Section Notes

Finances, Organization, and Accountability

In FY2015, the IMF operated within an unchanged budget envelope in real terms. This was the third year in row. Greater utilization and reallocation of the budget enabled the IMF to meet new demands. The IMF’s income is generated primarily through its lending and investment activities. The IMF has in place a comprehensive audit framework, which comprises complementary, yet distinct, roles of the external audit, internal audit, and External Audit Committee. The IMF’s staff of 2,611 come from 147 countries.

Budget and Income

Medium-term budget

In April 2015, in the context of the FY2016–18 medium-term budget, the Executive Board authorized a total net administrative budget appropriation for FY2016 of $1,051.5 million. The Board also approved a limit on gross expenditures of $1,289.8 million, including up to $42.5 million in carryforward of unspent FY2015 resources for possible spending in FY2016. It also approved a capital budget of $42.1 million for building facilities and information technology capital projects (Table 3.1).

Table 3.1
Budget by major expenditure category, FY2015 –19
Table 3 1
Box 3.1: HQ1 Building Renovation Progress

Renovation of the older of the two IMF headquarters buildings (HQ1) in downtown Washington, D.C., continued throughout the year. This extensive project is designed to replace aging building systems, including air conditioning, boilers, water pumps, 12 miles of water piping, hot water heating, building controls, and 35,000 light fixtures. The renovation will also support more energy-efficient and sustainable operations and improve work spaces by creating more modern, flexible, multifunctional facilities with more natural light, to help meet the IMF’s business needs over the next 20–25 years.

The project has experienced some challenges due to unexpected and complex technical conditions, as well as the discovery of additional asbestos that increased the scope of work. In January 2016, the Executive Board approved additional funding and project completion is now anticipated in 2020.

Considerable progress was made in FY2016 toward completing phase 1 of the project, which represents more than 50 percent of the overall square footage of the building.

Several public spaces were prepared for reopening in FY2017, including the atrium, gallery, bistro, cafeteria, and meeting spaces. Renovation of two office floors was completed and readied for staff to return and the next office floor was vacated for renovation. During construction, some staff have been temporarily relocated to the IMF’s other building (HQ2) or to leased space nearby.

The project aspires to Leadership in Energy and Environmental Design (LEED) certification and incorporates green building design and construction practices that will have a lower impact on the environment and lay the foundation for ongoing sustainable operations and maintenance.

The IMF FY2016 work program continued to support the gradual postcrisis stabilization of the global economy, amid growing uncertainties about the speed of recovery and vulnerabilities. While the number of IMF-supported programs was lower than the peak levels of FY2011/12, the growing complexities of the global economy and financial system had placed pressure on the Fund’s surveillance work and had resulted in increased requests for technical assistance. The institution was able to deliver on these demands within a flat budget in real terms thanks to the implementation of a cross-cutting streamlining initiative agreed as part of the FY2016 budget, together with ongoing departmental reprioritization efforts. Actual administrative expenditures in FY2016 totaled $1,038.3 million, $13.2 million below the total net budget. Average vacancy rates continue to decline and are now considered to be at a frictional level. Spending on physical security, both at headquarters and overseas, and on information technology security grew further, in line with the trend observed in recent years.

Capital budget expenditures for facilities and information technology totaled $131 million, including amounts appropriated from prior years. The HQ1 Renewal Program continued to progress, with several areas of the building in the final stage of testing and commissioning before reopening. In January 2016 the Executive Board approved supplemental funds for the HQ1 Renewal Program to cover unforeseen costs. Information technology capital spending totaled $25.9 million, mainly to improve knowledge management, enhance data management and analysis capacity, and streamline access to information for use within the Fund and by country officials.

For financial reporting purposes, the IMF’s administrative expenditures are accounted for on an accrual basis, in accordance with International Financial Reporting Standards (IFRS). These standards require accounting on an accrual basis and the recording and amortizing of employee benefit costs based on actuarial valuations. Table 3.2 provides a detailed reconciliation between the FY2016 net administrative budget outturn of $1,038 million and the IFRS-based administrative expenses of $1,326 million (SDR 951 million) reported in the IMF’s audited financial statements for the year.

Table 3.2
Administrative expenses reported in the financial statements, FY2016
Table 3 2

In April 2016 the Board approved a budget for FY2017, comprising a net administrative expenditure of $1,072.5 million and a limit on gross expenditure of $1,316.1 million. The FY2017 budget also includes up to $43.3 million in carry-forward of unspent FY2016 resources. As is customary, small adjustments were made in the budget to accommodate increases in the salary structure and in the cost of nonpersonnel expenses, in line with price increases. In addition, after four years of zero real growth, the FY2017 budget includes an increase of 0.5 percent in constant dollar terms to cover the institution’s rising information technology and physical security costs. The capital budget was set at $60.5 million, comprising $32.5 million for building facilities and $28 million for information technology. Indicative budgets for FY2018 and FY2019 were also presented to the Board, with early indications of upward pressure to cope with rising demands from the membership.

Income Model

Since its establishment, the IMF has relied primarily on its lending activities to fund its expenditures. To generate additional income, the IMF established the Investment Account in 2006 and invested its reserves. In 2008, the Executive Board endorsed a new income model that involved the establishment of an endowment funded from the profits from the limited sale of the IMF’s gold holdings. Along with the new income model, the Fifth Amendment to the Articles of Agreement, which became effective in February 2011, authorized the broadening of the IMF’s investment mandate to enhance the expected returns on its investments and further strengthen its finances over time. In January 2013, the Executive Board adopted Rules and Regulations for the Investment Account. The Board reviewed the investment strategy of the Fund’s reserves in August 2015 and adopted new Rules.


