Chapter

CHAPTER 7 Technical Assistance and Training

Author(s):
International Monetary Fund
Published Date:
September 2000
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The IMF offers its member countries a broad range of technical assistance and training in macroeconomic management covering fiscal, monetary, statistical, and legal areas. In the field, it provides this assistance through missions by IMF staff from various departments, supplemented by hired consultants and experts. The work is complemented by headquarters’ support. Training courses and seminars are conducted by the IMF Institute and other departments, both at headquarters and overseas. A Technical Assistance Committee–composed of senior staff from each of the IMF’s departments and assisted by a Technical Assistance Secretariat—advises IMF management on priorities and policies and coordinates assistance activities within the IMF.

Technical assistance continued at a high pace in FY2000, with demands placed on the IMF as part of the international effort to strengthen the global financial architecture. The Board conducted a major review of technical assistance in June 1999 and published an IMF Policy Statement on Technical Assistance in March 2000.

Developments in FY2000

Technical assistance to members remained a major part of the IMF’s work in FY2000, accounting for about 19 percent of total IMF administrative spending. Staff and experts supplied more than 300 person-years of services (see Table 7.1), comparable to the annual average for the past five years and more than double that of the late 1980s and early 1990s. The regional distribution of IMF technical assistance in FY2000 was similar to that in the previous year, except that the share for Asia and Pacific area countries was lower as their demand eased with the resolution of the Asian financial crisis. Technical assistance was equally allocated between the fiscal and monetary areas, which together accounted for about 70 percent of total assistance (see Figure 7.1).

Table 7.1Technical Assistance Delivery

(Effective person-years) 1

1996/971997/981998/991999/002
IMF technical assistance resources172.7189.6201.7211.2
Staff97.1103.998.9107.3
Headquarters based consultants20.120.821.225.2
Experts55.564.981.678.7
External technical assistance resources104.296.2100.086.9
United Nations Development Program21.524.414.49.6
Japan67.355.670.967.6
Other15.416.215.09.7
Total technical assistance resources277.0285.7301.7298.1
Total resources by department
Monetary and Exchange Affairs
Department114.6110.6120.8105.3
Fiscal Affairs Department96.298.8101.7103.4
Statistics Department36.639.038.942.0
IMF Institute11.012.115.427.3
Legal Department9.310.310.79.6
Other39.314.914.310.5
Total regional use by department251.0258.7274.0271.3
African Department54.565.872.176.5
Asia and Pacific Department49.042.557.649.0
European 1 Department22.523.822.427.3
European 11 Department57.652.647.149.5
Middle Eastern Department26.529.532.530.1
Western Hemisphere Department31.235.232.129.0
Interregional9.68.610.28.2
Nonregional use26.126.927.726.8
Total technical assistance use277.0285.6301.7298.1

An effective person-year of technical assistance is 260 days.

Estimated.

“Other” includes the Policy Development and Review Department, Bureau of Information and Technology Services, and Technical Assistance Secretariat.

An effective person-year of technical assistance is 260 days.

Estimated.

“Other” includes the Policy Development and Review Department, Bureau of Information and Technology Services, and Technical Assistance Secretariat.

Figure 7.1Composition of Technical Assistance, Financial Year 2000

(As a percent of total resources in effective personyears)1

1An effective person-year of technical assistance is 260 days. For the IMF Institute, figure excludes training provided or coordinated by the Institute at headquarters.

In addition to its own budgeted resources for technical assistance and training, the IMF administers financing provided by several bilateral and multilateral donors—including Australia, Denmark, France, Switzerland, Japan, New Zealand, and the United Kingdom, as well as the Asian Development Bank, the United Nations Development Program (UNDP), and the World Bank—either through the Framework Administered Account for Technical Assistance (established by the IMF in 1995), or through cost sharing under UNDP projects executed by the IMF or other arrangements with the IMF. Some donors—such as Norway, Sweden, the United Kingdom, the Inter-American Development Bank, and the European Union—have also coordinated technical assistance cofinancing arrangements with the IMF. In FY2000, external financing accounted for about 30 percent of the IMF’s total technical assistance and training activities, with Japan continuing to be the largest source of such external financing. The Technical Assistance Secretariat coordinates the management of this financing.

The IMF Institute continued to expand its training in different parts of the world. Building on earlier collaborative arrangements with partners, it launched the Joint Africa Training Institute (JAI) in 1999 with the World Bank and the African Development Bank. In 2000, it established the Joint China-IMF Training Program with the People’s Bank of China to deliver training to government officials in China, with six courses and one high-level seminar to be conducted in 2000. The Institute also delivered for the first time a distance learning course on financial programming and policies for 50 government officials. Participants received eight weeks of training in their home countries and attended a two-week residential workshop in Washington. Finally, as part of the Institute’s continuous restructuring of its curriculum to better meet the need for training in new, specialized policy areas, the Institute delivered several courses in financial sector issues at headquarters and overseas.

