The IMF and Transparency - Moving Forward, Speech by Shailendra J. Anjaria, Secretary, International Monetary Fund

October 28, 2002

The IMF and Transparency—Moving Forward1
Speech by Shailendra J. Anjaria
Secretary, International Monetary Fund
Given at the Third Annual Meeting of the Secretaries of the Multilateral Development Banks
Washington DC, October 28, 2002

The past decade has seen an explosion in global information flows, disseminated among individuals, civil society groups, corporations, parliaments, and academic institutions, as well as national governments and regional and international organizations. For any of these actors simply to be part of such a worldwide phenomenon seems unremarkable, and the process, natural and automatic. Among all the participants in this process, the IMF has, in fact, become a key actor and manager of substantial information flows in the domains of its competence, with the Internet as the instrument of choice for delivering a torrent of information, data, documentation, and analysis.2

Yet, just a few years ago, an IMF role in the global information explosion looked neither easy nor inevitable. It was well understood that such a role would need somehow to be squared with the unique role of the IMF as the institution of global monetary cooperation. In carrying out its work and responsibilities every day, the IMF's staff, management, and Executive Board handle highly sensitive and delicate information on exchange rates, reserves, budgets, and monetary policy, whose inappropriate or untimely disclosure could be extremely damaging to countries, markets, and institutions. This consideration underpinned the IMF's long tradition of dealing in confidence with officials of member governments, particularly when sensitive issues are discussed—while at the same time striving to maintain this confidence in order to ensure continuing candor and effectiveness of the dialogue with members. A corollary was that historically member governments themselves, and especially finance ministry and central bank officials, were virtually the only interlocutors of the IMF.

In the past decade, this has changed. From having been a relatively inward-looking institution, the IMF has become open, and the movement toward greater transparency looks set to continue.

I hope today to shed some light on this profound transformation, focusing on three areas: the key elements of the information flow involving the IMF; the broad ways in which greater transparency is beginning to trigger change—some might say, a revolution—in some of the processes that drive the institution; and possible directions for the future, including my guesswork on how, with the basic paradigm on transparency having been embraced, further meaningful gains will be captured.3

Although my comments will naturally focus on the IMF, its evolving experience may provide more general insights. The organizations represented here today are facing similar challenges, and I believe that—just as we have learned from the experience of other institutions, including in particular the World Bank, on what works and what doesn't work in the area of transparency and communication—colleagues from other institutions may benefit from the IMF's experience. I therefore look forward to hearing your comments on the experiences of your institutions on information policy and transparency.

I. Crisis and Transparency

The biggest and strongest push toward greater openness and transparency for the IMF and its members since its founding came from a key lesson driven home from the crisis in Mexico in late 1994 and early 1995, and subsequently from the Asian and other crises in 1997-98. These were major, damaging crises. A common feature and cause of the crises was the lack of full information—to the IMF, but also to the markets and the public at large—on key aspects of countries' financial situations—for example, on their international reserves and external debt. This lacuna contributed to significant delays in, first, recognizing, and then acting upon, critical problems. The unprecedented nature of these crises—especially the scale of capital outflows from the emerging market economies affected—attracted exceptional public attention and debate. Consequently, the IMF was not spared criticism, whether by civil society groups, academics, the press, or public officials in member governments, and a great deal of public scrutiny came to be focused on the responsiveness and response of the IMF to the crises. The steps taken by the IMF to resolve these crises, and prevent future ones if possible, became topics of attention and concern within and outside the institution that still dominate the policy debate today.

A natural fallout from the sequence of crisis and response was that reforms that, in another epoch, would have proceeded quietly, without much public fanfare, now required active and constant public engagement. Furthermore, the institutional response to crisis required that the IMF itself go about its business in a different way from before—for example, that it not only explain what it was doing to prevent future crises, but that it also be accountable in the public domain for the quality of advice given to members and the responsiveness of members to its advice.

In some public discussions over the past decade, the focus has been on whether the IMF's increased transparency has been substantial or window-dressing, whether the shift toward greater transparency will be long-lasting or temporary, and whether the IMF is publishing or releasing all or only a part of what it should be putting in the public domain. I personally have no doubts that the shift has been substantial, comprehensive, and permanent. And over at least the past five years, the desirability and usefulness of transparency and a full flow of information have not been disputed within the IMF. Furthermore, the coverage of the transparency policy is being progressively broadened and improvements are being continuously made in the specific ways information is made available.

