Designing and implementing economic policy require know-how and effective government institutions. Many developing countries 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. The IMF provides such technical advice and training to officials in member countries. Poor countries receive this assistance free of charge.

Designing and implementing economic policy require know-how and effective government institutions. Many developing countries 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. The IMF provides such technical advice and training to officials in member countries. Poor countries receive this assistance free of charge.

Through staff missions sent from headquarters, the provision of specialists on a short-term basis, resident advisors, and training on the job or at the Fund’s headquarters or its regional training institutes, the IMF offers assistance in the core areas of its expertise. These include macroeconomic policy formulation and management; monetary policy; central banking; financial systems; foreign exchange markets and policy; public finances and fiscal management; and macroeconomic, external, fiscal, and financial statistics.

Since the early 1990s, as the IMF’s membership has expanded and a growing number of countries have made the transition to a market-oriented economy, the Fund’s technical assistance has increased rapidly. More recently, the IMF’s efforts to strengthen the global financial architecture 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 work on offshore financial centers, and the fight against money laundering and the financing of terrorism, have also been associated with new requests for technical assistance. In addition, the IMF has mounted significant efforts in recent years, in coordination with other bilateral and multilateral technical assistance providers, to give prompt policy advice and operational assistance to countries emerging from conflict. At the same time, there is a continuing demand from Heavily Indebted Poor Countries (HIPCs) for help with debt sustainability analyses and management of debt-reduction programs, and from low-income countries for help with the design and implementation of programs to enhance growth and reduce poverty.

The IMF is keen to make its technical assistance as effective as possible, particularly by integrating it more closely with its surveillance activities and its financial support for policy programs. To this end, it is reinforcing coordination and collaboration with other technical assistance providers, especially the World Bank (see Appendix IV); improving the way technical assistance is delivered, in particular by establishing regional technical assistance centers (Box 5.1); strengthening the monitoring and evaluation of its technical assistance program; and disseminating information on the program more widely.

Regional Delivery of Technical Assistance in Africa

As part of the IMF’s Africa Capacity-Building Initiative-which aims to increase the volume, range, and coordination of technical assistance from various multilateral and bilateral providers-the IMF opened two Africa Regional Technical Assistance Centers (AFRITACs) in 2002-03. AFRITAC East, based in Dar es Salaam, Tanzania, serves Eritrea, Ethiopia, Kenya, Rwanda, Tanzania, and Uganda. AFRITAC West, based in Bamako, Mali, serves Benin, Burkina Faso, Côte d’Ivoire, Guinea, Guinea-Bissau, Mali, Mauritania, Niger, Senegal, and Togo.

The AFRITACs aim to strengthen the capacity of African countries to design and implement their poverty reduction strategies, in particular by improving the coordination of technical assistance in the Poverty Reduction Strategy Paper (PRSP) process.

The IMF has made use of this regional approach in delivering technical assistance to its member countries since 1993, when it opened the Pacific Financial Technical Assistance Center (PFTAC) in Fiji. All of these regional centers are guided by steering committees with representatives from participating countries and supporting donor agencies, as well as observers from regional institutions involved in capacity building. Each country appoints a representative and an alternate to the committee. The committees hold semiannual meetings. Center coordinators, who are IMF staff members, have responsibility for the day-to-day management of the centers and their work programs.

At each center, a small number of resident advisors deliver technical assistance and training throughout the subregion; they are typically supported by short-term specialists. The benefits of this regional approach include flexibility to respond rapidly as needs emerge; the ability to make frequent follow-up visits, which keep up the momentum of reforms and solidify relationships; and continued access to high-quality technical expertise that might otherwise be difficult for resource-constrained countries to obtain. In addition, the format and role of the regional centers enable them to help shape and advance regional policy initiatives and strengthen cooperation.

