing by increasing the rate of charge and reducing the rate of remuneration. The amounts thus collected are refunded when the unpaid charges are settled.

In FY2015, the adjustments for unpaid quarterly interest charges averaged less than 1 basis point, reflecting the current levels of overdue obligations and lending, and the prevailing low interest rate environment. The adjusted rates of charge and remuneration averaged 1.06 percent and 0.06 percent, respectively, in FY2015.

Net income

The IMF’s net income in FY2015 was SDR 1.6 billion, reflecting primarily income from the high levels of lending activity and income from its investments held in the Investment Account. As required by International Financial Reporting Standards (amended International Accounting Standard 19, Employee Benefits), the net income for the financial year includes a loss of SDR 0.5 billion arising from the immediate recognition of the effects of changes in actuarial assumptions used in determining the IMF’s defined benefit obligation of post-employment employee benefit plans.

Rule for Setting the SDR Interest Rate

In October 2014, the Executive Board amended the rule for setting the SDR interest rate in order to address issues surrounding the fact that the SDR rate had reached historic lows and to prevent it from moving toward a negative rate, by introducing a floor of 0.050 percent (5 basis points) and changing the rounding convention for calculating the SDR interest rate from two to three decimal places. The Executive Board also made a corresponding change in the rounding convention for the burden-sharing mechanism and reduced the minimum burden sharing adjustment from 1 basis point to 0.1 basis point.

The SDR interest rate provides the basis for calculating the interest charged to members on nonconcessional IMF loans from the IMF’s general resources, the interest paid to IMF members on their remunerated creditor positions in the IMF (reserve tranche positions), interest paid to lenders on their outstanding claims under borrowing agreements, and the interest paid to lenders on their SDR holdings and charged on their SDR allocations. The SDR interest rate is determined weekly and is based on a weighted average of representative interest rates on short-term financial debt instruments in the money markets of the SDR basket currencies, subject to a floor of 0.050 percent.

Extension of the 2012 Borrowing Agreements

In September 2014, the Executive Board approved a one-year extension of the 2012 Borrowing Agreements. These agreements have played a key role in ensuring that the IMF has adequate resources to meet members’ potential needs in the event that tail risks were to materialize.

In 2012, a number of member countries committed to increase IMF resources through bilateral borrowing agreements. Following Executive Board approval of the modalities for the 2012 Borrowing Agreements, 35 agreements for a total of about $396 billion (SDR 282 billion) were approved by the Executive Board, of which 33 agreements are now effective for a total of $381 billion (SDR 271 billion). The 2012 Borrowing Agreements are designed as a second line of defense after quota and New Arrangements to Borrow resources and have so far not been activated for use in financing operations. Each agreement has an initial two-year term, and may be extended by up to two additional one-year periods.

After this decision, which followed consultations with lenders, the initial two-year term of the agreements was extended by one year.

Box 3.1: Safeguards assessments: policy and activity

When the IMF provides financing to a member country, a safeguards assessment is carried out to obtain reasonable assurances that its central bank is able to adequately manage the resources received from the IMF and provide reliable program monetary data. Safeguards assessments are diagnostic reviews of central banks’ governance and control frameworks, and complement the IMF’s other safeguards, which include limits on access, conditionality, program design, measures to address misreporting, and post-program monitoring. They involve an evaluation of central bank operations in five areas: the external audit mechanism, the legal structure and autonomy, the financial reporting framework, the internal audit mechanism, and the system of internal controls.

As of April 2015, 272 assessments had been conducted, covering 96 central banks, 13 assessments of which were completed in FY2015. In addition, safeguards activities include monitoring of progress in addressing recommendations and other developments in central banks’ safeguards frameworks for as long as IMF credit remains outstanding. About 70 central banks are currently subject to monitoring.

An increased focus on collaboration with key stakeholders has raised awareness of safeguards issues. Two safeguards seminars, which covered the safeguards policy and its application, were conducted at the IMF–Singapore Regional Training Institute and with the Joint Partnership for Africa in Tunis. In addition, a high-level forum on central bank governance was held in Dubai in December 2014, with participants from 43 countries in Africa, Europe, and the Middle East. The forum, organized in partnership with the Hawkamah Institute for Corporate Governance, provid-ed a platform for a cross-regional dialogue on challenges and leading practices in audit oversight, governance, and risk management at central banks.

