The IMF’s upcoming surveillance review: In an ever more urgent global context, the Fund must learn lessons from its past failures to reform
•
Article summary
- The IMF’s review of surveillance takes place this year among deepening global polycrisis
- Civil society groups call for the IMF to conduct mandatory impact assessments of its own policies
- Civil society also demands mandatory country level consultation to make surveillance responsive to the needs of countries
The IMF’s Comprehensive Surveillance Review (CSR), which will be conducted this year, occurs in a global context in which it is vital to ensure that countries have policy sovereignty, including the ability to take action on issues such as climate change and rising inequality.
Surveillance is one of three main activities of the IMF – an annual macro-economic health check that is required for all IMF members (see Inside the Institutions, IMF Surveillance). Unions, academics, UN bodies and civil society organisations (CSOs) have long argued that the policies the IMF promotes through its surveillance undermine the capacity of states to fulfil their legally binding human rights obligations, exacerbate inequalities within and between countries, contribute to social and political instability, and disproportionately hurt the poor and marginalised (see Inside the Institutions, What are the main criticisms of the World Bank and the IMF?).
Interestingly the 2022 Guidance Note and the Independent Evaluation Office (IEO)’s evaluation of the Fund’s evolving mandate bear striking similarities with CSO recommendations and previous reviews in the areas of social and climate impacts. This suggests that what has been lacking so far is not consensus on required changes, but the political will to implement them.
Economic sustainability requires a systematic assessment of distributional impacts
The 2021 CSR highlighted the centrality of economic sustainability, which in the 2022 guidance note included: “distribution and inclusiveness, health and education, environment and climate, pandemic preparedness, and socio-political and geopolitical factors.” These are even more pressing as growing socio-economic disparities directly linked to the Fund’s pursuit of ever deepening austerity (See Observer Summer 2025), wreak havoc in the global polity and economy. In the Fund’s 2021 review, directors “supported incorporating the macro-financial and distributional impacts of policies, where macroeconomically relevant.”
Despite this, the Fund’s work on systematically addressing distributional impacts has been insufficient and when the social and gendered impacts of Fund policies are dealt with in surveillance reports (i.e. Article IVs), they are often disconnected from the policy advice as a whole. This raises questions such as whether the policy advice is unified and coherent, the degree to which it reflects local dynamics, whether there is an adequate discussion of the policy mix, including counter-cyclical approaches, and whether this approach is even-handed – ie: treats countries equally. Recognising this, the 2021 review calls for a “more unified policy advice that discusses the appropriate policy mix and associated trade-offs.”
Civil society has argued that this should be systematised through mandatory distributional impact assessments that are made public. Nabil Abdo of Oxfam International states, “inequality should not be merely a rhetorical concern for the Fund. Mandatory and systematic distributional impact assessments of its fiscal policy recommendations will give the authorities and the public a clear picture of the inequality impacts of the Fund’s policy advice. This would also enable the Fund staff, authorities and stakeholders to discuss different and alternative policy mixes that share the burden of reforms equitably, especially by the wealthiest in society.”
Ownership and Fund engagement must be improved with mandatory country level consultation
The Fund’s current ad hoc consultation processes impact negatively on the robustness of surveillance, contributing to lack of ownership, inflexibility and inadequate tailoring of policy approaches to the needs of countries. The 2021 review stated that there is “an increasing need to collaborate with a broader range of organisations, including specialized organisations and NGOs” and that such dialogue is necessary throughout the process of surveillance. These calls are again reflected in the 2022 Guidance Note which encourages staff to “routinely request meetings with political leaders (e.g., parliamentarians), trade unions, business representatives, and CSOs” particularly on issues which are macro critical, but where the Fund does not have expertise.
Yet again, there has been insufficient progress on improving consultation practices in the Fund. Abdo argues, “although the Fund has improved over the years in its engagement with CSOs, there is still a long way to go. The Fund should not only seriously take into consideration CSOs’ input, but also encourage dialogue between CSOs and the government, as well as have a clear and public calendar about mission visits to countries, more structured and deep discussions with CSOs, and most importantly make this engagement mandatory and systematic and not dependent on the goodwill of staff.”
Emerging issues versus ‘core’ mandate
There has been much attention paid to the Fund’s work in ‘emerging issues’ (i.e. gender, climate and inequality) particularly with US Treasury Secretary Scott Bessent’s call for the Fund to return to its ‘core’ mandate, i.e. macrostability issues. However, it is precisely the Fund’s ‘core’ activities that impact on countries’ abilities to uphold human rights, including economic, social and cultural rights, for the majority of their populations, and to enact policies that will make life on this planet liveable for future generations. The Fund’s work in these areas must integrate and ensure compliance with international agreements on climate, the Sustainable Development Goals (SDGs) and international human rights law. Federico Sibaja of international CSO Recourse states, “On climate, this means that the IMF must ensure its fiscal, financial, monetary and exchange rate policy advice allows countries to fulfil targets under the Paris Agreement. GHG emissions cuts must uphold climate-resilient development, and abide by the UNFCCC principle of Common but Differentiated Responsibilities (CBDR) principle according to which historic emitters must take the lead in decarbonisation and financial support.” On socio-economic and gender impacts, the Fund should limit its interventions to the impact of its own policies and systematically address negative impacts through providing alternate policy options to countries.
