External Advisory Group Feedback

22. The External Advisory Group (EAG) have also provided their views on the Fund’s comparative advantage in CD. ccording to the E G, the Fund’s strengths include its deep access to key government institutions, high-quality CD, and its ability to source trainers from other reputable institutions. In their view, the Fund could improve its CD by being mindful of the wider ecosystem for policy formulation and implementation, including through engagements with academia or the media. The Fund’s ability to provide ongoing support in a systematic manner is a key area of comparative advantage, and increased engagement with non-governmental stakeholders would be beneficial in this regard. There are also several opportunities to make training more effective, including by leveraging online training to increase enrollment and participant flexibility, by incorporating more theoretical and econometric aspects into material, and by tailoring courses to the recipients.

23. The EAG suggested clarifying the Fund’s role in the new priority areas as a primary producer or a user of knowledge. While the EAG did not identify any specific area where the Fund should be doing less CD, they suggested the Fund should look for ways to better coordinate with other organizations on newer priorities (e.g., gender, climate, digitalization) to avoid overlap and duplication. On these newer priorities, the emphasis should be on applying macro-criticality test and tailoring CD delivery to ensure its effectiveness. The Fund is seen by the EAG as well positioned to be a primary producer of knowledge on digitalization. On the other hand, in climate or gender, the Fund can embed these topics through its core areas of competence by leveraging the work done by other development partners with comparative advantage of the primary producers of knowledge in these areas. Above all, the Fund should focus on its core mandate, incorporating new priority areas when they reach the level of macro-criticality.

Partners Survey Results

24. The survey suggests a general consensus that Fund CD adds most value in the “traditional” core areas of Fund expertise. Macroeconomic analysis and forecasting, public financial management, domestic revenue mobilization, cash and debt management, monetary policies, financial sector regulation and supervision, good governance, as well as stronger statistical capacity and legal underpinning for reforms all feature prominently in the responses of all survey participants. CD partners expressed their strong preference for the Fund to focus on its core areas. At the same time, the partners welcome engagement and see a valuable role for the Fund to play in the new priorities and focus areas such as digitalization (e.g., central bank digital currency), climate, fragile and conflict-afflicted states (FCS), and gender issues. Lastly, some respondents considered advice on geoeconomic fragmentation, Article IV reports, financial sector assessment programs (FSAP)—all of these not considered CD in the strict sense—as highly valuable, highlighting the complementarity and synergies between CD and other Fund activities (surveillance and lending).

25. CD partners are supportive of a strategy with periodic and evolutionary shifts towards underserved areas and away from those with limited value added. Commenting on CD provided by Fiscal Affairs Department (FAD), some partners suggested greater emphasis on public investment management while others suggested more CD on “greening” FM. As to CD provided by Monetary and Capital Markets Department (MCM), greater emphasis on financial supervision capacities and central bank communications was suggested. Furthermore, partners urged a holistic approach to mainstreaming new priorities in the core areas of expertise. On climate, given the respective agencies’ comparative advantages and resource scarcity, some partners viewed the Fund’s CD adding most value on strengthening member countries’ fiscal resilience to climate-related shocks, macroeconomic effects of climate policies, analytical work on energy security, and climate stress testing of financial sector institutions. Furthermore, partners highlighted the importance of tailoring. For example, recognizing the FCS are often the ones in most need of CD assistance but are also the ones hardest to reach and gain traction with, partners strongly encouraged more tailoring to the country context.

26. Development partners typically diversify and complement their engagement with the Fund by engaging with other CD providers working in similar topical areas. Many of the Fund’s CD partners have bilateral CD arrangements (sometimes through other branches of the government or government agencies) with select country authorities, which serves well to facilitate complementary CD engagements by the Fund and vice versa. Among notable development partners who support CD in various macro and sectoral issues are the World Bank, other multilateral development banks, OECD, Bank for International Settlements (BIS), UN agencies, Alliance of Financial Inclusion (AFI), Instituto de Estudios Fiscales (IEF), and private development consulting companies. In some cases, the Fund’s development partners are also themselves beneficiaries of TA from other agencies. All this provides fertile ground for coordination and collaboration on CD in a mutually beneficial way.

27. CD partners expressed their support for various Fund CD initiatives. The partners expressed their appreciation of the value of IMF diagnostic tools in setting the stage for CD engagements and of the increase in the role of e-learning tools in complementing CD delivery. Opportunities to expand cooperation often arise from the initiatives in new priority areas in which the Fund leverages its own resources with external financing. For example, one of the partners initially supported the Revenue Mobilization Thematic Fund (RMTF) but later expanded their support to two regional CD centers (RCDCs) and the COVID-19 Crisis CD Initiative. Some partners emphasized the preference for relying on umbrella thematic CD funds like Global Public Finance Partnership (GPFP) (as opposed to mere deployment of long-term advisors) but cautioned against over-harmonizing CD financing vehicles at the expense of ability for some of them to specialize or support new CD ventures.

28. Partners envisage continued evolution in Fund CD over the medium term. They consider a focus on core areas of expertise, close attention to member needs, and increased responsiveness to the Board and other stakeholders’ important priorities. At the same time, in terms of delivery modalities, the consensus is for further enhancing the hybrid delivery model that emerged post-pandemic to maximize through. Partners also mentioned that post-pandemic and amid a higher-for-longer interest rate environment, the Fund should respond to the likely increase in demand for CD and diagnostics on such topics as governance, fiscal transparency, and debt management. They would also like to see clear linkages between specific topical CD (such as, for example, technical CD on tax administration) and broader developmental objectives, particularly in low-income countries (LICs) and FCS. In terms of geographic and topical coverage, partners often have their bilateral or regional and topical preferences. To meet these, a network of global partnerships with a broad base of partners becomes an indispensable asset in minimizing excessive dependence on a small number of external financing sources. Overall, some partners would favor a more sustainable funding model with lower risk of over-dependence on external financing.

29. Partners expressed support for the Fund’s CD coordination practices and suggested further improvement. No issues regarding how the Fund coordinates on CD with its established development partners were reported, but some noted that the same is not always the case with other CD providers. The partners appreciate the Fund’s efforts to strengthen coordination in the field and note that holding regular face-to-face briefing sessions for the partners and stakeholders resident in the country by the Fund’s CD mission chief is highly appreciated. Ideally, there would be a robust and comprehensive international framework for CD collaboration and coordination with other multilateral development banks (MDBs)/IFIs would be very helpful. But even smaller steps like the Fund’s more active engagement with existing coordination mechanisms (e.g., the Platform for Collaboration on Tax) would be beneficial. Some partners also noted the positive externality of collaboration and coordination that arises from the creation of broad multi-donor thematic vehicles like the new GPFP.

