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IMF POLICY PAPER

FY2023-FY2025 MEDIUM-TERM BUDGET

May, 2022

IMF staff regularly produces papers proposing new IMF policies, exploring options for reform, or reviewing existing IMF policies and operations. The following documents have been released and are included in this package:

  • A Press Release summarizing the views of the Executive Board as expressed during its April 28, 2022 consideration of the staff report.

  • The Staff Report on the Medium-Term Budget was prepared by the IMF staff and completed on April 22, 2022 for the Executive Board’s consideration on April 28, 2022.

The IMF’s transparency policy allows for the deletion of market-sensitive information and premature disclosure of the authorities’ policy intentions in published staff reports and other documents.

Electronic copies of IMF Policy Papers are available to the public from

http://0-www-imf-org.library.svsu.edu/external/pp/ppindex.aspx

International Monetary Fund

Washington, D.C.

© 2021 International Monetary Fund

Press Release

PR22/174

IMF Executive Board Approves FY2023–FY2025 Medium-Term Budget

FOR IMMEDIATE RELEASE

Washington, DC – May 27, 2022: On April 28, 2022, the Executive Board of the International Monetary Fund (IMF) considered the 2023-25 financial years (FY23-25) Medium-Term Budget in the context of significant economic uncertainty, driven by the fallout of the pandemic, the war in Ukraine, as well as shifting monetary conditions in major markets. At the same time, the membership is tackling the profound macroeconomic and financial implications of longer-term global challenges. The Board recognized the need for the Fund to remain agile in its response, working in close cooperation with partners.

The Board emphasized the need to continue exercising strict budget discipline through robust savings and reprioritization. At the same time, after a decade of flat real budgets, Executive Directors approved a targeted budget augmentation framework to step up the Fund’s work on longer-term global challenges. The real net administrative budget will increase on average by 2 percent each year during FY23 to FY25 relative to FY22, returning to a flat real budget trajectory thereafter. The new resources are linked to specific deliverables identified in strategies endorsed by the Board to tackle the macro-critical challenges of climate change and the rise of digital money, while reinforcing the Fund’s work on macrofinancial surveillance, fragility, and inequality. The approved budget is consistent with projected income.

The approved net administrative budget for FY23 (May 1, 2022–April 30, 2023), which covers all administrative expenses less receipts (primarily from external sources to help support capacity building activities and excluding lending income), has been set at US$1,295 million, a 1.8 percent ($21.8 million) real increase relative to FY22. The maximum amount of unused budget resources that can be carried forward from previous years will be reduced from 8 to 7 percent of the underlying budget, representing an initial unwinding of exceptional temporary space for immediate Covid-related crisis needs that was introduced in FY21.

The FY23 capital budget is set at US$78 million, a reduction of 1.3 percent from FY22, allowing critical investments but also time to take on board lessons from the remote environment and recent modernization experience.

The Board also approved an increase in the limit and a carryforward mechanism for externally funded spending, linked to a ramp up in capacity development activities to support the Fund’s structural transformation agenda.

Additional information can be found in the staff paper on the FY23-25 Medium-Term Budget and the Augmentation Framework Paper.

Title page

FY2023-FY2025 MEDIUM-TERM BUDGET

EXECUTIVE SUMMARY

Context. The pandemic and war in Ukraine are weighing on the global economy. Uncertain monetary conditions are also complicating economic management. Members are addressing the fallout, often with constrained policy space, while also seeking a durable, inclusive structural transformation to address the macro-financial implications of climate change, digital money, fragility, and inequality.

FY23–25 framework. After a decade of flat real budgets, the FY23-25 framework includes a phased augmentation to ramp up work in areas of the Fund’s mandate to support this structural transformation, working with partners and with reversion to a flat real envelope in FY26. In parallel, temporary crisis resources are being wound down, carefully paced given risks to the outlook. The Fund is adopting a hybrid work model, building on crisis lessons, while continuing to modernize operations and facilities.

FY23 administrative budget. The proposed budget ($1,295 million, a 1.8 percent real increase versus FY22) builds on extensive reprioritization and savings and the first phase of the augmentation. It recognizes members’ changing needs, with resourcing for deepening work on debt and governance. It also steps up the Fund’s efforts to support a greener, digital, and more inclusive global economy. At the same time, the Fund will need to remain agile, reprioritizing as needed given rapidly evolving circumstances.

External funding. Externally funded spending will continue to recover as travel-related capacity building picks up. A four-percent real increase in the limit for external resources (to $230 million) is proposed to support the structural transformation agenda. A carryforward mechanism for external financing is also proposed.

FY23 capital budget. Capital spending will be moderated in FY23, allowing critical investments but also time to take on board lessons from the remote environment and recent modernization experience. The new cloud-capital equivalent framework approved last year recognizes the changing nature of IT investment and provides a transparent framework for reporting on this spending.

Sustainability. The FY23–25 budget is consistent with the Fund’s medium-term income position and precautionary balance target.

Risks to the budget remain elevated, due, inter alia, to uncertainty in program demand, the early stage of work to support members’ structural transformation, the new hybrid model, and inflation developments. Enterprise risk management continues to be strengthened.

Approved By

Michele Shannon

Prepared by the Office of Budget and Planning (OBP) team led by Maria Albino under the supervision of Axel Schimmelpfennig and Justin Tyson with contributions from Feras Abu Amra, Gillian Adu, Emre Alper, Leslie Alvarez, Anand Balakrishnan, Raquel Chuayffet, Angeliki Economopoulos, Cher Huo, Mercy Pinargote, Delano Radgman, Andrea Salerno, Haydn Schaefermeyer, Anika Shtuni, Paul Tershakovec, Muriel Vimond, and Barrie Williams. Contributions from staff in CSF, HRD, ICD, ITD are noted in the text in the relevant sections.

