IMF Article IV Consultations

The IMF consults annually with each member governments in an attempt to assess each country’s economic health and to assist them in forestalling future economic and financial problems.  The consultations provide an independent analysis of the economy that will enable the Government of the country to make the changes necessary or at the very least understand what is happening in the economy for which they are responsible.

Why is IMF Consultations important?

In today’s globalized economy, where the policies of one country typically affect many other countries, international cooperation is essential. The IMF, has a membership of over 180 countries, and over the years has gained considerable experience and knowledge in the area of economic management. There are two main aspects to the IMF’s work: bilateral surveillance, which comprises appraisal of, and advice on the policies of each member country; and multilateral surveillance, or oversight of the world economy.

Montserrat is not a member of IMF but as an Overseas Territory of the UK is able to access its services through the United Kingdom’s membership. The ability to access this service and the information provided from the assessments made will help the Government to make better policy decisions and deliver more targeted programmes.  It will also help the Government to make the case to donor countries for support especially at this point where evidence based justification is essential.

The Consultations

IMF economists will continually and regularly monitor the economic performance once they begin. They will visit member countries—usually annually—to exchange views with the government and central bank and focus on whether there are risks to domestic and external stability that argue for adjustments in economic or financial policies. During their mission, IMF staff also typically meets with other stakeholders, such as parliamentarians and representatives of business, labor unions, and civil society to help evaluate the country’s economic policies and direction. On return to headquarters, the mission submits a report to the IMF’s Executive Board for discussion. The Board’s views are subsequently transmitted to the country’s authorities.

In recent years, surveillance has become increasingly transparent. Almost all member countries now agree to publication of a Public Information Notice, which summarizes the views of the Executive Board. In nine out of ten cases, the staff report and accompanying analysis are also published on the IMF’s website.

Clearly at a time when citizens are requesting more information and are expressing a desire to participate in the decision making process, the format of the consultations lend itself to greater public participation and scrutiny.  The IMF also provides training in the preparation and interpretation of the reports.  This may in the long run benefit the public with increased knowledge and awareness of the economy..