Abstract
1. This background paper considers the recommendation of the IEO Evaluation of the IMF and Capacity Development to “leverage further the advantages of Regional Capacity Development Centers (RCDC) and put them on a sustainable footing.” The IEO assessed that the RCDC model and the field-based CD delivery have become a cornerstone of the Fund’s CD delivery, and the model is highly appreciated by the membership for its effective results and efficient delivery.
RCDC Model and Field Presence1
A. Overview
1. This background paper considers the recommendation of the IEO Evaluation of the IMF and Capacity Development to “leverage further the advantages of Regional Capacity Development Centers (RCDC) and put them on a sustainable footing.” The IEO assessed that the RCDC model and the field-based CD delivery have become a cornerstone of the Fund’s CD delivery, and the model is highly appreciated by the membership for its effective results and efficient delivery.
2. Management’s Implementation Plan (MIP) to the IEO Evaluation highlights that RCDCs are critical to the Fund’s CD delivery, providing a strong field presence and ensuring tailored and responsive support to members. The Fragile and Conflict States (FCS) Strategy also recognizes the critical role of field presence in strengthening CD delivery, and the number of field-based CD experts is being increased as part of its implementation. Therefore, enhancing RCDCs’ sustainability and governance, including clarifying the roles of headquarters (HQ) and RCDCs, is a central element of the CD Strategy Review. Ensuring stable funding for the centers by expanding external financing and broadening the donor base remains important for RCDCs to improve reliability of funding and provide planning certainty. At the same time, exploring the mobilization of IMF financing of the centers and building on what has been put in place as part of the recent budget augmentation would be important steps in putting RCDCs on a more sustainable footing.
3. RCDCs have grown organically over time to effectively become a structural element of the Fund’s CD delivery. As such, the CD Strategy Review provides an important opportunity to consider actions to further boost RCDCs’ effectiveness, efficiency, and impact, and their further integration into IMF CD operations. To this end, staff considered longstanding strategic issues under three main categories: mandate (including coverage), governance, and funding, and identified proposals aimed at further strengthening the Fund’s field delivery mainly focusing on RCDCs. The proposals seek to entrench RCDCs as the field offices of Fund CD delivery and reinforce their mandate, governance, including clarifying respective roles of HQ and RCDCs, and funding stability. The human resource (HR) issues that are touched upon here are taken up in more depth in another dedicated background paper. A synopsis of the recommendations follows below (Box 1), with further details in the report.
Key Proposed Actions
Recognize RCDCs as integral part of the Fund structure responsible for field-based delivery of CD with IMF funding support for their sustainability. Several options can be considered in this regard to strengthen funding sustainability.
Increase funding flexibility by diversifying gradually RCDC external funding sources.
Reflect on RCDC’s coverage, relative size, and location every five years as part of CD Strategy Reviews, and as needed, seek further studies to support strategic decision-making.
Retain area department leadership of RTACs and ICD leadership of RTCs and clarify role of steering committees empowering CD recipient and donor ownership, engagement, and coordination.
Develop an RCDC Playbook to provide guidelines and good practices to:
Facilitate closer integration between RTCs and RTAC curricula.
Harmonize roles and responsibilities and existing good practices across RTACs.
Seek ways to increase delivery from the field to bolster CD effectiveness and distill best practices from proposed pilots of deploying Fund staff in the field in a variety of CD-related roles.
Ensure effective integration of field staff funded by non-RCDC vehicles.
B. Introduction and Background
4. The RCDC model is a cornerstone of the Fund’s CD field presence. It supports a more programmatic approach to CD, fostering greater country/regional engagement and ownership, and aiding donor coordination. The IEO report recommended to strengthen RCDC governance structure, ensure greater balance in funding across regions and provide for a stronger role for internal IMF financing where needed. The FCS Strategy seeks to enhance delivery in FCS by strengthening field presence through increased numbers of long-term experts (LTXs) in relevant RCDCs and in-country resident advisors.
5. This background paper focuses on enhancing the Fund’s field presence with a specific focus on RCDCs. While field presence is not confined to RCDCs, long-term experts (LTXs) who deliver from the centers grew over time to significantly outnumber those who deliver individual country projects. About 80 percent of resident experts deliver CD from RCDCs, making them chief part of the Fund’s field presence. Even though this paper does not delve into country-specific CD programs, it is acknowledged that they remain important depending on the context, which defines whether they are best delivered by country-based (bilateral) LTXs or peripatetic expert interventions. These bilateral LTXs are particularly instrumental in countries where the institutional capacity base is significantly lower and/or intensive Fund assistance is needed to support reform programs, for example, in FCS context. Bilateral LTXs and RCDC-based LTXs complement each other in meeting member countries’ CD needs.
6. The paper takes a closer look at issues surrounding the mandate, coverage, governance, and funding model of RCDCs. The proposals in this paper are built on collective departmental discussions as well as a stock taking study of relevant Fund policies and documents.
