Public Information Notice: IMF Executive Board Reviews the Fund's Transparency Policy

August 15, 2005

Public Information Notices (PINs) form part of the IMF's efforts to promote transparency of the IMF's views and analysis of economic developments and policies. With the consent of the country (or countries) concerned, PINs are issued after Executive Board discussions of Article IV consultations with member countries, of its surveillance of developments at the regional level, of post-program monitoring, and of ex post assessments of member countries with longer-term program engagements. PINs are also issued after Executive Board discussions of general policy matters, unless otherwise decided by the Executive Board in a particular case.

On June 20, 2005, the Executive Board of the International Monetary Fund (IMF) discussed the IMF's transparency policy, based on a staff report entitled Review of the Fund's Transparency Policy.


The IMF's transparency policy stems from a decision adopted in January 2001 by the Executive Board to allow the voluntary publication of country documents and more systematic publication of policy papers and associated Public Information Notices (PINs). It followed a number of steps taken since 1994 to enhance the transparency of the IMF as an institution and to increase the availability of information about its members' policies. The decision also defines the key elements of the IMF's publication policy, including safeguards to maintain the frankness of policy discussions with members and the appropriate balance between transparency and confidentiality. These safeguards include the possibility for members to request deletions of highly market-sensitive material. The decision calls for experience under the policy to be reviewed at regular intervals.

At the time of the last review, in September 2003, the Executive Board noted that progress had been made in publication rates for most types of documents and in most regions, reflecting the broad acceptance among the membership of the benefits of transparency. Nonetheless, thinking that further impetus was needed, the Board endorsed a move to a policy of voluntary but presumed publication for most country reports, in particular all staff reports on bilateral surveillance and the use of Fund resources (UFR), and of presumed publication of most policy papers.

The current review analyzed key trends observed since the last review. It noted, in particular, that publication rates for country reports had increased markedly since the last review, reaching 77 percent of all Article IV and UFR staff reports, while regional differences in publication rates had declined sharply. The review also highlighted a lengthening in the lag between Board discussion and publication for country documents. The review discussed various operational aspects of the experience under the publication policy, including the use of corrections and deletions, implementation costs, the impact on candor, and the timeliness of publication.

Executive Board Assessment

Directors welcomed the opportunity to review the implementation of the Fund's transparency policy and to discuss next steps. Given the relatively short track record of the framework of "voluntary but presumed" publication of most Fund documents introduced in 2004, Directors agreed that the key principles of the publication policy remain appropriate and most Directors noted that the main issue for this review is the effectiveness of the operational mechanisms for document publication.

Directors welcomed the continued rise in publication rates, with more than three-quarters of staff reports published during the review period. They were particularly encouraged by the decline in regional disparities, thanks to the substantial increases in publication rates among emerging markets and developing countries in Africa, Asia, the Middle East, and the Western Hemisphere. Some Directors attributed these improvements to the enhancements introduced at the time of the last review, including the policy of voluntary but presumed publication, while others saw the voluntary approach as continuing to be the key driving force.

Directors noted that more widespread publication of Fund documents has been accompanied by a lengthening of the average time lag between the Board discussion and the publication date. They underscored the time-sensitive nature of country documents in particular and reaffirmed the expectation that documents subject to voluntary but presumed publication be published on a timely basis.

Directors observed that about one-third of country documents were modified through deletions and/or substantive corrections after their issuance to the Board and prior to publication. Directors were concerned that the use of such substantive modifications has been uneven across the membership and that existing guidelines and policy have not always been applied consistently. Most Directors were also concerned about the adverse consequences of extensive document modifications for the timeliness of publication and resource requirements for staff and the authorities, although a few other Directors regarded the resources now dedicated to handling such modifications as commensurate with the importance of the task at hand.

Most Directors were satisfied that increased publication has not led to a significant erosion of candor, although in the view of a few other Directors the staff paper provided distinct evidence of loss of candor associated with the current publication policy. Directors in general emphasized the critical importance of preserving the frankness of both the policy dialogue between Fund staff and members, and of the information provided in staff reports to the Board. In this regard, several Directors reiterated that member countries must remain assured that the Fund is upholding its primary role as confidential policy advisor and that publication does not undermine confidence in this relationship. They stressed the need for continued monitoring of this issue.