30. Dissemination of information on Fund’s CD can help improve coordination. More active information sharing would help avoid duplication of effort and better calibrate CD delivery by other providers. Furthermore, best practice notes could also be prepared to highlight the cases of successful coordination, which could be scaled up (e.g., see Box 8 in the Overview Paper, profiling the case of Haiti, including the successful implementation of targeted joint monitoring matrix with key development partners). The Fund’s resident representative in the country can also help improve coordination. Partners emphasize the need for the Fund resident representatives to play a close and substantive role in CD preparation and delivery. RCDCs are a good vehicle for regional coordination, and this should be utilized more by the Fund to serve as platform for peer-to-peer discussions and interactions among policy practitioners. That said, coordination mechanism needs to appropriately be flexible to respond to the local context. For instance, in absence of in-country resident representatives, experts in RCDCs who are closer to the ground can help area departments’ coordination efforts.

31. CD partners support more integrated, flexible, and tailored assistance to increase traction and impact. In particular, many emphasized the importance of flexible implementation, with stronger reliance on available technologies (i.e., for hybrid or blended delivery), as well as coordination and engagement of other partners (both traditional such as the World Bank and non-traditional such as Civil Society Organizations). Integration of CD and surveillance/lending is fundamental for ensuring alignment with countries’ priorities and local contexts. Partners support the view that continuous monitoring of demand for training can help calibrate training courses to the changing policy environment. Also, a greater leverage of the Fund’s training alumni network could facilitate cross-pollination of ideas and knowledge, and ultimately improve impact. To this end, a networking platform could help better sustain training gains. Last but not least, regular monitoring and evaluation of CD delivery, growing quality and coverage of results-based management data should over time demonstrate progress in achieving the objectives and fulfilling the vision outlined for the Fund’s CD.

Outreach Consultations with Development and CD Partners

32. Consultations with global CD partners (e.g., WB, European Union) and regional development banks (Asian Development Bank, African Development Bank, Inter-American Development Bank, European Bank for Reconstruction and Development) shed additional light on the Fund’s comparative advantages. While there may be some overlaps between the Fund or WB or DBs CD in a few areas, the collaboration is strong and there is a desire to further strengthen it. The Fund’s CD is valued for its strategic high-level technical advice, on the basis of diagnostics and assessments, which partners like the WB, the ADB or other regional banks can complement with more intensive implementation assistance, often linked to their own projects or lending programs. The division of labor is clearer on monetary and financial sector CD where coordination with the WB is more structured (owing to the joint nature of broad-based diagnostics such as FSAPss) and less so in select fiscal/new priority areas (e.g., climate), where overlaps are greater, including in funding sources. That said, there are ongoing efforts to better coordinate in some of the new priority areas (e.g., on digital/cross-border transaction with the WB). In terms of coordination, other CD providers see the Resident Representatives playing a critical role for successful CD coordination.

33. Development partners expressed their appreciation for the unique feature of Fund CD—its integration with surveillance and lending. Many observed that Fund’s high-level diagnostics and tools when combined with broader policy direction from surveillance and program operations provide very helpful guidance in designing overall reform and a roadmap for engaging other development partners, avoiding duplication, and improving CD synergies. Also noted was the importance of the Fund’s high-level influence for driving important reforms, with opportunities to engage in sectoral reforms arising during the Fund’s program arrangements. Partners urged care in ensuring that CD in the core Fund area retains their focus, while mainstreaming new global policy priorities (e.g., climate). Having a longer time horizon, especially in FCS, and covering areas where others lack expertise (financial, statistics) at greater intensity would increase the impact. Finally, field presence significantly aids collaboration with other partners and in this regard both RCDCs and Resident Representatives provide a very helpful coordination mechanism.

Public Financial Management (FAD)

35. PFM CD focuses on sound budget institutions to support the formulation and implementation of fiscal policy. It encompasses a wide range of topics that includes, macro-fiscal management and forecasting, fiscal risk management, budget planning and preparation, public investment management, budget execution, cash and debt management, and accounting and fiscal reporting. FAD also assists countries in digitalizing PFM processes and tools and developing PFM reform plans and revamping institutional arrangements, including the development and strengthening of legal framework for PFM and organizational restructuring. The overarching objective is to make the budget formulation process more strategic and policy oriented, budget execution more robust, public investment more efficient, the analysis and management of fiscal risks more comprehensive, and fiscal reporting more comprehensive, reliable, and transparent. Emerging topics, such as climate change, gender, and digitalization of PFM, are increasingly occupying a greater share of FAD’s CD work.

36. FAD also provides expenditure policy CD, including wage bill management, fuel subsidy reforms, pensions, public finances for education and health policies, social protection, expenditure reviews and sustainable development goal costing. In addition, FAD builds capacity in the ministries of finance by providing training as part of medium-term CD engagements.

37. There is presence of other development partners in the delivery of PFM CD. They operate in several of the sub-topics of the PFM workstream, especially at the regional/country level where they have established presence in the field. At the same time, the share of the Fund’s FM CD is assessed to be relatively higher in macro-fiscal issues and policies, PFM strategies and action plans, fiscal risks, and core PFM functions (budget preparation and execution, treasury and cash management, accounting, and reporting). FAD also provides substantial support on public investment issues, with attention to budgeting of public investments. On expenditure policy, the share of Fund CD is highest in AFR region, which has been systematically prioritized for delivery of this assistance.

38. Other CD providers tends to cluster around their priority geographic or country grouping areas. The World Bank, the EU, GIZ, African Development Bank (AfDB), and France (through AFD and Expertise France) are most actively working in the PFM area in FCS and highly indebted LICs in AFR. In addition, USAID, UK Department for International Development (DFID), Norway, Sweden, UNDP, and UNICEF are also active on PFM CD delivery in these countries. PFM CD work in EUR is largely focused on Southeast and East European countries with the EC, SECO, and some individual countries like the Netherlands or Finland among the active players, along with the World Bank, OECD Sigma, EBRD, and local offices of the EC. The main other players on PFM in APD are the World Bank and the Asian Development Bank (ADB). The World Bank, the EU, USAID, GIZ, ADB, SECO, and France are all active in the MCD countries. The World Bank is one of the main other providers of CD on expenditure policy work across the globe (although the focus of its engagements is often short term, and Inter-American Development Bank (IADB) is active on this topic in WHD.