In accordance with a five-year review cycle, the IMF Executive Board will review the safeguards policy in October 2015, with a view to assessing the policy’s effectiveness and identifying areas for further improvement.

Arrears to the IMF

Overdue financial obligations to the IMF fell from SDR 1,295.5 million at end-April 2014 to SDR 1,290.8 million at end-April 2015 (Table 3.3). Sudan accounted for about 76 percent of remaining arrears, and Somalia and Zimbabwe for 18 and 6 percent, respectively. At end-April 2015, all arrears to the IMF were protracted (outstanding for more than six months); one-third consisted of overdue principal, and the remaining two-thirds, of overdue charges and interest. More than four-fifths represented arrears to the GRA, and the remainder to the Trust Fund and the PRGT. Zimbabwe is the only country with protracted arrears to the PRGT. Thanks to the SDR allocations in August/September 2009, all protracted cases have remained current in the SDR Department.

Under the IMF’s strengthened cooperative strategy on arrears, remedial measures have been taken to address the protracted arrears. At the end of the fiscal year, Somalia and Sudan remained ineligible to use GRA resources. Zimbabwe is not able to access GRA resources until it fully settles its arrears to the PRGT. A declaration of noncooperation, the partial suspension of technical assistance, and the removal from the list of PRGT-eligible countries remain in place as remedial measures related to Zimbabwe’s outstanding arrears to the PRGT.

On June 30 and July 13, 2015, Greece did not settle repurchase obligations falling due amounting to SDR 1,232 million and SDR 360 million, respectively. While the overdue obligations were outstanding, Greece was not permitted to receive any further IMF financing. Charges continued to accrue on all obligations. Greece subsequently settled these overdue obligations on July 20, 2015.

Audit mechanisms

The IMF’s audit mechanisms comprise an external audit firm, an internal audit function, and an independent External Audit Committee (EAC) that, under the IMF’s By-Laws, exercises general oversight over the annual audit.

External Audit Committee

The three members of the EAC are selected by the Executive Board and appointed by the Managing Director. Members serve three-year terms on a staggered basis and are independent of the IMF. EAC members are nationals of different member countries and must possess the expertise and qualifications required to carry out the oversight of the annual audit. Typically, EAC members have significant experience in international public accounting firms, the public sector, or academia.

The EAC selects one of its members as chair, determines its own procedures, and is independent of the IMF’s management in overseeing the annual audit. It meets in Washington, D.C., each year, normally in January or February to oversee the planning for the annual audit, in June after the completion of the audit, and in July to brief the Executive Board. The IMF staff and the external auditors consult with EAC members throughout the year. The 2015 EAC members were Gonzalo Ramos (chair), the secretary general of the Public Interest Oversight Board; Daniel Loeto, a chartered accountant and the chief accountant of the Bank of Botswana; and Mary Barth, a professor of accounting at Stanford University.

External audit firm

The external audit firm, which is selected by the Executive Board in consultation with the EAC and appointed by the Managing Director, is responsible for conducting the IMF’s annual external audit and expressing an opinion on the IMF’s financial statements, including the accounts administered under Article V, Section 2(b), of the Articles of Agreement and the Staff Retirement Plan. At the conclusion of the annual audit, the EAC briefs the Executive Board on the results of the audit and transmits the report issued by the external audit firm, through the Managing Director and the Executive Board, for consideration by the Board of Governors.

The external audit firm is appointed for a term of five years, which may be renewed for up to an additional five years. PricewaterhouseCoopers (PwC) was appointed as the IMF’s external audit firm in November 2014, following the mandatory rotation of Deloitte & Touche LLP after 10 years. The external audit firm can perform certain consulting services, subject to a blacklist of prohibited services and robust safeguards to protect the audit firm’s independence. These safeguards involve the IMF’s External Audit Committee and, for consulting fees above a certain limit, the Executive Board.

Office of Internal Audit and Inspection

The IMF’s internal audit function is assigned to the Office of Internal Audit and Inspection (OIA), which independently examines the effectiveness of the IMF’s risk management, control, and governance processes. OIA’s audit coverage includes the IMF staff, the Executive Board, offices of the Executive Directors, and the Independent Evaluation Office and its staff. In line with best practices, OIA reports to IMF management and to the EAC, thus ensuring its objectivity and independence.

