The objective of IMF technical assistance, as described in its Articles of Agreement, “is to contribute to the development of the productive resources of member countries by enhancing the effectiveness of economic policy and financial management.” In practice, the IMF fulfills this objective by helping countries build up their human and institutional capacity to design and implement effective macroeconomic and structural policies, put in place reforms that strengthen their financial sectors, and reduce vulnerability to crises.
Who benefits from IMF technical assistance?
Technical assistance is one of the benefits of IMF membership. It is normally provided free of charge to any requesting member country, within IMF resource constraints. About three-quarters of IMF technical assistance goes to low and lower-middle income countries, particularly in sub-Saharan Africa and Asia. Post-conflict countries are also major beneficiaries, with Timor-Leste, the Democratic Republic of Congo, and Afghanistan among the top ten recipients in recent years. A wide range of other countries seek technical assistance to strengthen their capacities. In helping individual countries reduce weaknesses and vulnerabilities, technical assistance also contributes to a more robust and stable global economy.
In what areas does the IMF provide technical assistance?
The IMF provides technical assistance in its areas of expertise, namely: macroeconomic policy, tax policy and revenue administration, expenditure management, monetary policy, the exchange rate system, financial sector sustainability, and macroeconomic and financial statistics. Since demand for technical assistance far exceeds supply, the IMF gives priority to providing assistance where it complements and enhances the IMF’s other key forms of assistance, surveillance and lending.
The IMF’s efforts to strengthen the international financial system have precipitated demands for technical assistance. For example, countries have asked for help to address financial sector weaknesses identified within the framework of the joint IMF-World Bank Financial Sector Assessment Program; adopt and adhere to international standards and codes for financial, fiscal, and statistical management; implement recommendations from off-shore financial centers assessments; and strengthen measures to combat money laundering and the financing of terrorism.
At the same time, there is a continuing demand for technical assistance to help low-income countries build capacity to design and implement poverty-reducing and growth programs, and to help heavily indebted poor countries undertake debt sustainability analyses and manage debt-reduction programs. The IMF also contributes actively to the Integrated Framework for trade-related technical assistance, which aims to assist the low-income countries expand their participation in the global economy.
How is technical assistance provided?
The IMF attaches great importance to country ownership. The recipient country is fully involved in the entire process of technical assistance, from identification of need, to implementation, monitoring, and evaluation.
The IMF delivers technical assistance in various ways. Support is often provided through short staff missions of limited duration sent from headquarters, the placement of experts and/or resident advisors for periods ranging from a few weeks to a few years (if the intention is to field a long-term advisor, countries may be asked to make a financial or in-kind contribution). Assistance might also be provided in the form of technical and diagnostic reports, training courses, seminars, workshops, and “on-line” advice and support.
The IMF has increasingly adopted a regional approach to the delivery of technical assistance and training. It operates five regional technical assistance centers, in the Pacific, the Caribbean, East and West Africa, and in the Middle East. In addition to training offered at the IMF Institute in Washington D.C., the IMF also offers courses, workshops, and seminars for country officials through a network of six regional training institutes and programs.
How is technical assistance paid for?
IMF technical assistance is financed from both internal and external sources. The IMF finances directly technical assistance delivery, supervision, administrative, and other overhead costs; and this accounts for about one-fifth of its total net administrative budget. The IMF also administers funding provided by bilateral and multilateral donors. Such cooperation and resource sharing has two benefits: it leverages the resources available for technical assistance, and it helps avoid duplication of advice.
Bilateral donors include Australia, Austria, Brazil, Canada, China, Denmark, Finland, France, Germany, India, Ireland, Italy, Japan, Luxembourg, the Netherlands, New Zealand, Norway, Portugal, Russia, Singapore, Sweden, Switzerland, the United Kingdom, and the United States. Multilateral donors include the African Development Bank, the Arab Monetary Fund, the Asian Development Bank, the European Commission, the Inter-American Development Bank, the United Nations, the United Nations Development Program (UNDP), and the World Bank. In FY 2004, external financing accounted for more than a quarter of the IMF’s total technical assistance and training activities, with Japan being the most generous donor.
How has technical assistance evolved?
Measures have been undertaken since 1999 to strengthen the effectiveness of IMF technical assistance, particularly through integrating it more closely with surveillance and lending programs; reinforcing coordination with other providers, especially the World Bank; improving modalities of delivery, especially through the establishment of regional centers; strengthening the monitoring and evaluation of technical assistance programs; and promoting the dissemination of information on those programs more widely. A 2005 review of technical assistance by the IMF’s Independent Evaluation Office (IEO) also yielded operational recommendations, such as a more medium-term perspective in setting technical assistance priorities. The IMF is considering how to implement the IEO’s recommendations.