Abstract

The need for further capacity building to develop and assess macroeconomic frameworks, analyze the dimensions and profile of poverty, and conduct poverty and social impact analysis has been noted by a wide array of internal and external commentators. This capacity building is required for governments, academics, and CSOs in PRGF countries and is seen as a key element in building greater ownership for program design and policy choices. Consistent with this perception, many people from these groups called for greater assistance by donors, the World Bank, and the IMF in helping to develop this capacity. Among the options for the IMF are continuing and strengthening macroeconomic training for civil society officials and expanding that training to CSOs in countries with PRGF-supported programs. Finally, there is scope for additional internal training of IMF staff to assist them in broadening their own capacity to incorporate poverty and social impact analysis into PRGF-supported programs.

The need for further capacity building to develop and assess macroeconomic frameworks, analyze the dimensions and profile of poverty, and conduct poverty and social impact analysis has been noted by a wide array of internal and external commentators. This capacity building is required for governments, academics, and CSOs in PRGF countries and is seen as a key element in building greater ownership for program design and policy choices. Consistent with this perception, many people from these groups called for greater assistance by donors, the World Bank, and the IMF in helping to develop this capacity. Among the options for the IMF are continuing and strengthening macroeconomic training for civil society officials and expanding that training to CSOs in countries with PRGF-supported programs. Finally, there is scope for additional internal training of IMF staff to assist them in broadening their own capacity to incorporate poverty and social impact analysis into PRGF-supported programs.

Technical Assistance

The IMF’s contribution to capacity building in HIPCs and countries participating in the PRSP process is being addressed in a multilateral context. To maximize the impact of technical assistance (TA), the IMF is focusing and setting priorities for its TA on the institution’s core macroeconomic and financial areas of responsibility, including public finance and administration, financial sector development, and development of sound statistical systems so as to support the member countries’ reform efforts and development goals.46 In particular, the IMF has supported a regional, country-based approach to TA for capacity building, including efforts to establish two new regional technical assistance centers scheduled to be opened in Africa in the summer of 2002. These centers have similar objectives: to focus TA squarely on capacity building; to increase the volume of TA to these countries; to raise the effectiveness of IMF TA projects through faster response, and strong ownership of the recipient governments; to increase positive externalities through sharing regionally based experiences; and to enhance accountability.

Although the IMF’s TA policy has undergone a major reorientation in the past couple of years, additional gains can be made by focusing even more closely on setting priorities for the IMF’s scarce TA resources to support both the goals of the IMF and the goals of the international community. Any additional resources for increased training of either government officials or CSO staff would need to be considered in the context of future budget discussions.47

Analytical Support

In parallel with supporting capacity building, the IMF’s research agenda is conducting additional work on the formulation of macroeconomic policies that explicitly take into account some of the distinguishing characteristics of low-income countries. In particular, the IMF is devoting attention to identifying the determinants of successful macroeconomic policies at different levels of economic development. It is also giving special emphasis to understanding the nature of shocks that low-income countries are subjected to and what the appropriate macroeconomic policy response should be. Such studies might provide important information to the staff on how to tailor monetary, fiscal, and exchange rate policies to the needs of the countries that are most likely to access the PRGF. Another relevant research project relates to the question of optimal conditionality design in poverty reduction programs. One area being explored is how to formulate “incentive-compatible” aid and debt relief programs when the preferences of the donor community and those of recipient country governments are not perfectly aligned.