International Monetary Fund:
Status of Efforts to Strengthen Safeguards Over Lending
NSIAD-00-211: Published: Sep 1, 2000. Publicly Released: Sep 1, 2000.
- Full Report:
Pursuant to a congressional request, GAO provided a status report on whether the International Monetary Fund's (IMF) policies provide reasonable assurances that financial resources provided to member countries are adequately safeguarded, focusing on the: (1) appropriate use of IMF resources by borrowers; and (2) accuracy of economic and financial information reported by borrowers, and upon which the IMF makes lending decisions.
GAO noted that: (1) IMF's long- standing method for safeguarding its resources against misuse by borrowers has primarily been to monitor borrowers' compliance with specific, agreed-upon loan conditions and IMF management believes that this means of assurance has generally been adequate; (2) however, according to a study conducted by IMF staff, IMF's financial resources have been vulnerable to borrower misuse, because IMF had not typically assessed the control procedures exercised by its borrowers' monetary authorities over their resources; (3) without such assessments, IMF did not have reasonable assurance that the borrowers' systems of internal controls, accounting, reporting, and auditing were adequate to ensure the integrity of the borrowers' financial operations; (4) although internal controls can be circumvented, an assessment as to the adequacy of these controls could lead to improved financial reporting and detection of the IMF of resources; (5) IMF has introduced additional measures for safeguarding its resources; (6) beginning with loans approved after June 30, 2000, IMF's policy is to assess the control environment of borrowing countries' central banks, particularly their internal controls and accounting and reporting systems, to evaluate the integrity of their operations; (7) as of July 1, 2000, IMF implemented a policy of requiring all borrowers to publish financial statements of their central banks, audited by independent external auditors in accordance with internationally accepted standards; (8) despite measures to prevent borrowers' misreporting of information, the internal IMF study concluded in February 2000 that IMF faced limitations in its ability to obtain assurances as to the accuracy of information that borrowers reported; (9) in several instances, borrowers reported inaccurate information to IMF and received loan funds to which they may not have been entitled; (10) according to IMF study, IMF remained vulnerable to borrowers receiving loan funds based on misreported information; (11) to address these concerns, IMF has taken several steps; and (12) IMF's management has also begun to strengthen its internal operating practices for monitoring borrowers' compliance with loan conditions and reporting requirements, but it has not yet completed and reported its plans in this area.