## _063014a

## Source details

**Canonical URL:** [_063014a](https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2014/_063014a.pdf)

## Other formats

- [Markdown version](/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2014/_063014a.pdf.md)
- [Structured JSON version](/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2014/_063014a.pdf.json)

---

### EXECUTIVE SUMMARY — Overview and Implementation Snapshot
- This Periodic Monitoring Report (PMR) reviews implementation status of actions set out in four Management Implementation Plans (MIPs) endorsed by the Board since the Fifth PMR (issued September 2012, approved February 2013).
- PMR also presents a brief update on progress related to previous MIPs agreed since 2007.
- Responsibility for preparing PMRs transferred to the Office of Internal Audit and Inspection (OIA); this is the first PMR prepared by OIA under this mandate.
- Assessment of implementation required judgment; some actions are one-off while others require progressive steps and a longer time horizon.
- Robust assessment may require additional information, including new surveys of country authorities, Executive Directors, and/or staff.
- Approved by Clare Brady; prepared by the Office of Internal Audit and Inspection with assistance of Juan Carlos di Tata (consultant).

- Key implementation statistics:
  - Total Board-endorsed recommendations in the four new MIPs: 21.
  - Total follow-up steps: 46.
  - Implementation status of the 46 follow-up steps:
    - 20 follow-up steps have been implemented (over 40 percent of the total).
    - 22 steps are in progress (just under 50 percent of the total).
    - 4 steps have been partially implemented.
  - Substantial progress: most actions envisaged in the four new MIPs have either been implemented or are in progress.

*Source: EXECUTIVE SUMMARY, _063014a - EXECUTIVE SUMMARY, June 30, 2014.*

### Integrated Surveillance Decision (ISD), Run-Up to the Crisis MIP, and Surveillance Practice
- ISD adoption and guidance:
  - Integrated Surveillance Decision adopted July 18, 2012; came into effect January 18, 2013.
  - Updated Guidance Note for Surveillance under Article IV Consultations issued October 2012; emphasizes stability as organizing principle and provides guidance on five operational priorities from 2011 TSR.
- Run-Up to the Crisis MIP linkage to 2011 TSR:
  - MIP built on 2011 TSR and listed five general recommendations with specific actions.
- Risk analysis and surveillance practice progress:
  - Since April 2012, WEOs increased attention to risks around the baseline, including fan charts and plausible downside scenarios.
  - Downside risks prominently analyzed in the GFSR and Fiscal Monitor.
  - Continued semi-annual Early Warning Exercise (EWE) and Vulnerability Exercises (VEs).
  - Modeling efforts and dissemination: downside scenario simulation results shared with country teams; tools underlying multilateral surveillance disseminated to area departments.
  - Risk Assessment Matrix (RAM) now regular in staff reports for Article IV consultations and Financial System Stability Assessments (FSSA).
  - Review of fiscal policy and public debt sustainability analysis in market-access countries (MACs) completed August 2011; guidance note issued May 2013.
  - Global Risks Assessment Matrix (G-RAM) managed by interdepartmental Risk Working Group (RG); Tail Risk Group (TRG) of A-level economists established to explore tail risks.
  - Macro-prudential policy work: Key Aspects of Macro-prudential Policy completed June 2013; Interdepartmental Group established.
- Box 2 selected progress findings:
  - Interconnectedness: significant progress via Spillover Reports and multilateral surveillance papers; coverage in Article IV consultations remained uneven.
  - Risk assessment: some progress in Article IV reports; fewer reports included tail risks.
  - Financial stability: Financial Surveillance Work Agenda (April 2012) and Financial Surveillance Strategy (FSS) (September 2012) published; coverage of financial sector issues increased but depth and cross-border analysis varied.
  - External sector: First Pilot External Sector Report (ESR) issued July 2, 2012; further work needed on methods and integration.
  - Traction: too early to assess improved traction; follow-up of past advice uneven, weaker for advanced countries.
- Pending issues under the MIP:
  - Further integration of global risk analysis into Article IV reports; deepen analysis of transmission channels and policy responses.
  - 2014 TSR to examine deeper analysis of linkages and risks across sectors, countries, institutions and markets.
  - Guidance note on macro-prudential policies envisaged by end-July 2014.

### Research at the IMF — Findings, SRR, and MIP Actions
- Major findings on quality and readership:
  - Fund research widely read; WEO and GFSR among high quality products.
  - Consultant’s background report (2010−12) survey results:
    - "92 percent" rated Fund research as “excellent” or “very good.”
    - "94 percent" “agreed” or “strongly agreed” that it was relevant.
    - More than "60 percent" “agreed” or “strongly agreed” that quality and relevance had improved over the past three years.
- Identified shortcomings:
  - Insufficient consultation with national authorities; uneven quality of WPs and SIPs; proliferation of research products; occasional excessive reliance on inappropriate techniques; perception of “message driven” research.
- Consultant’s six recommendations (summarized):
  - (i) Improve consultations with country authorities and academics.
  - (ii) Consolidate research products and define audiences.
  - (iii) Provide incentives to improve WP quality.
  - (iv) Supplement cross-country regressions and DSGE models with case studies.
  - (v) Institute policy of releasing data used in IMF research.
  - (vi) Improve dissemination by involving developing-country researchers and holding seminars during missions.
- Strategic Review of Research (SRR) and inputs:
  - Interdepartmental working group led by Research Department; external consultant prepared background report; inputs from EVC, surveys, and external reviewers.
- MIP actions and status:
  - Management/coordination: Economic Counselor convenes interdepartmental meetings once a year (MIP envisaged twice); no centralized Fund-wide coordinating mechanism established — classification: "Partially implemented."
  - Relevance and agenda setting: Strategic Review conducted; Research Department Agenda updated; new SDN series launched — review "Implemented" with qualifications.
  - Consultation with authorities: tenure and consultation improvements in progress; survey through end-2012 showed only half of authorities reported being consulted on SIP topic choice; of those consulted, "60 percent" agreed staff took their views into account.
  - Promoting openness and alternative perspectives: reforms under way; SDN series published; status: "In progress."
  - Technical quality: WP procedures modified end-2012; additional WP review measures proposed; data dissemination policy for flagships and WPs proposed — status: "In progress."
- Pending issues:
  - Complete Strategic Review; strengthen departmental policies for eliciting authorities’ views; further reinforce WP review processes and measure whether quality improvements have occurred across departments.

*Source: PERIODIC MONITORING REPORT — Implementation plan and status on follow-up to the IEO Evaluation of Research at the IMF (extracted from the provided chapter).*

### International Reserves — Findings, ARA Follow-Up, and MIP Actions
- IEO recommendations focused on reserve analysis in multilateral and bilateral contexts and in policy advice.
- Multilateral and bilateral main points:
  - Embed reserve adequacy in comprehensive treatment of threats to global financial stability; apply reserve adequacy indicators flexibly; provide clearer advice for advanced economies; recognize tradeoffs and integrate reserves advice with related policies.
- Follow-up instruments and reports:
  - Updated Guidance Note for Surveillance (October 2012) — stability organizing principle; reserve adequacy critical element.
  - External Sector Report (ESR), WEO, GFSR, Spillover Reports, VEs and EWE used to address global liquidity and market developments.
  - Note on liberalization and management of capital flows (April 2013).
- International Reserves MIP focus:
  - Ensure robust coverage of reserve adequacy in Fund surveillance, tailored to economy types.
  - Improve communication of Fund views on reserve adequacy.
- Follow-up ARA paper (Assessing Reserve Adequacy—Further Considerations, November 2013) key analytic conclusions:
  - Reserve needs reflect market maturity, depth, underlying liquidity, and economic flexibility; these do not always align with standard economy classifications.
  - For mature market countries (non-reserve currency issuers): potential foreign exchange funding needs of banking system informative; reserve needs could be augmented for trading liquidity and non-bank FX needs; computation complicated by data gaps.
  - For less-mature markets (mainly emerging markets): ARA metric broadly appropriate with refinements suggested (increase weight on other liabilities; add commodity import exposure component; adjust export weight for commodity exporters; introduce persistence in desired reserve holdings).
  - Cost-benefit discussions for holding reserves and illustrative presentations for LIC subgroups (RREs, frontier markets, Sub-Saharan economies).
  - Special cases: fully dollarized economies, partially dollarized economies, and currency unions treated with caveats; metric may be lower bound for fully dollarized economies.
- Pending actions and timelines:
  - Staff to engage the Board in July 2014 on additional operational considerations.
  - New guidance note on international reserves expected early 2015.
- Communication and toolkit actions:
  - Second Pilot ESR (August 2013) implemented.
  - Follow-up ARA paper informed by member country survey.
  - SPR’s Assessing Reserve Adequacy toolkit available internally; paper on Global Liquidity—Issues for Surveillance issued April 2014.
  - Consideration of making reserve adequacy toolkit available externally.
- Implementation status summary (selected):
  - Guidance Note for Surveillance (October 2012) — Implemented.
  - Follow-up ARA paper (November 2013) — Implemented.
  - Second External Sector Report (August 2013) — Implemented.
  - Stepped-up engagement through dedicated missions — In progress.

*Source: IMF Periodic Monitoring Report (implementation and follow-up to IEO Evaluations on International Reserves and The Role of the Fund as Trusted Advisor).*

### The Role of the Fund as Trusted Advisor — Findings and MIP Steps
- IEO evaluation period: 2005–12 (emphasis on 2007–08); majority of country authorities held positive views; Fund’s image improved after crisis.
- MIP steps:
  - Guidance Note encourages early exchange with authorities on topics; FDMD memo (June 2013) requires mission chiefs to contact authorities two months in advance of Article IV consultations.
  - SPR to monitor implementation through Policy Consultation Meetings (PCM); mission teams to share major policy questions and global assumptions at least one week before missions.
  - Note with operational guidance on jobs and growth for surveillance and program work issued September 2013.
- Pending issues:
  - No follow-up survey of country authorities or OED since MIP issuance; surveys planned for 2014 TSR.
  - Cross-country policy lessons remain limited in Article IV consultations; coverage of outward spillovers still at early stage.
  - ISD limits outward spillovers coverage to systemic countries.
- Staff tenure objective:
  - Departments aim for three years average tenure for country assignments.
  - Indicator for mission chief tenure: average tenure of 2.4 years in FY 2013, slight decline to 2.3 years in mid-FY 2014; flexibility needed for fragile states and high-intensity crisis assignments.

### HR Issues, Diversity, Training, and Cross-Cutting Matters
- HR implementation highlights and workforce statistics:
  - Efforts to broaden professional diversity and hire more financial sector experts and economists with policy-making backgrounds.
  - Economist Program composition:
    - Over half of the 29 economists that joined the Economist Program in 2013 were from non-US schools.
    - Close to two-thirds of the 28 EPs joining in 2014 will be non-US schools graduates.
    - Economist Program target slightly exceeded on average during CY 2011−CY 2013; percentage dropped to 36 percent in CY 2014.
  - Corporate Workforce Planning (CWP) data:
    - Workforce recovered to some 3,000 employees at end-FY 2012 from 2,500 in FY 2009.
    - Economist representation increased to 44 percent in FY 2012 from around one-third in FY 2000.
    - Specialists made up 14 percent of workforce in FY 2012, compared with 6 percent in FY 2008.
  - For CY 2011-2013, almost 82 percent of appointments of A11-A15 economists corresponded to mid-career macroeconomists and specialists; compares with 72 percent in CY 2010 and 59 percent in CY 2005.
  - Appointments of specialists averaged 38 a year during CY 2011-2013, of which 83 percent were contractual.
  - Externally Financed Appointee (EFA) program launched in 2013; Japan, Korea, and Sweden committed; one appointee started in 2013 and six expected in 2014, bringing total to seven.
  - External mobility program: leave without pay slots increased from 35 to 60.
- Training and internal economics training (IET) participant weeks (ICD data, excluding other internal training):
  - 2008: 1007.7
  - 2009: 793.9
  - 2010: 920.9
  - 2011: 921.9
  - 2012: 960.1
  - 2013: 944.7
- IET Events in Finance — FY 2008-2013 (Total 129 events; Participant Weeks total 1186.7):
  - 2008: 26 events, 230.4 participant weeks
  - 2009: 14 events, 122.8 participant weeks
  - 2010: 27 events, 278.1 participant weeks
  - 2011: 24 events, 170.6 participant weeks
  - 2012: 19 events, 203.6 participant weeks
  - 2013: 19 events, 181.2 participant weeks
- Leadership and people management initiatives:
  - New leadership development program focusing on staff development, delegation, coaching, people management clarity, intellectual leadership, and prioritizing strategic objectives.
  - New managerial and professional development courses providing approximately 500 new training seats a year.
  - Starting FY 2015, departments required to reimburse costs of last minute cancellations and no-shows for training.
- Diversity and Gender (Box 3 highlights):
  - Original 2014 benchmark for B-level women met four years earlier than targeted; new benchmarks adopted:
    - 25-30 percent for all B-level women.
    - 20-25 percent for B-level economists.
  - Shares at end of FY 2013: 21.9 percent (all B-level women) and 19 percent (B-level economists).
  - Flow target: half of all external hires at the professional level should be women.
  - Mid-career economist hires: women represented 24 percent of total mid-career hires in CY 2013.
  - Geographical diversity as of end-FY 2013: Transition countries benchmark surpassed; East Asian staff closing in on 2014 benchmark; progress limited for Africa; Middle Eastern share hardest to move.
  - B-level Diversity Initiative: nine individuals hired as of end-March 2014; hiring through Initiative to end in FY 2015.
- Pending HR issues:
  - Support for vulnerable countries not directly affected by crisis should be increased; some area departments lacked specialist support due to resource constraints.
  - Fund employees receive, on average, significantly less training than those at other institutions; FY 2013: departments reported, on average, around three annual training days versus 7-10 in other institutions.
  - Quantifiable training target: minimum of four days for FY 2015 to be set, subject to fully capturing training provided.