In FY2015, OIA completed assurance and advisory engagements to assess the adequacy of controls and procedures in order to mitigate risks to achievement of the IMF’s institutional and departmental goals. Engagements were in the areas of financial audits on the adequacy of controls to safeguard and administer the IMF’s financial assets and accounts, information technology audits to evaluate the adequacy of information technology management and the effectiveness of security measures, and operational audits of work processes and associated controls supporting the IMF’s core operations.

The Risk Management Unit (RMU) was established on June 9, 2014, to replace the Advisory Committee on Risk Management (ACRM). Previously OIA served as Secretariat to the ACRM. In this capacity, OIA coordinated the production of an annual risk management report to the Board and supported informal briefings of the Board on risk management. OIA’s last report on risk management was issued on June 20, 2014. In March 2015, the RMU presented the outline for a proposed risk management framework to the Executive Board for discussion in an informal Board session. More work in this area is to follow in FY2016.

The Board is informed of OIA activities twice a year by means of an activity report that includes information on audit results and the status of audit recommendations. The last informal Board briefing on these matters in FY2015 took place in January 2015.

HQ1 building renovation progress Box 3.2: HQ1 building renovation progress

The renovation of the older of the two IMF headquarters buildings (HQ1) in downtown Washington, D.C., continued in FY2015. The project is designed to replace aging building systems nearing the end of their useful lives and in need of replacement or refurbishment. The renewal will enable more energy-efficient and sustainable operations, provide more natural light throughout the building, and promote institutional collaboration through the introduction of modern work areas and meeting spaces.

The renovation began on May 1, 2013, and much of the initial work took place on the lower levels and public spaces. In FY2015, staff returned to offices in portions of the below-ground levels after renovation of that space, and work progressed on floors one to four of the building. The project has experienced some challenges due to unexpected and complex technical conditions, as well as the discovery of additional asbestos. More time has been and will be needed to remove this material in the other floors, in accordance with the health and safety protocols being followed.

The project aspires to LEED (Leadership in Energy and Environmental Design) certification and incorporates green building design and construction practices that are intended to have a lower impact on the environment and will help lay the foundation for ongoing sustainable operations and maintenance.


Human Resources Policies and Organization

Human resources

To be effective in the global economy, the IMF must recruit and retain a highly qualified international staff. In FY2015, the IMF introduced a new employment framework to ensure flexibility and fairness in the hiring rules for new staff and contractual employees, and revised benchmark targets for the geographic and gender diversity of staff.

Workforce characteristics

As of April 30, 2015, the IMF employed 2,156 professional and managerial staff, and 455 support staff. A list of the institution’s senior officers is here and its organizational chart can be found here.

Recruitment of 174 total new staff in 2014 was similar to the 2013 level of 176. The IMF requires economists with advanced analytical and policymaking experience, and in 2014 recruited 27 top university graduates through the Economist Program (EP) and 56 experienced mid-career economists. Two-thirds of mid-career hires were macroeconomists, and the rest experts in fiscal policy and the financial sector. In 2014, 490 contractual employees were hired, reflecting a 3 percent increase over 2013. Consistent with the aim of improving support to economists, 56 research assistants were hired, representing one-third of all support contractuals.

In 2014, six appointees from three countries were enrolled in the Externally Financed Appointee hiring program (EFA). The EFA was designed to provide up to 15 member country public sector officials with two years of IMF work experience. Costs are financed by member countries through a multidonor trust fund.

Diversity and inclusion

The IMF strives to ensure that the staff is diverse in terms of geographic region, gender, and educational background, but challenges remain. Of the IMF’s 188 member countries, 147 were represented by staff as of end-April 2015. Web Tables 3.1–3.3 show the distribution of the IMF’s staff by geographic region, gender, and country type.

Hiring of nationals from underrepresented regions stood at 43 percent of all external hiring at the professional level for 2014. More than half of the 2014 EP intake were from underrepresented regions. The share of women in the EP remained at 36 percent, and at 25 percent of mid-career economist hires.

During the year, several measures were introduced to improve the inclusiveness of the work environment. A new cross-cultural competence assessment was added to the training curriculum and a group mentoring program targeting professional staff from underrepresented regions was introduced.

The 2014 Diversity and Inclusion report revised regional and gender benchmarks for 2020. The benchmarks focus on areas where progress is most needed: professional staff from sub-Saharan Africa, the Middle East and Central Asia, and East Asia, and female managers. In view of significant progress and a strong pipeline of staff from transition economies, benchmarks for these countries were discontinued. Further integration of diversity and inclusion into human resources policies and strong accountability toward the new 2020 benchmarks are planned for 2015.

