[stop-imf] IMF responds to gentle internal conditionality critique

[robert weissman]

http://www.imf.org/external/np/sec/pn/2008/pn0852.htm

IMF Executive Board Discusses Implementation Plan Following IEO
Evaluation of Structural Conditionality in IMF-Supported Programs
Public Information Notice (PIN) No. 08/52
May 14, 2008



On May 2, 2008, the Executive Board of the International Monetary Fund
(IMF) discussed the implementation plan in response to board-endorsed
recommendations arising from the Independent Evaluation Office (IEO)
evaluation of structural conditionality in IMF-supported programs.

Background

On December 12, 2007, the Executive Board discussed the Independent
Evaluation Office's Evaluation of Structural Conditionality in
IMF-Supported Programs. In that report, the IEO put forward a set of
recommendations aimed at improving the IMF's work in setting structural
conditionality in IMF-supported programs.

Based on those IEO recommendations that were endorsed by the Board,
staff and management have prepared an implementation plan. The
implementation plan is part of a new framework established following an
External Evaluation of the IEO that seeks to ensure a more systematic
follow-up and monitoring of the implementation of Board-endorsed IEO
recommendations and envisages: i) the presentation to the Board of a
forward-looking implementation plan for Board-endorsed recommendations
soon after Board discussion of each IEO report and ii) periodic
monitoring of the state of implementation of actions set out in such plans.

Executive Board Assessment

Executive Directors welcomed the opportunity to provide feedback on
management's implementation plan for the Board-endorsed recommendations
arising from the IEO report on the Evaluation of Structural
Conditionality in IMF-Supported Programs. Directors generally considered
that the plan lays out an appropriate strategy, and that its specificity
and compactness will facilitate the monitoring of its implementation.
Directors welcomed the three elements of this implementation plan that
are aimed at ensuring parsimony and criticality in setting structural
conditionality=97namely, (i) the mechanisms being proposed to strengthen
program design; (ii) the proposed description of the rationale for
conditionality in program documents; and (iii) the dissemination of
information with a view to strengthening accountability in the
application of conditionality. They saw better Board scrutiny of
programs also as important.

Program Design

The 2002 Conditionality Guidelines=97which remain in effect=97call for
program-related conditionality to be established on all measures that
are critical for achieving the program goals, for monitoring the
implementation of reform measures, and for implementing specific
provisions under the Articles of Agreement or policies adopted under
them. Directors stressed that structural conditionality should focus on
core Fund competencies, and that conditionality in non-core areas
requires strong justification, and the Fund should draw, to the fullest
extent possible, on the advice of other multilateral institutions,
particularly the World Bank. Within this framework, Directors reiterated
that strengthened efforts are needed to achieve parsimony and a focus on
criticality in setting structural conditionality, including structural
benchmarks, and the proposed implementation plan will further cement the
move to parsimony. This approach would be consistent with the current
refocusing of the Fund on the basis of its comparative advantage.

Against this background, most Directors welcomed the proposal in Table 1
of the implementation plan to discuss the goals, strategies, and program
conditionality at the pre-brief stage, and to elaborate in the briefing
paper the rationale for prospective conditionality, with a view to
strengthening the design of Fund-supported programs.

Program Documentation

Directors agreed that all program Board documents should contain a full
and clear justification that the envisaged structural conditionality is
critical for achieving program goals (or, as the case may be, for
program monitoring or implementing specific provisions of the Articles
or policies adopted thereunder). They accordingly supported the proposal
in Table 1 that Board documents should provide a clear description of
the links between structural conditionality and the underlying program
goals and supporting reform strategies. Directors also agreed that any
conditions introduced during subsequent reviews will be anchored on the
rationale provided in the original program documents, and noted that
structural conditionality added during program reviews should be
adequately justified. Directors welcomed the staff work on best practice
examples for text boxes that could serve to highlight the criticality of
proposed conditionality. Some Directors also called for stocktaking at
the time of the final program review, to compare stated program goals
with their achievements.

Dissemination of Information

Directors welcomed the planned enhancement of the Monitoring of Fund
Arrangements (MONA) database in order to improve the monitoring of
program documentation, particularly with regard to the links between
goals and strategies. They also welcomed the initiative to make the MONA
database available to the general public for documents in the public
domain. Directors looked forward to receiving annually, for information,
summary statistics on conditionality and their documentation. They noted
that progress on the implementation plan would be assessed in the
context of the periodic monitoring reports on Board-endorsed IEO
recommendations and future conditionality reviews. Going beyond these
budgeted plans, many Directors considered that it would be useful if the
annual report to be provided by the staff could provide a basis for a
Board discussion, with some Directors suggesting an initial discussion
in the Evaluation Committee. The question of the frequency of Board
discussions will require careful consideration in the context of the
Fund's constrained budgetary environment.

Operational Guidance Note

Based on the proposals in Table 1, Directors welcomed staff plans to
review and propose changes to the 2006 Operational Guidance Note on
Structural Conditionality (OGN) so as to highlight the objectives of
parsimony and criticality as well as the need to enhance program
documentation. Directors noted that the revised OGN should also include
criteria for dealing with donor-driven conditionality and conditionality
requested by the authorities, as well as guidance on how to address
critical areas of reform in which the Fund may not have the expertise
and reliance on other multilateral institutions may not be sufficient.
Directors stressed that any changes to the OGN should be made in line
with the 2002 Conditionality Guidelines and in accordance with Executive
Directors' views expressed during the discussion of the IEO's evaluation
of structural conditionality. They looked forward to being informed
about these revisions.