In FY2000, a number of IMF initiatives relating to strengthening the architecture of the international monetary system began to generate new demands for technical assistance. Work on standards and codes, including fiscal transparency assessments, led to requests for technical assistance in carrying out the assessments, and in implementing recommendations, particularly on fiscal transparency issues. Financial Sector Assessment Programs (FSAPs), under which financial vulnerabilities are reviewed and measures recommended to strengthen financial systems, have also identified needs that prompted requests for assistance in such areas as secondary market development and risk assessment methodologies. Similarly, work on the Special Data Dissemination Standard and the General Data Dissemination System has generated needs for technical assistance and training in macroeconomic statistics. (see Chapter 4 for details on these initiatives.)

Technical assistance to support rehabilitation and recovery in countries emerging from conflict has always demanded a fast, flexible, and wide-ranging response from the IMF. In FY2000, several new entities (East Timor and Kosovo; see Box 7.1) and other countries recovering from violence (Liberia and Sierra Leone) received considerable IMF technical assistance—coordinated with the help of other providers—to support the creation or rehabilitation of fiscal, financial, and statistical institutions, and the development of policymaking capacity.

Review of Technical Assistance

In June 1999, the Executive Board discussed the IMF’s technical assistance program and how to make it more efficient and effective, drawing on a review prepared by the IMF’s Office of Internal Audit and Inspection. Generally, the Board favored better integrating technical assistance into a country’s overall policy framework; improving the follow-up and implementation of recommendations; strengthening communication and coordination among providers, and between providers and national authorities; and improving the process for selecting experts. The Board underscored the importance of better integrating technical assistance with IMF surveillance and program activities—which all contribute to the same ultimate objectives. Directors supported pursuing, selectively and experimentally, consultations on technical assistance needs in connection with country (Article IV) discussions and drawing up Technical Cooperation Action Plans that place needs in a medium-term framework for countries with substantial need for technical assistance.

Technical assistance will clearly have a more sustained impact if governments are committed to effective implementation. It should be confined to areas within the IMF’s core responsibilities and for which the staff has significant specialized expertise. Directors agreed that ongoing work on internationally agreed standards and codes of transparency could affect the demand for such assistance. Long-term experts could usefully complement assistance by staff and short-term experts, but requests for them should be scrutinized carefully and such experts should be overseen by headquarters staff. The impact of technical assistance would depend substantially on the transfer of knowledge and skills to officials in the recipient country. Assistance thus had to be conveyed in a clear and operationally useful way. Directors agreed with an enhanced effort to promote the public dissemination of best practices and lessons of technical assistance of general interest.

Directors stressed the need for comprehensive and rigorous evaluation of IMF technical assistance activities, including both ongoing self-evaluations and periodic broader independent assessments. They encouraged the staff to review, with the Board’s Evaluation Group, possible approaches to evaluation, including those of other providers. Directors favored resuming periodic and comprehensive reporting to the Board on the IMF’s technical assistance activities, the first report to be issued by mid-2000. They requested that a policy statement be prepared for Executive Board discussion presenting specific proposals on objectives, and the operational framework and evaluation methodologies of technical assistance.

Follow-Up to Technical Assistance Review

Following the June 1999 review, the steps taken by the IMF to implement the Board’s recommendation included:

