IMF needs an influential mediator


This is a guest article by Daniel Bradlow, SARCHI Professor of International Development Law and African Economic Relations at the University of Pretoria, arguing that the IMF should appoint an official mediator to help it deal with its problems. reputation.

An independently commissioned investigation alleged that IMF Managing Director Kristalina Georgieva could have pressured her subordinates to favor China in the World Bank. Doing Business Report during a previous position within the establishment.

Georgieva said she disagreed “fundamentally with the findings and interpretations” of the report. The IMF Executive Board said it had been briefed by its Ethics Committee and had had an exchange of views on the matter. He also met with the authors of the investigation.

The appointment of any IMF managing director is politically sensitive. But this development creates suspicion about the content of the political agreement that was reached to allow the promotion of Georgieva in the first place. It also raises concerns that the IMF Managing Director will exert similar pressure on his subordinates in future IMF reports and operations.

Such suspicions have already arisen before Georgieva was brought into charge. It is no secret that powerful IMF member states have pressured the IMF to take specific decisions in their favor, even when it undermines other long-standing IMF policies and procedures. Think, for example, of the difficulty experienced by “unpopular” countries such as Iran or Venezuela in accessing IMF financing. Or the disproportionately generous funding the IMF provided to Greece despite concerns about its compliance with the IMF’s debt sustainability requirements.

The IMF’s low-key response to the World Bank report, meanwhile, also hints at a hypocritical approach to good governance. On the one hand, the IMF preaches on the virtues of good governance and withholds funding from states that do not respect its political conditionality. On the other hand, he seems to take a cavalier approach to the conduct of his own leadership.

This is just the latest in a series of scandals that have hit IMF management in recent years. The three previous CEOs have faced ethics charges. Christine Lagarde was found guilty of negligence in her duties as Minister of Finance, Dominique Strauss-Kahn was forced to resign over serious sexual assault charges (which were later dropped) and Rodrigo Rato was in fact wound up in prison after being convicted of fraud.

Such incidents will become increasingly difficult to manage as the organization continues its campaign to incorporate politically charged issues into its operations.

In recent years, the IMF has advocated for its member states to spend more on things like public health, climate change and the sustainable development goals, and to pay more attention to the harmful effects of discrimination and discrimination. gender inequalities in their economies. In fact, through its funding programs and monitoring missions, it is likely to become an influential voice in policy making processes regarding these environmental and social issues in many of its poorest and weakest member states. .

These new areas of intervention necessarily require IMF officials to make decisions that are inherently political and that can have a substantial impact on the social values ​​of its member states. This inevitably puts the good judgment of IMF staff and management, as well as the integrity of their data, increasingly in the spotlight.

But there are steps the IMF could take to restore confidence in its operations.

First, management needs to formulate a set of publicly available policies that stipulate how it expects its staff to make decisions about the environmental and social aspects of macroeconomic policy. These policies should require staff to make decisions based on reliable data, appropriate consultations with all stakeholders, and without fear or favor from any particular stakeholder. They should also establish transparency standards that will guide the IMF’s approach to public consultations, data collection and management.

Second, the IMF’s executive board should create an independent mechanism that can hold the IMF accountable for its compliance with these policies. This could involve the appointment of a formal ombudsperson who is independent from IMF management and reports to the board.

Such an official might have the power to receive and investigate complaints from external stakeholders who claim they have been harmed by the failure to adhere to IMF operating policies and procedures by IMF staff and management. Upon completion of the investigation, the Ombudsman must submit a publicly available report to the Commission documenting his findings. The ombudsman should also publish an annual report that includes, where appropriate, a discussion of lessons he has learned from IMF operations as a result of his investigations.

It should be noted that the mission of the Ombudsman would be to investigate the conduct of the IMF and its compliance with its own policies and procedures. It would have no authority to investigate or comment on the policies or actions of its member states.

The appointment of such an ombudsman would ensure that the IMF complies with best practices in the governance of multilateral financial institutions. At present, it is the only institution of its kind that does not have an independent accountability mechanism whose activities are initiated by complaints from affected communities or individuals.

An ombudsman offers three advantages. The first is an immediate rise in reputation. No one can expect an institution engaged in the complex operations normally undertaken by the IMF to have a perfect record of performance. However, all institutions that have the power and authority to directly affect the lives of communities and individuals should be accountable to those harmed by their decisions. This is especially important for an organization like the IMF, which is immune from prosecution in any court in the world.

Second, it would help correct a serious blind spot in IMF operations: the absence of any formal mechanism to receive or investigate complaints. As it stands, the IMF often makes lending decisions without being fully aware of the impact of its policies and practices on poor, vulnerable or marginalized communities.

Finally, a mediator would therefore offer the IMF the opportunity to better learn from its mistakes. It would be the only IMF unit whose activities are initiated by external stakeholders, uncovering new information about how the lender’s policies and operations impact countries and individuals. Its findings would then hopefully help the IMF improve its operations.

As the IMF turns to more politicized areas of policy making, this is an innovation worth implementing.

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