Management structure and salaries

In 2014, a deputy managing director position was assigned the role of Chief Administrative Officer (CAO) for the first time, to improve focus on internal operational and administrative management.

IMF management remuneration is reviewed periodically by the Executive Board; the Managing Director’s salary is approved by the Board of Governors. Annual adjustments are made on the basis of the Washington, D.C., consumer price index. Reflecting the responsibilities of each management position, as of July 1, 2014, the salary structure for management was as follows:

Managing Director: $492,690
First Deputy Managing Director: $408,020
Deputy Managing Directors: $408,020

Management changes

On January 14, 2015, former Deputy Managing Director Naoyuki Shinohara notified IMF Managing Director Christine Lagarde of his intention to leave the IMF to return to Japan at the end of this term. His last day at the Fund was February 28, 2015.

On March 18, 2014, Deputy Managing Director Nemat “Minouche” Shafik informed Ms. Lagarde of her intention to leave the Fund to assume the position of Deputy Governor at the Bank of England responsible for Markets and Banking starting August 1, 2014.

Carla Grasso assumed office as Deputy Managing Director and Chief Administrative Officer of the IMF on February 2, 2015. Ms. Grasso is a dual national of Brazil and Italy. Before coming to the IMF, she worked for 14 years, at Vale S.A., one of the world’s largest mining companies, serving as vice president for human resources and corporate services from 2001 to 2011. Prior to that, Ms. Grasso served as secretary of the Brazilian Supplementary Social Security Office from 1994 to 1997, and also held several positions as advisor and coordinator in the Ministries of Social Security, Finance, and Planning, as well as in the Office of the President of Brazil.

Mitsuhiro Furusawa assumed office as Deputy Managing Director of the IMF on March 2, 2015. Immediately before coming to the Fund, he served as Special Advisor to Japanese Prime Minister Shinzo Abe and special advisor to the Minister of Finance. Among his recent ministry postings, Mr. Furusawa served as vice minister of finance for international affairs (2013–14), director-general of the Financial Bureau (2012–13), and senior deputy director-general of the International Bureau (2009–10). His overseas postings for the Japanese government included IMF Executive Director (2010–12), minister (Finance) at the Embassy of Japan in the United States (2007–09), and counselor (Finance) at the Embassy of Japan in France (1997–99).

Selection of new IMFC Chair

Agustín CarstensThe members of the International Monetary and Financial Committee (IMFC), the IMF’s policy advisory committee, selected Agustín Carstens, governor of Banco de México, as chairman of the committee for a term of three years, effective March 23, 2015. Mr. Carstens succeeded Tharman Shanmugaratnam, Singapore’s deputy prime minister and minister for finance, whose term ended March 22, 2015.

Mr. Carstens had been the governor of the Banco de México since January 2010. He served as Mexico’s finance minister from December 2006 until December 2009, and chaired the IMF and World Bank Joint Development Committee from March 2007 to October 2009. From August 2003 to October 2006, Mr. Carstens served as Deputy Managing Director of the IMF, and was an Executive Director on the IMF Board in 1999–2000. Mr. Carstens was Mexico’s deputy minister of finance from 2000 to 2003, and held a variety of posts in the Banco de México in a career spanning more than 20 years.

The IMFC, comprising finance ministers and central bank governors, is the primary advisory body of the IMF Board of Governors and deliberates on the principal policy issues facing the IMF. The committee has 24 members, reflecting the composition of the IMF Executive Board. Each member country that appoints, and each group of countries that elects, an Executive Director also appoints a member of the committee. The IMFC normally meets twice a year—in the spring and at the time of the IMF–World Bank Annual Meetings in the fall.



Independent Evaluation Office

The IEO was established in 2001 to conduct independent and objective evaluations of IMF policies and activities. Under its terms of reference, the IEO is fully independent from IMF management and operates at arm’s length from the Board of Executive Directors. Its mission is to enhance the learning culture within the IMF, strengthen the IMF’s external credibility, and support institutional governance and oversight.

Board reviews of IEO reports

In November 2014 the IEO released a report, “IMF Response to the Financial and Economic Crisis.” The report assessed the IMF’s actions to help contain the 2008 global financial crisis and navigate the global recovery, assist individual economies to cope with the impact, and identify and warn about future risks. It found that the IMF played an important role in the global response to the crisis, that the policy advice provided by staff was flexible and adaptable, and that IMF-supported programs reflected many lessons from past crises; with a reformed lending toolkit, supported by a resource mobilization effort that quadrupled the IMF’s resources, the IMF helped members cope with the crisis fallout.

