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Wide-ranging needs translate into increased demand for IMF technical assistance

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
January 2002
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The IMF provides technical assistance to its member countries in policy areas within its core mandate—namely, macroeconomic, monetary and foreign exchange, fiscal, external debt, and statistics. The IMF began to provide technical assistance to its members in 1964 in response to requests from newly independent African and Asian countries for help in establishing their central banks and ministries of finance.

The IMF’s technical assistance activities grew rapidly and, by the mid-1980s, the number of staff years 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. In addition to supporting the work of crisis prevention and management, and restoration of macroeconomic stability in postcrisis situations, the IMF provides assistance to countries that are following up on recommendations from Financial Sector Assessments, adopting international standards and codes, improving their tracking of public expenditures, and combating money laundering and the financing of terrorism.

IMF technical assistance in financial year 2002, by region

(percent of total resources)

Data: IMF, Annual Report 2002

The IMF’s technical assistance has grown from just under 70 person-years in 1970 to approximately 340 person-years annually and represents about 25 percent of the IMF’s total administrative budget.

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; and

  • institution and capacity building in central banks, treasuries, tax and customs departments, and statistical services.

Technical assistance is provided through missions, short- and long-term assignment of experts, and regional technical assistance centers. Two regional technical assistance centers have been established, one serving the small island economies of the Pacific, and the other serving the CARICOM countries and the Dominican Republic. Two more centers are planned to open later this year in Africa (see page 2). 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 and 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 developments and monetary analysis and research.

The Fiscal Affairs Department is responsible for providing policy advice and capacity building for revenue collection 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 assists members in meeting internationally accepted standards of statistical reporting. The agreement on the Special Data

Dissemination Standard has increased the demand for the department’s assistance, which covers monetary, balance of payments, national accounts, and government finance statistics.

The IMF Institute provides training to officials at IMF headquarters, at 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 prepare legislation and advises 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 and training on 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 Technology and General Services Department helps member countries automate and modernize computer operations in their central banks, finance ministries, and statistical offices.

External cooperation

In recent years, technical assistance projects have grown both larger and more complex, requiring multiple sources of financing. Large projects may 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 World Bank; the Asian Development Bank; the European Union; and the governments of Australia, Canada, Denmark, France, Ireland, Italy, Japan, the Netherlands, New Zealand, Switzerland, the United Kingdom, and the United States. The government of Japan also makes generous annual contributions to IMF scholarship programs. Such cooperative arrangements with multilateral and bilateral donors not only support activities financially but also help prevent 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.

A country’s commitment to reforms, a stable macroeconomic environment, and an adequate administrative structure are crucial for the successful implementation of technical assistance.

In response to the ever-increasing demand for technical assistance, the IMF sets clear priorities so that its resources can be allocated among member countries and regions in the most effective and efficient manner.

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, which is chaired by a Deputy Managing Director—takes part in this process. The Office of Technical Assistance Management has been established to help management develop policies guiding the delivery of technical assistance and the coordination of technical assistance within the IMF, as well as the collaboration with donor partners and technical assistance providers.

A number of conditions have been identified as being crucial for the successful implementation of technical assistance—in particular, commitment of the country authorities to policy and institutional reforms, a stable and cohesive macroeconomic environment, and an adequate administrative structure and local counterparts with appropriate skills.

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