## _081607

## Source details

**Canonical URL:** [_081607](https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/np/pp/2007/eng/_081607.pdf)

## Other formats

- [Markdown version](/-/media/websites/imf/imported-full-text-pdf/external/np/pp/2007/eng/_081607.pdf.md)
- [Structured JSON version](/-/media/websites/imf/imported-full-text-pdf/external/np/pp/2007/eng/_081607.pdf.json)

---

### IEO recommendations and Board reactions — overview
- IEO report recommendations across five categories: the rules of the game and guidance to staff; implementation of existing policy guidance; management of work on exchange rates; confidentiality and Executive Board oversight; and facilitating multilateral policy coordination.
- Key recommendations included:
  - Clarify the rules of the game for the IMF and member countries.
  - Develop practical policy guidance on key analytical issues.
  - Management attention to ensure effective dialogue with authorities.
  - Resolve inconsistencies and ambiguities in exchange regime classification.
  - Back advice on exchange rate regimes with more analytical work.
  - Stay at the forefront of developing analytical framework for assessing exchange rate levels, and translating existing methodologies into relevant advice in policy discussions.
  - Identify and address weaknesses in data provision.
  - Develop and implement guidance for the integration of spillovers into bilateral and regional surveillance.
  - Better focus analytical work on exchange rates.
  - Better understanding on the use and sharing confidential information with the Board in Article IV consultations.
  - Strategic focus on opportunities for potential multilateral concerted action.
- The Board broadly endorsed most recommendations, noting "the shared responsibility of the Board, management, and staff—as well as national authorities" and diverse views on some specific proposals.

### Board follow-up and selected actions
- I. Rules of the Game and Guidance to Staff
  - I.1 Clarify the rules of the game: Adoption of the 2007 Decision on Bilateral Surveillance.
  - I.2 Practical policy guidance: Revised Surveillance Guidance Note (by end 2007; guidance related to the 2007 Decision may be issued by October 2007); tentative review of the stability of the system of exchange rates in 2009; expand and improve CGER work; coordinated training plan by INS and PDR in 2008; best practice examples on PDR website in late 2007.
  - I.3 Management attention to dialogue: Management to develop a strategic approach to identify opportunities to improve effectiveness of dialogue; surveillance agendas and ongoing initiatives to increase MCM participation in Art. IV missions.
- II. Implementing Existing Policy Guidance
  - II.1 Resolve regime classification inconsistencies: Revised Surveillance Guidance Note; Review of Exchange Arrangements, Restrictions, and Markets in September 2007; focus in internal review process.
  - II.2 Back advice with analytic work: Revised Surveillance Guidance Note; knowledge dissemination; focus in internal review process; tentative 2009 review of system stability.
  - II.3 Improve assessments of exchange rate level: Expand and improve CGER methodologies (including low income countries and producers of exhaustible resources); knowledge dissemination; additional research in area departments; focus in internal review process.
  - II.4 Data provision problems: Review of data provision to the Fund in late 2007.
  - II.5 Integration of spillovers: Continued implementation of existing MTS initiatives; no new initiatives.
- III. Management of Work on Exchange Rates
  - III.1 Better focus analytical work: No changes in departmental organization; strengthen coordinating mechanisms (Surveillance Committee and CGER); clarify responsibility and accountability for exchange rate policy issues; consider structure of staff teams; increase MCM participation in Article IV missions.
- IV. Confidentiality and Board Oversight
  - Confidential policy discussions about contingencies should be a regular feature of the dialogue; options for Board accountability and oversight to be considered; no new initiatives planned pending Board Ad Hoc Committee discussion.
- V. Facilitating Multilateral Policy Coordination
  - Continued use of the multilateral consultation vehicle; Directors viewed multilateral consultations as a useful addition to the surveillance toolkit.

### Implementation plan — objectives and monitoring
- Primary components:
  - Update principles and framework of exchange rate surveillance.
  - Develop and disseminate knowledge and analytical tools.
  - Improve operational quality through better quality control and clearer guidance.
  - Adopt a strategic approach for effective engagement with country authorities.
- Monitoring:
  - The 2008 Triennial Surveillance Review (TSR) will review progress on implementation, assessing tangible deliverables and early-stage outcomes (e.g., quality control improvements).
  - Status of the implementation plan will be reported in the IEO’s Annual Report.

