Chapter

CHAPTER 8 Organization, Staffing, and Budget

Author(s):
International Monetary Fund
Published Date:
September 2001
Share
  • ShareShare
Show Summary Details

Financial year 2001 was one of expansion for selected IMF initiatives but was resource-constrained for most areas of the work program. With respect to staffing, the Executive Board approved the reclassification of 217 positions, converting some contractual positions to staff jobs, and streamlined and consolidated outsourcing arrangements. A revised employment framework was implemented to clarify and tighten criteria for employment, while allowing more flexibility in meeting staffing needs. Also, several initiatives were adopted to reduce stress on IMF staff, and guidelines on ethical standards for staff and the Executive Board were posted on the IMF’s website (see Box 8.1). As to the administrative budget, the Executive Board agreed on a framework for FY2002 based on zero growth in staffing, with some small increases in selected activities related chiefly to the IMF’s work on preventing financial crises. Financial year 2001 was also a year in which the IMF, in a move to further enhance the transparency and accountability of its activities, took steps to establish an Independent Evaluation Office to provide objective reviews and assessments of its operational work.

Shortly after the end of the financial year, on May 8, 2001, First Deputy Managing Director Stanley Fischer announced his intention to leave his position later in 2001. On June 7, Managing Director Horst Kohler announced that Anne Krueger would be Mr. Fischer’s successor. At the same time, he announced his intention to appoint new Directors of the Research Department and the Policy Development and Review Department in light of the departures of the current incumbents. He also announced the Director of the new International Capital Markets Department.

Organization

The IMF is governed by its Board of Governors, and its business is conducted by an Executive Board, a Managing Director, a First Deputy Managing Director, two other Deputy Managing Directors, and a staff of international civil servants. The institution’s founding Articles of Agreement require that staff appointed to the IMF demonstrate the highest standards of efficiency and technical competence and reflect the organization’s diverse membership.

In announcing his intention in early May 2001 to leave the IMF, First Deputy Managing Director Stanley Fischer said he would depart his post later in 2001, once a smooth transition to his successor was arranged. Paying tribute to Mr. Fischer, Managing Director Kohler said, “When I came to the IMF a year ago, Stan Fischer committed to work with me at least through my initial period as Managing Director. He has been superb. In due course, there will be plenty of opportunity for the Fund—and myself—to formally express appreciation of Stan Fischer’s service to this institution and its 183 members over the past seven years. Right now, I would like to confine myself to personal expression. Stan Fischer is an extraordinary economist and public servant. I have benefited enormously from his advice and support in my first year at the Fund. I have particularly benefited from his integrity and humanity. I am sorry he will be leaving so soon and I wish he had remained longer.”

Executive Board

The IMF’s 24-member Executive Board, as the IMF’s permanent decision-making organ, conducts the institution’s day-to-day business. In 2000, the Board held 130 formal meetings, 5 seminars, and 100 informal, committee, and other meetings. The Executive Board’s discussions are largely based on papers prepared by IMF management and staff. In 2000, the Board spent 60 percent of its time on member country matters (Article IV consultations and reviews and approvals of IMF arrangements); 35 percent of its time on multilateral surveillance and policy issues (world economic outlook, developments in international capital markets, IMF financial resources, strengthening the international financial system, the debt situation, and issues related to IMF lending facilities and program design); and its remaining time on administrative and other matters.

Figure 8.1IMF Organization Chart

(As of April 30, 2001)

1Operational in FY2002.

2Attached to the Office of Managing Director.

Box 8.1Code of Conduct for Executive Directors and Ethics Website

As part of the IMF’s continuing commitment to best practices and transparency in its own operations, the institution announced two initiatives in the area of ethical conduct during the financial year.

In August 2000, the Executive Board, drawing on existing internal practices, established a code of conduct intended to provide Executive Directors with guidance on ethical standards in connection with their role and responsibilities in the IMF. The code, which applies to the 24-member Executive Board, Alternate Executive Directors, and Advisors to Executive Directors, mandates regular financial disclosure reports and underlines the importance of the observance of the highest standards of ethical conduct.

Besides establishing guidelines for financial disclosure and basic conduct, the code also set up an Ethics Committee of five Executive Directors to consider matters relating to observance of the provisions of the code. These Directors will serve for two-year terms.

In February 2001, the IMF established a section on its public website dedicated to highlighting guidelines and issues related to staff ethics, financial disclosure, and dispute resolution. The section contains electronic links to the codes of ethical conduct and financial disclosure rules that IMF staff and Executive Directors must observe. The terms of reference for the IMF’s Ethics Officer and Ombudsperson are also available on this section of the public website.

In addition to publishing the ethical codes and standards of the IMF, judgments, orders, and other information related to the dispute resolution activities of the IMF Administrative Tribunal are also now published on the IMF’s public website. The Administrative Tribunal established on January 13, 1994, provides a judicial forum for resolving employment disputes arising between staff members and the IMF.

Departments

The IMF staff is organized mainly into departments with regional (or area), functional, information and liaison, and support functions (Figure 8.1). These departments are headed by directors who report to the Managing Director.

Area Departments

Six area departments—African, Asia and Pacific, European I, European II, Middle Eastern, and Western Hemisphere—advise management and the Executive Board on economic developments and policies in countries in their region. Their staffs are responsible also for putting together financial arrangements to support members’ economic reform programs and for reviewing performance under these IMF-supported programs. Together with relevant functional departments, they provide member countries with policy advice and technical assistance and maintain contact with regional organizations and multilateral institutions in their geographic areas. Supplemented by staff in functional departments, area departments carry out much of the IMF’s country surveillance work through direct contacts with member countries. In addition, 81 area department staff are assigned to members as IMF resident representatives (see Boxes 8.2 and 8.3).

