OREANDA-NEWS. April 28, 2010. At the session Hans-Rudolf Merz, Minister of Finance of Switzerland speaking on behalf of Azerbaijan and a range of other countries in the IMF Board of Directors said that the Fund’s core mandate should be focused on effective crisis prevention in normal times; crisis-lending should only complement this role.

Changes in the Fund’s policies and procedures must build on its particular institutional strengths, expertise, and comparative advantages, while also affirming a sensible division of labor and cooperation with other international bodies. Further policy refinements should thus focus on strengthening bilateral, multilateral, and financial sector surveillance, rather than on expanding the Fund’s lending toolkit.

The bilateral surveillance process with members should be preserved and its regular character maintained and clarified. Bilateral surveillance enables the Fund to assess each country’s policy implementation and to be a valuable advisor to member authorities. It is also through regular consultations with each member that the Fund has the biggest impact on members’ policies and sets itself apart from other international financial institutions. Proposals to strengthen the legal framework of Article IV consultations are thus welcome. It is a general concern that surveillance has not enough traction in member countries. To rectify this problem, countries should clearly commit to fulfilling their membership obligations.

“I welcome the IMF staff’s intention to buttress multilateral surveillance, including by initiating ad-hoc multilateral consultations on special topics and through spillover reports, which should be of particular interest to the membership. A multilateral surveillance decision could be helpful to implement the envisaged improvements.

“I strongly endorse strengthening financial sector surveillance. I am ready to support the adjustments in resources, organization, and operations that will enhance the coverage of financial sector issues throughout the Fund. In particular, I support making decisions on inclusion of module on stability in FSAP as compulsory part of surveillance. I don’t see a necessity to change drastically set of Fund’s crediting. The IMF plays an important role in international financial stability by easing adaptation of the members to shocks on the basis of the agreement on rational macroeconomic structure with support of temporary financing. I don’t believe that the Fund can diverge from traditional role,” Mr. Merz said.