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### Executive Summary — Context, Scope, and Mandate
- Review period: April 2010 to June 2015.
- Legal basis: Articles of Agreement of the IMF (Article I; Article V, Section 3).
- Counterparties: safeguards assessments focus on central banks of members borrowing Fund resources.
- Principal objective of the panel: provide the IMF Executive Board with advice on the conduct and focus of safeguards assessments, the operation of the risk-based monitoring framework, and the effectiveness and appropriateness of the ELRIC framework.
- Methods and evidence:
  - Consultations with central bank authorities, IMF Executive Directors’ offices, Fund and World Bank staff.
  - Examination of safeguards assessment and other Fund-specific documents and international reference materials.
  - Panel scrutiny: 25 of the 82 safeguards assessment reports generated during the review period.
  - Review timing and field work: panel performed the review during June and July 2015; two visits to Fund headquarters (June 16-18 and July 8-10); videoconferences with four central banks; meetings with area and functional departments, Office of Budget and Planning, Risk Management Unit, Offices of Executive Directors, and World Bank staff.

### Major Findings and Observations
- Overall effectiveness:
  - Panel opinion: safeguards assessment policy has been effective in mitigating potential risks of misuse of Fund resources and misreporting of monetary program data.
  - There have been no serious cases of misreporting on monetary program data or misuse of Fund resources during the policy review period.
  - Key stakeholders voiced approval and support for the policy.
  - Safeguards staff implement the policy with high competence and have adapted it to developments in central banks.
- ELRIC framework:
  - ELRIC framework application and execution was fully operational and appropriately followed the safeguards assessment policy.
  - Content, coverage, risk evaluation, recommendations and follow up were appropriate to individual circumstances.
  - Confidential safeguards assessment reports provide adequate documentary evidence for assurance to the IMF as part of the credit approval function.
- Monitoring and risk-based approach:
  - Monitoring activity followed approved framework, procedures and time frequency (determined on a risk basis), including follow-up on prior recommendations.
  - Post-assessment, risk-based monitoring is performed for as long as Fund credit is outstanding; central banks submit periodic updates on progress.
  - Safeguards staff in FIN continued to use the risk-based approach and adapted where necessary to changing circumstances.
- Collateral benefits:
  - Improvements within central banks across ELRIC areas and progress toward adopting international standards and best practices.
  - Strengthened central banks support financial stability, economic development and growth.

### Notable Developments and Key Statistics (April 2010–June 2015)
- Fund lending activity and credit outstanding:
  - Increased dramatically through 2012 to almost SDR 100 billion.
  - Declined since then to approximately SDR 60 billion.
  - During the review period, the Fund committed SDR 156 billion through new approved arrangements (excluding FCLs) that required safeguards assessments.
  - Total credit outstanding reached an all-time peak of SDR 99.7 billion in April 2012.
  - As at end-June 2015:
    - Total credit outstanding amounted to SDR 59.5 billion.
    - GRA lending: SDR 53.2 billion.
    - PRGT resources (concessional lending): SDR 6.3 billion.
    - The Fund had a total of 39 active programs and credit was outstanding in relation to 79 member countries.
- Concentration and arrears:
  - Cumulative total of the six largest exposures represented 81 percent of total GRA and PRGT credit outstanding at June 30, 2015.
  - The four largest exposures — Portugal, Greece, Ukraine and Ireland — constituted 83 percent of GRA credit outstanding at end-June 2015.
  - Arrears to the Fund at end-June 2015 amounted to SDR 1.3 billion (excluding Greece), equal to 2.2 percent of total credit outstanding.
  - Greece defaulted in June and July 2015 on payments of SDR 1.2 billion and SDR 0.4 billion, respectively; these amounts were subsequently repaid on 20 July 2015.
- Workload and recommendations:
  - A total of 82 safeguards assessments were performed, of which 15 were first time assessments.
  - Of the total 82 assessments completed, 12 do not relate to approved arrangements (assessments in connection with Rapid Credit Facility disbursements) and one was voluntary.
  - FIN safeguards staff generated 681 recommendations during the 82 safeguards assessments.
    - Note: the 681 recommendations reflect all those issued during the review period; the 536 recommendations noted in the staff report exclude recommendations with implementation dates not yet due or superseded by subsequent assessments.
  - Average recommendations per safeguards assessment: eight per report.
  - Overall implementation rate of safeguards recommendations during the period: 72 percent overall; 94 percent for recommendations under program conditionality.

### Panel Conclusions and Opinions
- Fundamental judgments:
  - The safeguards assessment policy is indispensable to the Fund’s risk mitigation framework and must remain in place while the Fund engages in financing activities.
  - First-hand verification underlies the Fund’s safeguards work.
  - Safeguards assessments must remain an obligatory ex ante requirement for all countries with new arrangements approved by the Fund’s Executive Board.
  - The policy met its objectives during the period under review and provided reasonable assurance of central bank operational and control frameworks.
- Limitations acknowledged:
  - Counterparty to assessments is a central bank; the policy does not give assurance relating to other agencies and currently does not cover the fiscal area.
  - The policy does not provide absolute assurance against willful override of controls or manipulation of data.
- Staff conduct:
  - Panel impressed by professionalism and dedication of FIN safeguards staff; FIN maintained separation between assessment work and technical assistance.
- Endorsement:
  - Panel comfortable with staff proposals on: safeguards modalities (risk-based approach for augmentations, successor arrangements and central banks with strong track records), modifications to monitoring framework aligning with institution-wide post-program monitoring criteria, enhanced focus on internal audit coverage, and fiscal safeguards reviews.
- Monitoring impact:
  - Panel notes data suggest safeguards monitoring practices have deterred misreporting cases; vast majority of central banks are properly reporting and managing Fund resources now that safeguards measures are in place.