Functional and Special Services Departments

The Fiscal Affairs Department is responsible for activities involving public finance in member countries. It participates in area department missions on fiscal issues, reviews the fiscal content of IMF policy advice and IMF-supported adjustment programs, and provides technical assistance in public finance. It also conducts research and policy studies on fiscal issues, as well as on income distribution and poverty, social safety nets, public expenditure policy issues, and the environment.

The IMF Institute provides training for officials of member countries—particularly developing countries—in such areas as financial programming and policy, external sector policies, balance of payments methodology, national accounts and government finance statistics, and public finance.

The Legal Department advises management, the Executive Board, and the staff on the applicable rules of law. It prepares most of the decisions and other legal instruments necessary for the IMF’s activities. The department serves as counsel to the IMF in litigation and arbitration cases, provides technical assistance on legislative reform, responds to inquiries from national authorities and international organizations on the laws of the IMF, and arrives at legal findings regarding IMF jurisdiction on exchange measures and restrictions.

The Monetary and Exchange Affairs Department provides analytical and technical support, including development and dissemination of good policies and best practices, to member countries and area departments on issues related to financial sector systems and soundness—including prudential regulation, supervision, and systemic restructuring; central banking, monetary, and exchange policies and instruments; and capital flows and exchange measures and systems. In surveillance activities and requests for the use of IMF resources, the department reviews issues related to its areas of competence and provides its expertise in policy assessment and development. It also delivers and administers technical assistance in these areas, coordinating with collaborating central banks, supervisory agencies, and other international organizations.

Box 8.2IMF Resident Representatives

At the end of April 2001, the IMF had 81 resident representatives covering 89 member countries in Africa, Asia, Europe, the Middle East, and the Western Hemisphere. These posts—usually filled by one IMF employee supported by local staff—help to enhance IMF policy advice and are often set up in conjunction with a reform program. The representatives, who typically have good access to key national policymakers, can have a major impact on the quality of IMF country work. In particular, resident representatives alert the IMF and the host country to potential policy slippages and provide on-site program support. They can also play an active role in IMF outreach in member countries. And, since the advent of enhanced initiatives for low-income countries, resident representatives have helped members develop their poverty reduction strategies (see Chapter 5) by taking part in country-led discussions on the strategy and presenting IMF perspectives. They also support monitoring of program implementation and institution building, working with different branches of government, civil society organizations, donors, and other stakeholders.

The Policy Development and Review Department plays a central role in the design and implementation of IMF financial facilities and other policies. Through its review of country and policy work, PDR ensures the consistent application of IMF policies and objectives throughout the institution, in the context of bilateral and multilateral surveillance and members’ economic programs supported by IMF resources, including in such critical areas as transparency and crisis prevention. In recent years, the department has spearheaded the IMF’s work in strengthening the international financial system, focusing and prioritizing conditionality, and the Poverty Reduction and Growth Facility and the Initiative for Heavily Indebted Poor Countries (HIPC Initiative). With area departments, the Policy Development and Review Department assists member countries that are making use of IMF resources by helping mobilize other financial resources, including debt and program financing (through the Paris Club and international banks). The department plays a key role in the preparation of meetings of the International Monetary and Financial Committee and the Development Committee, as well as representing the IMF in other groups (the Group of 24, for example) and at other institutions (especially the World Bank).

The Research Department conducts policy analysis and research in areas relating to the IMF’s work. The department plays a prominent role in developing IMF policy concerning the international monetary system and surveillance and cooperates with other departments in formulating IMF policy advice to member countries. It coordinates the semiannual World Economic Outlook exercise and prepares the annual International Capital Markets report, as well as analysis for the surveillance discussions of the Group of Seven, Group of Twenty, and such regional groupings as the Asia Pacific Economic Cooperation (APEC), and the Executive Board’s seminars on World Economic and Market Developments. The department also maintains contacts with the academic community and with other research organizations.

The Statistics Department maintains databases of country, regional, and global economic and financial statistics and reviews country data in support of the IMF’s surveillance role. It is also responsible for developing statistical concepts in balance of payments, government finance, and monetary and financial statistics, as well as producing methodological manuals. The department provides technical assistance and training to help members develop statistical systems and produces the IMF’s statistical publications. In addition, it is responsible for developing and maintaining standards for the dissemination of data by member countries.

The Treasurer’s Department formulates the IMF’s financial policies and practices; conducts and controls financial operations and transactions in the General Department, SDR Department, and Administered Accounts; controls expenditures under the administrative and capital budgets; and maintains IMF accounts and financial records. The department’s responsibilities also include quota reviews, IMF financing and liquidity, borrowing, investments, the IMF’s income, and operational policies on the SDR; it is also the lead department for the conduct of safeguards assessments of member country central banks.

Box 8.3Hong Kong Sub-Office Opened

In early January 2001, the IMF opened in Hong Kong, Special Administrative Region, a sub-office of its Resident Representative Office in the People’s Republic of China. At the opening, IMF Managing Director Horst Kohler made the following statement:

“I am pleased to visit Hong Kong for the opening of the IMF sub-office. The primary objective of the sub-office is to monitor financial and economic developments in the region. Hong Kong was a logical choice because, as a major financial center, Hong Kong SAR’s markets play a key role in intermediating the flow of capital in the region. We believe that our presence in Hong Kong SAR will greatly enhance the IMF’s surveillance and help us better understand emerging economic and financial issues. The office should play an important role in promoting and maintaining a dialogue with the international financial community and, in the process, help the Fund and the private capital markets contribute to the stability of the international financial system. I would like to thank the authorities for their support and encouragement in opening this office.”

In March 2001, the Managing Director announced his intention to establish an International Capital Markets Department, bringing together functions previously performed in the Policy Development and Review, Monetary and Exchange Affairs, and Research Departments (see Box 3.5).

Information and Liaison

The External Relations Department plays a key role in making the IMF’s policies and operations understandable to the general public and to the many individuals and institutions with a keen interest in the IMF. It edits, produces, and distributes the IMF’s nonstatistical publications; provides information services to the press and general public; maintains contacts with nongovernmental organizations and parliamentary bodies; drafts speeches for management; and manages the IMF’s website (see also Appendix V).