39. There is scope for both overlaps and complementarities with other development partners in the PFM CD space. The most likely areas of overlap are budget preparation, state-owned enterprise (SOE) governance and oversight, internal controls, accounting, and fiscal reporting. At the same time, with good coordination, there is substantial complementarity. Some success stories include cases where FAD provides comprehensive assessment of a country’s PFM/Public Investment Management (PIM), and other partners focus on the implementation of identified reforms at the institutional level or where FAD focuses on building capacity in the ministry of finance while other partners complement that with CD to other sectoral ministries or subnational governments. Cooperation with other providers also works well on the development of PFM strategies and action plans. Another case of effective complementarity is when other providers work on such essential elements of PFM framework as procurement or audit, which are typically excluded from the Fund’s scope of CD on PFM. Also important are the cases where other development partners step in with financing either the Fund’s CD activities or PFM infrastructure and tools.

40. Comparative advantages of the Fund’s PFM CD stem from its strategic focus, strong linkages to surveillance and lending, and high credibility with the authorities. Fund CD in PFM is recognized for its strategic focus on macro-critical issues, taking a system-wide view of reform needs, and linking reform actions to policy priorities. It introduces modern PFM practices, often based on its own analytical work, relies on a strong knowledge base, with experts drawn from all regions of the world, as well as strong quality assurance practices through its sizeable in-house expertise. A focus on core PFM functions and a set of expenditure policy sub-topics (i.e., wage bill management, fuel subsidy reform, sustainable development goal costing, as well as pensions, social protection and public finances for education and health policy) has helped with the credibility with the country authorities, particularly in the LICs. Last but not least, the Fund’s commitment to flexibility and diversity of CD delivery modalities and financing are part of its comparative advantage.

41. Key approaches to effective coordination and collaboration in the PFM workstream include regular interactions, joint work, and information sharing. In particular, virtual or in-person interactions with other providers to share CD objectives, conclusions, and recommendations, to define and coordinate follow-up activities have proven useful. Joint delivery of Public Investment Management Assessment (PIMA) and the Climate Module of PIMA (C-PIMA) with the World Bank has worked well. Collaboration with the World Bank on debt management, GovTech and digitalization of public finance, and with the UN Women on gender budgeting have been helpful. Close collaboration at the time of developing PFM strategies is of crucial importance to the eventual success of CD delivery (e.g., PFM strategy and action plan for the Democratic Republic of the Congo was a successful joint effort of the authorities, the IMF, the World Bank, and all other development partners involved). However, coordination challenges may stem from the divergence in the agenda of different development partners, including from, for example, the horizon of engagement of development partners. Despite challenges with absorptive capacity, there have been cases of similar CD requests channeled to more than one provider which results in overlaps and even in conflicting recommendations.

Domestic Revenue Mobilization (FAD)

42. Domestic Revenue Mobilization (DRM) includes CD on tax policy and revenue administration with complementary CD on tax law design and drafting by LEG. The tax policy, revenue administration (covering tax and customs), and tax law workstreams are highly integrated to support countries with their tax system reform. Key areas for tax policy CD are identifying and analyzing the revenue and economic implications of policy options, or measures to change the tax mix for equity and efficiency objectives. Revenue administration CD focuses on strengthening tax and customs administration capacity, particularly increasing compliance, implementing tax policies, adopting robust governance and strategic management frameworks, as well as modernizing core operational functions. Lastly, legal CD focuses on drafting of laws and regulations in all areas of taxation, often during joint FAD/LEG CD activities.

43. The Fund accounts for a significant share of global CD delivery in the DRM workstream. In some other areas, such as aspects of international taxation and customs administration operations, Organization for Economic Co-operation and Development (OECD) and the World Customs Organization (WCO) hold dominant positions respectively, due to the nature of their specialization and standard setting role. Other providers include the World Bank, UN, regional development banks and tax organizations. Furthermore, some CD providers have been expanding their footprint in the DRM CD. Examples include, ECD’s G20 Inclusive Framework serving as a steppingstone to provide CD beyond its core areas, UNDP has recently announced a new DRM program, ADB and African Tax Administration Forum (ATAF) both expanding their DRM CD. Bilateral CD through various organizations is also not uncommon. On customs administration, the volume of CD by other providers is large, but it is largely focused on trade modernization and illicit trade connected to organized crime and terrorism. Meanwhile, the Fund increasingly connects it customs CD to the DRM objective.

44. Comparative advantages of the Fund’s CD on DRM stem from the depth of its expertise and quality. Very few development partners have as extensive in-house CD delivery capacity as the Fund. Furthermore, integration with the Fund’s surveillance and lending functions and strong linkage between CD on revenue and expenditure are fundamental features that allow the Fund to provide integrated advice across the policy, administration and legal aspects of the tax system reform. F D’s CD strategy for FY –FY27 envisages further steps to adapt CD delivery to the future demands by encouraging further integration with the Fund’s area department work, making CD delivery model more flexible, tailored and agile. In particular, this involves customization of CD delivery to the country context.

45. Coordination with other providers in the DRM area is important for efficiency and impact. Given the strategic nature of the Fund’s CD, other partners often look to the Fund take the lead on coordination. In this context, the Platform for Collaboration on Tax (PCT) has been serving as a tool for exchange of information on CD and analytical work between the four major players in the DRM CD area: the IMF, the World Bank, the UN, and the OECD. Coordination with other providers tends to take place at the country level through coordination groups and CD debriefings. FAD regularly engages on DRM with international and regional organizations, which helped develop and implement global DRM tools—Tax Administration Diagnosis Assessment Tool (TADAT), International Survey on Revenue Administration (ISORA) and Virtual Training to Advance Revenue Administration (VITARA) —with OECD, Inter-American Center of Tax Administrations (CIAT), and Intra European Organization of Tax Administrations (IOTA). Lastly, the coordination of the Fund DRM CD with development banks often facilitates financing for reforms recommended by the IMF (e.g., the World Bank support for the procurement of Integrated Tax Administration System (ITAS) in Sierra Leone and Liberia while the AfDB doing the same in Zimbabwe).