Reflecting the high levels of lending activities and the current low returns on its investments, the IMF’s main source of income continues to come from charges levied on the outstanding use of credit. The basic rate of charge (the interest rate) on IMF financing comprises the SDR interest rate plus a fixed margin expressed in basis points. Under the rule adopted by the Executive Board in December 2011, the margin is reviewed every two years and is set so as to cover the IMF’s financing-related intermediation costs and allow for a buildup of its reserves. The rule also includes a cross-check to ensure that the rate of charge maintains a reasonable alignment against long-term credit market conditions. In April 2016, the Executive Board agreed to maintain the margin for the rate of charge at 100 basis points.

The IMF also levies surcharges on the use of large amounts of credit in the credit tranches and under Extended Arrangements. Following the effectiveness of the Fourteenth General Review of Quotas, the Executive Board revised the quota-based thresholds at which surcharges are applied to mitigate the effect of the doubling of quotas. Surcharges, referred to as level-based surcharges, of 200 basis points are levied on the use of credit above 187.5 percent of a member’s quota. Time-based surcharges of 100 basis points are levied on outstanding credit above the same threshold for more than 36 months in the credit tranches or 51 months under the Extended Fund Facility.

In addition to periodic charges and surcharges, the IMF also levies service charges, commitment fees, and special charges. A service charge of 0.5 percent is levied on each drawing from the General Resources Account (GRA). A refundable commitment fee is charged on amounts available under GRA arrangements, such as Stand-By Arrangements, as well as Extended, Flexible Credit Line, and Precautionary and Liquidity Line Arrangements, during each 12-month period. Commitment fees are levied at 15 basis points, 30 basis points, and 60 basis points on amounts available for drawing up to 115 percent, between 115 and 575 percent, and over 575 percent of quota, respectively. Commitment fees are refunded when credit is used, in proportion to the drawings made. The IMF also levies special charges on overdue principal payments and on charges that are past due by less than six months.

Remuneration and Interest

On the expenditure side, the IMF pays interest (remuneration) to members on their creditor positions in the GRA (known as remunerated reserve tranche positions). The Articles of Agreement provide that the rate of remuneration shall be not more than the SDR interest rate, nor less than 80 percent of that rate. The basic rate of remuneration is currently set at the SDR interest rate, which is based on a weighted average of representative interest rates on short-term financial debt instruments in the money markets of the SDR basket currencies, subject to a floor of 5 basis points. The IMF also pays interest at the SDR interest rate on outstanding borrowings under the bilateral loans and note purchase agreements, and the enlarged and expanded New Arrangements to Borrow.

Burden Sharing

The rates of charge and remuneration are adjusted under a burden-sharing mechanism that distributes the cost of overdue financial obligations to the IMF’s GRA equally between debtor and creditor members. Income loss due to unpaid interest charges that are overdue for six months or more is recovered via burden sharing by increasing the rate of charge and reducing the rate of remuneration. The amounts thus collected are refunded when the unpaid charges are settled.

In FY2016, the adjusted rates of charge and remuneration averaged 1.051 percent and 0.045 percent, respectively.

Net Income

The IMF’s net income in FY2016 was SDR 998 million, reflecting primarily income from the high levels of lending activity and income from its investments held in the Investment Account. As required by International Financial Reporting Standards (amended International Accounting Standard 19, Employee Benefits), the net income for the financial year includes a gain of SDR 543 million arising from the immediate recognition of the effects of changes in actuarial assumptions used in determining the IMF’s defined benefit obligation of postemployment employee benefit plans.

Arrears to the IMF

Overdue financial obligations to the IMF declined slightly from SDR 1,290.8 million at end-April 2015 to SDR 1,285.7 million at end-April 2016 (Table 3.3). At end-April 2016, three members— Somalia, Sudan, and Zimbabwe—remained in protracted arrears to the IMF (outstanding for more than six months). Somalia and Sudan have accumulated arrears dating back to the mid-1980s, accounting for about 18 and 76 percent of the total arrears, respectively. Zimbabwe, which has been in arrears to the Poverty Reduction and Growth Trust (PRGT) since February 2001, accounted for the remaining 6 percent. Onethird of total arrears as of end-April 2016 consisted of overdue principal, and the remaining two-thirds, of overdue charges and interest. More than four-fifths represented arrears to the GRA, and the remainder to the Trust Fund and the PRGT. Zimbabwe is the only country with protracted arrears to the PRGT. Due to the SDR allocations in August/September 2009, all protracted cases have remained current in the SDR Department.

Under the IMF’s strengthened cooperative strategy on arrears, remedial measures have been taken to address the protracted arrears. At the end of the fiscal year, Somalia and Sudan remained ineligible to use GRA resources. Zimbabwe is not able to access GRA resources until it fully settles its arrears to the PRGT. A declaration of noncooperation, the partial suspension of IMF’s technical assistance, and the removal from the list of PRGT-eligible countries remain in place as remedial measures related to Zimbabwe’s outstanding arrears to the PRGT.

Table 3.3
Arrears to the IMF of countries with obligations overdue by six months or more and by type, as of April 30, 2016
Table 3 3


Human Resources Policies and Organization

Human resources

To be effective in the global economy, the IMF must recruit and retain a highly qualified and diverse international staff. In FY2016, the IMF introduced a comprehensive compilation of rules governing staff employment in a Staff Handbook, conducted a review of compensation practices, focused on leadership development, and conducted a staff survey.


As of April 30, 2016, the IMF employed 2,223 professional and managerial staff, and 449 support staff. A list of the institution’s senior officials is on page 106 and its organizational chart can be found on page 84.

Recruitment of 182 total new staff in 2015 was slightly higher than the 2014 level of 174. In 2015, four managerial staff, 139 professional staff and 39 support staff were hired. The IMF requires economists to have advanced analytical and policymaking experience, and in 2015 recruited 19 top university graduates through the Economist Program (EP) and 56 experienced mid-career economists. Twothirds of mid-career hires were macroeconomists, and the rest experts in fiscal policy and the financial sector. During the year 489 contractual employees were hired.