The IMF’s Offices for Asia and the Pacific, in Europe, in Geneva, and at the United Nations maintain close contacts with other international and regional institutions (see Appendix IV).

Support Services

The Technology and General Services Department manages and delivers a full range of services essential for the IMF’s operation. These include information services (information technology, telecommunications, document management, and library services); facilities and general administrative services (facilities management, building projects, travel management, graphics, and procurement services); and language services (translation, interpretation, and non-English-language publications). Having these services under the umbrella of one department facilitates planning for service delivery, increases efficiency by reducing some overlaps in related functions, and helps in developing and applying common instruments for measuring and assessing services. This also allows more efficient allocation of budgetary resources to meet service needs.

The Human Resources Department carried out an extensive review of its work in 2000, which resulted in a reformulated human resource strategy and a reorganization of the department aimed at strengthening its ability to help other departments develop and meet their human resource goals.

The Secretary’s Department organizes the work of the IMF’s governing bodies and provides secretariat services to them. In particular, it assists management in preparing and coordinating the work program of the Executive Board and other official bodies, including scheduling and assisting in the conduct of Board meetings. The department also manages the Annual Meetings, in cooperation with the World Bank.

The IMF also has offices and secretariats responsible for internal auditing, review of work practices, budget matters, technical assistance, and investments under the staff retirement plan.

Staff

The Managing Director appoints a staff whose sole responsibility is to the IMF, whose efficiency and technical competence are expected to be, as set forth in the Articles of Agreement, of the “highest standards,” and whose diversity by nationality reflects its membership and gives “due regard to the importance of recruiting personnel on as wide a geographical basis as possible.” To provide the continuity and institutional memory from which the membership benefits, the IMF has an employment policy designed to recruit and retain a corps of international civil servants interested in spending a career, or a significant part of a career, at the IMF. At the same time, the IMF recognizes the value of shorter-term employment and recruitment of midcareer professionals consistent with the changing labor market and the benefit of fresh perspectives. In the case of a number of skills and jobs—relating mainly to certain services and highly specialized economic and financial skills—business considerations have called for shorter-term appointments or for outsourcing activities.

As of December 31, 2000, the IMF employed 728 staff at the assistant level and 1,727 professional staff (about two-thirds of whom were economists). In addition to its regular staff, the IMF had 380 contractual employees on its payroll, including experts, consultants, and other short-term staff. Of the IMF’s 183 member countries, 133 were represented on the staff. (See Table 8.1 for the evolution of the nationality distribution of IMF professional staff since 1980.)

Table 8.1Nationality Distribution of Professional Staff by Region(In percent)
Region1198019902000
Africa3.85.85.7
Asia12.312.714.8
Japan1.41.91.4
Other Asia10.910.813.4
Europe39.535.135.1
France6.95.54.8
Germany3.74.35.3
Italy1.71.43.1
United Kingdom8.28.06.2
BRO countries21.9
Other Europe19.015.913.8
Middle East5.45.55.4
Western Hemisphere39.141.039.0
Canada2.62.83.9
United States25.925.924.8
Other Western Hemisphere10.612.310.3
Total100.0100.0100.0

Regions are defined on the basis of the country distribution of the IMF’s area departments. The European region includes countries in both the European I and European II Departments. The Middle East region includes countries in North Africa.

The Baltics, Russia, and other countries of the former Soviet Union.

Regions are defined on the basis of the country distribution of the IMF’s area departments. The European region includes countries in both the European I and European II Departments. The Middle East region includes countries in North Africa.

The Baltics, Russia, and other countries of the former Soviet Union.

Categories of Employment

The IMF’s employment framework was revised in January 1999 to clarify and tighten criteria for employment and allow for flexibility in meeting the institution’s staffing needs. Based on the findings of a review of positions and functions undertaken in late 1999 and early 2000, the Board approved management’s recommendation to reclassify 217 positions. Of these, 181 contractual positions and 34 indirect vendor arrangements were converted to staff jobs, and 2 indirect vendor arrangements were made contractual positions.

These positions were then filled through a competitive process. The Board also endorsed a streamlining and consolidation of outsourcing arrangements.

Recruitment and Retention

Over the course of 2000, 311 new staff members joined the IMF—229 external recruits and 82 conversions to staff status under the Categories of Employment exercise (described above). The 229 external hires (140 economists, 30 hires in professional and managerial grades in specialized career streams, and 59 assistants) represent an increase of 11 over the 218 staff members hired in 1999. Of the external hires in 2000, 86 were midcareer economists and 47 entered the Economist Program. (The two-year Economist Program serves to familiarize entry-level economists with the work of the IMF by placing them in two different departments, each for a 12-month period, and then offering regular staff appointments to those who perform well.)

During 2000, 129 staff separated from the organization. The separation rate of staff in professional and managerial grades was 5.5 percent (88 staff) in 2000. This represents a decline from 5.9 percent (92 staff) in 1999 and 8.1 percent (122 staff) in 1998. (The high turnover in 1998 was largely the result of a sudden and sharp rise in resignations of economists joining private sector financial firms and a larger number of retirements, including those encouraged by incentives.) Ten of the 29 economists who resigned in 2000 joined private financial sector institutions, which have attracted some 60 IMF economists in recent years.

Stress on IMF Staff

Work-related stress among IMF staff has grown steadily in recent years as a result of both internal and external expectations, and Executive Directors have expressed concerns about the heavy work pressures. At the end of 1999, a Working Group on Stress, appointed by management, submitted a report proposing a practical plan for reducing negative stress. Also, the IMF’s Office of Internal Audit and Inspection completed, in March 2000, a review of personnel management practices in IMF departments. Finally, a survey by the IMF’s Staff Association Committee suggested measures to address stress related to staffs mission travel to member countries.

