Strengthening IMF Surveillance: An Assessment of Recent Reforms

The authors assess the potential impact of recently approved reforms to International Monetary Fund (IMF) surveillance; namely, the "2007 Decision on Bilateral Surveillance Over Members' Policies" and the "Statement of Surveillance Priorities" (SSP). They conclude that these complementary reforms have the potential to create a comprehensive and coherent framework for IMF surveillance. If implemented properly, the reforms could strengthen the effectiveness of surveillance and thus enhance the IMF's ability to prevent crises and maintain a stable international financial system. Moreover, the impact of the reforms would be increased with a few refinements to the application of the 2007 Decision – in particular, a focus on real exchange rate adjustment, rather than exchange rate misalignment – and some evolutionary amendments to the SSP. In addition, surveillance reforms would be more effective if they were supported by changes to the surveillance review process and by governance reforms that enhance the IMF's accountability framework and improve member co-operation.