In 2015, seven appointees from four countries were hired under the Externally Financed Appointee hiring program (EFA), bringing the total number of appointees to 13. The EFA was designed to provide up to 15 member-country governments with two years of IMF work experience. Costs are financed by member countries through a multipartner trust fund.


The IMF strives to ensure that the staff is diverse in terms of geographic region, gender, and educational background, but challenges remain. Of the IMF’s 189 member countries, 148 were represented by staff as of end-April 2016.

Hiring of nationals from underrepresented regions stood at 48 percent of all external hiring at the professional level for 2015.

More statistics and information on ongoing efforts to improve diversity and inclusion at the IMF are available on the last page of this report and in the “2015 IMF Diversity Annual Report.”


Christine Lagarde was reappointed as the Managing Director of the IMF for a second five-year term beginning July 5, 2016.

David Lipton was reappointed as the First Deputy Managing Director for a second five-year term beginning on September 1, 2016.

In early FY2017, Deputy Managing Director Min Zhu announced his intention to leave the IMF when his term expired in late July. The Managing Director praised his outstanding contributions to the Fund for the past five years and before that as a Special Advisor to the Managing Director. “His down-to-earth style, wonderful sense of humor, and warm personality served to reinforce his formidable intellect and passion for economics, and enabled him to provide strong leadership across a large range of issues,” she said. The Managing Director’s announcement also noted that a process was underway to identify a candidate to succeed him.

In July 2016, the Managing Director announced she had nominated Mr. Tao Zhang, Deputy Governor of China’s central bank (PBOC), to serve as an IMF Deputy Managing Director effective August 22. Zhang had previously served for four years as China’s Executive Director at the IMF. At the PBOC he held several positions, including head of the bank’s legal affairs department and head of its financial survey and statistics department. He also has worked at the World Bank and the Asian Development Bank. “Mr. Zhang brings a strong combination of international economic expertise, public sector policymaking, and diplomatic skills,” Christine Lagarde said. “He also has extensive experience with international financial institutions, excellent communication and negotiating skills, and a superb knowledge of IMF policies and procedures.”


The Executive Board reviews IMF management remuneration periodically. The Board of Governors approves the Managing Director’s salary. Annual adjustments are made based on the Washington, D.C., consumer price index. As of July 1, 2015, the salary structure for management was as follows:

Managing Director: $494,660
First Deputy Managing Director: $430,120
Deputy Managing Directors: $409,650


On July 20, 2015, IMF Managing Director Christine Lagarde appointed Maurice Obstfeld as Economic Counsellor and Director of the IMF’s Research Department, after his predecessor Olivier Blanchard retired from the Fund.

In March 2016, Director of the Human Resources Department Mark Plant announced his retirement, and Lagarde appointed Kalpana Kochhar as his replacement, effective June 13, 2016.

Box 3.2: Profiles of outgoing and incoming senior staff

Olivier Blanchard OLIVIER BLANCHARD’S distinguished career, insightful analysis, and original ideas have made him one of the world’s most cited economists. He was appointed as the IMF’s Economic Counsellor and Director of the Research Department in 2008. He stepped down in September 2015 after leading research at the IMF through the stormy days of the global financial crisis. A citizen of France, Mr. Blanchard obtained his Ph.D. in economics at the Massachusetts Institute of Technology (MIT) and taught at Harvard University before returning to MIT, where he served as Chairman of MIT’s Economics Department.

Mark Plant MARK PLANT During his 24-year career at the IMF, Mark Plant worked in the African Department and the then-Policy Development and Review Department, where he oversaw the review of IMF lending to low-income countries (LICs) and LIC policy development work. He returned to the African Department as Deputy Director before being appointed Director of the Human Resources Department in 2011. A U.S. citizen, Mr. Plant received his B.A. in economics and mathematics at the University of Virginia and his M.A. and Ph.D. in Economics at Princeton University.

MAURICE OBSTFELD MAURICE OBSTFELD took over as Economic Counsellor and head of the IMF’s Research Department in September 2015. A former Chair of the Department of Economics at the University of California at Berkeley, Mr. Obstfeld has advised many governments and consulted at central banks all over the world, as well as serving as a member of President Obama’s Council of Economic Advisers. A citizen of the United States, Mr. Obstfeld received his Ph.D. in economics from MIT after earning a B.A. from the University of Pennsylvania and an M.A. from Cambridge University. He was a Research Fellow at the IMF on four separate occasions.

KALPANA KOCHHAR KALPANA KOCHHAR has had an impressive career at the IMF, spanning more than 25 years and several departments. She took over as head of Human Resources in June 2016. Previously, she served as Deputy Director in the Asia and Pacific Department and in the Strategy, Policy and Review Department, and as Senior Advisor in the Research Department. She was also the Chief Economist for the South Asia Region at the World Bank. A citizen of India, Ms. Kochhar holds a Ph.D. and an M.A. in economics from Brown University, an M.A. in economics from Delhi School of Economics in India, and a B.A. in economics from Madras University in India.


In July 2016, the Managing Director announced the appointment of Sabina Blaskovic to the new position of Internal Investigator at the Fund. The Office of the Ethics Advisor, led by Olivia Graham as of October 2015, now focuses exclusively on advice, training, and outreach to promote the Fund’s ethics standards, whereas the separate Office of Internal Investigations, led by Blaskovic, takes responsibility for ethics investigations. This new division of responsibilities will enhance the efficiency of both the advisory and investigative functions through greater specialization. Blaskovic had previously held senior investigative positions at the International Fund for Agricultural Development, the United Nations Office of Internal Oversight Services, and in New York City government departments. Graham’s distinguished career in ethics includes more than 20 years of experience in international settings, such as the World Bank and the International Fund for Agricultural Development, where she was Director of Ethics.



