The IMF’s best kept secret is SPR, its magnificent, maleficent politburo

The author is an ex-IMF (and SPR) official and former acting governor of the State Bank of Pakistan.

The choreography of IMF missions is depressingly familiar. After weeks of heated negotiations, country officials desperately seeking an IMF bailout are presented with a list of exasperating demands they need to meet before finally gaining access to the Fund’s coffers.

Like the closing scene of a Greek tragedy, these demands invariably lead to public outrage that crescendoes into an epic confrontation. In a final show of defiance before capitulating, government officials and the rabid parts of the domestic media take potshots at the eponymous messenger of the Fund’s tough love — the “mission chief” who has travelled first class from Washington DC to become the face of the IMF and the bearer of bad news.

The poker-faced mission chief is invariably lampooned for lacking empathy, being insufficiently sensitive to realpolitik, and imposing a one size fits all program copied and pasted from some antiquated playbook. If only countries knew where most of the IMF’s demands actually originate, and how much frustration the mission chief herself is hiding behind that brilliant disguise of bureaucratic impenetrability.

Enter the IMF’s secretive politburo, a department innocuously called Strategy, Policy and Review, or SPR for short. These are the men and women in black, hiding in the shadows, calling most of the shots but taking none of the blame.

Like Keyser Söze in The Usual Suspects, the greatest trick the IMF ever pulled is convincing the world that SPR does not exist. If you look closely, however, you will begin to notice its fingerprints all over the IMF.

“Primus inter pares”, the “alpha male” of the Fund’s departments, the IMF’s “politburo”. These tongue-in-cheek epithets used for SPR inside the IMF are a testament to its enormous behind-the-scenes power. Crucially, no IMF report of any consequence can be put out without its approval. Without its consent, no Fund policy (such as that governing capital controls, debt sustainability or IMF lending) or IMF country program can see the light of day.

SPR derives its power from its assigned role as the Fund’s internal police, tasked with ensuring that mission chiefs toe the IMF’s party line. The logic behind SPR’s outsized influence is that mission chiefs can become soft and “go native” by virtue of their continuous interaction with country officials. As a result, they need to be saved from themselves and whipped into line every now and then.

SPR is considered to be more objective, thanks to operating in the shadows and in the safety of headquarters. Its dark-arts orientation also endows it with the sang-froid needed to twist the knife when tough measures are deemed necessary to save the country and protect the IMF’s money.

Or at least that’s the idea. The truth is that SPR has, over time, become less of an internally maligned but essentially benign overlord of the Fund’s zeitgeist and more of a thorn in the side of mission chiefs and sensible policymaking.

Internally, away from the sight of the world, mission chiefs time and again bow down to SPR, typically with as much exasperation as the country authorities yield to the wishes of mission chiefs. Time and again, SPR is like a dementor sucking all the joy out of country work.

It was not always this way. In the past, the top echelons of SPR used to be experienced IMF staffers that had done the rounds through different departments — including as mission chiefs. This allowed them to appreciate the subtle art of negotiation and the compromises that are needed in any Fund program. It freed them up to speak truth to power.

Their lack of obsequiousness meant that IMF management was also more willing to over-rule SPR, at least occasionally. As a result, the balance of power was actually pretty even. Mission chiefs often won when push came to shove. There was also less of a demand from the IMF’s executive board for “even-handedness” across countries, and the cookie-cutter approach it can devolve into. Trust and chemistry between the mission chief and country authorities, together with on-the-ground realities, mattered a lot more in designing Fund programs.

All told, there was a less adversarial relationship between mission chiefs and SPR, with the latter providing more support and less obstruction. As a result, IMF programs used to be more flexible and pragmatic.

All of these things are less true today, and the IMF (and the world) is poorer for it. These days, SPR acts more like the handmaid of IMF management looking to mould Fund policies to the whims of large shareholders.

As the Fund’s top management has become less technocratic and more political (especially over the last decade), SPR’s top staff have arguably also become more politicised and less objective. SPR has time and again been used to push through Fund programs and changes to IMF policies needed to accommodate shifting geopolitical winds (just look at Greece, Egypt, Argentina and Ukraine recently).

Given this newfound role, SPR has become even more influential within the internal power structure of the IMF. Management now ensures that loyalists are appointed to top SPR jobs to keep it onside, and often sides with the department rather than the mission chief on important issues where internal staff consensus proves elusive.

Unfortunately, this cosier relationship with top management has diminished SPR’s reputation in the eyes of IMF staff. Unlike the past, fewer of the best mission chiefs view it as a worthwhile career pitstop. And when they are looking for career mobility, most SPR staff find that it becomes a lot like Hotel California. The lamentable consequence is that SPR has become a more insular and incestuous department, with less of an appreciation for what life on the road and negotiations with countries are really like.

At a time when the global economy is grappling with huge threats posed by climate change, US-China rivalry and runaway public debt, we all have a stake in ensuring that SPR can recover its mojo. In particular, the delicate yin and yang of SPR and mission chief oversight over IMF programs — and SPR standing up to unreasonable management demands — needs to be returned to the days of yore. Only then can we reasonably expect out-of-the box solutions for global cooperation and IMF program design to emerge.

David Lipton, the popular former first deputy managing director of the IMF, once remarked that the difference between the World Bank and the IMF was that the latter was greater than the sum of its parts. And that SPR — which has no equivalent at the World Bank — was what gave the Fund this arithmetic alchemy.

Clearly, then, for all our sakes, SPR needs to be made great again. I say this as one of its old foot soldiers, who has many fond memories of its glory days.


Business Asia
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