  • Preparation and publication of a policy statement on technical assistance. In March 2000, the IMF issued its first Policy Statement on IMF Technical Assistance (see below). The statement reflects Executive Directors’ views expressed during the Board discussions in June and December 1999. It covers the scope and focus of technical assistance, criteria for its allocation, the need for recipient ownership, and the issues associated with publication and evaluation.
  • Resumed annual reporting on technical assistance to the Board. Regular annual reporting to the Board on technical assistance activities will resume in mid-2000. The report covers the traditional areas of technical assistance delivery by department, but also focuses on evolving issues, new trends, and evaluations.
  • Integrating technical assistance more closely with surveillance and program activities. To achieve this, the IMF proceeded on a pilot basis and in a limited number of countries to carry out consultations with governments on technical assistance needs in connection with country (Article IV) consultations. These consultations include, among other things, a review of past technical assistance where applicable, and agreement on broad priorities for future IMF technical assistance. For countries with substantial technical assistance needs, the IMF also prepared—on a pilot basis, with governments, and where appropriate, other multilateral and bilateral aid agencies—medium-term technical cooperation action plans. In mid-2001, the IMF will report on the experience with these pilots to the Executive Board, which will then review their effectiveness and resource implications.
  • Strengthened monitoring and evaluation. A paper on “The Evaluation of Technical Assistance by Other Providers” was circulated to Executive Directors for their information in March 2000. This paper examines the technical assistance policies and procedures of other institutions and is serving as background for guiding the ongoing work on developing appropriate systems for more rigorous monitoring of technical assistance in the IMF.
  • Enhanced collaboration with other technical assistance providers. The additional technical and institutional capacities that governments will need to develop under the Poverty Reduction Strategy Papers and the Initiative for Heavily Indebted Poor Countries (see Chapter 5), as well as the architecture initiatives noted above, are expected to boost demand for IMF technical assistance resources even further. These requirements, together with needs identified under the Technical Cooperation Action Plans, will likely exceed the IMF’s technical assistance resources and it will be necessary to involve other donor agencies more closely. Thus, in FY2000 the IMF initiated a series of consultations with other multilateral and bilateral donor agencies to strengthen ongoing collaboration and coordination and to forge new partnerships.

Box 7.1post conflict Technical Assistance for Kosovo and East Timor

In the case of two recent post conflict situations, Kosovo and East Timor, the United Nations asked the IMF to provide immediate technical assistance to help establish basic institutional capacity in the monetary and fiscal areas.

Monetary

The IMF’s Monetary and Exchange Affairs Department (MAE) advised on how to establish essential money and payment services quickly and on developing the institutional structure for modern, market-economy-based money and banking services. Most of MAE’s recommendations have been carried out by the respective local UN administrations, with MAE technical assistance providers coordinating the efforts of other donors.

In Kosovo, MAE personnel prepared four draft laws (on the use of currencies, banking, the establishment of the Banking and Payments Authority of Kosovo (BPK), and payment transactions). The first three of these were adopted in late 1999. The IMF is providing financing for the Managing Director of the Kosovo Banking and Payment Authority, and the U.S. Agency for International Development is financing four resident senior executives; both have provided many short term expert visits as well. The BPK officially opened on May 19, 2000. It has already licensed four banks and is providing payment services in deutsche mark. The training of Kosovars in the new operating procedures began in May 2000. Most foreign experts are expected to be replaced early in 2001.

In East Timor, MAE assisted with the preparation of key financial legislation. Regulations to establish the Central Payments Office, to designate the U.S. dollar as the official currency of East Timor, to license currency exchange bureaus, and to oversee a comprehensive banking system were approved by the UN Transitional Authority for East Timor in January and February 2000.

Fiscal

The IMF’s Fiscal Affairs Department (FAD) advised on how to establish essential fiscal institutions virtually from scratch. The approach taken was similar in both cases, and most of FAD’s recommendations have been implemented in Kosovo; it is too soon to assess progress in East Timor, where the assistance began six months later. Following the passage of enabling legislation in Kosovo, the central fiscal authority is now operating as a fledgling ministry of finance. The Fiscal Affairs Department coordinated this effort with the World Bank, the Euro The IMF’s Fiscal Affairs Department (FAD) advised on how to establish essential fiscal institutions virtually from scratch. The approach taken was similar in both cases, and most of FAD’s recommendations have been implemented in Kosovo; it is too soon to assess progress in East Timor, where the assistance began six months later. Following the passage of enabling legislation in Kosovo, the central fiscal authority is now operating as a fledgling ministry of finance. The Fiscal Affairs Department coordinated this effort with the World Bank, the European Union, and bilateral donors, orchestrating assistance from different sources and guiding the work of the provided experts. In Kosovo, where the major bilateral partner has been the U.S. government, progress has been excellent, with the central fiscal authority operating smoothly and nationals soon ready to take over.

The challenge in East Timor is more daunting. Although a central fiscal authority exists by law, it is not currently functional. Few East Timorese have the background or skills to work in such an institution. Equally problematic is finding experts to staff the central fiscal authority and to finalize the donor funding arrangements required to pay for the technical assistance.

The IMF’s Fiscal Affairs Department drew two conclusions from these post conflict experiences in Kosovo and East Timor. First, the overriding concern should be to establish a minimum fiscal administrative capacity as quickly as possible while meeting an acceptable level of transparency and accountability. Second, unlike most situations where experts act as advisors to the authorities, in these situations experts need to be given executive and line responsibility to have the central fiscal authority operating effectively even before training of counterparts takes place.

