Select Committee on Treasury Seventh Special Report




The Government welcomes the Fourth Report from the Treasury Committee, which makes a valuable contribution to the debate on the accountability of the International Monetary Fund.

(a) We welcome the establishment of the Independent Evaluation Office and we look forward to reading its reports and commenting upon its work in our future reports. We recommend that the Fund continue to make its operations and policies as transparent as possible (paragraph 8).

The Government agrees that the setting up of an Independent Evaluation Office at the IMF has been a fundamentally important development in improving the institution's transparency, openness and accountability. This is a development that the UK has been advocating for a number of years, and we will continue to work to ensure that it functions as an effective evaluation body. The Government welcomes the appointment of Mr Montek Singh Ahluwalia as head of the Evaluation Office and look forward to its regular reports to the IMFC, which will be published.

The Government is committed to enhancing transparency, both in the UK and internationally. The Government welcomes the ongoing measures to improve transparency and accountability at the Fund.

(b) We recommend, in the interests of greater transparency and accountability, that the Treasury press the Fund to change its policy to allow its most senior officials to appear on the record before Parliamentary Committees of member countries (paragraph 11).

The Government acknowledges that the policies at both the IMF and the World Bank regarding the appearance of staff to give evidence to parliamentary committees need further clarification. Stephen Pickford wrote to both the IMF and the World Bank on 1 June 2001 passing on the conclusions of the Committee's report and suggesting that the Managing Director and/or President be free to decide, in consultation with member country authorities, whether to give evidence to such committees themselves, and when they are unable to do so, to be able to delegate as appropriate. His letter is attached. We will forward the response on to the committee as soon as we have it.

(c) We intend to continue to hold hearings with the UK Executive Director and to publish reports on the IMF on a regular basis and we recommend that our equivalent committees, in other member countries, play a similarly active role in holding their own representatives at the IMF to account (paragraph 13).

The Government welcomes the interest that the Treasury Committee has shown in this area, and recognises the value of the Executive Director continuing to meet the committee on a regular basis. This is an important mechanism for improving accountability in the UK's relationship with the IMF.

(d) We welcome the Government's acceptance of our proposal for publication of an annual report on the work of the IMF, and on other activities of the Fund, and note the improvements which have been made to this year's report. We recommend that, in the interests of transparency, such reports should continue to be published annually (paragraph 14).

The Government agrees that an Annual Report to Parliament on UK operations at the IMF increases the transparency of our operations and improves accountability to Parliament and the public. We published our most recent report in January 2001 and the Treasury intends, as recommended by the Committee, to publish our next report at a similar time next year.

(e) We strongly recommend that the Chancellor push for a full publication of the Executive Board meeting minutes and begin to publish the UK voting record at the IMF immediately (paragraph 18).

The Government is committed to reporting to Parliament regularly on the position the UK takes on major policy issues discussed at the IMF. It believes that the best way to do so is within the Annual Report to Parliament. The improvements made to this year's report demonstrate our continued commitment in this regard. Following the Committee's recommendation, future reports to Parliament will include the UK's position on each vote made by the IMF's Board of Governors in the reporting period.

In most instances decisions are made in the Executive Board through a process of consensus-building, without recourse to formal voting. But the Government is committed to taking further steps to promote transparency in the Executive Board. Firstly, in those cases when all Executive Directors are asked to record a formal vote, we will publish the UK's vote in the Annual Report. Secondly, in all cases, including those where there is no vote, we will provide an explanation of the position taken by the UK Executive Director in Board discussions, except where it is judged to be not in the public interest to do so, for example where the UK's position is market sensitive.

The Fund currently publishes summings up of Board discussions on all major programme discussions and policy issues, as well as many Article IV surveillance discussions. However, formal minutes recording the position taken by all Directors are not released, since the Board has up to now taken the view that this would be detrimental to the process of consensus-building within the Board.

Nevertheless, we shall also continue to work to encourage other countries to make their relationship with the Fund more open.

The Government is committed to enhancing transparency at the IMF, reflected in the April communiqué of the IMFC, which welcomed the 'ongoing measures to improve transparency, governance and accountability in the Fund'. The IMF has taken steps to increase its institutional transparency and accountability, through wider dissemination of information about its policies and operations, and increasing contacts with outside groups. The Annual Report to Parliament details these important measures.

HM Treasury

November 2001

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