Statement By The Managing Director On The Management Implementation Plan For The Ieo Report On The Fund S Performance In The Run Up To The Crisis

The Management Implementation Plan puts forward a range of measures crucial to strengthening surveillance, carefully drawing on the IEO’s report and on the Triennial Surveillance Review (TSR). Yet stronger surveillance cannot be cast simply in terms of technical processes, such as those for better data, risk assessments, macro-financial integration, or messaging. Deeper and more difficult questions of institutional culture, of how we conduct our daily work, are also at play, and these too need to be answered. I will focus on two aspects of the task at hand: (1) breaking down silos; and (2) promoting diverse views/candor. I would like to share with you today some initiatives that the management team has sought to implement over the past nine months, to go over the initial results, and to propose a way forward with what remains to be done

The IMF carries out its mandate to foster macroeconomic stability and thereby facilitate prosperity by promoting the adoption of sound policies and international cooperation. Ultimately, the means to achieve these goals is to have Fund policy advice translated into concrete action. Key to achieving such traction is the relationship between Fund staff and member country authorities, together with the quality of the advice and members’ confidence in it. That is, the Fund needs to be seen as a trusted advisor. This evaluation examines in what circumstances the Fund is viewed as a trusted advisor to its member countries. It uses evidence gathered since 2005, but emphasizes the period since the onset of the global crisis in 2007–08. Because the concept of trusted advisor is “in the eyes of the beholder,” the evaluation derives the main attributes from country authorities themselves.

"This management implementation plan (MIP) proposes actions to advance the Board-endorsed recommendations of the IEO evaluation “The IMF and Fragile States.” The actions outlined below would have resource implications. While some can be covered by reallocating resources or are already in the Work Program, others may require temporary funding; a review of staffing allocations to countries in fragile and conflict situations (FCS) might call for new permanent resources. The actions are broad in scope and self-reinforcing in effect if adopted as a package. They include: - Message of high-level commitment: Reflecting the actions of this MIP, a Management statement underscoring a strengthened institutional commitment to support FCS accompanies the MIP for Executive Board and IMFC endorsement. - An effective institutional mechanism: A high-level interdepartmental FCS Committee that reports to and seeks guidance in a formal meeting with management twice a year, will be established. The Committee will be tasked to analyze internal and external coordination issues in FCS and propose new ways tostrengthen engagement. An interdepartmental Technical Taskforce will support the Committee and report on progress in implementing this MIP, including through a Board paper on Review of FCS Engagement at end-2020. - Country engagement strategies: FCS teams will develop country engagement strategies that, drawing on relevant external expertise, will explicitly allow for thesocial and political context and the factors underpinning fragility; and lay the basis for full integration of capacity development (CD) with surveillance and lending. - Providing more sustained financial support: Staff is reviewing the lending toolkit for low-income countries to provide more tailored and flexible support, including for FCS, while ensuring uniformity of treatment. Staff will report on efforts to support FCS with protracted arrears to the Fund in the upcoming reviews of overdue financial obligations. - Practical steps to increase the impact of its CD support: Measures already in train will be complemented by the forthcoming Capacity Development (CD) Strategy Review’s assessment of initiatives to better integrate CD and Surveillance, including in FCS. Staff will also review the experience with provision of statistical and financial CD in FCS. And consideration will be given to establishing a FCS multi-donor trust fund or another suitable financing vehicle to address unmet needs for long-term experts. - Human Resources (HR) issues: The forthcoming phase of the HR Strategy will look into strategic workforce and career planning, including recruitment, and will consider actions to ensure that the Fund has appropriate staff expertise and experience to work effectively in fragile states. This will include the introduction of a “career” playbook that provides incentives for staff to be more responsive to the needs of the Fund in FCS. Adequacy of staffing allocations to FCS missions will be reviewed to ensure evenhanded treatment of the membership. Staff training on FCS will also be stepped up."