Policyl Statement on IMF Technical Assistance

Objective of Assistance Program

In accord with the IMF’s first Article of Agreement, the objective of the IMF’s technical assistance1 program is to contribute to the development of the productive resources of member countries by enhancing the effectiveness of economic policy and financial management. The IMF’s technical assistance program works to achieve this objective in two ways. First, much of the IMF’s technical assistance seeks to support the efforts of members to strengthen their capacity—in both human and institutional resources—to formulate and implement sustainable, growth-oriented, and poverty-reducing macroeconomic, financial, and structural policies. Second, the IMF assists countries in the design of appropriate macroeconomic and structural policy reforms, taking account of the lessons learned by other countries in addressing similar economic policy concerns. In both ways, IMF technical assistance provides a cooperative framework for the sharing of knowledge and international experience, in a lasting manner, with member countries.

Scope and Nature

The IMF seeks to provide technical assistance as efficiently and effectively as possible in its core substantive areas of competency, namely:

  • macroeconomic policy formulation and management;
  • monetary policy; central banking; the financial system; and foreign exchange markets and policy;
  • fiscal policy, public finances, and fiscal management;
  • external debt monitoring; and
  • macroeconomic, external, fiscal, and financial statistics.

The specific topics covered, and the relative emphasis given, are very much influenced by the issues that emerge in the course of the IMF’s surveillance and program activities, such as the recent focus on the links between high-quality growth and poverty reduction.

The Annex to this statement describes the technical assistance provided by the functional departments of the IMF. The IMF’s regional (or area) departments, which are responsible for country-level management of surveillance and program operations, collaborate closely with the functional departments in the planning, implementation, monitoring, and follow-up of technical assistance.

Mode of delivery. Technical assistance is provided in a variety of forms. These include staff missions from headquarters; the placement of experts for periods ranging from a few months to a few years (depending on the nature of the tasks to be done and the capacity and interest of the countries concerned); the preparation of technical and diagnostic reports; the delivery of training courses, seminars, and workshops; and the on-line provision of advice and support from headquarters. Technical assistance and training are also delivered from regionally based centers.

Recruitment of experts. The IMF provides the services of qualified experts, either directly from its staff or from external sources. These are often drawn from the staff, or former staff, of member country ministries, institutions, and agencies. The IMF seeks to expand and review its roster of experts, in order to ensure an adequate supply of well-qualified specialists that are conversant with technical developments in their particular fields of expertise. The principal approach to identifying candidates is through the IMF’s contacts with central banks, financial supervision agencies, ministries of finance, tax and customs departments, and statistical offices. Advertising is also occasionally used for highly specific scarce skills. The importance of appropriate language, communication, and pedagogic skills is recognized in the recruitment of staff and experts. All IMF experts are professionally supervised and administratively backstopped by technically qualified IMF headquarters staff. The IMF’s resident representatives also liaise closely with experts during their assignments. During staff visits, area departments may follow up on the implementation of technical assistance related policy advice and the work of experts.

Collaboration with other technical assistance providers. The IMF is committed to cooperate and collaborate with other providers of technical assistance. The global decline in Official Development Assistance levels underscores the need to ensure that duplication and overlap in coverage are avoided and that technical assistance is delivered by the most appropriate source within a carefully coordinated framework. The limited character of the technical assistance provided by the IMF offers a fruitful basis for such collaboration, with the IMF’s provision of experts usefully complemented by technical assistance-related services and equipment offered by other technical assistance agencies.

Determining Technical Assistance Priorities

The sources of demand for IMF technical assistance. The IMF’s technical assistance services are one of the benefits and rights of membership, and its provision, in almost all cases, is not related to IMF conditionality.2 Much of the demand by countries for the IMF’s technical assistance services arises from the perception of recipient governments that such assistance can play an important role in helping them to strengthen their implementation of policies. As indicated above, the IMF’s surveillance and program activities may also generate requests for technical assistance. Specifically, it is often in discussions with country authorities during Article IV consultations, or when designing and monitoring IMFsupported programs, that the needs for capacity building and policy strengthening are mutually recognized and the concomitant requirements for technical assistance clearly identified. Recently, the IMF has given added emphasis to the importance of a better integration of technical assistance with its surveillance and program activities. In this regard, it stresses the importance of encouraging countries to identify their technical assistance needs and priorities well in advance, rather than waiting for problems to emerge. Working in partnership, the IMF and governments are thus moving further from a “reactive” to a more “proactive” stance in the planning, prioritization, and delivery of technical assistance.