### Governance, Board Processes, Candor, and Organizational Health
- Summing ups and minority views:
  - Working Group of Executive Directors report completed February 2013; March 2014 Board agreement reduced public minutes lag from five years to three years (retaining five-year lag for Use of Fund Resources or Policy Support Instrument); new rules effective August 27, 2014.
  - “Main Themes in Grays” continues to summarize “Issues for Discussion” and “Remaining Diverging Views.”
- External views and advisory input:
  - Board did not support regular outside analysts’ presence in Board/management discussions; External Advisory Groups and external experts continue to provide input.
  - 2014 TSR will seek guidance from an External Advisory Group and external experts.
- Speak truth to power and candor:
  - Statement of work values adopted July 31, 2012.
  - Guidance Note for Surveillance (October 2012) operational priority: staff should ensure candor and evenhandedness.
  - Managing Director encouraged use of existing channels following poor mid-2013 Staff Survey results on openness and risk taking.
  - Tail Risks Group created to promote alternative perspectives.
  - Pending issues: cultural change required; practices vary; evenhandedness remains perceived as a problem (IEO surveys showed about a third of country authorities and half of mission chiefs did not believe the Fund had become more evenhanded since onset of global crisis).
- Self-assessment and organizational health:
  - 2010 Staff Survey led to Fund-wide action plan rolled out October 2011.
  - Following 2013 survey, seven World Cafes identified six major concerns; Management announced initiatives and HRD launched intranet tracking site.
  - Initiatives include investing more in learning, easing movement for Specialized Career Streams, 360-degree development tool for managers by November 2014, articulated APR roundtable rules by April 2014, and employment framework review starting fall 2014 with reforms to take effect May 1, 2015.
  - Accountability Frameworks (AFs) piloted FY 2013 and introduced FY 2014; AF scorecards include strategic, budget, and people indicators; FY 2015 deliverables agreed between management and department heads.
  - IEO undertaking assessment of self-evaluation systems within the IMF.
  - Pending: many steps in response to 2013 Survey still initial; progress to be tracked through AFs and biennial staff surveys with mini-surveys interim.

### Staff Tenure, Handovers, and Country Assignment Continuity (Box 5)
- Tenure targets and monitoring:
  - Departments asked to move towards average desk tenure of three years.
  - Mission chief tenure monitored through the Accountability Framework; indicator introduced with FY 2015 Scorecards and posted on OMD’s website; scorecards updated every six months.
  - Area-department aggregate indicator:
    - FY 2013 total: 2.4
    - Mid-FY2014 total: 2.3
  - Area department mission chief tenure by department:
    - AFR: FY 2013: 2.4; Mid-FY2014: 2.2
    - APD: FY 2013: 2.0; Mid-FY2014: 2.0
    - EUR: FY 2013: 2.8; Mid-FY2014: 2.6
    - MCD: FY 2013: 2.5; Mid-FY2014: 2.5
    - WHD: FY 2013: 2.1; Mid-FY2014: 2.3
- Desk economists expected outturn:
  - As of April 2012, desk economists had served on assignments for an average of 1.3 years (ongoing assignments).
  - CWP paper argued expected outturn of 1.5 years consistent with reaching three-year benchmark under broadly uniform distribution assumptions.
- Handover, rotation, and transition procedures:
  - Areas and functional departments issued guidelines for handovers, including checklists and data management.
  - APR process to assess transition assistance by staff and managers.
  - Departments to manage rotations to avoid simultaneous departure of mission chiefs, resident representatives, and senior desks; monitored by SPMs with HRD support.
- Diversity and senior-staff hiring trends (as of end-FY 2013 and CY 2013):
  - Middle East attained B-level benchmark of 5 percent.
  - Transition countries halfway toward benchmark of 4 percent.
  - East Asian share increasing but below benchmark of 7 percent.
  - B-level staff from Africa below benchmark of 6 percent but on upward trend.
  - CY 2013 recruitment: six B-level staff hired externally (compared with eight in CY 2012 and five-year average of 10); three hires from underrepresented regions in CY 2013 versus six in CY 2012; none were women in CY 2013; one woman hired in early 2014.
  - B-level Diversity Initiative: nine individuals hired as of end-March 2014; 3-4 positions remaining; hiring to end in FY 2015.
- Outreach, transparency, and Trusted Advisor objectives:
  - SPR Guidance Note on Transparency Policy (November 2013) includes Transparency Policy Information Sheet (TPIS) for missions.
  - Guidance Note for Surveillance (October 2012) and FDMD memo (June 2013) emphasize outreach planning with COM support and updating RR TORs annually.
  - COM prepared outreach guidelines, toolkit, liaison officers, and expanded training on media/outreach.
  - New interdepartmental outreach database in place July 2013.
- Transparency policy implementation findings:
  - 2013 Review surveys suggest marginal loss of candor prior to publication; some 20 percent of mission chiefs cited need to maintain good relations as constraint.
  - Executive Directors and mission chiefs had concerns about evenhandedness; country authorities more positive on average with regional variation.
  - Proposal for annual Board report table of modification requests and database of modification requests to generate summary statistics starting 2014.

### Outreach, Transparency Policy, and Outreach Strategy for Mission Chiefs and Resident Representatives
- Outreach strategy design and monitoring (implementation steps beginning May 2013):
  - Mission chiefs to discuss outreach plans with authorities in mission planning with COM support; SPR to monitor during PCMs.
  - Resident Representatives’ TORs to underscore outreach strategy collaboration with authorities; HRD to monitor annual updates with COM support.
  - Implementation status:
    - Partially Implemented: FDMD instructions issued; consultation with authorities varies across countries; mission outreach plans usually included in Policy Notes and reviewed by COM.
    - Partially Implemented: Most TORs discuss outreach, but systematic updating not universal.

### Table 6 — Summary of Implementation Status for Recent MIPs (as presented)
- Total number of Board-Endorsed Recommendations: 21
- Total Number of Follow-Up Steps in the MIP: 46
- Of Which Implemented: 20
- Partially Implemented: 4
- Not Implemented: -
- In Progress: 22
- Percentage row (as presented): -; 100; 43.5; 8.7; -; 47.8

### Engagement with Low-Income Countries (LICs) and Sub-Saharan Africa
- LIC facilities framework and operational adjustments:
  - New architecture for LIC lending approved July 2009 (effective January 2010) under PRGT with three windows: ECF; SCF; RCF.
  - Policy Support Instrument (PSI) available for non-financial assistance and signaling.
  - Review of Facilities for LICs in September 2012; modifications approved April 2013 to offer more flexibility on augmentation requests, program extensions, precautionary support, and PRS document requirements.
- Concessional lending and PRGT sustainability:
  - IMF concessional lending commitments:
    - US$ 1.2 billion in 2008;
    - US$3.8 billion in 2009;
    - annual average of US$ 1.6 billion during 2010–13.
  - September 2012: Executive Board approved partial distribution of general reserves attributed to gold sales profits as part of PRGT sustainability strategy.
- Fund engagement in Sub-Saharan Africa (as of March 31, 2014):
  - Active engagements: 13 ECFs; 1 SCF; 4 PSIs; 2 SMPs.
  - Nine near-program countries.
  - 17 Ex-Post Assessments (EPAs) for Longer-Term Program Engagement since 2010, including 10 EPAs of Engagement with Sub-Saharan countries.
- Vulnerability assessment and LIC resilience:
  - Vulnerability Exercise framework and policy papers (2011, 2012); 2013 LIC Global Risks and Vulnerabilities Report concluded most LICs showed impressive resilience, with vulnerabilities in some small states, oil exporters, and fragile states.
- Collaboration, technical assistance, and analytic outputs:
  - Continued collaboration with WFP, UNICEF, ILO, DFID and others; DFID funded research (March 2014).
  - Bilateral donors contributed to regional TA and training in Sub-Saharan Africa.
  - Global Monitoring Reports on MDGs prepared annually.
  - May 2014 Africa Rising conference in Maputo convened with Mozambique Government.
- Macroeconomic frameworks for resource-rich developing countries:
  - New macro-fiscal frameworks applied in Angola, Gabon, Ghana, Mozambique.
  - Relevant papers and departmental papers cited (2012–2013).
- Debt sustainability and debt limits:
  - Staff Guidance Note on Joint Bank-Fund Debt Sustainability Framework for LICs issued November 2013; unified discount rate set at five percent.
  - Staff paper on Debt Limits in Fund Programs with LICs discussed informally January 2014; modified proposal to be presented before Annual Meetings.
- Forward priorities and planned analytical work:
  - Focus on prospects and vulnerabilities; macroeconomic management of natural resources; revenue mobilization; financial deepening; monetary policy; frontier economy challenges.
  - 2014 TSR to analyze surveillance on LICs; Low Income Developing Countries Report in September 2014 to replace LICs vulnerability reports; review of eligibility for concessional financing in Spring 2015.

*Source: Periodic Monitoring Report — Sixth Periodic Monitoring Report on the Implementation of Board-Endorsed IEO Recommendations.*

### EXECUTIVE SUMMARY

### EXECUTIVE SUMMARY

### Overview
- This Periodic Monitoring Report (PMR) reviews implementation status of actions set out in four Management Implementation Plans (MIPs) endorsed by the Board since the Fifth PMR (issued September 2012, approved February 2013).
- The PMR also presents a brief update on progress related to previous MIPs agreed since 2007.
- Responsibility for preparing PMRs was transferred to the Office of Internal Audit and Inspection (OIA); this is the first PMR prepared by OIA under this mandate.
- The assessment of implementation required judgment, especially for recommendations of a general nature concerning institutional values and processes. Some actions are one-off; other actions (institutional and cultural) require progressive steps and a longer time horizon to assess sustainability.
- The PMR recognizes that robust assessment of implementation may require additional information, including new surveys of country authorities, Executive Directors, and/or staff.
- Approved by Clare Brady; prepared by the Office of Internal Audit and Inspection with assistance of Juan Carlos di Tata (consultant).

### Summary implementation findings and key statistics
- The four new MIPs contained 21 IEO Board-endorsed recommendations, which resulted in 46 follow-up steps to address them.
- Implementation status of the 46 follow-up steps:
  - 20 follow-up steps have been implemented (over 40 percent of the total).
  - 22 steps are in progress (just under 50 percent of the total).
  - 4 steps have been partially implemented.
- Substantial progress has been realized: most actions envisaged in the four new MIPs have either been implemented or are in progress.

### Recent Management Implementation Plans (MIPs) — major points
- The four MIPs covered correspond to IEO evaluations of:
  - IMF Performance in the Run-Up to the Financial and Economic Crisis;
  - Research at the IMF – Relevance and Utilization;
  - International Reserves – IMF Concerns and Country Perspectives;
  - The Role of the Fund as Trusted Advisor.
- A more recent MIP arising from the IEO Evaluation of IMF Forecasts - Process, Quality, and Country Perspectives is not included because the associated MIP has not been issued to the Board.