### Major Panel Observations, Areas for Refinement, and Recommendations
- Framework expansion and governance:
  - Recommend expansion of the ELRIC framework or elevation of governance as an overarching principle covering transparency, autonomy, accountability and responsibility.
  - ELRIC acronym should either be expanded or governance emphasized across the framework.
- Risk management:
  - Incorporate risk management as a key component at the same level as the existing five ELRIC components (expand ELRIC or integrate IRMF).
  - Encourage central banks to develop integrated risk management frameworks and enterprise-wide risk management.
  - Panel considers an integrated risk management framework could be set as a minimum requirement; implementation can start with simple modular building blocks accommodating capacity constraints.
  - Footnote: "An IRMF should also help identify, detect and mitigate risk events of relevance to safeguards assessments."
- Transparency, disclosure and accountability:
  - Careful consideration required before wider dissemination of safeguards reports due to potential disincentives to cooperation.
  - Safeguards assessment reports are confidential and available only to IMF management and staff, to relevant country authorities and Executive Directors.
  - Panel recommends more consistent content for the summary paragraph on safeguards in staff reports for program countries; at minimum it should include:
    - any instances of misuse of Fund resources and misreporting of related monetary program data;
    - significant recommendations for legislative amendments which fall outside the powers of the central bank and are not included as structural benchmark/s in the program;
    - problems with obtaining access to data;
    - deviations from commitments in relation to safeguards recommendations.
  - That paragraph should be featured in the main body of the staff report.
  - Safeguards work should include ongoing engagement with key stakeholders, use of examples and case studies, and sharing lessons learned under ELRIC.
- Legal framework and engagement:
  - Many safeguards recommendations require amendments to legal frameworks (central bank autonomy, government financing by the central bank, governance).
  - Fund should be proactive and assertive in engaging key country role players to explain motivation, objectives and implications of proposed legal amendments stemming from safeguards recommendations.
- Budget financing and fiscal safeguards:
  - Twenty five arrangements approved during the review period involved budget financing.
  - GRA arrangements involving direct financing decreased to three per year in 2013 and 2014 after peaking in 2010 at seven.
  - PRGT arrangements with budget financing are rare (not exceeding two cases per year).
  - Arrangements involving budget financing exceeded 80 percent of total Fund credit outstanding at end-June 2015.
  - The panel recommends reconsidering the proposed 50 percent threshold for fiscal safeguards reviews; the pilot recommended reviews for countries with both (i) exceptional access to Fund resources, and (ii) more than half of the resources being directed to budget financing. The panel considers the 50 percent threshold does not appear to be sufficiently justified and could be revisited.
  - Fiscal safeguards reviews do not necessarily give the same level of assurance as safeguards assessments; achieving parity would be extremely costly and challenging.
  - Since the pilot study only one member met the risk-based criteria for a fiscal safeguards review; an assessment in 2015 concluded that Ukraine broadly met the safeguards criteria under the LeTIFA framework, except for weaknesses in the reporting of financial data.
- Monitoring frequency and verification:
  - Current practice: staff makes only one on-site visit to a central bank during the life of a Fund loan (loan term could extend up to ten years); the panel questions adequacy of a single on-site visit irrespective of loan duration.
  - The panel encourages integrating metrics for more first-hand verification in the post-program period based on:
    - materiality of the Fund’s exposure;
    - staff’s assessment of safeguards risks at the central bank;
    - the Fund’s reputational risk in relation to the exposure.
- Resources and staffing:
  - Given current workload, FIN safeguards division is appropriately staffed; Fund must maintain base capacity to perform safeguards assessments and ongoing monitoring.
  - Any streamlining of safeguards budget should be based on risk-based savings and should not put the Fund’s balance sheet at risk to achieve minor savings.
  - Panel encourages professionally diverse skill set on safeguards staff, including banking regulation and supervision experience and post-graduate qualifications in law, risk management or finance.
  - Minimum requirement remains professional accounting and auditing background; central banking experience is highly recommended.
- Update of guidance materials:
  - Internal operational guidance should be updated regularly; Operational Guidelines for Safeguards Assessments (last updated in 2009) should constitute the basis of operational guidance.

### Stakeholder Engagements — Conferences, Views and Panel Decisions
- Four central banks invited for videoconference selection criteria:
  - (i) arrangement included budget financing;
  - (ii) representative size of arrangements;
  - (iii) representative geographic spread.
- Countries selected for teleconference:
  - Ukraine (large arrangement, Europe);
  - Ireland (large arrangement, Europe);
  - Jamaica (medium-size arrangement, Caribbean);
  - Sierra Leone (small arrangement, Africa).
- These arrangements equate to 20 percent of the monetary value of all arrangements approved during the review period.
- Central banks consulted were unanimous in support of the safeguards assessment policy and requested extension beyond ELRIC to cover governance and risk management; stakeholders praised FIN safeguards staff professionalism.
- Panel met with Fund staff from AFR, APD, EUR, FAD, FIN, LEG, MCD, MCM, SPR, WHD and the Risk Management Unit; met with Offices of Executive Directors and referenced confidential safeguards reports across many countries (exact list preserved in annexes).

### Procedural Summary — Safeguards Assessment Cycle
- Trigger: member country requests financial assistance; new or update safeguards assessment triggered by a member’s request for a program.
- Workstream:
  - Off-site work: review of information and conference calls.
  - On-site work: in-country verification of compliance via original documentary evidence and stakeholder meetings.
  - Diagnostic reviews cover all five ELRIC areas: external audit mechanism; legal structure and autonomy; financial reporting framework; internal audit mechanism; internal controls system.
- Publication and exceptions:
  - Cornerstone requirement: publication of financial statements independently audited by high-quality external auditors in accordance with international standards.
  - Exceptions and limited procedures apply for emergency assistance (Rapid Credit Facility and Rapid Financing Instruments) and Flexible Credit Line (FCL) arrangements.
- Monitoring:
  - Risk-based monitoring duration and intensity are a function of vulnerabilities identified, interim progress, and emerging issues; mostly off-site, but on-site visits may be undertaken, even annually where justified.
- Membership participation:
  - Members are entitled to request safeguards assessments; members may volunteer and are encouraged to do so if they have a Policy Support Instrument (PSI) or a Staff Monitored Program.

### Forward View and Capacity Development
- Panel read draft staff report and found it overall consistent with panel observations.
- Investment in safeguards assessments viewed as an investment in stronger central banks that may reduce future assessment and monitoring costs.
- Capacity development:
  - Over the longer term, capacity development could be one of the more effective investments to improve the Fund’s credit risk profile.
  - Fund may leverage the self-assessment template to bring more detail to central bankers and inform other stakeholders (parliamentarians, ministries of finance).
  - Self-assessment cannot replace independent assessment.
  - Fund may consider developing a website with applicable resources aimed at capacity development.
- Panel recommendation: investigate additional initiatives to enhance governance and central bank risk management dimensions of the safeguards assessment policy.

*Source: Executive Summary; Sections 1, 3, 13, 42,  IV–V and Annexes (excerpts) — IMF safeguards assessment panel report excerpt.*

### Executive Summary ......................................................................................................

### Executive Summary

### Context and Mandate
- Review period: April 2010 to June 2015.
- The safeguards assessment policy’s legal basis derives from the Articles of Agreement of the IMF, including:
  - Article I: general resources of the Fund are made available temporarily to Fund member countries under adequate safeguards.
  - Article V, Section 3: the Fund shall adopt policies on the use of its general resources that will establish adequate safeguards for the temporary use of the general resources of the Fund.
- Safeguards assessments focus on central banks of members borrowing Fund resources; central banks typically manage, on behalf of the government, resources from Fund lending arrangements.
- The panel’s principal objective: provide the IMF Executive Board with advice on the conduct and focus of safeguards assessments and the operation of the risk-based monitoring framework, and to advise on the effectiveness and appropriateness of the ELRIC framework.