Linking technical assistance with surveillance. This objective is currently being pursued, on an experimental basis, in two respects. First, Technical Assistance Consultations (TCs) have been added to the agenda of a selected number of Article IV missions. A TC provides an opportunity for discussions on the effectiveness of past IMF technical assistance and on the scope and direction of future possible assistance from the IMF. Secondly, for countries facing critical capacity constraints in their efforts to implement programs of economic and financial reforms, the IMF initiated a pilot project involving the preparation of medium-term Technical Cooperation Action Plans (TCAPs). TCAPs are intended to comprise a comprehensive assessment of a country’s or subregion’s macroeconomic and financial management weaknesses in the core areas of the IMF’s work and an elaboration of a technical assistance program for addressing these. Such exercises are carried out by IMF staff and the country authorities with the active participation and support of other interested donors. The preparation of a TCAP is seen as the beginning of a dynamic process that would involve a commitment by the authorities, the IMF, and other donors to provide resources to implement the TCAP and jointly to monitor and adjust its implementation over an agreed time period.

Unanticipated sources of demand. Despite the intention to improve projections of technical assistance requirements through the TCs and TCAPs, some of the demand for technical assistance from the IMF will still arise in response to unexpected changes in the policy environment of a country—a change in government, an unanticipated crisis, or an external shock. There is thus expected to remain a continuing element of unpredictability in the demand for technical assistance services, and an important characteristic of the IMF’s technical assistance program will remain its capacity to respond quickly to such situations.

Prioritizing technical assistance requests. Technical assistance is provided only when requested by a country’s authorities. 3 Since the demand for such assistance normally exceeds the resources available from the IMF, a number of considerations are taken into account in prioritizing country requests. In order of their relative importance, these are the extent to which:

  • a country’s authorities are strongly supportive of obtaining the technical assistance and committed to ensuring its implementation. Such commitment is critical for the technical assistance to be effective and have a measurable impact. A strong prior track record in effectively using the IMF’s technical assistance services is one key indicator of country commitment;
  • the technical assistance addresses those weaknesses in a country’s institutional capacity for macroeconomic policy implementation that have been identified in the course of the IMF’s surveillance and other work;
  • technical assistance contributes to strengthening a country’s capacity to design and implement an IMF-supported program, especially in the preparation of a Poverty Reduction Strategy Paper and in the implementation of a Poverty Reduction and Growth Facility program;
  • technical assistance supports a country’s efforts in complying with internationally agreed standards and codes of statistical, fiscal, and financial transparency;
  • other donors cannot provide the requested assistance;
  • technical assistance would be the only benefit of IMF membership accruing to a country; and
  • technical assistance can be provided in collaboration with other technical assistance providers, since this allows the IMF to use its cooperation with other donors to leverage its limited resources.

While emphasizing the need to apply the above criteria systematically when appraising individual requests for technical assistance, the IMF recognizes that at times two additional factors may influence a decision to provide technical assistance:

  • the systemic or regional importance of the requesting country; and/or
  • the emergence of the need for technical assistance as a result of a postcrisis situation.

With respect to the former, even when it is clear that a technical assistance project may not be fully effective, the IMF may provide critically necessary technical assistance in order to maximize the prospects for successful macroeconomic policy implementation. With respect to the latter, when countries are faced with the task of rebuilding their basic macroeconomic management institutions, the international community has come to expect that the IMF will be able to respond to these needs, even when the risk of failure is considered high.

Role of Recipient Governments in Realizing Effective Technical Assistance

Strengthening recipient country ownership. The IMF’s technical assistance program is based on the fundamental principle that to be effective and to have a high impact, it is important to ensure that a partner country is fully committed to owning the work associated with the assistance and implementing the recommendations flowing from the technical assistance. This underscores the importance of having IMF technical assistance activities planned and implemented with the full involvement of the recipient authorities at each of the various stages of the process, from identification of need through discussion and agreement on terms of reference and project objectives, to implementation, monitoring, and evaluation. Particularly when it is intended to field a long-term expert—whether on a full-time or peripatetic basis—close consultation with the authorities is critical in order to ensure that the conditions are right for making good use of an expert’s time. Such consultation should result in reaching agreement on the type of expert required; the needed qualifications and experience; and, ultimately, on the individual chosen to provide the technical assistance. A mutual review of the results of past and current technical assistance efforts, including a country’s track record in the implementation of technical assistance recommendations, and a consideration of future needs, are important aspects of the process of enhancing ownership by recipient country authorities.