7. The Fund’s field-based CD delivery through RCDCs has proven to be highly effective. Management’s response to the IEO Evaluation highlights that RCDCs are critical to the Fund’s CD delivery, providing a strong field presence and ensuring tailored and responsive support to members, and urged exploring options for further increasing IMF financing of the centers. The IEO report also acknowledged that while originally envisaged to be temporary and limited to certain situations, RCDCs are now seen as a central element of the Fund’s engagement with CD users. The independent evaluations of RCDCs’ CD in the past 10 years also confirm the overall effectiveness and membership’s appreciation of the CD (see Background Paper on Monitoring and Evaluations). Overall, the RCDC model is working well, and is highly appreciated by CD users in member countries and development partners.
8. The gradual expansion of RCDCs over the past two decades has been a defining trend in the IMF CD delivery (Figure 1). By end FY2023, around 44 percent of direct CD delivery (excluding management, administration, and analytics) was through the global network of RCDCs. Eleven Regional Technical Assistance Centers (RTACs) together with five regional training centers (RTCs) and one CD office in Thailand (CDOT), are part of a global network of Regional Capacity Development Centers (RCDCs) that supports much of the Fund’s CD work on the ground.2, 3 Together, they serve 165 countries and territories and 79 percent of the IMF membership. Most of the FCS (42 countries), small developing states (SDS) (34 countries) and LIDCs (59 countries) are covered by RCDCs. RCDCs serve 88 percent of the emerging market and middle-income economies (EMMIE). EMMIE Countries that are not covered by RCDCs are all in the Western Hemisphere: Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, Uruguay, and Venezuela.
9. RCDCs have played an increasingly important role in targeted and well-tailored CD delivering results to the recipient member countries. They are an important extension of the Fund in the field and are acknowledged for being regional knowledge hubs and platforms for peer-to-peer learning and communication with CD recipients. CD results and impact are driven by frequent and intensive hands-on engagement that arises from sustained field presence, which supports stronger ownership, better tailoring, and improves integration of surveillance and lending (Bassanetti, 2021). Evaluations and econometric analysis of results-based management (RBM) data support RCDCs as producing better CD outcomes; accordingly, “projects with at least some activities supported by RCDCs are more likely to have higher outcome ratings” (Evaluations and Impact CD Strategy Review Background Paper).
Growth of Regional Capacity Development Centers of the IMF
Citation: Policy Papers 2024, 015; 10.5089/9798400271502.007.A003
Source: Fund staff.C. Do RCDCs have Sufficient Geographical and Topical Coverage?
10. RCDCs have developed organically over the years driven by availability of external funding. As a result, there are geographical overlaps as well as gaps in coverage. Geographical coverage by RTCs is more extensive than that for RTACs in general (see Annex I for country coverage of RCDCs). The gaps and overlaps in country coverage of RCDCs are discussed extensively in De Lannoy (2022).
11. Some RCDC gaps exist, but overall, much of the demand for CD has been adequately covered by HQ and other donor-funded CD programs, including thematic trust funds with global coverage. The gaps can be in part explained by the presence of financially strong members and/or CD programs delivered by other development partners. Staff noted the availability of other sources of CD in all regions except for South America.
12. However, the need for a RCDC, particularly for training, has been becoming more pronounced in South America. ICD and other CDDs currently organize multi-country classroom training at CARTAC and CAPTAC-DR, in the absence of a dedicated RTC in the region. Courses are also being offered at the Center for Latin American Monetary Studies (CEMLA) and the Association of Supervisors of Banks of Americas (ASBA), focusing on financial and monetary policy, but only covering part of the CD spectrum. While CD from HQ has been available, it is not a comparable substitute for a field delivery that provides specialized training courses, peer-to-peer learning, and cross cultivation of knowledge. Donor interest and availability of member country resources has been limited. Nevertheless, staff’s discussions suggested there may be a merit in exploring further the case for a training center in the region based on unmet demand.
13. Drawing on the lessons from the pandemic and leveraging virtual and hybrid modalities of delivery can support under-served geographical areas/topics. While virtual modalities are not a substitute for in-person delivery, they can be flexibly used, including in hybrid form, and delivered from HQ (e.g., when the time difference between HQ and CD recipient country is not large to allow remote CD delivery) and RCDCs to address gaps. More broadly, making more foundational training available online can help address the large demand that cannot be met with in-person courses (see Background Paper on Modalities).
14. At the topical level, there is increasing demand in the new priority areas (in particular, climate and digitalization). CD departments need time to build up required expertise to be able to provide high-quality CD and value-added policy advice. Thus, the growing demand in the new priority areas will be met gradually. These new priority areas are being incorporated into existing workstreams as specialist expertise builds up, starting with provision from HQ.
15. Gaps in RCDC coverage do not necessarily indicate a gap in the Fund CD coverage, but a periodical assessment of gaps would be beneficial. As the economic landscapes evolve, demand in regions could potentially grow or develop in different directions in the future. In this context, it would be important to put in place processes the Fund follows to assess needs and consider crucial decisions periodically, such as to whether to open a new center or modify/close an existing one within available resourcing.
