IMF Board backs stronger, clearer fiscal policy advice after independent evaluation review

THE International Monetary Fund’s (IMF) Executive Board has broadly endorsed recommendations to strengthen the clarity, consistency and analytical depth of the Fund’s fiscal policy advice, following an independent evaluation covering the tumultuous 2008-2023 period marked by the global financial crisis and the Covid-19 pandemic.

- SIPHELELE DLUDLA

In a chair’s summing up issued after a board meeting held earlier this month, executive directors welcomed the Independent Evaluation Office (IEO) report, which assessed IMF fiscal advice delivered through surveillance during a period of unprecedented shocks and rising public debt levels.

Directors noted that the past decade and a half saw a decisive shift toward greater fiscal activism, with governments relying more heavily on public spending and tax policy both to stabilise economies in the short term and to address longer-term challenges such as inequality, climate change and development needs.

This evolution, they said, has increased the need for the Fund to more clearly articulate trade-offs between competing policy objectives.

Against that backdrop, the Board welcomed the IEO’s generally positive assessment of recent IMF fiscal advice, while signalling strong support for the implementation of its key recommendations. Directors broadly endorsed Recommendation 1, which calls for IMF bilateral surveillance to more typically include clear, specific and well-communicated advice on the appropriate fiscal stance, the expected macroeconomic impact of recommended policies, the overall policy mix and potential cross-border spillovers.