### Scope, Approach, and Evidence Base
- The panel’s mandate: examine effectiveness and appropriateness of the safeguards assessments policy in the five years since its last review in 2010.
- Methods and sources:
  - Consultations with central bank authorities, IMF Executive Directors’ offices, Fund and World Bank staff.
  - Examination of safeguards assessment and other Fund-specific documents.
  - Study of international reference materials.
- Panel scrutiny: 25 of the 82 safeguards assessment reports generated during the review period.
- Review timing and field work:
  - Panel performed the review during June and July 2015.
  - Two visits to Fund headquarters: June 16-18 and July 8-10.
  - Video conferences with four central banks; meetings with area and functional departments, Office of Budget and Planning, Risk Management Unit, Offices of Executive Directors, and World Bank staff.

### Major Findings and Observations
- Overall effectiveness:
  - The panel’s opinion: the safeguards assessment policy has been effective in achieving its objective to mitigate potential risks of misuse of Fund resources and misreporting of monetary program data.
  - There have been no serious cases of misreporting on monetary program data or misuse of Fund resources during the policy review period.
  - Key stakeholders in the safeguards process voiced approval of and support for the policy.
  - Safeguards staff implement the policy with high competence and have adapted it to developments in central banks.
- ELRIC framework:
  - The ELRIC framework, application and execution was fully operational and appropriately followed the safeguards assessment policy.
  - The content, coverage, risk evaluation, recommendations and follow up were appropriate to the individual circumstances.
  - Confidential safeguards assessment reports provide adequate documentary evidence for assurance to the IMF as an important part of the credit approval function.
- Monitoring:
  - Monitoring activity followed the approved framework, procedures and time frequency (determined on a risk basis), including follow-up on recommendations from prior safeguards assessments.
  - Post-assessment, risk-based monitoring is performed for as long as Fund credit is outstanding; central banks submit periodic updates on progress.
- Risk-based approach:
  - Safeguards staff in FIN continued to use the risk-based approach and adapted where necessary to changing circumstances.
- Collateral benefits:
  - Improvement within central banks in the areas covered by the ELRIC framework, and progress toward adopting international standards and best practices, are important collateral benefits.
  - Strengthened central banks support financial stability, economic development and growth.

### Notable Developments and Statistics
- Global context:
  - The review covers the period immediately following the global economic crisis in late 2008 into 2009.
  - Fund lending activity and members’ credit outstanding:
    - Increased dramatically through 2012 to almost SDR 100 billion.
    - Declined since then to approximately SDR 60 billion.
- Budget financing:
  - Increased use of funds by member countries for budgetary financing, which included arrangements representing over 80 percent of the total credit outstanding balances at end-June 2015.
  - This unprecedented level of resources for budget financing constituted a learning exercise from a safeguard assessment point of view.
- Safeguards assessment workload:
  - First-time and update safeguards assessments reached peak heights in 2010 and 2011.

### Panel Conclusions
- Within the scope of its work, the panel found that during the review period:
  - The safeguards assessment policy was applied in an effective manner that allowed its objectives to be met.
  - Safeguards staff applied the safeguards assessment policy appropriately and effectively.
- The Executive Board receives limited direct information on safeguards assessments; periodic independent reviews by an external expert panel constitute a key oversight input.

### Major Panel Observations and Areas for Refinement
- Expansion of the ELRIC framework.
- Risk-based allocation of resources.
- Transparency / confidentiality of safeguards assessments.
- Safeguards in budget financing.

### Safeguards Assessment Cycle (procedural summary)
- Trigger: member country requests financial assistance; a new or update safeguards assessment is triggered by a member’s request for a program.
- Workstream:
  - Off-site work: review of information and conference calls.
  - On-site work: in-country verification of compliance via original documentary evidence and meetings with stakeholders.
  - Diagnostic reviews cover all five ELRIC areas: external audit mechanism; legal structure and autonomy; financial reporting framework; internal audit mechanism; internal controls system.
- Publication and exceptions:
  - Cornerstone requirement: publication of financial statements independently audited by high-quality external auditors in accordance with international standards.
  - Exceptions and limited procedures apply for emergency assistance (Rapid Credit Facility and Rapid Financing Instruments) and Flexible Credit Line (FCL) arrangements.
- Monitoring:
  - Risk-based monitoring duration and intensity are a function of vulnerabilities identified, interim progress, and emerging issues; mostly off-site, but on-site visits may be undertaken, even annually where justified.
- Membership participation:
  - Members are entitled to request safeguards assessments; members may volunteer and are encouraged to do so if they have a Policy Support Instrument (PSI) or a Staff Monitored Program.

### Forward View
- The panel read the draft staff report to be submitted to the Executive Board and found it overall consistent with the panel’s observations.
- Investment in safeguards assessments is framed as not only preventing losses but as an investment in stronger central banks that may reduce future assessment and monitoring costs.

*Source: Executive Summary.*

### 13. The panel’s decision on which four central banks to invite for teleconference

### 13. The panel’s decision on which four central banks to invite for teleconference

### Selection criteria and invited central banks
- Considerations for selection:
  - (i) arrangement included budget financing;
  - (ii) representative size of arrangements; and
  - (iii) representative geographic spread.
- Countries selected:
  - Ukraine (large arrangement, Europe);
  - Ireland (large arrangement, Europe);
  - Jamaica (medium-size arrangement, Caribbean);
  - Sierra Leone (small arrangement, Africa);
  - all the arrangements included budget financing.
- Additional connections:
  - Two of the panel members are connected, respectively, to the central banks of Georgia and Seychelles.
- Monetary coverage:
  - These arrangements equate to 20 percent of the monetary value of all arrangements approved during the review period.

### Review of safeguards assessment reports
- Sample reviewed:
  - The panel studied 25 of the 82 safeguards assessment reports produced during the period since the 2010 review.