Building on these recommendations, management and the Human Resources Department issued a statement introducing a number of initiatives to reduce stress and improve human resource management practices in the IMF. The plan included measures in six areas: (1) establishing a better balance between workload and resources; (2) improving managerial practices and strengthening accountability; (3) increasing the flexibility of work arrangements; (4) improving the mission work environment; (5) giving more guidance to individuals on how to deal with stress; and (6) addressing stress arising from living abroad and traveling frequently.

With regard to overwork, the Executive Board, management, and staff agree that the approach must consist of a combination of a more sharply focused institutional mandate with clear priorities and the elimination of low-priority activities, on the one hand, and the provision of sufficient resources for new tasks on the other. The Human Resources Department decided to begin quarterly stress surveys of staff to monitor progress. The Stress Reduction Plan calls for:

  • Better resource planning through annual departmental human resource plans;
  • Expecting and rewarding good managerial practices and behavior of senior staff, in promotion standards and in annual performance assessments;
  • Providing greater flexibility in work arrangements by implementing a Compressed Work Schedule in a number of departments;
  • Creating a mission code of conduct to reduce stress on missions. A code of conduct is being reviewed by the departments for adoption; and
  • Providing staff with information and guidance to help them deal with stress.

To help reduce stress on families including dualcareer couples, the IMF has opened a child care center at its Washington headquarters, and has discouraged mission travel during the first 60 days of IMF employment and before and after the birth/adoption of a child; the Human Resources Department and management also began monitoring all individuals whose travel exceeds 50 business days a year.

Salary Structure

To recruit and retain the staff it needs, the IMF has developed a compensation and benefits system designed to be competitive, to reward performance, and to take account of the special needs of a multinational and largely expatriate staff. The IMF’s staff salary structure is reviewed and, if warranted, adjusted annually on the basis of a comparison with salaries paid by selected private financial and industrial firms and public sector organizations mainly in the United States, but also in France and Germany. On the basis of updated analyses of comparator salaries, the salary structure was increased by 4.5 percent for FY 2001, and the Board approved an increase of 4.8 percent for FY 2002 (see Table 8.2 for the IMF staff salary structure).

Table 8.2IMF Salary Structure, effective May 1, 2001(In U.S. dollars)
GradeRange

Minimum
Range

Maximum
Illustrative Position Titles
A121,36032,060Not applicable (activities at this level have been outsourced)
A223,94035,880Driver
A326,78040,180Staff Assistant (Clerical)
A430,00045,040Staff Assistant (Beginning Secretarial)
A533,65050,450Staff Assistant (Experienced Secretarial)
A637,60056,460Senior Secretarial Assistant, Other Assistants (e.g., Editorial, Computer Systems, Human Resources)
A742,17063,270Research Assistant, Administrative Assistant
A847,23070,870Senior Administrative Assistant (e.g., Accounting, Human Resources)
A950,24075,380Librarian, Translator, Research Officer, Human Resources Officer
A1057,79086,670Accountant, Research Officer, Administrative Officer
A1166,36099,560Economist (Ph.D. entry level), Attorney, Specialist (e.g., Accounting, Computer Systems, Human Resources)
A1274,310111,470Economist, Attorney, Specialist (e.g., Accounting, Computer Systems, Human Resources)
A1383,250124,850Economist, Attorney, Specialist (e.g., Accounting, Computer Systems, Human Resources)
A1493,220139,860Deputy Division Chief, Senior Economist
A15/B1105,350158,050Division Chief, Deputy Division Chief
B2121,460176,220Division Chief
B3144,330187,800Assistant Department Director, Advisor
B4168,190210,230Deputy Department Director, Senior Advisor
B5198,060237,740Department Director
Note: The above salary structure for IMF staff is intended to be internationally competitive to enable the IMF to secure highly qualified staff from all member countries. The salaries are reviewed annually by the Executive Board. The salaries are kept in line with the salaries for equivalent grades and positions in private sector financial and industrial firms and in representative public sector agencies, mainly in the United States but also in France and Germany. Because IMF staff other than U.S. citizens are usually not required to pay income taxes on their IMF compensation, the salaries are set on a net-of-tax basis, which is generally equivalent to the after-tax take-home pay of the employees of the public and private sector firms from which IMF salaries are derived.
Note: The above salary structure for IMF staff is intended to be internationally competitive to enable the IMF to secure highly qualified staff from all member countries. The salaries are reviewed annually by the Executive Board. The salaries are kept in line with the salaries for equivalent grades and positions in private sector financial and industrial firms and in representative public sector agencies, mainly in the United States but also in France and Germany. Because IMF staff other than U.S. citizens are usually not required to pay income taxes on their IMF compensation, the salaries are set on a net-of-tax basis, which is generally equivalent to the after-tax take-home pay of the employees of the public and private sector firms from which IMF salaries are derived.

Management Remuneration

Reflecting the responsibilities of each management position and the relationship between the management and staff salary structures, the salary structure for management, as of July 1, 2000, is as follows:

Managing Director$317,7101
First Deputy Managing Director$266,790
Deputy Managing Directors$254,080

The management pay structure is subject to a combination of periodic structural reviews by the Executive Board and annual revisions. It is autonomous and not formally linked to remuneration in other international organizations.

Executive Board Remuneration

Upon the recommendation of the Board of Governors’ Committee on the Remuneration of Executive Directors, the Governors approved from July 1, 2000, increases of 5.0 percent in the remuneration of Executive Directors and 5.6 percent in the remuneration of Alternates. The remuneration of Executive Directors is $ 168,660.2 The remuneration of Alternate Executive Directors is $145,890.3 In previous years, a supplemental allowance had been paid to Executive Directors and Alternate Executive Directors. In July 2000, the Board of Governors’ Committee on the Remuneration of Executive Directors recommended that the allowance be incorporated into salary and the Governors approved this change.