In light of the growing demand and competing needs for technical assistance, the IMF must prioritize its technical assistance resources effectively. The Fund introduced a set of prioritization filters and guidelines in 2001 to enable its functional departments to align resources with recipient-country needs more systematically, consistent with the IMF’s core areas of competence, main program areas, and key policy initiatives. (See Box 5.2.)

External Financing

The IMF finances its technical assistance mainly from its own resources, but external financing provides an important complement. External financing is provided in the form of grant contributions, mainly under the IMF’s Framework Administered Account for Technical Assistance Activities but also through cost-sharing arrangements under United Nations Development Program (UNDP) projects and, in a small number of cases, direct reimbursement arrangements. There were 15 subaccounts under the umbrella Framework Administered Account in FY2004, including three multidonor subaccounts to support the Pacific Financial Technical Assistance Center (PFTAC), the Africa Regional Technical Assistance Centers (AFRITACs), and technical assistance to Iraq (see the “Other Administered Accounts” section of the Financial Statements for additional information). Box 5.3 describes the new subaccounts set up in the past financial year.

A Framework for Selecting Projects

The IMF’s Executive Board in FY2001 put in place a formal framework to allocate resources for technical assistance more effectively and better align technical assistance with policy priorities. Under this framework, IMF technical assistance is divided into five “main program areas”: crisis prevention, poverty reduction, crisis resolution and management, post-conflict/post-isolation cases, and regional/multilateral arrangements. These program areas are complemented by three categories of “filters,” as follows:

  • Target filters: the technical assistance must fall within the IMF’s core areas of specialization, support a limited number of key program areas, or buttress policy priorities.

  • Effectiveness filters: the technical assistance must be deemed to have a substantial impact and be effectively supported and implemented by the recipient country. It also should be sustainable in terms of financing and lasting in its effect.

  • Partnership filters: technical assistance requests have preference when delivered regionally, benefit several recipients, draw on multiple financial sources, or complement third-party assistance.

In FY2004, external financing accounted for 29 percent of total assistance delivered by the IMF. Japan remained the largest single donor, providing some 60 percent of all external finance for technical assistance. Other bilateral donors were Australia, Austria, Brazil, Canada, China, Denmark, Finland, France, Germany, India, Ireland, Italy, Luxembourg, the Netherlands, New Zealand, Norway, Portugal, Russia, Singapore, Sweden, Switzerland, the United Kingdom, and the United States. Multilateral donors were the African Development Bank, the Arab Monetary Fund, the Asian Development Bank, the European Commission, the Inter-American Development Bank, the United Nations, the UNDP, and the World Bank.

New Technical Assistance Subaccounts

The China Technical Assistance Subaccount was established in May 2003 as a special arrangement to co-finance the East AFRITAC. A contribution of $200,000 was received.

The Technical Assistance Subaccount for Iraq was established in July 2003 to enhance Iraq’s capacity to formulate and implement policies in the macroeconomic, fiscal, monetary, financial, and related statistical fields, including training programs and activities that strengthen the legal and administrative framework in these core areas. The United Kingdom, Canada, Australia, Italy, and India have pledged a total contribution of $7.6 million. (For more about Fund relations with Iraq, see Section 1.)

The Canada Technical Assistance Subaccount was established in January 2004 to promote voluntary compliance among taxpayers, increase the efficiency of tax administration, and restore taxpayers’ confidence in the fairness and integrity of tax administration in Indonesia. The Canadian International Development Agency (CIDA) has pledged a contribution of $2.3 million toward the Indonesia Tax Administration Reform project.

IMF technical assistance is coordinated and supervised by the Office of Technical Assistance Management in the Office of the Managing Director. A more complete description of the goals, scope, and operational methods of the IMF’s technical assistance is available in a number of documents, including the Policy Statement on IMF Technical Assistance, available on the IMF’s website.