### Rules of the game and Surveillance Guidance Note (SGN)
- The 2007 Decision on Bilateral Surveillance Over Members' Policies revalidated the fundamental purpose of surveillance and clarified expectations in areas covered by the IEO report, including assessment of exchange rate levels and policies, candor, and evenhandedness.
- The SGN will be fully revised by end 2007 to reflect expectations set out in the 2007 Decision.
  - Guidance on operational aspects related to the 2007 Surveillance Decision expected by October 2007.
  - An Interim Guidance Note was issued and substantial outreach material produced to familiarize staff and others with the new Decision.

### Practical policy guidance on key analytical issues (stability of the system; intervention)
- Planned initiatives:
  - The revised SGN will include guidance on assessing exchange rate levels and on the uses and limits of intervention, emphasizing tailoring advice to country circumstances and avoiding an overly prescriptive approach.
  - Tentative review of the stability of the system of exchange rates planned for 2009; to be prepared by RES and PDR, in consultation with MCM, focusing on implications for international financial stability of trends in exchange regimes and policies during the current decade. Results could inform further guidance on exchange rate policy advice and regime assessment.
- Footnote: The 2009 review would also help inform advice on the role of exchange regime and exchange rate management for the use of aid in low income countries; this area was identified in a separate Implementation Plan relating to IMF and Aid to Sub-Saharan Africa.

### Enhancing analytic techniques and knowledge dissemination (CGER and training)
- CGER enhancements and research:
  - RES to continue refining the CGER methodology against experience applying CGER in exchange rate surveillance.
  - Planned work includes:
    - Examine whether CGER estimates are broadly in line with subsequent real exchange rate movements at different horizons.
    - Research on the link between capital flows and real exchange rates.
  - RES will seek to expand CGER methodology, with area departments’ help, to key low income countries and producers of exhaustible resources; results expected to be shared with the Board on a trial basis in FY2009 in the semi-annual CGER note.
- Knowledge dissemination and capacity building:
  - Training, workshops, and seminars to be strengthened to translate knowledge and techniques into operational use by staff teams.
  - INS and PDR to develop a coordinated and targeted dissemination plan in early 2008, in consultation with RES and MCM.
  - Best practice examples of exchange rate surveillance to be posted on PDR’s website in late 2007.

### Management engagement with authorities and surveillance agendas
- Strategic approach to dialogue:
  - Surveillance agendas are expected to encourage an early focus on engagement strategy with authorities.
  - Staff encouraged to seek inputs from authorities on critical policy issues for surveillance and areas where authorities see potential value-added from technical assistance.
  - Member countries could be encouraged to prepare policy statements as inputs into policy discussions (as suggested in the 2004 Biennial Surveillance Review).

### Strengthening financial sector expertise in Article IV missions
- MCM participation in Article IV missions is being increased; staff teams encouraged to seek technical inputs from MCM earlier in surveillance.
- INS and MCM to set up a financial sector surveillance training program featuring two new one-week courses expected to be attended by about 60 mission chiefs and desk economists a year, with first deliveries expected in late 2007 and early 2008 respectively.
- INS to provide a one-week course targeted at economists with little or no training in finance, starting in October 2007.
- Expected impact: improvement in skill mix to strengthen understanding of market underpinnings of exchange rate issues and integrate financial sector analysis in exchange rate surveillance.

### Management and Board incentives to raise controversial issues
- Management actions:
  - Promote candor in surveillance and make expectations clear to staff (e.g., through participation in the Surveillance Committee) that critical—including controversial—issues should be adequately raised and covered.
  - Management’s clearance of staff reports signals support for staff positions on potentially controversial issues and management will provide support when needed in discussions with authorities or at the Board.
- Board role:
  - Adoption of the new Surveillance Decision is expected to further strengthen the Board’s role in supporting candor in surveillance.

### Implementing existing policy guidance — regime classification and analysis
- Revised SGN to:
  - Provide clear guidelines on description and analysis of de facto and de jure regimes.
  - Clarify that identifying the de facto exchange rate regime requires primarily a careful description of backward-looking de facto exchange rate policies, with inputs from the classification maintained by MCM.
  - Underscore importance of discussing authorities’ forward-looking policy intentions.
  - Clarify that staff reports should indicate, at least in the Appendix on Fund Relations, what the de jure exchange regime is.
- MCM will collect and publish information on de jure exchange regimes beginning with the 2008 Annual Report on Exchange Arrangements and Exchange Restrictions (AREAER).
- REARM planned for September 2007 to review recent trends and propose measures to improve classification of de facto regimes used for the AREAER.
- Coordination strengthened between MCM and PDR on classification and description of de facto regimes; PDR now routinely comments on proposed AREAER re-classifications by MCM.

