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International Monetary Fund. Strategy, Policy, & Review Department
The coverage of risks has become more systematic since the Global Financial Crisis (GFC): staff reports now regularly identify major risks and provide an assessment of their likelihood and economic impact, summarized in Risk Assessment Matrices (RAM). But still limited attention is paid to the range of possible outcomes. Also, risk identification is useful only so much as to inform policy design to preemptively respond to relevant risks and/or better prepare for them. In this regard, policy recommendations in surveillance could be richer in considering various risk management approaches. To this end, progress is needed on two dimensions: • Increasing emphasis on the range of potential outcomes to improve policy design. • Encouraging more proactive policy advice on how to manage risks. Efforts should continue to leverage internal and external resources to support risk analysis and advice in surveillance.
International Monetary Fund. Strategy, Policy, & Review Department

scale and range of potential challenges call for a deeper and more holistic approach to risk assessment. A deeper appreciation of the range of outcomes should also be accompanied with a tighter integration of risk management within policy advice. Figure 2. CSR Survey: Confronting Risks and Uncertainties is Key Priority (Responses in percent) Source: CSR Survey. 5. This paper discusses how to adjust surveillance in response to these challenges. To set the stage, the paper starts by defining risk and the concept of risk management in the macroeconomic

International Monetary Fund. Strategy, Policy, & Review Department

Copyright Page IMF POLICY PAPER 2021 COMPREHENSIVE SURVEILLANCE REVIEW—BACKGROUND PAPER ON THE SURVEILLANCE PRIORITY CONFRONTING RISKS AND UNCERTAINTIES May 2021 IMF staff regularly produces papers proposing new IMF policies, exploring options for reform, or reviewing existing IMF policies and operations. The following documents have been released and are included in this package: The Staff Report , prepared by IMF staff and completed on March 19, 2021 for the Executive Board’s consideration on May 10, 2021. The IMF’s transparency policy

International Monetary Fund. Strategy, Policy, & Review Department
The scenario planning exercises help to draw out the surveillance priorities and stress- test the robustness of those priorities to uncertainties in the decade ahead. To inform the two priorities on confronting risks and uncertainties and mitigating spillovers, the scenarios illustrate how different shocks and alternative policy approaches carry their own risks and can have both positive and negative spillovers. The scenarios also illustrate some of the complex economic and non-economic factors that feed into the priority on economic sustainability and demonstrate how resource constraints and changing economic structures underpin the need for a unified policy approach.
International Monetary Fund. Strategy, Policy, & Review Department

more fragmentation than in other scenarios. Income inequality rose slightly on balance in Corponationals but fell in Big Data Building Blocs. The latter scenario is the most tech-forward amongst the three scenarios, and considers how different approaches to data privacy might generate different growth regimes. The concluding Section 3 provides tables comparing scenarios’ outcomes and lessons for the surveillance priorities, namely confronting risks and uncertainties, mitigating spillovers, fostering economic sustainability, and employing a unified policy approach

International Monetary Fund. Strategy, Policy, & Review Department
Fund surveillance needs to evolve to face the economic and financial challenges that will shape the global landscape for years to come. This paper first takes stock of the current economic and financial landscape. To better serve the membership in this context, Fund surveillance should be prioritized around four key priorities: (i) confronting risks and uncertainties: policymakers will need to actively manage the risks of a highly uncertain outlook; (ii) preempting and mitigating adverse spillovers: shifting patterns of global economic integration will bring about new channels for contagion and policy spillovers; (iii) fostering economic sustainability: a broader understanding of sustainability to better account for the impact of economic and non-economic developments on stability; and (iv) unified policy advice: better accounting for the trade-offs and synergies among different policy combinations in the face of limited policy space and overlapping priorities, tailored to country-specific circumstances. These priorities should further enhance the traction of Fund surveillance.
International Monetary Fund. Strategy, Policy, & Review Department

better position Fund surveillance and help the membership confront the challenges posed by the emerging macrofinancial landscape, the CSR proposes four surveillance priorities for the period ahead: Confronting risks and uncertainties . Policymakers will need to actively manage the risks and uncertain implications of the major underlying trends (discussed above) on growth prospects and economic and financial stability. In this context, Fund surveillance should take account of these risks more explicitly. This will require a better understanding of risk-reward trade

International Monetary Fund. Strategy, Policy, & Review Department
This Guidance Note provides guidance to country teams for surveillance under Article IV consultations. It supersedes the 2015 Guidance Note and its supplement. Fund surveillance continuously adapts to the evolving economic and financial landscape. The 2021 Comprehensive Surveillance Review (CSR) identified priorities for Fund surveillance, both in terms of content and modalities. This Guidance Note covers: Scope and requirements: The note lays out the coverage of, and formal requirements for, Article IV consultations and staff reports. It also outlines best practices aimed at enhancing the traction of Fund analysis and policy advice. Priorities and focus. The note reflects the four surveillance priorities identified in the CSR: (i) confronting risks and uncertainties, (ii) preempting and mitigating spillovers, (iii) ensuring economic sustainability, and (iv) adopting a more unified approach to policy advice. The note also provides guidance on sharpening the focus and selectivity of Article IV staff reports. Policies. The note discusses the content of surveillance in the areas of fiscal policy, macrofinancial analysis and financial policies, monetary policy, external sector policies, and macrostructural policies. Applications. The note considers several applications of such policies, such as with respect to the Integrated Policy Framework, climate change, and gender. Process and procedures. The note describes the Article IV consultation cycle and process, lays out drafting and publication guidelines for staff reports, and covers the treatment of confidential information.
International Monetary Fund. Strategy, Policy, & Review Department

Comprehensive Surveillance Review The 2021 Comprehensive Surveillance Review (CSR) identified the following surveillance and operational priorities. Surveillance Priorities Confronting risks and uncertainties. Consider the range of potential outcomes and provide more proactive advice on mitigating and managing risks. Preempting and mitigating spillovers. Ensure consistent coverage across members, enhance coverage of outward spillovers, strengthen the link between bilateral and multilateral surveillance, use the Fund’s convening power to encourage discussion