Technical Assistance Delivery in FY2004

One way the IMF measures its technical assistance is by tracking the time spent helping countries. In FY2004 the IMF provided the equivalent of 367 person-years of technical assistance. This was 3 percent higher than in FY2003 and over 100 person-years higher than a decade earlier (263 person-years in FY1994).

Reflecting new needs within program areas, technical assistance in FY2004 increased for policy reform and capacity building. Assistance for countries trying to meet international standards and codes and to promote financial sector improvements also rose. Technical assistance for the Heavily Indebted Poor Countries (HIPC) Initiative declined, reflecting the maturing of the program (see Table 5.1).

Table 5.1

Technical Assistance Program Areas, FY2002-04

(Field delivery in person-years)1

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Source: IMF Office of Technical Assistance Management.Note: FSAP = Financial Sector Assessment Program, HIPC = Heavily Indebted Poor Countries Initiative, AML/CFT = Anti-Money-Laundering and Combating the Financing of Terrorism.

Excludes headquarters-based activities related to technical assistance. An effective person-year of technical assistance is 260 days.

Of all the regions, sub-Saharan Africa continued to receive the largest, and an increasing, share of IMF technical assistance. Technical assistance also increased, and has remained high, in the Asia-Pacific region, in part because of the assistance provided to post-conflict countries such as Cambodia and Timor-Leste, and support for reforms in China, Indonesia, and Mongolia. Some of the technical assistance provided to central and eastern Europe supported those countries’ preparations for EU membership on May 1, 2004. Technical assistance to other geographical regions, as well as for interregional projects, remained broadly the same as over the past three years (see Table 5.2 and Figure 5.1).

Table 5.2

Technical Assistance Sources and Delivery, FY2000-04

(In effective person-years)1

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Source: IMF, Office of Technical Assistance Management.

An effective person-year of technical assistance is 260 days. New definition used since 2001; data adjusted retroactively.

In FY2004 the former European II Department was dissolved, and its countries were absorbed by the new European Department and the Middle East and Central Asia Department.

Indirect technical assistance, including technical assistance policy, management, evaluation, and other related activities.

The decline in technical assistance delivered by the IMF Institute in FY2003-04, as measured in this table, reflects changes in financial arrangements related to the administration of IMF regional training institutes and not a decline in the delivery of training. As indicated in Table 5.5, training delivered by the IMF Institute rose over this period.

Includes the Fund’s Policy Development and Review Department, the Technology and General Services Department, and the Office of Technical Assistance Management.

Figure 5.1
Figure 5.1

Technical Assistance by Region, FY2004

(As a percent of total regional delivery, in effective person-years)

The IMF’s Monetary and Financial Systems Department remained the Fund’s largest technical assistance provider, delivering 122 person-years of assistance, reflecting the IMF’s financial sector initiatives. The Fiscal Affairs Department, the IMF’s second-largest technical assistance provider, increased its delivery to some 96 person-years. The Statistics and Legal Departments both stepped up technical assistance. The increase by the Legal Department was mainly a result of its involvement in activities to combat money laundering and the financing of terrorism (see Figure 5.2 and Table 5.3).

Figure 5.2
Figure 5.2

Technical Assistance by Department, FY2004

(As a percent of total resources, in effective person-years)

Table 5.3

Technical Assistance Delivery by Assignment, FY20041

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Technical assistance delivered out of headquarters, training activities, and missions related to the management of the technical assistance program, such as resource mobilization, monitoring, and evaluation, are not included.

Long-term assignments have a minimum duration of six months. Because extensions, which can be shorter, are counted as separate assignments, the average duration can be shorter than six months.

Evaluation of Technical Assistance

In April 2003, the IMF launched a formal evaluation program to gauge the effectiveness and impact of its technical assistance. The first three evaluations were provided to the Fund’s Executive Board in March 2004.