46. That said, ensuring effective collaboration across the spectrum of CD providers in DRM needs continued attention. The adoption of the Addis Ababa Action Agenda has served as a nudge to expand DRM CD across the globe and created a highly competitive space with the growing number of providers, which in turn makes CD coordination more complex (UN, 2015). Specifically, the large CD providers often have no central CD monitoring function making it difficult to maintain a stable partnership. It is not always easy to see the full picture of all providers’ activities even though the CT’s online integrated platform has gone a long way of providing a regular snapshot of the four participants’ work in DRM CD.

Climate (FAD)

47. The Fund provides climate CD through a number of avenues, including mitigation support, PFM, and macro-fiscal analysis. The Climate Policy Assessment Tool (CPAT) is used to provide analysis of the environmental, fiscal, economic, and distributional impacts of carbon pricing and a wide range of other mitigation policies. The CPAT and other models/databases (e.g., Vehicle Feebates Model, Border Carbon Adjustment Model, the Fossil Fuel Subsidy Database, and nationally determined contribution (NDC) conversions) underpin CD delivery to member countries in designing and implementing policies to achieve their climate goals. Green PFM framework helps to mainstream climate objectives into the overall PFM architecture and processes and the climate module of the Public Investment Management Assessment tool (C-PIMA) helps to identify steps to make PIM more climate-responsive. The Fund also provides streamlined comprehensive climate fiscal policy diagnostics and has developed the Climate Macroeconomic Assessment Programs (CMAP) to enable comprehensive climate diagnostic assessments. It should be noted that other Fund departments (e.g., MCM, STA) also provide climate-related CD.

48. Climate considerations are now integral to core CD workstreams. For example, tax policy advice often considers how revenue enhancing reforms can achieve environmental and climate mitigation objectives. This could focus on mitigation policies integrated in general tax reforms or on the rates and scope of existing excises that can be adjusted to better reflect the externality cost of fossil fuel consumption. Tax policy design for fossil extraction increasingly also focuses on how carbon taxation of direct greenhouse gas emissions can be incorporated into the fiscal regime to encourage a switch toward improved technology and relatively less emitting fossil fuels during the energy transition. There is increasing demand from member countries for advice on the tax policy regimes for minerals that are viewed as being critical for the energy transition.

49. The Fund plays a leading role in analytics and country analysis and increasingly so in mitigation policies. On climate PIM/PFM CD, the Fund is a substantial provider among the development partners. The Fund has also been in working towards mainstreaming climate across the traditional CD areas, in close coordination with the World Bank. For example, both CPAT and CMAP (initially known as CCPA) are joint World Bank-IMF products. Meanwhile, other providers’ climate CD delivery may both overlap with and complement Fund CD. Apart from the World Bank, the main other providers are the regional development banks. Given that the development banks traditionally have strong in-country presence, they are well placed to accompany the implementation of PFM/PIM reforms related to climate.

50. Comparative advantage of Fund CD in climate stems from its analytical strength. Another source of comparative advantage is the integration of Fund CD with other operations, including the recently established RST.

51. Coordination and collaboration are critical, given the cross-cutting nature of the climate topic. This is also important to avoid inconsistent advice on key climate areas. Joint analytic work, including model development, is a good practice in this regard. The World Bank participation in the PIMA/C-PIMA missions also ensures common understanding of PFM/PIM weaknesses and facilitates development of a reform strategy and action plan. Country-level coordination is most effective in supporting on-the-ground implementation of CD advice, for example on the environmental tax reforms or the fiscal regime for natural resource extraction.

Central Bank Operations (MCM)

52. Central bank operations CD focuses on domestic market operations, central bank governance, and foreign exchange operations and market development. Domestic market operations CD focuses on monetary policy implementation and operations, emergency liquidity assistance, collateral frameworks, and money market development. Central bank governance CD covers governance and operational risk management, currency issuance and management, central bank accounting, and transparency code. And foreign exchange operations and market development CD includes foreign exchange reserves management, foreign exchange operations of the central bank, and development of the foreign exchange market. In addition, complementary CD is delivered in collaboration with other divisions with MCM and/or LEG, including central bank legislation reform, digital money and central bank digital currency (CBDC), financial market infrastructure, and climate policy and collateral frameworks, amongst others.

53. Other providers in this CD workstream offer complementary assistance, albeit they often have a more thematical or regional focus. For instance, Deutsche Bundesbank provides an array of training courses for central bankers from around the world, the BIS provides CD on reserves management, and the Bank of England on monetary operations. Other providers include boutique consulting firm OGResearch that focuses on monetary policy analysis and operations and the US Treasury. Complementary work is also done by Riksbank, Norges Bank, and the World Bank, and by FrontClear that particularly focuses on money market development in sub-Sahara Africa. Regional institutions like Macroeconomic and Financial Management Institute of Eastern and Southern Africa (MEFMI) also conduct training in reserves management and financial sector development.

54. The Fund’s comparative advantages stem from its network and depth of expertise and in-house tools. In addition, a broad scope of experts working at the Fund and a pool of high-quality external experts, including current staff from central banks and supervisory authorities, with a plethora of experience that the Fund can rely upon through its external expert roster enable agile response to any CD demand in the central bank operations workstream from the member country authorities. This also facilitates coordination and collaboration with other CD providers, including through joint workshops. Cross-country information from the Fund’s internal database also serves as an input to CD design.

Financial Sector Supervision and Regulation (MCM)

55. The Fund provides CD and policy advice on prudential regulation and supervision. In this workstream, Fund CD focuses on the regulation and supervision of banking, insurance, and securities markets. Fund CD is informed by the Fund’s participation in the international standard-setting bodies, including on new developments such as fintech, cybersecurity and climate-related financial risks. While driven by country demand, Fund CD in this workstream tends to adopt in a programmatic way by taking a longer-horizon view. Specific areas of CD support in this workstream include Basel II and Basel III implementation, risk-based supervision (RBS), International Financial Reporting Standards (IFRS) 9 and in particular expected credit losses, cyber security and operational resilience, fintech (e.g., e-money, open banking, crypto-assets, stablecoins, peer-to-peer lending), regulation and supervision of securities intermediaries, insurance regulation and supervision (IFRS 17), and governance diagnostic assessments (GDA) in sequence with other CD engagements.

