The Unique Nature of the Responsibilities of the IMF

Areas of Risk for the Code of Conduct

Since it sets constraints on behavior, any code of conduct is typically subject to pressure and confronts a variety of risks. The pressure reflects a natural tendency to avoid the constraints; the risks develop out of the incidence or frequency of successful avoidance. There is, then, a relationship between those pressures and risks, on one side, and the balance of rules and discretion within the code of conduct, on the other. While rules may give rise to pressure, they also identify deviations clearly and, to that extent, help contain the risk of their occurrence. In contrast, discretion may contribute to lessening pressure, but by rendering deviations less "deviant" tend to increase their incidence. Pressures and risks have arisen in areas concerned with the principles of operation developed in the IMF to foster the observance of the code of conduct itself. The reason is that such principles must contain all the elements required for balance between rules and discretion, and it is precisely such balance that is always subject to tension.


A key incentive for sustained cohesion in the membership is provided by the fundamental principle of universality. While membership in the IMF is not an automatic right, it has been open to all countries willing and able to subscribe to the code of conduct. The acknowledgment of diversity of circumstances has eased the process of accession for countries of different characteristics and in different circumstances. The spirit of the institution has been to avoid the emergence of country groupings and to view all countries only from the common perspective of members. This does not mean that pressures do not arise to distinguish groups of members on the basis of different criteria. Generally, the IMF has resisted those pressures in its operations, although for analytical purposes it may separate countries into groups.46 This is one of the tenets of the institution against which pressure will continue to persist. Yet, cohesiveness will require resistance to such pressure by means of clear focus on the common interest. Otherwise, the framework will become set for members to concentrate instead on attaining the best individual country bargain, with the local rather than the universal interest becoming the common denominator of country behavior.


Uniformity of treatment is possibly the institutional principle most subject to continuous strain. To an important extent, this is inevitable, because uniform treatment of different members or of members in non-uniform circumstances calls for the exercise of a substantial degree of judgment. Balanced judgment is required in ascertaining the different weights to be given to the members themselves and to the differences in their circumstances, in order to ensure effectiveness and relevance to the principle of uniformity. In the area of surveillance, uniformity of treatment requires taking account of a member's capacity to influence the system as a whole. In the area of conditionality, it requires that the adjustment effort sought from members be broadly commensurate with their adjustment needs.

In a properly functioning system, the exercise of conditionality tends to be more an exception than a norm. If surveillance, in general, is effective in promoting members' observance of their international obligations, the emergence of external imbalances calling for adjustment should be relatively limited in frequency and duration. In this context, it is worth emphasizing that surveillance, when effective, not only promotes order in each national economy but also in the system as a whole. These considerations suggest that too much concentration on conditionality may indicate ineffectual surveillance. Balance between surveillance and conditionality ensures symmetry in the treatment of members, regardless of whether or not they are using IMF resources. Similarly, perceptions of asymmetry hint at an imbalance in the effectiveness of the two functions.


The risks in the area of neutrality--or in the containment of IMF activities within the legitimate international domain--can be related to the characteristics and scope of the mandate of the institution. The bias toward rules or toward discretion in the code of conduct also plays an important role. Typically, rules must meet certain standards of transparency and clarity that make their application to policy aims and instruments relatively precise. This precision greatly eases the observance of neutrality in the broad exercise of IMF surveillance. In contrast, regimes with a mainly discretionary nature are less likely to exhibit transparency and precision. As a result, the signals that they send tend to be relatively more ambiguous--a characteristic that complicates the observance of neutrality.

In fact, clarity of mandate tends to require a fairly unequivocal definition of its scope. This explains the focus in the IMF's code of conduct on the balance of payments and, more generally, on external variables. As the code of conduct moves from reliance on rules toward discretion, however, the boundaries of the scope of the mandate become less clear. In the Bretton Woods order, the measurement of a balance of payments position was dependent on the par value commitment, which gave an important reference point for its assessment. Since that time, the commitment has been replaced by concepts such as external viability or sustainability, which encompass other aims (growth, price stability) and broaden the range of policy instruments that need monitoring. In this setting, apart from the trade-off that exists between the depth and the breadth of a mandate, determining where to draw a line between the national and international domains increases in complexity and widens the range for emerging differences in judgment.

46 There have been exceptions to this general rule, e.g., the lapsed Trust Fund, the structural adjustment facility (SAF) and the enhanced structural adjustment facility (ESAF), which relate to a specific group of countries and not to the membership at large.