Charging policy of the IMF for its technical assistance. In line with the practice of other bilateral and multilateral agencies, the IMF’s technical assistance is generally provided free of charge. The exception relates to the assignment of long-term experts (defined as experts residing in a country for six months or more), for which countries may be asked to make a specified financial (or equivalent in-kind) contribution to the IMF. Whether a contribution is required, and the amount charged, depends on the country’s ability to pay, although no member is denied access to technical assistance because it is unable to pay. The IMF’s management determines the charges within a basic policy framework on country contributions established by the IMF’s Executive Board. As a cooperative undertaking between the IMF and the requesting country, the IMF recognizes that successful technical assistance requires careful preparation and commitment of resources by the recipient authorities. Important in this regard are the assignment of counterpart staff and adequate complementary resources (for example, office space and equipment, administrative support staff, communications facilities, material supplies, and utilities), all of which amount to a considerable real cost for the recipient government, over and above whatever charges may be levied by the IMF.

Monitoring and Evaluation

Development of a cost-effective and well-integrated system of monitoring and evaluation. Monitoring and evaluation are essential for ensuring accountability and transparency in technical assistance activities; for assessing their relevance, efficiency, effectiveness, and impact; and for drawing lessons on how to strengthen ongoing and future technical assistance operations. The size of the IMF’s technical assistance program, though still modest by international standards, has reached a level requiring the adoption of a systematic approach to technical assistance monitoring and evaluation. Staff are in the process of preparing proposals in this area, drawing on the experience and current practices of other agencies. Monitoring needs to involve both IMF staff and country authorities in order to ensure that all ongoing technical assistance efforts are meeting agreed targets and objectives and producing the required outputs. Monitoring also inevitably involves making evaluative judgments during a project’s lifetime, which are then used to improve ongoing implementation efforts. In contrast, more analytical evaluation exercises generally take a longer-term perspective, are often carried out independently of the directly involved staff (sometimes by external evaluators), and focus mainly on completed operations or on completed operations of an ongoing program.

A common approach to monitoring and evaluation will be developed to enable judgments across countries and selected subject areas, so that lessons can be drawn and used to strengthen future operations. All monitoring and evaluation activities will require input from the recipient authorities, at the project and policy level, to ensure their views on the reasons for success and failure of technical assistance are fully taken into account. In-depth, thematic evaluation studies on selected topics are expected to complement routine and comprehensive monitoring activities by individual technical assistance departments. Such studies serve as a cross-check on the consistency and quality of the advice rendered, and allow for an assessment of the policy and capacity-building impact of the technical assistance provided and of its sustainability. Independent evaluations will also be undertaken, taking account of budgetary implications.

External Dissemination

The IMF recognizes the importance of disseminating information on its technical assistance activities of general interest both to the membership and the public at large. One vehicle for this will be an Annual Report on Technical Assistance to the Executive Board, which will summarize technical assistance activities and related technical assistance policy developments over the previous year, as well as the outcome of monitoring and evaluation efforts. The report will also highlight any policy issues on which Board guidance may be needed.

In the interests of transparency and a well-informed public, the IMF believes that information on the lessons learned from the IMF’s technical assistance program, as well as on the assistance provided to individual countries, should be disseminated as widely as possible. Thus, information on the general substance of the IMF’s technical policy advice in the different functional areas is disseminated both through IMF research and other publications (e.g., handbooks, occasional papers, and pamphlets), and increasingly on the IMF’s external website. 4 While the IMF recognizes the public interest would also be served by the provision of information on the country specific advice tendered by the IMF, it is also important to recognize that members may seek the IMF’s technical advice on a confidential basis. It is thus appropriate that a member country should have the right to decide on whether to allow publication of this advice. For this reason, individual technical assistance reports will continue to be circulated on a restricted basis within the IMF, the World Bank, and other cooperating donor agencies, with wider distribution contingent upon the permission of the country concerned.

Internal Management of Technical Assistance

Although the management of the IMF’s technical assistance program is largely devolved to individual departments, IMF wide policies and procedures governing the financing, planning, implementation, monitoring, evaluation, and reporting of technical assistance are coordinated and developed by a senior-level Technical Assistance Committee (TAC). Reporting directly to the Deputy Managing Director responsible for technical assistance matters, the TAC also acts as a forum for reaching agreement on recommendations to management on the allocation of technical assistance resources across the different geographic regions and functional areas. In addition, it serves as the coordinator for pilot technical assistance initiatives undertaken by the IMF (such as the recent experiment with TCs and TCAPs) and for the implementation of the reforms that emanated from the Executive Board’s June 1999 review of the IMF’s technical assistance activities. The TAC and its subcommittees are supported by a small unit, the Technical Assistance Secretariat (TAS), attached to the Office of Budget and Planning in the Office of the Managing Director, which also assists in negotiating and administering technical assistance agreements with other agencies and donors. The TAS compiles aggregate data on planned and actual technical assistance delivery for internal and external reporting purposes.