Risk Management at the Fund

By virtue of its role, as established in the Articles of Agreement, the IMF faces a range of financial and nonfinancial risks. In February 2016, the Executive Board approved a risk acceptance statement indicating the degree of risk the IMF is willing to tolerate across the Fund’s activities and has the capacity to successfully manage over an extended period of time. The statement will be reviewed periodically to reflect any changes in existing policies and processes, a set of strategic decisions made by the Executive Board and Management in setting the Fund’s philosophy on risk, given its unique institutional role and business model.

The IMF uses three lines of defense to actively manage risks. Departments conducting day-to-day operations establish and maintain systems of internal controls for identifying and managing the risks inherent in those operations (see Box 3.3 on some elements of risk management). In specific areas, crossdepartmental committees provide additional risk oversight. An independent Risk Management Unit is responsible for developing and maintaining the risk management framework, devising tools to assess risk, and reporting to management and the Board on the IMF’s overall risk profile, highlighting areas where additional mitigation efforts are required.

The Risk Management Unit’s periodic risk assessment feeds into the Fund’s strategic and budget planning cycle. The Office of Internal Audit and Inspection (OIA) provides independent assurance on the effectiveness of governance, risk management, and internal controls (see section on OIA below). Ultimate responsibility for maintaining effective risk management and mitigation lies with management and the Executive Board.

The IMF monitors and actively manages risks across four broad areas: strategic, core, cross-functional, and reputational. Managing strategic risk requires establishing a clear strategic framework and responding to the evolving external environment. Strategic direction is guided by the Managing Director’s Global Policy Agenda, informed by continuous analysis of emerging issues affecting the international monetary system.

Risks in the IMF’s core functions relate to aligning the IMF’s three main areas of activity—surveillance, lending, and capacity development—with the Fund’s strategic direction and underlying objectives, while also ensuring that its financing model remains safeguarded. In managing credit risks, the IMF employs a multilayered framework with the primary tools focused on access, program design, and conditionality. An adequate level of precautionary balances and the Fund’s de facto preferred creditor status are also an integral part of this framework. In February, 2016, the Executive Board conducted a biennial review of the adequacy of the precautionary balances. The Executive Board supported retaining the current medium-term indicative target for precautionary balances of SDR 20 billion and raising the minimum floor for precautionary balances, from SDR 10 billion to SDR 15 billion.

Risks in its cross-functional assets refer to the capacity of the IMF’s human capital, technology, physical assets, and other supporting elements to enable implementation of the strategic direction and avoid any disruption in effective performance of the institution’s core functions. Cross-functional risk also concerns other financial risks, such as income and investment risks. Reputation risk refers to the possibility that stakeholders might take a negative view of the IMF, resulting in damage to its credibility, traction, and effectiveness.


Audit Mechanisms

The IMF’s audit mechanisms comprise an external audit firm, an internal audit function, and an independent External Audit Committee (EAC) that, under the IMF’s By-Laws, exercises general oversight over the annual audit.


The three members of the EAC are selected by the Executive Board and appointed by the Managing Director. Members serve three-year terms on a staggered basis and are independent of the IMF. EAC members are nationals of different member countries and must possess the expertise and qualifications required to oversee the annual audit. Typically, EAC members have significant experience in international public accounting firms, the public sector, or academia.

The EAC selects one of its members as chair, determines its own procedures, and is independent of the IMF’s management in overseeing the annual audit. It meets in Washington, D.C., each year, normally in January or February to oversee the planning for the annual audit, in June after the completion of the audit, and in July to brief the Executive Board. The IMF staff and the external auditors consult with EAC members throughout the year. The 2016 EAC members were Daniel Loeto Gonzalo (chair), a chartered accountant and the chief accountant of the Bank of Botswana; Mary Barth, a professor of accounting at Stanford University; and Kamlesh Vikamsey, a chartered accountant and senior partner in an accounting firm in India.


The external audit firm, which is selected by the Executive Board in consultation with the EAC and appointed by the Managing Director, is responsible for conducting the IMF’s annual external audit and expressing an opinion on the IMF’s financial statements, including the accounts administered under Article V, Section 2(b), of the Articles of Agreement and the Staff Retirement Plan. At the conclusion of the annual audit, the EAC briefs the Executive Board on the results of the audit and transmits the report issued by the external audit firm, through the Managing Director and the Executive Board, for consideration by the Board of Governors.

The external audit firm is appointed for a term of five years, which may be renewed for up to an additional five years. PricewaterhouseCoopers was appointed as the IMF’s external audit firm in November 2014, following the mandatory rotation of the predecessor firm Deloitte & Touche LLP after 10 years. The external audit firm can perform certain consulting services, except for a blacklist of prohibited services and subject to robust safeguards to protect the audit firm’s independence. These safeguards involve oversight of the EAC and, for consulting fees above a certain threshold, the Executive Board’s approval.


The IMF’s internal audit function is assigned to the Office of Internal Audit and Inspection (OIA), which independently examines the effectiveness of the IMF’s governance, risk management, and internal control processes. In line with best practice, OIA reports to IMF management and to the EAC, thus ensuring its objectivity and independence.

OIA’s FY2016 work included assurance and advisory engagements that assessed the adequacy of controls and procedures to mitigate risks to the achievement of the Fund’s institutional and departmental goals. Engagements included audits and advisory reviews covering the adequacy of controls to select and contract the IMF’s service providers, the adequacy of the IMF’s business continuity planning, information technology work to evaluate the adequacy of the controls that protect the Fund’s information assets, and a review of the IMF’s capacity development activities.