### IMF Performance in the Run-Up to the Financial and Economic Crisis — assessment highlights
- The IEO report (January 10, 2011) found the Fund provided few clear warnings of the buildup of vulnerabilities and risks in the global financial system and that surveillance paid insufficient attention to risks of contagion and spillovers from the crisis in advanced economies.
- The 2011 Triennial Surveillance Review (TSR) identified the need for improvement in five areas: interconnectedness, risk assessment, financial stability, external sector, and traction; the 2011 TSR also covered multilateral surveillance and related products.
- Progress noted:
  - Strengthened monitoring of risks and dissemination of risk assessments.
  - Steps to change insular culture: better integrate financial sector issues into macroeconomic assessments; encourage staff to challenge “group think;” address silo behavior by intensifying cross-departmental collaboration, promoting diverse ideas, and better analyzing linkages and spillovers.
- Ongoing work:
  - Further integration of global risk analysis into Article IV reports.
  - Strengthening analysis of macro-financial linkages and financial spillovers.
  - Improving information sharing and coverage of cross-country experiences.
  - Addressing weaknesses identified in the 2013 Staff Survey.
- Pending issues:
  - Need to devote more time to staff training.
  - Address remaining perceptions about lack of evenhandedness across countries.
  - Strengthen support available for vulnerable (but non-systemic, non-advanced) countries on issues requiring specialized expertise.
- Staff observations cited that vulnerable countries not affected by the financial crisis were receiving insufficient support on specialized expertise issues due to resource constraints.

### Research at the IMF – Relevance and Utilization — assessment highlights
- The envisaged Strategic Review of Research has been completed.
- The MIP implementation assessment relied to a large extent on findings of a report prepared by an external consultant in support of the Strategic Review.
- Actions in progress:
  - Steps to intensify consultations with country authorities on research topics.
  - Implementation of new procedures to strengthen the review process for working papers; these procedures should help address “message driven” research identified in the IEO report.
- Remaining gaps:
  - No centralized Fund-wide coordinating mechanism for all research activities across the Fund has been put in place, despite exchanges of information across departments.

### International Reserves – IMF Concerns and Country Perspectives — assessment highlights
- The implementation assessment was more straightforward because the topic and associated MIP involved a shorter list of follow-up steps.
- A follow-up paper, Assessing Reserve Adequacy – Further Considerations, issued in November 2013, addresses many issues raised in the IEO Evaluation in the context of bilateral surveillance of international reserves.
- Planned actions:
  - In July 2014, staff expected to engage the Board on additional operational considerations.
  - It is intended that a new guidance note on international reserves will be issued in early 2015.

### The Role of the Fund as Trusted Advisor — assessment highlights
- Management issued clear instructions on a number of actions to address the recommendations.
- Evidence exists that some actions have been implemented.
- Definitive assessment of progress on several other actions requires additional information from surveys of country authorities and Executive Directors envisaged in the MIP.

### HR issues and cross-cutting matters
- The PMR provides detailed information on steps taken to address HR issues, including hiring of experts and mid-career economists, diversity, leadership development, and staff tenure in country assignments.
- The EVC indicated two issues requiring special attention going forward: monitoring of human resources issues and implementation of past IEO recommendations.
- Some assessments noted resource pressures in a tight budget environment affected implementation efforts.

### Forward monitoring and next steps
- Further steps in many actions still in progress will be tracked in forthcoming exercises, such as the TSR.
- Where work is on track and covered elsewhere, additional follow-up in future PMRs will be provided at a more general level.
- For specific actions not covered elsewhere, the next PMR is expected to provide a progress report.

*Source: EXECUTIVE SUMMARY, _063014a - EXECUTIVE SUMMARY, June 30, 2014.*

### 10. On July 18, 2012, the Executive Board adopted the Integrated Surveillance Decision

### 10. On July 18, 2012, the Executive Board adopted the Integrated Surveillance Decision

### Adoption of ISD and surveillance guidance
- The Integrated Surveillance Decision (ISD) was adopted on July 18, 2012, and came into effect on January 18, 2013.
- Under the new decision, Article IV consultations now serve as a vehicle for both bilateral and multilateral surveillance and cover potential or actual outward spillovers from members’ policies that may significantly influence the effective operations of the international monetary system.
- An updated Guidance Note for Surveillance under Article IV Consultations was issued in October 2012:
  - Emphasizes that stability should be the organizing principle of surveillance.
  - Provides guidance on the five operational priorities identified in the 2011 TSR.
- On November 27, 2012, the Executive Board discussed a progress report “One Year after the 2011 TSR.” Main findings summarized in Box 2.

### Run-Up to the Crisis MIP and linkage to 2011 TSR
- The MIP arising from the IEO Evaluation of the IMF Performance in the Run-Up to the Financial and Economic Crisis (the Run-Up to the Crisis MIP) built on the 2011 TSR:
  - Reflected areas in which the TSR was expected to address concerns raised in the IEO evaluation.
  - Included further steps to respond to IEO recommendations.
- The MIP listed five general recommendations, each followed by more specific actions. Progress and implementation are discussed and summarized in Table 2 (not reproduced here).

### Creating an environment encouraging candor and diverse/dissenting views (IEO recommendation)
- IEO recommended: “Create a risk assessment unit that reports directly to Management, with the purpose of developing risk scenarios for the systemically important countries and analyzing tail risks for the global economy.”
- Board decision: did not support creating a new risk assessment unit, but encouraged enhanced outreach to disseminate risk assessments.
- Managing Director established a Risk Management Unit reporting to the First Deputy Managing Director (FDMD), with initial responsibility for:
  - developing the main elements for a strengthened RM framework;
  - fostering development of additional tools to analyze and monitor risks to the Fund, and promoting their use over time by operational units;
  - producing reports on the Fund’s risk profile at regular intervals, highlighting areas where additional risk analysis or mitigation efforts need to be undertaken.

### Progress on risk analysis and surveillance practices
- Key steps taken:
  - Since April 2012, all WEOs have increased attention to risks around the baseline, including use of fan charts and plausible downside scenarios.
  - Downside risks prominently analyzed in the GFSR and Fiscal Monitor.
  - Continued semi-annual Early Warning Exercise (EWE) to identify and assess low probability but possible high impact risks.
  - Vulnerability Exercises (VEs) conducted with interdepartmental risk working group and area departments for advanced, emerging market, and low income countries.
  - Modeling efforts to better analyze spillovers; downside scenario simulation results shared with country teams.
  - Updated Guidance Note for Surveillance emphasizes leveraging multilateral and regional risk analysis (WEO/GFSR/FM/REOs) and being guided by the Global Risks Assessment Matrix (G-RAM); staff encouraged to draw on VEs and EWE.
  - Tools underlying multilateral surveillance disseminated to area departments.
  - Country risk assessments became more pointed; Risk Assessment Matrix (RAM) is now regular in staff reports for Article IV consultations and Financial System Stability Assessments (FSSA).
  - Review of the framework for fiscal policy and public debt sustainability analysis (DSA) in market-access countries (MACs) completed in August 2011, calling for a risk-based approach to MAC DSAs; a guidance note issued in May 2013.
  - G-RAM exercise managed by an interdepartmental Risk Working Group (RG), which also analyzes vulnerable members and operational implications for allocation of Fund resources.
  - An independent interdepartmental Tail Risk Group (TRG) of A-level economists established to explore tail risks; TRG makes quarterly presentations, is expected to develop alternative views, and reports to both the main RG and to Management.
  - Macro-prudential policies: a paper on Key Aspects of Macro-prudential Policy completed in June 2013; an Interdepartmental Group established to facilitate sharing of views and consistency in Fund advice.

### Box 2: Progress Report — main findings (selected)
- Interconnectedness
  - Significant progress in strengthening analytical base through Spillover Reports; multilateral surveillance papers examining macroeconomic and financial linkages; and cluster analysis. REOs also examining spillovers.
  - The paper on The Liberalization and Management of Capital Flows: An Institutional View provided an overall approach to Fund advice on capital flows.
  - Coverage of spillovers in Article IV consultations remained uneven; limited progress on cross-country analysis and conducting Article IV consultations together for interconnected countries.
- Risk Assessment
  - Some progress increasing coverage of risks in Article IV reports. Many reports experimented with RAMs, but fewer included tail risks.
  - Most multilateral reports for Spring 2012 flagged some risks, but there was no uniform treatment of relevant risks across publications.
- Financial Stability
  - Financial Surveillance Work Agenda published in April 2012, followed by a Financial Surveillance Strategy (FSS) in September 2012. Progress in implementing the FSS discussed in Box 4 (not reproduced here).
  - Financial experts assigned to Article IV teams of countries with systemic financial sectors.
  - Significant work on financial stability and development in LICs, including a paper on Enhancing Financial Sector Surveillance in Low-Income Countries.
  - Coverage of financial sector issues increased in Article IV reports; more consistent follow-up of FSAP recommendations. Discussion of macro-prudential issues still limited.
  - Depth of analysis of macro-financial linkages and cross-border linkages varied considerably; few reports used analysis available in multilateral surveillance products. Lack of adequate data remained an impediment.
- External Sector
  - First Pilot External Sector Report (ESR) issued on July 2, 2012. ESRs provide multilaterally consistent analysis of external positions of 28 large economies and the Euro Area, drawing on Pilot External Balance Assessment (EBA) methodologies.
  - Further progress needed to refine assessment methods and extend them to other economies; more work necessary to better integrate external sector discussion with other policies in country reports.
- Traction
  - Too early to assess whether reforms improved traction. Some TSR recommendations being implemented: during the 2012 Spring Meetings the IMFC discussed the Consolidated Multilateral Surveillance Report; during the 2012 Annual Meetings, the Global Policy Agenda.
  - Staff had begun discussing macro-social issues (e.g., employment and income distribution) considered critical for macroeconomic stability.
  - Follow up of past advice in Article IV reports remained uneven, weaker for advanced countries.

### Pending issues under the MIP
- Further integration of global risk analysis into Article IV reports remains a pending challenge:
  - Focus on risks has sharpened, but depth of analysis varies.
  - Discussion of transmission channels and policy responses could be strengthened.
  - Country teams now receive associated probabilities of global risks through the G-RAM to achieve a more consistent view of risks in country reports.
- The 2014 TSR will examine how to deepen analysis of linkages and risks across sectors, countries, institutions and markets, including through strengthened quantitative analysis.
- A guidance note on macro-prudential policies is envisaged by end-July 2014.

### Human resources, diversity, and training (IEO recommendations and MIP implementation)
- IEO recommended broadening professional diversity by hiring more financial sector experts, analysts with financial markets experience, and economists with policy-making backgrounds; and strengthening financial sector expertise through training and hiring experienced market participants in MCM and area departments.
- MIP Implementation highlights:
  - Substantial efforts to broaden professional diversity, including hiring more financial sector experts and economists with policy-making backgrounds; efforts on gender and geographical diversity described in Box 3.
  - HR broadened the search for high-quality staff by widening the university base in Western Europe, contacting faculty across East Asia, reintroducing campus activities, and using social media.
  - Over half of the 29 economists that joined the Economist Program in 2013 were from non-US schools; close to two-thirds of the 28 EPs joining in 2014 will be non-US schools graduates.
  - Progress in broadening knowledge of area department economists through dissemination of the financial sector toolkit by MCM to area departments.
  - Internal Economics Training (IET) participant weeks (ICD data, excluding other internal training):
    - 2008: 1007.7
    - 2009: 793.9
    - 2010: 920.9
    - 2011: 921.9
    - 2012: 960.1
    - 2013: 944.7
  - IET Events in Finance — FY 2008-2013 (Total 129 events; Participant Weeks total 1186.7):
    - 2008: 26 events, 230.4 participant weeks
    - 2009: 14 events, 122.8 participant weeks
    - 2010: 27 events, 278.1 participant weeks
    - 2011: 24 events, 170.6 participant weeks
    - 2012: 19 events, 203.6 participant weeks
    - 2013: 19 events, 181.2 participant weeks
  - A pilot “guru” track created with 10 non-managerial positions at the A15/B1/B2 levels; five specialized departments participated; six individuals reclassified to the new track.
  - The 2013 Corporate Workforce Planning (CWP) data showed workforce recovered to some 3,000 employees at end-FY 2012 from 2,500 in FY 2009; economist representation increased to 44 percent in FY 2012 from around one-third in FY 2000; specialists made up 14 percent of workforce in FY 2012, compared with 6 percent in FY 2008.
  - For CY 2011-2013, almost 82 percent of appointments of A11-A15 economists (staff and contractual) corresponded to mid-career macroeconomists and specialists (mainly financial sector experts); compares with 72 percent in CY 2010 and 59 percent in CY 2005.
  - Appointments of specialists averaged 38 a year during CY 2011-2013, of which 83 percent were contractual.
  - Externally Financed Appointee (EFA) program launched in 2013; to date three member countries (Japan, Korea, and Sweden) committed, with one appointee starting in 2013 and six expected to begin in 2014, bringing the total to seven.
  - External mobility program: leave without pay slots increased from 35 to 60 to promote external mobility; significant proportion of secondments taken in the financial private sector.
  - HRD expanded training courses in late 2013 and relaxed eligibility, making contractual employees eligible for all courses.
  - HRD announced addition of new managerial and professional development courses providing approximately 500 new training seats a year, including Leading Confidently, Handling Performance Conversations, APR workshops, and Project Management Workshops for A9-A14 staff.
  - Starting FY 2015, departments required to reimburse costs of last minute cancellations and no-shows to encourage managers to ensure employees attend planned training.