The objectives of the evaluation program include (1) improving the accountability and transparency of Fund technical assistance; (2) increasing the frequency and coverage of technical assistance evaluations; (3) generating and disseminating lessons learned to make Fund technical assistance more effective; and (4) integrating technical assistance with the Fund’s surveillance and program work. Evaluation findings are expected to inform responses to future technical assistance requirements and to make collaboration with other technical assistance providers and initiatives more effective. As the number of evaluations grows, generating lessons of wider relevance, the findings will also inform the Executive Board’s periodic reviews of the Fund’s technical assistance policy and practices.

The intention is to provide the Executive Board with three or four evaluations a year, internal as well as external, covering a mix of topics.

In selecting the initial set of topics, four areas of particular policy relevance were given prominence: (1) the link between technical assistance and the Fund’s surveillance and policy work; (2) technical assistance delivered by regional centers such as the East and West AFRITACs; (3) the role of Fund technical assistance in the heavily indebted poor countries (HIPCs) and in low-income countries eligible for support from the Fund’s Poverty Reduction and Growth Facility; and (4) technical assistance activities designed to respond to new initiatives and calls for international assistance.

Two of the first three evaluations, initiated in FY2003 and completed in FY2004, were assessments of technical assistance delivered by the Fund’s Fiscal Affairs Department in the area of public expenditure management in selected countries in sub-Saharan Africa. They were carried out by IMF staff and external consultants. The third, a mid-term review of the Caribbean Regional Technical Assistance Center (CARTAC), was carried out by an external team. (The report on the evaluations is available at www.imf.org/external/np/ta/2004/eng/030104.htm.) Ten additional evaluations are planned for FY2005-07 (see Table 5.4).

Table 5.4

Technical Assistance (TA) Evaluation Program–FY2005-07

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The reviews and evaluations of the regional TA centers are being carried out as part of a twotier monitoring and evaluation process employed by the centers in which the regular reviews of the centers’ performance are the responsibility of the centers’ governing committees, while the less frequent but in-depth reviews and evaluations are usually undertaken by external consultants or parties on behalf of the steering committees.

The IMF’s Independent Evaluation Office (IEO) is also conducting an assessment of the Fund’s technical assistance activities during 2000–03. The IEO’s report is expected to be completed during FY2005.

Board Review of Technical Assistance

In March 2004, the IMF Executive Board reviewed the Fund’s technical assistance since the previous review, conducted in July 2002. The Board examined, in particular, the Fund’s experience in low-income countries, as well as with using a regional approach to technical assistance and training. In addition, the Board considered the growing importance of external financing of technical assistance, the ongoing efforts to strengthen technical assistance information and resource management, proposals to broaden external dissemination of technical assistance reports, and technical assistance project monitoring and related resource use.

Directors generally considered that technical assistance had made considerable strides toward acquiring a strategic focus and enhancing its impact and effectiveness in the past two years. However, given the critical role of technical assistance across a range of policy areas—and the continued strong demand for it by IMF members—Directors emphasized that the main challenges continued to be to ensure that technical assistance was well focused and effective and that appropriate priorities were being set. A number of Directors were of the view that, given the significant excess demand for IMF technical assistance, consideration should also be given to allocating more resources for it. Directors underscored the essential contribution of IMF technical assistance for low-income countries and countries emerging from conflict situations, particularly in laying the institutional foundations for sustained poverty reduction.

Directors were encouraged by the Fund’s progress in implementing the prioritization process, which was introduced in 2001. They looked forward to continuing strong efforts at further improving the prioritization and effectiveness of technical assistance, sharpening the focus on results, and systematically incorporating the lessons of technical assistance evaluations. They endorsed the steps being proposed to work toward these objectives.

To stay well focused, the technical assistance program would need to remain flexible, as this would help ensure that the balance among programs and initiatives was in line with the evolving needs of the membership. While technical assistance requirements needed to be met in a strategic way, the IMF must continue to have the technical assistance instruments to respond to changing needs in a flexible and timely manner. Close coordination of IMF functional departments, which organize and provide the technical assistance, and IMF area departments would continue to be important in this regard.