However, the report said that the agreed doubling of quotas has not become effective, leaving the IMF dependent on borrowing arrangements for more than two-thirds of its total credit capacity. It also said that the IMF’s record in surveillance was mixed, and although the IMF’s calls for global fiscal stimulus in 2008–09 were timely and influential, its endorsement in 2010–11 of a shift to consolidation in some of the largest advanced economies was premature.

The IMF Executive Board and management broadly supported most of the IEO report recommendations. These included ensuring that the IMF has sufficient resources to contribute to future crisis resolution, better structuring engagements with other organizations, and further integrating and consolidating risk and vulnerability analyses.

In July 2014, the IEO released a report, “Recurring Issues from a Decade of Evaluation: Lessons for the IMF.” The report focused on the five most common issues that the IEO had identified in its past evaluations: organizational silos, attention to risks and uncertainty, country and institutional context, evenhandedness, and Executive Board guidance and oversight. It found that the IMF’s Executive Board and management had taken actions to address the issues in all five areas, but that challenges remained and were likely to persist, as the recurring issues were to varying degrees inherent to the nature of the IMF. Executive Directors and management broadly supported the report’s recommendations and emphasized that efforts to address these issues should continue in order to enhance the IMF’s effectiveness and credibility.

IEO revisits of past evaluations

The IEO issued two reports in FY2015 revisiting past IEO evaluations. The initial impetus for this series came from inquiries from Executive Directors and member country authorities on the status of issues raised in past evaluations. The 2013 external evaluation of the IEO also found a strong case for revisiting some of these issues.

The evaluation updates are brief stocktaking exercises, more modest in scope than full IEO evaluations, but broader in coverage than the Periodic Monitoring Reports (PMRs) prepared by IMF staff. The updates summarize the original IEO evaluation, describe relevant developments that have taken place since the evaluation (including implementation of the IEO’s recommendations), and identify outstanding issues and any new ones related to the evaluation topic that merit continued attention.

The two revisits issued in FY2015 covered three past evaluations. One looked back at the IEO “Report on the Poverty Reduction Strategy Papers (PRSPs) and the Poverty Reduction and Growth Facility (PRGF)” (2004) and “The IMF and Aid to Sub-Saharan Africa” (2007); the other updated the main issues of the 2005 evaluation of “The IMF’s Approach to Capital Account Liberalization.” The original reports and revisits are available on the IEO website.

IEO Work Program

In FY2015, the IEO launched a new evaluation, “The IMF and the Euro Area Crisis.” The IEO is also working to conclude “Learning from Experience: An IEO Assessment of Self-Evaluation Systems” and an evaluation of “Statistics for Global Economic and Financial Stability: The Role of the IMF.” The IEO issued a note on “Possible Topics for Evaluation over the Medium Term” in January 2015 and consulted with Executive Directors and other stakeholders on potential future evaluation topics on this basis.

Implementation of Board-endorsed recommendations

The sixth PMR on the status of implementation plans in response to Board-endorsed IEO recommendations was approved by the Executive Board in August 2014. This was the first PMR prepared by the Office of Internal Audit and Inspection under the procedure recommended by the external evaluators of the IEO and approved by the Board in February 2013. It reviewed the status of Management Implementation Plans (MIPs) for four IEO evaluations issued during 2011–13 and provided an update on progress on relevant issues related to previous MIPs agreed upon since 2007.

In considering the PMR, the IMF’s Executive Board Evaluation Committee noted that it represented an improvement over previous reports but that more could be done to sharpen the focus on whether implementation measures proposed by management have been effective in achieving the high-level objectives of the Board-endorsed recommendations. No new MIPs were issued by the IMF in FY2015.


Outreach and Engagement with External Stakeholders

The objectives of IMF outreach are twofold: first, to listen to external voices to better understand their concerns and perspectives, with the aim of improving the relevance and quality of IMF policy advice; and second, to strengthen the outside world’s understanding of IMF objectives and operations. Among the specific groups with which the IMF engages in its outreach activities are civil society organizations and youth leaders, trade and labor unions, parliamentarians, academics, think tanks, and the media. Tools such as social media, videos, and podcasts have formed an increasing part of the IMF’s outreach strategy in recent years.