Contents

  • Abbreviation and Acronyms

  • SECTION I. OVERVIEW

  • SECTION II. FY22 DEVELOPMENTS

  • A. FY22 Administrative Budget

  • SECTION III. MEDIUM-TERM CONTEXT

  • A. Calibrating the Pandemic Response

  • B. Accelerating a Durable Transformation

  • C. Adequately Resourced and Representative IMF

  • D. Post-Pandemic Workplace

  • E. Fund’s Income Position and Budget

  • SECTION IV. FY23 ADMINISTRATIVE BUDGET

  • A. Budget Overview

  • B. Budget Change by Priority Topics

  • C. Budget by Output

  • D. Department Budget Allocations

  • SECTION V. CAPITAL BUDGET

  • A. FY22 Capital Spending

  • B. FY23 Capital Spending

  • SECTION VI. RISKS

  • SECTION VII. SUMMARY PROPOSAL FOR FY23

  • BOXES

  • 1. Strategic Approach to Longer-Term Challenges

  • 2. Principles Driving the Augmentation Framework

  • 3. Resilience and Sustainability Trust (RST)

  • 4. Augmentation—FY23 Key Deliverables

  • 5. CD Delivery Composition and Evolution

  • 6. Change in the Aggregate Envelope for Externally Funded CD

  • 7. Implementation of the Cloud Capital Equivalent (CCE)

  • FIGURES

  • 1. Net Administrative Budget, FY03-22

  • 2. Reprioritization Over the Last Decade

  • 1. Net Administrative Budget, FY03-22

  • 3 Average Overtime Rate and Annual Leave

  • 4. Fund Projected Outputs, FY22

  • 5. Vacancy Rates, FY20-22

  • 6. Global Policy Agenda and Funding

  • 7. Fund Financial Support FY02–23

  • 8. Allocation by Output and Issue Area, FY23–25

  • 9. Post-Pandemic Workplace

  • 10. Income and Expenses—FY08–32

  • 11. FY23 Budget—Reprioritization and Savings, Including Crisis: $89 Million

  • 12. FY23 Spending by Priority Topics

  • 13. Fund-Financed FY23 Budget by Output

  • 14. FY23 Augmentation by Output and Issue Area

  • 15. FY23 New Budget Allocations by Department

  • 16. FY23 Augmentation Allocation by Department and Issue Area

  • 17. Capital Spending, FY03-25

  • TABLES

  • 1. FY22 Crisis Funding

  • 2. FY22 Utilization

  • 3. Administrative and Capital Budget Envelopes, FY22-25

  • 4. Budget Envelope, FY22–23

  • 5. Administrative Budget by Major Expense Category, FY23

  • 6. FY23 Budget Space

  • 7. Carryforward—FY23

  • 8. Budget Augmentation: from Strategy to FY23

  • 9. Budget Adjustments by Department, FY22–23

  • 10. FTE Changes by Department, FY22–23

  • 11. Capital Expenditures, FY21–22

  • 12. Medium-Term Capital Budget, FY22-25

  • 13. Estimated Capital Needs for Key Modernization Projects

  • 14. Proposed Appropriations, FY23

  • ANNEXES

  • I. Projected FY22 Outturn

  • II. Concepts/Overview of the Budget Process

  • III. Proposed Policy for Externally-Funded Carryforward

  • IV. Statistical Tables

Abbreviation and Acronyms

ACES

Analytic Costing and Estimation System

AD

Area Departments

AFR

African Department

APD

Asia & Pacific Department

CCAM

Caucasus, Central Asia, and Mongolia

CCAMTAC

Caucasus, Central Asia, and Mongolia Technical Assistance Center

CCBR

Comprehensive Compensation and Benefits Review

CD

Capacity Development

CDFF

Capacity Development Fund-financed

CDEF

Capacity Development Externally financed

CDMAP

Capacity Development Management and Administration Program

COM

Communications Department

CSF

Corporate Services and Facilities Department

CSR

Comprehensive Surveillance Review

EUR

European Department

FAD

Fiscal Affairs Department

FCS

Fragile and Conflict-Affected States

FGF

Fund Governance and Fund Finances

FIN

Finance Department

FSAP

Financial Sector Assessment Program

FTE

Full-Time Equivalent

GED

Global External Deflator

GPA

Global Policy Agenda

GRA

General Resource Account

HRD

Human Resources Department

ICD

Institute for Capacity Development

iDW

Integrated Digital Workplace

IEO

Independent Evaluation Office

ISU

Internal Support

ITD

Information Technology Department

LEG

Legal Department

MCD

Middle East & Central Asia Department

MCM

Monetary and Capital Markets Department

MSGS

Multilateral Surveillance, Global Cooperation and Standard Setting

MTB

Medium-Term Budget

NAB

Net Administrative Budget

OBP

Office of Budget and Planning

OED

Office of Executive Directors

OIA

Office of Internal Audit

OIC

Office of Innovation and Change

ORM

Office of Risk Management

PFTAC

Pacific Financial Technical Assistance Centre

PRGT

Poverty Reduction and Growth Trust

RST

Resilience and Sustainability Trust

RES

Research Department

RFI

Rapid Financing Instrument

RTAC

Regional Training Assistance Center

SEC

Secretary’s Department

SPR

Strategy, Policy, and Review Department

STA

Statistics Department

BSL

Bilateral Surveillance and lending

TRM

Office of Transformation Management

TFMF

Trust Fund Management Fee

WHD

Western Hemisphere Department

FY2023-FY2025 Medium-Term Budget
Author: International Monetary Fund. Office of Budget and Planning