Statement By The Managing Director On The Independent Evaluation Office Report On The Imf And Fragile States

I welcome the report of the Independent Evaluation Office (IEO) on the IMF and Fragile States. The report recognizes that the Fund has made important contributions in restoring macroeconomic stability, building core institutions, and catalyzing donor support across a diverse range of countries in fragile and conflict situations. The IEO’s analysis and findings provide a thorough stock-taking and resonate with staff. Accordingly, I broadly support the IEO’s recommendations to make the Fund’s engagement with countries in fragile and conflict situations more impactful.

The Managing Director welcomes the IEO's novel report, which identifies recurring issues from past evaluations and assesses progress in addressing them. The report's focus on organizational silos, attention to risks and uncertainty, country and institutional context, evenhandedness, and Executive Board guidance and oversight is appropriate given their relevance and importance for the effectiveness and credibility of IMF operations.

The Independent Evaluation Office (IEO) has produced a detailed report that provides valuable insights on how the IMF responded to the global financial and economic crisis. The analysis in the report is broadly balanced, and Managing Director welcomes the IEO’s finding that the IMF played an important role in the global response to the crisis, and broadly supports the report’s recommendations

Over the past six months, a key theme has been ensuring strong follow-up to IEO evaluations, a priority stressed by the recently competed External Evaluation of the IEO. Of particular note, the Managing Director has issued a statement highlighting actions planned to strengthen the IMF’s engagement with fragile states following our recent evaluation, and this statement is being presented to the IMFC for endorsement. In addition, the IEO has completed two updates of past evaluations, advanced work on two ongoing evaluations (on IMF financial surveillance and on IMF advice related to unconventional monetary policies), and is now considering its future work program in light of the External Evaluation.

I welcome the report of the Independent Evaluation Office (IEO) on the IMF and Social Protection. This is an area in which the Fund has broadened its engagement in recent years, responding to the needs of the membership. The conclusion that I draw from the report—that the Fund has made strong progress—is therefore an encouraging one, even as I recognize that there is scope to do better. The IEO’s analysis and findings have much in common with recent work by Fund staff, while providing a broader perspective that is very valuable. Overall, I find the IEO’s recommendations for refining the Fund’s approach to social protection to be well-judged, and the proposals have my support.

I would like to thank the Independent Evaluation Office (IEO) for preparing this informative update on the 2008 report on governance of the IMF. It is reassuring that the Update recognizes the significant progress made in improving efficiency, accountability, and voice of the Fund’s main governance bodies, and I concur that the remaining challenges need our continued attention and collective commitment.

This evaluation assesses the IMF’s work on countries in fragile and conflict-affected situations (FCS), addressing both (i) its engagement through surveillance, lending, and capacity development and (ii) the frameworks and procedures for its engagement. It finds that the IMF has provided unique and essential services to FCS to restore macroeconomic stability and rebuild core macroeconomic institutions as prerequisites for state building, playing a role in which no other institution can take its place. In this critical role, it is broadly acknowledged to have had a high impact. While the IMF has provided relatively little direct financing, it has catalyzed donor support through its assessment of a country’s economic policies and prospects. Notwithstanding this positive assessment, the IMF’s overall approach to its FCS work seems to have been conflicted. Not only has it failed consistently to make hard choices necessary to achieve full impact from its engagement in countries where success requires patient and dedicated attention over the long haul, but past efforts have not been sufficiently bold or adequately sustained, and the staff has tended to revert to treating fragile states using IMF-wide norms, rather than as countries needing special attention. The report proposes six recommendations to improve the effectiveness of the IMF’s FCS work: (i) to issue a statement of high-level commitment to FCS work for IMFC endorsement; (ii) to create an effective institutional mechanism with the mandate and authority to coordinate and champion such work; (iii) to develop comprehensive strategies for individual FCS; (iv) to adapt its lending toolkit to deliver more sustained financial support to FCS; (v) to take practical steps to increase the impact of its capacity development support to FCS; and (vi) to take steps to incentivize high-quality and experienced staff to work on individual FCS and find pragmatic ways of increasing field presence in high risk locations.

I welcome the report of the Independent Evaluation Office (IEO) on the IMF Advice on Unconventional Monetary Policies (UMP). The report recognizes that the Fund’s engagement on UMP since the Global Financial Crisis has been wide-ranging and, in many respects, impressive. The report offers valuable insights on how to further improve the timeliness and value added of the IMF’s advice on UMP. Accordingly, I broadly support the general thrust of IEO’s recommendations, which are helpful in informing Management’s consideration of how to push forward the Fund’s work in this area.