The International Monetary Fund came under a withering attack yesterday from its internal self-policing watchdog, which demanded far-reaching reforms to improve effectiveness.

The IMF was accused of being widely perceived as both slow to respond to emerging world issues and ineffective in delivering strategies.

The charges were levelled in a report from the IMF's Independent Evaluation Office, the IEO, which called for action to bolster the legitimacy of the fund's top governing bodies and tougher international oversight of its day-to-day management.

The report said that an overhaul of the fund's operations and governance needed to go still further than recent reforms of its 185 member countries' voting rights, which gave some emerging market countries a bigger say.

Tom Bernes, the head of the IEO, said: “Our evaluation finds that reforms have not kept pace with broader changes in the environment in which the fund operates.” The IEO called for moves to clarify the roles of the IMF's executive board of officials from constituent groups of member nations, and of its policy-setting International Monetary and Financial Committee (IMFC).

The IMF's managing director, Dominique Strauss-Kahn, and his three deputies, should face more rigorous scrutiny of their decisions and actions by both the board and IMFC, the report said. It argued that a new council should take charge of setting strategy and policing management. The existing executive board was too involved in day-to-day management at a detailed level and needed to restrict its role.

It said the size of the board, which has doubled from 12 to 24, hampers its effectiveness. Disgruntled developing countries have long argued that European countries are over-represented and should see their participation cut to a single seat. The IEO also found evidence of a “chilling effect” deterring board representatives, especially those from poorer states, from challenging management and staff views “for fear of negative repercussions”.

Mr Strauss-Kahn welcomed the IEO findings and said that they should be considered the beginning of a process for broader governance reforms at the IMF. He said he would announce reform initiatives in coming weeks.

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