*Source: One Year after the 2011 Triennial Surveillance Review – Progress Report.*

### Box 3. Progress on HR Issues (Cont.)

### Box 3. Progress on HR Issues (Cont.)

### Gender and Geographical Diversity
- Findings and benchmarks:
  - The original 2014 benchmark for B-level women was met four years earlier than had been targeted.
  - New benchmarks adopted: 25-30 percent for all B-level women and 20-25 percent for B-level economists.
  - Shares at end of FY 2013: 21.9 percent (all B-level women) and 19 percent (B-level economists).
  - For the first time, a flow target was established: half of all external hires at the professional level should be women.
  - Economist Program hiring:
    - Target for the Economist Program was slightly exceeded, on average, during CY 2011−CY 2013.
    - Percentage dropped to 36 percent in CY 2014.
  - Mid-career economist hires: percentage of women remains significantly below the gender benchmark.
- Geographical diversity:
  - As of end-FY 2013:
    - Benchmark for all staff surpassed for Transition countries.
    - Share of East Asian staff was closing in on its 2014 benchmark.
    - Progress limited for Africa.
    - Overall share of Middle Eastern staff proved hardest to move.
  - Progress at the B-level discussed under the Trusted Advisor MIP.
- Governance:
  - The current Diversity Working Group is developing a new set of diversity benchmarks to be recommended to the Diversity Council.

### Internal Culture and Institutional Values
- Leadership and people management:
  - A new leadership development program is being implemented to address the need for a more open environment.
  - Program focus areas:
    - Developing staff and strengthening capabilities at all levels.
    - Increased delegation and coaching of others.
    - Greater clarity regarding managerial responsibilities at all levels, in particular for people management.
    - Building intellectual leadership through better capturing collective capability, rather than individual contributions.
    - Prioritizing strategic objectives at B3-B5 levels.
  - Clear expectations being established for Fund managers from the B5 to A15/A14 levels.
  - Parallel process to strengthen leadership and teamwork within individual departments, including advice from HR consultants.

### Pending Issues under the MIP (Human Resources and Related)
- Support for vulnerable countries:
  - The support available for vulnerable countries not directly affected by the financial crisis should be increased.
  - Staff interviews for the PMR indicated some area departments not directly affected by the crisis were not receiving sufficient specialist support due to resource constraints.
- Diversity for mid-career economists:
  - CY 2013: nationality diversity improved with 40 percent of mid-career hires from underrepresented regions.
  - Women represented only 24 percent of total mid-career hires in CY 2013—close to the five-year average but significantly below the 50 percent gender recruitment benchmark.
- Training and capacity building:
  - Fund employees receive, on average, significantly less training than those of other institutions.
  - FY 2013: departments reported, on average, around three annual training days, compared with 7-10 annual days in other institutions.
  - Looking forward: quantifiable targets to be set on training, starting with a minimum of four days for FY 2015.
  - Efforts to better capture the full range of training provided before considering a higher target.
  - ICD plans to expand the Finance curriculum.
- Hiring patterns and career progression:
  - Large and increasing share of A14 fungible economists with limited scope for career progression led CWP to recommend targeting A12 and A13 candidates.
  - Result: external appointments of fungible economists at grade A14 occur only in exceptional circumstances.
  - Monitoring needed as lower entry level could discourage potential candidates or lead to early dissatisfaction.
  - Staff Recruitment and Retention Experience report indicated some mid-career economist applicants decided not to pursue Fund employment after initial conversations with hiring managers.
- Recruiting specialists:
  - Recruiting specialists (technical assistance experts and financial sector experts) has been more challenging due to financial and qualitative factors.
  - Internal work groups are developing policy and practical measures to address recruitment challenges.
  - CWP recognized that targeting A12 and A13 candidates for specialist positions is not feasible given need for seasoned talent at A14 and above.
  - Need to develop a comprehensive strategy for this group as some needs originally considered temporary turned out to be more permanent.

### Governance and Board Processes: Minority Views and External Input
- IEO recommendation: “Ensure that summing ups of Board discussions better reflect areas of significant disagreement and minority views.”
- MIP implementation on summing ups:
  - Working Group of Executive Directors established early 2012; report completed February 2013.
  - Recommendations included:
    - (i) Directors renew familiarity with current practices for the rule of silence and conventions for commenting on draft summing ups.
    - (ii) Secretary continue to address Directors’ concerns with collegiality and fairness, particularly when there is wide diversity of views.
    - (iii) Chair ensure summing ups adequately capture views expressed by Directors in their Gray and oral statements.
  - March 2014 Board agreement: reduce time lag to make minutes publicly available from five years to three years, retaining five-year lag only for minutes involving Use of Fund Resources or a Policy Support Instrument. New rules effective August 27, 2014.
  - “Main Themes in Grays” continues to provide a good summary of “Issues for Discussion” or “Remaining Diverging Views,” allowing explicit airing of minority views during Board meetings.
- Pending Issues under the MIP: None.

- IEO recommendation: “Actively seek alternative or dissenting views involving eminent outside analysts on a regular basis in Board and/or Management discussions.”
- MIP implementation on external views:
  - Board members did not support making this a regular aspect of Board/management discussions.
  - External Advisory Groups have continued to provide area departments with independent advice on staff analysis and recommendations.
  - External experts contributed to the 2011 TSR, Strategic Review of Research, Financial Surveillance Strategy, Transparency Review, and the Review of Conditionality.
- Pending Issues under the MIP:
  - As the recommendation was not endorsed, no outstanding MIP issues. Efforts to incorporate external expert views in policy papers expected to continue.
  - The 2014 TSR will seek guidance from an External Advisory Group and external experts, in addition to surveys and interviews with country authorities, staff, and other stakeholders.

### Strengthen Incentives to “Speak Truth to Power”
- IEO recommendation: “Management should encourage staff to ask probing questions and challenge Management’s views and those of country authorities.”
- MIP implementation to promote candor and diverse views:
  - Statement of work values adopted July 31, 2012, promoting “an intellectually open atmosphere that seeks diverse views to develop the best solutions.”
  - Guidance Note for Surveillance (issued October 2012) operational priority: “staff should ensure for all countries the candor and evenhandedness of reports.”
    - Encourages staff to exchange views with authorities on topics for discussion early in the consultation cycle.
    - Requires “a brief assessment of the authorities’ response to key policy recommendations raised in previous Article IV consultations” as a formal requirement for Article IV reports.
  - Following poor mid-2013 Staff Survey results on openness and risk taking, the Managing Director encouraged staff to use existing channels to promote diverse views.
  - Ongoing leadership training emphasizes enabling subordinates to speak freely.
  - Creation of a Tail Risks Group, consisting of A-level staff, to promote new perspectives.
- Pending Issues under the MIP:
  - Cultural change required; no straightforward metric for candor and openness.
  - Practices vary across country teams on exchanging views with authorities prior to Article IV consultations.
  - Follow-up on past advice has improved but appears weaker for advanced economies.
  - Surveys of staff and country authorities in the 2014 TSR will monitor developments.
  - Evenhandedness of Fund advice remains perceived as a problem:
    - IEO surveys showed about a third of country authorities and half of mission chiefs did not believe the Fund had become more evenhanded since the onset of the global crisis.
  - The 2014 TSR will reexamine traction and evenhandedness across countries and groups of countries in implementation of the new surveillance framework and policy advice.

### Self-Assessment and Organizational Health
- IEO recommendation: “Conduct regular IMF-wide self-assessments to look at the health and functioning of the organization.”
- MIP implementation and actions:
  - 2010 Staff Survey identified areas for improvement; a Fund-wide action plan rolled out October 2011 covering accountability frameworks, mobility, leadership training, and performance management.
  - Following the 2013 survey, seven World Cafes identified six major areas of concern: staff development and career progression, manager accountability, APRs and performance management, categories of employment, career tracks, and work-life balance.
  - Management announced initiatives to promote an enabling work environment, strengthen people management, and empower staff to manage careers; HRD launched an intranet site to track progress and collect comments.
  - Main initiatives:
    - i. Invest more in learning: list of courses expanded; grade restrictions relaxed; ICD opened flagship macroeconomics course to all Fund employees via a new online learning platform.
    - ii. Make it easier for staff in Specialized Career Streams (SCS) to move to other departments and jobs.
    - iii. Rate managers more explicitly for people management: a 360-degree development tool to be available to managers by November 2014.
    - iv. Articulate rules to ensure consistency in the APR roundtable discussions by April 2014; communicate process and criteria used by Review and Senior Review Committees, including feedback on outcomes.
    - v. Reform the Fund’s employment framework: Review of Categories of Employment in fall 2014 to recommend modifications; extensive consultation underway led by HRD, LEG, and OBP; department-by-department reviews of contractual assignments over the summer to provide early budget impact indications; reforms to take effect starting May 1, 2015.
  - Accountability frameworks (AFs):
    - Piloted in FY 2013 and introduced in FY 2014 to align departments with institutional goals and promote cross-departmental collaboration.
    - AF scorecard divided into: strategic objectives/work deliverables, budget indicators, and people indicators.
    - November 2013 review introduced improvements; latest scorecards include deliverables and key objectives for FY 2015 agreed between management and department heads.
  - Regular self-assessments through policy reviews with inputs from authorities and external stakeholders continued (examples: Review of the Fund’s Transparency Policy and the Triennial Surveillance Review).
  - No modality currently in place to review the Fund’s medium-term strategy.
  - IEO undertaking an assessment of self-evaluation systems within the IMF to examine systems used by the Board, management, and staff to learn from experience and incorporate lessons.
- Pending Issues under the MIP:
  - Several areas identified in the 2013 Staff Survey mirror those from 2010, suggesting some actions after 2010 were not effective.
  - Many steps in response to the 2013 Survey are still in initial stages; progress will be tracked through AFs and biennial staff surveys, with mini-surveys planned for interim years.
  - IEO Evaluation of Self-Assessment Systems will provide further review opportunities.

### Integrating Financial Sector Issues into Macroeconomic Assessments
- IEO recommendations:
  - “Continue to strengthen the FSAP and address the problems... which limited its effectiveness in the run-up to the crisis.”
  - “Strengthen financial sector expertise in the IMF by updating the staff’s knowledge through training and by hiring experienced market participants... Missions to G-20 economies and other financial centers should include experienced financial experts.”
- MIP implementation and progress:
  - TSR made recommendations to enhance Fund’s role by increasing effectiveness of financial sector surveillance; some implemented, others in progress.
  - Progress Report on Financial Sector Surveillance considered by the Board in an informal session in September 2013; Box 4 summarizes FSS progress as of that date.
  - Although insufficient Board support to increase mandatory FSAP frequency for systemically important financial sectors from five to three years, financial sector experts have been assigned to Article IV teams involving systemically important financial sectors.
  - Updated Guidance Note for Surveillance under Article IV consultations: staff should systematically follow up on implementation of relevant FSAP findings and recommendations in Article IV reports; indications of more consistent follow-up.
  - MCM dissemination:
    - Based on cross-country lessons from FSAPs, MCM has been disseminating monitoring tools (e.g., stress testing) as part of its financial tool box.
    - Made area department economists more familiar with financial sector issues and helped improve coverage in Article IV reports.
    - MCM reinforced internal training to improve quality and focus of review comments; new guidance to MCM participants in Article IV missions being implemented.
  - Data provision:
    - Following 2012 Review of Data Provision to the Fund, an Operational Guidance Note on Data Provision issued to improve reporting of shortcomings in financial and external data in Article IV reports.
  - Hiring and training of financial sector experts discussed in Box 3.
- Pending Issues under the MIP:
  - Further progress required to better integrate financial sector issues into macroeconomic assessments:
    - Continue improving coverage of macro-financial linkages and financial spillovers in Article IV reports.
    - Further analyze potential spillovers from the exit from extraordinary macro-financial policies.
    - Deepen analysis of financial regulation and macro-prudential policies, including cross-border implications (a guidance note on this issue expected in 2014).
    - Continue developing operational implications of inter-departmental risk analysis for country work.
  - Resource constraints:
    - Available resources still insufficient to address institutional needs in financial sector expertise.
    - Coverage of financial sector issues in advanced crisis-affected countries has improved, but increasing FSAP frequency for non-systemic/non-advanced vulnerable countries was not possible due to resource constraints.
    - Enhancing Financial Surveillance in LICs paper envisages pilot studies across a range of LICs, but implementation affected by lack of resources.
    - Staff will continue to collaborate with the World Bank to clarify division of responsibilities and explore leveraging expertise.