In addition, OIA delivered the Seventh Periodic Monitoring Report on the Status of Implementation Plans in Response to Board- Endorsed Recommendations of the IMF’s Independent Evaluation Office (IEO). This was the second such report prepared by OIA under the procedure recommended by the external evaluators of the IEO and approved by the Board in February 2013. On the grounds that no new Management Implementation Plans had been issued during the year, the report focused on a discussion of progress made on the four plans reviewed in the previous report. The Executive Board’s Evaluation Committee reviewed the Seventh Periodic Monitoring Report in September 2015, and the full Board approved it in October 2015.

The Board is informed of OIA activities twice a year in an activity report that includes information on audit results and the status of audit recommendations. The most recent informal Board briefing on these matters took place in January 2016.

Independent Evaluation Office

The Independent Evaluation Office (IEO) was established in 2001 to conduct independent and objective evaluations of IMF policies and activities. Under its terms of reference, the IEO is fully independent of IMF management and staff and operates at arm’s length from the Fund’s Executive Board. Its mission is to enhance the learning culture within the IMF, strengthen the IMF’s external credibility, and support institutional governance and oversight.

Executive Board Reviews of IEO Reports and Recommendations


In September 2015, the IEO released its report, “Self-Evaluation at the IMF: An IEO Assessment.” The IEO found that considerable self-evaluation takes place at the IMF, that many IMF self-evaluation activities and reports were of high technical quality, and that self-evaluation informed reforms in policies and operations. Yet, there are gaps in coverage, weaknesses in quality, and shortcomings in distilling and disseminating lessons, in part because of the absence of an explicit, conscious, institution-wide approach to this work. Moreover, the evaluation found that recent decisions made as part of a costsaving exercise may weaken the self-evaluation framework.

To help address these concerns, the evaluation recommended that the IMF adopt an overall policy for self-evaluation. Such a policy should be general to allow practices to evolve with the operational environment, while also setting out the goals, scope, key outputs, and expectations for utilization and follow-up.

The evaluation also recommended that all lending programs undergo some form of self-assessment, to provide the platform for learning from experience, as well as to enhance transparency on the use of IMF resources. Finally, the evaluation called on IMF management to develop products and activities to distill and disseminate the findings and lessons of evaluations in ways that highlight their relevance for staff work and enhance learning.

In discussing the report, the Executive Board welcomed this first assessment of self-evaluation at the IMF and agreed on the importance of having a clearly articulated approach to selfevaluation and on the need to better disseminate lessons from self-evaluation.


In March 2016, the IEO released its report, “Behind the Scenes with Data at the IMF: An IEO Assessment.” The report examined whether the IMF’s policies and practices with respect to data and statistics are adequate for fulfilling the IMF’s mandate in a rapidly evolving global economy.

Box 3.3: Managing Risks with Safeguards Assessments

When the IMF provides financing to a member country, a safeguards assessment is carried out to obtain reasonable assurances that the country’s central bank is able to adequately manage the resources received from the IMF and provide reliable monetary data on the IMF-supported program. Safeguards assessments are diagnostic reviews of central banks’ governance and control frameworks, and complement the IMF’s other safeguards, which include limits on access, conditionality, program design, measures to address misreporting, and postprogram monitoring.

They involve an evaluation of central bank operations in five areas: the external audit mechanism, the legal structure and autonomy, the financial reporting framework, the internal audit mechanism, and the system of internal controls. As of end-April 2016, 283 assessments had been conducted, covering 94 central banks, 11 assessments of which were completed in FY2016. In addition, safeguards activities include monitoring progress in implementing recommendations and addressing other developments in central banks’ safeguards frameworks for as long as IMF credit remains outstanding. About 60 central banks are currently subject to monitoring.

In October 2015, the IMF Executive Board concluded a fiveyearly review of the safeguards policy. The review confirmed the policy’s effectiveness and its positive contribution to the Fund’s overall risk management framework. It also recognized that the safeguards process has helped central banks improve their control, audit, and reporting practices. No significant changes were made to the framework for conducting the safeguards work, as it was found to remain relevant and adequate. A new element introduced to the safeguards policy was that for cases involving direct budget financing, a risk-based approach for fiscal safeguards reviews of state treasuries would be conducted. The reviews will only apply for arrangements where a member requests exceptional access to Fund resources and a substantial portion of the funds, at least 25 percent, is directed to financing the state budget.

In addition, regional safeguards seminars were conducted during FY2016 at the Joint Vienna Institute in Austria, Joint Partnership for Africa in Pretoria, South Africa, and at the IMF-Middle East Center for Economics and Finance in Kuwait. The seminars highlighted international leading practices in safeguards areas and provided a forum for central bank officials to share experiences.

The evaluation found that data provision from member countries has improved markedly over time, allowing the institution, to a large extent, to keep abreast of the growing complexity and interconnectedness of the world economy. However, the evaluation concluded—as had other reports in the past—that data deficiencies still affect the Fund’s strategic operations. In particular, problems with data and data practices have, at times, left the IMF less than fully equipped to play its critical role of helping to secure global macro-financial stability.

In the aftermath of crises, data have often been put at the forefront, prompting important changes in the Fund’s approach to data. Yet, once the crises subside, the data issues typically receive low priority, being viewed as mere support activities to the Fund’s strategic operations. The causes of some data deficiencies lie outside the IMF itself. Nonetheless, internal institutional constraints, data management structures, incentive systems, and quality control mechanisms have hampered effective flows and utilization of data. Some steps are underway, including a new data management governance structure and initiatives to fill data gaps revealed by the global financial crisis, but these efforts fall short of a clear, comprehensive strategy that recognizes data as an institutional strategic asset, not just as an input for other work.