56. The Fund’s comparative advantage stems from its global membership, close links with the international financial standard setters and staff expertise. The multi-faceted relationship the Fund has with the members through its surveillance, lending and CD operations (as well as FSAP and financial sector stability review (FSSR) assessments) strengthens the Fund’s comparative advantage in this workstream. In addition, the Fund participates in the Financial Stability Board (FSB) and sectoral international financial standard setters and their technical working groups on development of global financial policy and international standards. The Fund conducts assessments of implementation of these international standards through four core principles assessments in its FSAPs (i.e., Basel Core Principles, International Association of Insurance Supervisors, International Organization of Securities Commissions, International Association of Deposit Insurers) across advanced, emerging, and developing economies.

57. Fund CD in this workstream also benefits from Fund’s diagnostic tools and programmatic approach to CD delivery. The overarching CD strategy is developed in coordination with the Fund’s area department country teams and guided by the Financial Sector Stability Review. FSSRs include diagnostic reviews, CD roadmaps and workplans, and follow-up projects tailored to the needs of recipient countries.

58. This CD workstream is served by a number of other providers. The World Bank, the Toronto Center, the US Treasury’s ffice of Technical ssistance ( T ), and the Financial Stability Institute of the BIS are the main other providers of CD in this workstream. Notably, the Toronto Center and the OTA predominantly provide foundational training in bank supervision while their CD activities are limited in both in volume and in coverage of countries. The orld ank’s CD ranges from placing bank supervision experts in countries to providing technical assistance on a wide range of topics but its CD is limited by availability of donor funding unlike the Fund which utilizes both external and its own resources. The complementarity with the orld ank’s CD is clear in that it focuses on the financial market development and in some cases can also support market infrastructure financing and development. Meanwhile, the BIS provides foundational training (with free access to the authorities in LICs). This allows the Fund CD to focus on the more pressing technical issues in financial regulation and supervision.

59. The Fund collaborates with many of the providers. Effective coordination and collaboration include the Fund’s work with the World Bank and the BIS. For example, FSSR missions are coordination with the World Bank, including resulting TA workplans that ensure complementarity. Every year for more than 30 years, the Fund has been co-organizing with the U.S. Federal Reserve Board and the World Bank an international conference targeting mid-level supervisors. The Fund and the BIS co-organize a bi-annual symposium on TA that brings together TA providers, recipients as well as donors to discuss current and future TA needs. Nevertheless, challenges remain with regard to the availability of experts to meet the spikes in CD demand in fast-growing areas such as non-bank financial intermediation or fintech and cyber risk. The collaboration with the World Bank could benefit from further formalization of arrangements.

Digital Money (MCM)

60. The Fund actively participates in the policy dialogue and delivers CD on digital money. Central Bank Digital Currencies (CBDCs) is one of the key areas of engagement with specialized advice and technical support offered on CBDC feasibility assessment, design, pilot testing, implementation, and supervision. In addition, the Fund has also been assisting member country authorities with adoption of other forms of digital money (e.g., e-money and stablecoins). These developments come hand-in-hand with improvements in financial market infrastructure such as setting up an instant payment system or opening access to payment systems for non-bank payment service providers. To assist member countries, the Fund supports drafting of national payments strategies and applicable regulations, developing payment supervisory and oversight frameworks. The Fund has also developed an approach to regulation of unbacked crypto assets or stablecoins (IMF, 2023b and 2022b).

61. There are many other players in the broader area. With respect to more traditional types of digital money (such as e-money) and related financial market institutions (FMIs), the share of CD delivery is approximately equally split between the Fund and the World Bank and there exists a potential for overlap. However, the World Bank is more active in working with the FCS, in particular on infrastructure development projects which the World Bank can also finance at least to some extent. In contrast, the Fund focuses more on countries’ CD requests on assessing macro-financial implications of issuing CBDC or adopting other types of digital money. Other institutions also work on CDBCs, including BIS which, however, does not directly serve LICs, Japan International Cooperation Agency (JICA) which provides digital money assistance in select countries in Asia. ADB is also supporting regional explorations on digital money with some Pacific states.

62. Comparative advantages of the Fund’s CD in this area relate to its broad membership and experience with assessment of macro-financial implication of digital money. The Fund’s traditional involvement in development of international standards for FMIs, its role as the assessor of countries’ financial sectors through F s, and its ability to quickly build in-house expertise on digital money adoption are also factors in its comparative advantage. Through conducting FSAPs in advanced economies, the Fund keeps abreast of developments in these countries with respect to CBDC projects and is therefore well placed to channel experiences with digital money adoption from advanced economies to emerging markets and developing economies and LICs.

63. There is a growing need for coordination of CD in digital money. This could take the form of an international forum to share experiences and lessons, including on a wide array of policy implications. There is also a need for deeper investigation and coordination among international partners on digital money work, including but not limited to CD. To this end, there is a growing list of cases when CBDC CD delivery was organized jointly with the World Bank (e.g., Morocco and Haiti). Meanwhile, BIS representatives took part in the Sub-Saharan Africa regional conference on CBDC and crypto assets. However, reliance on information coordination efforts might prove insufficient due to the large numbers of country CD requests in this area. A coordination mechanism for the institutions to list their bilateral engagement and share views regarding CD traction would minimize risks of overlap and focus the efforts on countries where assistance is most needed and/or have a higher chance of achieving its objectives, in particular in the case of FCS.

Real Sector Statistics (STA)

64. Fund CD on real sector statistics focuses on improving the methodological framework and compilation practices for the datasets. This work is underpinned by manuals and compilation guides that the IMF has produced in collaboration with other international agencies and covers the following areas: national accounts (quarterly GDP, annual GDP, financial accounts and balance sheets by institutional sector, and high-frequency indicators of economic activity), consumer price index, producer price index, residential property price index, commercial property price index, and export-import price indices. An intensive training program—mostly delivered through RCDCs and in collaboration with national statistical agencies—has been designed to support the TA in this area. The broader institutional priorities and data needs, especially in low- and lower middle-income economies and FC , provide strategic guardrails for the Fund’s CD in this workstream. For example, the upcoming updates of the international statistical standards for national accounts will call for CD on data gaps for surveillance and policy analysis in the area of wellbeing and sustainability, digitalization, climate change, and informal economy.

