Chapter 1 Overview of Developments in Financial Year 2008
- International Monetary Fund. Independent Evaluation Office
- Published Date:
- October 2008
The financial year 2008 saw the production of evaluation reports on “Structural Conditionality in IMF-Supported Programs” and “Governance of the IMF.” The Structural Conditionality report was discussed by the Board in FY2008, the Governance report in May 2008. FY2008 also saw Executive Board discussions related to the reports on “The IMF and Aid to Sub-Saharan Africa” and “IMF Exchange Rate Policy Advice.”
The IEO has long been mindful of the need to ensure effective follow-up on specific IEO recommendations. This issue was raised in the report of the External Evaluation of the IEO,1 where the panel noted the problem that “there is no formal mechanism for the Board to follow-up specific recommendations made by the IEO.”
In previous IEO Annual Reports a summary has been provided of all IEO recommendations, the Executive Board’s response, and a factual indication (provided by IMF staff upon request of the IEO) of any additional steps taken since the Board discussion of the evaluation report. The External Evaluation noted however that “since the annual report is not discussed formally by the Board, the IEO’s findings regarding implementation—or not—are likely to pass unnoticed by many Directors.”
This process has taken a significant step forward in FY2008, with the realization of a new framework for following up on, and monitoring, the implementation of IEO recommendations approved by the IMF Executive Board. Following agreement in the Executive Board in January 2007 to a more systematic approach and stronger monitoring of the implementation of Board-endorsed IEO recommendations, FY2008 saw the production of the first Management Implementation Plans (MIP) by IMF staff in response to Board-endorsed recommendations arising from IEO reports, and the first Periodic Monitoring Report (PMR) by IMF staff on the state of implementation of previous recommendations. The IEO welcomes this new framework as an important step forward in maintaining an effective institutional accountability framework, as well as promoting a strong learning culture at the IMF. This new framework improves on the previous process by ensuring that the Executive Board now has the ownership and the accountability for the monitoring of those recommendations it endorses, as was recommended by the External Evaluation.
This is however an evolving process, and there is always room for improvement. At the Executive Board discussion of the first PMR in January 2008, it was highlighted that the IEO has the option to include or refer to the staff’s monitoring assessments in its Annual Report, with clear acknowledgment of any such staff work. The IEO may therefore come back to this issue in future Annual Reports.
The Executive Board discussion of the first PMR took place in January 2008.2 Since this was the first PMR it reviewed the implementation of all Board-endorsed IEO recommendations made from the first ten IEO evaluations, and provided a list of those recommendations that IMF staff viewed as outstanding, together with remedial measures.3 Directors agreed in that discussion that the IEO’s recommendations have had a substantial impact on how the Fund operates, and welcomed that the lessons have generally been absorbed and the recommendations substantially implemented.
One important issue highlighted in the January 2008 Executive Board discussion of the first PMR was that the Board called on the IMF staff to produce well-defined and measurable criteria to gauge better the progress in implementing IEO recommendations. The Board also considered that monitoring would benefit from greater specificity and clarity of the follow-up actions required—including in their formulation in Board discussions, their recording in Board summings up, and their articulation by Management in MIPs.
In FY2008 the Executive Board discussed the first MIPs. These were for “The IMF and Aid to Sub-Saharan Africa,” “IMF Exchange Rate Policy Advice,” and “Structural Conditionality in IMF-Supported Programs.” The last of these was prepared in April 2008 and discussed the following month. These reports and discussions are detailed in Chapter 2.
Budget and Staffing
In FY2008 the budget was spent nearly in full (Appendix 1), with the execution rate reaching 94 percent of the approved budget. The FY2009 budget for the IEO must be seen in the context of a significant downsizing of the IMF staff and the offices of the Executive Directors, where the budgetary envelope for financial years 2009–11 implies substantial real savings in administrative expenditures of more than 13½ percent over the medium term. The IEO budget approved for FY2009 stands at $4.8 million, a 2.8 percent nominal increase (a cut in real terms of about 1.2 percent). The IEO will phase in the loss of one full-time regular staff economist position during FY2009. This decrease means that by FY2010 the IEO will have a regular complement of 12 positions. On a full year basis, the total budget would decrease by 4.2 percent in real terms from FY2008.
The budgetary reductions since FY2006 will have a significant impact on IEO output going forward. Given the constrained budget environment, the IEO revised its work plan underlying the approved budget. The office will attempt, to the extent possible, to work on three evaluations at any point in time, and to complete about two evaluations per year. The number of projects actually completed will depend on their complexity and scope.
Discussions of the IEO’s human resource policies took place in FY2008, which followed up on recommendations made by the External Evaluation of the IEO. These discussions gave rise to some specific changes in IEO staffing policies. First, in September 2007, the Executive Board agreed to amend the terms of reference for the Director of the IEO, and the terms and conditions of appointment for noncontractual employees of the IEO. The more significant elements of the amendments have the effect of: (1) excluding administrative and staff assistants from the requirement that regular positions in the IEO can be limited to a maximum of six years, which is designed to ensure institutional continuity; and (2) removing the minimum initial appointment for noncontractual employees, aimed at relieving the constraints on the recruitment from both the outside and inside the IMF in specific circumstances.
Second, responding to the External Evaluation recommendation that outside IEO hires have a cooling-off period of at least one or two years before they can take a position with the IMF, discussions were held in the Evaluation Committee to decide on the best way to maintain the right incentives for external candidates to seek IEO employment, while being mindful of the need to maintain the actual and perceived independence of the IEO. Following these discussions, in May 2008 the Executive Board agreed that any IEO project leader hired in the future from outside the IMF staff (i.e., with no employment rights to join the IMF staff) would be expected to have a cooling-off period of 12 months before he or she could be employed as an IMF staff member. Since the IEO’s inception, no project leader has so far applied to join the IMF. IEO hires from outside the IMF have no automatic right of IMF staff employment, which means that this policy will have to be implemented by the IMF Management. Updated administrative documents pertaining to the governance of the IEO have been posted on the IEO’s website.
Outreach and Communication Activities
The IEO engages in external outreach activities to disseminate its evaluation findings to a wide audience. The IEO has continued to build on the revamped outreach and communication activities detailed in the 2007 Annual Report, which included a new website, active management of the e-mail subscriber list, and the publication of a biannual newsletter. The IEO has now experimented with publishing the biannual newsletter in eight different languages. Given its importance and relevance to the whole membership, the IEO report on “Governance of the IMF” has also been made available in eight languages.
Various outreach events are organized to discuss the work of the IEO, and they are detailed in Appendix 2.