Against this background, Directors expressed a range of views on the appropriate response to the trends reported in the staff paper. A majority of the Board generally agreed with the staff's recommendations for improving timeliness of publication, better preserving candor, and reducing implementation costs. Specifically, they saw merit in clarifying the criteria and procedures for document modifications and in introducing a number of incentives for prompt publication. Some of these Directors suggested measures going further than those proposed by the staff, based on the view that the staff paper might have underplayed the benefits of greater transparency and overstated the potential trade-off between transparency and candor.

Many other Directors, however, were concerned that some of the changes proposed could undermine efforts to promote further increases in publication rates and they stressed the importance of gaining a better understanding of the reasons behind the findings in the staff paper. A number of these Directors considered that the existing operational mechanisms for transparency policies appear to be working sufficiently well. They therefore questioned the need for changing the operational mechanisms at the present time. A number of Directors also suggested that greater flexibility is needed in the application and interpretation of the mechanisms. These Directors also expressed some concern that strict enforcement of the publication guidelines could affect the balance between candor and greater openness or compromise the quality of staff reports.

In considering the staff proposals, some Directors also underscored that transparency should not be equated with publication of Fund documents. They saw the most relevant part of transparency as being implemented by member countries themselves, including through the timely and widely accessible publication of data, and information on, and the rationale for, policy decisions and intentions. These Directors noted that their authorities place great value on maintaining a high level of transparency, and on publishing staff reports as one aspect of these efforts.

On balance, a majority of the Board broadly endorsed the proposals set out in the issues for discussion in the staff paper while suggesting some modifications. The specific recommendations are:

Directors agreed that members should retain the ability to propose deletions of highly market-sensitive material contained in country documents and country policy intentions documents that have been issued to the Board prior to publication. They stressed that the criteria for deletions need to strike the right balance between preserving candor and providing adequate safeguards against possible adverse consequences of publication.

On this basis, most Directors endorsed the definition of the criterion of high market sensitivity set out in paragraph 51 of the staff report. Some Directors, however, considered that deletion of politically sensitive issues that fall outside the current policy would help better reconcile the objectives of candor and transparency. A few Directors also pointed to the greater risks related to market-sensitive information in emerging market countries. A few Directors also argued that information already in the public domain or relating to developments of longer-term horizons could well prove market sensitive, and should also be covered by the deletions policy. More fundamentally, Directors agreed that the determination of what constitutes highly market-sensitive information will continue to have to be made on a case-by-case basis in line with the criteria set forth in paragraph 51 of the staff report.

In addition, Directors agreed that the deletion of references to a policy that is not yet in the public domain and that the authorities of a member country intend to implement could be permitted in instances where the premature disclosure of operational details of the policy would, in itself, seriously undermine the authorities' ability to implement it. Most Directors expected that these deletions would apply only in rare circumstances.

Most Directors agreed that members should submit any requests for deletions in writing as early as possible, but no later than three weeks after the Board meeting although this time-frame may be extended if the circulation period for the Board documents concerned had been reduced. A few Directors called for a stricter cut-off date while, on the other hand, some others thought that further discussion is needed to determine what would be an appropriate length of time for requests given the need for communication with the authorities, and for coordination among the relevant ministries and agencies in the country. Directors agreed that, at the discretion of the Managing Director, deletions can be accompanied by minor rephrasing of text, but only to the extent that this would help retain maximum candor or minimize the risks of misinterpretation. Directors reaffirmed that the Managing Director may recommend to the Board to withhold publication when modifications would undermine the overall assessment and credibility of the Fund.

Directors pointed out that requests for corrections by the authorities often serve to improve the quality of Fund documents through corrections of factual mistakes or clarifications of the authorities' policies and views. They emphasized that corrections to country documents and country policy intention documents that have been issued to the Board should be used for the sole purpose of ensuring factual accuracy. Specifically, corrections shall be limited to (i) data and typographical errors; (ii) factual mistakes; and (iii) mischaracterizations of views expressed by the authorities concerned. Other than in exceptional circumstances, corrections should take the form of straight substitution of text in existing sentences, rather than the removal or addition of entire sentences. Directors agreed that changes with significant implications for the substance of the report—including updates and important corrections related to the authorities' views or policy intentions—should be discussed in a supplement to the staff report. In addition, any corrections to the views, analysis, and appraisal of the staff must be discussed and justified in such a supplement; it was suggested that, where practical, they might be incorporated in the document to be published as corrections to the original text. The staff will come back to the Board with specific proposals on this issue in the context of the proposed decision.