65. The Fund is a key provider of CD in real sector statistics among international agencies, both in terms of the range of core topics and the number of countries served. STA ‘s TA in real sector statistics is geared towards addressing the methodological framework and compilation techniques for the core datasets. This strategic focus on methodology and compilation is meant to provide national statistical systems the basic framework to compile the statistics. The CD provided by other agencies may then cover additional areas relating to data collection that support the compilation of the statistics and includes CD to conduct household and economic surveys, and to develop business registers,. For example, the world bank’s long-running Living Standards Measurement Study and the bank’s CD on source data development that focuses on establishing business registers and supporting economic and household survey programs are very useful complements to the Fund’s CD on national accounts and consumer price index. On the use of Big Data, coordination with other CD providers will be necessary. The Fund is preparing training on the use of Big Data for macroeconomic statistics, which is to be led by IMF Big Data Center of Excellence to be established by STA in FY2025.

66. The Fund’s real sector statistics CD is fully integrated with the work on methodological development. This is a source of comparative advantage in that the country authorities are assisted through the Fund’s CD in adopting the latest standards that address important data gaps related to surveillance, lending, and broader policy developments. The Fund’s STA is a member of Inter-Secretariat Working Group on National Accounts (ISWGNA) that provides strategic vision, direction, and coordination for the methodological development and implementation of the System of National Accounts (SNA). It is also a member of Inter-Secretariat Working Group on Price Statistics (IWGPS) and a member of the Governing Board of the International Comparison Program (ICP). This allows for productive collaboration with other major players in this area such as Eurostat, OECD, UN Statistics Division, ILO, and the World Bank. Availability of external financing for the Fund’s CD in this area (particularly through Data for Decisions (D4D) Fund) is a source of agility and enables STA to adapt and respond to the increasing CD demands given the importance of timely availability of accurate data for economic policymaking.

67. Coordination, nevertheless, remains important, given resource constraints both on the side of national statistical agencies and CD providers. STA ‘s long-term experts placed in the field play an important role in promoting coordination with the World Bank and other CD providers to prevent overburdening the national statistical agencies, avoid duplication of advice, and jointly identify the priority areas for CD. Recently, the Fund’s STA and the world bank have implemented a more formalized coordination mechanism that allows the Fund to review the World Bank project concepts and work programs. Lists of contact points and regular meetings between HQ-based staff of the two institutions to identify priority areas for source data development and the timing of the data collection exercises. Looking ahead, the Fund could seek a more active role in designing the household budget surveys, given their importance for national accounts and for building the weights of the consumer price index.

External Sector Statistics (STA)

68. External sector statistics (ESS) CD helps member countries produce reliable and timely data for macroeconomic policymaking. To address the call for comprehensive analysis of cross-border capital flows for macroeconomic surveillance, in addition to the Balance of Payments, the ESS CD includes compilation of various cross-border position data, such as International Investments Position (IIP) statistics, Quarterly External Debt Statistics (QEDS), Reserve Template, Coordinated Direct Investment Survey, Coordinated Portfolio Investment Survey data, and other ESS data sets with enhanced granularity. The ESS TA covers a broad range of issues from closing data gaps and safeguarding sound methodology to efforts to address legal and institutional constraints, such as promoting solid legal basis for production and dissemination of specific ESS datasets, ensuring resource availability, knowledge sharing, and fostering inter-institutional ESS source data provision.

69. The Fund has an agile approach to ESS CD delivery combining various delivery modalities. The ESS technical assistance delivery is complemented by training activity, most frequently in a blended form, combining synchronous and asynchronous training. The new trend in ESS training is to supplement lectures with customized compilation exercises, where participants are using their own country data. An intensive training program is mostly delivered through RCDCs. However, ESS CD delivery is greatly enhanced due to the availability of multilateral (e.g., through Data for Decisions (D4D) Fund) and bilateral (e.g., Japan Technical Assistance Sub-Account and others) external financing. Availability of external financing allows the Fund to create and maintain countries’ capacity to measure wider scope of the E and timely address emerging data needs (e.g., new labor and capital mobility trends, cross-border activities of multinational corporations, cross-border transactions related to countries’ role in the global value chain, digital money, etc.).

70. The Fund has a comparative advantage in providing ESS CD. It is the sole or a primary author of the Balance of Payments Manual (BPM) and its related compilation guide, Remittances Compilation Guide, External Debt Guide, and the Guidelines for the Reserve Asset Template. It is a contributor to the Manual on Statistics of International Trade in Services and helps establish data standards on foreign direct investment. While the Fund is the sole provider of comprehensive ESS CD, it coordinates with other CD providers on specific issues—with the World Bank on QEDS and UNCTAD on Trade CD. STA ‘s long-term experts placed in the field play a significant role in promoting coordination with the other CD providers and promoting complementarity of the ESS CD with the other CD workstreams.

71. The Fund fosters coordination and collaboration with other development partners on methodological issues. STA leads the IMF Committee on Balance of Payments Statistics that advises on methodological revisions and endorses collection of new data to address ESS data gaps. The Committee, and other working groups ensure productive collaboration on methodological issues with the Bank for International Settlements, European Central Bank, European Commission-Eurostat, Organization for Economic Co-operation and Development, UN Conference on Trade and Development, UN Statistics Division, and the World Bank. This is essential for the ongoing update of the BPM6, which will among others is to ensure that the IMF’s data needs and key topics for surveillance (digitalization, climate, well-being, external sustainability, informal economy) are addressed in the updated manuals. Going forward, the Fund will provide CD to support members in adopting the new standards and producing relevant data the IMF surveillance and lending activities.

Financial and Fiscal Law (LEG)

72. Fund CD focuses on legal policy, design and drafting of legal frameworks for central banks, financial institutions and markets, as well as fiscal policies and institutions. The financial and fiscal law CD is provided either on a standalone basis or in support of IMF-supported programs. Frequently, the delivery takes place in close coordination with either the Fund’s MCM or FAD departments. TA is complemented by training activities in the same areas of law, typically targeting senior level lawyers in central banks, ministries of finance, financial sector supervisory agencies, tax administration authorities, and supreme audit institutions.

