## pp1002182018reviewfunds-cdstrategyoverview

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### Executive summary — role, purpose, and strategic focus
- CD is one of the Fund’s three core activities and has grown in importance in recent years.
- CD supports member countries’ efforts to build institutions and capacity to formulate and implement sound economic policies, complementing surveillance and lending.
- CD is voluntary and provided based on requests (Art. V.2(b) of the Fund’s Articles of Agreement).
- CD comprises technical assistance (TA), training, and related activities.
- The 2018 CD Strategy Review:
  - Examines progress under the Fund’s 2013 CD Strategy and proposes a CD strategy for the next five years.
  - Notes substantial progress on 2013 recommendations (governance, prioritization, funding clarity, M&E, TA/training integration, technology, outreach).
- Two mutually reinforcing strategic objectives for the next five years:
  - Increase the impact of Fund CD by strengthening integration with the Fund’s policy advice and lending operations and by framing CD through comprehensive country-tailored strategies focused on implementation and outcomes.
  - Increase the efficiency of CD by improving CD processes and systems to enhance transparency and strengthen the basis for strategic decision making.
- Rationale for integration: stronger coordination between CD and the Fund’s other core functions will better connect CD with countries’ risks and vulnerabilities and ensure surveillance and lending integrate lessons from CD more effectively.

### Key recommendation areas (overview)
- Five specific recommendation areas to support the strategy and mitigate institutional risks:
  - Clearer roles and responsibilities for key internal and external stakeholders in the CD process.
  - Continued strengthening of prioritization and monitoring.
  - Better tailoring and modernization of CD delivery with a focus on implementation of TA recommendations.
  - Greater internal consultation and sharing of CD information.
  - Further progress in external coordination, communication, and dissemination of information.
- Annex I contains detailed recommendations.

### Growth, scale, staffing, and footprint
- CD work has grown rapidly in the past decade.
- CD accounts for about a third of Fund spending and 18 percent of staffing—roughly 725 full-time equivalents (FTEs).
- Nearly all member countries have benefited from Fund CD since 2013.
- The network of regional CD centers (RCDCs) totals 16 and is supported by partners and host countries.
- Growth has increased responsiveness but created needs for more robust internal infrastructure and greater emphasis on risk identification and mitigation in CD operations.

### Progress on 2013 agenda and governance
- Substantial progress on 2013 priorities: governance, prioritization, funding model, outcomes orientation and M&E, TA/training integration, technology use, outreach.
- Notable actions and outcomes:
  - CD governance strengthened under the Committee on Capacity Building (CCB); CD Policy statement issued August 2014; CCB terms of reference completed July 2013 and regular meetings since November 2013.
  - Prioritization strengthened via an interdepartmental resource allocation process; area departments prepare regional strategies; 2017 reforms call for country-level strategy notes (CSNs) for heavy CD users.
  - RBM required for all new projects since May 2017; catalog of indicators and outcomes in place.
  - Common Evaluation Framework (CEF) introduced in 2016.
  - Online learning launched in late 2013; webinars and remote delivery experimented with.
  - CD communications group and outreach platforms established.

### CD funding model and external financing
- 2008 Board endorsement of stepped-up mobilization of outside resources for TA and external training.
- Share of external financing in direct CD spending reached 55 percent in FY18.
- The largest five contributors account for about half of total external financing.
- The 2014 CD policy statement codified a funding model and an interdepartmental review process for new externally funded initiatives.
- Risk-mitigating measures include diversifying donors, seeking greater funding certainty and consolidation, simplifying procedures, and strengthening external engagement and communications.