*Source: 2013 Corporate Workforce Planning paper; FY 2013 Diversity and Inclusion Annual Report; and information provided by the Human Resources Department.*

### Box 4. Progress on Financial Sector Surveillance

### Box 4. Progress on Financial Sector Surveillance

### Overview: Financial Surveillance Strategy (FSS)
- In September 2012 the Executive Board adopted the IMF’s Financial Surveillance Strategy (FSS), specifying concrete steps to strengthen financial surveillance over a period of three to five years.
- A background note on one-year progress in implementing the FSS was prepared by staff in September 2013.
- The FSS is built on three main pillars:
  - (i) Improving risk identification and policy analysis
  - (ii) Fostering an integrated view of financial sector risks in products and instruments
  - (iii) Engaging more effectively with stakeholders

### Progress by pillar (as of September 2013)
- Improving risk identification and policy analysis:
  - Substantial advances in:
    - Capital flow management (Board paper: The Liberalization and Management of Capital Flows, November 2012)
    - Macro-prudential policy (several Board papers, including Key Aspects of Macro-prudential Policy, July 2013)
  - Progress also on assessment of regulatory reforms and the effectiveness of unconventional monetary policy.
  - More limited progress in:
    - Sovereign-bank feedback loops
    - Cross-border linkages and spillover analysis
    - Financial deepening in countries with shallow financial systems
- Fostering an integrated view of financial sector risks:
  - Significant progress incorporating global risks into bilateral surveillance, including coordination on the RAMs.
  - Institutional support reinforced via new guidance notes, increased interdepartmental collaboration, enhanced dissemination of financial risk monitoring tools, and guidance to MCM participants in Article IV consultations.
  - Coverage of macro-financial linkages in Article IV consultations remained limited and had deficiencies.
- Engaging more actively with stakeholders:
  - Progress through:
    - Facilitating global dialogue via high-level events (including on macro-prudential policy and global financial risks)
    - Contributing to the global regulatory reform agenda
    - Deepening collaboration with the World Bank (including on the LIC Pilot)
    - Addressing data gaps

*Source: Financial Surveillance Strategy-Progress Report (8/29/13).*

### Board review, guidance notes, and timelines
- The Board will have the opportunity to review further progress in implementing the FSS in the context of the 2014 TSR and the 2014 review of the FSAP, conducted separately but concurrently with the TSR.
- The TSR will discuss expanding and deepening the Fund’s analysis of macro-financial linkages and better integrating work on financial sector risks.
- The Guidance Note for Surveillance under Article IV Consultations will be updated in early 2015.
- Lessons from the Fund’s engagement during the global financial crisis will be discussed in a follow-up Crisis Program Review, scheduled for Board discussion in May 2015.

### Other connected issues and Board agenda items
- Board briefings and planned discussions:
  - Board briefed in June and December 2014 on progress with the global regulatory reform agenda, with another briefing planned for December 2014.
  - June 2014: staff briefed the Board on cross-border resolution issues.
  - October 2014: Board will discuss Monetary Policy: Its Role Now and in the Future.
  - January 2015: Board will take up From Banking to Sovereign Stress—Implications for Public Debt.
  - November 2014: Board will examine Enhancing Resilience and Supporting Growth in Emerging Markets: Role of Financial Deepening.
- Data and standards:
  - Fifth progress report on closing data and information gaps under the G-20 Data Gaps Initiative provided to the Board for information in September 2014.
  - January 2015: Board will discuss the Ninth Review of the Fund’s Data Standards Initiatives, including reforms to modernize the GDDS.
- Staff engagement:
  - Staff should continue efforts to enhance engagement with central banks in different regions and reach out to other regional stakeholders.

### IV. Overcome Silo Behavior and Mentality — IEO Recommendation and MIP Implementation
- IEO recommendation: clarify rules and responsibilities for the internal review process to better connect the dots, bring cross-country experience to bear, and establish interdepartmental collaboration at an early stage of the Article IV process.
- MIP Implementation actions and status:
  - FDMD memo (June 2013) required functional departments to ensure economists assigned to country teams bring cross-country examples and that area departments generate cross-country analysis where helpful.
  - New measures to ensure cross-country experience among staff while balancing mission-team stability:
    - Staff encouraged to seek assignments outside their department after five years; centralized support provided after seven years if necessary.
    - An indicator of the share of fungible economists (A11 to B5) with seven or more years in a department is tracked through the AFs: declined from 14.6 percent at end-FY 2012 to 8.8 percent in mid-FY 2014.
  - Surveillance Committee revamped (weekly Management-led meetings); interdepartmental collaboration strengthened via standing groups and task forces (e.g., Low-Income Country Consultative Group, Financial Sector Surveillance Group).
  - Practice on policy papers: concept note circulated for comments, followed by interdepartmental meeting and mid-point discussions.
  - Enhanced analysis of linkages and spillovers:
    - WEO regional chapters emphasized policy spillovers and interactions.
    - Pilot External Sector Reports prepared in 2012 and 2013.
    - Spillover Reports for five systemic economies issued in 2011, 2012, and 2013 (2013 report discusses impact of advanced-economy policies on capital flows to emerging markets and contains analysis of spillovers to LICs).
  - Cluster analysis and pilots:
    - March 2012 paper Enhancing Surveillance: Interconnectedness and Clusters used cluster analysis to identify cross-border trade and financial interconnectedness and case studies.
    - Area departments began experimenting with cluster-level surveillance (e.g., German supply chain, Nordic and Baltic cluster-reports).
- Pending issues:
  - Need to improve information sharing and coverage of cross-country experiences in Article IV reports; cross-country policy lessons remain limited.
  - Work underway to refine ESR methodology and better integrate Pilot ESRs, Spillover Reports, and staff vulnerability analysis with other surveillance products.
  - Efforts to strengthen depth and analytical rigor of spillover analysis and extend cluster-level surveillance:
    - Future pilot clustered reports envisaged to examine policy responses to housing busts in Europe and explore trade and financial linkages between the ASEAN-5 countries (both planned for mid-2015), and analyze financial interconnections between Central America and other Latin American countries (early 2015).

### V. Deliver a Clear, Consistent Message on the Global Outlook and Risks — IEO Recommendation and MIP Implementation
- IEO recommendation: ensure the assessment of the global economy is consistent and comprehensive, with a central scenario and clear specifications of risks and vulnerabilities, and transmit this assessment clearly to the membership.
- Steps taken to address consistency and fragmentation:
  - Chapter I of the WEO devotes significant coverage to risks around the baseline scenario.
  - The Consolidated Multilateral Surveillance Report (CMSR) was replaced in October 2012 by the Global Policy Agenda (GPA), which distills key messages from the WEO, GFSR, Fiscal Monitor, and other surveillance products.
  - Management decision in early 2013 to consolidate and better coordinate multilateral surveillance products (flagships and REOs) to shorten reports and better coordinate first-chapter messages from the GFSR and FM.
  - Global developments and risks scheduled for discussion in:
    - September 2014 and March 2015 (joint Board sessions of the WEO, the GFSR, and the FM)
    - WEMD Updates in July 2014 and January 2015
- Implementation status summary (from Table 2 highlights):
  - Actions to pay greater attention to risks around the baseline in WEOs: Implemented.
  - Global Policy Agenda replacing CMSR and distilling flagship messages: Implemented.
  - Need remains to shorten and better integrate flagship publications; scope for further improvement.

*Source: Financial Surveillance Strategy-Progress Report (8/29/13).*

### 18. The IEO Evaluation of Research at the IMF found that Fund research was widely read and

### _063014a - 18. The IEO Evaluation of Research at the IMF found that Fund research was widely read and

### Major findings on quality and readership
- Fund research was widely read and included a large number of high quality products, particularly the WEO and the GFSR, but also other publications.
- The consultant’s background report covering the period 2010−12 found Fund research is generally of high quality and well regarded by those in the economics profession and official circles.
- Survey results reported in the consultant’s report:
  - "92 percent" of respondents rated Fund research as “excellent” or “very good.”
  - "94 percent" “agreed” or “strongly agreed” that it was relevant.
  - More than "60 percent" of respondents “agreed” or “strongly agreed” that the quality and relevance of Fund research products had improved over the past three years.

### Identified shortcomings
- Insufficient consultation with national authorities on research topics.
- Uneven quality of research, especially Working Papers (WPs) and Selected Issues Papers (SIPs).
- A proliferation of research products.
- In some cases, excessive reliance on inappropriate or overly sophisticated techniques.
- Perception that some directed research may be “message driven.”

### Consultant’s six recommendations
- (i) Improve consultations with country authorities and academics on research topics.
- (ii) Consolidate research products and define intended audiences more precisely.
- (iii) Provide carrots and sticks to improve the quality of WPs.
- (iv) Supplement cross-country regressions and Dynamic Stochastic General Equilibrium (DSGE) models with case studies.
- (v) Institute a policy of releasing data used in IMF research.
- (vi) Improve dissemination by involving developing country researchers and holding seminars at the time of country missions.

### Strategic Review of Research (SRR) process and inputs
- An interdepartmental working group led by the Research Department conducted the first periodic SRR.
- An external consultant prepared a background report on research at the Fund covering 2010−12, assisted by four external reviewers with specific areas of expertise.
- Inputs included members of the EVC, surveys distributed via Executive Directors to national authorities, informal sampling of non-academic economists, and external reviewers’ examinations of IMF research in four general topics.

### Management Implementation Plan (MIP) actions and status
- Management / coordination:
  - The Economic Counselor convenes interdepartmental meetings once a year (the MIP envisaged twice a year) and has updated Executive Directors regularly about the Research Department’s Medium-Term Agenda.
  - No centralized Fund-wide coordinating mechanism for all research activities has been put in place; tension exists between promoting candor/diversity and centralization.
  - Status in summary table: "Partially implemented."
- Relevance and agenda setting:
  - The first periodic Strategic Review was conducted by an interdepartmental group.
  - Research Department Agenda updated twice a year; current agenda for 2013-2014 includes revisiting fiscal and monetary/exchange rate policies post-crisis; macro-prudential policy; capital flows; inequality, jobs and growth; tools for LICs; improving modeling for multilateral surveillance.
  - New SDN series launched; SDNs on international policy coordination and monetary policy in the new normal issued in 2013 and 2014 respectively.
  - Status in summary table: Research review implemented, but no indicative medium-term research agenda set; classified as "Implemented" for review but overall noted as implemented with qualifications.
- Consultation with authorities:
  - Steps to increase tenure of mission chiefs and country teams to improve familiarity with country issues.
  - Survey through end-2012 showed only half of authorities reported being consulted on SIP topic choice; of those consulted, only "60 percent" agreed staff took their views into account.
  - Area departments will strengthen policies for eliciting authorities’ views and maintain a log of requests and fulfillment; no presumption staff will limit research to authorities’ requests.
  - Missions to countries with poor dissemination (especially some LICs) encouraged to step up outreach including seminars; possibility of regional research conferences.
  - Status: "In progress" / "Implemented" for some items.
- Promoting openness and alternative perspectives:
  - Reforms to change internal culture (leadership, management training, mobility, accountability) under way.
  - Management demonstrated commitment by publishing analytical work challenging conventional views (e.g., fiscal multiplier in European programs) and by an Ex-Post Evaluation of the 2010 Stand-By Agreement with Greece.
  - SDN series issued to elicit comments and encourage debate; examples include: Redistribution, Inequality, and Growth; Obstacles to International Policy Coordination, and How to Overcome them; Rethinking Macro Policy II: Getting Granular; Economic Diversification in LICs: Stylized Facts and Macroeconomic Implications; Income Inequality and Fiscal Policy; and Fiscal Frameworks for Resource Rich Developing Countries.
  - Survey of country authorities showed only half viewed WPs and SDNs as unbiased.
  - Status in summary table: "In progress."
- Technical quality of analytical research:
  - At end-2012, procedures for WPs were modified to improve quality; typical elements include senior staff quality control, presentation at internal/external seminars, and review by departmental analytical groups.
  - COM guidelines require courtesy review by departments with relevant competence and notification of concerned Executive Director(s) when papers deal with specific countries or groups of countries.
  - Outside experts reviewing WPs judged that some WPs should not have been issued, indicating prior inadequate quality control; SDNs judged to meet quality standards more uniformly.
  - Additional steps being considered:
    - i. Institute a Fund-wide procedure for WPs where B-level approvers may request departmental review or external referee review; authors expected to fully address comments prior to issuance.
    - ii. RES and ICD, with other departments, plan a half- or one-day course (offered twice a year) on good practices for Fund research.
    - iii. Data dissemination: for flagships and Board papers all non-confidential data used in analysis to be posted on the web at time of publication; for WPs, authors to post non-confidential data either when the WP is issued or, if journal submission is intended, when the paper is published.
  - Status in summary table: "In progress" / "Implemented" distinctions noted; consultant’s report included assessment of technical quality.

