IMF Updates Safeguards Assessments, Highlights Risks in Central Bank Governance
SDG 8: Decent Work & Economic Growth | SDG 16: Peace, Justice & Strong Institutions
Institutions: Reserve Bank of India | Ministry of Finance
The International Monetary Fund (IMF) has released its 2025 Update on Safeguards Assessments (covering May 2022–April 2025). Safeguards assessments are IMF’s due-diligence mechanism to ensure that resources provided under IMF programs are not misused and that member central banks maintain sound reporting and governance standards.
The 2025 update records 44 completed assessments (with 4 in progress), most concentrated in Africa (43%), followed by the Middle East/Central Asia (23%) and Asia-Pacific (11%). The framework now includes a standalone governance pillar, coverage of central bank digital currencies (CBDCs), and Fiscal Safeguards Reviews (FSRs) for cases where treasuries manage IMF funds.
Findings show that while external audits and reporting improved, weaknesses persist in internal controls, oversight, and governance, especially around foreign reserves, liquidity operations, and internal audit functions. Implementation of recommendations remains uneven, given that many reforms require legal or structural changes. Monitoring now covers 86 central banks (up from 82 in 2022).
For India, where the RBI already maintains strong audit and disclosure practices, the IMF findings reinforce the need to further strengthen internal oversight, reserves management, and governance frameworks. This is critical as India explores CBDCs and deepens its global financial engagement.
What are Safeguards Assessments? → Reviews conducted by the IMF to evaluate central banks’ governance, audit, legal framework, financial reporting, and control systems, aimed at reducing risks of misuse of IMF resources and misreporting of data.
What is CBDC? → A Central Bank Digital Currency (CBDC) is the digital form of a country’s fiat currency, issued and regulated by its central bank. Unlike cryptocurrencies, CBDCs are sovereign money, designed to improve efficiency, financial inclusion, and cross-border payments. They also raise new governance and cybersecurity challenges.
What are FSRs? → Fiscal Safeguards Reviews (FSRs) are IMF assessments of a country’s treasury systems, conducted when IMF funds are managed by the government’s Ministry of Finance rather than the central bank. They check whether fiscal operations, like budget execution, accounting, and reporting, are strong enough to safeguard IMF resources.
Follow the full update here: IMF Report PDF