Source:
IFIs Latin American Monitor
Mon Jun 02 2008
The Independent Evaluation Office (IEO) of the International Monetary Fund (IMF), an internal assessment body, released a report on the governance of the financial institution, pointing some criticism in terms of representativeness and accountability. The IMF has failed to adequately adapt to the changing global reality and its leadership should be more responsible for the management of the institution, reported the IEO.
The IMF internal regulator also argued there is a perception that the institution acted slowly in identifying emerging issues and it failed to offer or agree on strategies to respond to these challenges.
The IEO asked for clarification of the roles of the Fund management, the oversight board, composed by member countries, and the International Monetary and Financial Committee (IMFC), composed by finance ministers and central bankers of the 185 member countries Fund. It also said that the managing director and his three subordinates should be monitored in a more strict way by the board and the IMFC.
At the same time, the IEO argued that the IMFC lacked a high level of surveilance on the institution, and proposed creating a new council to correct "the little control exercised over the direction and supervision of inefficient policies carried out." To carry out these reforms, "will require a significant degree of commitment of member countries at ministerial level" suggested the IEO in its statement.
The IEO said that changes in the governance of the institution must go beyond the recent reforms in the power of voting, which gave some emerging countries more influence to reflect the new economic powers such as China, India, Mexico, Brazil and South Korea. "Our assessment is that reforms have not kept pace with changes in the wider environment in which the Fund operates," said Tom Bernes, head of the IEO. "In our opinion, if this is left unanswered, could weaken the effectiveness with the passage of time," he said. The report of the IEO said that the issues of legitimacy and relevance have to do with broader issues of governance, as the process for electing the managing director.
The current and former managing directors have been European politicians whose political party lost the elections. According to a gentleman's agreement dating from the creation of IMF and World Bank in the Bretton Woods Conference (1944), the World Bank has always had American presidents while the IMF director is appointed by the Europeans. But in the meantime the two institutions' membership has grown to 185 countries and therefore the selection mechanisms such as weighted voting based on the actions that countries possess are being severely challenged.
In response to the IEO, Strauss-Kahn welcomed the report, saying it should be regarded as the beginning of the process of comprehensive reforms on the governance of the IMF.
Sources: Reuters, IMF
Related Information:
* Watchdog releases report on IMF corporate governance, IMF information
* IMF reforms itself, a little, by IFIs Latin American Monitor
* IMF challenged on accountability, governance, by Bretton Woods Project
|
