## _100709 - Section 1 ## Source details **Canonical URL:** [_100709 - Section 1](https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2009/_100709.pdf) ## Other formats - [Markdown version](/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2009/_100709.pdf.md) - [Structured JSON version](/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2009/_100709.pdf.json) --- ### I. Overview - Periodic Monitoring Reports (PMRs) established by the Executive Board in January 2007 to ensure systematic monitoring of IEO recommendations endorsed by the Board. - First PMR discussed January 2008; second PMR discussed by the Evaluation Committee (EVC) in November 2008. - This third PMR updates: - Status of performance benchmarks related to IEO evaluations covered in the first and second PMRs (listed in the Periodic Monitoring Report on the Status of Implementation Plans in Response to Board-Endorsed IEO Recommendations, Table 5). - Implementation status of the management implementation plan (MIP) for Board-endorsed recommendations from the IEO evaluation of “Structural Conditionality in IMF-Supported Programs.” - The Executive Board discussed the IEO Evaluation of “IMF Involvement in International Trade Policy Issues” in June 2009; the related MIP will be discussed by the Executive Board later in 2009 and is not reported here. - Status of recommendations related to the IEO’s 2008 evaluation on IMF Corporate Governance is being handled separately. ### II. Summary of Implementation Status - A. Structural Conditionality in IMF-Supported Programs - Implementation of key performance benchmarks related to the IEO Evaluation of Structural Conditionality in IMF-Supported Programs is complete. Details in Appendix Table A.1. - Completed actions and developments: - Operational Guidance Note on Conditionality (OGN) revised in July 2008 to emphasize rigorous application of the principles of parsimony and criticality when designing conditionality; revisions improve program documentation to establish links between program goals, strategies, and conditionality. An inter-departmental contact group established in February 2008 developed these OGN revisions. The OGN is being further revised to reflect the move towards a review-based structural conditionality framework. - Monitoring of Fund Arrangements (MONA) database launched on the Fund’s external web site in January 2009. - First annual report on the application of structural conditionality (Application of Structural Conditionality 2008 Annual Report), issued to the Board for information in July 2008 and made available on the Fund’s external website, provides new data for the period 2005-07; it found that the overall number of conditions had remained unchanged relative to the findings of the IEO evaluation, but conditions had become more concentrated in the IMF’s core areas of expertise (including those shared with the World Bank). The second annual report will soon be issued to the Board for information. - Two recent staff papers identify a decline in the frequency of structural conditions in low-income country programs and in recent crisis programs. - Additional important changes not directly related to the IEO evaluation: - The IMF no longer establishes structural performance criteria under any of its lending arrangements, nor structural assessment criteria under the Policy Support Instrument. - Table 1. Structural Conditionality—Status of Key Benchmarks (as reported) - Expected Date / Date Completed - 1. Creation of inter-departmental contact group — February 2008 / February 2008 - 2. Revise OGN on conditionality — July 2008 / July 2008 - 3. Modifications to the MONA database: - Put in place a system to track goals and strategies and its links to conditions — July 2008 / July 2008 - First annual monitoring report — August 2008 / July 2008 - Availability on IMF external website 1/ — End-2008 / January 2009 - 1/ Temporarily removed from external website between May and October 2009 to allow time for the design of a better economic classification of structural conditions (see Table 2). - B. Outstanding Recommendations from the Second PMR - Structural reforms in Fund-supported programs now monitored through a review-based approach; conditionality attached to such reforms now takes the form of benchmarks (assessed in reviews) or prior actions. - Most outstanding recommendations from the previous PMR have been fully addressed, although some actions remain to be taken. Highlights: - Revised guidance on operational aspects of the 2007 Surveillance Decision issued in June 2009; an updated Surveillance Guidance Note expected to take effect in October 2009 and be circulated to the Executive Board. - Stability of the system of exchange rates reviewed at an informal Board seminar in July 2009; the underlying staff paper expected to be published soon and a revised classification of exchange rate arrangements is being published. - MONA database made available on the IMF’s external web site beginning in January 2009 (later temporarily removed to redesign economic classification and put back on in October 2009). - In light of wide-ranging modifications to LIC facilities in July 2009, the recommendation to conduct the 2010 review of the PRGF need not be retained as a performance benchmark. - Table 2. Outstanding Recommendations From the Second PMR — Implementation Status (selected items) - 1 Revise Surveillance Guidance Note to reflect 2007 Surveillance Decision and guidance on its implementation - Largely completed. Revised guidance on operational aspects of the 2007 Surveillance Decision was issued in June 2009. An updated Surveillance Guidance Note, which reflects both the Triennial Surveillance Review and the 2007 Surveillance Decision, is expected to