The key to the revolution in transparency at the IMF is clearly not the volume of material that is put out in the public domain, but rather the profound change it is bringing to the core of the IMF's work with member countries. This is because the IMF was able to exploit the opportunities to build on the four pillars on which the initiatives on transparency and openness stand, to which I now turn.


The first pillar is the establishment and refinement of internationally recognized standards and codes of good practice in policy-making at the national level. Some cover transparency directly, others indirectly, but they all lead to greater openness and accountability of members and the IMF itself. 4

First and foremost, standards cover the provision of financial and economic information and data to the public that, once implemented, enhance a government's accountability and openness to citizens and financial markets directly, without an intermediary. A crucial fact now recognized the world over is that without adequate data and timely information neither national policy makers nor international institutions nor financial markets can make sound decisions. The IMF, in turn, cannot provide useful advice without good information. Thus, a key part of the early transparency initiatives at the IMF was the establishment in 1996 of standards to guide members in publishing a regular and timely flow of comprehensive economic and financial data.5 The goal, of course, is to reduce surprises for markets and to aid policymakers in implementing sound economic policies. Availability of such information does not mean, of course, that policymakers or markets will not make mistakes—they have, and they will surely continue to do so. But the world is too integrated to accept a lack of information as an excuse for mistakes.

The efforts of the international community did not stop at data standards. The membership has agreed that the list of standards and codes that are useful for Fund and World Bank operational work must also include codes of good practices in fiscal, monetary, and financial policies, banking supervision, securities, insurance, payments systems, corporate governance, accounting, auditing, insolvency and creditor rights, and most recently, anti-money laundering and combating the financing of terrorism. In all these areas, the IMF is called upon to work closely with national authorities and the relevant international agencies—especially the World Bank—to help ensure that best practice is recognized and implemented, and the competence of other bodies is acknowledged and reinforced.

Publication of documents

The second pillar of the openness strategy is an ambitious approach for releasing policy documentation and IMF Executive Board assessments of member country developments. The IMF is now making available systematically—but still on a voluntary basis in key respects—information on IMF surveillance that covers not only developing countries and countries in transition from central planning, but also industrial countries, under our procedures for Article IV consultations with all members.

Since the mid-1990s, the IMF's membership has moved from publishing relatively little to publishing a large proportion of country and policy documents. To illustrate: in the period January 2001 to August 2002, over 80 percent of members agreed to publish Public Information Notices (PINs)—a key source of information on the IMF Board's assessment of countries' macroeconomic and financial situations—following their Article IV consultations.6 The publication rate for Article IV staff reports was 61 percent, while 56 percent of staff reports on use of Fund resources were published. About 95 percent of national authorities' letters of intent in use of Fund resources cases were released. Interestingly, publication rates have varied from region to region, with the advanced economies and the transition countries of central and eastern Europe having the highest, and the developing countries of the Middle East and Western Hemisphere regions having the lowest rates, but catching up.

These publications make up only a part of the picture. In addition to Executive Board policy and country documents, the IMF publishes well over 1,000 research working papers, documents, and reports each year. Last year 1,400 items were added to the Fund's external website, which receives about 4 million hits per month.

The outreach effort

The third pillar involves new engagement in extensive outreach efforts with civil society organizations, academic and professional groups, and private market participants, while participating in dialogue that both offers them opportunities to better understand the formulation of policies often still under consideration, and allows the IMF to learn from them. To support the outreach effort, the IMF's media relations activity has been substantially strengthened.7 In a fundamental way, this change reflects the interrelatedness of information flows and decision-making processes between official policymakers and others at the national level, and finds its reflection at the international level, including at the IMF.

The handling of the recent proposals of IMF management on mechanisms for restructuring unsustainable external debts of member governments—the Sovereign Debt Restructuring Mechanism (SDRM)—provides a window into the significance of these outreach efforts. From its very first launching in November 2001 by IMF First Deputy Managing Director Anne Krueger, the proposed mechanism has been adapted in response to comments from officials, private market participants, and the public. 8 When the international community finally converges on the agreed features of an operational SDRM, there is every reason to be confident that a mechanism that is developed and launched in the glare of public scrutiny will be stronger and sounder than any that could emerge from behind closed doors.

