April 10, 2007

 

FOR IMMEDIATE RELEASE

Contact: Jo Marie Griesgraber

(202) 277-9390

 

Report Makes Recommendations on IMF Accountability, IMF Listening

 

Washington DC – The New Rules for Global Finance Coalition today released a new report by a High-Level Panel on IMF Board Accountability.

 

The Panel asserts that “a well-functioning global financial system requires a global institution with the mandate of the IMF that is responsive to its membership, and accountable through its shareholders to the global community.”   However, the Panel expressed concern that the Fund’s current “weakness in accountability undermines the legitimacy and effectiveness of the Fund.”  

 

The Panel is comprised of a wide range of people knowledgeable about the IMF and committed to the principle of accountability.  It includes former executive directors and senior staff members, academics, and representatives from non-governmental organizations, all of whom acted in their personal capacity.  The Reports recommendations represent a consensus among the Panelists.  The names of the panelists follow.

 

The IMF Executive Directors invited the Panel to present its recommendations in an informal seminar prior to releasing the Report to the public.

 

Recommendations:

 

The Report reviewed the IMF’s Articles of Agreement (the equivalent of its constitution). When assessed against current governance practices and principles, important gaps were found in the Articles’ mechanisms of accountability. 

 

 To fill those gaps in the Articles, the Report recommends first:

·        That the selection of the Managing Director (MD) be open, and merit based.

 

The Articles give the power to select the Managing Director to the Executive Board.  However, in practice since the beginning of the Fund, the European governors of the Fund nominate a European acceptable to the US who has then been approved by the Board. (Similarly the US “names” the President of the World Bank.) The panel recommends that the Executive Board revisit its earlier proposals to open this process to qualified candidates from the entire membership and that candidates be selected on merit, with account taken of management experience.

 

Second, the Panel recommends:

·        That the Executive Board engage in periodic performance evaluations of the Managing Director whom they select and who serves at their discretion.

 

Significant progress on the implementation of the rest of Panel’s recommendations will require action on both of these fronts.

 

In order to fill other gaps in the Articles regarding accountability, the Panel also recommends:

 

·        That the Fund’s highest governing body, the Board of Governors, periodically evaluate the performance of the Executive Board. 

·        That the Executive Board engage in periodic self-evaluation of its performance, including with the assistance of independent external evaluators.

 

No such evaluations take place currently within the IMF.

 

The Report further reviewed contemporary principles of board accountability to stakeholders.  The High-Level Panel identified the 185 member countries of the Fund as the shareholders; the stakeholders are external individuals and groups such as national parliaments, the private sector, and civil society organizations.  The four core principles of contemporary accountability are:  evaluation, transparency, participation and the establishment of an external complaint mechanism.  Filling the gaps identified in the Articles of Agreement, as described above, fulfills the first criterion on evaluation.

 

The Panel reported firm consensus on the evaluation and the transparency recommendations.  Regarding transparency, the Panel called for:

 

·        timely release first of the minutes and eventually of transcripts of Executive Board meetings., and

·        the publication of staff performance guidelines. These are the documents whereby management instructs staff how to implement Executive Board decisions.

 

Regarding participation of stakeholders, generally the Panel recommends:

 

·        clear communication to relevant stakeholders, with adequate notice to the maximum extent feasible. 

 

The Panel was not of one mind regarding an External Complaint Mechanism for the Fund. Participants did agree that the Fund, like most other international financial institutions, has been embroiled in a number of controversial programs that have resulted in substantial complaints about its functioning and that may have undermined its effectiveness, credibility and even its perceived legitimacy.  There was consensus that given the centrality of the principle to Contemporary Principles of Board Accountability to Stakeholders, the Fund should engage in an experimental approach. Therefore, the Panel recommends that:

 

·        the Executive Board experiment with ways to implement this principle by holding independent and public sessions to receive input from all parties who wish to provide information on a particular difficult case from the recent past. 

 

The purpose of these public sessions should be not only to provide an independent report on the selected controversies, but also to give the IMF some experience in dealing with an external complaints mechanism.

 

New Rules for Global Finance is a coalition of development, human rights, labor, environmental, and religious organizations and scholars dedicated to the reform of the global financial architecture in order to stabilize the world economy, reduce poverty and inequality, uphold fundamental rights, and protect the environment.

 

Panel Members:

 

·        Marc-Antoine Autheman, Former IMF & World Bank Executive Director, France

·        Monica Blagescu, Accountability Programme Manager, One World Trust, UK/Romania

·        Jack Boorman, Former Counsellor and Director of the Policy Development and Review Department, International Monetary Fund, USA

·        Daniel Bradlow, Professor of Law & Director of International Legal Studies, Washington College of Law, American University, USA/South Africa

·        Coralie Bryant, Former Professor, School of Economic and Public Affairs, Columbia University, USA

·        Binny Buchori, Executive Director, Centre for Welfare Studies, Perkumpulan Prakarsa, Indonesia

·        Jo Marie Griesgraber, Executive Director, New Rules for Global Finance Coalition, USA

·        Daniel Kaeser, Former IMF Executive Director, Fellow of the Swiss Forum for International Affairs, Switzerland

·        Karin Lissakers, Advisor to the Chairman, Soros Fund Management, Former Executive Director of the IMF, USA

·        Bulus Paul Lolo, Minister, Permanent Mission of Nigeria to the United Nations, Nigeria

·        John Odling-Smee, Former Director of European II Department, IMF and Former Deputy Chief Economic Advisor, HM Treasury UK

·        Djoomart Otorbaev, Former Deputy Prime Minister, Kyrgyz Republic

·        Jeff Powell, Coordinator, Bretton Woods Project, UK/Canada

·        Ramesh Singh, Chief Executive, Action Aid International, South Africa/Nepal

·        Leo Van Houtven, President, Per Jacobsson Foundation, USA/Belgium

·        Patrick Watt, Policy Coordinator, ActionAid, UK

 

Observers:

·        Charles Abugre, Head, Global Advocacy & Policy Division, Christian Aid, UK/Ghana

·        Walden Bello, Director, Focus on the Global South, Thailand/Philippines

 

Rapporteur:  James V. Riker, University of Maryland, USA

 

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High-Level on Panel on IMF Board Accountability: Key Findings & Recommendations

 

More information on the High-Level Panel on IMF Board Accountability