### Monitoring, evaluation, and Results-Based Management (RBM)
- Two central initiatives:
  - Unified RBM framework rolled out Fund-wide; since May 2017 information gathered and monitored for all new CD projects.
  - Common Evaluation Framework (CEF) introduced in 2016 to support medium-term evaluation planning.
- RBM details:
  - Standardized RBM framework endorsed by the Board in 2013 required for all CD operations since May 2017.
  - All CD projects are organized along “results chains,” or log frames.
  - RBM is influencing CD planning by clarifying objectives and supporting more robust monitoring and early warnings.
- Implementation challenges:
  - Defining concrete outcomes and indicators, attribution and aggregation of long-term results, and measurement.
  - Ongoing work to ensure consistent adoption, quality testing, and strengthened business processes and tools.

### Stakeholder feedback, strengths, and challenges
- Strong appreciation for quality and usefulness of Fund CD; Fund seen as leading among development partners on influence and helpfulness per AID Data study.
- Survey summary (exact figures):
  - 77% of CD recipients strongly agreed or tended to agree that CD contributed effectively to implementation of policy advice.
  - 72% of CD recipients indicated that greater than half of TA recommendations were adopted.
  - 41% of CD recipients indicated that insufficient resources hamper CD advice implementation.
  - 69% of CD recipients strongly agreed or tended to agree that CD is well-coordinated with other TA providers.
  - 48% of CD external partners strongly agreed or tended to agree that CD is well-coordinated with other TA providers.
- Challenges from background work:
  - Uneven integration of CD and surveillance; interaction often dependent on individual mission chiefs and resource availability.
  - Weak information sharing systems and fragmented processes limit internal coordination and strategic analysis.
  - Human resource issues: career development, mobility, HQ/field movement, and mobilizing staff with appropriate skills.

### Prioritization, FY18 spending snapshot, and FY19–FY21 projections
- Key finding: "With 95 percent of delivery linked to priority topics and/or countries, the fact that most priority areas have grown has not translated into increased shares in many cases."
- Training by Mode of Delivery (FY18):
  - Face to face 70%
  - Online learning 30%
- By Region (FY18):
  - Sub-Saharan Africa 30%
  - Asia and the Pacific 20%
  - Europe 9%
  - Middle East and Central Asia 12%
  - Western Hemisphere 13%
  - Multiple or no region specified 16%
- By Income Group (FY18):
  - AE 4%
  - EM 30%
  - LIDC 32%
  - Mixed & other 34%
- By CD Type (FY18):
  - TA 84%
  - Training 16%
- By Delivery Department (FY18):
  - RCDC 23%
  - FAD 39%
  - ICD 14%
  - LEG 5%
  - MCM 19%
  - STA 12%
  - Other including RTACs 18%
- Field versus HQ-based Spending (FY18):
  - HQ-based 58%
  - RCDC 42%
- Field Delivery Share (FTEs) highlights:
  - Fragile states 28%
- Priority country group shares and contributions to overall delivery (FY18):
  - Program countries 18.8%
  - Highly vulnerable countries 15.8%
  - Fragile states 4.6%
  - Additional shares in figure: 2.1%, 11.6%, 11.9%, 3.6%, 31.6%
- By Priority Topic (FY18): examples include Domestic revenue mobilization, Public financial management, Financial market deepening for LICs, Financial integrity (AML/CFT), Financial supervision & regulation incl. fintech & cyber risks, monetary policy frameworks, Data, CD Management, Other spending including ICD macro training.
- Projected FY19–FY21 under budget:
  - CD’s share of spending will level off at 31 percent following rapid growth based on external funding.
  - External funding is expected to stabilize at 58 percent of direct spending.
- Recommendation highlights on prioritization:
  - Deepen strategic engagement with country authorities throughout the CD process.
  - Area Departments to lead overall country engagement, including CSNs for heavy CD users (defined by a common metric).
  - Narrow the list of priorities and build on better information systems.
  - Develop and operationalize a clear governance framework for RBM and the CEF.
- Ongoing enhancements:
  - Move from annual to rolling three-year resource allocation cycle (initiated in 2017).
  - Focus on aggregates rather than missions; support multi-year engagements through RCDCs and multi-partner vehicles.
  - Need to strengthen data and adopt a project-based mindset.

