IMF Barely Modifies Disclosure Policy

9 January 2010

After an opaque review process, the International Monetary Fund January 8 announced modest changes to its disclosure policy, but retained the major impediment to disclosure, allowing governments to prevent release of documents pertaining to their countries.

This power prevents the release of more than 10 percent of some of the most important documents about countries. That percentage has decreased over the years, but now seems stable as China, Brazil, many Middle Eastern countries, and others resist the IMF’s stated preference for voluntary disclosure of such key documents as the Article IV and Use of Funds reports.

A subtle shift toward “greater automaticity” will be made in that the Fund will no longer need to get explicit permission from governments in order to publish relevant documents. Instead, members accepting publication would need to take no action. But publication will continue to be voluntary.

More broadly, the IMF said it has “changed the focus of `why’ information should be disclosed to `why not?’“ This is expressed as a goal in the preamble, however, not as a functional shift to a system in which disclosure is presumed subject to certain exemptions, as recently adopted by the World Bank. The Fund has no system for requestors to appeal denials.

The IMF said governments will be encouraged to allow disclosure of certain additional documents:  Financial Sector Stability Assessments and reports on compliance with international codes and standards, disclosure of which now runs at 62 and 75 percent respectively. Not publishing these reports represents a “reputational risk” cautions the staff report, that “can allow impressions of `secret dealings’ to take hold.”

However, the staff said mandatory publication would be a “major departure” that would require amending the original Articles of Agreement that created the Fund.

The list of IMF documents about its own operations will be slightly expanded, including materials on the Fund’s income, financing and budget.

The wait for documents from the IMF archives will be trimmed. Public access to Executive Board papers will be cut from 5 to 3 years, and Board minutes will be released after 5 years, instead of 10.

Hidden Policymaking

The IMF revealed its new policy, along with a variety of staff review papers, after a virtually closed process that began earlier this year. This Spring, the Fund invited outside comments on the old policy, adopted in 2005. It held a meeting to hear from interested parties.

But after that, the process was entirely internal. The IMF did not share any proposed changes in advance.

Documents issued January 8 indicated that the staff proposed reforms in late October, but these were not made public. The Board considered them on December 17, where a few objections were voiced, according to an explanatory statement issued from the Fund’s First Deputy Managing Director, John Lipsky.

As a result of objections, a few proposals were dropped, including one that would have required members who did not consent to the release of a document to provide an explanation to the Board.

Essential Pillar

Underscoring the Fund’s resistance to mandating disclosure of documents about individual countries, the statement by Lipsky states that “Fund members’ views differ on how transparency influences the Fund’s effectiveness in their countries.” It continues, “This is why voluntary publication will remain an essential pillar of the Fund’s policy.”

A footnote in the staff recommendations documents that 10 countries have never allowed publication of a staff report about their country. Fund officials in the past have been reluctant to “shame” such countries.  Footnote 6 of the October 26 staff paper, however, lists: Bahrain, Brazil, Brunei, Dominican Republic, Guyana, Myanmar, Oman, Saudi Arabia, Turkmenistan, and Venezuela.

Deletions are allowed in reports that are released to protect such things as market sensitive information. An IMF staff review found that about a quarter of the deletions were unwarranted under the policy. The staff documented that there has been a “marked pick-up” in the use of deletions, with alterations made in about 16 percent of recent reports. This is higher than the approximately 10 percent rate previously reported.

The Fund staff did not propose changes to the deletion criteria. The staff paper suggests that staff use “deliberate effort” to avoid the “slippery slope” of increasing deletions. The Board rejected a proposal to put a generic note about deletions only reports where deletions were made.

The new policy will be effective March 17, 2010.

By Toby McIntosh

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Filed under: IFTI Watch


In this column, Washington, D.C.-based journalist Toby J. McIntosh reports on the latest developments in information disclosure in International Financial and Trade Institutions (IFTI).
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