Diversity

The Executive Board continued to emphasize staff diversity as important for improving the IMF’s effectiveness as an international institution. The IMF’s Senior Advisor on Diversity, who reports to the Managing Director, designed a number of initiatives and indicators to strengthen and monitor nationality and gender diversity (Tables 8.1 and 8.3), as well as diversity management in the organization. The Senior Advisor works closely with the Human Resources Department and other departments to identify needs and opportunities for promoting diversity and implementing departmental action plans, which have been prepared and monitored annually since 1996. In FY 2001, departments integrated these action plans into comprehensive human resource plans, which henceforth will provide a framework for the IMF’s diversity efforts. Typically, diversity actions include measures to help ensure grade and salary equity, initiatives in recruitment and career development, orientation and mentoring programs for newcomers, measures to improve communication and increase the transparency of human resources policies and procedures, and promotion of family-friendly work arrangements and benefits, including the extension of the Medical Benefits Plan to domestic partners.

Table 8.3Gender Distribution of Staff
198019902000
StaffNumberPercentNumberPercentNumberPercent
All staff
Total1,444100.01,774100.02,456100.0
Women67646.882746.61,14246.5
Men76853.294753.41,31453.5
Support staff
Total613100.0642100.07281100.0
Women49280.354084.161884.9
Men12119.710215.911015.1
Professional staff
Total646100.0897100.01,386100.0
Women17326.827430.548434.9
Men47373.262369.590265.1
Economists
Total362100.0529100.0877100.0
Women4211.67013.220122.9
Men32088.445986.867677.1
Specialized career streams
Total284100.0368100.0509100.0
Women13146.120455.428355.6
Men15353.916444.622644.4
Managerial staff
Total185100.0235100.03421100.0
Women115.9135.54011.7
Men17494.122294.530288.3
Economists
Total99100.0184100.0271100.0
Women44.094.9259.2
Men9596.017595.124690.8
Specialized career streams
Total86100.051100.071100.0
Women78.147.81521.1
Men7991.94792.25678.9

Includes only staff on duty.

Includes only staff on duty.

In addition, the IMF is placing more emphasis on people management skills and diversity sensitivity in the performance assessment of supervisors and in promotion decisions, which are of particular importance in an institution with a diverse workforce.

The departmental annual progress reports submitted to the Human Resources Department in FY2001 showed improvements in diversity awareness, systematic approaches, and people management practices. At the IMF level, progress was achieved in the recruitment, promotion, and overall representation of underrepresented staff groups among junior-level staff. Progress toward having more women and developing country staff at the managerial level, however, stalled in 2000 and persistent efforts will be needed to improve the balance at this level. Achieving satisfactory diversity of staff in an institution that emphasizes career employment is a continuing goal that requires concerted effort.

Administrative and Capital Budgets

The IMF has entered a new period that calls for a more focused and strengthened role in the international monetary system, to be achieved without a significant further increase in the institution’s size. During the past few years, in the wake of the Asian and other regional crises, the IMF expanded to address the immediate requirement of the countries concerned, as well as to contribute to the prevention and resolution of financial crises. This expansion was preceded by a five-year period of little or no growth in staffing.

The IMF’s internal budget process was reviewed by a panel of external experts beginning in late 2000. Their report and findings were discussed at an Executive Board seminar in spring 2001. There was broad support among Board members for the general direction of the reforms proposed in the evaluators’ report, which can build on changes already introduced over the last two years. The Executive Board endorsed management’s proposal to establish a task force that would, in cooperation with departments, consider the gradual introduction of a more output-oriented budget framework. The task force will also pursue certain specific proposals aimed at more immediate improvements in the transparency, accountability, and efficiency in the IMF’s budgetary system. It was also agreed that the medium-term budget exercise, suspended last year, would be resumed.

Budget Framework for FY2002

The Committee on the Budget (a subcommittee of the Executive Board) agreed on a budget framework based on zero growth in the number of staff, with the exception of 15 new positions for the new International Capital Markets Department, and a small strategic research unit, and a modest increase in the dollar budget. The framework’s budget objectives are to help focus the work and the resources of the IMF on its core priorities, reduce work pressures and stress, and maintain the size of the organization. These are to be achieved through redeployment of staff, reduction of activities, and streamlining of practices. Some 26 positions are to be eliminated throughout the IMF and redeployed to priority areas, especially with respect to the new initiatives. An additional 40–50 positions are expected to be redeployed to help form the International Capital Markets Department.

Programs, Budgets, and Actual Expenditure in FY2001

The major functional areas of the IMF are represented in the form of three core program areas: surveillance, financing, and technical assistance. (See Table 8.4 for the estimated administrative costs for these major activities, as well as for support functions, the Board of Governors, and the Executive Board, and Figure 8.2 for the distribution by these programs of allocated expenditure in FY2001.) The IMF’s Administrative Budget for the financial year ended April 30, 2001, authorized total spending of $689.9 million, or $650.9 million net of estimated reimbursements. The FY2001 Capital Budget of $50.6 million included $23.5 million for building facility projects and $27.1 million for information technology projects. Actual administrative expenditures during the year totaled $638.0 million net of reimbursements, and capital project disbursements totaled $34.6 million (Table 8.5).

Table 8.4Estimated Cost of Major IMF Activities, Financial Years 2000–021(In millions of U.S. dollars)
ActivityFinancial

Year

2000
Percent

of

Total
Financial

Year

2001
Percent

of

Total
Budget

Financial

Year 2002
Percent

of

Total
Staff and management2
Surveillance151.125.9162.825.5188.027.0
Use of Fund resources123.521.2137.121.5157.422.6
Technical assistance110.018.9118.418.6124.517.9
Support functions143.124.6159.325.0160.323.1
Subtotal527.990.5577.690.5630.290.6
Board of Governors and
Executive Board355.19.560.49.565.29.4
Total583.0100.0638.0100.0695.4100.0
Note: Because of rounding, details may not add to total.

Cost estimates for financial years 2000 and 2001 are based on year-end data.

