Page 2 of 2 Fixing the IMF identity
crisis By Daniel D Bradlow
into the national policymaking process,
should be less accessible or accountable to those
people directly affected by its decisions than
other actors in this process.
IMF-international-organization
relations. The IMF, because of the broadening
scope of its operations, encroaches on the
"jurisdiction" of other United Nations specialized
agencies. In general, because of disparities in
their financial and political resources, these
other agencies have been unable either to
challenge the IMF or to
coordinate their activities with the IMF
effectively. The resulting de facto expansion of
IMF "jurisdiction" both disempowers the other
agencies and increases the cost of the IMF giving
bad policy advice.
IMF's lack of
internal accountability. The IMF still
operates on the erroneous assumption that its
existing channels of accountability - the board of
executive directors, and the board of governors -
are sufficient. Most consumer member states are
only indirectly represented on the board of
executive directors, on which IMF supplier states
hold the overwhelming majority of the votes, and
the fund's operations have become too complex for
these directors to exercise firm and effective
oversight over the management and staff. The board
of governors, composed of central-bank chiefs and
finance ministers, meets infrequently and is not
designed to deal with particular operational
cases.
The IMF's lack of effective
internal accountability mechanisms has an
important operational implication: it means the
staff and management are in essence unaccountable.
The executive board of the IMF has not required
the management to develop a publicly available set
of operating rules and procedures to guide their
activities. This deficiency grants IMF management
and staff great discretion and increases their
vulnerability to pressure from the most powerful
member states.
How can these problems be
solved? There are three basic approaches that can
be taken.
1. Declare the IMF to be
irredeemably flawed and that it should be
abolished. This approach, followed by many
activists critical of the IMF, is unrealistic. The
increasingly integrated global financial system
needs an international organization where all
states can meet to discuss issues relating to the
global monetary and financial system, including
the challenges the current system poses for the
poorest and weakest states in the system. Thus,
while it is possible to close the IMF, we cannot
eliminate the need for such an organization - and
in the current geopolitical climate it is not
realistic to expect a new one to be created.
2. Change IMF policies. This approach,
while raising important issues, is ultimately
inadequate because it focuses on the symptoms
rather than the real cause: the IMF's
decision-making structure. Without changing this
structure, the IMF will always adopt policies that
are insufficiently responsive to the needs of its
consumer member states.
3. Undertake
comprehensive reform of the IMF's governance. This
approach, which is the most feasible, is based on
the premise that the IMF must adhere to the same
principles of good governance - transparency,
predictability, participation, reasoned
decision-making, and accountability - that apply
at the national level.
The IMF needs a
comprehensive program of reform to bring it into
compliance with these principles. This reform
program should be divided into short-, medium- and
long-term components, based on who must act to
implement the reform proposal.
Short-term
items are those that only require action by the
IMF management and executive board. Given the
current vulnerability of the IMF and the general
questioning of its role even by officials in the
Group of Seven countries, it is realistic to
assume that, with some effort by activists and
non-governmental organizations (NGOs), the board
can be persuaded to implement at least some of
these items.
Medium-term items are those
that will require the participation of the IMF's
governors and are politically more sensitive.
These items will, therefore, require more
concerted efforts from activists and NGOs and more
collaboration with government ministries and
legislatures in member states.
Long-term
items require amendments to the Articles of
Agreement, which, for many IMF states, including
the US, require ratification by their national
legislatures.
A comprehensive reform
agenda consists of the following components.
Make the IMF more responsive to
stakeholders. This requires establishing
formal procedures for free communication between
IMF officials and all interested parties,
including non-state actors, in its member states;
increasing the number of alternative executive
directors for those board constituencies with
large numbers of IMF member states; increasing
consumer-state and decreasing Eurozone
representation on the IMF board; and using
double-majority voting procedures.
Make
the IMF more transparent. This requires
producing a publicly available manual of IMF
operating policies and procedures; publicly
releasing drafts of official reports and policies
and inviting public comment on them; and opening
the selection procedures for the IMF's managing
director and senior staff.
Improve the
IMF's accountability. This requires appointing
an ombudsman with the power to investigate
complaints from any party that feels it has been
harmed by the IMF's failure to act in conformity
with its mandate or its operating policies and
procedures; and subjecting the IMF's managing
director and senior staff to periodic evaluation.
Unless the IMF implements this
comprehensive governance-reform program, it is
unclear that it will ever be able to contribute
effectively to solving the complex monetary and
financial challenges or the problems of poverty,
inequality and inadequate governance that plague
our world today. Fortunately, the current crisis
of confidence in the IMF creates a good
opportunity to persuade it to adopt the most
important elements. Daniel D Bradlow
is professor of law and director of the
international legal studies program, American
University, Washington College of Law, Washington,
DC, and research associate with the Center for
Human Rights, faculty of law, University of
Pretoria, South Africa.