### Status of Implementation of 2010 Panel Recommendations
- Overall progress:
  - Substantial progress has been made in addressing the 2010 panel recommendations.
- Box 2 — Key implementation steps reported by staff:
  - Sharper focus on governance:
    - Safeguards assessment reports now include a governance chapeau that provides a high level staff appraisal.
    - Work includes a more explicit focus on governance attributes (transparency, autonomy, accountability, responsibility) across the ELRIC framework.
    - Greater focus on the composition, capacity, competence and role of oversight bodies such as the board and audit committee.
    - Staff meets with audit committee members to gain further insight into issues or difficulties that may signal governance gaps or weaknesses.
  - Risk management:
    - Safeguards assessments currently only take stock of the extent to which a bank has developed an integrated risk management function.
    - Risk management continues to be technically demanding and consequently its breadth and maturity depends on capacity at the bank.
    - Central banks are at different stages of maturity in adopting enterprise-wide risk management operations. There is no “one size fits all” and implementation challenges abound.
  - Budget finance:
    - A pilot exercise of five budget financing cases was completed in 2013 by staff to assess the effectiveness and usefulness of different approaches to identifying fiscal safeguards risks at the state treasury level.
    - The exercise recommended a risk-based approach to identifying fiscal safeguards risks going forward (see Section III, Part E).
  - Collaboration and outreach:
    - Staff continued the regional safeguards assessments seminars series, with events in Austria, Brazil, Kuwait, Singapore, South Africa and Tunisia.
    - Presentations were made at conferences organized by the World Bank, European Central Bank, the Federal Reserve Bank of New York, and the Central Banking International Operational Risk Working Group.
    - Staff coordinated visits with senior officials from the International Accounting Standards Board and the International Auditing and Assurance Standards Board (IAASB).
    - From 2011, an IMF representative was appointed as an observer at the Consultative Advisory Group of the IAASB, which provides input on audit standard setting.
    - Staff has established contacts with senior representatives of international audit firms to discuss audit quality issues.
    - In 2013 and 2014, the IMF partnered with the Hawkamah Institute for Corporate Governance (Dubai) to host high-level fora on central bank governance. More than 80 senior bank officials and external auditors participated at each of these events.
  - Self-assessments:
    - A tool for central banks’ self-assessment was developed and disseminated at recent regional safeguards seminars in Vienna, Singapore and Pretoria.
- Panel recommendation:
  - The panel recommends that additional initiatives be investigated to enhance the potential positive impact of governance and central bank risk management dimensions of the safeguards assessment policy (see Section III).

### Panel’s observations from stakeholder engagements
- General support:
  - Interviewed central banks were in unanimous support of the safeguards assessment policy and appreciated the rationale and due diligence work conducted in connection with Fund programs.
- Impact on reforms:
  - The safeguards process has facilitated change at central banks and provided additional leverage in negotiations with government and state entities.
  - Recommendations requiring amendments to legal frameworks, including national constitutions or central bank legislation, are often sticking points.
- Commitment and challenges:
  - Interviewed central banks declared commitment to sound safeguards standards and practices and strongly supported further enhancement of the policy.
  - In a limited number of cases, structural reforms required for greater central bank autonomy may be disrupted by political-economy challenges.
- Areas for additional substantive input:
  - Central banks sought extension of the policy beyond the current ELRIC framework, particularly on governance and risk management.
  - Requested clarity and customized guidance on:
    - autonomy of a central bank;
    - central bank accountability;
    - fit and proper requirements of central bank executive management (including the governor and deputies).
  - The panel believes staff needs to be more assertive and address governance more comprehensively.
- Staff professionalism:
  - Central banks were impressed with the professionalism, knowledge, expertise and attitude of the FIN safeguards staff.

### Panel’s statistical review (April 2010 to June 2015)
- Fund commitments and assessments:
  - During the review period, the Fund committed SDR 156 billion through new approved arrangements (excluding FCLs) that required safeguards assessments.
  - A total of 82 safeguards assessments, of which 15 were first time assessments, were performed.
  - Note: Of the total 82 assessments completed, 12 do not relate to approved arrangements, but rather were assessments in connection with Rapid Credit Facility disbursements and one voluntary assessment.
- Misreporting/misuse:
  - During this period, no serious cases of misreporting or misuse arose at central banks of member countries that borrowed from the Fund.
  - The companion staff report highlights technical misreporting issues that arose during this period.
- Credit outstanding:
  - Total credit outstanding reached an all-time peak of SDR 99.7 billion in April 2012.
  - As at end-June 2015, the Fund had a total of 39 active programs with member countries and credit was outstanding in relation to 79 member countries.
  - Total credit outstanding amounted to SDR 59.5 billion at end-June 2015.
    - GRA lending: SDR 53.2 billion.
    - PRGT resources (concessional lending): SDR 6.3 billion.
  - Concentration risk:
    - The cumulative total of the six largest exposures represented 81 percent of total GRA and PRGT credit outstanding at June 30, 2015.
    - The four largest exposures — Portugal, Greece, Ukraine and Ireland — constituted 83 percent of GRA credit outstanding at end-June 2015.
- Arrears:
  - Arrears to the Fund at end-June 2015 amounted to SDR 1.3 billion (excluding Greece), substantially the same figure as at end-April 2010.
  - The arrears are 2.2 percent of total credit outstanding.
  - The arrears are attributable to Somalia, Sudan and Zimbabwe and arose prior to 2000 before the adoption of the safeguards assessment policy.
  - In June and July 2015, Greece defaulted on payments due of SDR 1.2 billion and SDR 0.4 billion, respectively, but these amounts were subsequently repaid on 20 July 2015.
  - The safeguards staff informed the panel that amounts in arrears are not considered to fall within the scope of misreporting or misuse of Fund resources.
- Safeguards recommendations and implementation:
  - The number of safeguards assessment recommendations per safeguards assessment has averaged eight per report.
  - The FIN safeguards staff generated 681 recommendations in the course of conducting the 82 safeguards assessments during the review period.
    - Note: The 681 recommendations reflect all those issued during the review period. In contrast, the 536 recommendations noted in the staff report exclude those: (i) with implementation dates that are not yet due; or (ii) superseded by subsequent assessments.
  - Overall implementation rate of safeguards recommendations during the period under review:
    - 72 percent overall;
    - 94 percent for recommendations under program conditionality.

### Panel’s review opinion
- Fundamental view:
  - The safeguards assessment policy is an indispensable element of the Fund’s overarching risk mitigation framework and must remain in place for as long as the Fund is engaged in financing activities.
  - First-hand verification underlies the Fund’s work in safeguards assessments.
- Mandatory and effectiveness:
  - Safeguards assessments must remain an obligatory ex ante requirement for all countries with new arrangements approved by the Fund’s Executive Board.
  - During the period under review, the policy met its objectives and provided reasonable assurance of the soundness of central bank operational and control frameworks and standard reporting mechanisms within counterparty central banks.
  - The policy was applied without exception throughout the review period and was applied in substance, not merely in form.
- Limitations:
  - The counterparty to assessments was a central bank; the policy does not give assurance relating to other agencies and currently does not cover the fiscal area.
  - The policy does not provide absolute assurance and may not prevent misuse of resources by a willful override of controls or manipulation of data.
- Benefits vs costs:
  - The intended benefits which the Fund and its membership gain from the safeguards assessment policy well-exceed the costs.
  - Collateral benefits to the membership and central bank stakeholders are substantial and go well beyond the primary policy objective for the Fund.
- Staff conduct and separation of roles:
  - The panel was impressed by the professionalism and dedication of the FIN safeguards division staff and their constructive rapport with counterpart central banks.
  - The FIN safeguards division strictly maintained its focus on assessments and did not offer technical assistance as a separate product; the panel supports a clear separation between assessment work and technical assistance.
- Monitoring and deterrence:
  - The panel notes that the data suggest that safeguards monitoring practices have deterred misreporting cases.
  - The vast majority of central banks are properly reporting and managing Fund resources now that safeguards measures are in place.
- Endorsement of staff proposals:
  - The panel is comfortable with the proposals for change set out in the staff report, relating to:
    - safeguards modalities, i.e., a risk-based approach for augmentations, successor arrangements and central banks with strong track records;
    - modifications to the monitoring framework that align with the institution-wide criteria for post-program monitoring;
    - enhanced focus on internal audit coverage;
    - fiscal safeguards reviews.

