Have you ever had the experience when the ATM spat your card out with the screen flashing "INSUFFICIENT FUNDS". Surprised? Did you forget to top up your account? If you think running out of money is an inconvenience, imagine the same problem on a national or even global scale. Investors, bankers, and government policy-makers all hate these kinds of surprises, too. Without up to date economic data, a local problem in one country can cause trouble for other countries that have financial dealings there.
One of the International Monetary Fund's (IMF) most important jobs is to conduct an annual "checkup" of the economy of all the IMF's member countries. These checkups help uncover issues in a country's economy that other member countries may be unaware of. Sharing accurate, objective information avoids nasty surprises in international trade and monetary exchange.
The annual economic checkup is called the Article IV consultation. The name "Article IV," comes from the IMF's rules that all member countries have agreed to. These rules direct the IMF to keep tabs on economic policies in each member country where a group of IMF staff visit a particular member country and will collect economic data and statistics and meet with various government and banking officials. They will prepare a report for the IMF Executive Directors and also use the information when they discuss the country and offer it advice. If it has an economic problem, it could grow to hurt other countries. IMF also functioned as a lender of last resorts. If a government is bankrupt or unable to pay for its operations, they can turn to the IMF for financial assistance. However IMF will impose many conditions for that loans which may be painful to the countries concerned such as the need for increasing revenues (taxes), reducing expenditures (less subsidies etc). It is better not to be in that position.
The IMF collects among others, these three main data:
- The values and amounts of the country's imports and exports - This can help tell if the country's international trade is healthy.
- The amounts of government tax income and operating expenses, including civil service wages - This can confirm whether the government is allowing its debts to grow too much to be good for the economy.
- Interest rates and currency exchange rates - These figures help tell if there is enough money available for investment and whether the country's exports are competitive on the international market.
The same Article IV mission was here in Brunei Darussalam last July. In fact the IMF missions have been coming almost every year to Brunei Darussalam since we became the 180th member of IMF in 1995, conducting a 'checkup' on our economy and the government finances. One of the least known fact to most Bruneians and in fact to almost most citizens of the various countries in the world is that their country is being checked, inspected and audited. The Brunei government has to tell IMF everything and the IMF gets data on everything they wanted and if they don't like the data or think the data is suspect, they can get their data elsewhere. The mission produced a confidential staff report telling the government what's wrong and what needs to be done. Even though the report is confidential, a short executive summary called the Public Information Notice (PIN) is always made public. As usual this year's PIN on Brunei will be made available on IMF's website for you to read (I will inform you once IMF releases it) and you don't have to wait to read it in BB next year. So, if you are under the impression that the Brunei government is not being scrutinised, think again.
PS. The following are links to the IMF website containing documents on Brunei Darussalam if you are interested to follow up further:-