IMF Surveillance

March 1, 2021

A core responsibility of the IMF is to oversee the international monetary system and monitor the economic and financial policies of its 190 member countries, an activity known as surveillance. As part of this process, which takes place at the global, regional, and country levels, the IMF identifies potential risks to stability and recommends appropriate policy adjustments needed to sustain economic growth and promote financial and economic stability.

Why is IMF monitoring important?

Vigilant monitoring by the IMF is essential to identifying stability and growth risks that may require remedial policy adjustments. Moreover, international cooperation on these efforts is critical in today’s globally integrated economy, in which the problems or policies of one country can affect many others. IMF membership, which includes all but a handful of the world’s nations, can facilitate this cooperation. IMF monitoring includes both bilateral surveillance, focused on individual member countries, and multilateral surveillance, or oversight of the global economy.

Consulting with member states

IMF monitoring typically involves annual visits to member countries. During these visits IMF staff engage government and central bank officials in discussions about risks to domestic and global stability as well as policies and reforms to address those risks. These discussions focus on exchange rate, monetary, fiscal, and financial policies, in addition to macro-critical structural reforms. IMF staff also typically meet with other stakeholders, including members of the legislature and representatives from the business community, labor unions, and civil society, among other groups. Comprehensive discussions with a broad array of groups leads to better evaluations of each country’s economic policies and outlook.

Upon completion of their evaluation IMF staff present a report to the Executive Board for discussion. The Board’s views on the report are then transmitted to the country’s authorities, concluding a process known as an Article IV consultation. In recent years, surveillance has become more transparent and most member countries now publish a press release summarizing the staff report and accompanying analysis, as well as the views of the Board.

Global oversight

The IMF also monitors regional and global economic trends and analyzes the impact that member country policies may have on neighboring countries and the global economy. It issues periodic reports on these trends and analysis. The World Economic Outlook provides detailed analysis of the global economy and its growth prospects, addressing issues such as the macroeconomic effects of global financial turmoil and the potential for global spillovers, especially those that may result from the economic, fiscal, and monetary policies of large, globally central economies such as the United States, China, and the euro area. The Global Financial Stability Report assesses global capital markets and financial imbalances and vulnerabilities that pose potential risks to financial stability. The Fiscal Monitor updates medium-term fiscal projections and assesses developments in public finances. The IMF also publishes regional economic reports that provide detailed analysis of major regions of the world.

The IMF cooperates closely with other groups, including the Group of Twenty industrialized and emerging market economies, and since 2009 has supported the G20’s efforts to sustain international economic cooperation through its mutual assessment process. The IMF analyzes member country policies to determine how consistent they are with the goal of sustained and balanced global growth. External Sector Reports analyze and assess the external positions of 29 of the world’s largest economies, plus the euro area. The analysis systematically assesses current accounts, exchange rates, external balance sheet positions, capital flows, and international reserves. Twice a year the IMF issues a Global Policy Agenda that pulls together the key findings and policy advice from multilateral reports and proposes a future policy agenda for the IMF and its members. 

Adapting surveillance to evolving global challenges

The IMF periodically reviews its surveillance activities to better adapt to changes in the global economy. Reflecting a heightened awareness of the implications of financial interconnectedness across countries, the 2011 review focused on multilateral surveillance. This laid the foundation for the 2012 Integrated Surveillance Decision, which clarified that IMF surveillance should focus on policies related to members’ domestic and balance-of-payments stability, as well as systemic stability. In September 2012 the Board endorsed a Financial Surveillance Strategy that proposed concrete steps to further strengthen IMF monitoring activities. Together these reforms led to an overhaul of the surveillance toolkit and update of the legal framework.

The 2014 Triennial Surveillance Review supported these reforms, and the 2018 Interim Surveillance Review, which took stock of progress in advancing the TSR’s recommendations, found that IMF surveillance had become better adapted to the global conjuncture during 2014-17. The ongoing Comprehensive Surveillance Review (CSR) is considering how to adapt surveillance for the global landscape of 2021-30. The CSR has identified four broad surveillance priorities to better support the membership in the period ahead: (i) confronting risks and uncertainties; (ii) preempting and mitigating spillovers; (iii) fostering economic sustainability; and (iv) adopting a more unified approach to policy advice. A key objective of the CSR is to strengthen the traction of the IMF’s policy advice by realigning how the IMF engages with member countries in line with these surveillance priorities.