The IMF is accountable to its 190 member countries and has a system of checks and balances to ensure accountability, ranging from internal and external audits to risk management and evaluation of its policies and operations. Similarly, the IMF staff is expected to observe the highest ethical and workplace standards of conduct.
Checks and Balances
The IMF conducts audits of all its operations. The audit mechanisms are set up to improve governance, transparency, and accountability and include an external audit firm, an independent External Audit Committee, and the Office of Internal Audit (OIA).
The External Audit Committee is independent of the IMF and its Executive Board. The committee reports to the Board of Governors and is responsible for overseeing the IMF’s external audit, internal audit, financial accounting and reporting, risk management, and internal control functions.
The OIA is an independent assurance and advisory function designed to protect and strengthen the IMF. The OIA’s mandate is twofold: (1) bringing a systematic and disciplined approach to assess and improve the effectiveness of the IMF governance, risk-management processes, and internal controls; and (2) acting as a consultant and catalyst for improvement of the IMF’s business processes by advising on best practices and the development of cost-effective control solutions. To ensure independence vis-à-vis IMF departments and offices, the OIA reports directly to the Managing Director and maintains a functional reporting relationship with the External Audit Committee. The OIA’s 2023 program of work encompassed several key areas, including support for the IMF’s modernization programs, transition to a hybrid work model, and considerations for strengthening data privacy.
Managing Enterprise Risks
The Office of Risk Management is a centralized risk-management function of the IMF and constitutes the second line in the Fund’s risk management and governance architecture. It provides independent risk oversight and challenge of first-line enterprise risks to ensure consideration of the most critical
risks across the IMF’s core functions, finances, and other activities. The office provides the leadership and innovation necessary to identify, assess, measure, monitor, and report risks, as well as their treatment plans. It also serves to strengthen and steer the implementation of the IMF’s Enterprise Risk Management Framework and foster a strong risk-management culture throughout the organization.
In December 2022, the Executive Board approved the IMF’s enterprise risk management (ERM) policy, framework, road map, and risk tolerance, building on the Fund’s existing risk management practices and encompassing all the enterprise risks it confronts; at its core, the ERM policy aims to create and maintain a healthy risk-management culture and promote a practice of self-assessment. A framework for risk tolerance statements and the associated risk tolerance levels was approved by the Executive Board in March 2023. Together, the policies support enterprise risk reports and risk treatments to manage risk within the approved risk-tolerance levels. ERM is an integrated process for managing enterprise-wide risks to enhance risk-based decision-making so that the IMF can fulfill its mandate.
The scope of the approved ERM policy provides forward-looking assessments and analysis of enterprise strategic; business; operational; financial; reputational; and environmental, social, and governance risks across all IMF activities to enhance risk-based decision-making. The ERM framework comprises nine interrelated components that underpin the framework: (1) integration of risk information into strategic decision-making; (2) risk tolerance; (3) risk governance and escalation; (4) risk culture, supported by training and communication; (5) control environment; (6) risk response and remediation; (7) risk policies; (8) risk data infrastructure; and (9) risk-management processes.
Learning from Experience
The Independent Evaluation Office (IEO) conducts objective and independent evaluations on issues and on the basis of criteria relevant to the IMF mandate. The IEO is fully independent of IMF management and staff, operating at arm’s length from the Executive Board. Its purpose is to enhance the learning culture within the IMF, strengthen the institution’s external credibility, and support the Executive Board’s institutional governance and oversight responsibilities. In FY 2023 IEO evaluations focused on the IMF’s emergency response to the COVID-19 pandemic, CD work, and engagement with small developing states. The IEO also recently published a book on lessons from its second decade and challenges it will face. More information about the IEO is available at https://ieo.imf.org.
Engagement with the Public
The IMF meets regularly with political leaders and country authorities and routinely engages with a wide range of private sector representatives, the media, and nongovernment stakeholders such as the academic community, civil society organizations, parliamentarians, labor unions, and youth leaders. Opportunities for such two-way dialogue allow the IMF both to explain its approaches and to learn from others to improve its policy advice.
