The IMF’s latest report card

The Independent Evaluation Office (IEO) of the International Monetary Fund has just published one of its two yearly evaluations, this one titled Research at the IMF: Relevance and Utilization, covering 1999 to 2008.

Some of its findings are striking:

First, the relevance of research was often hampered by lack of early consultation with country authorities on research themes and by lack of sufficient country and institutional context.

This is something that I and many others have been banging on about for years. The Fund tends to crank the handle of a generic model, applying the findings to every country irrespective of what it’s actually like. But the solution proposed by the IEO won’t work: “Increased and earlier interaction with authorities as well as longer country assignments by mission members would enhance the country and institutional context of research”

As an architect of a one-size-fits-all approach, further refined over decades, the IMF is hardly likely to transform its research in response to a vague exhortation to talk more to governments and spend longer in-country. Serious change would require a deeper reform process based on a more open version of economics and a democratic management system that wasn’t dominated by Europe and America.

The IEO also finds that:

…many authorities reported that IMF research was message-driven, and many staff indicated that they often felt pressure to align their conclusions with IMF views.

Fair enough. The IMF is ideological and it doesn’t really do what’s best for countries, instead bailing out the international financial institutions that stand to lose from balance of payments crisis. This is what the Fund is trying to do in Greece right now, in consort with the European Central bank.

But the IEO’s answer — “working papers should reflect the results of technical analysis even if these are not well aligned with messages in surveillance activities documents” — won’t change anything.

The IMF’s research bias is a result of its architecture and methodological approach. As Joseph Stiglitz, William Easterly and others have pointed out, the Fund tends to serve the interests of Wall Street. Many of its staff come from investment banks and many go to work in them afterwards. Capitol hill lobbyists wield powerful influence. It’s no surprise that its research doesn’t reflect national context and that staff are encouraged to push a party line.