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

The Management Implementation Plan (MIP) proposes actions in response to the Board-endorsed recommendations provided by the Independent Evaluation Office (IEO)’s report on the IMF’s early response to the COVID pandemic. The two IEO recommendations aim for the Fund to (i) Develop special policies and procedures that could be quickly activated to address particular needs and circumstances of global crises and (ii) Take steps to reinforce the Fund’s institutional preparedness to deal with global crises and other large shocks. The MIP highlights how existing workstreams will be used to address part of the recommendations, specifically: (i) Drawing the lessons from the use of precautionary lending instruments during the pandemic and using them in the ongoing review of these facilities; (ii) Drawing the lessons from the implementation of governance safeguards in the context of covid-related emergency financing and respond to the actions identified in the final stocktaking; and (iii) Reviewing financial implications of covid-related lending on Poverty Reduction and Growth Trust (PRGT) resources in the regular updates on PRGT financing and resources. The MIP also defines new actions that aim to enhance the Fund’s preparedness to face future crises and are slated to be implemented by the end of FY25. These consists in: (i) Developing a crisis playbook, which will further codify Management’s commitment to an early participatory consultation with the Board in the event of a global crisis and inform the engagement with the Board on the broad strategy and institutional priorities for responding to the crisis; (ii) Enhancing the process of staff reallocation during a crisis through expanding the staff Talent Inventory to include skills and experience relevant in crises and examining HRD’s coordinating role in staff reallocation, as well as reviewing how recruitment processes could be made more agile in a crisis; (iii) Developing a strategy for surge capacity of the Crisis Management Team; (iv) Reviewing the experience of pandemic-related lending to low-income countries to consider the adequacy of access norms and the possible need for enhancements of the low-income lending toolkit against the long-term financial sustainability of the PRGT; and (v) Exploring ways to further strengthen the coordination with partners, especially the World Bank.

This paper presents a forward-looking management implementation plan (MIP) for the IEO evaluation. In addition to addressing the specific Board-endorsed IEO recommendations, the paper also tries to transcend a narrow interpretation by providing new implementation ideas where the Board saw merit in the IEO’s general, if not specific, approach. For example, while the Board did not agree with the specific recommendation to create a risk-assessment unit, this paper takes a broader view and presents proposals to address the general concern of a lack of risk-focus in IMF surveillance.

Periodic Monitoring Reports update the status on Management Implementation Plans (MIPs) in response to Executive Board-endorsed IEO recommendations. The last Periodic Monitoring Report (PMR) was discussed by the Board Evaluation Committee (EVC) and then agreed by the Board in August 2011. That report concluded that all key performance benchmarks related to the MIPs covered in that report had either been met or were on track for timely completion, that no new remedial actions were proposed, and that there were no outstanding performance benchmarks to be reviewed in the next PMR. In their assessment to the Executive Board, the EVC did, however, note that further work was needed on three other issues—staff mobility, enhanced coverage of previous implementation plans, and the process for following up on IEO recommendations. This fifth report therefore updates work on these three issues, including a consolidated picture of recent progress on all Board-endorsed recommendations made since the first PMR in 2007. This PMR also presents progress on the Implementation Plan in response to Board-endorsed recommendations arising from the IEO Evaluation of IMF Interactions with Member Countries (hereafter, Interactions Evaluation).

Monitoring Report (PMR) on the Status of Management Implementation Plans (MIPs) in Response to Board-Endorsed IEO Recommendations assesses the progress made over the last year on actions contained in the four MIPs arising from recent IEO evaluations, and another four for which individual management actions were classified as still “in progress” in the Seventh PMR. Overall, 34 of the 77 actions included in the eight MIPs covered in this PMR remain open. Progress on the actions envisaged in the management implementation plans has been somewhat uneven, with more progress being made on the most recent MIPs. Of the 19 actions that have been implemented over the past year, only three relate to the older management actions. Many of the older actions are more broadly worded, and in many instances have no clear timetable. The actions that are progressing more slowly also tend to involve fundamental changes to institutional culture and practices, and therefore require a continuous, long-term effort. In spite of the slower progress on the older actions, significant advances have been made in several key areas. These include: Fund-wide risk analysis and management; the mainstreaming of macro financial surveillance; training on financial sector topics and macro forecasting; acknowledgement, discussion, and dissemination of information on IMF forecasts; the shift towards increasing reliance on quota resources, relative to borrowing; and the approval of the new Statement of Principles and Best Practices in Self-Evaluation. In addition, the 2015 Staff Survey showed significant improvements in several indicators related to the Fund’s internal culture and institutional values. Overall, management and staff appear committed to ensuring that open actions remain on track. Progress on all open actions will be assessed in future PMRs.