take effect in October 2009. - 2 Conduct Review of the Stability of the System of Exchange Rates - Completed. A paper entitled "Toward a Stable System of Exchange Rates" was discussed at an informal Board seminar in July 2009 and will be published as an Occasional Paper in the near future. - 3 Review system on Classification of Exchange Rate Arrangements - Completed. The existing IMF staff classification system has been modified. The revised classification will be published in the 2009 Annual Report on Exchange Arrangements and Exchange Restrictions (AREAER) and in the IMF’s 2009 Annual Report. - 4 Expand and improve CGER work (including refining methodologies and expanding it to key low-income countries and producers of exhaustible resources) - A Working Paper outlining a methodology to assess current account balances in exporters of non-renewable resources was issued as IMF WP 09/33. A second working paper presenting three CGER-type methodologies for exporters of non-renewable resources is forthcoming in the fall of 2009. Extension and adaptation of CGER methodologies to low income countries is at an advanced stage; preliminary background notes should be available for circulation in the fall of 2009, with an Occasional Paper ready by the end of the fiscal year. - 5 Conduct 2010 Review of PRGF - In July 2009, the Executive Board approved wide-ranging modifications to upgrade concessional financing facilities for low-income countries (LICs), and the Extended Credit Facility (ECF) will succeed the PRGF. Directors agreed to review experience with the new facilities and financing framework within three years of the effective date of the decision. - 6 Make MONA database available on the Fund’s external website - Completed. The MONA database was launched on the Fund’s external web site in January 2009 containing information beginning in 2002. In May 2009, the database was taken off the website to allow time for the design of a more up-to-date economic classification of structural conditions. The database was put back on the external website in October 2009. - 7 Assess the evolution of the FSAP in recent years as part of the FY2010 Review of the FSAP - The Board discussed in September 2009 a staff paper assessing the lessons learnt from the FSAP over the last decade and proposing enhancements to make it more flexible, targeted, and better integrated with surveillance. - 8 Measures to address excessive staff mobility will be carefully examined in the coming year - A more strategic and targeted approach to mobility was introduced to support crisis departments through centrally-managed transfers of mid-career staff to crisis departments. The expectation is that staff should serve at least two years in an assignment before moving. ### III. Conclusions - All key performance benchmarks related to the MIPs covered in this report have either been met or are on track for timely completion. - No new remedial actions proposed. - There are no outstanding performance benchmarks to be reviewed in the next PMR. - Proposed Decision: The Executive Board supports the conclusions in Paragraph 7 of the Third Periodic Monitoring Report on the Implementation of Board-Endorsed IEO Recommendations (PMR). *Prepared by the Strategy, Policy, and Review Department; Approved by Reza Moghadam; October 7, 2009.* ### _100709 - Section 2 ### Information in Board Documents and Program Documentation - "Program documentation needs to be more explicit about the objectives being supported by the IMF and how the measures being proposed would help achieve these objectives." - "For PRGF arrangements, in particular, program requests should be accompanied by an operational roadmap covering the length of the program, elaborating on the modalities of the reforms and on their sequencing and expected impact." - Staff reports should include a description of the links between goals, strategies, and conditionality. A judgment that a condition is of critical importance for achieving program goals should be at the core of such description. - "One way of doing so would be for staff to quantify the impact of the implementation of SC on the macroeconomic framework of the Fund-supported program; it is recognized, however, that such assessment might not always be possible ex ante." - "The use of an appendix table would be a possibility for establishing these links but would not be required; these appendix tables will not be subject to the usual word count limits." ### Directors' Support and Specific Proposals - Supported: "Directors agreed...that the link between program goals, strategies, and conditions should be better explained...." - In particular: "...some Directors reiterated their support for inclusion in program documents of text boxes that lay out the rationale for ... conditions." - "...several Directors proposed that initial program requests include a roadmap describing the sequencing and linkage of conditions to stated program goals; some Directors proposed that final program reviews should include a stock-taking to compare stated program goals with their achievement." ### Staff Reporting, Review Processes, and Guidance - "See item 2.1 and 2.4 above." (cross-references retained as in source) - "In addition, in the context of reviewing the OGN, the contact group will assess if there is a need for additional guidance regarding the use of structural benchmarks." - "See item 2.1 above." ### Appendix Tables and Implementation Notes - Note: "The first three columns of this table reproduce Table 1 of 'Implementation Plan in Response to Board-Endorsed Recommendations Arising from the IEO Evaluation of Structural Conditionality in IMF-Supported Programs,' omitting those recommendations that were not supported by the Executive