Capacity development (CD) is one of the Fund’s three core activities and has grown in importance in recent years. It supports member countries’ efforts to build the institutions and capacity necessary to formulate and implement sound economic policies, thereby complementing the Fund’s surveillance and lending mandates. Member countries, partners, and external commentators give the Fund high marks for the quality of its CD. At the same time, efforts need to continue to strengthen Fund CD to serve members’ current and evolving needs. The 2018 CD Strategy Review examines progress under the Fund’s 2013 CD Strategy and proposes a CD strategy for the next five years. It notes substantial progress in addressing the 2013 recommendations, which included strengthening the CD governance structure, enhancing the prioritization processes, clarifying the funding model, strengthening monitoring and evaluation, promoting greater integration of TA and training, exploiting new technologies for delivery, and leveraging CD as outreach. However, background work for this review also pointed to the need to strengthen the CD framework further. The review builds upon the existing CD strategy, focusing on two mutually reinforcing objectives. First, the impact of Fund CD needs to be increased by further strengthening integration with the Fund’s policy advice and lending operations, while continuing to make progress in framing CD through comprehensive strategies tailored to each member’s needs, capacity, and conditions, focusing on implementation and outcomes. Stronger coordination between CD and the Fund’s other core functions will better connect CD with countries’ risks and vulnerabilities and ensure surveillance and lending integrate lessons from CD more effectively. Second, the efficiency of CD needs to be increased by improving CD processes and systems. This will enhance transparency and strengthen the basis for strategic decision making. Five specific areas of recommendations support the strategy. Likewise, they mitigate institutional risks stemming from the Fund’s CD activities. They include clearer roles and responsibilities for key internal and external stakeholders in the CD process; continued strengthening of prioritization and monitoring; better tailoring and modernization of CD delivery with a focus on implementation of TA recommendations; greater internal consultation and sharing of CD information; and further progress in external coordination, communication, and dissemination of information (Annex I).
stepping-up mobilization of outside resources for TA and external training. Today, the Fund’s CD activities benefit from significant support from members. The share of external financing in direct CD spending reached 55 percent in FY18, with the largest five contributors now accounting for about half of the total. To mitigate risks stemming from increased reliance on external funding and its concentration, a funding model was codified in the 2014 CDpolicystatement, and an interdepartmental review process for new externally funded initiatives was established to ensure
strategy providing a comprehensive framework for CD activities and the substantial strengthening of the CD governance and prioritization framework (see Box 1 ).
Box 1. Key Recommendations from 2013 CD Strategy Review
New Steps for Staff
Prepare a new policy statement for Board approval
Completed with issuance of CDPolicystatement in August 2014
Draft new terms of reference for the CCB
Completed July 2013; First meeting under new structure held in November 2013;
Since then, the CCB has been holding
International Monetary Fund. Finance Dept. and International Monetary Fund. Monetary and Capital Markets Department
6. The broad composition of CD spending across regions and topics is driven by the demands and needs of member countries and guided by the CD priorities of the Fund . As outlined in the 2014 CDpolicystatement, Fund policies seek to ensure adequate funding for CD in crisis situations, allowing donor financing when donor interests are consistent with Fund priorities and objectives, and relying on Fund financing when donor support is not available. 4 The planning and prioritization of CD activities takes place at the institutional level and are informed by
With continued efforts to maximize the use of available resources, the FY 17 outturn represents a small increase in spending within a largely flat budget envelope. Reallocations from lower priority areas and efficiency gains, along with flexibility provided by carry forward resources enabled the Fund to deliver on the initiatives and priorities in the Global Policy Agenda and Management’s Key Goals. In terms of outputs, there was a small shift in spending from country and regional work to policy work. Within the former, spending moved from lending activities towards bilateral surveillance and capacity development. In terms of inputs, the structural budget was almost fully utilized. Highlights are presented followed by a discussion of the outputs and inputs. Details on capacity development are presented in the Annex.
in June 2013, which presented the first integrated strategy for CD. Prioritization has also been strengthened in accordance with the 2014 CDPolicyStatement. 3 Fund policies seek to ensure adequate funding for CD in crisis situations, allowing donor financing when donor interests are consistent with Fund priorities and objectives, and relying on Fund financing when donor support is not available. The planning and prioritization of CD activities takes place at the institutional level and are informed by the Global Policy Agenda and other initiatives discussed by
This paper outlines reforms to increase the effectiveness of the Fund’s capacity development (CD) program. It builds on the 2008 and 2011 reviews of technical assistance (TA) and the 2008 review of training, which set in motion important changes to make CD more valuable to member countries. Reforms will involve Board endorsement in a few areas and implementation by staff of related next steps.
Regular reviews of the CDpolicystatement and of CD activities conducted under its umbrella . General reviews of the Fund’s TA activities have been prepared and published from time to time in dedicated studies or as part of other related work. However, this has been done on an ad hoc basis. 6 Future reviews of CD activities would be conducted at a similar frequency as reviews of surveillance and conditionality (three to five years). The reviews could also be used to guide prioritization and delivery of CD. ICD, in partnership with area and functional
Operating within a flat real budget envelope, the Fund delivered on the priorities and initiatives laid out in the Global Policy Agenda and Management’s Key Goals (MKGs). Resource pressures were addressed via implementation of streamlining initiatives, strategic reallocation of resources towards higher priority areas, and careful budget management. In terms of outputs, spending in FY 16 continued the shift from crisis management to crisis prevention, in line with the MKGs. Output shifted moderately from multilateral surveillance and oversight of the global system to bilateral surveillance and capacity development. Lending activity expenditure remained broadly unchanged. Average country spending was broadly aligned with assessment of risk. The net administrative budget outturn in FY 16 was $1,038 million against an approved budget of $1,052 million. The modest underspend reflects the preservation of the contingency reserve and lower-than-planned travel expenditure. Relative to FY 15, higher budget execution led to a small real (0.8 percent) year-on-year increase in net expenditures. Total capital expenditures of $131 million were recorded in FY 16 out of the $435 million in available appropriations. HQ1 Renewal expenses made up 70 percent of the spending.
to totals due to rounding.
1 Signed contributions and pledges for current cycle as of April 30, 2016.
C. CD Volume and Distribution
5. The Fund’s overall objectives and the needs of member countries determine the volume and distribution of TA and training. Governance of CD activities has been strengthened following the Executive Board’s review of the Fund’s CD strategy in June 2013 and the Board’s approval of an updated CDpolicystatement in 2014. 1 Fund- and donor-financing of CD ensure adequate funding for CD in crisis situations, allow donor