Transparency and the IMF

As the International Monetary Fund (IMF) and the World Bank hold their annual meetings, issues of transparency will be lurking in the background. This week President Obama and Brazilian President Dilma Rouseff formally launched the Open Government Partnership involving 46 nations in an effort designed to foster unprecedented transparency in governance by governments around the world. The IMF has for many years also called for national governments to expand their level of transparency, but recent controversy over its leadership selection process highlighted the lack of transparency in its own decision-making. The dynamic new leader of the IMF, Christine Lagarde, should endorse the emerging global commitment to transparency by opening up the Fund’s decision-making to public scrutiny.

The International Monetary Fund has, for many years, been a leader in arguing that national governments should expand their fiscal transparency. The IMF has called for “open budget processes” and established a code of good practices on fiscal transparency. Yet, the IMF has been slow to apply its insights about the benefits of transparency to its own governance. Early last year, the IMF modestly improved its own transparency policy, by merely reducing the delay in the release of its board minutes from five years to three years. The concern that financial institutions such as the IMF are somehow different from other institutions because of the sensitive nature of their deliberations is undercut by the growing transparency within institutions such as the Federal Reserve and the World Bank.

In contrast to the IMF’s reluctance to substantially overhaul its transparency policy, the World Bank in recent years has adopted a much more sweeping policy around access to information. The Bank’s new plan, which took effect in 2010, declassified more than 17,000 documents and created a searchable database of more than 100,000 documents. While the Bank already disclosed the minutes of its board meetings after approval by the board, it also agreed to release more extensive summaries of these meetings. The Bank’s new rule also provided for the simultaneous release of board documents to the public. While there could certainly be more effective implementation of these policies by the Bank, these reforms still offer potential lessons for its sister institution, the IMF.

In order for the IMF to approach the transparency level of many of its peer institutions and approximate the standards of transparency that it has been championing, it must substantially reform its own access to information policies. The Independent Evaluation Office within the IMF has previously called for greater transparency, including shortening the time for the release of board meetings minutes. Even traditionally secretive financial institutions, such as the Federal Reserve in the United States, have successfully adopted this practice. It is unclear why the IMF would require three years to make public its deliberations when the Federal Reserve now releases the minutes of its board meetings within just three weeks.

Before becoming Managing Director, Lagarde was a strong champion of the United Nations Convention Against Corruption, which calls for greater transparency in decision-making. As an important step in demonstrating its new direction, the IMF should make its deliberations public within a reasonable time, so that board minutes are available to the public in a matter of weeks rather than years. The IMF should also provide for the simultaneous release of key documents sent to its board, consistent with the policies that the World Bank has recently adopted. While international institutions in the past jealously guarded their secrecy, 21st century institutions will need to keep up with evolving norms of transparency in governance if they are going to be successful.