### Strengthening analysis of exchange regimes and exchange rate levels
- Actions:
  - Better guidance in the revised SGN pointing to key dimensions for analysis and stressing that analysis should be candid, balanced, comprehensive, country-specific, implementation-aware, and informed by cross-country experience.
  - Dissemination of best practice examples on PDR’s website.
  - Tentative 2009 review of the stability of the system of exchange rates could distill practical guidance and collect cross-country experience.
- Exchange rate level assessment:
  - Include guidance on assessing exchange rate levels in the revised SGN.
  - Continue to develop and refine analytical tools (CGER work program).
  - Better knowledge dissemination of techniques and best practices.
  - Area departments plan additional bilateral surveillance work using CGER inputs, other quantitative methodologies tailored to individual countries, and qualitative analyses.
  - Analytical work on exchange rate assessment for oil producers initiated in MCD.
  - Increase emphasis on assessments of exchange rate levels in internal review process; additional emphasis already resulting from the 2007 Surveillance Decision.

### Data provision, spillovers, and multilateral coordination
- Data provision:
  - Improving data provision to the Fund remains a challenge.
  - Planned review of data provision to the Fund in late 2007 to consider scope and possible remedies.
- Spillovers:
  - Continued initiatives under the Medium-Term Strategy: regional outlooks; better assessment of external economic and financial market spillovers affecting individual countries by drawing on multilateral and regional surveillance; and spillovers from systemic countries.
  - Increased use of the Fund’s Global Economic Model and Global Fiscal Model has benefited spillover analysis.
  - Management instructed that "Staff reports for systemically important countries ... should include a substantive analysis and discussion of spillover issues, drawing the implications of the country’s developments, policies, and vulnerabilities both generally for the international community and specifically for neighboring countries and other affected groups."
- Multilateral consultations:
  - Multilateral consultations will continue as a key vehicle to promote debate on issues of systemic or regional importance and to enhance and deepen Fund multilateral surveillance.

### Management of exchange rate work and internal coordination
- No significant reorganization proposed; improvements include:
  - Better coordinating mechanisms on exchange rate work. Surveillance Committee tasked to review periodically topics in exchange rate work of Fund-wide relevance and make recommendations to management.
  - CGER to continue as a key forum to improve analytics on exchange rate levels.
  - Closer integration of financial sector work in Fund surveillance through increased MCM participation in Article IV missions.
- Confidentiality and Board oversight:
  - No new initiatives proposed at present on expectations for inclusion in Article IV staff reports versus oral Board mentions or confidential staff-authority discussions; further actions could be considered following the Board’s Ad Hoc Committee on Confidential Information discussion of a related report.

### 1.      This paper presents an implementation plan that responds to the Board-

### This paper presents an implementation plan that responds to the Board-endorsed recommendations in the IEO Report on the Evaluation of the IMF’s Exchange Rate Policy Advice, 1999-2005 (“the IEO Report”)

### IEO recommendations and Board reactions — overview
- The IEO report made wide-ranging recommendations across five categories: the rules of the game and guidance to staff; implementation of existing policy guidance; management of work on exchange rates; confidentiality and Executive Board oversight; and facilitating multilateral policy coordination.
- Key IEO recommendations included:
  - Clarify the rules of the game for the IMF and member countries.
  - Develop practical policy guidance on key analytical issues.
  - Management to give more attention to ensuring effective dialogue with authorities.
  - Resolve inconsistencies and ambiguities in exchange regime classification.
  - Back up advice on exchange rate regimes with more analytical work.
  - Stay at the forefront of developing analytical framework for assessing exchange rate levels, and translating existing methodologies into relevant advice in policy discussions.
  - Identify and address weaknesses in data provision.
  - Develop and implement guidance for the integration of spillovers into bilateral and regional surveillance.
  - Better focus the analytical work on exchange rates.
  - Better understanding on the use and sharing confidential information with the Board in Article IV consultations.
  - Strategic focus on opportunities for potential multilateral concerted action.
- The Board broadly endorsed most recommendations, noting “the shared responsibility of the Board, management, and staff—as well as national authorities” and diverse views on some specific proposals.

