IMF inches toward openness, but challenges remain
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IMF inches toward openness, but challenges remain

Last Updated: Tuesday, July 23, 2013, 10:03
 
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IMF inches toward openness, but challenges remain
Washington: The International Monetary Fund tiptoed toward greater openness on Monday, pledging to publish more reports on its lending to governments and to release details of internal discussions more quickly.

To publish or not to publish has long been a burning debate within the Washington-based multilateral lender. The conflict reflects the IMF's dual functions: to advise each of its 188 member countries on their economies, and to act as a global economic watchdog.

In its discussions with each government, the IMF must balance transparency and confidentiality, as it seeks to give insight into a country's economy without jeopardizing privileged information that can sometimes be politically damaging.

The slow evolution toward transparency reflects the IMF's recognition in the last decade that it needs to gain broad public support for its programs to ensure they succeed, instead of just talking privately to governments.

Being more open also promotes the Fund's legitimacy as an impartial adviser to the world's governments, even though it has historically been dominated by Europe and the United States.

But the IMF admitted on Monday it still faced issues in convincing countries its advice was impartial and would stay confidential. Sixty percent of large emerging market countries said concerns about confidentiality prohibited them from seeking the Fund's advice, it said.

And analysts said the Fund's changes do not go far enough in opening up its internal decision-making to outside scrutiny.

Until the 1990s, IMF rules did not allow publication of any of the lender's dealings with governments for fear they would be less forthcoming if they knew economic details would be made public.

But over time, as the public and financial markets became more sophisticated and demanded more openness, the Fund and governments have been forced to change.

This trend accelerated with the global financial crisis in 2008, which showed how problems in one country could easily spill over into another, and countries and citizens asked for more information about possibly sensitive financial issues.

Publication remains voluntary, meaning governments can decide to keep private any material on their economy gathered by the IMF. But the IMF said it would publish everything if there were no objections.

Now, only 25 countries - including several in the Middle East, Central Asia and Africa - have asked the IMF to publish materials only if they explicitly allow it.

The IMF said the new policies meant 92 percent of all country reports were published from 2009 to 2012, compared to 85 percent previously. There are also smaller delays between the time of any IMF board discussion and its disclosure.

At the same time, a fifth of all countries over the past three years - twice as many as in the previous period - asked the Fund to delete certain details before publication.

IMF staff recommended a few small changes to the Fund's policies, such as shortening to two weeks the period within which most materials should be made available to the public. However, the deadlines remain voluntary.

They also proposed publishing detailed minutes of the board's discussion within three years, instead of five -- though the board has not yet approved this.

Sargon Nissan of the Bretton Woods Project, a non-profit watchdog, said the progress the IMF has made on transparency is welcome, but still fell far short of what was needed.

He pointed to the IMF's "mea culpa" on Greece, in which the Fund took three years to admit it had lowered its normal standards in approving a program for the indebted European country.

"I (give) mild applause for what they're doing, but there needs to be a sea change in the thinking of the Fund in terms of who it's accountable to," he said.

"Without a more transparent and candid IMF, we're going to have more problematic and skewed and asymmetric economic policies, and that doesn't really bode well for emerging from the period of crisis."

Reuters



First Published: Tuesday, July 23, 2013, 10:03


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