1998 IMF Survey Supplement on the Fund / September 1998
Technical Assistance Complements Surveillance and Financing
The expansion of the IMF’s membership and the adoption of market-oriented reforms by a large number of countries worldwide fueled a rapid growth of IMF technical assistance activity during 1990–94. Since then, owing to budgetary and staffing constraints, the quantity of technical assistance and training delivered by the IMF has leveled off to slightly more than 300 years of staff and expert time, plus some $10 million annually for scholarships and trainees. Technical assistance activity represents approximately 17 percent of the IMF’s total administrative expenditures.
Demand for the IMF’s technical assistance exceeds its capacity. This requires rigorous prioritization and allocation of technical assistance resources among member countries and regions. As part of this process, the IMF’s area (regional) departments play a major role in helping to identify and prioritize countries’ technical assistance needs, often in consultation with other donors. The allocation of resources and determination of the IMF’s technical assistance policies and procedures are facilitated by the Technical Assistance Committee, an interdepartmental committee of senior IMF staff.
The IMF’s Executive Board has paid increasing attention to technical assistance matters in recent years. In addition to commenting on the importance of technical assistance in individual country cases, the Board has provided guidance on evaluation of technical assistance, financing arrangements, and areas of priority. There is a growing consensus that a careful blending of policy and institution-building technical assistance in support of governments’ macroeconomic objectives is a critical ingredient for creating and maintaining sustainable growth. Indeed, technical assistance is viewed as one of the three main elements of the IMF stool, along with surveillance and program design and financing.
Types of Technical Assistance
The IMF provides technical assistance and training in four broad areas: designing and implementing fiscal and monetary policies; institution-building (such as the development of central banks, treasuries, tax and customs administration); collecting and refining statistical data; and drafting and reviewing financial legislation. The IMF provides technical assistance through many departments. These include:
The Monetary and Exchange Affairs Department (MAE) focuses its assistance on central banking and exchange system issues and in designing or improving monetary policy instruments. MAE’s assistance covers banking regulation, supervision, and restructuring; foreign exchange management and operations; central bank organization and management; central banking accounting; clearing and settlement systems for payments; monetary operations and money market development; and monetary analysis and research.
The Fiscal Affairs Department is chiefly responsible for providing policy advice on tax and customs administration, public expenditure management and budgeting, tax policy issues, pension reform and social safety net design, and public expenditure reviews.
The Policy Development and Review Department provides advice on debt policy and management and on the design and implementation of trade policy reforms.
The Statistics Department helps members comply with internationally accepted standards of statistical reporting. The agreement on the Special Data Dissemination Standard has already prompted an increase in the demand for its technical assistance, which covers monetary, balance of payments, real sector, and government finance statistics and includes a substantial training element through regional and local seminars.
The IMF Institute provides training for officials at IMF headquarters, the Joint Vienna Institute, and national and regional centers. Courses and seminars cover a range of topics, including financial programming and policy, financial analysis, public finance, and external sector policies, statistics, and monetary exchange operations. The IMF Institute also manages several scholarship programs for economists from Asia funded by Japan and Australia—in Japan and Australia and at North American universities. To meet the growing demand for training in the future, training opportunities will be expanded through distance learning, increased collaboration with other regional training institutions, and the introduction of specialized courses for high-level officials.
The Legal Department provides assistance to members in drafting legislation and educating senior government lawyers, mainly in the law of central banking, commercial banking, foreign exchange, and fiscal affairs. This assistance is provided in coordination with other IMF departments and with legal departments of other international financial institutions, such as the World Bank.
The Treasurer’s Department provides technical assistance on the IMF’s financial organization and operations, the establishment and maintenance of IMF accounts, accounting for IMF transactions and positions by members, and other matters related to members’ transactions with the IMF.
The Bureau of Computing Services has assisted in the modernization of computer systems in central banks, finance ministries, and statistical offices.
Delivering Technical Assistance
Advisory missions provide an important component of assistance. They offer advice on monetary, fiscal, and statistical problems that often lie at the heart of the macroeconomic imbalances that countries wish to address. In addition, the IMF places experts in the field for periods ranging from six months to two years to assist in the implementation of policy reform recommendations.
Traditionally, IMF technical assistance has a single, well-focused objective and a relatively short time span. In recent years, technical assistance projects have grown both larger and more complex. Time horizons have lengthened, and multiple sources of financing have been needed to underwrite costs. Large projects now commonly involve more than one IMF department and more than one donor.
External Cooperation and Coordination
Beginning in 1989, the IMF took formal steps to coordinate its technical assistance policies and cooperate with other multilateral and bilateral agencies to minimize conflicting advice and redundant activities. It also began to explore ways of complementing its own resources through various financing arrangements with other technical assistance suppliers. This cooperation has led to a more integrated approach to the planning and implementation of technical assistance, particularly at the country level, where comprehensive, multiyear programs of technical assistance are being implemented.
Coordination has also progressed at the global level through specialized technical steering committees and working groups. The IMF continues to participate in international forums, such as the Development Assistance Committee of the Organization for Economic Cooperation and Development, which reviews and coordinates technical assistance policies and procedures. In the central banking area, coordination has led to operational cooperation between the IMF and 24 central banks in providing technical assistance and training to the countries of the former Soviet Union. The IMF coordinates this arrangement with support from the Bank for International Settlements.
The Japanese government has continued its generous annual contribution to IMF technical assistance and the scholarship program. In addition, the IMF has general technical assistance agreements with the United Nations Development Program (UNDP), as well as several individual country agreements with the World Bank and the European Union. A number of bilateral contributors have supported IMF-administered technical assistance by making cash contributions to UNDP-IMF projects. To accommodate the growing interest of other potential contributors in supporting IMF technical assistance, the Executive Board authorized the establishment of a Technical Assistance Framework Account in April 1995. Under the Framework Account, separate subaccounts are created for individual contributors to support IMF technical assistance activities. The most recent contributors are Switzerland and Denmark. Subaccounts can be established easily and quickly and can be used to finance a variety of short- or long-term technical assistance and training activities that a contributor may wish to support through the IMF.