### Collateral benefits
- The safeguards assessment policy has generated multiple collateral benefits:
  - Facilitates establishing a roadmap for required reforms and enhances central bank capacity in understanding and proficiency.
  - Increasingly viewed as a useful and aspirational benchmarking instrument by member country authorities.
  - Enables and facilitates improvements and reforms; in some cases, central bank autonomy and accountability are enhanced.
  - “All domestic boats are lifted” when the quality of a central bank’s safeguards rises, lowering the Fund’s risk profile over the longer term.
  - Enhances the Fund’s reputation as a responsible international financial institution and its credibility as a prudent lending institution.

*Source: 13. The panel’s decision on which four central banks to invite for teleconference — IMF safeguards assessment panel report excerpt.*

### 42. The Fund should pay particular attention to the issue of capacity development

### 42. The Fund should pay particular attention to the issue of capacity development

### Capacity development and safeguards
- Over the longer term, capacity development could be one of the more effective investments to improve the Fund’s credit risk profile.
- The Fund may be able to leverage the self-assessment template prepared by safeguards staff as a tool to:
  - bring more detail to the attention of central bankers; and
  - inform other key stakeholders, including parliamentarians and the ministries of finance.
- A self-assessment, useful as it may be, can never replace an independent assessment.
- The Fund may consider developing a website with applicable resources aimed at capacity development.

### Panel recommendations — overview
- The panel offers recommendations to ensure the safeguards policy remains relevant and sufficiently flexible to adapt to changing global and financial conditions.
- The recommendations build on the current strong base of safeguards work and aim to maintain and enhance policy effectiveness.

### A. Governance
- Continue to emphasize governance either:
  - as the apex concept (the prism through which all safeguards are viewed) which pulls all other aspects together; or
  - at the same level as the existing five components thereof.
- As a visual manifestation of this change, the panel recommends:
  - the ELRIC acronym either be expanded; or
  - governance continue to be emphasized as an overarching principle across the framework.
- The acronym has provided a useful basis for common understanding between safeguards teams and central banks.

### B. Risk Management
- Safeguards staff should incorporate risk management as a key component of its safeguards framework at the same level as the existing five components (either by expanding ELRIC or integrating it into the core framework).
- Central banks should be encouraged to develop an integrated risk management framework and apply enterprise-wide risk management as soon as reasonably possible.
- The panel considers that an integrated risk management framework or enterprise-wide risk management could be set as a minimum requirement for central banks.
- The process can start with simple but effective modular building blocks and need not be automated initially, accommodating capacity constraints and country-specific circumstances.
- There was strong support for more emphasis on risk management among the central banks interviewed by the panel.
- A central bank which manages its risks soundly constitutes a better quality risk exposure for the Fund and its membership.
- Footnote: "An IRMF should also help identify, detect and mitigate risk events of relevance to safeguards assessments."

### C. Transparency and Disclosure, and Accountability
- Enhancing Fund transparency on safeguards activities requires careful consideration because wider dissemination of safeguards reports could create disincentives for central banks, external auditors and perhaps others to cooperate with and provide information to Fund staff.
- Safeguards assessment reports are confidential documents available only to IMF management and staff, and to relevant country authorities and Executive Directors.
- The panel recommends more consistent content for the summary paragraph on safeguards in staff reports for program countries; at a minimum the paragraph should include:
  - any instances of misuse of Fund resources and misreporting of related monetary program data;
  - significant recommendations for legislative amendments which fall outside the powers of the central bank to effect, and are not included as structural benchmark/s in the program;
  - problems with obtaining access to data; and
  - deviations from commitments in relation to safeguards recommendations.
- The paragraph should be featured in the main body of the staff report.
- Safeguards work should include an ongoing program of engagement with key stakeholders to ensure fuller understanding of the purpose, nature and impact of the policy, including:
  - use of examples and case studies based on actual experience; and
  - sharing of lessons learned under the ELRIC framework.
- Outreach should convey that the application of sound standards is a "rule of the game", promotes confidence and reduces risk, thereby adding economic value-add, though it may take time.

### D. Legal Framework
- Safeguards assessment recommendations often require amendments to legal frameworks, typically relating to:
  - central bank autonomy;
  - government financing by the central bank; and
  - governance of the central bank.
- In many cases the central bank is not legally empowered to effect such amendments; constitutional amendments may be required.
- Vulnerabilities in central bank autonomy, governance and government financing can expose the Fund and its members to increased and possibly unacceptable risks.
- Structural reforms may not always be encapsulated in the legal framework; benefits may be temporary if dependent on incumbents.
- The panel recommends the Fund be proactive and assertive in engaging key role players in country to inform them of the motivation for, objectives and implications of proposed legal amendments stemming from safeguards recommendations.
- The Fund’s involvement and sharing of information has provided central banks with constructive leverage in negotiations with government and state entities.

### E. Budget Financing and Fiscal Safeguards Reviews — key statistics and findings
- The number of arrangements involving direct budget financing has declined.
- Twenty five arrangements approved during the review period involved budget financing.
- GRA arrangements involving direct financing decreased to three per year, in 2013 and 2014, after peaking in 2010 at seven.
- PRGT arrangements with budget financing have smaller access and are rare (not exceeding two cases per year).
- Arrangements which involve budget financing exceed 80 percent of total Fund credit outstanding at end-June 2015.
- GRA arrangements involving budget support represent a significant share of total Fund credit outstanding, because they include the largest Fund arrangements (i.e., the four members within the Eurosystem, and Ukraine).
- In 2010 the Executive Board endorsed a requirement in the form of a framework between the central bank and government to ensure timely servicing of the member’s financial obligations to the Fund.
- Fiscal safeguards pilot exercise:
  - Conducted by the Fiscal Affairs Department (FAD) during FY2013 in response to 2010 guidance.
  - The 2013 board paper proposed using existing diagnostic tools where possible to carry out fiscal safeguards reviews.
- The panel notes the Fund takes on a materially higher level of risk in transactions where its resources are applied for budgetary financing than Balance of Payments (BoP).
  - Resources remain liquid in the hands of the central bank for BoP support but are typically dissipated when applied for budgetary support by a ministry of finance.
- Fiscal safeguards reviews do not necessarily give the same level of assurance as safeguards assessments; achieving the same level would be extremely costly and challenging.
- Since the pilot study only one member met the risk-based criteria for a fiscal safeguards review; an assessment carried out in 2015 concluded that Ukraine broadly met the safeguards criteria under the LeTIFA framework, with the exception of weaknesses in the reporting of financial data.
- The panel recommends that the threshold of 50 percent proposed for fiscal safeguards reviews be reconsidered; the pilot recommended reviews for countries with both:
  - (i) exceptional access to Fund resources, and
  - (ii) more than half of the resources being directed to budget financing.
- The panel considers the 50 percent threshold does not appear to be sufficiently justified and usefully could be revisited.