16. The Committee for Capacity Building (CCB) is the appropriate strategic forum to periodically reflect on RCDC’s coverage, relative size, and location. The five-yearly CD Strategy Reviews provide an opportunity to deliberate on gaps and evolving needs at a high-level as well as to advise on follow-on actions, such as the formation of working groups to assess criteria for establishing a new RCDC. These criteria would include CD demand, ownership, absorptive capacity, and supply, similar CD needs, geographic proximity, common language, institutional traditions, membership in regional organizations, political proximity, and availability of funding, including donor interest and potential host and member country contributions. Strategic discussion would also need to recognize resource availability, with any net additional resourcing to be considered against other priorities as part of the broader strategic planning and budget process.
Proposed Actions
Reflect on RCDC’s coverage, relative size, and location every five years, and as needed, seek further studies to support strategic decision-making. This current review pointed to a gap in CD coverage and a potential for an RCDC in Latin America and options for a training center can be explored. This would involve a follow-on working group (WHD, CDDs, OBP, and ICD) to assess the medium-term training and technical assistance (TA) demand in this region, build an indicative budget, and explore alternative financing sources as well as donor interest towards a proposal for consideration and approval by CCB and management.
Leverage virtual and hybrid modalities of CD delivery to support under-served regions/countries.
D. How can RCDCs Support Better Synergies?
17. In principle, the mandate of RTACs and RTCs are delineated, the former delivering predominantly TA and the latter providing training. Typically, RTCs focus on more foundational training (macro, specialized webinars) to build human capital while RTACs support specific TA programs and associated training, with heavy emphasis on institution building. CD delivery modalities are covered more in depth in a dedicated background paper.
18. In practice, most RCDCs already provide both TA and training. RTACs traditionally focus on TA but do provide a significant amount of more specialized and targeted training embedded in TA in addition to a few IMF Institute courses. On the other hand, some RTCs are now adding a relatively small but growing number of macroeconomic frameworks TA projects to their operations. As the IEO reports, there is a blurred distinction between TA and training with the concept of CD covering both activities (De Lannoy, 2022; and Enoch, 2022). In addition, SARTTAC, was designed explicitly as an integrated center covering training and TA given its catchment area, South Asia, which was devoid of an RTAC or RTC. RCDCs employ/integrate in their delivery of CD all modalities as needed (Figure 2). The network of RCDCs, based on their organic growth, will likely continue to develop when regional CD needs arise and funding is available to support them.
RCDC CD Delivery Spending by Modality, FY2023
(Share of total CD delivery)
Citation: Policy Papers 2024, 015; 10.5089/9798400271502.007.A003
Source: Fund staff calculations.Notes: Field-based work refers to CD provided on a non-resident basis, at the beneficiary country (other than the staff/expert’s duty station.) Duty station-based work includes CD support from the staff/expert’s duty station (i.e., involving no travel, such as desk review of legislation, operational manuals, guidelines, or procedures; draft official reports; and research papers, etc. Excludes preparation for delivery of CD activities or external expert backstopping.)19. The effectiveness of RTCs and RTACs could be enhanced through more systematic coordination and integration of programs and modalities. Synergies between HQ, RTC and RTAC programs can be improved within regions through prioritization and well-coordinated project design weaving them together as part of tailoring CD to members’ needs. Regular interaction between HQ and RCDC teams on CD progress and challenges could help enhance the traction and commitment by the authorities, and their effective use of CD advice. The synergies among the centers can effectively be cross cultivated. Overall, the Fund is making some strides in improving coordination of the curriculums of RTCs with RTACs (e.g., joint training programs between METAC and CEF, and CCAMTAC and JVI); however, there is more space for closer and centralized coordination, which could be led by the area departments (ADs). For training courses, RTACs and RTCs can coordinate more to improve the selection of participants particularly of members of the core/technical groups working in the ongoing TA projects. In general, there is also a need for sharing of existing good practices which would help harmonize approaches.
20. The pandemic highlighted the potential for blending CD modalities and maximizing the impact of both technical assistance and training. It allowed staff to experiment with innovative approaches for delivering CD, reach larger audiences with its online offerings and enhanced integration of CD with surveillance and lending through participation of ADs in CD activities and experts in surveillance and programs. The use of virtual modalities where possible could significantly enhance RTC and RTAC collaboration in regions as well as accessibility and integration of training programs. In addition, RTCs are continuously enhancing peer-to-peer learning opportunities globally through webinars (for example, finance series and climate series by ATI), and they could bring in country examples from different regions.
21. Future structure of RCDCs will remain needs based. The IEO background paper on training asserted that unintegrated RTAC and RTCs equally coordinate and work well together as the integrated model (De Lannoy, 2022, p. 16). This is also supported by the staff’s experiences.
22. Delivery support from HQ will be necessary for new workstreams or topics until more field expertise is developed in areas such as climate and digitalization. There may be a business case for deploying Fund HQ staff in the field to support effective delivery due to efficiencies related to proximity and flexibility when justified by the volume of field delivery in a given workstream and potential value added of backstopping and CDD-RCDC-CD recipient coordination closer to the field. However, careful consideration should be given to coordination with CD delivery departments (CDDs) at HQ to maintain consistency of advice and quality control as well as complementarities with other donor-funded programs.
