New IMF Disclosure Policy Goes Into Effect

16 March 2010

The International Monetary Fund’s slightly revised disclosure policy enters into effect March 17, with the hope that a few more governments will allow the public release of key Bank documents about their countries, but still with a proviso giving governments veto power.

Although the new policy is not expected to allow significantly greater access to IMF documents, one footnote may help  those seeking to understand  the published descriptions of Executive Board deliberations.

These so-called “summings up” appear within the IMF’s Public Information Notices (PINs).  The Board’s thinking is described in these summations, without names, and using words that the Bank has not decoded.

The decryption system is cited in the footnote, with a link that brings readers to “Qualifiers Used in Summings Up of Executive Board Meetings.”

Here’s how it works, using as an example a sentence from the March 16 announcement of the conclusion of the Article IV consultation with Mexico.  The summings up section of the PIN always begins with the subhead “Executive Board Assessment.”

One paragraph says:

A number of other Directors pointed to the need to take due account of the costs and externalities of reserve accumulation.

Decoding Descriptions

What “a number of means,” according to the decoder, is “6-9 Executive Directors.”

That’s kind of in the middle—between “a few” (2-4), “some” (5-6),  “many” (10-15), and “most” (15 or more).

The numerical clarity was made public in September, the change triggered by a recommendation of the May 2008 Independent Evaluation Office, which noted in a report that even Bank insiders had trouble deciphering the summings up. “The code words used to describe the extent of support for a position among Directors should be clarified and made public,” according to the IEO report.

The IO also said: “To improve the clarity and transparency of these summaries, it is recommended that they state more clearly what constitutes a formal decision or the views of the Board, as opposed to the views of groups of Directors.”

The “qualifiers” memo describes the Board’s decision-making process.”  It states in part:

Since the Fund’s inception, the Executive Board has emphasized the importance of seeking consensus rather than formal voting. As an alternative to formal votes, the Board decided in 1946 to task the Chairman with the responsibility for identifying the “sense of the meeting,” which would be the basis for decision making.

New Policy Goes Into Effect

The new policy issued in January retains the right of governments to prevent release of documents pertaining to their countries, particularly the Article IV review materials.

In 2009, China blocked the release of these documents.

Why China objected may be inferred from the summings up of the Board discussion, which noted in part:

Looking ahead, many Directors considered that a further strengthening of the renminbi would be part of a comprehensive strategy to rebalance the economy by increasing the purchasing power of households and the labor share of income, and reorienting investment toward non-tradable sectors.

Decoded, this means that 10-15 of the 24 directors supported a controversial revaluation.

In writing its new transparency policy, the IMF board resisted requiring the disclosure of the staff reports that accompany the Article IV reviews. Under the “greater automaticity” of the new policy, the Fund will no longer need to get explicit permission from governments in order to publish relevant documents. But publication will continue to be voluntary.

The Board rejected a staff proposal that would have required members who did not consent to the release of a document to provide an explanation to the Board.

About 10 percent of countries undergoing Article IV reviews block their release, including China, Brazil, and many Middle Eastern countries.  Ten countries have never allowed publication of a staff report about their country. Fund officials in the past have been reluctant to “shame” such countries: Bahrain, Brazil, Brunei, Dominican Republic, Guyana, Myanmar, Oman, Saudi Arabia, Turkmenistan, and Venezuela.

As described by the Fund: “Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country’s economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board. At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country’s authorities.”

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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