### Pending issues highlighted in the MIP
- Complete the Strategic Review of Research currently in progress.
- Area departments to strengthen policies and maintain logs for eliciting authorities’ views on research topics; no presumption staff will be limited to authorities’ requested issues.
- Further actions to improve outreach and dissemination in LICs and to organize regional research conferences are possibilities under consideration.
- No quick solutions to promoting openness and alternative perspectives; new procedures at end-2012 and additional WP review strengthening are expected to help address “message driven” concerns.
- No evidence yet available to determine whether quality improvements from new procedures have occurred across departments; further reinforcement of WP review processes planned.

### Implementation status summary (as presented in Table 3)
- Improving the Management of IMF Research: Coordination stepped-up; Economic Counselor to continue interdepartmental meetings; overall classification: "Partially implemented."
- Enhancing the Relevance of Research: Strategic Review conducted; no indicative medium-term research agenda set; classification: "Implemented" for the review but with outstanding agenda-setting.
- Staff consultation on SIPs and other research: Departments to step up consultations; reforms announced to balance cross-country experience and team stability; classification: "In progress" and in some aspects "Implemented."
- Promoting Openness to Alternative Perspectives: Reforms announced; statement of workplace values forthcoming; new procedures to strengthen WP review; classification: "In progress."
- Enhancing Technical Quality of Analytical Work: New WP procedures adopted; forthcoming Strategic Review to assess technical quality more broadly; classification: "In progress" with elements "Implemented."

*Source: PERIODIC MONITORING REPORT — Implementation plan and status on follow-up to the IEO Evaluation of Research at the IMF (extracted from the provided chapter).*

### 24. The recommendations included in the IEO Evaluation on International Reserves focused

### The recommendations included in the IEO Evaluation on International Reserves focused on the Fund’s approach to the analysis of reserves in both a multilateral and bilateral context, as well as on its policy advice.

### I. Main findings and recommendations (multilateral and bilateral contexts)
- Multilateral context:
  - Embed discussion of reserve adequacy in a comprehensive treatment of threats to global financial stability and reflect developments in global liquidity and financial markets.
  - Policy initiatives should target underlying distortions rather than just symptoms, such as excessive reserves.
- Bilateral context:
  - Apply reserve adequacy indicators flexibly and reflect country-specific circumstances.
  - Provide clearer advice on reserve adequacy considerations for advanced economies.
  - Recognize multiple tradeoffs involved in decisions on reserve adequacy and reserve accumulation at the country level.
  - Better integrate advice on reserves with advice on related policy areas.

### II. Executive Board reaction and Fund follow-up instruments
- Board discussion:
  - Executive Directors broadly supported the general recommendations but noted the Fund had already made progress.
- Instruments and reports integrating reserve adequacy and external stability issues:
  - Updated Guidance Note for Surveillance (October 2012) — establishes stability as organizing principle; balance of payments stability at the core; regards reserve adequacy as a critical element of balance of payments and global stability assessments.
  - External Sector Report (ESR) — provides a multilaterally consistent view of external imbalances and integrates advice on reserve adequacy with related policy areas.
  - World Economic Outlook (WEO), Global Financial Stability Report (GFSR), Spillover Reports, Vulnerability and Early Warning Exercises — address threats to global stability, including from global liquidity and financial markets.
  - Note providing operational guidance on liberalization and management of capital flows (April 2013) — stresses that application needs to reflect country circumstances.

### III. International Reserves Monitoring Implementation Plan (MIP) — focus and scope
- MIP concentrated on recommendations with broad Executive Director support, primarily on reserve adequacy assessments in bilateral surveillance.
- Two specific areas emphasized:
  - Ensure robust coverage of reserve adequacy in Fund surveillance, with guidance tailored to certain types of economies.
  - Improve communication of the Fund’s views and guidance on reserve adequacy.

### IV. MIP Implementation — Ensure robust coverage and tailored guidance
- Guidance and analytic updates:
  - Updated Guidance Note for Surveillance (October 2012) encourages use of metrics from the IMF paper Assessing Reserve Adequacy (ARA) for emerging market and developing economies, exploration of other approaches, and scenario analysis for sudden stops and extreme balance of payments shocks.
  - Follow-up paper Assessing Reserve Adequacy—Further Considerations (November 2013) aims to: (i) explore the use of reserves in recent years and their role with other external liquidity buffers in preventing/mitigating crises; and (ii) review ARA metrics and consider improvements to better account for country-specific factors. The paper focuses exclusively on reserves held for precautionary motives.
- Key analytic conclusions and proposals from the follow-up ARA paper:
  - Reserve needs reflect maturity, depth, and underlying liquidity of a country’s market and its economic flexibility; these characteristics do not always align with standard classifications of advanced, emerging, and low-income countries.
  - Within each economy type, reserve needs depend on the nature of the exchange regime.
  - For mature market countries that are not reserve currency issuers:
    - Potential foreign exchange funding needs of the banking system may provide a basis for reserve needs.
    - Reserve needs could be augmented to reflect measures of trading liquidity, market participants’ behavior, and possibly foreign exchange liquidity needs of some non-banks.
    - Computation is complicated by significant data gaps.
  - For economies with less-mature markets (mainly emerging market economies):
    - ARA metric and related risk weights appear broadly appropriate, with possible exception of exports.
    - Greater country-specificity could improve assessments.
    - Proposed ARA refinements: (i) increase weight applied to other liabilities; (ii) add component based on commodity import exposure for countries highly dependent on commodity imports; (iii) adjust upward the weight applied to exports for countries heavily reliant on commodity exports; (iv) introduce persistence in desired reserve holdings for countries with a history of capital flows volatility (e.g., maintain reserves relative to some moving average of the country’s metric level).
  - Cost and benefits:
    - Discussed cost of holding reserves in market access countries (mature and less mature markets), for different types of LICs, and return on reserve assets.
    - Suggested that Resource Rich Economies (RREs) might need to hold a higher level of reserves to withstand external shocks.
    - Provided illustrative presentation on adequate reserve levels for LIC subgroups (RREs, frontier markets, and Sub-Saharan economies) using alternative proxies for the cost of holding reserves, while noting refinements could not capture full range of factors affecting cost.
  - Applicability to special cases:
    - Fully dollarized economies (including fully dollarized LICs) and currency unions: metric may be relevant but should be perceived as a lower bound for reserve adequacy for fully dollarized economies; specific issues for dollarized LICs were discussed.
    - Partially dollarized economies: ARA metric generally well suited.
    - Currency unions: nature of the union critical for needed external buffers; financial architecture and synchronization may limit scope for heavy reliance on reserve pooling.
- Pending actions and timelines:
  - Follow-up ARA paper addresses many IEO issues for bilateral surveillance.
  - In July 2014 staff will engage the Board on additional operational considerations, examining how income levels, capital controls, and commodity-intensive trade affect reserve needs.
  - A new guidance note on international reserves expected to be issued in early 2015.

### V. MIP Pending and connected issues raised by Executive Directors
- Directors’ requests for further work:
  i. Additional work to assess drivers of reserve accumulation in excess of precautionary levels.
  ii. For mature market countries that are not reserve currency issuers, efforts to address data gaps impeding construction of indicators of short-term bank foreign exchange funding, trading liquidity, and pricing behavior of market participants.
  iii. Further work to strengthen Fund policy advice on foreign exchange market intervention and fuller discussion of alternatives to reserve accumulation (central bank swaps, Fund arrangements, regional financing arrangements). A paper on The Role of Exchange Rate Intervention—Issues and Experiences tentatively scheduled for Board discussion in January 2015.
- Future LIC work:
  - Further explore heterogeneity of LICs, including high vulnerability of small states and mono-export economies to shocks.

### VI. MIP Implementation — Improve communication of the Fund’s views and guidance
- Actions taken:
  - Second Pilot External Sector Report (August 2013) aimed to provide a multilaterally consistent assessment of external developments and policy recommendations, placing greater emphasis on capital flows and refining the Pilot External Balance Assessment (EBA).
  - Follow-up ARA paper informed by a survey gathering member country views on motive/use of reserves, analytical frameworks for precautionary reserve adequacy, and approaches to intervention.
  - SPR’s Assessing Reserve Adequacy toolkit, including the ARA metric, available to staff on the internal IMF website for cross-country comparisons.
  - Paper on Global Liquidity—Issues for Surveillance issued in April 2014 to illustrate new empirical research avenues for global liquidity to enrich surveillance.
- Pending communication actions:
  - MIP envisages stepped-up engagement on reserve adequacy, including dedicated missions focusing on countries where reserve adequacy is central to the policy mix.
  - Consideration of making the reserve adequacy toolkit available on the external IMF website to broaden usage and solicit feedback from policymakers and academics.

### VII. Implementation status summary (selected items)
- Guidance Note for Surveillance (October 2012) — Implemented.
- Follow-up ARA paper (November 2013) — Implemented; guidance note in progress.
- Second External Sector Report (August 2013) — Implemented.
- Stepped-up engagement through dedicated missions and as part of regular surveillance — In progress.

### VIII. The Role of the Fund as Trusted Advisor — related findings (overview)
- IEO Evaluation period: 2005–12, emphasis on sub-period 2007–08.
- Key findings:
  - Majority of country authorities held positive views; Fund’s image improved after the crisis and was perceived as more open, flexible, and responsive.
  - Six recommendations made; five broadly endorsed by the Board (one recommendation on incorporating views of all countries in major policy paper preparation received limited support).
- MIP steps and implementation notes:
  - 2012 Guidance Note encourages early exchange with authorities on topics and fosters dialogue on rationale and relevance of policy advice.
  - FDMD memo (June 2013) requires mission chiefs to contact authorities two months in advance of Article IV consultations; SPR to monitor implementation through Policy Consultation Meetings (PCM); mission teams to share major policy questions and global assumptions at least one week before missions.
  - Note with operational guidance on jobs and growth for surveillance and program work issued in September 2013; application must reflect country circumstances.
- Pending issues:
  - No follow-up survey of country authorities or OED since the MIP was issued; surveys planned for 2014 TSR could assess progress.
  - Cross-country policy lessons remain limited in Article IV consultations; coverage of outward spillovers in Article IV reports still at early stage.
  - ISD limits outward spillovers coverage to systemic countries.
  - 2014 TSR will assess institutional effectiveness in surveillance, including integrated surveillance capacity and cross-departmental expertise use.
- Staff tenure objective:
  - Departments should aim for three years average tenure for country assignments.
  - Indicator for mission chief tenure for all area departments: average tenure of 2.4 years in FY 2013, slight decline to 2.3 years in mid-FY 2014, with variations across departments; flexibility needed for fragile states and high-intensity crisis assignments.