Role of External Financing

In recent years, the IMF has sought to expand its range of contacts and collaboration with other technical assistance providers. For example, the IMF has cooperated with other donor agencies on a number of large-scale integrated multiyear technical assistance projects of administrative and institutional reform. Equally, the IMF’s technical assistance program has benefited from generous cofinancing from a few multilateral and bilateral agencies, which have supplemented the IMF’s own budgetary resources for these activities. As the IMF’s mandate broadens, the pressure of demand on its technical assistance resources is likely to increase further—for work on implementing the new international codes and standards; for work on strengthening the banking sector and financial systems; for helping HIPC countries undertake debt sustainability analyses and manage their debt reduction programs; and for public expenditure management and statistical technical assistance in connection with the design and implementation of Poverty Reduction Strategy Papers and IMFsupported policy programs under the new Poverty Reduction and Growth Facility. The IMF will seek every opportunity to cooperate with other agencies in these areas. The TCAPs in particular will require the close involvement of other donor agencies,5 since effecting and financing their implementation will greatly exceed the technical assistance resources and instruments available to the IMF.

The IMF encourages member countries who have not yet done so to consider providing such complementary financial support in order to enhance the resources available for technical assistance, preferably in a manner that is as unrestricted as possible. Meanwhile, the IMF’s efforts to deepen technical assistance collaboration with its multilateral and bilateral development partners will continue.

Annex Types of Technical Assistance by IMF Department

Fiscal Affairs Department

Tax policy: advising on improving the administrative and economic efficiency of indirect taxes (sales taxes, VAT, and excises), corporate and personal income taxes, payroll and social fund taxes, property taxes, and tariffs—including issues arising in connection with minimum taxes, tax incentive provisions, taxation of financial services and transactions; tax treatment of international capital flows, cross-border issues in both direct and indirect taxes, agricultural taxation, ad valorem versus specific excise rates; and interactions between inflation and taxation.

Tax and customs administration: providing advice and assistance on improving the effectiveness of tax and customs administration; increasing tax compliance through strengthening of collection, audit, and taxpayer service functions; implementing significant new taxes; establishing special controls over the largest taxpayers; introducing measures to bring small and medium-sized taxpayers into the tax net; and rationalizing customs procedures to secure revenue and facilitate trade.

Budgeting and public expenditure management: advising on strengthening budget planning and preparation, budget execution, auditing, classifying government accounts and data reporting, establishing treasury systems, harmonizing regional budget practices, assessing transparency of fiscal systems, and, in particular, ensuring conformity with the Code of Fiscal Transparency.

Expenditure policy: although principally the responsibility of the World Bank, occasional missions carrying out expenditure reviews, formulating social safety net schemes, and rationalizing social insurance schemes.

Fiscal federalism: although principally the responsibility of the World Bank, occasional missions to assess approaches to rationalizing interregional transfers systems, consider assignments of tax and expenditure responsibilities, and formulate approaches to regulate borrowing by decentralized governmental units.

Fiscal and macroeconomic management: advising on ways to strengthen the capacity to undertake fiscal management in a macroeconomic context through institutional restructuring, adoption of improved techniques of macrofiscal analysis, and provision of appropriate training.

Training: preparation and delivery of courses on topics in public finance in a number of languages and, on occasion, in country-tailored seminars.

IMF Institute

Delivery of policy-oriented training: organizing policy oriented training courses and seminars for officials of member countries on a range of topics relating to macroeconomic and financial policy formulation and implementation. These courses, seminars, and conferences—held in Washington, at regional training centers, and in member countries—are designed to improve the ability of officials to manage economies and conduct appropriate policies. Schedules, administrative information, and training material are accessible from the IMF website (www.imf.org/external/np/ins).

Legal Department

Drafting legislation, commenting on draft legislation prepared by the authorities of member countries, drafting implementing regulations, and providing other legal advice and training with a focus on the following areas: central banking, commercial banking, foreign exchange, taxation (including all taxes as well as tax administration and procedure), customs regulations, budget law, collateral law, bankruptcy law, and other economic laws.

Monetary and Exchange Affairs Department

Central banking and currency arrangements: advising on the establishment and strengthening of the organization and operation of central banks, currency boards, and other currency arrangements; the issuance of new currencies; central bank accounting and internal audit; and associated legislative, regulatory, and organizational reforms.

Monetary and exchange policy operations, and public debt management: advising on the design and implementation of monetary policy instruments and operations; money and exchange market intervention techniques and procedures; institutional framework and instruments for public debt management; and coordination with monetary management.