73. CD on financial law cover monetary and macroprudential legal frameworks and financial sector regulation, supervision, resolution, and safety net. In particular, the Fund’s EG provides advice to member countries on legal topics related to central bank governance, mandate, autonomy, transparency, payment system, issuance of CBDC, emergency liquidity assistance frameworks. Financial sector legal topics in CD cover the soundness and stability of financial institutions and include advice on the alignment of legal regimes for financial institutions with international good practices, to the extent it is appropriate in the relevant members’ circumstances. In addition, this also included advice on legal topics related to the regulation and supervision of financial institutions (with an emphasis on banks), deposit guarantee schemes, and resolution regimes.

74. CD on fiscal law covers tax frameworks and PFM legal frameworks. On taxation, LEG CD covers all main areas of tax administration and collection. Specifically, the areas of Fund expertise include taxation of income and profit, value added taxes (VAT) or goods and services taxes (GST), customs and excise taxes, environmental taxation, tax administration and procedures in international taxation, including international trade-related issues, as well as tax law frameworks for specific sectors (e.g., natural resources, financial sector, and securities and capital markets). On PFM, legal CD focuses on constitutional issues and advice on the adoption of legal and regulatory frameworks to promote fiscal and debt sustainability, transparency, and sound public finances. This encompasses the legal foundations of the budget process, fiscal responsibility frameworks, public debt management (PDM), public investment management, SOEs, and sovereign wealth funds.

75. The Fund’s comparative advantage is aided by its role in the global policy agenda development. In certain areas, such as central bank legal framework reform and tax law reform, the breadth and depth of the Fund’s EG expertise is unique. Overall, the Fund’s key role in the global policy agenda development in multiple areas—such as central banking, tax, banking and bank resolution legal frameworks, and PFM/PDM legal frameworks—enables it to provide integrated legal advice (e.g., on the governance of central banks with the dual mandate of ensuring price stability and contributing to financial stability, on the role of central banks when managing sovereign wealth funds, and on the development of local currency bond markets). The wide geographic reach, access to cross-cutting expertise within the Fund, and CD integration with Fund surveillance and lending are all contributing factors to the comparative advantage of the Fund’s CD.

76. Other providers include multilateral regional development banks and select country authorities. The World Bank engages in legal reform related to banking and bank resolution, public debt management, state-owned enterprises, public-private partnerships, and public investment, and in certain aspects of international tax law reform. The ADB also provide CD on legal reform, including financial sector legal framework. The EBRD provides legal TA on overlapping subject matters, such as public-private partnerships and corporate governance. Country authorities themselves sometimes provide TA on overlapping topics to that of the Fund’s CD (e.g., Pacific Financial Regional Technical Assistance Center (PFTAC) countries have been exchanging TA on law reform; the E has “twinning” program for E member states focusing on key aspects of the aquis communautaire). Complementarity with the Fund’s CD typically arises when legal advice is provided to support policy recommendations provided by other institutions, when there are differences in the subject matter coverage or objectives of legal advice provided by others, and when coordination takes place at the international and cross-institutional level on matters related to international standards and good practices.

77. Coordination and collaboration focused on seeking complementarity and leveraging synergies. Coordination with CD providers outside the Fund at both project-specific and programmatic basis. For example, the Fund’s EG is an active participant in the work of the CT. LEG has also been working with the World Bank on many occasions (e.g., legal aspects of the public debt management reform) and effectively collaborating with the OECD, the UN, UNIDROIT Working Groups on Bank Insolvency, Basel Committee on Banking Supervision (BCBS), and FSB. While internal collaboration is well-established practice and tends to work smoothly, coordination and collaboration with outside providers could benefit from better formalization, in particular with regard to CD partner and provider coordination in member countries that benefit from multiple sources of CD.

Governance and Anti-Corruption (LEG)

78. Fund CD focuses on governance diagnostic assessments, direct CD on anti-corruption/rule of law, and regional training on the topic. Governance diagnostics (GD) are meant to provide a holistic assessment of corruption and to map out recommendations for addressing corruption vulnerabilities. Direct CD engagements can then help with drafting anti-corruption legislation and regulations, building institutional frameworks with particular focus on asset declaration, conflict of interests, anti-corruption agencies, and strengthening judicial integrity. Regional training on governance and anti-corruption has been delivered through the regional training centers. In response to the COVID-19 pandemic, the Fund has also offered country-tailored CD on implementation of emergency spending-related safeguards, including measures aimed at publishing beneficial ownership information for procurement decisions and undertaking ex-post audits.

79. Given the Fund’s mandate, CD in this workstream has a narrowly defined scope. It is primarily focused on macro-critical weaknesses and associated corruption vulnerabilities in fiscal governance, financial sector oversight, central bank governance and operations, rule of law (i.e., contract enforcement and protection of property rights) and AML/CFT. Nevertheless, governance and anti-corruption CD delivery has increased consistently in the recent years. This is a reflection of the Fund’s comparative advantages due to its unique expertise in the priority areas and close integration of CD with surveillance and lending. Governance Diagnostics are increasingly playing a role in setting a strategic baseline for CD engagements.

80. Several other CD providers operate in this area, including international and regional organizations, government aid agencies, and non-governmental organizations. The World Bank, the UN Office on Drugs and Crime (UNODC), Organization for Economic Co-operation and Development (OECD), United Nations Development Program (UNDP), and International Development Law Organization (IDLO) all have a broader mandate and support variety of initiatives in governance and anti-corruption. Others, like the International Organization of Supreme Audit Institutions (INTOSAI), are offering targeted CD on strengthening governance. Regional organizations like the EU, the Council of Europe, the OSCE, and the Association of South-Eastern Asian Nations Parties Against Corruption (ASEAN-PAC), as well as the regional development banks (ADB, EBRD, and IADB) are providing similar assistance but typically focus on their respective membership constituencies. The list of government agencies active in this workstream includes USAID (USA), GIZ (Germany), NORAD (Norway), Foreign Commonwealth and Development Office (UK), SDC (Switzerland), SIDA (Sweden), and JICA (Japan). Lastly, NGOs like the Basel Institute of Governance, American Bar Association, International Bar Association, CEELI Institute, Development Alternatives Incorporated, Creative Associates International and others receive donor funding to implement governance and anti-corruption projects.

