Social Dimensions of the IMF's Policy Dialogue

Collaboration with Other Institutions in Program Design and Monitoring

Given the IMF's mandate and own limited resources, the IMF draws in program design and monitoring on the expertise of other institutions, including the World Bank, the UNDP, the ILO, other UN agencies, and regional development banks. The IMF assists member countries in integrating social policies in the macroeconomic framework developed in close collaboration with these institutions, so as to ensure that they are consistent with sustainable macroeconomic policies over the medium term.

Traditionally, collaboration has been particularly close between the World Bank and the IMF. In the social area, the IMF's comparative advantage is to advise member governments on the macroeconomic and budgetary implications of policy options, in particular the financial viability of such options. The World Bank advice centers on long-term poverty reduction and broad-based human resource development, in particular, through improving the level of, and access to, basic social services, administrative capacities, and the cost-effectiveness of social expenditure, including social safety nets. IMF-supported structural adjustment programs rely largely on World Bank expertise with regard to human resource development, public sector reform, and design of social safety nets and social security arrangements.

Social policy implementation is monitored mainly by the World Bank. Except in the selected cases where the IMF has provided its own technical advice, the IMF staff concentrates on macroeconomic and budgetary developments, including social spending developments. In tandem, the World Bank monitors social policy and project implementation, often by means of on-site inspections and social indicators.

In the case of low-income countries, collaboration between the IMF and the World Bank is formalized in the policy framework papers (PFPs), which set out macroeconomic and structural adjustment policies of countries in a medium-term framework. They are prepared by the governments borrowing from the IMF under the ESAF and in certain other cases, and from the World Bank under Structural Adjustment Credits in collaboration with the World Bank and IMF staffs. All recent PFPs examine the social impact of the adjustment program and often also describe human resource developments. Through their distribution to the participants of Consultative Group meetings, PFPs facilitate consistency in policy advice and financing with other bilateral and multilateral donors on all aspects of structural adjustment policies, including the social impact.

Collaboration with UN agencies and other institutions involved in social policies is an ongoing process. The Managing Director of the IMF participates in meetings of the UN's Administrative Council Committee, and the IMF staff regularly comments on reports prepared by UN agencies and benefits from access to the data bases of several UN agencies. The contribution and support of UN agencies and other institutions have been very important in helping the IMF in its approach to the social dimensions of structural adjustment, poverty reduction, and social safety nets. In addition, there have been close interagency staff contacts on several specific countries, including with the ILO and the UNDP. Close collaboration with UN agencies is particularly essential in countries that are in, or in the period immediately following, domestic or international conflict, when fully functioning governments might not yet be in place and destruction of social and other infrastructure has taken place.

While collaboration with other agencies has been fruitful in the past, there is still a need for further improving coordination of technical advice on the design of social safety measures in the context of adjustment operations, since such assistance has not always been available on a timely basis. Given the IMF's limited resources, it is highly dependent on the responsiveness of other institutions in terms of both technical and financial assistance for social programs.