The cost of general supervision, training, professional development, and leave has been distributed proportionately to each of the other categories.

The Executive Board costs include salaries and benefits of Executive Directors, Alternates, and Assistants; business and other travel; communications; building occupancy; books and printing; supplies and equipment; information technology; and other miscellaneous costs of Executive Directors’ offices. The cost of the Board of Governors consists mainly of the travel and subsistence of Governors, the costs of staff support services provided for the Board of Governors, including the costs of the Annual Meetings, and other miscellaneous administrative services.

Note: Because of rounding, details may not add to total.

Cost estimates for financial years 2000 and 2001 are based on year-end data.

The cost of general supervision, training, professional development, and leave has been distributed proportionately to each of the other categories.

The Executive Board costs include salaries and benefits of Executive Directors, Alternates, and Assistants; business and other travel; communications; building occupancy; books and printing; supplies and equipment; information technology; and other miscellaneous costs of Executive Directors’ offices. The cost of the Board of Governors consists mainly of the travel and subsistence of Governors, the costs of staff support services provided for the Board of Governors, including the costs of the Annual Meetings, and other miscellaneous administrative services.

Figure 8.2Estimated Cost of Major Activities, FY2001

(As a percent of total costs)

Note: Information is based on financial year 2001 outturn of expenditures. The cost of general supervision, training, professional development, and leave has been distributed proportionally to each of the other categories. Because of rounding, details may not add to total.

Table 8.5Administrative and Capital Budgets, Financial Years 1999–20021(Values expressed in millions of U.S. dollars and SDRs)
Financial Year Ended

April 30, 1999:

Actual Expenses
Financial Year Ended

April 30, 2000:

Actual Expenses
Financial Year Ended

April 30, 2001:

Actual Expenses
Financial Year Ending

April 30, 2002:

Budget
(In millions of U.S. dollars)
Administrative Budget
I. Personnel Expenses
Salaries249.2267.7292.1322.7
Other Personnel Expenses122.0149.4154.0162.9
Subtotal371.2417.1446.1485.6
II. Other Expenses
Business Travel47.148.856.365.5
Other Travel28.135.635.038.1
Communications11.011.611.913.6
Building Occupancy44.948.153.258.2
Books and Printing9.711.612.813.1
Supplies and Equipment9.58.510.010.4
Information Technology26.025.030.531.6
Miscellaneous13.618.019.720.8
Subtotal189.9207.2229.4251.4
III. Reimbursements(40.5)(41.3)(37.5)(41.6)
Total Administrative Budget520.6583.0638.0695.4
Less: Reimbursement for administering the SDR Department(4.8)(4.5)(3.1)(4.7)
Reimbursement for administering the SAF/ESAF2
Net Administrative Budget expenses3515.9578.5634.9690.6
Capital Budget
Capital project budgets414.467.350.640.0
Capital project disbursements43.939.534.6
Total Budget Expenditure5564.5622.5672.6
Memorandum item(In millions of SDRs)
Administrative expenses reported in the financial statements6392.1448.4384.6

Administrative Budget as approved by the Board for the financial year ending April 30, 2002, compared with actual expenses for the financial years ended April 30, 1999, April 30, 2000, and April 30, 2001; and Capital Budgets as approved by the Board for capital projects in financial years 1999, 2000, 2001, and 2002. Due to rounding, details may not add to total.

The following reimbursements were not included in the Administrative Budget by Executive Board decision: FY1999, $56,180; FY2000, $62,651; FY2001, $71,583; and FY2002, $79,506.

Net Administrative Budget expenses exclude valuation or loss on administrative currency holdings.

Multiyear Capital Budgets for projects beginning in each financial year.

Total administrative budget expenditure and capital project disbursements.

The Fund’s financial statements, which are prepared in accordance with International Accounting Standards (IAS), include depreciation and account for employee benefits in accordance with IAS 19. These expenses are accounted for somewhat differently for budget purposes. Differences include a one-time adjustment of SDR 268 million in FY2000 for financial reporting purposes that was excluded for budget purposes. The adjustment was made to comply with a revision to IAS 19.

Administrative Budget as approved by the Board for the financial year ending April 30, 2002, compared with actual expenses for the financial years ended April 30, 1999, April 30, 2000, and April 30, 2001; and Capital Budgets as approved by the Board for capital projects in financial years 1999, 2000, 2001, and 2002. Due to rounding, details may not add to total.

The following reimbursements were not included in the Administrative Budget by Executive Board decision: FY1999, $56,180; FY2000, $62,651; FY2001, $71,583; and FY2002, $79,506.

Net Administrative Budget expenses exclude valuation or loss on administrative currency holdings.

Multiyear Capital Budgets for projects beginning in each financial year.

Total administrative budget expenditure and capital project disbursements.

The Fund’s financial statements, which are prepared in accordance with International Accounting Standards (IAS), include depreciation and account for employee benefits in accordance with IAS 19. These expenses are accounted for somewhat differently for budget purposes. Differences include a one-time adjustment of SDR 268 million in FY2000 for financial reporting purposes that was excluded for budget purposes. The adjustment was made to comply with a revision to IAS 19.

Programs and Budgets in FY2002

In the course of the last few years, several initiatives have been added to the IMF’s main program areas. These include the Financial Sector Assessments Program (FSAP) and the Reports on the Observance of Standards and Codes (ROSCs), which support surveillance. The Poverty Reduction and Growth Facility (PRGF) for low-income countries and the enhanced Initiative for Heavily Indebted Poor Countries (HIPCs) represent improvements in facilities for the use of IMF resources. In addition, the Technical Assistance Program is being strengthened through better planning and prioritization. Most of the increase in the size of the staff recently authorized was needed to undertake these new activities. In FY2002, a small increase in staff resources was authorized to bring the new programs up to their intended capacity. In addition, the establishment of the International Capital Markets Department, primarily through staff reallocation, will enable the IMF to focus more on financial market issues, a core area of its mandate. In April 2001, the Executive Board approved appropriations for administrative budget expenditures for FY2002 of $736.9 million (or $695.4 million net of estimated reimbursements), a 6.8 percent increase over the revised budget of the previous year. More than a third of this increase relates to earlier Executive Board decisions, namely, the full-year impact of a staffing increase for the new initiatives authorized in FY2001, an increase in staff in most Executive Directors’ offices, and the creation of an Independent Evaluation Office (EVO). In addition, a capital projects budget of $40 million was approved for building facilities, information technology equipment, and major software development.