The IMF’s Communications Department has primary responsibility for conducting the IMF’s outreach activities and its engagement with external stakeholders. As the institution’s policies have evolved—for instance, in its increased focus on promoting poverty reduction in low-income developing countries through a participatory approach and its emphasis on transparency and good governance—outreach and communication have become an integral part of IMF country work as well.

Box 3.3: Outreach to new policy influencers

The global financial crisis and its aftermath underlined the importance of reaching out to a broad range of stakeholders, including civil society organizations (CSOs), youth, labor organizations, and parliamentarians, to explain and seek feedback on the IMF’s policy advice.

In its eighth year, the IMF Civil Society Fellowship pro-gram sponsored the participation of about 40 CSOs from developing economies in the Spring and Annual Meetings. On the margins of the meetings, the IMF, the World Bank, and CSOs organized about 100 sessions on a broad range of policy issues that included debt sustainability, inequality, climate change, and gender. More generally, the IMF also engaged with civil society in informal discus-sions on key policy issues, such as the IMF’s response to the Ebola outbreak and sovereign debt restructuring. Civil society was also invited to provide input through public consultations on the IMF’s Fiscal Transparency Code and on the integration of countries’ poverty reduction strategies with Fund-supported programs in low-income developing countries.

The IMF continued to step up its engagement with youth—the next generation of policymakers and world leaders—through the Annual Meetings, introductory seminars for students on the IMF, university visits by IMF management, and youth events with senior staff. The First Deputy Managing Director chaired town hall discussions with university students in Chile, Mexico, and Peru, events designed to help spotlight the 2015 Annual Meetings in Peru. In the same vein, an IMF Latin American Youth Essay contest brought eight winners to the 2014 Annual Meetings, which included a youth seminar on the topic of inclusive growth and entrepreneurship.

Given the significant impact of the global crisis on jobs, the IMF continued to regularly engage with labor organizations on a number of levels. At headquarters, the IMF hosted the biennial, high-level meeting with the Interna-tional Trade Unions Confederation, and held formal and informal discussions with labor organizations on jobs and growth, inequality, and collective bargaining.

The IMF engages with parliamentarians—a group that plays an important role in their countries’ economic decision-making process—mainly through the Parliamentary Network on the World Bank and the International Monetary Fund, but also through targeted in-country and regional seminars on issues such as extractive industries, structural reforms, and inequality (for example, in Bangla-desh and Peru). This year’s Parliamentary Network Global Conference, co-hosted by the IMF and attended by about 200 members of parliament from more than 80 countries, focused on the 2015 development agenda, health care systems, gender equality, jobs and growth, and environmental challenges.

Outreach by IMF management and senior staff

As the importance of the IMF’s outreach efforts has grown in the face of the global financial crisis and aftermath, the management team has played an increasingly important role in those efforts. Outreach by management and senior IMF staff provides an opportunity to articulate the institution’s strategic vision and the key policy priorities for the membership at large; to marshal support for policymakers for difficult national reforms that carry both domestic and global benefits; to learn more about issues affecting key stakeholders in member countries, including nontraditional constituents, with the aim of strengthening IMF analysis and policy advice; and to reinforce the IMF’s commitment to providing needed support to members, particularly those most affected by the crisis.

The Managing Director, Deputy Managing Directors, and senior IMF staff travel extensively in all five regions, meeting with authorities and key stakeholders in member countries and taking advantage of numerous opportunities to further the IMF’s outreach objectives.

Regional Office for Asia and the Pacific

As the IMF’s window to Asia and the Pacific, a region whose importance in the global economy continues to grow, the Regional Office for Asia and the Pacific (OAP) monitors economic and financial developments to help bring a more regionally focused perspective to IMF surveillance. It seeks to enhance understanding of the IMF and its policies in the region and to keep the IMF informed on regional perspectives on key issues. In this capacity, OAP has continued to be engaged in bilateral surveillance in Japan and Mongolia, and increased regional surveillance with active participation by OAP staff in forums in Asia, including ASEAN+3 (the Association of Southeast Asian Nations plus China, Japan, and Korea) and APEC (Asia-Pacific Economic Cooperation).

