The IMF has drawn up a medium-term strategy to help address the latest challenges facing the institution’s 184 members, particularly as they grapple with the adjustments needed to take advantage of 21st-century globalization. The strategy covers the main fields of the IMF’s work, including surveillance of the global, regional, and national economies; crisis prevention and lending; technical assistance for member countries; and governance of the institution, including the voice and representation of members.
Upon joining the IMF in June 2004, Managing Director Rodrigo de Rato launched a strategic review to consider how to best ensure that the IMF allocate its resources effectively and stay ahead of emerging challenges. An initial report was published in September 2005, sparking a lively internal—and public— discussion about the appropriate role of the IMF A report on how the new approach would be implemented followed in April 2006 and was welcomed by the policy-setting International Monetary and Financial Committee (IMFC) of the Board of Governors. Key proposed changes in the work of the IMF include the following:
Economic surveillance: At the global level, stronger IMF surveillance means doing more to identify and promote effective responses to threats to economic stability, including expanding coverage of exchange rate assessments. At the country level, surveillance would also be bolstered through deeper analysis of financial systems; a stronger global perspective; more regional context; and more active outreach to build consensus, including at the regional level.
In an important evolution in its role, the IMF is also introducing a new multilateral consultation procedure. The consultations will provide a key vehicle for analysis and consensus building and should enable the IMF and its member countries to propose actions to address vulnerabilities that affect individual members and the global financial system. The first such consultation, on global imbalances, is under way with China, the Euro Area, Japan, Saudi Arabia, and the United States. The new consultations complement the IMF’s existing individual country consultations, enabling the IMF to take up issues simultaneously with systemically important members and, where relevant, with entities formed by groups of members, such as the European Union.
Emerging markets: The IMF plans to broaden its lending instruments to include a mechanism with high-access contingent liquidity support for countries with strong macroeconomic policies, sustainable debt, and transparent reporting, but still facing potential vulnerabilities. It also stands ready to support regional and other reserve-pooling arrangements, including by signaling sound policies.
Low-income countries: The IMF will help countries manage the macroeconomic challenges of meeting the Millennium Development Goals, especially those associated with stepped-up aid and managing debt in the wake of the recent round of debt relief. To do this, the IMF will focus more on the IMF’s core areas of expertise while remaining engaged in the development problems these countries confront. The IMF will look carefully at how it cooperates with other development partners, especially the World Bank, in assisting its low-income members.
Country representation and voice: Another priority is to adjust member countries’ quotas and representation in the governance of the institution to reflect changes in their weight and role in the global economy. This will boost members’ sense of ownership and participation in the IMF and safeguard its legitimacy as a cooperative institution in the eyes of all members.