### Summary of Board follow-up and actions (selected items from Table)
- I. Rules of the Game and Guidance to Staff
  - I.1 Clarify the rules of the game: Adoption of the 2007 Decision on Bilateral Surveillance.
  - I.2 Practical policy guidance: Revised Surveillance Guidance Note (by end 2007; guidance related to the 2007 Decision may be issued by October 2007); tentative review of the stability of the system of exchange rates in 2009; expand and improve CGER work; coordinated training plan by INS and PDR in 2008; best practice examples on PDR website in late 2007.
  - I.3 Management attention to dialogue: Management to develop a strategic approach to identify opportunities to improve effectiveness of dialogue; surveillance agendas and ongoing initiatives to increase MCM participation in Art. IV missions.
- II. Implementing Existing Policy Guidance
  - II.1 Resolve regime classification inconsistencies: Revised Surveillance Guidance Note; Review of Exchange Arrangements, Restrictions, and Markets in September 2007; focus in internal review process.
  - II.2 Back advice with analytic work: Revised Surveillance Guidance Note; knowledge dissemination; focus in internal review process; tentative 2009 review of system stability.
  - II.3 Improve assessments of exchange rate level: Expand and improve CGER methodologies (including low income countries and producers of exhaustible resources); knowledge dissemination; additional research in area departments; focus in internal review process.
  - II.4 Data provision problems: Review of data provision to the Fund in late 2007.
  - II.5 Integration of spillovers: Continued implementation of existing MTS initiatives; no new initiatives.
- III. Management of Work on Exchange Rates
  - III.1 Better focus analytical work: No changes in departmental organization; strengthen coordinating mechanisms (Surveillance Committee and CGER); clarify responsibility and accountability for exchange rate policy issues; consider structure of staff teams; increase MCM participation in Article IV missions.
- IV. Confidentiality and Board Oversight
  - Confidential policy discussions about contingencies should be a regular feature of the dialogue; options for Board accountability and oversight to be considered; no new initiatives planned pending Board Ad Hoc Committee discussion.
- V. Facilitating Multilateral Policy Coordination
  - Continued use of the multilateral consultation vehicle; Directors viewed multilateral consultations as a useful addition to the surveillance toolkit.

### Implementation plan — objectives and monitoring
- Primary components of the implementation plan:
  - Update principles and framework of exchange rate surveillance.
  - Develop and disseminate knowledge and analytical tools.
  - Improve operational quality through better quality control and clearer guidance.
  - Adopt a strategic approach for effective engagement with country authorities.
- Monitoring:
  - The 2008 Triennial Surveillance Review (TSR) will review progress on implementation, assessing tangible deliverables and early-stage outcomes (e.g., quality control improvements).
  - Status of the implementation plan will be reported in the IEO’s Annual Report.

### Rules of the game and Surveillance Guidance Note (SGN)
- The 2007 Decision on Bilateral Surveillance Over Members' Policies revalidated the fundamental purpose of surveillance and clarified expectations in areas covered by the IEO report, including assessment of exchange rate levels and policies, candor, and evenhandedness.
- The SGN will be fully revised by end 2007 to reflect expectations set out in the 2007 Decision.
  - Guidance on operational aspects related to the 2007 Surveillance Decision expected by October 2007.
  - An Interim Guidance Note was issued and substantial outreach material produced to familiarize staff and others with the new Decision.

### Practical policy guidance on key analytical issues (stability of the system; intervention)
- Planned initiatives:
  - The revised SGN will include guidance on assessing exchange rate levels and on the uses and limits of intervention, emphasizing tailoring advice to country circumstances and avoiding an overly prescriptive approach.
  - Depending on resource constraints, a review of the stability of the system of exchange rates is tentatively planned for 2009; to be prepared by RES and PDR, in consultation with MCM, focusing on implications for international financial stability of trends in exchange regimes and policies during the current decade. Results could inform further guidance on exchange rate policy advice and regime assessment.
- Footnote context:
  - The 2009 review would also help inform advice on the role of exchange regime and exchange rate management for the use of aid in low income countries; this area was identified in a separate Implementation Plan relating to IMF and Aid to Sub-Saharan Africa.

### Enhancing analytic techniques and knowledge dissemination (CGER and training)
- CGER enhancements and research:
  - RES will continue to refine the CGER methodology against an increasing stock of experience applying CGER in exchange rate surveillance.
  - Planned work includes examining whether CGER estimates are broadly in line with subsequent real exchange rate movements at different horizons and research on the link between capital flows and real exchange rates.
  - RES will seek to expand CGER methodology, with area departments’ help, to key low income countries and producers of exhaustible resources; given data limitations, results expected to be shared with the Board on a trial basis in FY2009 in the semi-annual CGER note.
- Knowledge dissemination and capacity building:
  - Training, workshops, and seminars will be strengthened to translate existing knowledge and techniques into operational use by staff teams.
  - INS and PDR will develop a coordinated and targeted dissemination plan in early 2008, in consultation with RES and MCM.
  - A section with examples of best practice in exchange rate surveillance will be created on PDR’s website in late 2007.