### Country-tailored delivery focused on implementation
- Strategic shift: from providing technical advice ("what to do") to assistance with implementation ("how to do it"); partner to design and implement reforms.
- Key elements:
  - Reinforcing diagnostics with a robust toolkit to diagnose institutional capabilities.
  - Engaging on institutional readiness: leadership, resistance to change, resource constraints, human capacity limits, political instability.
  - Strengthening flexibility: multi-year engagements, knowledge sharing, reducing emphasis on detailed TA reports, focused training, language diversity, blended field/HQ support, RCDC support.
- Recommendations:
  - Strengthen strategic engagement and country ownership for RBM and CD project objectives.
  - Consider training and advice focused on leadership, management, strategy development, possibly via partnerships.

### Fragile states — tailored approaches and findings
- Fragile states institutional priority since 2014; heterogeneous group (post-conflict, small and vulnerable).
- FY18 facts:
  - 6 of the top 20 CD users are fragile states.
  - 42 of the 43 fragile states received CD in FY18.
- Lessons and adaptations:
  - Multi-year frameworks to improve integration of CD with surveillance and lending.
  - RTACs cover 38 of the 43 fragile countries; CDOT serves Myanmar; Somalia and South Sudan have dedicated trust funds.
  - Emphasis on targeting and sequencing TA for institutional capability while delivering quick tangible results.
  - Flexible delivery models (offsite locations, hands-on training, follow-up conditional on prior recommendation completion).
- Fragile-states delivery principles:
  - Mindful of limited absorptive capacity, local resource scarcity, political/security concerns.
  - Prioritization, sequencing, incremental reforms, hands-on advice, possible temporary supplementation of local capacity.

### Languages other than English (Box 6)
- Importance: working in languages other than English is critical to the Fund’s engagement.
- FY18 classroom and online delivery (exact figures):
  - FY18: 28 courses in languages other than English to over 750 officials (11 percent of courses and 10 percent of classroom trainees).
  - About one quarter of classroom training delivered with interpretation into another language—to over 1,850 officials (accounting for a quarter of classroom trainees). Languages: Arabic, Chinese, French, Spanish, Portuguese, Russian.
  - Online training in FY18: over 1,025 government officials (21 percent of online trainees) trained in languages other than English (French, Spanish, Russian, Arabic).
- Operational constraint: requirement to translate TA reports to English prior to publication represents a constraint in some cases.

### Role of the Executive Board and oversight
- The Executive Board provides strategic direction and oversight through strategic planning, budget processes, regular reviews, and policy guidance.
- Key Board roles:
  - Guidance through Board work programs and discussion of Management’s Key Goals and the Global Policy Agenda (GPA).
  - Consideration of CD in the Medium-term Budget discussion each spring.
  - Approval of international organization and nonmember eligibility for CD and establishment of new external financing accounts.
  - Participation in five-yearly CD reviews, topic-specific reviews, and briefings (e.g., November 2017–July 2018 departmental briefings).
- Future updates expected to incorporate high-level results based on RBM and related evaluations.

### Questions for Directors and Annex I recommendations (summary)
- Questions for Directors include:
  - Agreement with main findings and key themes.
  - Endorsement of strategic objectives.
  - Views on whether operational recommendations support strategic objectives.
  - Whether proposed objectives and recommendations mitigate institutional risks.
  - Other suggestions to enhance CD impact and efficiency.
- Annex I recommendations (key actions):
  - Clarify roles and responsibilities; deepen strategic engagement; Area Departments to lead overall country engagement; strengthen integration of CD and surveillance.
  - Better prioritization and monitoring; narrow priorities; operationalize governance for RBM and CEF.
  - Enhance country-tailored delivery focused on implementation; increase modernization, modularity, flexibility; experiment with technologies; follow up on fragile states plan; strengthen RCDC support.
  - More effective internal consultation and information sharing; implement KMU project, Digital Workspace, and CDMAP; continue informal Board briefings.
  - Improved external coordination and communication; publish more topical notes; implement working group recommendations on TA report publication; increase sustainability of external financing.

