Central Banking Technical Assistance to Countries in Transition

Statement of the Bank of Estonia

Susana Almuina, Ian McCarthy, Gabriel Sensenbrenner, and Justin Zulu
Published Date:
December 1995
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At the Bank of Estonia, technical assistance is divided into two parts—technical assistance and training—and is carried out by two separate departments—the International Office and the Personnel Department. This division is because the Bank is working in two directions: helping different departments to prepare the development process according to its needs, which is an issue of technical assistance, and educating the staff, which is an issue of training. However, we have noticed that this kind of division between technical assistance and training is not always the best solution, as sometimes the border between the two is unclear. We are trying to work out the most convenient way to coordinate these two fields.

Decision making in the fields of technical assistance and training is done separately by the responsible officers together with the heads of departments and experts from other institutions in Estonia. Information is exchanged and meetings are organized between the involved persons. Senior management of the Bank of Estonia is interrelated in the process by a vice president, the coordinator for technical assistance at the management level and responsible for the development processes in the Bank of Estonia.

Offers for technical assistance are mainly selected on the basis of our needs and possibilities and are assessed closely in connection with the development processes in that specific field. Priorities are established by the Bank of Estonia, and when a need has arisen we look for the best solution to find assistance from the donor countries and organizations. We try to assess carefully the offered technical assistance according to our needs and our possibilities to absorb it effectively.

In the beginning of re-establishing the Bank of Estonia we encountered a lack of coordination among the donor organizations, which sometimes caused duplication of offered assistance. On our part, we did not pay so much attention to the determination and prioritization of our needs, and decisions were mostly made to find solutions to the existing problems at that moment. This led to the situation where consultants were sent to Estonia who made enquiries about the same things and questioned the same officers of the Bank of Estonia. This problem has diminished, and we have started to plan the technical assistance according to our medium-and long-term needs. However, our rapidly changing and developing environment may sometimes cause changes in the re-evaluation of our needs and specific projects, and thus may be creating confusion also for the donor organizations.

Exchanges of views on the technical assistance process with other central banks have been informal rather than formal. We have had very good contacts with the United Kingdom, Switzerland, Austria, and the United States in areas of training and with the Nordic central banks, especially Finland and Sweden, concerning the practical exchange of knowledge in specific areas. We are most grateful for that opportunity. The Bank of Estonia has provided feedback to the donor organizations during various direct meetings and conversations, and in writing if necessary. We also suggest that joint meetings between the recipient central banks and coordinating central banks could be organized at least once a year to provide sufficient feedback and a possibility to exchange views between different central banks.

We find that the key elements of success of technical assistance are the amount of preliminary work done by recipient officials in the fields of determination and prioritization of needs, competence of the recipient officials in their areas, and interest by the recipients in receiving technical assistance (for example, work before the start of the specific projects and cofinancing of projects) and an effective use of it. The key elements on the donor side would be knowledge of the institutional background, continuity of the participants in the missions in one area, and readiness to adapt quickly to the changing environment in the recipient country.

Our need for technical assistance and training becomes clear through practical everyday work and the senior management planning process for the Bank of Estonia. In the processes of our development, we have noticed an increased demand for the use of longer-term experts with on-site training in specific fields, instead of the many general and extensive missions.

According to an internal questionnaire, we have found out that there is a need for technical assistance in the fields of banking supervision, payments systems, and banking statistics and analysis. Currently we are working on banking supervision and implementation of modern bank accounting formulas, leading to new changes also in accounting of enterprises, together with the IMF. With the help of the assistance carried out previously by the experts of the IMF, our Balance of Payments Department has successfully started operations.

The effectiveness of the technical assistance delivered is assessed by the recipient officials and departments through joint meetings with donors and the discussion of the existing problems and the possible solutions for them. We carefully examine the reports prepared by the experts and analyze the next steps to be taken in specific fields. Information is also provided on whether that specific kind of assistance or training would be requested in the future.

We have shared our experience in making monetary and economic reforms to such countries as Turkmenistan, Armenia, Moldova, Georgia, Ukraine, and Uzbekistan, and we have found this kind of experience to be mutually useful and important, and we would like to continue this process in the future.

The Bank of Estonia has come to the conclusion that an essential part of the development of the overall banking system is close cooperation between the central bank and commercial banks. In the process of restructuring the banking sector in Estonia, the Bank of Estonia had the leading role in coordinating training and technical assistance to commercial banks. That particular role has diminished with the strengthening of the Banking Association. However, we still play an active part in helping to coordinate technical assistance and training to commercial banks.

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