*Source: IMF Periodic Monitoring Report (implementation and follow-up to IEO Evaluations on International Reserves and The Role of the Fund as Trusted Advisor).*

### Box 5. Staff Tenure in Country Assignments

### Box 5. Staff Tenure in Country Assignments

### Tenure targets and monitoring
- Departments were asked to move towards average desk tenure of three years.
- Mission chief tenure is monitored through the Accountability Framework; the average three-year target is measured based on the last completed assignment.
- This indicator was introduced with the FY 2015 Scorecards and is posted on OMD’s website. Scorecards are updated every six months.
- Area-department aggregate indicator:
  - FY 2013 total: 2.4
  - Mid-FY2014 total: 2.3
- Area department mission chief tenure by department:
  - AFR: FY 2013: 2.4; Mid-FY2014: 2.2
  - APD: FY 2013: 2.0; Mid-FY2014: 2.0
  - EUR: FY 2013: 2.8; Mid-FY2014: 2.6
  - MCD: FY 2013: 2.5; Mid-FY2014: 2.5
  - WHD: FY 2013: 2.1; Mid-FY2014: 2.3

### Desk economists and expected outturn
- Data for desk economists (from the 2013 CWP paper) show:
  - As of April 2012, desk economists had served on their assignments for an average of 1.3 years, based on ongoing assignments.
  - The CWP paper argued that, assuming a broadly uniform distribution of changes in desk tenure over time, one would expect an outturn of 1.5 years to be consistent with reaching the three-year benchmark.

### Handover, rotation, and transition procedures
- Area and functional departments should set out clear expectations and procedures for handovers of country assignments, including on data management.
- All areas and functional departments have issued guidelines establishing minimum requirements and recommending best practices for handovers; requirements include a checklist of information to be handed by the outgoing economist to the successor.
- The APR process should include an assessment of how well staff and managers assist with transition processes.
- Area departments should manage staff rotation to ensure mission chiefs, resident representatives, and senior desks do not leave a country assignment at the same time; this is monitored by area departments’ SPMs with support from HRD.
- Mission teams should engage closely with OED prior to, during, and after policy discussions with country authorities.

### Diversity and senior-staff hiring trends
- The MIP envisaged improving diversity of senior staff to strengthen relationships with country authorities.
- Geographical diversity data (as of end-FY 2013):
  - Middle East had attained the B-level benchmark of 5 percent.
  - Transition countries were halfway toward their benchmark of 4 percent.
  - East Asian staff share, while increasing, was still below its benchmark of 7 percent.
  - Share of B-level staff from Africa was still short of the benchmark of 6 percent, but on an upward trend.
- Recent hiring trends (CY 2013):
  - The Fund recruited six B-level staff from the external market in CY 2013, compared with eight hires in CY 2012 and a five-year average of 10.
  - Of the six hired in 2013, only three were from underrepresented regions, compared with six in CY 2012.
  - None were women in CY 2013; one woman was hired in early 2014.
- B-level Diversity Initiative:
  - Established in FY 2011.
  - As of end-March 2014, nine individuals had been hired under the program, with 3-4 positions remaining.
  - Hiring through the Initiative is due to end in FY 2015, at which time the effectiveness of the program will be assessed.

### Outreach, transparency, and Trusted Advisor objectives
- Trusted Advisor MIP: staff should make authorities aware of the Fund’s policy on the treatment of confidential information and be encouraged to have informal/brainstorming discussions with country authorities.
- SPR Guidance Note on the Fund’s Transparency Policy (November 2013) includes a Transparency Policy Information Sheet (TPIS) for missions; TPIS states:
  - Staff should disclose to the Executive Board any information necessary for the Board to conduct surveillance or make decisions on Fund-supported programs, including authorities’ policy positions and plans relevant for surveillance or financial assistance.
  - TPIS notes that information on hypothetical courses of action informally discussed with authorities would generally be excluded from disclosure to the Board, although such information “may, at some point, become of such importance for surveillance or Fund-supported programs that it may need to be disclosed to the Board.”
- Outreach guidance and tools:
  - October 2012 Guidance Note for Surveillance encourages area departments to develop outreach programs as part of mission planning in consultation with COM; Article IV press conferences at the end of missions and/or Board meetings should be routine unless specific reasons not to hold them are identified.
  - June 2013 FDMD memo: mission chiefs should discuss outreach plans/strategy with authorities in mission planning, with COM support; terms of reference for Resident Representatives (RRs) should underscore outreach strategy collaboration with authorities and be updated annually (practices vary across departments).
  - COM prepared guidelines on outreach with civil society, legislators, media, and public; maintains a communications toolkit and liaison officers for departments.
  - May 2013 pilot on social media for RRs includes four posts: India, Pakistan, South Africa, and Peru; Social Media Guidance Note for RRs and Social Media Operational Guidelines issued.
  - COMDC maintains RRs and Regional Offices websites (including in four languages other than English) on imf.org; COMCD handles posting, site creation, and redesign; COM prepared RR Website guidelines with specific instructions.
  - Media and Public Relations course expanded in 2013 to include outreach; AFR, APD, and EUR have delivered the new course to their RRs at Annual RR retreats.
  - A new interdepartmental outreach database was put in place in July 2013; department representatives update activities, usually for a period of three months.

### Transparency policy implementation and monitoring
- 2013 Review of the Fund’s Transparency Policy surveys suggest a marginal loss of candor arising from external pressures before publication of reports:
  - Some 20 percent of mission chiefs cited the need to maintain good relations with authorities as a factor constraining candid reporting, but the vast majority thought all important information remained in published reports.
  - Executive Directors were the most concerned about evenhanded application of the policy; half believed the policy was not applied evenhandedly.
  - Mission chiefs, on balance, felt the policy was not applied evenhandedly, though less strongly than Directors.
  - Country authorities were, on average, more positive about evenhandedness, with substantial variation across regions; greatest concerns from authorities in the Middle East, Africa, and the Western Hemisphere.
- Review findings on deletions and corrections:
  - A detailed examination of a sample of cases revealed only a few that did not fulfill all criteria under the policy, with little evidence of bias.
  - Corrections requests remained high during the crisis, especially for advanced economies; European crisis countries accounted for a major share of countries requesting the largest numbers of deletions on grounds of market sensitivity.
- Measures to strengthen monitoring and recordkeeping:
  - Proposal for an annual report to the Board containing a table of all modification requests, detailing rejected requests with country name, specific request, and reason for rejection, to help assess evenhandedness.
  - Staff developing a database of modification requests to generate summary statistics on rejected modifications for inclusion in the report on Key Trends in the Implementation of the Fund’s Transparency Policy, starting in 2014.
  - Guidance Note (November 2013) envisages strengthened recordkeeping: country teams will copy SPR when corrections and deletions memoranda are sent to SEC, even when SPR sign-off is not required; this record-keeping does not include requests that were rejected.

### Implementation actions and status (selected items relevant to staff tenure and continuity)
- Target of three years average tenure for country assignments to be monitored by HRD: Implemented.
- Measures to raise the share of nationals from under-represented regions among senior staff and set targets for representation of women at senior levels: In progress; to be monitored through 2014 Diversity and Inclusion Annual Report.
- Transition rules to be introduced by July 2013 to support orderly handovers: Implemented.
- SPMs to work to prevent simultaneous turnover of mission chief, senior desk, and/or Resident Representative: Implemented.
- Role of OED in liaison process to be emphasized and monitored through an annual survey beginning by April 2014: In progress.
- Surveys of country authorities for forthcoming TSRs to be enhanced to determine progress in improving the Fund’s role as trusted advisor: In progress; survey to be conducted in context of the 2014 TRS.
- Staff to inform authorities of the Fund’s policy on confidential information and be encouraged to have informal/brainstorming discussions: In progress; instructions included in the Guidance Note on Transparency; progress to be monitored through surveys of country authorities and OED.

*Source: HRD and Area Departments Accountability Frameworks; Box 5, "Staff Tenure in Country Assignments", Periodic Monitoring Report.*

### 5. Work closely with country authorities to design a  customized outreach strategy  for mission chiefs and resident  rep

### 5. Work closely with country authorities to design a  customized outreach strategy  for mission chiefs and resident  representatives

### Outreach strategy design and monitoring
- All steps will begin in May 2013: Mission chiefs should discuss outreach plans/strategy with authorities in the context of mission planning, with support from COM. SPR will monitor during PCMs.
- Resident Representatives’ terms of reference will be clarified to underscore the importance of formulating an outreach strategy in collaboration with the country authorities, to be updated on an annual basis. This will be monitored by HRD, with support from COM.
- Implementation status:
  - Partially Implemented. Instructions have been issued by the FDMD, but consultation with the authorities varies across countries. Mission outreach plans are usually included in Policy Notes and reviewed by COM.
  - Partially Implemented. Instructions have been issued by the FDMD. Most TORs discuss outreach, but updating is not systematic.

### Key operational notes and institutional follow-up
- Mission chiefs’ outreach plans to be discussed as part of mission planning with COM support.
- SPR to monitor outreach during PCMs.
- HRD to monitor annual updating of Resident Representatives’ terms of reference, supported by COM.

---

### 6. Implement the Fund’s transparency policy in a uniform and fair manner

### Review and implementation
- The next Review of Transparency, expected to be issued to the Board in the second quarter of 2013, will provide updated analysis on implementation of the policy, including whether it has been applied in an even-handed manner across the membership. To the extent that shortfalls are found, it will provide concrete recommendations on how these may be addressed.
- Implementation status:
  - Implemented. Recommendations have been made to improve evenhandedness.

---

### Table 6. Summary of Implementation Status for Recent Management Implementation Plans (MIPs)

- Total number of Board-Endorsed Recommendations: 21
- Total Number of Follow-Up Steps in the MIP: 46
- Of Which Implemented: 20
- Partially Implemented: 4
- Not Implemented: -
- In Progress: 22
- Percentage row (as presented): -; 100; 43.5; 8.7; -; 47.8

---

### PREVIOUS MIPs AGREED SINCE 2007: Summary of recent developments

### A. IMF Interactions with Member Countries — major developments and actions
- Areas of focus not yet addressed elsewhere: (i) recent modifications in the Fund’s non-concessional lending facilities; (ii) review of the Fund’s Capacity Development Strategy; (iii) initiatives to increase effectiveness of staff in the field; and (iv) recent work on fragile states and small states.
- Lending toolkit reforms and reviews:
  - In November 2011, the Executive Board reviewed the Flexible Credit Line (FCL) and the Precautionary Credit Line (PCL) and approved reforms including: (i) consolidation of GRA emergency assistance tools under the Rapid Financing Instrument (RFI); and (ii) replacement of the PCL with the Precautionary and Liquidity Line (PLL) allowing PLL arrangements as insurance and for actual balance of payments need, including six-month arrangements for short-term liquidity shocks.
  - In February 2014, the Board discussed a staff paper on the Review of the FCL, the PLL, and the RFI. Executive Directors agreed the FCL, the PLL, and the RFI should remain in the Fund’s lending toolkit and saw scope for further refinements.
  - In April 2014 staff issued another paper on Review of the FCL, the PLL, and the RFI – Specific Proposals, focusing on: (i) alignment of qualification criteria for FCL and PLL; (ii) methodology to calculate a new external stress index; and (iii) use of a limited set of new institutional indicators. The Board discussed staff’s proposals on May 21, 2014.
- Capacity development and training:
  - In May 2013, the Executive Board considered a staff paper on The Fund’s Capacity Development Strategy: Better Policies through Stronger Institutions; several reforms were endorsed by the Board.
  - Follow-up: staff will submit a revised statement for Board approval on a LOT basis and provide supplementary information on capacity development activities in Fund budget documents starting with the FY 2014 budget outturn paper.
  - External IMF training triennial survey (2012) results: 98 percent of respondents were satisfied with training during 2009–2011, with 77 percent expressing strong satisfaction. The survey noted demand for all types of training was expected to increase during 2012−2016.
- Field staff effectiveness and Resident Representatives (RRs):
  - A Working Group established in early 2011 identified gaps (selection, training, management of RRs) and suggested improvements, most endorsed by Management: longer lead times for RR selection; focus on outreach/interpersonal/diplomatic skills in selection; comprehensive training for newly appointed RRs; strengthened interactions between RRs and headquarters; maximize use of local staff.
  - A new interdepartmental group has been set up to coordinate the Resident Representative program across area departments and is following up on previous Working Group recommendations, including developing a training program for RRs.
- Engagement with fragile states and small states:
  - May 2012 guidance note provides operational guidance on engagement with low-income and middle-income countries in fragile situations; effectiveness will be assessed for a sub-group of fragile states as input into a broader review tentatively envisaged for early 2015.
  - March 2013 staff paper on Macroeconomic Issues in Small States presented proposals to strengthen Fund engagement. Staff Guidance Note on Engagement with Small Developing States issued in March 2014. Another paper on Selected Issues in Small States to be presented in early 2015.
  - New special provisions effective April 2013 resulted in three small states (Marshall Islands, Micronesia, and Tuvalu) becoming PRGT-eligible.