23. Any increase in field-based staff would need to ensure close coordination with RCDCs through area departments (ADs) as well as other relevant departments. The decision on field-based and HQ-based staff should be based on the business case, country needs, capacity, resource implications, and the Fund’s comparative advantage in CD delivery. While enhancing the field presence through staff in charge of direct CD delivery (currently at HQ) is broadly being advocated, the question of moving other strategic HQ functions (backstopping and managerial positions) to the field would have implications for budget, HR model, and the division of responsibilities between CD and AD staff in the field which will all have to be explored. Any movement of HQ staff should thus be first considered on an institutional pilot basis and be closely integrated with RCDCs and ADs and other relevant departments. The implementation should align with broader HR policy developments and take into consideration the HRD resources required in the day-to-day administration of the field-based staff and experts. These setup and evaluation of such pilots could be addressed by the CCB.
Proposed Actions
Deepen integration with HQ and coordination of RTC and RTAC work programs to improve synergies in CD delivery. Developing an RCDC Playbook to provide good practices would help facilitate closer integration with HQ, and between RTCs and RTACs curricula and systematic year-round interaction among CDDs, ADs, Resident Representatives (RRs), and RCDCs, clearly define roles and responsibilities, and support closer integration in developing the work program and related budgets. During CD prioritization and design, RTC and RTAC programs should be considered in unison in responding to the authorities’ capacity building needs in a tailored fashion. In this regard, ADs’ providing greater input into regional training needs and curricula would help better tailor training programs to member country needs. To provide greater input by ADs and reflect regional training needs, a point person position or role in AD’s senior leadership team could be considered.
Distill best practices from an institutional pilot of deploying Fund staff in the field, who can provide comparative advantage of CD delivery in the field. The proposed pilot in de-concentration should aim at enhancing efficiencies through proximity and agility, especially in regions with large time difference from HQ (e.g., APD, AFR, and MCD), and facilitating further the integration of HQ and RCDC delivery with a country-centric approach to CD. Implications related to the governance structure and HR would need to be carefully considered.
E. How to Strengthen RCDCs’ Governance?
24. RCDCs are Fund offices established without separate legal personality and follow IMF policies and procedures.4 The governance structure (Annex II) aims to promote accountability, member country ownership, and coordination with partners. The Steering Committee (SC) members provide strategic guidance, endorse workplans and budgets, and directors manage the RCDC offices and operations in coordination with the ADs and CDDs; ADs set strategic priorities for countries; and CDDs set sectoral work plans and backstop CD delivery.
25. RCDCs have become a core part of the Fund’s CD delivery. They are considered by the membership as field extensions of the Fund due to their establishment and oversight by the Fund. However, their staffing and operational funding are not fully harmonized with that of the Fund’s HQ CD delivery. Given the importance of RCDCs in CD, a core mandate of the Fund, it is key to establish RCDCs as integral parts of the Fund’s CD delivery structure, with the attendant implications for governance.
26. It is important to distinguish between RTACs and RTCs when assessing the governance structure. RCDC’s governance is very different compared to HQ; these field offices report to both Fund Management and SCs. Also, while both RTC and RTAC Directors have managerial responsibilities, the degree of managerial authority or autonomy varies. RTCs have more autonomy than RTACs as they do not have a matrix management structure. Exceptions are SARTTAC, which includes both training and TA and has an RTAC set-up, and ATI, which has both a multi-donor and matrix management structure.
27. There are several challenges and opportunities related to the current RTAC governance model:
Fragmentation of funding sources and reporting are caused by the increasing placements of LTXs financed by thematic vehicles with different reporting requirements. While this practice provides some additional flexibility to fill funding gaps, governance will need to be adjusted accordingly where all those contributing should be informed and the work, irrespective of funding, should be integrated in the reporting.
There are differing backstopper and LTX management practices across CDDs. The role of the backstopper requires clarification with each CDD developing minimum guidance consistent across departments and expected interaction with ADs and RTACs (existing STA, LEG and FAD internal guidance notes for backstoppers can be a useful starting point). Differing departmental processes on LTX performance assessments and roles of RTAC directors in recruiting staff and evaluating LTX performances would also need to be harmonized, as well as differences between the reporting of LTX performance at the majority of RTACs (to both CDD and director) and RTCs (director and/or deputy director)
SC composition and meeting format could be further enhanced to support more active engagement and coordination at the center of the governance model. The composition of the members can be optimally configured to include key CD providers in the region, who are currently invited as observers, and management of central banks and ministries of finance in members countries in addition to donor partners, who may also appreciate simplifications along these lines as long as they still can fulfill their oversight and accountability requirements. Further streamlining would be useful as the thematic vehicles complement the regional funding structure of RTACs.
