This paper evaluates the IMF’s exchange rate analysis since the 2008 TSR. It focuses on the evolution of methods, the quality of the IMF‘s multilateral and bilateral exchange rate analysis, the evenhandedness and transparency of this analysis, and the need to improve the coverage and integration of external stability assessments.

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This paper assesses progress in strengthening Fund surveillance and identifies needed improvements. It differs from past reviews insofar as it: (A) encompasses not only bilateral but also multilateral surveillance; and (B) steps-up external inputs in the form of studies by outside observers, commentaries, and assessment of recommendations by an external advisory group.

This paper (a) provides a snapshot of the overall value added of Fund‘s surveillance perceived by stakeholders; (b) details where the Fund stands in terms of four operational priorities set out in the 2008 TSR; (c) examines key issues identified in the recent IEO paper on the IMF performance in the run up to the global crisis; and (d) discusses stakeholders' perception on the communication aspects of surveillance.

Over the past three years, the IMF has worked to assist members in addressing the repercussions of the global financial crisis while also tackling gaps in its surveillance framework that the crisis laid bare. This reform agenda has drawn extensively from the recommendations of the 2008 Triennial Surveillance Review (TSR), as well as subsequent IMF and IEO reviews of the Fund's performance in the run-up to the crisis. This TSR provides an opportunity to take stock of the steps taken and to assess recent experience with surveillance.

This report seeks to help the IMF enhance its effectiveness by identifying major recurring issues from the IEO’s first 20 evaluations and assessing where they stand. The IMF’s core areas of responsibility are surveillance, lending, and capacity development. The aim of this report is to strengthen the follow-up process by focusing on key issues that recurred in IEO evaluations, rather than on specific recommendations on their implementation. The IEO believes that a framework of reviewing and monitoring recurring issues would be useful in establishing incentives for progress, strengthening the Board’s oversight, and providing learning opportunities for the IMF.

External study prepared by Stephen Pickford, former IMF/World Bank Executive Director for the United Kingdom and former Managing Director of International and Europe at H.M. Treasury and G-20 Finance Deputy, United Kingdom: Surveillance (both bilateral and multilateral) is a key instrument for the Fund’s crisis prevention role, analyzing economic developments and policies at national, regional and global levels. It also identifies risks and vulnerabilities, and forms the main basis for the Fund‘s discussions with policy-makers.