Board." *Source: _100709* ### Section 1 ### _100709 - Section 1 ### I. Overview - Periodic Monitoring Reports (PMRs) were established by the Executive Board in January 2007 to ensure systematic monitoring of IEO recommendations endorsed by the Board. - The first PMR was discussed by the Executive Board in January 2008 and the second PMR was discussed by the Evaluation Committee (EVC) in November 2008. - This third PMR updates: - The status of performance benchmarks related to IEO evaluations covered in the first and second PMRs (listed in the Periodic Monitoring Report on the Status of Implementation Plans in Response to Board-Endorsed IEO Recommendations, Table 5). - The implementation status of the management implementation plan (MIP) for Board-endorsed recommendations stemming from the IEO evaluation of “Structural Conditionality in IMF-Supported Programs.” - The Executive Board discussed the IEO Evaluation of “IMF Involvement in International Trade Policy Issues” in June 2009; the related MIP will be discussed by the Executive Board later in 2009 and is not reported here. - The status of recommendations related to the IEO’s 2008 evaluation on IMF Corporate Governance is being handled separately. ### II. Summary of Implementation Status #### A. Structural Conditionality in IMF-Supported Programs - The implementation of key performance benchmarks related to the IEO Evaluation of Structural Conditionality in IMF-Supported Programs is complete. Details are provided in Appendix Table A.1. - Completed actions and developments: - The Operational Guidance Note on Conditionality (OGN) was revised in July 2008 to emphasize rigorous application of the principles of parsimony and criticality when designing conditionality in Fund arrangements; revisions also improve program documentation to establish links between program goals, strategies, and conditionality. An inter-departmental contact group established in February 2008 developed these OGN revisions. The OGN is being further revised to reflect the move towards a review-based structural conditionality framework. - The Monitoring of Fund Arrangements (MONA) database was launched on the Fund’s external web site in January 2009. - The first annual report on the application of structural conditionality (Application of Structural Conditionality 2008 Annual Report), issued to the Board for information in July 2008 and made available on the Fund’s external website, provides new data for the period 2005-07. It found that the overall number of conditions had remained unchanged relative to the findings of the IEO evaluation, but conditions had become more concentrated in the IMF’s core areas of expertise (including those shared with the World Bank). The second annual report will soon be issued to the Board for information. - Two recent staff papers identify a decline in the frequency of structural conditions in low-income country programs and in recent crisis programs. - Additional important changes not directly related to the IEO evaluation: - The IMF no longer establishes structural performance criteria under any of its lending arrangements, nor structural assessment criteria under the Policy Support Instrument. - Table 1. Structural Conditionality—Status of Key Benchmarks (as reported) - Expected Date / Date Completed - 1. Creation of inter-departmental contact group — February 2008 / February 2008 - 2. Revise OGN on conditionality — July 2008 / July 2008 - 3. Modifications to the MONA database: - Put in place a system to track goals and strategies and its links to conditions — July 2008 / July 2008 - First annual monitoring report — August 2008 / July 2008 - Availability on IMF external website 1/ — End-2008 / January 2009 - 1/ Temporarily removed from external website between May and October 2009 to allow time for the design of a better economic classification of structural conditions (see Table 2). #### B. Outstanding Recommendations from the Second PMR - The implementation of structural reforms in Fund-supported programs is now monitored through a review-based approach; conditionality attached to such reforms now takes the form of benchmarks (assessed in reviews) or prior actions. - Most outstanding recommendations from the previous PMR have been fully addressed, although some actions remain to be taken. Highlights: - Revised guidance on operational aspects of the 2007 Surveillance Decision was issued in June 2009; an updated Surveillance Guidance Note is expected to take effect in October 2009 and be circulated to the Executive Board. - The stability of the system of exchange rates was reviewed at an informal Board seminar in July 2009; the underlying staff paper is expected to be published soon and a revised classification of exchange rate arrangements is being published. - The MONA database was made available on the IMF’s external web site beginning in January 2009 (later temporarily removed to redesign economic classification and put back on in October 2009). - In light of wide-ranging modifications to LIC facilities in July 2009, the recommendation to conduct the 2010 review of the PRGF need not be retained as a performance benchmark. - Table 2. Outstanding Recommendations From the Second PMR — Implementation Status (selected items) - 1 Revise Surveillance Guidance Note to reflect 2007 Surveillance Decision and guidance on its implementation - Largely completed. Revised guidance on operational aspects of the 2007 Surveillance Decision was issued in June 2009. An updated Surveillance Guidance Note, which reflects both the Triennial Surveillance Review and the 2007 Surveillance Decision, is expected to take effect in October 2009. - 2 Conduct Review of the Stability of the System of Exchange Rates - Completed. A paper entitled "Toward a Stable System of Exchange Rates" was discussed at an informal Board seminar in July 2009 and will be published as an Occasional Paper in the near future. - 3 Review system on Classification of Exchange Rate Arrangements - Completed. The existing IMF staff classification system has been modified. The revised classification will be published in the 2009 Annual Report on Exchange Arrangements and Exchange Restrictions (AREAER) and in the IMF’s 2009 Annual Report. - 4 Expand and improve CGER work (including refining methodologies and expanding it to key low-income countries and producers of exhaustible resources) - A Working Paper outlining a methodology to assess current account balances in exporters of non-renewable resources was issued as IMF WP 09/33. A second working paper presenting three CGER-type methodologies for exporters of non-renewable resources is forthcoming in the fall of 2009. Extension and adaptation of CGER methodologies to low income countries is at an advanced stage; preliminary background notes should be available for circulation in the fall of 2009, with an Occasional Paper ready by the end of the fiscal year. - 5 Conduct 2010 Review of PRGF - In July 2009, the Executive Board approved wide-ranging modifications to upgrade concessional financing facilities for low-income countries (LICs), and the Extended Credit Facility (ECF) will succeed the PRGF. Directors agreed to review experience with the new facilities and financing framework within three years of the effective date of the decision. - 6 Make MONA database available on the Fund’s external website - Completed. The MONA database was launched on the Fund’s external web site in January 2009 containing information beginning in 2002. In May 2009, the database was taken off the website to allow time for the design of a more up-to-date economic classification of structural conditions. The database was put back on the external website in October 2009. - 7 Assess the evolution of the FSAP in recent years as part of the FY2010 Review of the FSAP - The Board discussed in September 2009 a staff paper assessing the lessons learnt from the FSAP over the last decade and proposing enhancements to make it more flexible, targeted, and better integrated with surveillance. - 8 Measures to address excessive staff mobility will be carefully examined in the coming year - A more strategic and targeted approach to mobility was introduced to support crisis departments through centrally-managed transfers of mid-career staff to crisis departments. The expectation is that staff should serve at least two years in an assignment before moving. ### III. Conclusions - All key performance benchmarks related to the MIPs covered in this report have either been met or are on track for timely completion. - No new remedial actions are proposed. - There are no outstanding performance benchmarks to be reviewed in the next PMR. - Proposed Decision: The Executive Board supports the conclusions in Paragraph 7 of the Third Periodic Monitoring Report on the Implementation of Board-Endorsed IEO Recommendations (PMR). *Prepared by the Strategy, Policy, and Review Department; Approved by Reza Moghadam; October 7, 2009.* ### Section 2 ### _100709 - Section 2 ### Information in Board Documents and Program Documentation - "Program documentation needs to be more explicit about the objectives being supported by the IMF and how the measures being proposed would help achieve these objectives." - "For PRGF arrangements, in particular, program requests should be accompanied by an operational roadmap covering the length of the program, elaborating on the modalities of the reforms and on their sequencing and expected impact." - Staff reports should include a description of the links between goals, strategies, and conditionality. A judgment that a condition is of critical importance for achieving program goals should be at the core of such description. - "One way of doing so would be for staff to quantify the impact of the implementation of SC on the macroeconomic framework of the Fund-supported program; it is recognized, however, that such assessment might not always be possible ex ante." - "The use of an appendix table would be a possibility for establishing these links but would not be required; these appendix tables will not be subject to the usual word count limits." ### Directors' Support and Specific Proposals - Supported: "Directors agreed...that the link between program goals, strategies, and conditions should be better explained...." - In particular: "...some Directors reiterated their support for inclusion in program documents of text boxes that lay out the rationale for ... conditions." - "...several Directors proposed that initial program requests include a roadmap describing the sequencing and linkage of conditions to stated program goals; some Directors proposed that final program reviews should include a stock-taking to compare stated program goals with their achievement." ### Staff Reporting, Review Processes, and Guidance - "See item 2.1 and 2.4 above." (cross-references retained as in source) - "In addition, in the context of reviewing the OGN, the contact group will assess if there is a need for additional guidance regarding the use of structural benchmarks." - "See item 2.1 above." ### Appendix Tables and Implementation Notes - Note: "The first three columns of this table reproduce Table 1 of 'Implementation Plan in Response to Board-Endorsed Recommendations Arising from the IEO Evaluation of Structural Conditionality in IMF-Supported Programs,' omitting those recommendations that were not supported by the Executive Board." *Source: _100709 - Section 2* --- _Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2009/_100709.pdf_