Surveillance Priorities for the International Monetary Fund

2008-2011

Last Updated: October 05, 2009

In pursuit of its mandate to promote international monetary and financial stability, IMF surveillance will be guided through 2011 by the following priorities:

Economic priorities

After the most severe slowdown since the 1930s, the global economy has begun to show tentative signs of a recovery. The objective should be well-timed and coordinated policies to restore global growth in a sustainable manner. Priorities are to:

• Allow for an orderly unwinding of crisis-related policy interventions to ensure a sustained recovery. In particular, design exit strategies that:

    ° Support the economy and the financial system as needed. Resolve financial market distress, and maintain measures to support demand and financial intermediation until recovery takes firm root; and

    ° Safeguard the room for future policy maneuver. In particular, pay due regard to medium- and long-term implications of crisis-related measures, including on public sector balance sheets.

• Strengthen the global financial system. Upgrade domestic and cross-border regulation and supervision, especially in major financial centers. Avoid the exposure of capital-importing countries, including low-income countries, to excessive risks.

• Promote a rebalancing of sources of global demand, through both macroeconomic and structural policies, so as to achieve sustained world growth while keeping global imbalances in check. In this context, encourage open trade and competition. Be ready to adjust to changes in commodity prices.

In coordination with other International Financial Institutions, the IMF should promote a common understanding of the forces and linkages underlying these challenges; draw key lessons from different experiences to share across the membership; provide clear advance warnings of risks to global economic and financial stability; and advise on how best to use policy-in particular monetary, fiscal, exchange rate, and financial sector policies-in support of these objectives.

Operational priorities

• Risk assessment Refine the tools necessary to provide clear early warnings to members. Thorough analysis of major risks to baseline projections (including, where appropriate, high-cost tail risks) and their policy implications should become more systematic;
• Financial sector surveillance and real-financial linkages Improve analysis of financial stability, including diagnostic tools; deepen understanding of linkages, including between markets and institutions; and ensure adequate discussion in surveillance reports;
• Multilateral perspective Bilateral surveillance to be informed systematically by analysis of inward spillovers; outward spillovers (where relevant); and cross-country knowledge (as useful); and,
• Analysis of exchange rates and external stability risks In the context of strengthening external stability analysis, integrate clearer and more robust exchange rate analysis, underpinned by strengthened methodologies, into the assessment of the overall policy mix.

The Executive Board has set the above priorities to foster multilateral collaboration and guide IMF management and staff in the conduct of surveillance. These priorities look ahead three years, but may be revised if circumstances warrant. They will guide the Fund's work within the framework for surveillance provided by the Articles of Agreement and the relevant Board decisions, including the 2007 Decision on Bilateral Surveillance. Moreover, traditional areas of strength (such as fiscal policy and debt sustainability analysis) and relevant country-specific issues should not be overlooked.

The Executive Board is responsible for conducting, guiding and evaluating surveillance in order to ensure the achievement of these priorities. Management and staff are responsible for delivering on the operational priorities, subject to members' cooperation in line with commitments under the Articles of Agreement. To foster progress toward economic priorities, management and staff are responsible for providing candid high-quality analysis and effective communication. The Managing Director will report: (i) regularly on actions toward priorities and readily visible results; and (ii) at the time of the next Triennial Surveillance Review on progress in attaining these priorities; management's and staff's contributions; and factors that impeded progress.

• Press Release: IMF Executive Board Revises Surveillance Priorities for 2008-2011
• IMF Executive Board Adopts Surveillance Priorities for 2008-2011
• IMF Executive Board Reviews the Fund's Surveillance
• 2008 Triennial Surveillance Review - Overview Paper
• Surveillance and Crisis Prevention
• IMF Surveillance
• See more documents on Surveillance
• IMF Surveillance — The 2007 Decision on Bilateral Surveillance