### IV. Other observations — Monitoring
- Current practice: staff makes only one on-site visit to a central bank during the life of a Fund loan, whose term could extend up to ten years.
- The panel questions whether a single on-site visit irrespective of loan duration is adequate to prudently manage and mitigate relevant risks.
- The single "snapshot" on-site assessment becomes less relevant over longer time spans.
- Ongoing off-site monitoring is necessary and important, but is not sufficient when compared to on-site verification.
- The panel encourages staff to consider integrating metrics for more first-hand verification in the post-program period, based on:
  - materiality of the Fund’s exposure;
  - staff’s assessment of safeguards risks at the central bank; and
  - the Fund’s reputational risk in relation to the exposure.

### IV. Other observations — Resources
- The panel’s view: given the current workload, the FIN safeguards division is appropriately staffed.
- At a minimum, the Fund must maintain a base capacity to effectively perform safeguards assessments and ongoing monitoring.
- Safeguards work is indispensable to the Fund given its ex ante due diligence and risk management role in relation to the Fund’s credit risk exposures.
- No other part of the Fund would have the capacity over the short to medium term to take on this function effectively.
- Any streamlining of the safeguards budget should be based on risk-based savings and should not put the Fund’s balance sheet at risk to achieve minor savings relative to the Fund’s overall risk exposure.
- The panel encourages safeguards staff to maintain a professionally diverse skill set, including consideration of individuals with:
  - banking regulation and supervision experience and
  - post-graduate qualifications in law, risk management or finance.
- The original focus of safeguards staff was accounting, auditing (internal and external) and financial disclosure; a professional accounting and auditing background remains a minimum requirement, while central banking experience is highly recommended.

### IV. Other observations — Update of guidance material
- Internal documents on safeguards work should be updated on a regular basis.
- Operational guidance should be updated at least as regularly as the safeguards assessment policy or whenever operational procedures are changed significantly.
- The Operational Guidelines for Safeguards Assessments, last updated in 2009, should constitute the basis of such operational guidance.

### V. Conclusions — key findings and judgments
- The safeguards assessment policy is an indispensable element of the Fund’s overarching safeguards assessment policy and must remain in place for as long as the Fund is engaged in financing activities.
- The panel concluded that the safeguards assessment policy was effective in meeting its objectives during the period under review.
- Application of the safeguards assessment policy—via safeguards assessments and post-safeguards-assessment monitoring for the whole period that Fund credit remains outstanding—appears to have provided reasonable assurance of the soundness of central bank operational and control frameworks and standard reporting mechanisms within counterparty central banks.
- The panel’s main recommendations are outlined in Section III to ensure the policy adapts to changing global and financial conditions.
- The panel acknowledges excellent cooperation received during its work and appreciates assistance from offices of Executive Directors, World Bank and IMF staff, and Finance Department staff.

*Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2015/_091115.pdf*

### 3. The principal objective of the panel of independent external expert (the “panel”) will

### _091115 - 3. The principal objective of the panel of independent external expert (the “panel”) will

### Principal objective and deliverables
- The principal objective of the panel of independent external expert (the “panel”) will be to provide the IMF’s Executive Board with advice on the focus of safeguards assessment and the operation of the risk-based monitoring framework.
- The panel will prepare a formal report outlining its key findings and recommendations, which will be submitted to the Executive Board together with the policy review paper prepared by staff.
- The chair of the panel will also be expected to attend the Executive Board’s discussion of the safeguards assessment policy review, currently scheduled for October 23, 2015.

### Scope of advice and continuity with prior reviews
- Building on the results of the previous reviews, the panel is expected to provide advice to the Executive Board on:
  - the effectiveness of the safeguards assessment policy; and
  - the continued appropriateness of the ELRIC framework, taking into account the application of the framework and the evolving governance and control practices.

### Focus of the panel’s work
- The work of the panel will focus on:
  - Assessments. Advising the Executive Board on the continued appropriateness of the ELRIC framework and its application, taking into account:
    - adaptations made by staff in applying the framework over time; and
    - the evolution in governance and control practices in the public and private sectors since the

- Page reference: 25

*Source: _091115 - 3. The principal objective of the panel of independent external expert (the “panel”) will*

### introduction of the safeguards assessment policy.

### introduction of the safeguards assessment policy

### External Expert Panel: role and inputs
- The panel’s review of the adequacy and coverage of safeguards reports is expected to be a key input to assist the Board with the safeguards assessment policy review.
- Panel members will be invited to share their views on any other aspects for the review.
- The panel’s views on the appropriateness of the current safeguards requirements for programs involving direct budget financing would be useful.
- Footnote finding: The 2002, 2005 and 2010 reviews all concluded that:
  - (i) the ELRIC framework provided a robust methodology for assessing central banks;
  - (ii) assessments have had a significant and enduring positive impact on central bank operations; and
  - (iii) the safeguards assessment policy had been broadly endorsed by central banks.
- Confidentiality note (footnote): Safeguards assessment reports are not shared with the Executive Board or made available to other multilateral financial institutions, except the World Bank and the European Central bank with written consent of the central bank in question.

### Monitoring and risk-based approach
- Monitoring: Assessing the operation of the risk-based monitoring framework and its effectiveness during the period of an arrangement, and thereafter.
- Monitoring is currently conducted "for as long as Fund credit remains outstanding."
- Refinements to risk-based approach: Assessing the current safeguards modalities and scope for efficiencies and streamlining, on a risk-based approach, in light of improvements in central bank control frameworks since the safeguards assessment policy was first developed in 2000.

