Transcript

International Monetary Fund
Washington, D.C.
Tuesday, May 27, 2008

OPERATOR: Ladies and gentlemen, thank you for standing by, and welcome to the IEO Report on Fund Governance. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. Instructions will be given at that time. If you should require assistance during the call, please star and then zero. I would now like to turn the conference over to your host, Director of Independent Evaluation Office, Mr. Thomas Bernes. Please go ahead.

MR. BERNES: Thank you. Hello everybody. I believe you have received the documents which I would remind you are embargoed until 10:00 a.m. Washington time tomorrow. I have with me Ruben Lamdany, Assistant Director of the Independent Evaluation Office, who headed the team for this evaluation.

In some ways this is an unusual evaluation for the IEO in that we are looking at how the governance arrangements of the institution itself work. I think that it is a strength of the institution that it has created an independent office such as the IEO which is able to undertake such independent evaluations.

Good governance has increasingly been recognized as a critical element in the performance of institutions which is what prompted us to undertake this evaluation. Our evaluation focuses on the three principal organs of IMF governance, the IMFC which is the main body for ministerial engagement, the Executive Board to whom most authority has been delegated, and management. While gradual reforms over the last six decades have allowed the Fund to remain relevant in a changing world, our evaluation finds that reforms have not kept pace with broader changes in the environment in which the Fund operates.

The Fund started with 44 member countries and 12 Executive Directors some 60 years ago. Today it has 185 member countries and 24 Executive Directors. While roles have adapted, in many ways the formal structure remains largely untouched. We looked at governance in this report from the perspective of the formal role set out in the Articles of Agreement, the informal ways in which the Fund like any other organization, operates, and from what best practice in the public and private sector suggests, and these have evolved substantially over the last number of years.

I would underline that there is no perfect model of good corporate governance. Rather, any system of governance has to address a number of elements, effectiveness, efficiency, accountability, and voice which is the ability of all stakeholders to have their concerns heard. There are difficult tradeoffs between these. In looking at these from the context of the IMF, we found that effectiveness has been the strongest aspect of Fund governance. Indeed, many have held the Fund out as perhaps the strongest multilateral institutional performer. At the same time, we found that accountability and voice have been the weakest aspects. In our view, if left unaddressed, this could likely undermine effectiveness over time.

The report has four main conclusions and recommendations and includes a series of detailed measures specific to each of the main governance bodies. First, we find a lack of clarity in the respective roles of the main governance bodies, and in particular between the Board and management. We believe these need to be clarified with a view to minimizing overlaps and addressing possible gaps.

Second, the Fund needs more systematic ministerial involvement. The IMFC as an advisory body has only a limited mandate. We recommend the activation of the Council which is provided for in the Articles and which would be a decision-making body. At a minimum, we believe this would strengthen transparency and accountability.

Third, we believe the Board's effectiveness is hindered by an excessive focus on executive rather than supervisory functions. The Board still discusses and approves most operational issues. We recommend that the Board should shift away from executive day-to-day operational activities and focus more on formulating strategy, monitoring policy implementation, and exercising effective oversight over management.

Finally, we believe an operating framework needs to be in place to hold management accountable for its performance.

The report is wide ranging and complex. While some issues can be tackled on their own, many are interrelated and will need to be considered together. To make progress on these will require the attention and commitment of all stakeholders from the Executive Board and management to ministers and governors who bear ultimate responsibility. We are pleased with the discussion which we did have with the Executive Board and management last week, and I believe you have the press statements which they are issuing which is also embargoed until tomorrow. We believe that's a good start to the process, and at this point we would be happy to respond to any questions which you have.

OPERATOR: Ladies and gentlemen, if you have a question please press star and then one. If you're using a speaker phone, please lift the handset before pressing the numbers. Once again, if you have a question or comment, please press star followed by one now. No one has queued up. Please continue.

MR. BERNES: I've covered the main conclusions and recommendations of the report. It goes into a lot of detail on specifics which are very wide ranging and I think many of those are very internal, so I don't propose to go into those unless people have specific questions on them.

OPERATOR: As a reminder, if you have a question, please press star and then one now. No one has queued up, sir.

MR. BERNES: There is no point holding people if nobody has questions right now and I realize this is a lot of material and complex material to digest. If you have any questions, you can get in contact with us directly and the press release I believe gives the email address for inquiries and both how to contact myself or Ruben Lamdany, and certainly we would be happy during the course of the day to respond to any questions you may have.

OPERATOR: Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation.

MR. BERNES: Thank you.


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