Similarly, most papers on internal policies are published and information on the financial operations of the IMF is regularly posted on the IMF website.9 The twice-yearly Managing Director's statement on the Work Program of the Executive Board is released in its entirety to the public.10 For those interested in looking to assess historical records, the lag for public access to the comprehensive minutes of Executive Board meetings is now down to 10 years—one of the most liberal access policies among international organizations.

Learning from experience and from outside

The fourth, and perhaps most crucial, pillar is readiness to learn from experience, both successes and failures, by using every available means to take into account views and suggestions from many quarters for institutional reform and policy development.

Two recent reviews illustrate this learning culture at the IMF—the Review of the Poverty Reduction Strategy Paper (PRSP) approach to reducing poverty in low-income countries, conducted jointly with the World Bank, and the Review of the Poverty Reduction and Growth Facility (PRGF), the IMF's low-cost lending window for low-income countries, made public in March 2002.11 Both reviews were open and inclusive, drawing on contributions from developing countries, donor agencies, international organizations, and civil society organizations. The ultimate aim is to ensure that these initiatives will be fully aligned with national priorities and enhance pro-poor growth strategies.

Another example was the review of the IMF's program conditionality begun in late 2000. The review included public involvement through the Internet and seminars with wide participation of academics, policymakers, and civil society organizations. This process resulted in revised guidelines, published in September 2002, that significantly streamline the number of conditions in IMF loans and aim to strengthen national ownership of adjustment and reform programs. 12

The establishment of the Independent Evaluation Office (IEO) at the IMF in July 2001 to provide objective and independent evaluations on IMF issues provides a further example.13 The IEO aims to enhance the learning culture of the IMF, promote better public understanding, and support the Executive Board in its institutional governance and oversight. The IEO has full access to IMF Board and staff documents, and consults broadly with outside experts and others. Its first report in 2002—on prolonged use of IMF financial resources—was well received, and has led IMF management to establish a staff task force to recommend how its recommendations should be operationalized from 2003. Other independent evaluations underway will be seeing the light of day in the next six months.

II. Does Transparency Matter?

This audience needs no reminder that almost any initiative taken by a large organization immediately faces two pitfalls—first, the risk that the initiative becomes overly bureaucratized, in time changing perhaps the form, but not the substance, of the process it is supposed to reshape; and second, that after the novelty wears off, the initiative loses impact. Will the transparency initiatives taken by the IMF and its members face such a fate?

I believe not.

It is now clear that the IMF's members view transparency for themselves and the IMF as valuable, and not just as a fashion or a procedure. Realistically and consistently applied, and subject to safeguards that are naturally needed, transparency holds the promise of making a fundamental and lasting difference in the way the IMF and members do their business, bringing considerable benefits to the international community in three ways:

  • By improving the quality of IMF policymaking and policy advice;
  • By strengthening market assessments and private sector decisions; and,
  • By enhancing the quality of national economic policies.

Let me turn to each of these.

Quality of IMF policymaking and policy advice

All four pillars described above—the growing role of standards, the extensive publication of previously confidential documents, the outreach effort, and the institutional willingness to learn—already influence policy development and decision-making processes in the IMF, and in a number of ways improvements are becoming evident in the quality of the decisions made. At all levels, staff, management, and the Executive Board are now keenly aware that the Fund's work processes increasingly meet not only the standard test of accountability to member governments—for so long the unique touchstone of institutional strength—but also the even higher standard of accountability implied by the additional test of transparency. As a result, transparency has helped the IMF focus more intensively on its key priorities. This sharpened focus has led, in the first place, to reforms aimed at making the IMF more effective at carrying out its core mandate—such as streamlining conditionality, enhancing surveillance, and focusing technical assistance. In the broader international setting, it has improved communication and collaboration with other international agencies, and sharpened the respective roles and contributions of the IMF and its partner agencies. In addition, as many of the IMF's operations—for example, those based on an assessment of whether a policy program will in fact be carried out—are inherently risky, greater openness has required that risk to be explicitly acknowledged and taken into account.