### Annexure 3 — Safeguards assessments performed during review period (2010–15) — selected entries
- The annexure lists safeguards assessments with columns: Country; Area; Dept; Assessment Type; Date of the Report; Selected in sample.
- Selected entries (exact text preserved):
  - Comoros — AFR — Update Assessment — 4/20/2010 — No
  - Congo, Democratic Rep — AFR — Update Assessment — 4/27/2010 — No
  - Mauritania — MCD — Update Assessment — 4/30/2010 — No
  - Angola — AFR — First time Assessment — 5/4/2010 — No
  - Dominican Republic — WHD — Update Assessment — 6/1/2010 — No
  - Tajikistan — MCD — Update Assessment — 6/2/2010 — No
  - Moldova — EUR — Update Assessment — 6/3/2010 — No
  - Jamaica — WHD — First time Assessment — 6/8/2010 — No
  - Iraq — MCD — Update Assessment — 6/14/2010 — No
  - Malawi — AFR — Update Assessment — 6/25/2010 — No
  - Seychelles — AFR — Update Assessment — 7/29/2010 — No
  - Greece — EUR — First time Assessment — 8/16/2010 — No
  - El Salvador — WHD — Update Assessment — 9/13/2010 — No
  - Zambia — AFR — Update Assessment — 10/29/2010 — No
  - Solomon Islands — APD — First time Assessment — 10/29/2010 — Yes
- Further entries continue through 2015 and include repeated updates and first-time assessments for a wide range of countries and regional central banks, some marked "Yes" under "Selected in sample" and others "No".

### Annexure 4 — External Expert Panel’s sources of information (categories and selected items)
- Fund-specific reference material:
  - 2015 Review
  - 2011 Safeguards Assessment Policy – Update - Staff
  - 2012 Safeguards Assessment Policy – Update - Staff
  - 2013 Safeguards Assessment Policy – Update - Staff
  - 2014 Safeguards Assessment Policy– Update - Staff
  - 2013 Safeguards Assessment Policy – Fiscal Safeguards Pilots - Staff
  - 2015 Safeguards Assessment Policy – Scoping Note - Staff
  - 2015 Safeguards Assessment Policy - Terms of Reference for External Expert Panel – Staff and Panel
  - 2015 Safeguards Assessment Policy - Facts and Figures - Staff
  - 2015 Safeguards Assessment Policy – Videoconferences with central banks – Selection considerations – Staff and Panel
  - Safeguards Assessment Documents, IMF Factsheet, 2 April 2015
- Previous reviews and documents (selected):
  - 2000 Safeguards Assessment Policy- Review—Board Paper Strengthening Safeguards on the Use of Fund Resources
  - 2002 Review—Board Paper Safeguards assessments Review of Experience and Next Steps, EBS/02/27
  - 2005 Review—Report of the Independent Panel on Safeguards Assessments
  - 2010 Safeguards Assessments Policy - Framework for Risk-Based Monitoring
  - 2010 Safeguards Assessments Policy - Review - Staff
  - 2010 Safeguards Assessments Policy - Review - External Expert Panel
- Confidential safeguards reports cited (exact country titles and years):
  - Armenia – Central Bank of the Republic of Armenia (2014)
  - Bangladesh – Bangladesh Bank (2011)
  - East Caribbean Central Bank (2012)
  - Egypt – Central Bank of Egypt (2013)
  - Georgia – National Bank of Georgia (2014)
  - Greece – Bank of Greece (2012)
  - Guinea – Banque Centrale de la Republique de Guinee (2012)
  - Honduras – Banco Central de Honduras (2011)
  - Ireland – Central Bank of Ireland (2011)
  - Jamaica – Bank of Jamaica (2013)
  - Kyrgyzstan – National Bank of the Kyrgyz Republic (2011)
  - Lesotho – Central Bank of Lesotho (2012)
  - Malawi – Reserve Bank of Malawi (2012)
  - Morocco – Bank Al-Maghrib (2013)
  - Nepal – Nepal Rasta Bank (2011)
  - Portugal – Banco de Portugal (2011)
  - Pakistan – State Bank of Pakistan (2013)
  - Romania – National Bank of Romania (2014)
  - Samoa – Central Bank of Samoa (2014)
  - Seychelles – Central Bank of Seychelles (2014)
  - São Tomé and Príncipe - Central Bank of São Tomé and Príncipe (2013)
  - Sierra Leone – Bank of Sierra Leone (2014)
  - Solomon Islands – Central Bank of Solomon Islands (2013)
  - Ukraine – National Bank of Ukraine (2014)
  - Yemen – Central Bank of Yemen (2015)
- Reports obtained from IMF.org and related sites (selected titles preserved):
  - Articles of Agreement of the International Monetary Fund, IMF, 27 December 1945
  - By-laws, Rules and Regulations of the IMF, IMF, May 2011
  - 2011 Review of the Standards and Codes Initiative, IMF, 16 February 2011
  - Standards and Codes: The Role of the IMF, IMF, 27 March 2015
  - Guidance Note for Surveillance under Article IV Consultation, IMF, May 2015
  - IMF Surveillance, IMF Factsheet, 14 April 2015
  - Protecting IMF Resources: Safeguards Assessments of Central Banks, IMF Factsheet, 27 March 2015
  - Staff Guidance Note on the Use of Fund Resources for Budget Support, IMF, 23 March 2010
- Other international sources and standards cited (selected):
  - Corporate Governance Principles for Banks – Guidelines, Basel Committee on Banking Supervision, July 2015
  - Principles of Corporate Governance, Organization of Economic Cooperation and Development, 2004
  - Internal Control: Guidance for Directors on the Combined Code [Turnbull Report]. The Institute of Chartered Accountants in England & Wales, 1999.
  - Enterprise Risk Management—Integrated Framework. Committee of Sponsoring Organizations (COSO), 2004.
  - ISO 31000 Risk Management: Principles and Guidelines. International Organization for Standardization (ISO), 2009.
  - Updated Guidance Note on the Fund’s Transparency Policy, IMF, 7 April 2014

*Source: introduction of the safeguards assessment policy.*

### 1. The panel held conferences with the following central banks.

### 1. The panel held conferences with the following central banks.

### Central Bank Authorities in Attendance
- Central Bank of Ireland  
  - On 16 June 2015 (Teleconference)  
  - Mr Patrick Honohan, Governor  
  - Mr Mark Cassidy, Head, Financial Stability Division)  
  - Mr Allan Kearns (Deputy Head, Operational Risk Division)  
  - Mr. David O’Riordan (Deputy Head, Payment & Securities Settlement)  
  - Mr John Hodgkinson (Manager, Financial Control & Procurement)  
  - Mr John Rowe (Manager, Financial Markets Division)  
  - Mr. Joe Foy (Head, Internal Audit Division)
- Bank of Jamaica  
  - On 16 June 2015 (Videoconference)  
  - Mr. Livingstone Morrison, Deputy Governor
- National Bank of Ukraine  
  - On 17 June 2015 (Videoconference)  
  - Mr. Rashkovan, Deputy Governor
- Central Bank of Sierra Leone  
  - On 17 June 2015 (Videoconference)  
  - Mr Ibrahim Stevens, Deputy Governor  
  - Mr Ralph Ansumana, Director of Internal Audit

### Staff Consulted
- The panel met with Fund staff from area and functional departments on 16 to 18 June, 2015.  
- Departments represented were: AFR, APD, EUR, FAD, FIN, LEG, MCD, MCM, SPR, WHD.  
- The panel met with the head of the Fund’s recently established Risk Management Unit.