Ethics and Staff Conduct
The Ethics Office assists the organization in maintaining high ethical standards of conduct and the reputation of the IMF and its employees for probity, integrity, and impartiality. It is an independent office led by the Ethics Advisor and Head of the Ethics Office, who reports directly to the Managing Director. The Ethics Office provides advice to management and the IMF’s Human Resources Department regarding ethical standards within the IMF, training and outreach, and confidential advice and guidance to all IMF personnel on the rules of conduct. It oversees the annual Ethical Conduct and Core Values Certification, as well as the Financial Disclosure Program.
The Ombudsperson is a confidential, impartial, independent, and informal resource for resolving employment-related problems. The Office of Internal Investigations conducts inquiries and investigations into allegations of misconduct, including breaches of the Code of Conduct. The IMF Integrity Hotline, administered by an independent third party, is available for anonymous and confidential reporting of suspected misconduct involving IMF employees by staff members or members of the public.
On December 16, 2022, the IMF’s Executive Board endorsed an implementation plan to further strengthen the framework of institutional governance and analytical integrity. The implementation plan responds to the Institutional Safeguards Review, which was considered by the Executive Board on June 30, 2022. The review was undertaken in an integrated manner, involving a Board steering group, IMF management, two staff working groups, and an external panel of high-level experts. The review found that the IMF safeguards mechanisms are generally robust. It identified areas in which the data and analytical integrity frameworks could be further bolstered and the smooth and effective functioning of the IMF’s system for internal disputes could be strengthened. The Institutional Safeguards Review implementation plan sets out a comprehensive package of policy and process reforms to respond to the review’s recommendations and is anchored on four focal areas: data and analytical integrity, leadership, building trust and increasing transparency in the dispute resolution and integrity framework, and strengthening the dispute resolution system and its processes. Implementation progress is being carefully monitored and will be subject to independent validation by the OIA.
When the IMF provides financing to a member country, it carries out a safeguards assessment to obtain reasonable assurance that the country’s central bank can manage the IMF resources and provide reliable monetary data on the IMF-supported program.
The assessments involve an evaluation of central bank operations in six areas:
The assessments involve an evaluation of central bank operations in six areas: (1) governance arrangements, (2) external audit mechanism, (3) legal structure and autonomy, (4) financial reporting framework, (5) internal audit mechanism, and (6) system of internal controls. From 2000 to the end of April 2023, 381 assessments had been conducted, covering 106 central banks; 15 of these assessments were completed in FY 2023.
The IMF also monitors progress as central banks work to improve their safeguards frameworks and address IMF recommendations in safeguards assessments. The monitoring continues for as long as IMF credit remains outstanding, and about 84 central banks are currently subject to monitoring. The monitoring activity has increased by about 22 central banks compared with pre-pandemic levels, owing to the financing extended to member countries to address the impact of the COVID-19 pandemic.
The IMF also conducts fiscal safeguards reviews of state treasuries when a member requests exceptional access to IMF resources in cases in which a substantial portion of the funds—at least 25 percent—is directed toward financing the state budget. The 2022 Safeguards Policy Review expanded this requirement for a fiscal safeguards review to include cases of high combined credit exposure with at least 25 percent of resources also directed to budget financing. During FY 2023, two fiscal safeguards reviews were conducted, and one was in progress at the end of the year.
As part of the safeguards reviews, outreach activities included in-person regional safeguards seminars conducted during FY 2023 at the Africa Training Institute in Mauritius, IMF–Middle East Center for Economics and Finance in Kuwait, and Joint Vienna Institute in Austria. The seminars highlighted leading international practices in safeguards areas and provided a forum for central bank officials to share experiences. In addition, a high-level central bank governance forum was held in Dubai for bank officials and their external auditors. The event covered recent developments in topical governance issues and digitalization issues such as fintech and central bank digital currencies.
Corporate Social Responsibility
Environmental sustainability and philanthropic initiatives are at the core of the IMF’s corporate social responsibility program.