Press Release: IMF and European Union Sign €5 Million Agreement to Scale Up Cooperation in Capacity Building in Managing Natural Resource Wealth
December 8, 2011Press Release No. 11/452
December 8, 2011
The International Monetary Fund (IMF) and the European Union (EU) signed an agreement today for a contribution of €5 million (around US$6.8 million) to enhance their cooperation in capacity building under the Managing Natural Resource Wealth Topical Trust Fund, to which the EU becomes the largest donor.
“This contribution agreement allows us to implement the medium-term capacity building activities that are so crucial to developing countries to better manage their rich natural resources,” IMF Deputy Managing Director Ms. Nemat Shafik said after signing the agreement at a ceremony in Brussels. “Effective management of natural resource wealth is an important pillar in developing countries’ strategy for transitioning from aid dependency to sustainable growth.”
The IMF’s topical trust funds, financed by multiple donors, provide technical assistance globally on specialized topics. The IMF launched the trust fund on Managing Natural Resource Wealth in May 2011 to scale up technical assistance to help low-income and lower-middle-income countries endowed with oil, gas, and minerals to manage these resources effectively (see Press Release No. 10/497).
“Ensuring sustainable resource extraction and increasing domestic revenues are indispensable for successful long term development in our partner countries,” said Mr. Fokion Fotiadis, Director General for Development Cooperation of EuropeAid, who signed on behalf of the EU. “Technical cooperation provided by this Trust Fund will be crucial to prevent what is commonly known as "the resource curse" and will provide an opportunity for better donor coordination.”
The EU joins Australia, the Netherlands, Norway, Switzerland, Kuwait and Oman on the Steering Committee of the Trust Fund. With a budget of $25 million, the fund will provide capacity building for approximately 50 countries over the coming five years. The EU has significantly increased its contributions to IMF capacity building since a Framework Agreement between the EU and the Fund was signed in 2009. Today’s agreement brings the total contributions by the EU to IMF capacity building to almost $49 million.
The Managing Natural Resource Wealth fund complements other topical trust funds focused on Anti-Money Laundering/Combating the Financing of Terrorism (launched in May 2009—see Press Release 09/108), and on Tax Policy and Administration (launched in May 2011—see Press Release No. 11/133). Responding to the recent crisis, further topical trust funds are envisaged, including on sustainable debt strategies and managing debt portfolio risks.