Directors’ job expectations cover strategic management of the RCDC, in cooperation with area and TA departments, as well as the operational management of the center. Core responsibilities include, among other things, hiring of new staff and day-to-day staff management; budget management (envelope allocation and CDMAP); maintaining financial controls over the office’s administrative payments; relationship building, communications outreach, and overall engagement with member country authorities as well as with existing and potential donors; field fundraising; coordinating reporting and RBM adherence; planning, conducting, and overseeing steering committee meetings; and designing regional CD strategies to ensure prioritization of resources and surveillance integration.
Proposed Actions
Enable RTACs to move more towards becoming delivery offices that can be supported by different funding sources rather than regional funding mechanisms. In the case of LTXs stationed in RTACs but funded by other funding vehicles, governance arrangements need to ensure that their work is well coordinated and integrated, and the funding vehicles are accountable to the members they serve as well as donor partners. Work pressures of RTAC directors can be alleviated by introducing deputy director positions (when justified by the size of the center and extent of responsibilities) and greater harmonization of CDD practices in HQ.
Further harmonize roles and responsibilities and existing good practices across RTACs by developing guidelines and emphasizing best practices to:
Clarify the relationship between RTAC directors and LTXs and better define roles and responsibilities to facilitate systematic year-round interaction among HQ departments, RCDCs, LTXs, and ResReps;
Enhance the role of the backstopper in the relevant CDD divisions to integrate LTXs’ CD delivery better into the Fund’s surveillance work (all field-based CD delivery needs to be back-stopped by CDDs);
Further facilitate integration by ADs’ participation in key CD missions (as warranted) and training virtually, and vice versa, by considering field-based staff (LTXs) consultation in key program or surveillance missions as warranted; and
Harmonize across CDDs’ performance management and recruitment practices, including clarifying and enforcing the role (and involvement) of RCDC directors (Please see CDSR background paper on HR Policies).
Pursue a more systematic approach for SC meetings to yield further stakeholder engagement and coordination. Being mindful of donor fiduciary responsibilities and potential impact on funding from members and partners, SC meetings could be designed/set up more effectively to engage members. This could be considered on a case-by-case basis and include increasing more active engagement, reducing administrative burden, and considering more targeted check-ins with members. LTXs should be full participants in the SC irrespective of their funding and their work should be integrated into the SC reports.
F. How to Support Funding Sustainability?
28. The separate and organic development of RCDCs over the last 30 years has led to important differences in their funding models. Most RTACs are funded by a combination of external donors, member countries and the Fund’s own resources, usually a contribution to cover the salary of the director and center overheads (see Annex III for more information on RCDC funding model). RTCs have different funding arrangements, with some fully funded by their host countries (CEF and CICDC, funded by Kuwait and China respectively) and others being multi-donor arrangements (SARTTAC and ATI). JVI is unique in that only around 60 percent of courses are organized and funded by the IMF, with the remainder organized by Austria and other training partners.
29. The current external partner driven funding model facilitated the expansion of the global RCDC network. Donor partner contributions represent between 30 and 90 percent of external funding for the 12 RCDCs—10 RTACs, SARTTAC, and ATI, which all have multi-donor arrangements and similar governance models (Figure 3). For these 12 centers alone, external funding constitutes 93 percent on average. In FY2023, about half of the Fund’s external funding for CD came from the Fund’s four largest partners—Japan, the EU, Switzerland, and Germany—both in terms of annual paid contributions and new signed agreements. Commitments from member countries play an important role in some RCDCs (e.g., SARTTAC, CCAMTAC).
External Funding Commitments to RCDCs, Current Multi-Year Phase
(As of December 31, 2023)
Citation: Policy Papers 2024, 015; 10.5089/9798400271502.007.A003
Source: Fund staff calculations.Note: Partner refers to donors who do not receive CD from the center; member refers to those who receive CD from the center; and host refers to the country in which the center is located. Depending on the center, the figures are for the most recently completed phase (AFC Phase 3; AFS Phase 2; METAC Phase 4; PFTAC Phase 5; SARTTAC Phase 1) or for an ongoing phase (AFE Phase 5; AFW Phase 4; AFW2 Phase 2; CAPTAC Phase 3; CARTAC Phase 5; CCAMTAC Phase 1; ATI Phase 2). The 12 RCDCs shown here have multiple donors and multi-year phases. The other 5 RCDCs (CEF, CICDC, STI, JVI and CDOT) are excluded due to differences in funding model and structure.30. Available liquidity for RCDCs is generally manageable but is unevenly distributed across vehicles (Figure 4). The IMF’s Framework Administrative Account for Selected Fund Activities (SFA) account at the Bank for International Settlements (BIS) holds a sizeable contribution from partners, reflecting ongoing partner support. This provides a desirable buffer and reflects the advantages of the Fund’s established upfront financing model. Half of the funding vehicles (12) have liquidity positions covering at least 12 months of expected expenditures in cash and an additional eight when considering signed contributions agreements. This provides reassurance of short-term liquidity coverage (up to one year) for over 85 percent of the funding vehicles. However, this liquidity is not fully fungible across funding vehicles and some RCDCs that are starting new phases have more immediate fundraising needs. This accentuates the need to improve fungibility of funding vehicles.
