Press Release: IMF and Switzerland Sign Agreement on Switzerland’s Contribution of $5 million to the IMF’s Topical Trust Fund on Tax Policy and Administration
April 17, 2011Press Release No. 11/142
April 17, 2011
Ms. Nemat Shafik, Deputy Managing Director of the International Monetary Fund (IMF), and Her Excellency, Ambassador Beatrice Maser, Head of Economic Cooperation and Development of Switzerland, today signed an agreement on Switzerland’s contribution of $5 million to the IMF’s multi-donor Topical Trust Fund on Tax Policy and Administration.
“The Topical Trust Fund for Tax Policy and Administration is an important vehicle for scaling-up the Fund’s capacity building work in low- and lower-middle-income countries. While raising domestic revenue is essential for funding development, we also want to help create tax systems that are fair, as well as efficient,” Ms. Shafik said during the signing ceremony in Washington, D.C. today. “Switzerland is a very important partner and we are extremely pleased that Switzerland accepted the unanimous nomination as vice chair of the Steering Committee for this trust fund.”
“The launch of this Topical Trust Fund is another step in a long-term partnership between Switzerland and the IMF on tax policy and tax administration reform dating back to 1996. It underscores that we share a long-term approach in a field which is complex, as institutional capacity is not built overnight,” Ambassador Maser said.
The Topical Trust Fund on Tax Policy and Administration, launched in December 2010 (see Press Release No. 10/500) will provide about US$30 million over five years to finance technical assistance to the strengthening of tax systems in low- and lower-middle-income countries, using the IMF’s proven expertise and infrastructure. The multi-donor trust fund—one of a number being set up to finance IMF technical assistance in specific priority fields—will address weaknesses at the heart of low revenue-collection rates, including fragmented administrative structures, poorly designed operational processes, and unclear accountability.
The Steering Committee had its first meeting on April 12, 2011 in Washington, D.C. (see Press Release No. 11/133), at which the donors (comprising representatives from Germany, Switzerland, the Netherlands, Belgium, Luxembourg and Kuwait) endorsed the work plan for the first year of the trust fund’s operations, commencing May 1, 2011, which foresees technical assistance costing approximately US$4 million for 12 low-income and lower-middle-income countries. The beneficiary countries are being selected according to their need for revenue mobilization, commitment to reforming their tax systems, and their absorptive capacity.
With the signing of this agreement, Switzerland, through its Swiss Economic Cooperation Office, brings its contributions to the IMF’s capacity building to $45 million comprising contributions to the two Topical Trust Funds on (i) Anti-Money Laundering and Combating the Financing of Terrorism and (ii) Managing Natural Resource Wealth; an intensive program of bilateral assistance; and support for four IMF Regional Technical Assistance Centers in Africa.