Boosting Tax Revenues Through Capacity Building

Indonesia has made significant progress over the past two years 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. Other achievements included setting 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, including 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. In view of the broad division of responsibilities among the agencies, the IMF’s Fiscal Affairs Department (FAD) formulated the reform strategy-which was closely linked to Indonesia’s IMF-supported program-and identified the technical assistance requirements, while the bilateral agencies financed and recruited technical experts. FAD developed terms of reference for the various technical assistance assignments, monitored the implementation of the reforms and the progress of the experts, and kept donor agencies informed of developments.

The IMF is also coordinating technical assistance from donors in the area of legal reform. The program, which is financed by the Netherlands, is supporting the efforts of the Indonesian authorities to establish an effective bankruptcy regime and a competent and objective judiciary to carry it out. While significant progress has been made, considerable work remains.

Careful planning and monitoring, coordination with other providers in both the design and the implementation of technical assistance strategies, efficient leveraging of external financing, and broader dissemination of lessons learned, Directors stressed, would all be critical steps in the broad-based effort to enhance the effectiveness of technical assistance. Directors highlighted the importance of actively involving national authorities in the design of technical assistance projects to foster strong country ownership and commitment and help ensure the sustainability of technical assistance results. In this context, Directors expressed support for the proposal to set milestones for the continuation of technical assistance, in particular in the context of longer-term programs. They also suggested that further consideration be given to the development of exit strategies as a way of enhancing effectiveness and ownership of reform efforts.

Directors supported the actions under way to improve the management, monitoring, and results-based evaluation of technical assistance. They looked forward to a standardized evaluation methodology and the possible establishment of an independent technical assistance evaluation function within the IMF. Directors also endorsed the swift establishment of an IMF-wide computerized technical-assistance information-management system, which will provide the basis for more effective monitoring.

The major share of IMF technical assistance to low-income countries was provided in the context of IMF financial arrangements, Directors noted. To help ensure effectiveness and lasting results in these circumstances, Directors underscored that technical assistance strategies for these countries needed to be firmly aligned with country-owned poverty reduction strategies, taking into account absorptive and administrative capacity constraints, and the role of other technical assistance providers. It is also important that technical assistance strategies in low-income countries go beyond the objective of producing short-term results and remain firmly directed at supporting institution building over the longer term, while remaining flexible enough to respond swiftly to evolving needs. To ensure close coordination of IMF technical assistance with that of other technical assistance providers, Board members encouraged the staff to identify potential technical assistance partners proactively and to promote clear understandings between technical assistance providers and the authorities of client countries on the broad road map for assistance and division of labor. They noted the useful role that IMF resident representatives can play in this area.

The growing evidence that regional arrangements for delivery of technical assistance and training appeared to be effective while fostering ownership and enhancing coordination with other technical assistance providers was welcomed by Directors. In view of the significant resource requirements of the IMF and external donors, they stressed the need for continuous, close monitoring and regular evaluation of the operations of the regional technical assistance centers, and looked forward to the forthcoming mid-term evaluation of the Africa Regional Technical Assistance Centers. Most Directors welcomed the expansion of the IMF Institute’s regional programs, which they saw as cost effective and well adapted to the needs of the regions they serve.

Board members commended the generous external funding provided by donors to complement the IMF’s own technical assistance resources. They saw several challenges going forward. These included securing an adequate volume of external resources over the long term; ensuring that staff resources, instruments, and adequate systems are available to manage external financing according to international best practice; and prioritizing externally financed technical assistance as rigorously as IMF-financed technical assistance.

To foster the wider sharing of lessons learned from technical assistance experience, Directors encouraged member countries to consent to the voluntary publication of technical assistance reports on the IMF’s external website, with due consideration to ensuring the confidentiality of sensitive information.