OAP contributes to capacity development in the region through the Japan–IMF Scholarship Program for Asia, the Japan–IMF Macroeconomic Seminar for Asia, and other macroeconomic seminars. Highlights during the year included a June 2014 seminar on fiscal policy rules and fiscal councils in Asia and the Pacific and an October 2014 seminar offered jointly by Bank Indonesia and the IMF’s Monetary and Capital Markets Department to regional central bankers on modernizing monetary policy frameworks in frontier economies.

The office also conducts outreach activities in both Japan and the rest of the region and engages in dialogue with Asian policymakers by organizing conferences and events on current policy issues central to the IMF’s work. A conference co-organized with the Bank of Korea in November 2014 focused on macroeconomic rebalancing for sustainable growth, and a conference jointly organized in Tokyo with Hitotsubashi University in March 2015 discussed challenges related to inequality and potential policy responses, with a particular focus on the implications of fiscal redistribution.

Regional Office in Paris and Brussels

The IMF Europe Office, located in Paris and Brussels, serves as liaison to European Union institutions and member states, as well as international organizations and civil society in Europe. The office engages with institutions such as the European Commission, the European Central Bank, the European Stability Mechanism, the European Parliament, the Economic and Financial Committee, and the Eurogroup Working Group, on euro area and EU policies as well as EU–IMF country programs. It also represents the IMF at the Organisation for Economic Co-operation and Development.

More broadly, it fosters the dialogue on global economic issues with EU institutions, international organizations, and governments and civil society in Europe, and meets frequently with representatives from industry associations, unions, academia, and the financial sector. It also supports the IMF’s operations in Europe, including in economic surveillance, IMF-supported programs, and technical assistance, and helps to coordinate communication and outreach activities across the region.


Quotas and Governance

IMF quota reform

Quota subscriptions are a central component of the IMFs financial resources. Each member country of the IMF is assigned a quota, based broadly on its relative position in the world economy. A member country’s quota determines its maximum financial commitment to the IMF and its voting power, and has a bearing on its access to IMF financing.

In 2010, the Board of Governors, the IMF’s highest decision-making body, approved a package of far-reaching reforms of the IMF’s quotas and governance (“2010 reforms”), which included notably the following measures:

Completion of the 14th General Review of Quotas with an unprecedented doubling of quotas and a major realignment of quota shares—a shift of more than 6 percent from overrepresented to underrepresented members and a more than 6 percent quota shift to dynamic emerging market and developing countries, while protecting the quota shares and voting power of the poorest members.

A proposed amendment to the Articles of Agreement (“Board Reform Amendment”) that would facilitate a move to a more representative, all-elected Executive Board.

A request to the Executive Board to bring forward the timetable for completion of the 15th General Review of Quotas to January 2014, and request to complete a comprehensive quota formula review by January 2013.

Members committed to make best efforts to complete their domestic approval processes of these reforms by the Annual Meeting of the Board of Governors in October 2012. However, the Board Reform Amendment and the quota increases under the 14th Review have still not become effective pending the ratification of the reforms by several members, including the United States. Initiation of the work on the 15th Review has been on hold.

Against this backdrop, and as requested by the IMFC, on January 14, 2015, the Executive Board held an informal discussion on options for next steps, building on its existing work.

On January 28, the Executive Board reported to the Board of Governors on the status of the 2010 Reforms and 15th General Review of Quotas. The Executive Board’s report to the Board of Governors contained also a proposed resolution, which was adopted on February 18, 2015, by the Board of Governors. The Resolution expressed deep regret that the 14th Review quota increases and the Board Reform Amendment have not become effective, and that the 15th Review has not been completed. The resolution also emphasized the importance and urgency of the 2010 reforms for the IMF’s credibility, legitimacy, and effectiveness, and reiterated the commitment to their earliest possible implementation, while urging the remaining members who have not yet accepted the 14th Review quota increases and the Board Reform Amendment to do so without further delay.

The resolution also called for the completion of the 15th Review by December 15, 2015, in line with the timetable mandated under the Articles of Agreement. It also called on the Executive Board to work expeditiously and to complete its work as soon as possible on interim steps in the key areas covered by the 2010 reforms, and thus to enable the Board of Governors to reach agreement on steps that represent meaningful progress toward the objectives of the 2010 reforms by June 30, 2015. The resolution stressed that such interim steps should not in any way be seen as a substitute for the 2010 reforms, which remain the highest priority.

On March 27, 2015, the Executive board had a second informal discussion on possible interim steps, which provided a basis for IMFC and G20 discussions on this topic at the 2015 Spring Meetings.