Projected Liquidity Balances
(In months of estimated budgeted spending, as of December 31, 2023)
Citation: Policy Papers 2024, 015; 10.5089/9798400271502.007.A003
Source: Fund staff calculations.Note: Signed agreement and commitments and pledges only include the amounts identified for the calculation across vehicles.31. The five-yearly funding cycles of RCDCs introduce uncertainty over financing. Five-year funding cycles increase financing risks due to on-off fundraising patterns, non-alignment with funding partners’ shorter development aid budget cycles, a need to shorten or extend the funding cycles depending on the funding situation, and obsolescence of program documents as the base for fundraising efforts. On the other hand, the phased model provides clarity of communication of long-term funding needs, allows to adjust workplans in response to feedback from evaluations, generates a sense of urgency that helps fundraising during phase renewals, and helps to secure multi-year commitments, which mitigate financing risks.
32. The funding position is less comfortable for a number of RCDCs. During FY2024, four RCDCs (AFC, AFS, PFTAC, and SARTTAC) have started new phases, leading to an additional fundraising ask of almost $200million. In FY2025, six RCDCs will start a new phase leading to an additional fundraising ask of more than $224 million (excluding CICDC and ATI for which future budgets are still to be determined).
33. RCDC delivery is also aided by co-located and cross-funded experts financed by sources other than the RCDC, which creates financing flexibility.5 Co-located and cross-funded advisors from thematic funding vehicles and in some cases by Fund’s own budget developed over time in an ad-hoc way.6 Currently, there are 171 Fund LTXs in the field; 119 of those are funded by RCDCs. Sixteen LTXs located in RCDCs have been funded by other sources, ten of which were placed in AFRITACs, and three more are planned or under consideration. While funding flexibility is a clear benefit of these LTX postings, greater coherence and clarity about governance and accountability are needed for deciding how to allocate CD to various vehicles and countries of coverage for co-located LTXs, as well as for efficiency and effectiveness of CD delivery from the centers.
34. This small shift toward co-locating experts may support the argument that RCDCs can serve members more effectively if framed as delivery platforms rather than funding vehicles for a particular region. Going forward, diversifying the RCDC funding model would be beneficial for sustainability. While any changes introduced to the funding model may have a potential impact on fundraising efforts by the Fund (at least in the short term), there are also multiple benefits from gradually moving to a system where RCDCs are delivery vehicles that can be funded from multiple vehicles. This flexibility is already in train via new umbrella funding arrangements, which allow resources to be allocated more efficiently in line with needs. The new EU umbrella fund, AFRITAC funding from Germany and Switzerland, the FCDO umbrella agreement (SIMF), and umbrella funding from China and Korea provide examples. This also supports the view that RCDCs ought to be considered as integral and permanent part of the Fund offices. It would also provide more flexibility in terms of delivering CD to currently underserved regions and/or countries. However, increased field presence would also have implications for indirect budgetary costs as well as additional resources for the support functions that administer field staff work and other field office payments.
35. Moving towards greater use of thematic funds and other sources in RCDCs would require time. Any shift from regional funding vehicles towards vertical thematic funds has administrative difficulties but also in view of the potential impact on fundraising. Disadvantages of retiring RTACs as funding vehicles include that (a) this would complicate channeling member contributions, which are a strong commitment of recipients’ ownership of Fund CD; and (b) CD budgets that are currently arranged around regional priorities would be shifted towards thematic priorities, and they would no longer be centrally managed. This will require close collaboration between CDDs and ADs as part of the prioritization process via the CCB.
36. The utilization of the Fund’s resources could align better with RCDC’s increasingly central role in the delivery of CD. Currently, only two percent of the Fund-financed overall CD delivery spending is being utilized to sustain RCDCs, compared to 20 percent used on other CD delivery in FY23 (Figure 5).
CD Delivery Spending
(Share of total)
Citation: Policy Papers 2024, 015; 10.5089/9798400271502.007.A003
Source: Fund staff calculations.37. The RCDC network should be recognized as an integral element of the Fund’s CD structure and funding arrangements should support their sustainability. RCDCs should be viewed as IMF field offices responsible for field delivery of CD. Staff discussions considered several options to support this objective.
Proposed Actions
IMF01 funding could help support RCDCs as Fund field offices. In that regard, and building on the approach taken during the recent budget augmentation, the IMF could consider continuing to deploy more IMF01 funding for RCDCs to promote stability and predictability of their funding structure. This will highlight the importance of CD alongside surveillance and lending and may resonate well with partners as external funding would focus on CD delivery while the Fund covers overhead and administrative costs of the centers. However, given the flat budget environment and existing budget constraints, identifying such resources through internal reprioritization will be challenging. The Fund may consider using some of the current IMF01 CD budget envelope in RCDCs primarily focusing on key vulnerabilities in specific centers where the donor base is less strong for direct delivery and operational costs. Pros: Relatively uncomplicated as reallocation could happen as part of the CD prioritization process. Cons: This would reduce fungibility and availability of IMF01 resources to fill gaps, including in HQ CD. There are challenges related to moving HQ spending, which is mainly on personnel, to the field, and this would also need to tie to reforms to the employment framework.