During its discussion, the Executive Board welcomed the report. Directors broadly supported the report’s main findings and endorsed the recommendation that the IMF develop a long-term strategy for data and statistics that provides a common institutional objective and acknowledges data as a strategic asset. They also supported the IEO’s call for the IMF to define and prioritize its data needs, clarify the role and mandate of the Statistics Department, reexamine incentives for staff with respect to data management, and make clear the degree to which the institution takes responsibility for the quality of the data it disseminates.

The IEO Work Program

During FY2016, in addition to issuing the two reports discussed above, the IEO continued its work on the evaluation of the IMF and the euro area crisis. The evaluation focuses on the IMF’s role during the banking and sovereign debt crises of Greece, Ireland, and Portugal, as well as IMF surveillance and technical assistance in these and other euro area countries and institutions. The IEO plans to issue the report before the 2016 Annual Meetings.

The IEO also launched a new evaluation on IMF work on social protection, with the draft issues paper discussed by Executive Directors in an informal seminar in March 2016. During FY2017, the IEO intends to begin work on an evaluation of the IMF’s work on fragile states. Completed evaluations, issues papers, IEO Annual Reports, and other documentation can be found on the IEO website at

Implementation of Board-Endorsed Recommendations

Management Implementation Plans for two IEO evaluations— “IMF Forecasts” and “Recurring Issues from a Decade of Evaluation”—were approved by the Executive Board in September 2015. As mentioned above, the Seventh Periodic Monitoring Report was approved by the Board in September. In October 2015, Executive Directors, after consulting with management and staff, determined that Management Implementation Plans should be presented to the Board within six months after completion of an IEO evaluation, in line with a recommendation from the 2013 External Evaluation of the IEO.

In December 2015, the Board approved Management’s plan to follow up on the IEO evaluation of the “IMF Response to the Financial and Economic Crisis” by ensuring that the IMF as a quota-based institution has sufficient resources to contribute to future crisis resolution, developing guidelines for structuring engagement with other organizations, and consolidating and simplifying the current framework to identify and assess risks and vulnerabilities. In March 2016, the Board’s Evaluation Committee discussed the Management Implementation Plan for the IEO’s assessment of “Self-Evaluation at the IMF.” Implementation plans and monitoring reports are available on the IMF and IEO websites.


Outreach and Engagement with External Stakeholders

The objectives of IMF outreach are twofold: first, to listen to external stakeholders to better understand their concerns and perspectives, with the aim of improving the relevance and quality of IMF policy advice; and second, to strengthen the outside world’s understanding of IMF objectives and operations. The IMF’s Communications Department has primary responsibility for conducting the IMF’s outreach activities and its engagement with external stakeholders.

The communications strategy has developed over time. Over the past decade, the Fund’s approach has evolved from increased transparency to more proactive engagement with the media and other stakeholders: to explain the IMF’s policies and operations; to enable the IMF to participate in, and contribute to, intellectual debate on important economic issues; and to better facilitate twoway learning and dialogue with the IMF’s global membership. Like most modern organizations, the IMF now uses communications as a strategic tool to help strengthen its effectiveness. Strategic engagement through new technologies such as social media, videos, blogs, and podcasts has formed an increasing part of the IMF’s communications strategy. At the same time, in today’s rapidly changing world, the Fund is reaching out to a new set of influencers, including civil society organizations (CSOs) and private sector networks.

The IMF engages with parliamentarians—a group that plays an important role in their countries’ economic decisionmaking process—mainly through the Parliamentary Network of the World Bank and the International Monetary Fund, but also through targeted in-country and regional engagement on such issues as extractive industries, structural reforms, and inequality. During the past year, the IMF conducted significant in-country outreach to the U.S. Congress, explaining the work of the IMF and the need for the 2010 Quota and Governance reforms, which became effective in January 2016.

The IMF also organized a special seminar for parliamentarians from central, east, and southeast Europe at the Joint Vienna Institute. The seminar, which was offered in various languages, including Romanian, Russian, and Serbian, featured presentations on key economic issues in the region and the IMF’s work. During the IMF’s Spring Meetings, about 250 members of parliament from more than 80 countries gathered for this year’s Parliamentary Network Global Conference. Among the topics of discussion were such pressing issues as climate change, the migration crisis, tax evasion and tax havens, and capacity development. Some parliamentarians also had bilateral meetings with IMF and World Bank representatives of their countries and regions.

In its ninth year, the IMF Civil Society Fellowship program sponsored the participation of 60 very engaged CSOs from developing economies in the Spring and Annual Meetings. Overall, about 1,000 CSO representatives attended the meetings. On the margins of the meetings, the IMF, the World Bank, and the CSOs organized some 100 sessions at the CSO Policy Forum on a broad range of issues that included debt sustainability, inequality, climate change, conditionality, responsible taxation, and gender. The IMF has also worked toward increasingly including CSOs in the Program of Seminars: this year, for instance, Oxfam’s International Executive Director Winnie Byanyima participated in a panel on international taxation with IMF Managing Director Christine Lagarde.

The IMF engages with CSOs beyond the Spring and Annual Meetings through meetings and consultations at headquarters on thematic issues (financing for development, quota reforms, inequality, gender, debt), frequent meetings with local CSOs during staff missions (Ghana, Tunisia, Ukraine), regional events (conferences in Mozambique and India), and country visits by IMF management.

The IMF continued to step up its engagement with youth—the next generation of policymakers and world leaders—through the Annual Meetings, introductory seminars for students on the IMF, university visits by IMF management, and youth events with senior staff. This year, for example, the Managing Director met with 200 students, young entrepreneurs, and youth leaders at Zayed University in Dubai, United Arab Emirates, to discuss the economic challenges facing today’s youth and, more specifically, the issues faced by youth in the Middle East.

Given the significant impact of the global financial crisis on jobs, the IMF continued to regularly engage with labor organizations on a number of levels. At headquarters, the IMF hosted the biennial, high-level meeting with the International Trade Unions Confederation, and held formal and informal discussions with labor organizations on jobs and growth, inequality, and collective bargaining.

