Central Bank Governance Forum Dubai, December 8-9 Mr. Simon Bradbury Deputy Director Finance Department, IMF 1 Overview Safeguards Focus on IMF Lending Assessments The Forum Governance & ELRIC 2
IMF Core Functions Surveillance Review of member macroeconomic policies and financial developments Provide advice to 188 member countries to foster economic stability Lending Financial support to member countries facing balance of payments problems Technical Assistance Strengthen member country institutional development and capacity 3 Where the IMF Gets its Money Member country payment of quotas - currently SDR 238 billion Borrowing - total borrowing access of SDR 370 billion Trust funds with bilateral contributions for concessional lending and debt relief to low- income countries. 4
GRA Credit Outstanding USD 116.6 billion GRA credit outstanding 5 PRGT Credit Outstanding USD 9.3 billion credit outstanding to low incom e countries 6
The Safeguards Policy Introduced in 2000 to mitigate the risks of misuse and misreporting A safeguards assessment is required whenever a country borrows from the IMF Provides reasonable assurance that central banks have appropriate structures in place to manage resources and ensure the integrity of operations Establishes prioritized recommendations to address key vulnerabilities. Facilitates the Board’s decision on approval and review of lending arrangements Promotes international good practices in transparency, accountability and autonomy 7 ELRIC framework Safeguards reports include a snapshot of governance practices at a central bank and identify vulnerabilities across five key areas: 8
Safeguards Assessments 266 assessments completed as of end-October 2014 � 96 Central Bank’s assessed, regionally: 9 Safeguards Assessments Benefits to Central Banks Promoted improved controls and enhanced transparency & accountability Surveyed CBs agreed that there was a positive impact on operations and management Assessments helped CBs to implement initiatives that were already being contemplated Supported amendments to the CBs legal frameworks that underpin good governance Periodic demand for voluntary assessments Safeguards seminars continue to receive good participation 10
2010 Safeguards Policy Review Sharper focus on governance and risk- management Continued emphasis on Oversight and Audit Quality Retain confidentiality, but broaden dissemination of findings Outreach and further engagement with stakeholders Trial option for fiscal assessments 11 Lessons from high profile Governance abuse cases Oversight bodies need to be e fg ective, not just exist in form. Control environment is dynamic and may deteriorate over time. CB internal audit and sta fg need to have channels to report questionable transactions/behaviors A quality external audit can play a key role in uncovering frauds Short term remedial measures are important, but cannot substitute for integrity, e fg ective governance and controls. 12
Focus on Governance Our reports are now more explicit on governance issues. We consider the key attributes of good governance: discipline & commitment (including “tone from the top”) transparency and accountability autonomy “checks and balances” (internal controls) 13 Assurance Functions Internal and external audits, and Risk Management enable good governance When assessing the e fg ectiveness of internal and external audit, we look for the role of audit oversight, including in: ensuring internal audit independence and authority review of external audit independence, performance, and quality monitoring audit recommendations ensuring internal audit has adequate coverage & resources Risk Management is a developing function for most central banks 14
Audit Oversight What we look for: independent membership to ensure checks-and-balances over management adequate mandate - which covers internal and external audit, controls and financial reporting requisite skills or access to external experts, if needed actual practices - meetings, matters considered, ability to challenge auditors and management Challenges faced by central banks: legal framework, the rotation and skills of Board members, internal audit capacity resulting in poor assurance on internal controls 15 2013 Governance Forum - Takeaways Risk Management: Governance structures vary. Board-level oversight often with the AC. RM is a new function for many CBs and implementation challenges abound. Most advocated a separation between Internal Audit and Risk Management Audit Oversight and Audit Quality: Most CBs have or are required to have an audit oversight body Key challenge is to ensure adequate skills and expertise on the AC Audit quality has improved over the last decade; Acs role in audit oversight has also increased 16
2014 Governance Forum - Objectives Continue exchange on evolving practices in good governance at central banks Focus on the role of audit committees in audit and control oversight What makes assurance functions e fg ective? Recognize that “one size does not fit all” and share your experience Network 17 Meet the IMF Team Mr. Simon Bradbury Mr. George Kabwe Ms. Joanna Grochalska Mr. Elie Chamoun Mr. Wouter Bossu 18
Additional Information More information on the Safeguards policy and activities is available under the following link: https://www.imf.org/external/np/exr/facts/safe.htm by contacting: safeguards@imf.org or any member of the IMF Team. � Thank You ! 19
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