The IMF helps countries design economic policies and manage their financial affairs more effectively by strengthening their human and institutional capacity. We call this "technical assistance."
Technical assistance benefits low-income countries
Technical assistance is one of the benefits of IMF membership. Building capacity within a country helps the government implement more effective policies, leading to better economic outcomes. About two-thirds of IMF technical assistance goes to low- and lower-middle-income countries. Post-conflict countries are also major beneficiaries.
Apart from the immediate benefit to recipient countries, technical assistance also contributes to a more robust and stable global economy by helping individual countries reduce weaknesses and vulnerabilities—for example, in the financial sector. Further, technical assistance provided to emerging and advanced economies in select cutting-edge areas helps provide traction to IMF policy advice, keeps the institution up to date on innovations and risks to the international economy, and help address crisis-related challenges.
Integrating technical assistance with IMF monitoring and lending
Technical assistance is an important complement to the IMF’s other core functions of surveillance and lending. Specialized technical assistance from the IMF helps build both institutional and human capacity in countries for effective policymaking. Moreover, the IMF’s surveillance and lending work often helps identify areas for strengthening the IMF’s technical assistance in line with international best practices. In view of these linkages, achieving greater integration between technical assistance, training, surveillance, and lending operations is a key priority for the IMF.
Technical assistance covers core areas of IMF expertise
The IMF provides technical assistance in its areas of core expertise: macroeconomic policy, tax policy and revenue administration, expenditure management, monetary policy, the exchange rate system, financial sector stability, legislative frameworks, and macroeconomic and financial statistics. In particular, efforts in recent years to strengthen the international financial system and fiscal and debt policies have triggered additional demands for IMF 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 and to adopt and adhere to international standards and codes for financial, fiscal, and statistical management.
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 help countries—several of which have benefited from debt relief under the Heavily Indebted Poor Countries (HIPC) Initiative—undertake debt sustainability analyses and develop debt management strategies. The IMF also contributes actively to the Enhanced Integrated Framework for trade-related technical assistance, which aims to assist low-income countries expand their participation in the global economy. The recipient country is fully involved in the entire process of technical assistance, from identification of need to implementation, monitoring, and evaluation.
Technical assistance delivery takes a regional approach
The IMF delivers technical assistance in various ways. Depending on the nature of the assignment, support is often provided through staff missions of limited duration sent from headquarters or the placement of experts and/or resident advisors for periods ranging from a few weeks to a few years. Assistance might also be provided in the form of technical and diagnostic studies, training courses, seminars, workshops, and “online” advice and support.
The IMF has increasingly adopted a regional approach to the delivery of technical assistance and training. It operates eight regional technical assistance centers—in the Pacific; the Caribbean; East, West, Central, and Southern Africa; the Middle East; and in Central America. The IMF will open in late 2013 a second regional center in West Africa for non-francophone countries.
Topical trust funds
The regional centers are complemented by technical assistance financed through topical trust funds. The first such fund started operations in May 2009, concentrating on building capacity in connection with anti-money laundering and combating the financing of terrorism. The trust funds on tax policy and administration, managing natural resource wealth, and the South Sudan started operations in 2011, and a fourth one is under preparation on developing a tax administration diagnostic tool for global use. In addition, the IMF and the World Bank are working on a joint trust fund to provide assistance on developing sustainable debt strategies and are renewing another joint trust fund to provide assistance on financial sector issues.
Donors play a large role in financing technical assistance
Technical assistance accounts for about one-quarter of the IMF’s operating budget. It is financed by both internal and external resources, the latter comprising funds from both bilateral and multilateral donors. Such cooperation and resource sharing with external donors has benefits: it leverages the internal resources available for technical assistance; helps avoid duplication of advice by different donors; and strengthens collaboration with donors and other technical assistance providers.
Bilateral donors to the IMF’s technical assistance program include Australia, Belgium, Brazil, Canada, China, Denmark, France, Germany, Italy, Japan, the Republic of Korea, Kuwait, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Oman, Qatar, Saudi Arabia, Spain, Sweden, Switzerland, the United Kingdom, the United States of America, and more than forty beneficiary countries.
Multilateral donors include the African Development Bank, the Asian Development Bank, the Caribbean Development Bank, the Central American Bank for Economic Integration, the European Union, the European Investment Bank, the Inter-American Development Bank, and the Islamic Development Bank. In FY 2013, external financing accounted for about four-fifths of IMF technical assistance field delivery.