_Italic line: Source: 2018 CD STRATEGY REVIEW—OVERVIEW PAPER — INTERNATIONAL MONETARY FUND_

### EXECUTIVE SUMMARY

### EXECUTIVE SUMMARY

### Role and recent evolution of Capacity Development (CD)
- Capacity development (CD) is one of the Fund’s three core activities and has grown in importance in recent years.
- CD supports member countries’ efforts to build the institutions and capacity necessary to formulate and implement sound economic policies, thereby complementing the Fund’s surveillance and lending mandates.
- CD is voluntary and provided based on requests; the Fund’s Articles of Agreement indicate that “If requested, the Fund may decide to perform ...technical services that are consistent with the purposes of the Fund” (Art. V.2(b)).
- CD is made up of technical assistance (TA), training, and related activities.
- Member countries, partners, and external commentators give the Fund high marks for the quality of its CD, while staff and stakeholders note the need to continue strengthening the CD framework to serve members’ current and evolving needs.

### Purpose of the 2018 CD Strategy Review
- The 2018 CD Strategy Review examines progress under the Fund’s 2013 CD Strategy and proposes a CD strategy for the next five years.
- It notes substantial progress in addressing the 2013 recommendations, which included:
  - strengthening the CD governance structure,
  - enhancing the prioritization processes,
  - clarifying the funding model,
  - strengthening monitoring and evaluation,
  - promoting greater integration of TA and training,
  - exploiting new technologies for delivery, and
  - leveraging CD as outreach.
- Background work for this review also pointed to the need to strengthen the CD framework further.

### Strategic focus and objectives for the next five years
- The review builds upon the existing CD strategy, focusing on two mutually reinforcing objectives:
  - Increase the impact of Fund CD by further strengthening integration with the Fund’s policy advice and lending operations, while continuing to make progress in framing CD through comprehensive strategies tailored to each member’s needs, capacity, and conditions, focusing on implementation and outcomes.
  - Increase the efficiency of CD by improving CD processes and systems to enhance transparency and strengthen the basis for strategic decision making.
- Rationale for stronger integration:
  - Stronger coordination between CD and the Fund’s other core functions will better connect CD with countries’ risks and vulnerabilities and ensure surveillance and lending integrate lessons from CD more effectively.

### Key recommendation areas (five specific areas)
- The review offers recommendations in five specific areas to support the strategy and mitigate institutional risks from the Fund’s CD activities:
  - Clearer roles and responsibilities for key internal and external stakeholders in the CD process.
  - Continued strengthening of prioritization and monitoring.
  - Better tailoring and modernization of CD delivery with a focus on implementation of TA recommendations.
  - Greater internal consultation and sharing of CD information.
  - Further progress in external coordination, communication, and dissemination of information.
- Annex I contains the recommendations in detail.

### Institutional and contextual analysis — major themes
- Institution building is complex and takes time:
  - There is no single path to building strong institutions; the Fund’s five decades of CD experience shows the process takes many years, is context-specific, and measuring progress is difficult.
  - CD requires a medium-term approach, flexible delivery, and success measured by impact on the ground.
- Country ownership is key:
  - Effective CD means letting countries lead, including in defining their own strategies and priorities, setting realistic objectives, and recognizing each country’s unique starting point and institutional capacity.
  - Recent research emphasizes legitimacy and support for reforms is best rooted where capacity is built by the country itself through a process of learning, iterating, and adapting.
- The world is changing rapidly:
  - Members face risks from low productivity and potential growth, unfavorable demographic trends, rising inequality, uncertainty about the future of work, elevated vulnerabilities related to debt build-up, external imbalances, stretched asset valuations, and tightening global financial conditions.
  - The technological revolution, including advances in information and communications technology and the use of artificial intelligence, is challenging economies and institutions to learn, adapt, and evolve.
  - Questions related to global public goods are increasingly urgent in an interconnected world.
- The Fund must continue to adapt its approach to engaging with countries on CD:
  - CD cannot be a secondary or isolated activity; where capacity is weak, effective policy advice and financial support require a focus on institutional and human capacity building.
  - Synergies among the Fund’s three core functions (surveillance, lending, CD) can be further leveraged; members view the Fund as one institution, and the Fund is uniquely positioned to support members with its global reach and specialized expertise.
  - Regular engagement with high-level policymakers can strengthen targeting, visibility, and effectiveness of CD, and the Fund is well-positioned to support knowledge sharing, peer learning, and coordination among CD providers.