Private sector decisions

With the exponential increase in the importance of international capital markets, the greater availability of timely data and information on policymaking provides market participants with a basis for making sounder decisions. As already mentioned, along with the data initiatives, the IMF has pioneered work on generally accepted standards and codes in a range of specific economic policy areas, working on many of them with the World Bank. The best practices relating to transparency in areas such as fiscal, monetary, and financial market policies that have been developed and assembled in cooperation with relevant partners now feed into the surveillance function of the IMF. As surveillance is being conducted increasingly in the public domain—with more and more of the associated documents published and open to scrutiny—the nature of surveillance is being transformed, with markets better positioned to assess countries' performance in relation to published best practices in a number of areas, and the IMF's own assessments in turn being open to judgment by the public and the markets.

Transparency and openness offer the promise of reducing the frequency and severity of financial crises. A key feature of the latest financial difficulties in Latin America has been that markets seem to have been doing a better job of differentiating among countries than in previous crises. Contagion has therefore been limited, both from Latin America to Europe or to Asia, and even within Latin America. The reduced contagion points to the considerable potential payoff from making further efforts to respond to satisfy the public's and the markets' curiosity about the true state of economies and the direction of economic policies.

Quality of national economic policies

The significantly greater openness in the formulation of economic policies at the national level has provided essential support for greater transparency at the international level, including at the IMF, and this convergence has contributed to positive-sum synergies. A clear example is the greater attention now being paid globally to governance issues, in which the IMF became more active in 1996.14 Today, even without the specific involvement or advice of any outside agency, national parliaments, civil society groups, and the media in many countries are apt to question, and press for investigation and resolution, cases of alleged instances of corruption, whether in the public or corporate sectors. And there is broader realization at the national and international levels of the importance of the rule of law and of transparently run institutions. Accordingly, policy advice and technical assistance by the IMF and other multilateral institutions is increasingly directed to capacity-building, with a high premium on strengthening the human and physical capital needed to build and run institutions.

Another example is the policy making process in many low-income countries based on the PRSP process reviewed recently, which now increasingly provides a common framework for financial assistance from the IMF and other international and bilateral sources. This process involves broad-based consultation that serves to enhance ownership of government policies by a range of national and international stakeholders. More generally, Fund transparency based on the four pillars serves to promote effective implementation at the national level of policies developed with IMF advice, which, in turn, is developed and formulated more transparently.

III. Moving Forward with Greater Transparency

Increased transparency and openness, by promoting sound decisions by the official sector, both nationally and at the IMF, and by private market participants, provide a basis for a more robust international economic and financial system working for the benefit of all. Although the positive effects of transparency are increasingly self-evident, certain key questions remain for reflection and discussion. How these questions are answered will help shape future moves toward further increases in transparency.

Transparency for all?

First, I believe that policymakers, and public opinion generally, will increasingly be looking for balance among the degrees of transparency and accountability of different actors. Recent corporate scandals have highlighted weaknesses in corporate governance in some of the most developed financial markets in the world, linked not only to accounting and auditing standards, but also to a culture of providing misleading or incomplete information to lenders and private investors. Both improved standards and strengthened corporate governance will be crucial in helping to maintain the global momentum toward greater transparency and openness. Similarly, international institutions and national governments will need to move in tandem toward greater transparency.

Is anyone listening?

A second challenge will be to go beyond merely providing information or data or documents to the public, making sure as well that they form part of a communication strategy that is effective. At the very least, this will require greater attention to the form in which information is provided, to make it more easily understood and digested by a nonspecialist audience. At the IMF, the criterion of effective communication for multiple audiences has not been systematically at the forefront for staff authoring papers for the Executive Board, but may need to be in future, as the same communication will more often need to be effective both internally and externally.

Trading candor for transparency?

A third key question relates to the perceived trade-off between the candor of the confidential advice that the IMF provides as trusted advisor to its members on sensitive topics and the imperative of openness and transparency. So far, the trade-off has been drawn by accepting that improvements in transparency should be introduced pragmatically and without compromising candor and comprehensiveness in IMF discussions and documents. When the transparency initiatives were first launched, it was felt that setting overly ambitious targets in an international institution of members at varying stages of development and with different traditions would risk being perceived by some as interference with internal structures—a perception that could discourage candid dialogue and even the implementation of reforms. It was therefore accepted that the IMF could not be more transparent than its members wanted it to be.

