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Some IMF Staff Too Defensive With Internal Auditor, Report Says

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March 29 (Bloomberg) -- Some employees of the International Monetary Fund are acting too defensively and are sometimes even “antagonistic” toward recommendations presented by the lender’s internal auditor, a report found.

Such behavior toward the IMF’s Independent Evaluation Office is more widespread among senior staff members and more common than it used to be, according to the report by three former government and IMF officials, which was commissioned by the board of directors and published today.

“We believe these attitudes are counter-productive and need to be constructively addressed,” the authors, who include former Colombian Finance Minister Jose Antonio Ocampo, wrote. “This requires significant dialogue and rebuilding mutual trust between management, staff and the IEO.”

Tensions built between the IEO and the fund’s staff last year when the internal auditor said the lender had overemphasized the risks posed by countries such as China and South Korea amassing too many reserve assets. In a response to that audit, the staff said the report “misconstrues the motives of the fund.”

“Tensions between the fund staff and the IEO are to some extent inevitable, and disagreements often constructive,” IMF Managing Director Christine Lagarde said in a statement released with the report. “At the same time, the panel is right that the relationship needs to improve, and the IEO will become even more effective with greater engagement with and from the fund.”

A majority of employees and board member see the IEO contribution to IMF ideas as positive, according to today’s report.

Still, the report also criticized the use made of the auditor’s recommendations, which “tend to be watered down at each stage” of their implementation. The IEO has also been too restricted in the topics it can write about, according to the report.

To contact the reporter on this story: Sandrine Rastello in Washington at srastello@bloomberg.net

To contact the editor responsible for this story: Chris Wellisz at cwellisz@bloomberg.net

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