New Building

Planning is under way to construct a second headquarters building on property owned by the IMF immediately alongside the existing headquarters building. The IMF selected a development manager and an architectural firm through competitive procurement, and the design is well advanced. Under current projections, the new building will make it possible to house all staff within the headquarters complex, reducing overall costs by eliminating the need to lease office space. The project is expected to be completed by 2005.

Independent Evaluation Office

During FY2000, the Executive Board decided to establish an Independent Evaluation Office to complement the ongoing internal and external reviews and evaluations of IMF work and thereby improve the institution’s ability to draw lessons from its experience and more quickly integrate improvements into its future work. The key motivations for the EVO are to enhance the learning culture within the IMF, strengthen the IMF’s external credibility, promote better understanding of the IMF’s work, and support the Executive Board’s institutional governance and oversight responsibilities. The office—which is expected to be operational before the Fall 2001 Annual Meetings—will conduct objective and independent evaluations of IMF policy and operations.

Background

The idea of establishing an independent evaluation office at the IMF goes back at least to January 1993 when the Executive Board considered a management proposal for a separate evaluation office. Despite extensive discussions, however, a consensus was not reached to proceed with the proposal at that time. Instead, the IMF continued its existing practice of internal evaluations, which included self-evaluations on such issues as IMF-supported programs in the Asian crisis, the Enhanced Structural Adjustment Facility (ESAF), and surveillance. Also, the Office of Internal Audit and Inspection (OIA) conducted reviews of the IMF’s resident representative program and of technical assistance.

Subsequently, the IMF sponsored and published a number of evaluations by external experts, including of such fundamental aspects of its work as the ESAF, its internal research activities, and surveillance. In March 2000, the Executive Board reviewed the experience under this approach, drawing on views from both within and outside of the official sector. Among the general concerns raised with the exclusive use of external experts for independent evaluations was that—despite the generally high quality of the evaluations to date—a lack of familiarity with the details of the IMF’s operations and mandate could limit the practical value of their advice. Also, the external experts were unavailable to assist Directors over the long-term implementation of their work and in maintaining the institutional memory of experience gained through particular evaluations.

Consequently, the Executive Board decided on April 10, 2000, to set up an Independent Evaluation Office in the IMF. The International Monetary and Financial Committee (IMFC), in its communiqué of April 16, 2000, urged the Board to agree on the terms of reference, structure, staffing, and operating procedures and to report back to the Committee at its fall 2000 meeting.

Developments During FY2001

The Executive Board met in early August 2000 to discuss a background paper that elaborated on the operational modalities of the Independent Evaluation Office. While providing clarity on fundamental issues such as institutional accountabilities, the scope of activities, organizational structure, the responsibilities of EVO’s Director, the EVO budget, and some operational considerations, Directors were cognizant of the need not to be overly prescriptive on such other issues as how the unit would be managed. They realized that—for EVO to be able to function independently—the precise manner in which it was managed, including the specifics of its recruitment policy, should be left to its Director.

Box 8.4IMF’s Independent Evaluation Office: Terms of Reference

Purpose

The Independent Evaluation Office (EVO) has been established to systematically conduct objective and independent evaluations on issues, and on the basis of criteria, of relevance to the mandate of the Fund. It is intended to serve as a means to enhance the learning culture within the Fund, strengthen the Fund’s external credibility, promote greater understanding of the work of the Fund throughout the membership, and support the Executive Board’s institutional governance and oversight responsibilities. EVO has been designed to complement the review and evaluation work within the Fund and should, therefore, improve the institution’s ability to draw lessons from its experience and more quickly integrate improvements into its future work.

Structure and Accountabilities

EVO will be independent of Fund management and staff and will operate at arm’s length from the Fund’s Executive Board. Its structure and modalities of operation must protect its operational independence—both actual and perceived.

A Director, to be appointed by the Executive Board, will head EVO. The Director’s term of appointment will be for a period of four years renewable for a second term of up to three years. The Director’s appointment may be terminated at any time with the approval of the Executive Board. At the end of the term of service, the Director will not be eligible for appointment or reappointment to the regular staff of the Fund. The Director will be responsible for the selection of EVO personnel (including external consultants) on terms and conditions to be determined by the Board with a view to ensuring that the office is staffed with independent and highly qualified personnel.

Responsibilities

The Director of EVO will be responsible for the preparation of its work program. The content of the work program should focus on issues of importance to the Fund’s membership and of relevance to the mandate of the Fund. It should take into account current institutional priorities, and be prepared in light of consultations with Executive Directors and management, as well as with informed and interested parties outside the Fund. The Director will present EVO’s work program to the Executive Board for its review.

EVO, through its Director, will report regularly to the Executive Board, including through the preparation of an annual report. It is also expected that the International Monetary and Financial Committee will receive regular reports on the activities and findings of EVO.

With respect to individual evaluations, staff, management, and—when appropriate—the relevant country authorities will be given an opportunity to comment on the assessments being presented to the Executive Board.

The Director of EVO, in consultation with Executive Directors, will prepare a budget proposal for EVO for consideration and approval by the Executive Board. Its preparation will be independent of the budgetary process over which management and the Office of Budget and Planning have authority, but its implementation will be subject to the Fund’s budgeting and expenditure control procedures. EVO’s budget will be appended to that of the Executive Board within the Fund’s Administrative Budget.