Gradually, increase flexibility of funding and planning ingraining RCDCs more as delivery centers than funding mechanisms.
Make the regional funding vehicles continuous rather than phased, which implies moving away from a rigid five-year planning and funding cycle, which has been found to be inflexible, inefficient and with often disjointed fundraising to a rolling plan schedule, aligned with the three-year medium-term workplan, without compromising the Fund’s multi-year prefunding model (e.g., by formulating prefunding goals spanning a number of years, which provide a rolling fundraising “ask”).
Consolidate thematic funds and move increasingly to umbrella funds to cover CD delivery by CDDs and RCDCs. To further increase the flexibility of allocation and prioritization of CD across regions, current efforts should be continued to further (e.g., Fiscal Fund and EU umbrella fund for RTACs in AFR also covering ATI) and facilitate the integration of existing and future funding vehicles with RCDC work programs and budgets. The move to more thematic or vertical funds would provide more flexibility in allocation of CD based on demand and institutional priorities, and also facilitate delivering CD in currently underserved areas. Alongside this effort, the Fund should continue to explore all external funding sources and effective ways to leverage regional priorities of donors.
Consider an ultimate endpoint of a transition from regional to vertical trust funds as the main sources of RCDC financing, which will take time. To smoothen the transition and counter any adverse impact of fundraising, given that some large donors have clear regional preferences, further consolidation of regional trust funds could be considered in the interim as part of the transition.
Annex I. Geographical Coverage of RCDCs
Country Coverage of RCDCs
Citation: Policy Papers 2024, 015; 10.5089/9798400271502.007.A003
Source: De Lannoy (2022).Geographical Distribution of RCDCs
Citation: Policy Papers 2024, 015; 10.5089/9798400271502.007.A003
Source: Fund staff.Annex II. RCDCs Governance Structure
1. The governance framework for the RTACs is articulated in the RTAC Handbook, and the RTACs largely align with the guidelines relating to the establishment of a steering committee, its role, composition, role of the SC members, director, and HQ (the respective AD and CDDs) decision-making framework (see RTAC Handbook for more on governance and operational guidance for the RTACs). There is less consistency where the RTCs are concerned. In all cases, the IMF is represented by ICD, the following can be said:
RTAC Governance Framework
Citation: Policy Papers 2024, 015; 10.5089/9798400271502.007.A003
Source: RTAC Handbook, May 2022.2. No such handbook exists for RTCs (JVI, ATI, CEF, CDOT, and STI), but they follow a similar overall format with the development of strategic priorities for training and activities in support thereof, including through the endorsement of an indicative annual work plan, guided by the annual meeting of (a) an Executive Board (JVI); (b) Steering Committee (ATI and CEF); (c) Advisory Committee (CDOT); and (d) Executive Committee (STI). There are, however, some notable differences:
3. Composition: While, in all cases, the ‘SC’ comprises representatives of participating donors and the IMF, in some cases:
Beneficiary countries are included as members (e.g., ATI and CDOT).
Observers (regional development bank, World Bank, OECD) are also invited.
Area departments are represented (not the case for JVI).
4. Chair: Where the ‘SC’ is chaired by the RTC Director in the cases of ATI and STI; for JVI the chair alternates between the IMF and Austrian authorities. For CEF, the Kuwaiti Government chairs; and for CDOT the chair rotates between members.
Roles and Responsibilities
RCDCs Versus HQ-Led Delivery
| RTAC Director |
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| Area Departments (AD) |
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| Capacity Development Departments (CDDs) |
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| Institute for Capacity Development (ICD) |
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| RTAC Director |
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| Area Departments (AD) |
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| Capacity Development Departments (CDDs) |
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| Institute for Capacity Development (ICD) |
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Annex III. RCDCs Funding Model
1. RTACs are primarily financed by contributions from donor partner governments, multilateral or regional organizations, and member countries as well as host countries. Consultations with donor partners to set up a financing arrangement can have long gestation periods, often require multilateral discussions between the IMF, the donor partner, and its embassies or field offices. While the primary responsibility for mobilizing external resources for CD sits with ICDGP, several departments and offices at HQ and the field are involved in the fundraising process.
RCDCs CD Delivery Spending Breakdown, FY2023 CD Delivery Spending by Resource Type
(In percent of total)
Citation: Policy Papers 2024, 015; 10.5089/9798400271502.007.A003
Source: Fund staff calculations.Funding Structure for Current Operating Phases of RCDCs
Citation: Policy Papers 2024, 015; 10.5089/9798400271502.007.A003
Source: Fund staff calculations.2. Increasingly, cross-funding between vehicles better uses overall available liquidity and makes external funding more flexible. Currently, 15 long-term advisors located in RCDCs are funded by other sources, 9 of which are placed in AFRITACs. About half of the advisers were funded by the COVID-19 Crisis Capacity Development Initiative (CCCDI). Four advisors focus on debt issues, three on AML/CFT, three on tax administration, and two on macro-fiscal issues. There is one advisor each on resilience, resource mobilization, and customs administration. In addition, another advisor on debt management to be financed by Japan Technical Assistance Sub-Account (JSA) is scheduled to start this fiscal year in SARTTAC and three more advisors are under consideration.
