strong support for more emphasis on risk management among the central banks interviewed by the panel. A central bank which manages its risks soundly constitutes a better quality risk
exposure for the Fund and its membership.
C. Transparency and Disclosure, and Accountability
47. Enhancing Fund transparency on its safeguards activities requires careful
consideration, taking into account the inhibiting impact this may have on central bank candor. While transparency has many benefits, these would have to be weighed against the
drawbacks in view of the due diligence nature of safeguards work. Safeguards assessment reports are confidential documents available only to IMF management and staff, and to
relevant country authorities and Executive Directors. Wider dissemination of safeguards reports could create disincentives for central banks, external auditors and perhaps others to
cooperate with and provide information to Fund staff.
48. Against this background, the panel recommends that a more consistent content
be maintained for the summary paragraph on safeguards in staff reports for program countries. At a minimum, the summary paragraph should include the following
information: any instances of misuse of Fund resources and misreporting of related monetary program data; significant recommendations for legislative amendments which fall
outside the powers of the central bank to effect, and are not included as structural benchmarks in the program; problems with obtaining access to data; and deviations from
commitments in relation to safeguards recommendations. The paragraph should be featured in the main body of the staff report.
49. Safeguards work should also include an ongoing program of engagement with
key stakeholders to ensure a fuller understanding of the purpose, nature and impact of the policy. In addition to the typical outreach initiatives, it would be useful to make use of
examples and develop case studies based on actual experience, to more effectively convey the nature and impact of safeguards assessments and the collateral benefits. The sharing of
lessons learned would help in the education process under the ELRIC framework.
50. Through outreach to relevant stakeholders, the Fund informs and facilitates.
Outreach is a powerful tool to ensure proper understanding of the motivation for the safeguards work. A key message to be conveyed is that the application of sound standards,
inter alia, is a “rule of the game”, promotes confidence and reduces risk, thereby adding economic value-add, though it may take time.
D. Legal Framework