### B. IMF Involvement in International Trade Policy Issues
- SPR External Sector Unit coordinates work on trade, capital flows, exchange rates, and international reserves; work ongoing to update SPR’s Trade Webpage for staff use.
- Trade monitoring and coordination:
  - Updates to management and departments on trade developments, including the WTO Doha Trade Round.
  - Preparation of a regular internal trade monitor was temporarily discontinued in May 2013 but expected to resume.
  - Coordination with the WTO and the OECD has continued; IMF/WB/WTO joint trade workshops continue annually, with the Fund organizing this year’s joint workshop in November.
- Research and outreach:
  - SPR organized monthly trade seminars for staff and outside experts on topics such as trade finance, GVCs, the Trans-Pacific Partnership.
  - Staff paper "Trade Interconnectedness: The World with Global Value Chains" issued in August 2013 documenting evolution of GVCs since the mid-1990s and implications for surveillance.
  - The Fund’s review of work on trade policy expected to be finalized towards the beginning of 2015.

### C. Structural Conditionality in IMF-Supported Programs
- 2011 Review of Conditionality findings: conditionality more focused, aligned with program goals, tailored to country circumstances, and more parsimonious with discontinuation of structural performance criteria; but focus/parsimony may be pressured in a more challenging global environment.
- Recent developments:
  - Trend toward increased structural conditionality since 2011; Greece Ex-Post Evaluation (2013) noted very detailed structural fiscal conditionality under the 2010 SBA due to weak administrative capacity.
  - Structural reforms and the Fund’s role to be covered in a background paper for the 2014 TSR prepared by external experts.
  - Annual Report on the Application of Structural Conditionality discontinued in 2010 due to resource constraints; structural conditionality reviewed in EPAs and EPEs for specific program countries.
  - Guidance note on conditionality expected to be revised and issued in mid-2014.
  - Staff Discussion Note "Anchoring Growth: The Importance of Productivity-Enhancing Reforms in Emerging Market and Developing Economies" released December 2013; dataset covers up to 120 countries (depending on indicator) over the period 1970–2012 and has been transformed into a toolkit for staff.
  - Going forward: expand work on inequality, jobs, and growth; update Jobs and Growth toolkit; assess post-crisis growth performance in advanced economies; operationalize analytical work on inequality and jobs and growth in Article IV consultations.

### D. IMF Exchange Rate Policy Advice
- Outputs and methodological developments:
  - Pilot External Sector Reports (ESRs) and Spillover Reports issued; introduction of the Pilot External Balance Assessment (EBA) approach; updated instructions on external assessments and exchange rates in the Guidance Note for Surveillance under Article IV Consultations (October 2012).
  - Pilot ESRs issued in 2012 and 2013 cover 29 of the IMF’s largest economies and the Euro Area; Prepared by an External Sector Report Coordinating Group supported by an interdepartmental team.
  - Pilot EBA approach:
    - First version used in the 2012 Pilot ESR; second Pilot ESR incorporated an enhanced EBA including a broader analysis of policy roles.
    - EBA comprises three methods, each based on a CGER predecessor, with innovations: clearer distinction between descriptive understanding of current accounts/real exchange rates and normative evaluations estimating contribution of “policy gaps”; steps to strip out cyclical factors; consideration of a greater range of explanatory variables.
    - Pilot EBA provides estimates for current accounts and exchange gaps for 49 advanced and emerging market economies used as inputs in Pilot ESRs.
    - Countries outside EBA generally rely on older approaches (CGER). For economies with special characteristics, country teams often adjust methodologies; a staff paper "External Assessments in Special Cases" (January 2014) reviews approaches and notes tradeoffs (multilateral inconsistency, accuracy, evenhandedness).
    - SPR is working on extending the EBA methodology to a broader set of emerging market and low-income countries; training seminars will be conducted once methodology for non-EBA countries is finalized.
  - Spillover Reports issued in 2011, 2012, and 2013 examine external effects of domestic policies in five systemic economies: China, the Euro Area, Japan, the United Kingdom, and the United States.
- Guidance and expectations for Article IV surveillance:
  - Guidance Note (October 2012) states assessment of balance of payments stability is broader than exchange rate assessment; Article IV staff reports are expected to provide clear assessment of: (i) the current account and exchange rate level/competitiveness; (ii) developments from capital and financial account that could lead to balance of payments instability for the member or its trading partners; and (iii) cross-border spillovers that may significantly impact global stability.
  - Assessments should include a clear analysis and bottom line on whether current account and exchange rate are broadly consistent with medium-term fundamentals, integrated into broader stability and overall policy mix analysis, supporting clear policy recommendations.
  - Numerical exchange rate estimates should be included in staff reports (drawing from Pilot ESR, EBA where available, and CGER/CGEr-type estimates), except where serious data limitations require largely qualitative assessments.
  - In January 2015 the Board will be briefed on "The Role of Exchange Rate Intervention: Issues and Experiences", reviewing country experiences and taking into account capital flow impacts.

### E. The IMF and Aid to Sub-Saharan Africa
- (Section header present; substantive developments on concessional lending products and related reforms discussed under IMF and Aid to Sub-Saharan Africa MIP earlier in the document.)

*Source: _063014a - 5. Work closely with country authorities to design a  customized outreach strategy  for mission chiefs and resident  rep*

### 38. Several developments have taken place regarding the Fund’s engagement with LICs, and

### _063014a - 38. Several developments have taken place regarding the Fund’s engagement with LICs, and

### LIC facilities framework and operational adjustments
- A new architecture for LIC lending facilities approved in July 2009 (effective January 2010) provided a unified framework under the Poverty Reduction and Growth Trust (PRGT) for eligible LICs.
- The framework consists of three lending windows: the Extended Credit Facility (ECF); the Standby Credit Facility (SCF); and the Rapid Credit Facility (RCF).
- For policy advice and signaling, countries can request non-financial assistance under the Policy Support Instrument (PSI).
- The LIC facilities framework was reviewed in September 2012 (Review of Facilities for Low-Income Countries).
- Modifications approved in April 2013 (Facilities for Low-Income Countries – Proposals for Implementation) seek to offer more flexibility on:
  - augmentation requests;
  - program extensions;
  - precautionary support;
  - requirements of formal poverty reduction strategy documents.

### Concessional lending and PRGT sustainability
- IMF concessional lending commitments:
  - US$ 1.2 billion in 2008;
  - US$3.8 billion in 2009;
  - annual average of US$ 1.6 billion during 2010–13.
- In September 2012, the Executive Board approved a partial distribution of the Fund’s general reserves attributed to gold sales profits as part of a strategy to make the PRGT sustainable over the longer term.

### Fund engagement in Sub-Saharan Africa (as of March 31, 2014)
- Active engagements:
  - 13 ECFs;
  - 1 SCF;
  - 4 PSIs;
  - 2 SMPs.
- There were nine near-program countries.
- Fund staff had conducted 17 Ex-Post Assessments (EPAs) for Longer-Term Program Engagement since 2010, including 10 EPAs of Engagement with Sub-Saharan countries.

### Vulnerability assessment framework and LIC resilience
- A framework for assessing vulnerabilities and emerging risks in LICs from external shocks was described in Managing Volatility: A Vulnerability Exercise for Low-Income Countries (IMF Policy Paper, 2011).
- First application: Managing Global Growth Risks and Commodity Price Shocks – Vulnerabilities and Policy Challenges for Low-Income Countries (IMF Policy Paper, 2011).
- Second application: Global Risks, Vulnerabilities, and Policy Challenges Facing Low-Income Countries (IMF Policy Paper, 2012).
- In September 2013, staff issued the 2013 Low-Income Countries Global Risks and Vulnerabilities Report, which concluded:
  - most LICs showed impressive resilience in sustaining strong growth over the global crisis and the ensuing sluggish recovery;
  - vulnerabilities remained in some small states, oil exporters, and fragile states.

### Collaboration, technical assistance, and analytical outputs
- Continued collaboration with international agencies including the World Food Program, UNICEF, the ILO, and the UK’s Department for International Development (DFID).
  - Collaboration informed Fund work on food security, social support, and labor market issues.
  - DFID provided funding for research including a paper on Sustaining Long-Run Growth and Macroeconomic Stability in Low-Income Countries—The Role of Structural Transformation and Diversification (issued March 2014).
- Other bilateral donors contributing to regional technical assistance and training initiatives in sub-Saharan Africa include the European Union, Mauritius, Canada, Switzerland, and Australia.
- Global Monitoring Reports on progress toward the Millennium Development Goals by 2015 are prepared annually and discussed by the Development Committee during the Annual Meetings.
- In late May 2014, the Government of Mozambique and the Fund convened a high level Africa Rising conference in Maputo to take stock of Africa’s sustained strong economic performance and outlook.

### Macroeconomic frameworks for resource-rich developing countries
- Fund teams are applying new macro-fiscal frameworks and policy analysis for resource-rich developing countries.
- Recent applications include Angola, Gabon, Ghana, and Mozambique.
- Relevant publications and papers cited:
  - Resource-Rich Countries Can Seize Opportunities (IMF Survey Magazine, 2012);
  - Dutch Disease: Wealth Managed Wisely (Finance and Development, 2012);
  - Macroeconomic Policy Frameworks for Resource-Rich Developing Countries (IMF Policy Paper, 2012);
  - Boom, Bust or Prosperity? Managing Sub-Saharan Africa’s Natural Resource Wealth (IMF Departmental Paper, 2013).
- A paper entitled The Economic Impact of IMF-Supported Programs in LICs (Occasional Paper 277) assessed the economic impact of the Fund’s support to LICs through its facilities.

### Debt sustainability and debt limits
- A new Staff Guidance Note on the Application of the Joint Bank-Fund Debt Sustainability Framework for Low-Income Countries was issued in November 2013.
  - Incorporates changes approved by the IMF and IDA Boards in February 2012.
  - Changes include:
    - revised thresholds for public and publicly guaranteed debt;
    - new benchmarks for public debt;
    - revised guidance on incorporating remittances;
    - a “probability approach” using country-specific information;
    - a new assessment of the overall risk of debt distress.
  - The Fund and the Bank modified and unified the discount rates used in the external debt analysis for LICs.
  - The new unified discount rate has been set at five percent and will remain in effect until the next review of the debt sustainability framework for LICs.
- A staff paper on Debt Limits in Fund Programs with Low Income Countries was discussed at an informal session of the Executive Board in January 2014.
  - The paper contains a proposed new approach to handling external borrowing limits in Fund programs, building on a March 2013 paper on the Review of the Policy on Debt Limits in Fund-Supported Programs.
  - Executive Directors provided suggestions to refine the proposed approach; staff are expected to present a modified proposal to reform the IMF’s debt limits policy before the Annual Meetings.

### Forward-looking priorities and planned analytical work
- Going forward, work on LICs will focus on:
  - prospects and vulnerabilities;
  - macroeconomic management of natural resource wealth;
  - revenue mobilization;
  - financial deepening;
  - monetary policy issues;
  - challenges faced by frontier economies.
- Specific planned outputs and initiatives:
  - The 2014 TSR will analyze how surveillance on LICs differs from that on other countries.
  - A Low Income Developing Countries Report in September 2014 will examine economic prospects and vulnerabilities and will replace the LICs vulnerability reports produced in recent years.
    - The report will include a discussion of debt dynamics in LICs following the provision of comprehensive debt relief.
  - Continued work on macroeconomic frameworks for managing natural resource revenues.
  - A paper on Current Challenges in Revenue Mobilization will discuss initiatives to help build effective and efficient revenue systems.
  - Analytical work on private capital flows and macro-financial linkages in LICs, and global financial transmission into Sub-Saharan Africa.
  - Examination of benefits and risks associated with sovereign bond issuance by frontier LICs.
  - A review of eligibility for concessional financing will be conducted in the Spring of 2015.
  - Continued provision of advice and capacity building to strengthen monetary policy frameworks in LICs.

*Periodic Monitoring Report — Sixth Periodic Monitoring Report on the Implementation of Board-Endorsed IEO Recommendations*

---


_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2014/_063014a.pdf_