Regional Office for Asia and the Pacific

As the IMF’s window to Asia and the Pacific, a region whose importance in the global economy continues to grow, the Regional Office for Asia and the Pacific (OAP) monitors economic and financial developments to help bring a more regionally focused perspective to IMF surveillance. It seeks to enhance understanding of the IMF and its policies in the region and to keep the IMF informed on regional perspectives on key issues. In this capacity, OAP is engaged in bilateral surveillance—currently on Japan, Nepal, and Thailand—and has stepped up its participation in regional surveillance. OAP staff actively participate in forums in Asia, including the Association of Southeast Asian Nations plus China, Japan, and Korea (ASEAN+3), Asia-Pacific Economic Cooperation (APEC), and Executives’ Meeting of East Asia Pacific Central Banks (EMEAP).

OAP contributes to capacity development in the region through the Japan-IMF Scholarship Program for Asia, the Japan-IMF Macroeconomic Seminar for Asia, and other seminars on macroeconomic and financial issues. Highlights during the year included an October 2015 seminar on financial sector stability organized jointly with the State Bank of Vietnam and the IMF’s Monetary and Capital Markets Department and a January 2016 seminar on integrated macroeconomic statistics and the balance sheet approach organized jointly with the National Bank of Cambodia and the IMF’s Statistics Department.

The office also conducts outreach and recruiting activities in both Japan and the rest of the region and engages in dialogue with Asian policymakers by organizing conferences and events on current policy issues central to the IMF’s work. A high-level conference co-organized with the Bangkok Stock Exchange in November 2015 focused on developing capital markets in the Mekong Region, and a conference jointly organized in Tokyo with Hitotsubashi University in March 2016 discussed progress and future challenges in economic integration in Asia, including in the areas of trade, financial markets, and labor markets.

Regional Office in Paris and Brussels

The IMF Europe Office, located in Paris and Brussels, serves as liaison to European Union (EU) institutions and member states, as well as international organizations and civil society in Europe. The office engages with institutions such as the European Commission, the European Central Bank, the European Stability Mechanism, and the European Parliament, as well as the Economic and Financial Committee and the Eurogroup Working Group, on euro area and EU policies and EU-IMF country programs. It represents the IMF at the Organisation for Economic Co-operation and Development.

The office also supports the IMF’s operations in Europe, including economic surveillance, IMF-supported programs, and technical assistance, and helps to coordinate communication and outreach activities across the region. More broadly, it fosters the dialogue on global economic issues with EU institutions, international organizations, governments, and civil society in Europe, and meets frequently with representatives from industry associations, trade unions, think tanks, financial markets, and the media.

The office has organized several joint workshops and events, including a workshop with the Centre for European Policy Studies on the effectiveness of structural reforms and a conference with the Fund’s Fiscal Affairs Department on fiscal governance. The office convenes high-level policy lunches twice a year in Paris, Brussels, London, and Berlin to discuss the Fund’s views on key challenges facing the European economy. Staff members had speaking roles at international conferences in Belgium, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Spain, and the United Kingdom.

As part of the office’s role in supporting capacity development and outreach, it co-sponsored a workshop at the Joint Vienna Institute (JVI) for parliamentarians from several EU countries and staff spoke at various other JVI events. The office’s outreach activities include an external office newsletter that provides regular updates on IMF events and publications to key European stakeholders and an active Twitter feed. Finally, the office supports IMF recruiting efforts by interviewing candidates at universities in several European countries.

Outreach by Resident Representatives

The IMF has Resident Representatives in 85 countries across the globe who conduct a variety of outreach activities designed to improve understanding of the IMF’s work and macroeconomic issues, often in collaboration with local universities, governments, and nongovernmental organizations.

In Jamaica, for example, to help maintain and build support for the country’s comprehensive, IMF-supported economic reform program, Resident Representative Bert van Selm conducted extensive outreach during the year, giving several radio and TV interviews and public presentations, contributing newspaper op-eds, and organizing a quarterly outreach seminar in collaboration with the University of the West Indies, with participation of key opinion leaders from the media, civil society, academia, and the private sector.

In Zimbabwe, the IMF Resident Representative, Christian Beddies, joined participants from embassies, international organizations, and nongovernmental organizations in September 2015 for the inauguration of The Space, a platform through which about 2,000 young Zimbabweans discussed the nation’s current and future challenges and devised strategies for inclusive growth. Subsequently, the IMF office contributed to a series of free lectures on basic economics and development economics, and plans to participate in a program organized by The Space that includes panel discussions, economic lectures, and possible short internship programs.

Box 3.4: Reaching Out to Trade Unions in Guinea

Following the February 2016 general strike, IMF Resident Representative in Guinea Jose Sulemane met with civil society organizations and unions that called for the strike to discuss their demands for fuel price cuts. He presented Guinea’s fuel price structure, shared information on pump prices in neighboring countries, and explained the economic implications of a cut in pump prices.

In April, he organized a half-day workshop with CSOs and unions to explain the role of the IMF in Guinea. He described the broad lines of the country’s 2016 budget and the importance of the government’s revenue mobilization efforts, encouraging attendees to tap information available in his office to improve their understanding of economic issues and enhance their dialogue with the government.

Reactions to these initiatives were very positive: CSO and union leaders welcomed the IMF’s 2016 Article IV consultation mission and invited Sulemane to their retreat scheduled in mid-May 2016 to train them on economic policies.

During the year, the Fund upgraded all 123 Resident Representative websites to improve design and consistency as part of an effort to enhance local and regional communication.