### Findings on progress since 2013 (overview)
- Substantial progress has been made on the 2013 agenda in areas such as governance, prioritization, funding clarity, monitoring and evaluation, TA/training integration, technology use, and outreach.
- Despite progress, background analysis identified remaining needs to strengthen the CD framework further to better serve members’ current and evolving needs.

### Institutional approvals and preparation
- Date: October 3, 2018
- Approved by: Sharmini Coorey
- Prepared by: the Institute for Capacity Development (ICD) in consultation with other departments.

*Source: 2018 CD STRATEGY REVIEW—OVERVIEW PAPER (EXECUTIVE SUMMARY)*

### 3.      CD has grown to be a sizable pillar of the Fund’s work.  CD work has grown rapidly in the

### pp1002182018reviewfunds-cdstrategyoverview - 3.      CD has grown to be a sizable pillar of the Fund’s work.  CD work has grown rapidly in the

### Growth, scale, and staffing
- CD work has grown rapidly in the past decade (Figure 1).
- CD now accounts for about a third of Fund spending and 18 percent of staffing—roughly 725 full-time equivalents (FTEs).
- The pace of growth has improved the Fund’s ability to respond to members’ needs but has created challenges, including the need for a more robust internal infrastructure and greater emphasis on identifying and mitigating risks in CD operations.

### Member demand and delivery footprint
- Fund CD is provided based on country requests and anchored in the Fund’s “trusted advisor” role.
- Demand is strong; nearly all member countries have benefited from Fund CD since 2013.
- The network of regional CD centers (RCDCs) totals 16 and is supported by a community of partners and host countries (Figure 2).

### Vision for country-centered CD
- The review sets out a vision for country-centered CD that is well-integrated with the Fund’s policy advice and highly effective.
- Realizing the vision requires:
  - Building on progress toward a comprehensive country-tailored approach.
  - Focusing on institutional and human capacity building to support sustainable economic development and stability.
  - Modernizing CD delivery to be more flexible and support implementation of technical advice.
  - Working closely with member countries and partners to extend the Fund’s role as a knowledge hub and convener for technical practitioners and policy makers.
- Achieving the vision will require concerted efforts to adapt Fund CD machinery, culture, and incentives.

### Report structure and focus
- The report:
  - Assesses progress on recommendations from the 2013 CD strategy.
  - Describes challenges and opportunities drawing on surveys, interviews, and background work.
  - Recommends steps to increase impact and efficiency of CD—focusing on how the Fund operates.
  - Describes potential resource implications.
  - Lays out proposed issues for discussion.
- Risk considerations are integrated throughout the paper.

### Assessment framework for the review
- The review employs a comprehensive assessment framework that:
  - Builds on previous staff and Independent Evaluation Office (IEO) CD reviews, policy reviews on related topics, and operational strategies relevant to CD.
  - Benefits from strong interdepartmental inputs and review by CD, area, and support departments.
  - Is informed by broad outreach (stakeholder surveys, interviews, public consultation), background studies, commentaries by Fund staff and external experts, and an External Advisory Group.