Going forward, however, my guess is that this understanding will probably evolve further. As time passes, policymakers are becoming more comfortable operating in a more transparent and open environment, both domestically and internationally. The voluntary mechanisms for member approval for the publication of IMF country documents have produced strikingly positive results. Public opinion and civil society organizations are coming to expect forward movement, rather than a standstill or backsliding, with respect to transparency. And most importantly, policymakers increasingly understand openness and transparency as contributing to, rather than detracting from, a climate that fosters and encourages the adoption of sound economic policies. When this circle is squared across-the-board, the perceived trade-off that was drawn, yesterday, between candor of IMF advice and openness and transparency will, tomorrow, shift even more decisively in favor of the latter. When this happens, there will be an even stronger, broadly shared and unequivocal, understanding that openness enhances, rather than diminishes, the IMF's core mandate of promoting sound policies.

A panacea?

Finally, a note of caution. Good as it is, transparency is not an end in itself and cannot be a magic bullet to solve all problems. It certainly does not replace the need for well designed and implemented policies at the national level, nor substitute for sound institutions, laws, and regulations. Nor can transparency be accepted as an alternative to the effective formulation and timely delivery of sound policy advice and well-targeted technical and financial support to member countries. Moreover, in order to safeguard a sufficient margin for confidential and frank communication between the IMF and national authorities to forestall or resolve crises, the iterative process of advancing the consensus on initiatives aimed at achieving even greater transparency and openness will remain necessary, even if at times it will seem slow. What will be crucial globally, however, is the accumulating evidence that openness and transparency are proving to be a force for good, catalyzing and focusing reforms and changes in policy advice and institutional practices at the international level, as a natural complement to the greater openness at the national level that is helping to drive the positive impulse for the reform of national economies.

1 This text is an expanded and updated version of remarks I delivered on October 28, 2002 at the Third Annual Meeting of the Secretaries of the Multilateral Development Banks, hosted in Washington, D.C., by the Inter-American Development Bank. The views expressed here are those of the author and not of the International Monetary Fund. I am grateful to my counterparts at the IDB, the World Bank, the Asian Development Bank, the African Development Bank, and the Islamic Development Bank who participated in a stimulating discussion, and to my IMF colleagues Patrick Cirillo, Luc Hubloue, and Graham Hacche for their input and comments.

2 In a "slow" week, the IMF now posts 10-15 new items to its external website at During peak periods, this can go to over 100 items per week.

3 A comprehensive account of the recent evolution in Fund governance, and its links to greater openness and transparency, is given in Leo van Houtven, Governance of the IMF: Decision Making, Institutional Oversight, Transparency, and Accountability, IMF Pamphlet Series No. 53, August 2002 at

4 For information on IMF reports on country observance of internationally recognized standards and codes, see As of October 31, 2002, 316 reports on observance of standards and codes (ROSCs) were completed for 86 economies, of which 234 were published for 71 economies.

5 For a comprehensive overview of IMF initiatives on data standards, see

6 See The Fund's Transparency Policy, Statement by Horst Köhler on the Occasion of the Sixth Meeting of the International Monetary and Financial Committee, September 25, 2002, at

7 Its most visible manifestation is the biweekly press conference by the Director of IMF External Relations. A transcript of the press conference is posted on the IMF's website within a few hours, providing a documentary record in real time of the information being made publicly available on IMF activities.

8 For a timeline of the evolution of the SDRM, see For an updated state of play on the debate, see Anne O. Krueger, Sovereign Debt Restructuring Mechanism-One Year Later, speech delivered at the European Commission, Brussels, December 10, 2002 at

9 On the IMF financial activities, see As part of the effort to enhance public understanding of its finances, the IMF now uses a new method of measuring its liquidity. See IMF Announces New Measure of Its Capacity for New Lending, IMF Press Release N02/55, December 16, 2002 at

10 See the most recent work program at

11 See for a comprehensive overview of the 2002 review of the PRGF and the PRSP approach.

12 For the new guidelines, see

13 The IEO's website is at

14 See http:/


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