Directors agreed that corrections should normally be brought to the attention of the Board prior to the conclusion of the document's consideration by the Board, so that the Board discussion may be based on the most accurate information and so that publication can take place with as little delay as possible thereafter. Most Directors agreed that corrections made after the Board discussion should be limited to cases where failure to make the correction would undermine the overall value of the publication, although a few were of the view that this requirement was unfairly demanding for countries with very limited administrative capacity and in cases of late circulation of the document to the Board.

Directors considered the merits of greater disclosure of publication-related modifications in published Fund documents. Most Directors considered that a generic statement of the applicable policy, in line with current practice, is the best option available.

Most Directors reaffirmed the strict prohibition on negotiating staff reports with country authorities, given the Fund's unique mandate in surveillance and use of Fund resources. Consequently, drafts of staff reports may not be shared with members. At the same time, Directors highlighted the importance of a close working relationship between the country authorities and Fund staff to ensure that both sides have a good understanding of each other's views on key issues. They emphasized that staff should make every effort to ensure that the views of the authorities are fairly and accurately represented in staff reports, including by seeking the authorities' comments on missions' concluding statements. Such efforts could also go a long way to reducing country requests for modifications and deletions in staff reports. Furthermore, continuity of staff country assignments as well as good communication skills were seen as helpful in this connection. Several Directors also suggested that, in the case of Selected Issues Papers, a collaborative approach between staff and the authorities on the selection of topics and on the relevance of staff's analysis to member country needs would be useful. In this connection, they noted that the prohibition on sharing drafts of staff reports with the authorities does not extend to chapters in Selected Issues Papers.

Most Directors considered that the set of principles set out above should help maintain the candor of published Fund documents, while providing adequate safeguards against possible adverse consequences of publication. They stressed that document modifications should not be used to promote publication and that prolonged negotiations on such modifications should generally be avoided. Most Directors expected that the more explicit criteria for modifications and the ongoing learning process by both staff and the authorities should reduce the need to exercise discretion in applying the Fund's transparency policy. They acknowledged that there will continue to be instances where the need to maintain the candor of staff's analysis and the authorities' concerns about publication cannot be reconciled.

Directors considered a number of options for expediting the publication of time-sensitive documents, in particular country documents and policy intentions documents. They expected that the above-mentioned clarifications of criteria and time limitations for corrections and deletions should help reduce publication lags. Directors highlighted the useful role Executive Directors' offices can play in informing member authorities about the Fund's transparency policies, and in screening to the extent possible any requests for document modifications while ensuring that the authorities' views are adequately reflected in Fund documents.

In addition, Directors considered whether and how the Executive Board should be informed and a factual statement to the public be released when a member's consent to publish a document subject to presumed, but voluntary, publication has not been received by the Fund within 30 calendar days of its consideration by the Executive Board. A broad majority of the Board supported the provision to the concerned Executive Directors' offices of systematic reminders on publication following Board discussions of reports subject to presumed publication. The Board was more divided on the three additional proposals aimed at shortening lags in the publication of reports. On balance, a majority of the Board supported the regular circulation to the Board of information about reports for which publication consent has not been received within the presumption period, as well as the inclusion of information on the timeliness of publication in aggregate publication statistics disseminated outside the Fund. A number of Directors also supported the release of factual statements stating that the Board considered a report and that it may be published later subject to the member's consent. However, many other Directors expressed reservations or did not support these three proposals, noting that the authorities should have some flexibility in determining the right timing of publication from the country perspective.

A broad majority of Directors agreed on a number of other operational changes, including: (i) clarifying the modalities of publication of joint staff advisory notes on poverty reduction strategy documents; (ii) clarifying the policy regarding the publication of decisions to extend repurchase expectations; and (iii) clarifying that a factual statement should be issued whenever a Chairman's statement is not issued after a Board decision on the use of Fund resources. Directors have also offered a number of other useful suggestions relating to transparency policies, which staff will bear in mind in their future work.

The Fund's transparency policy will be reviewed in the broader context of the Fund's overall communications approach while continuing to have separate Board papers, and a three-year cycle is considered appropriate so long as some basic quantitative information is provided to the Board in the interim. Therefore, the next review of the Fund's transparency policy is expected to take place by June 2008.


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