In Armenia, Resident Representative Teresa Daban Sanchez partnered with the Leadership School Foundation, a leading academic organization, to provide lectures and workshops on such issues as the global economic outlook, perspectives on the Armenian economy, women’s labor market participation and gender issues, and collective action. In June 2015, for example, Masood Ahmed, IMF Director of the Middle East and Central Asia Department, gave a lecture at the school titled “Policy Challenges and Opportunities for Armenia in the Context of Regional and Global Economic Shocks” that was very well attended and generated a lively exchange of views with students.

As part of IMF outreach in Georgia, Resident Representative Azim Sadikov has been making a concerted effort to engage the country’s future leaders. The activities included presentations and roundtable discussions with students from Tbilisi State University, St. Andrew University, and the School of Political Sciences. Topics covered ranged from the economic challenges facing Georgia and the region to the forces shaping the global economy and the Fund’s evolving role.

In Malaysia, the IMF held a two-day workshop in Kuala Lumpur on the ongoing process of economic and financial integration in the Association of Southeast Asian Nations (ASEAN) in November 2015. Hosted by the Malaysian Ministry of Finance and cosponsored by the Malaysian Institute for Economic Research, the seminar drew 25 participants from think tanks and academia from nine ASEAN countries, as well as representatives from the ASEAN Secretariat, World Bank, and Asian Development Bank. Held at a critical juncture, with the launch of the ASEAN Economic Community during the ASEAN Leaders’ Summit, the event helped strengthen the Fund’s outreach to an important group of influencers in ASEAN, a large, dynamic, and strategically important region with 630 million people and a GDP of $2.6 trillion.

Kosovo has a Stand-By Arrangement with the IMF that is supporting the authorities in their efforts to preserve macrofinancial stability and improve Kosovo’s growth prospects. The Fund’s Resident Representative based in Pristina, Ruud Vermeulen, gives guest lectures at universities, speaks at a range of events, and engages with the local media through television and radio interviews, press conferences, and newspaper and magazine articles. These activities reach a wide audience and help raise public awareness about the need for key reforms. Positive feedback suggests that this outreach also helps build a better understanding of what the Fund does in general and what it is doing in Kosovo in particular.


Quotas and Governance

IMF Quota Reform

As described in the “Spotlight” on quota reform, in January 2016, wide-ranging IMF quota and governance reforms went into effect—a crucial step that strengthened the Fund’s role in supporting global financial stability. The reforms significantly increased the IMF’s core resources, enabling the institution to respond to crises more effectively, and also improved the IMF’s governance by better reflecting the increasing role of dynamic emerging and developing countries in the global economy.

Enactment of the reforms, originally approved by the Board of Governors in 2010, has enabled a more representative, modern IMF that is better equipped to meet the needs of its member countries in the 21st century. The reforms built on an earlier set of institutional changes passed by the Board of Governors in 2008. As of April 30, 2016, 177 members, accounting for 99.3 percent of total quotas, had consented to quota increases and 167 members had completed the payments of their quota increases. With these payments, total quotas in the IMF reached SDR 471.6 billion.

Nauru Becomes 189th IMF Member Country

The Republic of Nauru became the 189th member country of the IMF in April 2016, at a ceremony held in Washington, D.C.

Nauru will be the second-smallest member of the Fund, after Tuvalu, as measured by its quota subscription of SDR 2 million ($2.81 million). This will be the case after it pays for its quota increase under the Fourteenth General Review, which will increase its quota to SDR 2.8 million. The country, located in the Pacific Ocean, has a population of about 10,500 and a land area of about eight square miles. Nauru is also the smallest sovereign state in the world after Vatican City in terms of both population and area.

Nauru’s economy relies on phosphate mining, the Australian Regional Processing Center (RPC) for asylum seekers, and revenue from fishing license fees. In recent years, growth has been strong, mainly driven by RPC operations and phosphate exports, although it moderated in 2015.

Membership allows the IMF and other development partners— the country has also joined the World Bank—to help the authorities implement economic reforms and tackle development challenges. The country will participate in an annual IMF review of its economy and benefit from cross-country analysis and access to IMF lending. Nauru receives technical assistance through the IMF’s Pacific Financial Technical Assistance Center, based in Fiji.



Transparency in economic policy and the availability of reliable data on economic and financial developments are critical for sound decision-making and for the smooth functioning of an economy. The IMF has policies in place to ensure that meaningful and accurate information—about both its own role in the global economy and the economies of its member countries—is provided in real time to its global audiences.

Transparency helps economies function better and makes them less vulnerable to crises. Greater openness on the part of member countries encourages more widespread public discussion and examination of policies, enhances the accountability of policymakers and the credibility of policies, and facilitates efficient and orderly functioning of financial markets. Greater openness and clarity by the IMF about its own policies and the advice it provides to its member countries contributes to a better understanding of the IMF’s own role and operations, building traction for the Fund’s policy advice and making it easier to hold the institution accountable. Outside scrutiny should also support the quality of surveillance and IMF-supported programs.

The IMF’s approach to transparency is based on the overarching principle that it will strive to disclose documents and information on a timely basis unless strong and specific reasons argue against such disclosure. The principle respects the voluntary nature of publication of documents that pertain to member countries.

Publication of country documents prepared for consideration by the IMF Executive Board (“Board documents”) is typically “voluntary but presumed,” meaning that, while voluntary, the publication of these documents is encouraged. A member’s consent to publication of a Board document is typically obtained on a non-objection basis. The publication of policy papers is presumed but is subject to Board approval, while the publication of multicountry documents requires consent from either the Board or the involved members depending on the type of document involved.

The IMF’s efforts to improve the understanding of its operations and engage more broadly with the public has been pursued along four broad lines: (1) transparency of surveillance and IMF-supported programs, (2) transparency of its financial operations, (3) external and internal review and evaluation, and (4) external communications. The Fund’s Transparency Policy is reviewed every five years: the last review was in 2013. See also the sections on “Accountability” and “Outreach and Engagement with External Stakeholders” above.