Financial market development, focusing particularly on money, government debt, and foreign exchange markets: advising on the development of efficient primary, secondary, and derivative markets and instruments; market regulation and organization (agents, trading arrangements, accounting, settlement systems, and codes of conduct); and measures to strengthen market depth and liquidity.

Exchange systems and currency convertibility: advising on the design of exchange systems, exchange regulations, and the choice of exchange rate arrangements; foreign exchange reserve management practices and operations; and reforms to support progress toward currency convertibility for current and capital account transactions.

Payment systems: advising on the organization and oversight of payment systems, policies to reduce systemic risk in payment clearing and settlement systems, as well as on the promotion of operational efficiency; also, advising on interbank and securities settlement systems and linkages to monetary policy.

Bank supervision and regulation: advising on techniques of prudential regulation and supervision, including licensing, on-site and off-site inspection procedures, risk assessment and risk management, capital adequacy, loan classification and provisioning, other prudential rules, reform of banking laws, and organization of the banking supervision function.

Bank restructuring and banking safety nets: in collaboration with the World Bank, advising on the development and implementation of strategies for banking system restructuring and bank exit, management of systemic banking crises, deposit guarantee schemes and liquidity support facilities, techniques for bank recapitalization, and arrangements for loan recovery.

Implementation of international standards: in collaboration with international regulatory bodies, regional supervisory organizations, cooperating central banks, financial supervisory agencies, and the World Bank, assisting members in their assessments of compliance with international standards related to the financial system, including Basel Core Principles and Code of Good Practices on Transparency in Monetary and Financial Policies, and advising on the implementation of such standards.

Policy Development and Review Department

External debt monitoring: advising and assisting in the creation of wide-coverage, high-frequency debt monitoring systems created by authorities (usually based in central banks) in emerging markets to provide them with timely information on market sentiment and to help them monitor the participation by banks or other creditors in the context of efforts to prevent or resolve financial crises.

Statistics Department

In all the areas listed below, technical assistance is designed to improve the collection, compilation, and dissemination of official statistics. In addition to providing assessments with respect to accuracy, coverage, and timeliness, technical assistance missions in each area often deliver on-the-job training, and help design statistical reporting forms and classification keys, as well as short- and medium-term action plans for improving statistical procedures.

Multisector statistical issues: carrying out multisector missions to provide an assessment of weaknesses in specific areas, as well as assisting in the development of statistical legislation, institutional organization of statistics, national statistical policy and strategy, and interagency coordination and consistency issues.

Balance of payments and external debt statistics: assessing the accuracy and comprehensiveness of data collection and compilation systems for international transactions in goods and services; financial flows, including direct and portfolio investment; and international investment position statistics.

Government finance statistics: providing guidance on the compilation and reporting of fiscal data, focusing on comprehensiveness of institutional coverage of government, preparation of bridge tables linking national classifications with international standards, and assessment of the consistency of bank financing of the deficit with the monetary accounts.

Monetary and financial statistics: advising on the adequacy of institutional coverage; appropriate classification of monetary accounts in terms of financial instruments, residency, and institutional sector; proper valuation of instruments; and correct statistical treatment of derivative instruments and banks under liquidation.

National accounts and price statistics: providing guidance to governments in their efforts to develop annual and quarterly national accounts, and advising on efforts to overhaul or update a producer price, consumer price, or international trade price index system.

Data dissemination standards: assisting countries in preparing metadata submissions and complying with the requirements of the Special Data Dissemination Standard (SDDS) or with participation in the General Data Dissemination System (GDDS); and advising countries on the status of their dissemination practices vis-a-vis the dissemination standards.

Technology and General Services Department

Support for technical assistance projects keyed to other IMF departments: for example, for Monetary and Exchange Affairs: assisting in developing systems for central banking operations, book-entry systems for government securities, banking supervision systems; for Fiscal Affairs: assisting in designing computer-based financial, budget, and expenditure control and information systems for ministries of finance; for Statistics: elaborating systems to collect and manage financial and economic time-series data or systems that facilitate econometric analyses.

1The term “technical assistance” as used here includes training provided to country officials such as that organized by the IMF Institute.
2Eligibility for technical assistance for countries in protracted arrears to the IMF is restricted in the absence of specific approval of the Executive Board, which takes account of a country’s degree of cooperation with the IMF in seeking to redress its arrears difficulties.
3Technical assistance may also be provided, with the Board’s agreement, to nonmembers and to international organizations.
4In this connection, a website will be established dealing with technical assistance issues, both as a vehicle for dissemination of information and as a conduit for feedback to the IMF.
5It will be particularly important to work with the World Bank and the UNDP, to ensure consistency with the Bank’s Comprehensive Development Framework and the UN system’s Country Strategy.

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