### Offices of Executive Directors Consulted
- The panel met with three separate assemblies of personnel from the offices of executive directors.  
- Offices were represented variously by executive directors, alternates, or advisors.

### Views from Central Banks
- Topics discussed included:  
  - (i) the motivation for, and objectives and scope of the safeguards assessment policy,  
  - (ii) effectiveness of safeguards assessments and monitoring in achieving the safeguards assessment policy objectives,  
  - (iii) usefulness of the safeguards activities to the central bank’s operations and its management,  
  - (iv) value of the safeguards seminars,  
  - (v) the adequacy of the ELRIC framework and whether there were any suggestions for improvement,  
  - (vi) issues related to governance and risk management,  
  - (vii) the authorities’ views on transparency,  
  - (viii) confidentiality of safeguards assessment reports,  
  - (viii) appropriateness of safeguards recommendations, priorities, and deadlines,  
  - (ix) effectiveness of communication with the safeguards staff,  
  - (x) the authorities’ views on extending safeguards assessments beyond their current association with Fund arrangements, to be conducted proactively with all Fund members,  
  - (xi) practicality of having a central bank employ a self-assessment template to evaluate its safeguards,  
  - (xii) relationship with safeguards staff and evaluation of their performance,  
  - (xiii) legislative amendments flowing from safeguards recommendations,  
  - (xiv) central bank autonomy,  
  - (xvi) central bank solvency,  
  - (xvii) technical assistance.
- Key findings and views:  
  - The central banks consulted approved of the safeguards assessment policy and acknowledge its benefits.  
  - They appreciate that the safeguards exercise has better aligned them with sound principles and practices.  
  - They recommend the process to other central banks, even outside the context of a pending financial arrangement with the Fund.  
  - All agreed that risk management (RM) and governance require and warrant focused attention.  
  - They were unanimous that the ELRIC framework needs to be extended also to cover governance and risk management.

### Views from Offices of Executive Directors
- Topics queried of OEDs:  
  - (i) appraisal of the value and effectiveness of the current safeguards assessment policy and its possible extensions of the ELRIC framework to include governance and risk management,  
  - (ii) judgment about expanding safeguards to treasuries when resources for budgetary support are at stake, and  
  - (iii) views on transparency for safeguards information.
- Key findings and views:  
  - The OEDs expressed general satisfaction with the safeguards assessment policy, believing it to be helpful in reducing risk to the Fund and protecting its reputation.  
  - The panel gained the sense that the OEDs were supportive of strengthening the safeguards assessments policy framework, inter alia by extending the safeguards assessments policy framework to include corporate governance and risk management.  
  - Many OEDs expressed the position that it is not acceptable to neglect safeguards assessments of treasuries, although they acknowledged the logistical difficulties of doing so.  
  - The OEDs were interested in the basis for the panel’s decisions on which central banks to interview and what the panel’s review entailed.

### Views from Staff
- Discussion topics for staff were the same as those for OEDs.
- General staff views:  
  - Staff members in general are supportive of the safeguards assessment policy and believe it is a worthwhile undertaking.  
  - Economists for some countries see the safeguards assessment policy as a bureaucratic hurdle whose findings and recommendations are tangential to the countries’ economic problems and solutions.
- Functional departments:  
  - Had a clear understanding of the role of safeguards in general and the safeguards assessments policy.  
  - Noted that the IMF is not a standard-setter and in the absence of an IMF policy line on a particular topic, safeguard staff would need to exercise judgment.  
  - Expressed support for extending the safeguards assessments policy to corporate governance and risk management.  
  - Informed the panel of technical assistance rendered by the Fund to central banks or in relation to central banking.  
  - Emphasized the importance of maintaining a clear distinction between performing assessments and providing technical assistance.
- Risk Management Unit and Fund characteristics:  
  - The Fund’s Risk Management Unit intended to apply enterprise risk management.  
  - The characteristics of the Fund loan portfolio were discussed, including its high level of concentration and the increasing unpredictability of its cash flows and performance.  
  - The panel was informed of the Fund’s approach to central bank autonomy, which is based on the EU Monetary Union construct of three dimensions: personal autonomy, functional autonomy and financial autonomy.  
  - Concerns were expressed about the complexity and perimeter of fiscal safeguards procedures.  
  - It was emphasized that the Fund is not a commercial lender, but a lender of last resort.
- Area departments:  
  - Expressed appreciation for the safeguards assessments policy but were concerned about the impact of certain types of recommendations on the authorities’ commitment to a program.  
  - Complimented the impact of the safeguards assessments policy, but expressed reservations about recommendations which impacted progress of programs, such as recommendations which require amendment to the legal framework.  
  - Suggested that more recognition should be given to country circumstances.  
  - Indicated that there was a high rate of adoption of other recommendations.
- Meetings with safeguards staff:  
  - Discussed operational dimensions and challenges of the safeguards assessment policy.  
  - Staff informed the panel about: the objectives and scope of application of the safeguards assessments policy and its application to central banks; the types of Fund arrangements and the applicability of safeguards assessments policy; the safeguards assessment cycle; the content of the safeguards assessment report, including the ELRIC risk ratings and the overall risk rating.  
  - Challenges relating to amendments of the legislative frameworks were noted.  
  - The panel canvassed safeguard staff views on ELRIC, governance and risk management, central bank solvency and the potential use of the self-assessment template.  
  - The issue of and safeguards staff’s involvement in the Greece situation was also discussed.  
  - Discussion of Fund’s budget support financing and the related fiscal safeguards procedures highlighted the challenges in this area.  
  - It was noted that where structural reforms are not encapsulated in the legal framework and though institutionalization, they may not become embedded and their benefits may not be reaped in future.  
  - The importance of political economy considerations, especially in the case of recommendations which require amendments to the legal framework was emphasized.
- Meetings with FIN senior staff:  
  - The panel and FIN exchanged perspectives on the key issues for this year’s safeguards assessment policy review.  
  - The panel briefed FIN on results of the discussions with central banks, Fund executive directors and advisors, and Fund staff, and informed FIN of its key conclusions and recommendations.

*Source: _091115 - 1. The panel held conferences with the following central banks.*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2015/_091115.pdf_