### Progress on the 2013 agenda
- Substantial progress has been made on the 2013 CD review agenda, which focused on:
  - Strengthening governance structure.
  - Strengthening prioritization.
  - Clarifying the funding model.
  - Reinforcing orientation toward outcomes and enhancing monitoring and evaluation.
  - Enhancing CD delivery and outreach, including greater TA-training integration, exploiting new technologies, and leveraging CD in outreach.
- Notable actions and outcomes:
  - CD governance strengthened under the management-led Committee on Capacity Building (CCB); CD Policy statement issued August 2014; CCB terms of reference completed July 2013 and regular meetings since November 2013.
  - Prioritization strengthened via an interdepartmental resource allocation process recognizing country needs and Fund priorities (Figure 3). Area departments prepare regional strategies in consultation with CD departments; 2017 reforms call for country-level strategy notes (CSNs) for heavy CD users, including fragile states. Training included in this process starting 2017.
  - Resource allocation reforms require explicit area department agreement on timing and scope of all CD missions.
  - RBM in use for all new projects since FY18; catalog (indicators and outcomes) in place.
  - Common Evaluation Framework (CEF) introduced in 2016 for CD evaluations.
  - Training integration expanded; online learning launched in late 2013; webinars and remote delivery experimented with to enhance reach and continuity of TA.
  - CD-focused outreach platforms and communication efforts established, including CD landing page and CD social media accounts; CD communications group created.

### CD funding model and external financing
- In 2008 the Board endorsed stepped-up mobilization of outside resources for TA and external training.
- The share of external financing in direct CD spending reached 55 percent in FY18.
- The largest five contributors now account for about half of the total external financing.
- To mitigate risks from increased reliance and concentration, a funding model was codified in the 2014 CD policy statement and an interdepartmental review process for new externally funded initiatives was established to ensure alignment with Fund CD priorities.
- Risk-mitigating measures and strategic partnership approaches include:
  - Diversifying the donor base (bilateral donors, multilateral institutions, private entities).
  - Seeking greater funding certainty, consolidation, flexibility, and closer integration across funding vehicles, including multi-partner and umbrella agreements.
  - Standardizing and simplifying CD procedures to improve efficiency and transparency.
  - Strengthening external engagement and communications to enhance CD visibility.

### Monitoring, evaluation, and results focus
- Efforts have centered on two initiatives:
  - A unified Results-Based Management (RBM) framework rolled out Fund-wide; since May 2017 information gathered and monitored for all new CD projects.
  - A Common Evaluation Framework (CEF) introduced in 2016 to strengthen focus on results and support medium-term evaluation planning.
- RBM details and status:
  - A standardized RBM framework endorsed by the Board in 2013 has been required for all CD operations since May 2017—whether Fund or externally financed.
  - All CD projects are organized along “results chains,” or log frames, to set expected causal relationships between resources and expected results as the basis for monitoring and evaluation.
  - RBM is influencing CD planning by helping staff clarify objectives and support more robust monitoring and early warnings for adaptation.
  - Implementation challenges include defining concrete outcomes and indicators, attribution and aggregation of long-term results, and measurement; work is ongoing to ensure consistent adoption, quality testing, and strengthened business processes and tools.

### Other delivery, technology, and dissemination developments
- TA and training integration expanded under headquarters- and RCDC-managed CD activities; delivered substantial joint ATI-AFRITAC training; SARTTAC opened in 2017.
- Technology use:
  - Online training program launched in late 2013 to share Fund knowledge, complement face-to-face training, and improve TA absorption.
  - Videoconferences and email enabled continuity of TA (example: FAD continuing fiscal TA to Liberia during the Ebola crisis).
- Dissemination and information management:
  - Work underway to strengthen the Fund’s fragmented TA document and information management system.
  - Launch of Partners Connect and efforts to provide timely information to donors aim to improve donor relations and coordination.
  - Publication of CD-related materials has expanded in selected areas (e.g., “How-to” Notes, “Technical Notes and Manuals,” “Tax Law Notes”), but publication of TA reports remains limited.