If requested by the Executive Board, EVO will provide technical and administrative support for any external evaluations launched directly by the Executive Board.

Consultation, Publication, and External Relations

In carrying out its mandate, including the preparation of its work program, EVO will be free to consult with whomever and whichever groups it deems necessary, both within and outside the Fund.

EVO will have sole responsibility for drafting its evaluations, annual reports, press releases, and other documents or public statements.

EVO’s work program will be made public and there will be a strong presumption that EVO reports will be published promptly (within the constraints imposed by the need to respect the confidentiality of information provided to the Fund by its members), unless, in exceptional circumstances, the Executive Board were to decide otherwise.

Publication of evaluations will be accompanied by comments from management, staff, and others, including relevant country authorities, where appropriate, along with the conclusions reached by the Board in considering the evaluation report.

Relations with Fund Staff and Management

In conducting its work, EVO should avoid interfering with operational activities, including programs, or attempting to micromanage the institution.

Review of Experience with EVO

Within three years of the launch of EVO operations, the Executive Board should initiate an external evaluation of EVO to assess its effectiveness and to consider possible improvements to its structure, mandate, operational modalities, or terms of reference. Without prejudging how that review would be conducted, it should be understood that the review would include the solicitation of broad-based input from outside the official community.

At the conclusion of the discussion, the Board agreed that the background paper on which the discussion was based and the Chairman’s concluding remarks would be posted on the IMF’s website to provide an opportunity for public comment. Directors also supported the preparation of terms of reference for EVO that would be presented as part of the report to the IMFC in Prague. Finally, they endorsed the recommendation that the process of engaging an executive search firm to assist the Board in appointing the Director of EVO should begin.

On the basis of the August discussion and input received from the public in the period immediately following the posting of the background paper, the Evaluation Group of Executive Directors drafted terms of reference for EVO (see Box 8.4), which were discussed and approved by the Executive Board in September 2000 and later endorsed by the IMFC.

In December, the Board named a firm to assist in identifying candidates for the director of the office. In April 2001, the Board offered the position as first Director of the IMF’s Independent Evaluation Office to Montek Singh Ahluwalia of India; shortly thereafter Mr. Ahluwalia accepted the position, effective July 2001. At the time of his appointment, Mr. Ahluwalia was a member of the Indian Planning Commission, and of the Economic Advisory Council to the Prime Minister of India. He was Finance Secretary at the Ministry of Finance of India between 1993 and 1998, and has held a range of senior policy positions within the Indian government. A prominent economist who has written and spoken extensively on national and international economic issues, Mr. Ahluwalia has also worked at the World Bank.

Process for Selecting the Managing Director

In July 2000, the IMF and the World Bank set up separate Working Groups to review the process for selecting the heads of their respective institutions. Each group met at least monthly to review past practices and develop work programs. The chairs of the Bank and Fund Working Groups participated in each other’s meetings as observers and exchanged working papers and minutes. The Working Groups subsequently prepared interim reports to their respective Boards in September 2000. Both Working Groups met jointly several times and agreed to prepare a draft joint report for submission to their respective Executive Directors.

On April 26, 2001, the IMF Executive Board considered the Draft Joint Report of the Bank Working Group to Review the Process for Selection of the President and the Fund Working Group to Review the Process for Selection of the Managing Director. Directors agreed on the importance of achieving a more transparent and open selection process and endorsed the report as guidance for future selection processes. The Board also agreed to transmit the Draft Report to the International Monetary and Finance Committee for its meeting on April 29, 2001, and to make the report publicly available at that time. The Executive Board further agreed that strict parallelism with the Bank should be observed.

The IMF Working Group was chaired by Yukio Yoshimura, Executive Director for Japan. Other Executive Directors who were members of the Working Group were Thomas Bernes (Canada), Michael Callaghan (Australia), Bernd Esdar (Germany), Aleksei Mozhin (Russia), Hernan Oyarzabal (Venezuela), Cyrus Rustomjee (South Africa), and Shakour Shaalan (Egypt).

Management and Senior Staff Changes

Shortly after the end of the financial year, on May 8, 2001, First Deputy Managing Director Stanley Fischer announced his intention to leave his position later in 2001. Earlier, on March 7, the Managing Director had announced that Michael Mussa, IMF Economic Counsellor and Director of the Research Department, would be relinquishing his post on June 29, and on May 14, it was announced that Jack Boorman, Counsellor and Director of the Policy Development and Review Department, would be leaving his position later in the year.

On June 7, the Managing Director proposed the appointment of Anne Krueger, a Stanford University professor and former Vice President of the World Bank, as Mr. Fischer’s successor. At the same time, he announced his intention to appoint Directors for the Research Department and Policy Development and Review Department and for the newly created International Capital Markets Department. Gerd Hausler, formerly chairman of Dresdner Bank AG’s investment banking arm and a member of the banking group’s Managing Board, would be Counsellor and Director of the International Capital Markets Department. Harvard University economist Kenneth S. Rogoff, an authority on international economics, would become Economic Counsellor and Director of the IMF’s Research Department, succeeding Mr. Mussa. Timothy Geithner, former U.S. Treasury Undersecretary for International Affairs and currently a Senior Fellow for International Economics at the Council of Foreign Relations, would become Director of the Policy Development and Review Department, succeeding Mr. Boorman.

1

In addition, a supplemental allowance of $56,860 is paid to cover expenses.

2

In determining the salary adjustments for Executive Directors for 2000, the committee took into consideration the remuneration and core responsibilities of a variety of comparator positions. These included the permanent representatives to the European Commission, the Organization of Economic Cooperation and Development, the World Trade Organization, members of the Governing Board of the European Central Bank, economic ministers/counsellors at embassies in Washington, and the highest-level civil servant in the ministry of finance and central bank for selected member countries.

3

These figures do not apply to the U.S. Executive Director and Alternate Executive Director, who are subject to U.S. congressional salary caps.

    Other Resources Citing This Publication