The IMF provides technical assistance to its member countries in areas within its core mandate—namely, macroeconomic policy, monetary and foreign exchange policy and systems, fiscal policy and management, external debt, and macroeconomic statistics. The IMF began to extend technical assistance to its members in 1964 in response to requests from newly independent African and Asian countries for help in establishing their own central banks and ministries of finance.
The IMF’s technical assistance activities grew rapidly and, by the mid-1980s, the number of staff members devoted to these activities had almost doubled. In the 1990s, many countries–those of the former Soviet Union as well as a number of countries in eastern Europe–moved from command to market-oriented economies, turning to the IMF for technical assistance. The IMF has also helped countries and territories establish governmental institutions following severe civil unrest–for example, in Angola, Cambodia, East Timor, Haiti, Kosovo, Lebanon, Namibia, Rwanda, and Yemen. The IMF’s technical assistance has grown from almost 70 person-years in 1970 to about 300 person-years annually by 2000 and represents about 15 percent of the IMF’s total administrative expenditures.
Types of technical assistance
The IMF provides technical assistance in three broad areas:
- designing and implementing fiscal and monetary policies;
- drafting and reviewing economic and financial legislation, regulations, and procedures, thereby helping to resolve difficulties that often lie at the heart of macroeconomic imbalances; and
- institution and capacity building, such as in central banks, treasuries, tax and customs departments, and statistical services.
Technical assistance is provided through missions and short- and long-term assignments of experts to institutions in member countries. In addition, the IMF trains officials from its member countries through courses offered at its headquarters in Washington, as well as at the Joint Vienna Institute, the Singapore Training Institute, the Joint Africa Institute, the Joint Regional Training Center for Latin America, and other regional and subregional locations. Assistance is provided through several IMF departments.
The Monetary and Exchange Affairs Department focuses on central banking and exchange system issues as well as on designing or improving monetary policy instruments. Its assistance covers banking regulation, supervision, and restructuring; foreign exchange management and operations; central bank organization and management; central bank accounting; clearing and settlement systems for payments; monetary operations and money market development; and monetary analysis and research.
The Fiscal Affairs Department is responsible for providing policy advice on revenue collections and tax and customs administration; public expenditure management, including budget preparation and execution, as well as treasury operations; and pension reform and social safety net issues.
The Statistics Department helps members meet internationally accepted standards of statistical reporting. The agreement on the Special Data Dissemination Standard has already increased the demand for the department’s assistance, which covers monetary, balance of payments, real sector, and government finance statistics.
The IMF Institute provides training to officials at IMF headquarters, its regional centers, and through in-country courses. The courses and seminars cover a variety of topics, including financial programming and policy, financial analysis, public finance, external sector policies, statistics, banking supervision, and monetary exchange operations. The institute also manages scholarship programs for economists from Asia that are funded by Japan and Australia in those countries and at North American universities.
The Legal Department helps members draft legislation and educates senior government lawyers, mainly in the laws of central banking, commercial banking, foreign exchange, and fiscal affairs.
The Policy Development and Review Department provides advice on debt policy and management and on the design and implementation of trade policy reforms.
The Treasurer’s Department provides technical assistance in the IMF’s financial organization and operations, the establishment and maintenance of IMF accounts, accounting for IMF transactions and positions by members, and other matters related to members’ transactions with the IMF.
The Bureau of Information Technology Services helps member countries automate and modernize computer operations in their central banks, finance ministries, and statistical offices to enable them to take advantage of available technologies.
In recent years, technical assistance projects have grown both larger and more complex, requiring multiple sources of financing to support activities. Large projects now commonly involve more than one IMF department and more than one development partner. Donors with which the IMF cooperates include the United Nations and the United Nations Development Program; the governments of Australia, Canada, Denmark, France, Japan, the Netherlands, New Zealand, Switzerland, and the United Kingdom; the World Bank; the Asian Development Bank; and the European Union. The government of Japan also makes generous annual contributions to IMF technical assistance programs and scholarship support. Such cooperative arrangements with multilateral and bilateral donors not only support activities financially but also help avoid conflicting advice and redundant activities and have led to a more integrated approach to the planning and implementation of technical assistance. As the demand for technical assistance in macroeconomic and financial management grows, such arrangements will become even more valuable.
Composition of technical assistance in financial year 2001
Data: IMF, Annual Report 2001
In response to the ever-increasing demand for its technical assistance, the IMF must set clear priorities so that its resources are allocated among member countries and regions in the most efficient way possible. The IMF’s area (regional) departments are instrumental in identifying countries’ technical assistance needs, and an interdepartmental committee of senior IMF staff–the Technical Assistance Committee—assists in this process. A number of conditions have been identified as being crucial for the successful implementation of technical assistance: commitment of the country authorities to policy and institutional reforms; a stable and cohesive macro-economic environment; and an adequate administrative structure and local counterparts with appropriate skills.