### Management engagement with authorities and surveillance agendas
- Strategic approach to dialogue:
  - Surveillance agendas are expected to encourage an early focus on engagement strategy with authorities.
  - Staff will be encouraged, whenever feasible, to seek inputs from authorities on critical policy issues for surveillance and areas where authorities see potential value-added from technical assistance.
  - Member countries could be encouraged to prepare policy statements as inputs into policy discussions, as suggested in the 2004 Biennial Surveillance Review.

*Source: Implementation plan in response to the Board-endorsed recommendations in the IEO Report on the Evaluation of the IMF’s Exchange Rate Policy Advice, 1999-2005.*

### 12.      Ongoing initiatives to strengthen financial sector expertise in Article IV missions

### 12.      Ongoing initiatives to strengthen financial sector expertise in Article IV missions

### Strengthening financial sector expertise in Article IV missions
- Participation by MCM staff in Article IV missions is being increased; staff teams are encouraged to seek technical inputs from MCM at an earlier stage of surveillance.
- INS and MCM are setting up a financial sector surveillance training program featuring two new one-week courses expected to be attended by about 60 mission chiefs and desk economists a year, with the first deliveries expected in late 2007 and early 2008 respectively.
- INS will also provide a one-week course targeted at economists with little or no training in finance, starting in October 2007.
- Expected impact: improvement in skill mix to strengthen understanding of the market underpinnings of exchange rate issues and integrate financial sector analysis in exchange rate surveillance.

### Management and Board incentives to raise controversial issues
- Management actions:
  - Promote candor in surveillance and make expectations clear to staff (e.g., through participation in the Surveillance Committee) that critical—including controversial—issues should be adequately raised and covered.
  - Management’s clearance of staff reports signals support for staff positions on potentially controversial issues and management will provide support when needed in discussions with authorities or at the Board.
- Board role:
  - With the adoption of the new Surveillance Decision, the Board’s role in supporting candor in surveillance is expected to be further strengthened.

### Implementing existing policy guidance — regime classification and analysis
- Revised Surveillance Guidance Note (SGN) actions:
  - Provide clear guidelines on description and analysis of de facto and de jure regimes.
  - Clarify that identifying the de facto exchange rate regime requires primarily a careful description of backward-looking de facto exchange rate policies, with inputs from the classification maintained by MCM.
  - Underscore the importance of discussing authorities’ forward-looking policy intentions.
  - Clarify that staff reports should indicate, at least in the Appendix on Fund Relations, what the de jure exchange regime is.
- MCM will collect and publish information on de jure exchange regimes beginning with the 2008 Annual Report on Exchange Arrangements and Exchange Restrictions (AREAER).
- REARM (Review of Exchange Arrangements, Restrictions, and Markets), planned for September 2007, will review recent trends and propose measures to improve the classification of de facto regimes used for the AREAER.
- Coordination strengthened between MCM and PDR on classification and description of de facto regimes; PDR now routinely comments on proposed AREAER re-classifications by MCM.

### Strengthening analysis of exchange regimes and exchange rate levels
- Actions to strengthen analysis:
  - Better guidance in the revised Surveillance Guidance Note pointing to key dimensions for analysis and stressing that analysis should be candid, balanced, comprehensive, country-specific, implementation-aware, and informed by cross-country experience.
  - Dissemination of best practice examples of analysis of exchange regimes on PDR’s website.
  - A tentatively planned review of the stability of the system of exchange rates (paragraph 9) could distill practical guidance and collect cross-country experience.
- Exchange rate level assessment actions:
  - Include guidance on assessing exchange rate levels in the revised SGN.
  - Continue to develop and refine new analytical tools for assessing exchange rates (initiatives described in CGER work program).
  - Better knowledge dissemination to staff of cutting-edge techniques and best practices.
  - Area departments plan additional bilateral surveillance work on exchange rate assessments using inputs from CGER methodology, other quantitative methodologies tailored to individual countries, and qualitative analyses.
  - Analytical work on exchange rate assessment for oil producers initiated in MCD.
  - Increase emphasis on assessments of exchange rate levels in internal review process; additional emphasis already resulting from the 2007 Surveillance Decision.