### Role of the Executive Board
- The Executive Board provides strategic direction and oversight for CD through strategic planning and budget processes, regular reviews, and policy guidance.
- The Board’s roles include:
  - Providing guidance on CD activities through Board work programs and discussion of Management’s Key Goals and the Global Policy Agenda (GPA).
  - Considering CD in the Medium-term Budget discussion each spring, including CD priorities and the size of CD relative to other Fund outputs.
  - Approving international organization and nonmember eligibility for CD and approving establishment of new external financing accounts.
  - Incorporating CD considerations into policy papers on core topics (e.g., data, fragile states, governance).
  - Participating in five-yearly CD reviews, periodic topic-specific reviews, and briefings (e.g., November 2017–July 2018 departmental briefings highlighting CD activities).
- Future updates and strategic reviews are expected to incorporate high-level results based on RBM and related evaluations.

_Italic line: Source: 2018 CD STRATEGY REVIEW—OVERVIEW PAPER, INTERNATIONAL MONETARY FUND_

### 9.      Surveys and interviews with key stakeholders point to important strengths in the

### pp1002182018reviewfunds-cdstrategyoverview - 9.      Surveys and interviews with key stakeholders point to important strengths in the

### Stakeholder feedback and strengths
- Wide appreciation for the quality and usefulness of Fund CD:
  - Outreach reaffirmed appreciation for the technical quality of CD advice.
  - Interviews and survey data show the Fund’s global experience with economic and financial sector reforms is considered useful to policy makers.
  - A recent study by AID Data found respondents saw the Fund as leading among development partners on key parameters of influence and helpfulness.
  - Recipients generally indicated that CD contributed effectively to implementation of policy advice; similar results are seen in many evaluations of the IMF’s CD activities.
- Interest in greater transparency and information:
  - Interviews with external partners underscored interest in more information on CD activities, including through publication of TA reports.
- Continued emphasis on outcomes:
  - External evaluations recommended more focus on achievement of outcomes (e.g., increase in tax revenue) rather than outputs (e.g., drafting of frameworks or regulations), to reframe CD activities around what matters most for the country.

### Summary of survey results (exact figures as reported)
- ... of CD recipients strongly agreed or tended to agree that CD contributed effectively to implementation of policy advice: 77%
- ... of CD recipients indicated that greater than half of TA recommendations were adopted: 72%
- ... of CD recipients indicated that insufficient resources hamper CD advice implementation: 41%
- ... of CD recipients strongly agreed or tended to agree that CD is well-coordinated with other TA providers: 69%
- ... of CD external partners strongly agreed or tended to agree that CD is well-coordinated with other TA providers: 48%

### Challenges identified in background work
- Uneven practices of integrating CD and surveillance:
  - The 2018 Interim Surveillance Review noted “...little progress has been made in leveraging knowledge from cross-country experiences in Article IV policy advice and in integrating technical assistance with bilateral surveillance, and this area would benefit from a course-correction.”
  - Progress includes the participatory RAP process, enhanced interdepartmental dialogue, CSNs drafted by area departments through structured dialogue with CD departments and engagement with authorities, requirement for area departments to develop CSNs for all heavy CD users, and a multi-year fragile states initiative begun in 2015.
  - Despite progress, interaction still depends too much on the interest of individual mission chiefs and availability of expert resources; embedding good practices more systematically is needed.
- Weak information sharing systems and fragmented processes:
  - CD processes and systems have not kept pace with the expansion of CD activities, expansion of regional centers, and greater use of external funding.
  - Accessing TA documents and using CD information remains difficult for staff, complicating internal coordination, leading to sizeable inefficiency and limiting strategic analysis of CD activities.
- Human resource issues:
  - Past reviews highlighted challenges related to career development and mobility for CD-providing staff.
  - Need to ensure work on CD issues and on countries with significant institutional constraints is valued on an equal footing with other core Fund activities.
  - Related issues (movement between HQ and field assignments, mobilizing staff with appropriate skills) will be taken up in the upcoming HR Strategy.