81. Coordination with other partners is key to ensuring effective and sustainable reforms. The highly fragmented nature of the CD landscape in this area creates potential for occasional overlap in CD activities. In addressing these challenges, the Fund’s strong convening power has been instrumental to ensure productive collaboration. For example, while the Fund assists member states in developing regulatory and institutional frameworks, other providers, such as the World Bank, UNDP, EU, Council of Europe, provide trainings, support communication, provision of software and hardware for implementation. The Fund has also joined forces at the institutional level with the World Bank, UNODC, EU, OECD, and INTOSAI to ensure that CD activities routinely benefit from analysis, reports, and advice of these organizations, particularly on issues related to public procurement, SOEs, implementation of safeguards in emergency financing scenarios, anti-corruption, and the rule of law. At the operational level, collaboration with regional multilateral development banks and other development partners has enabled close coordination of CD efforts, facilitated gathering of inputs for surveillance purposes, and contributed to successful implementation of reforms.

AML/CFT (LEG)

82. Fund CD assists member countries building their capacity in Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT). This workstream includes TA, training, and knowledge sharing activities tailored to the specific needs of countries. CD engagements focus on enhancing the effectiveness of countries’ AML/CFT frameworks, , improving countries’ understanding of money laundering and terrorism financing (ML/TF) risks, strengthening the capacity of supervisors of financial and non-financial sectors (e.g., lawyers, accountants), enhancing the governance and capacity of financial intelligence units, using AML/CFT measures to support the fight against proceeds of corruption and tax crimes, analyzing and mitigating cross-border illicit financial flows, and bolstering international cooperation.

83. The Fund’s comparative advantages in AML/CFT CD reflects a set of factors. First, Fund employs staff with specialized AML/CFT CD expertise and takes an interdisciplinary approach that is crucial for addressing the diverse aspects of AML/CFT. Second, the Fund’s near-universal membership grants it a global perspective and reach, enabling the wide dissemination of AML/CFT best practices and learning from diverse experiences. Third, close integration with surveillance and lending inform the Fund’s policy dialogue with its members and highlight the negative macroeconomic implications of financial crimes. Fourth, the Fund’s strong partnerships with other international organizations, like the Financial Action Task Force (FATF), the World Bank, the United Nations, and Egmont Group of Financial Intelligence Units facilitate the coordination of global efforts in AML/CFT.

84. Several international organizations complement the Fund’s AML/CFT CD. The FATF sets global AML/CFT standards and provides training through regional bodies and its Busan training center, collaborating closely with the Fund. The World Bank integrates AML/CFT CD into its development programs, focusing on legal and regulatory framework strengthening, aligned with poverty reduction goals. The United Nations Office on Drugs and Crime (UNODC) offers CD and supports the implementation of international conventions against organized crime, jointly conducting training programs with the Fund. Regional development banks like the Asian, African, and Inter-American Development Banks offer financial resources and technical assistance to enhance AML/CFT systems regionally. These organizations work synergistically, each bringing unique expertise and resources to establish robust AML/CFT frameworks globally. Finally, private sector firms such as Deloitte, KPMG, PricewaterhouseCoopers, Ernst & Young, and various consultancies provide specialized AML/CFT CD, consulting services, and technological solutions, assisting in mutual evaluation preparations and addressing identified deficiencies. These firms collaborate with governments, financial institutions, and regulators to enhance AML/CFT system effectiveness.

85. The Fund actively engages and consults with other development partners. Coordination occurs through multilateral and bilateral meetings at FATF and its regional bodies’ plenaries and events, as well as through ongoing dialogue with counterparts during the Fund’s lending programs, Article IV, and FSAP consultations. The Fund also works closely with FATF, particularly in standard setting and mutual evaluation. The good practices on effectiveness of CFT policies that have been developed through collaboration with various international organizations (UNODC, UN Counter Terrorism Executive Directorate, and Europol) and incorporate insights from FATF Secretariat and CFT experts are detailed in a recent publication (IMF, 2023a). However, coordinating with other providers poses challenges like information sharing barriers due to data privacy or security concerns, divergent priorities and approaches among different providers, and resource constraints. To overcome these, the IMF focuses on establishing clear coordination mechanisms such as regular meetings, joint planning sessions, and effective information sharing with relevant entities.

Macroeconomic Training and TA (ICD)

86. The Fund delivers macroeconomic training and TA to develop institutional capacity for macroeconomic analysis and forecasting. Macroeconomics training accounts for about half of total CD delivery by the Fund’s ICD, with the core curriculum including Financial Programming and Policies (FPP), Macroeconomic Diagnostics (MDS), Fiscal Policy Analysis (FPA), Fiscal Frameworks (FF), Fiscal Sustainability (FS), Model-Based Monetary Policy Analysis and Forecasting (MPAF), Monetary and Fiscal Policy Analysis with DSGE Models (DSGE), Macroeconometric Forecasting and Analysis (MFA), Monetary Policy (MP), Exchange Rate Policy (ERP), and Managing Capital Flows: Macroeconomic Analysis and Policies (MCF). TA in this workstream helps develop a range of models and tools for structured macroeconomic forecasting and policy analysis in a range of institutional settings. This workstream also supports the integration of these frameworks into the decision-making process of CD-recipient institutions. It should be noted that MCM also provides some CD related to modeling, forecasting and policy analysis.

87. The Fund accounts for a substantial share of macroeconomic training provided globally. This share is somewhat higher in emerging economies than in the developing countries. Relative to other development partners, the Fund provides a range of tools of varying sophistication that facilitate increased tailoring, ownership, and absorption. The slight tilt in favor of CD on more sophisticated tools reflects the Fund’s specialization and the fact that foundational frameworks are also offered by other providers, which include the World Bank, regional development banks, as well as some bilateral partners. In this context, it should be noted that support from bilateral development partners, including within the central bank networks, can be quite flexible and tailored to the needs of specific counterparty, which highlights scope for potential collaboration. In other words, the work by other providers could facilitate and complement that of the Fund (e.g., collaboration with SECO on assistance to the Ministry of Economy of Uzbekistan, and with IADB on assistance to the MoF of the Dominican Republic).

88. The Fund’s comparative advantages stem from quality of CD and its integration with surveillance. At present, only the World Bank can offer similar high-quality tools but the Fund’s experience and capacity to tailor its assistance to the specific country needs remains strong.

89. Coordination with other providers has been generally successful. On some occasions, CD recipients successfully served as facilitator of direct coordination with other providers working in the same or in related areas. However, challenges to successful coordination often arise due to confidentiality clauses with the recipient of assistance, lack of flexibility in the TORs once approved, and insufficient appreciation on of the potential benefits of cooperation between different CD providers.