In concluding their review, Directors stressed that efforts to strengthen technical assistance provision were an ongoing process that needed to be continually refined in light of progress with monitoring and evaluation of technical assistance. They looked forward to the forthcoming evaluation of IMF technical assistance by the IEO, which they hoped would provide additional guidance on enhancing technical assistance performance.

IMF Institute

The IMF Institute trains officials from member countries through courses and seminars focused on four core areas—macroeconomic policy management, and financial sector, fiscal, and external sector policies. Training is delivered by Institute staff and by staff from other IMF departments, occasionally assisted by outside academics and experts, at IMF headquarters in Washington, D.C., and at various overseas locations. Some preference in acceptance of applications for training is given to officials from developing and transition countries.

In FY2004, the IMF Institute, with the assistance of other IMF departments, offered 120 courses, attended by 3,846 participants (see Table 5.5). About two-thirds of this training in terms of the number of courses, and about one-half in terms of participant- weeks, were provided through the IMF’s six regional institutes and programs, which are located in Austria, Brazil, China, Singapore, Tunisia, and the United Arab Emirates (see Table 5.6). Training in Washington, with longer courses, continued to play an important role, accounting for about one-third of participant-weeks. The remainder of the training was at overseas 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.

Table 5.5

IMF Institute Training Programs for Officials, FY2000-04

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Source: IMF Institute.

Includes Joint Vienna Institute (established in 1992); IMF-Singapore Regional Training Institute (1998); IMF-AMF (Arab Monetary Fund) Regional Training Program in the United Arab Emirates (1999); Joint Africa Institute (1999), currently located in Tunisia; Joint China-IMF Training Program (2000); and Joint Regional Training Center in Brazil for Latin America (2001). Data do not include courses delivered by other organizations at the IMF’s regional training institutes and programs.

These are not included in the total course count below as the residential segment is already reflected in the training activity at headquarters.

Participants who were invited to the residential part of the courses are included both here and under headquarters training.

Includes only participant-weeks for the distance part of the course. Participant-weeks for the residential part are included in headquarters training.

Table 5.6

IMF Institute Regional Training Programs

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A number of other European countries and the European Union, although not formal sponsors of the Joint Vienna Institute, provide financial support.

In 2003, the Joint Africa Institute shifted its operations temporarily from Cote d’Ivoire to Tunisia, owing to the security situation in Cote d’Ivoire.

The number of training courses and seminars rose by 6 percent in FY2004, and the number of participant-weeks rose by 2 percent. The smaller increase in the number of participant-weeks is a continuation of the trend of the past few years, reflecting a shift in the composition of IMF Institute courses toward shorter, more specialized courses delivered through the regional programs. The increase in training activity was achieved despite the effects in the early part of FY2004 of the war in Iraq and the outbreak of Severe Acute Respiratory Syndrome (SARS) in some Asian countries. Reflecting the security situation in Côte d’voire, the location of the Joint Africa Institute was shifted to Tunis in June 2003. Given the logistical challenges of such a move, IMF training at the Joint Africa Institute was slightly less than planned. It was nevertheless higher than in FY2003, and the Institute also offered more courses in Africa outside the Joint Africa Institute to compensate for the shortfall.

The IMF Institute has continued to pay close attention to curriculum development. In FY2004, the topics covered in new courses included debt management, financial market analysis, financial sector standards and stability, financial soundness indicators, and policies for monetary and financial stability. The Institute has also continued to provide, both in Washington and through the regional institutes and programs, short seminars on key issues. These seminars are tailored to the needs of high-level officials. In FY2004, topics covered in the seminars included the challenges of growth and globalization in the Middle East and North Africa, euro adoption in the EU accession countries, financial development and integration in Africa, and management of subnational finances and debt.

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    Technical Assistance by Region, FY2004

    (As a percent of total regional delivery, in effective person-years)

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    Technical Assistance by Department, FY2004

    (As a percent of total resources, in effective person-years)