On April 18, 2015, at its Spring Meeting, the IMFC of the IMF issued a communiqué that included the following statement:

We remain deeply disappointed with the continued delay in progressing the 2010 IMF Quota and Governance Reforms. Recognizing the importance of these reforms for the credibility, legitimacy, and effectiveness of the IMF, we reaffirm that their earliest implementation remains our highest priority. We continue to urge the United States to ratify the 2010 reforms as soon as possible. Mindful of the aims of the 2010 reforms, we call on the IMF Executive Board to pursue an interim solution that will meaning-fully converge quota shares as soon as and to the extent possible to the levels agreed under the 14th Review. We will use the 14th Review as a basis for work on the 15th Review of Quotas, including a new quota formula. We reaffirm our commitment to maintaining a strong, well-resourced, and quota-based IMF.

2014 Executive Board election

Newly elected IMF Executive Directors began their two-year term in November 2014, following an election for the 19 currently elected seats. As a result, eight new Executive Directors and a number of new Alternate Executive Directors joined the Board and will serve a two-year term until October 31, 2016.

For the first time since 1970, all eligible members participated in the election (the five members that appoint Executive Directors—France, Germany, Japan, the United Kingdom, and the United States—are not eligible to participate). At present all IMF member countries are represented on the Executive Board for the first time in more than four decades.

To guide the election process, the Board established a committee whose task was to recommend rules for the conduct of the election, including the conduct of the election under the pending Seventh Amendment of the Articles of Agreement, in the event that the amendment was ratified during the election process. The committee followed the work of the 2012 election committee, which had recommended new voting limits for multi-country constituencies reflecting a balance between the formation of constituencies by member countries and a desirable balance in the voting power at the Executive Board. The Executive Board and the Board of Governors subsequently approved the committee’s recommendations.

The next regular election of Executive Directors will be conducted in October 2016.

Nauru application for membership

On May 9, 2014, the IMF announced that the Government of the Republic of Nauru had filed an application for membership in the IMF. Under the IMF’s procedures, the application will be considered by the IMF’s Executive Board, which will then submit a recommendation to the Board of Governors of the IMF in the form of a Membership Resolution. These recommendations cover the amount of quota in the IMF, the form of payment of the subscription, and other customary terms and conditions of membership. After the Board of Governors has adopted the Membership Resolution, the applicant country may become a member once it has taken the legal steps required under its law to enable it to sign the IMF’s Articles of Agreement and to fulfill the obligations of IMF membership.



Review of the Communication Strategy

Like most modern organizations, the IMF uses communications as a strategic tool to help strengthen its effectiveness. It does so by more proactive engagement with various stakeholders to better explain Fund policies and operations, by participating in and contributing to intellectual debate on important economic issues, and by facilitating two-way learning with the IMF’s global membership. This communications role was recognized in the 2011 Triennial Surveillance Review and in a 2013 assessment by the Independent Evaluation Office, which noted that the IMF is now viewed by its membership as more open, listening, and responsive.

In July 2014, the Executive Board discussed a review of the IMF’s Communications Strategy. It followed the Board’s establishment in 2007 of a framework guiding IMF communications, which focused on deepening understanding of IMF policies, better integrating communications in daily operations, raising the impact of communications products, and reaching different audiences through enhanced outreach.

The 2014 paper emphasized several key communications issues. The first is taking further steps to ensure clarity and consistency in communication in a world where demand for IMF services continues to rise. The second is doing more to assess the impact of IMF communications and thus better inform efforts going forward. And the third is engaging strategically and prudently with new media—including social media.

In the Executive Board discussion of the 2014 review, Directors considered that the framework guiding the communications strategy, as endorsed by the Executive Board in 2007, remains broadly appropriate. They observed that the overall strategy has allowed the IMF to communicate effectively and flexibly.

Directors encouraged continued efforts to strengthen and adapt IMF communication, with a view to deepening public understanding of the IMF’s work and policy advice. They agreed that clarity and consistency are vital for effective communication and welcomed steps to differentiate more clearly official IMF policy from staff views. Directors also supported plans to conduct impact assessments to gauge the effectiveness of IMF communications and draw lessons for the IMF’s communications strategy.

Directors noted that the increasing use of new technologies at the IMF—including social media—has helped strengthen communication around important events and products. They stressed that any expansion of social media activity should continue in a careful and strategic way, with adequate oversight, appropriate training, and proper resourcing.