Multilateral surveillance

The process

Multilateral surveillance is geared more towards analysis of recent world developments, projections of future development, identification of risks of instability in the international economic system and the proposing of the ensuing policy recommendations. The primary vehicle for the Fund's multilateral surveillance is World Economic Outlook, produced twice a year, which provides a comprehensive set of economic forecasts for the world economy. It usually covers the broad areas of the world economic situation, global economic prospects and related policies issues, especially policy stances in industrial countries. There is an emphasis on financial and foreign exchange markets and external payments, financing and debt.

Technical aspects

The forecasts used by IMF are produced by a bottom-up rather than top-down procedure, that is, they are not produced by a single model of the world economy, but rather compiled from forecasts for individual countries by the Fund's area departments. The country projections are prepared on the basis of internationally consistent assumptions about world activity, exchange rates, and conditions in international financial and commodity markets. For approximately 50 of the largest economies, accounting for 90 per cent of world output, the projections are updated for each World Economic Outlook exercise. For smaller countries, the projections are based on those prepared at the time of the Fund's regular Article IV consultations with the member, after reflecting changes in assumptions and global economic conditions.

The focus of multilateral surveillance is on examining the impact of national policies on the global environment. These "environmental" projections are fed back into the forecasting and analysis that underpins the bilateral Article IV consultations. The regular monitoring of key economic developments helps in the assessment of the consistency and sustainability of national policies in the light of developments in the world economy. Monitoring further helps identify situations that warrant policy review and consultations. Special attention is devoted to developments in exchange rates, trade and capital flows, which are the principal elements of international interaction, as well as the broad range of economic policies underlying them.

Regional surveillance

The Fund has engaged in surveillance at the regional level in response to the integration of Europe into a single market, that is, the European Union. Furthermore, the crises in Mexico and Asia have highlighted the need for surveillance at the regional level. A framework is now in place for twice-yearly policy discussions with European Union institutions responsible for common policies in the euro area, including the European Central Bank. Discussions are expected to focus on the common monetary policy, exchange rate implications and the fiscal position of the euro area as a whole. The European Central Bank has been given observer status on the IMF Executive Board. Nonetheless, members of the European Union will continue their Article IV consultation on an annual basis.

The Fund has been active in providing inputs to other regional mechanisms for policy consultations. It has been designated as the technical secretariat to the Manila Framework group. The Fund has also been invited to present economic briefings for the ASEAN Finance Ministers' process (for further details on these initiatives see chapter VI). Similarly, the Fund has contributed inputs to the APEC forum. The Fund's main contribution has been the preparation of background papers; however, these papers do not focus much on regional interrelationships but rather are drawn from available materials resulting from country-level consultations. The Fund conducts regular discussions with regional entities of a number of currency unions, such as the West African Economic and Monetary Union, the Central African Economic and Monetary Community and the Eastern Caribbean Currency Board.

Other regular statistical publications of the Fund

The Fund produces a number of regular statistical publications covering its member countries, of which the following are the most important:

Balance of Payments Statistics Yearbook: An annual publication covering balance of payments data for about 160 countries and international investment position data for 48 countries, as well as regional and world totals of major balance-of-payments components.

Government Finance Statistics Yearbook: An annual publication providing detailed data on revenue, expenditures, financing and debt of central governments and, when available, data on state and local governments and institutional units of government.

International Financial Statistics: A monthly publication reporting current data on exchange rates, international liquidity, international banking, money and banking, interest rates, prices, production, international transactions, government accounts and national accounts, by country and for regional and world aggregates.

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