### Data provision, spillovers, and multilateral coordination
- Data provision:
  - Improving data provision to the Fund remains a challenge.
  - A planned review of data provision to the Fund in late 2007 will consider the scope of the problem and possible remedies.
- Spillovers:
  - Initiatives under the Medium-Term Strategy will continue: focus on regional trends through regional outlooks; better assessment of external economic and financial market spillovers affecting individual countries by drawing on multilateral and regional surveillance; and spillovers emanating from systemic countries.
  - Analysis of spillovers has benefited from increased use of the Fund’s Global Economic Model and Global Fiscal Model.
  - Management instructed that “Staff reports for systemically important countries ... should include a substantive analysis and discussion of spillover issues, drawing the implications of the country’s developments, policies, and vulnerabilities both generally for the international community and specifically for neighboring countries and other affected groups.”
- Multilateral consultations:
  - Multilateral consultations will continue to be used as a key vehicle to promote debate on issues of systemic or regional importance and to enhance and deepen Fund multilateral surveillance.

### Management of exchange rate work and internal coordination
- No significant reorganization proposed; improvements to existing structure include:
  - Better coordinating mechanisms on exchange rate work. Surveillance Committee tasked to review periodically topics in exchange rate work of Fund-wide relevance and make recommendations to management.
  - CGER will continue as a key forum to improve analytics on exchange rate levels.
  - Closer integration of financial sector work in Fund surveillance through increased MCM participation in Article IV missions.
- Confidentiality and Board oversight:
  - No new initiatives proposed at present on expectations for inclusion in Article IV staff reports versus oral Board mentions or confidential staff-authority discussions; further actions could be considered following the Board’s Ad Hoc Committee on Confidential Information discussion of a related report.

### Estimated costs (summary and Appendix details)
- Overall additional cost estimate for above initiatives:
  - Some US$5 million (19.6 full time equivalent (FTE) staff years) in FY2008.
  - Costs would be lower in subsequent years, though the review of the stability of the system of exchange rates, tentatively planned for FY2009, would add an estimated US$0.7 million (almost three FTE staff years) in that year.
- Further CGER development and SGN update:
  - Expected to cost about US$1.1 million in FY2008, a similar amount in FY2009, and US$0.8 million in subsequent years.
  - Resources expected mainly from reallocation within RES and a small reallocation within PDR, with any residual financed from central resources.
  - Reallocation will require reductions in other departmental activities: research on trade, low-income countries, and emerging markets (the dollar equivalent of three FTEs) and approximately US$0.25 million (the dollar equivalent of one FTE) to be financed from central resources.
- Cost of devoting greater resources to exchange rate surveillance:
  - Estimated at about US$3.9 million in FY2008, and probably somewhat less in subsequent years.
  - The FY2008 amount represents some 3.2 percent of the current surveillance budgets of area departments.
- Appendix detailed breakdown (FY2008 totals = US$5 million; 19.6 FTE staff years):
  - Costs associated with developing knowledge and guidance: US$1.1 million (4.3 FTE staff years)
    - Enhancement of CGER: US$1 million, including:
      - Expansion of CGER methodologies to low-income countries and exporters of natural resources: US$0.38 million.
      - Self-assessment of whether CGER estimates are broadly in line with subsequent real exchange rate movements: US$0.15 million.
      - Work on the link between capital flows and the real exchange rate: US$0.5 million.
    - Incorporating better guidance on exchange rate issues into the SGN: approximately US$0.06 million.
  - Costs associated with improving the coverage of exchange rate issues: US$3.9 million (15.3 FTE staff years)
    - Improving assessment of exchange rate levels: estimated additional work in 64 cases costing approximately US$2.2 million.
    - Further analysis of regime suitability: work could cover approximately 53 cases and cost US$1.1 million.
    - Incorporation of experts on foreign exchange markets to Article IV missions: perhaps 10 cases costing approximately US$0.4 million.
    - Dissemination initiatives: estimated cost approximately US$0.08 million (approximately 0.1 FTE staff years for preparation and an additional 0.2 FTE staff years of attendance per year).
- Beyond FY2008:
  - Recurrent costs will remain, including recurrent costs of CGER expansion estimated at US$0.8 million (three FTE staff years).
  - In FY2009, the tentatively planned review of the stability of the system of exchange rates would add approximately US$0.73 million (2.9 FTE staff years).

*Source: _081607 - 12.      Ongoing initiatives to strengthen financial sector expertise in Article IV missions*

---


_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/np/pp/2007/eng/_081607.pdf_