Following the publication of the Fund’s response to the Independent Evaluation Office (IEO) evaluation report (see Update 85) which was endorsed by the executive board in April, the IMF has published its three-part implementation plan on international reserves including a successor paper updating the Fund’s 2011 work on reserve adequacy. The implementation plan includes updating its guidance where necessary, preparation of a staff guidance note for assessing adequacy; and additional engagement on reserve issues with members, the private sector and academics. The paper outlines further work on two areas: ensuring robust coverage of reserve adequacy in Fund surveillance and developing advice on adequacy to reflect certain characteristics of economic structures; and improving the communication and external understanding of the Fund’s advice on issues related to reserve adequacy. This follows from the December IEO evaluation which criticised the IMF’s reserve policy advice and also revealed a widespread belief that the IMF’s reserves advice was “biased” and “political” (see Update 84).
The Fund’s implementation plan sets out initiatives to address unresolved IEO concerns, and also identifies where the Fund believes it has already remedies them adequately. The Fund set out initiatives in four areas. It produced revised guidance on bilateral surveillance in October which focussed on “balance of payments stability as an operational priority for surveillance”, and on managing global external imbalances via its 2012 External Sector Report. The Fund believes its institutional view on the liberalisation and management of capital flows also reflects the IEO’s recommendation to better integrate its policy analysis and advice. The Fund expects to show progress on spillover reports and other multilateral surveillance products in its 2013 spillovers report.