Global Imbalances and Fund Surveillance1

Over its existence the IMF has been an instrument with multiple objectives. The main objectives have been (a) surveillance over countries' economic policies; (b) occasional provision of financial resources for countries undergoing adjustment under a Fund-supported program; (c) technical assistance for structural reforms and for institution building; and (d) ‘certification’ over some desirable actions by counties.The Fund is now criticised for its limited role with respect to global imbalances, which have become very large in connection with a few major countries such as the United States, China, and Japan. Critics are demanding a larger role in multinational surveillance. Some changes would make the Fund more effective: the quotas assigned to the countries could better reflect their current economic power; some expansion in multilateral surveillance work should be planned; the Management and the staff should be instructed to be much more focused or even blunt in their views on countries' policies; the resources available to the Fund should be increased; and the executive directors should be made more independent from the countries that nominate them. Comparative Economic Studies (2006) 48, 391–407. doi:10.1057/palgrave.ces.8100169