IMF Opens Up: Partnerships with Donors a Win-Win

I would like to talk about one of the IMF’s core mandates that is highly successful but rarely grabs headlines: technical assistance for capacity building.

Although less glamorous than the surveillance and lending operations of the Fund, for many countries these advisory services in areas such as macroeconomic policy, public financial management, tax policy and revenue administration, financial sector supervision, or statistics are indispensable. They help IMF member countries identify weaknesses in policies and institutional frameworks, develop concrete reform proposals and strategies, and put together the nuts and bolts for translating the IMF’s policy advice into concrete implementation of reforms.

Technical assistance in the IMF’s areas of core expertise is thus not only an important complement to the IMF’s policy advice in many countries but also helps them pursue their broader developmental and poverty reduction strategies by strengthening their capacity in macroeconomic management. Our technical assistance is also an important complement to the broader aid and development efforts of other bilateral and multilateral donors.

For example, as my colleague Carlo Cottarelli pointed out in his recent post, low-income countries need to continue improving the way they spend foreign aid. I firmly believe that the IMF must work closely with development partners to make our and their assistance more effective.

Not only in terms of coordinating interventions and exploiting synergies, but also because the input from donors and other stakeholders makes IMF technical assistance better and more effective. It is a classical win-win proposition: while donors (and, of course, beneficiary countries) benefit from both the depth and breadth across countries of Fund expertise in its core areas, conversely the Fund benefits from donors’ expertise in integrating interventions into their overall programs and managing them in a results-based framework.

Our delivery of technical assistance is demand driven, that is, only provided upon request of the recipient country which is fully involved in the entire process of technical assistance, from identification of need, to implementation, monitoring, and evaluation.

Rising demand

Before the financial crisis, demand for our technical assistance was already high and rising.  The crisis and its after-effects have further boosted demand. This is particularly relevant in Africa, as Antoinette Sayeh has noted, capacity building is essential in helping countries through the crisis.

In the wake of the global slump, external donors are even more crucial to help us meet the rising need for technical assistance. Happily, donors generally recognize IMF technical assistance as a high quality product that achieves additional traction from its integration with the Fund’s lending and surveillance activities and complements their own interventions in key areas. But we have not remained complacent. We have embarked on comprehensive reforms to make IMF technical assistance more attractive to donors.  We have strengthened the governance and accountability of technical assistance, increased cost transparency, and are improving information-sharing through better dissemination of technical assistance-related information.

Regional approach

We also complemented our technical assistance product lines to better link up with donors’ regional and thematic priorities.

This has been done through the Regional Technical Assistance Centers and the Topical Trust Funds (more on them in a later post). The former provide multi-topic technical assistance, regionally; the latter operate globally but with a specialized topical focus. Both are organized as multi-donor trust funds. In addition, bilateral trust funds provide more specialized technical assistance focused on specific countries and topics customized to narrower donor priorities. All technical assistance interventions are prioritized and coordinated in a comprehensive allocation process that ensures the best use of resources and synergies to the benefit of recipient countries.

We have already substantially scaled up our partnership with donors. Not only have we increased technical assistance under bilateral accounts, but, last year, we opened a new Regional Technical Assistance Center for Central America and Panama and started operations under the IMF’s first topical trust fund on Anti-Money Laundering and Combating the Financing of Terrorism.

Country needs are plentiful and we plan to further expand our technical assistance through new and scaled-up, regional centers, as well as through more topical trust funds.

More in my next posts.

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