IMF ignores exchange rate surveillance …

For Saudi Arabia.

Just how is the continuation of Saudi Arabia's dollar peg consistent with the IMF's long-term expectations for oil prices ($40-55 a barrel?) and the dollar (tend to depreciate over time)?   And why does it make sense for a country with a very large current account surplus to continue to peg to currency of a country with a large current account deficit through 2010?

From the IMF Article IV, with emphasis added.

Directors supported the authorities' prudent conduct of monetary policy, which also entails increasing domestic interest rates in line with international developments in the interest rate structure. This policy is consistent with the exchange rate peg, and has contributed to Saudi Arabia's remarkable degree of price stability. Directors endorsed the authorities' decision to keep the current pegged exchange rate regime unchanged in the period leading to the Gulf Cooperation Council (GCC) monetary union in 2010.

I can see why the G-7 is calling for the IMF to take a bit more active role in exchange rate surveillance.  That doesn't mean endorsing the current exchange rate policy of every country.

I know the Saudis are not terribly transparent, but one last thing:  Shouldn't the IMF be able to do better than just putting up an end-of-2004 forecasts for Saudi Arabia's fiscal and current account surpluses?  We are almost in 2006 now.  Hint - try $100 billion for the 2005 current account surplus.