By Gerry Rice and Olga Stankova
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When it comes to forging economic policy, communicating with the public is no longer an afterthought. Instead, communications are increasingly seen as a policy tool in itself. To be sure, communications can never be a substitute for good policies. But economic reforms are more likely to fail or even be reversed unless they are understood, believed, and accepted by those whom they affect. The same principle applies to a wide range of policies—monetary, financial, fiscal, and structural.
The proliferation of social media makes it possible for ever more people to express their views on public policies, fueling rising expectations for transparency and accountability across the globe. As a result, policymakers face growing pressure to better explain their actions to a broader public and show that they merit support. That means they will have to work harder to make their messages heard, understood, and believed.
In a new paper, IMF staff draw on a large body of research to provide country authorities with an overview of frontier challenges in communications across different areas. Of course, each policy area faces its own, unique communications challenges. But they have enough in common to allow policymakers in one area to learn from the experiences of others. The paper also looks at country examples to highlight issues that arise and recur in a wide range of political systems and policy frameworks.
Communications can play a central role in restoring and maintaining trust.
Importance of trust
Trust is a central theme, because it is vital to the functioning of any economy and to the success of reforms. Polls across multiple countries show a long-running and deepening decline in trust in institutions and experts. The profound effects of the global financial crisis, increasing inequality, political polarization, and a lack of sincere attention to the needs of the public all seem to have contributed.
Communications can play a central role in restoring and maintaining trust. However, trust is not something that can easily be rebuilt once it has been broken, and efforts to restore trust will fail if communications are perceived as just another attempt at manipulation or “spin.” Instead, they may further erode trust. To be successful, both policies and communications must be trustworthy.
Learning from experience
Communicating effectively means learning from experience. It also means calibrating communications to fit distinct policy areas.
For example, in monetary policy, communications often take place within a well-established policy framework and play a central role in managing inflation expectations. There is a large empirical literature on how such communications work.
By contrast, in financial stability policy, the framework is still developing, and less is known about the most effective way to communicate. One challenge here is to find the right degree of transparency to avoid destabilizing financial markets.
In fiscal and structural policies, political economy considerations—who gets what, when, and how—is often at the very forefront of communications, with a high premium on both listening to and persuading the public. Brazil, for example, was a pioneer in public participation in the budget process, which has spread throughout Latin America. In many countries it is now required by law to listen to and consult civil society organizations on budget priorities.
And in a crisis, action may be required simultaneously in many policy areas. A coordinated approach to communications, with mutually supportive messages, can help maintain confidence and reduce the ultimate costs of the crisis.
New communications capacity
Despite diversity among areas of policy, communicating effectively with a broader audience is key for all countries. To succeed, it will be increasingly important to continuously upgrade communications capacity, harnessing new technologies, and using multiple channels, with many different paths from sender to receiver. A key goal is to reach audiences directly, with less intermediation. That is especially important in countries where specialized economic media are still developing, or a particular political agenda may be dominating.
An improved communications toolkit may also include behavioral insights, along with the ethical use of techniques such as audience segmentation, made easier in today’s social media world. Messages that connect with and are relatable to the intended audiences’ needs and interests and are tiered by channels and content can also help to build understanding. For example, the Bank of Jamaica has begun an innovative communications campaign to explain the benefits of price stability, including through social media, as well as TV and radio advertising using Jamaica’s popular reggae music.
Building understanding of policy is fundamental to its effectiveness. Better communications can help in the success of a country’s reform efforts. To this end, the experience of other countries and institutions can provide valuable insights.
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