Funding Mix Tradeoffs
Citation: Policy Papers 2024, 015; 10.5089/9798400271502.007.A003
Source: Fund staff.References
Bassanetti, Antonio, 2021, “What Drives CD Outcomes: Evidence from RBM Data,” IMF Working Paper (Washington: International Monetary Fund).
De Lannoy, Anthony, 2022, “The IMF and Capacity Development – Training,” IEO Background Paper No: BP/22–02/03 (Washington: International Monetary Fund).
Enoch, Charles, 2022, “The IMF and Capacity Development—Delivery,” IEO Background Paper No: BP/22–02/08 (Washington: International Monetary Fund).
Independent Evaluation Office, 2022, “The IMF and Capacity Development,” (Washington: International Monetary Fund).
International Monetary Fund, 2018a, “2018 Review of the Fund’s Capacity Development Strategy— Staff Background Studies and Short Notes,” October (Washington).
International Monetary Fund, 2018b, “2018 Review of the Fund’s Capacity Development Strategy—Overview Paper” (Washington).
International Monetary Fund, 2020, “Revising the Funding Model for IMF Capacity Development—Reform Considerations” (Draft) (Washington).
International Monetary Fund, 2022a, “IMF Strategy for Fragile and Conflict-Affected States (FCS),” IMF Policy Paper, (Washington).
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International Monetary Fund, 2023a, “Review of the Fund’s Capacity Development Strategy Concept Note” (Washington).
International Monetary Fund, 2023b, “Implementation Plan in Response to the Board Endorsed Recommendation from the IEO Evaluation on IMF and Capacity Development,” (SM/23/117) (Washington).
International Monetary Fund, 2023c, “CD Strategy Review Background Paper Evaluations and Impact,” (Draft) (Washington).
International Monetary Fund, ,2023d, “External Fundraising for Capacity Development: Update and Outlook” (Memo) (Washington).
Stedman, Louellen, 2022, “The IMF and Capacity Development—Funding Issues,” IEO Background Paper No: BP/22–02/13 (Washington: International Monetary Fund).
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Prepared by Dilek Goncalves (ICD) under the guidance of a working group co-led by Sukhwinder Singh (AFR) and Michaela Schrader (ICD) with contributions from Justin Tyson (AFR); Nikki Sodsriwiboon (APD); Mark Horton, Kotaro Ishi (all EUR); Sailendra Pattanayak, Andrew Okello, Gerardo Una (all FAD); Johannes Kiess (FIN); Fernando Delgado, Donna Muwonge, Nathalie Carcenac and Bekzod Akramov (all ICD); Tony Hyman (LEG); Holger Floerkemeier (MCD); Zsolt Ersek (MCM); Rainer Koehler (STA); and Maria Oliva and Paula Beltran (all WHD).
The 10 RTACs are the Pacific Financial Regional Technical Assistance Center (PFTAC, 1993), the Caribbean Regional Technical Assistance Center (CARTAC, 2001), African Regional Technical Assistance Center (AFRITAC) East (2002), AFRITAC West (2003), the Middle East Regional Technical Assistance Center (METAC, 2004), AFRITAC Central (2007), the Central America, Panama, and Dominican Republic Regional Technical Assistance Center (CAPTAC-DR, 2009), AFRITAC South (2011), AFRITAC West 2 (2013), and the Caucasus, Central Asia, and Mongolia Regional Capacity Development Center (CCAMTAC, 2021). In addition, the South Asia Regional Training and Technical Assistance Center is currently the only integrated TA and training center (SARTTAC, 2017).
The six RTCs are the Joint Vienna Institute (JVI, 1992), the IMF-Singapore Regional Training Institute (STI, 1999), the African Training Institute (ATI, 2013), the IMF–Middle East Center for Economics and Finance in Kuwait (CEF, 2011), CICDC (2018, trains primarily government officials from China), and Capacity Development Office in Thailand (CDOT).
JVI is an exception as it is an independent international organization established initially as a venture of six international organizations (IMF, EBRD, IBRD, OECD, EIB, and WTO) and the Austrian Authorities. The IMF and Austria have renewed the memorandum of understanding on the continuation of the JVI every four years since 2002.
“Co-located” refers to LTX who report to HQ, are located at RCDCs, and are funded by thematic trust funds or other non-RCDC resources. “Cross-funded” refers to RCDC LTX that are funded by transferring resources from thematic trust funds or other non-RCDC resources to a RCDC.
As in the case of deployment of LTXs following the Fund’s FCS strategy.
