The IMF provides technical advice and training to help strengthen the design and implementation of macroeconomic and financial sector policies in member countries and boost the institutional capacity of their governments. Sound economic policymaking and implementation require know-how and effective government institutions. Many developing countries, in particular, need help to build up expertise in economic management and advice about what policies, reforms, and institutional arrangements are appropriate and have worked well elsewhere.
Through staff missions sent from headquarters, the provision of specialists on a short-term basis, resident advisors, and training in the field or at the Fund’s headquarters or its regional training institutes, the IMF offers technical assistance in the core areas of its expertise. These include macroeconomic policy formulation and management; monetary policy; central banking; the financial system; foreign exchange markets and policy; public finances and fiscal management; and macroeconomic, external, fiscal, and financial statistics (see Indonesia, next page). Such assistance is a benefit of IMF membership and is free except for countries that can afford to reimburse the IMF.
In the early to mid-1990s, as the IMF’s membership expanded to include a number of countries in transition from centrally planned to market-based economies, the Fund’s technical assistance grew rapidly. More recently, the IMF’s efforts to strengthen the global financial system so as to reduce the risk of crises and improve the management and resolution of those that do occur have generated new demands for technical assistance, from countries seeking to adopt international standards and codes for financial, fiscal, and statistical management. The Fund’s recent work on offshore financial centers and the fight against money laundering and the financing of terrorism have also required extra technical assistance. In addition, the IMF has mounted significant efforts, in coordination with other bilateral and multilateral technical assistance providers, to give prompt policy advice and operational assistance to countries emerging from armed conflict. At the same time, there is a continuing demand from low-income countries for help with debt sustainability analysis and the management of debt-reduction programs, and with designing and implementing programs to enhance growth and accelerate poverty reduction.
Increasingly, the IMF has been organizing its technical assistance and training at a regional level. It operates five regional technical assistance centers, two in Africa and one each in the Caribbean, the Middle East, and the Pacific. In addition to training offered at headquarters, the IMF offers courses and seminars through regional institutes and programs. There are currently four regional training centers: The Joint Regional Training Center for Latin America (in Brazil), the Joint Africa Institute (in Tunisia), the IMF-Singapore Regional Training Institute (in Singapore), and the Joint Vienna Institute (in Austria). The IMF has furthermore set up training programs in collaboration with China and the Arab Monetary Fund. In FY2004, external financing paid for 29 percent of total technical assistance delivered by the IMF Japan remained the largest single donor, providing some 60 percent of all the external finance.
Boosting tax revenues in Indonesia
Indonesia made significant progress during 2002-03 in strengthening its tax and customs administrations with assistance from the IMF. Initiatives to register more corporate and individual taxpayers, rationalize audit programs, and speed up the collection of tax arrears generated tax revenues amounting to 0.3 percent of GDP in 2002 and 0.5 percent of GDP in 2003. Indonesia also set up a modern tax office dedicated to large taxpayers and a computerized system for filing tax returns and recording tax payments. In the area of customs administration, a comprehensive modernization strategy is being carried out by streamlining customs clearance procedures, curbing smuggling, controlling undervaluation of imports, and improving the customs department’s governance.
Reform of Indonesia’s revenue administration has benefited from close cooperation between the IMF and donor agencies from Australia, Canada, and the United States.
The IMF is also coordinating technical assistance from donors in the area of legal reform. The program, financed by the Netherlands, is helping Indonesia authorities to establish an effective bankruptcy regime and a competent and objective judiciary to enforce it.
The IMF Institute trains officials from member countries through courses and seminars in the core areas of macroeconomic policy management, and financial sector, fiscal, and external sector policies. Training is offered by staff from the Institute and other IMF departments, occasionally assisted by outside academics and experts. Applications from developing and transition country officials are given preference. In FY2004, the IMF Institute, with the assistance of other IMF departments, offered 120 courses, attended by 3,846 participants. Much of the training was provided through the IMF’s four regional centers, located in Austria, Brazil, Singapore, and Tunisia, and through the programs operated in collaboration with China and the Arab Monetary Fund. Training in Washington, including through longer courses, continued to play an important role, accounting for about one-third of participant-weeks. The remainder of the training was at locations outside the IMF regional network, largely as part of collaboration between the IMF Institute and national or regional training programs but also in the form of distance learning.