Opinion Shadow of doubt

On Wednesday, the managing director of the IMF, Christine Lagarde, released a statement on its Independent Evaluation Office’s (IEO’s) report on the recurring issues that a decade of evaluations of the institution have thrown up. The IEO report identified five persistent problems: the executive board’s lack of clear guidance and ineffectiveness in some areas; organisational silos and insufficient exploitation of synergistic potential between departments; inadequate recognition of risks and uncertainty in staff reports; not enough attention paid to country specificity and institutional context; and the lack of evenhandedness — members with similar characteristics are, or are perceived to be, treated differently.

While Lagarde’s statement listed the remedial measures that have already been taken, like instituting a risk management unit, for instance, some of the problems are “inherent to the nature of the IMF” and will take greater exertion to correct. This, and the fact that follow-up to evaluation has become, according to the report, a mere “box-ticking exercise”, are probably why these problems are unremitting. Significantly, by flagging the unequal treatment of member countries as a long-standing issue, the IEO report has given institutional credence to a longstanding grievance of large emerging market economies.

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According to the report, the unequal treatment of countries manifests itself in analysis (policy prescriptions and funds devoted to research), influence (conditionalities and surveillance tailored to further the interests of the IMF’s major shareholders) and candour (staff are less inclined to deliver brutally honest assessments to advanced countries and there are more deletions in reports for these countries than for others). While some of these asymmetries can be argued away — advanced countries may be more systemically important and therefore more resources may be devoted to research them — it is imperative for the Fund to be and to be seen to be more objective and neutral.

Addressing this issue will be the biggest challenge for the IMF in the days ahead. While the report suggests some ways ahead, including greater transparency, the fact that half the Fund’s executive directors viewed it as being not evenhanded suggests that the scale of the problem is large.