### CD strategy objectives for the next five years
- Two key objectives:
  - Increasing the impact of Fund CD by strengthening integration between CD, surveillance and lending and moving to a comprehensive country-tailored approach that adapts delivery to support implementation more consistently.
  - Increasing the efficiency of Fund CD by improving CD processes and systems, including through the CD Management and Administration Program (CDMAP).
- Rationale:
  - Leveraging synergies will better connect CD to countries’ risks and vulnerabilities and tailor it to institutional and organizational needs.
  - Improved processes and systems will facilitate timely access to CD information, better management and targeting of CD resources, more effective coordination between CD and surveillance/program work, and more informed strategic decision-making and governance.
- Five specific recommendation areas:
  - Clearer roles and responsibilities of internal and external stakeholders in the CD process.
  - Continued strengthening of prioritization and monitoring.
  - Increased tailoring and modernization of CD delivery.
  - Better internal consultation and sharing of CD information.
  - Continued work on external coordination, communication, and dissemination.
- Risk mitigation:
  - Recommendations recognize the need to mitigate risks through alignment in prioritization of CD with other activities and robust oversight, including in the context of the recent increase in external funding for CD.

### Roles and responsibilities (key points and recommendations)
- Country authorities must lead throughout the CD process:
  - Encourage and support countries to develop their own CD strategies and coordinate them internally and with development partners, recognizing difficulties in countries with capacity constraints.
  - Regular discussions of the CD agenda during surveillance missions and more active consultation with authorities (including through RCDC staff and resident representatives) in preparation of RSNs and CSNs should become routine.
- Tailoring individual projects:
  - Move to medium-term programmatic approaches involving multiple interventions and delivery modalities.
  - Projects are most successful when designed with detailed input from authorities on focus, presentation, and delivery modalities, coordinated with other CD providers, and mindful of absorptive capacity.
- Monitoring:
  - Regular discussion and concurrence on project objectives and milestones under the RBM framework, with authorities fully engaged to allow midcourse corrections and adaptations.
- Leadership and coordination roles:
  - Area departments should lead overall country engagement, establish country strategies and priorities for CD, and collaborate with CD departments.
  - CD departments remain responsible for technical content and for building the Fund’s role as a knowledge hub.
  - Country teams, including resident representatives and RCDCs, are positioned to have an overview across sectors and to draw together work by various CD departments.
  - CSNs for heavy CD users should inform and draw on regional CD strategies; clarification of cases where a CSN is required (e.g., through a common metric) is needed.
  - Leadership by the country mission chief will facilitate closer internal dialogue, greater use of CD to support surveillance priorities, greater incorporation of CD findings in surveillance advice, and enhanced monitoring of implementation.

### Integrating CD and surveillance: implementation guidance
- Need for a more systematic approach drawing on good practice to integrate CD and surveillance consistently.
- Practices to be expanded and standardized:
  - Improved coordination around CD and surveillance missions and linkages in related documents.
  - Development of a consistent playbook to facilitate year-round interaction among departments, RCDCs, resident representatives, and authorities, with countries at the center.
  - Experimentation and knowledge sharing to understand obstacles to integration, mindful of resource implications.
  - Central role for initiatives that strengthen information sharing.
  - The 2020 Comprehensive Surveillance Review is expected to explore further how to better integrate CD and surveillance, following this review’s findings and mainstreaming best practices.

*2018 CD STRATEGY REVIEW—OVERVIEW PAPER*

### 19.      Given excess demand for Fund CD, prioritization is critical for ensuring that scarce

### pp1002182018reviewfunds-cdstrategyoverview - 19.      Given excess demand for Fund CD, prioritization is critical for ensuring that scarce

### Prioritization and Current CD Spending (FY18 snapshot)
- Finding: "With 95 percent of delivery linked to priority topics and/or countries, the fact that most priority areas have grown has not translated into increased shares in many cases."
- Training by Mode of Delivery (FY18):
  - Face to face 70%
  - Online learning 30%
- By Region (FY18):
  - Sub-Saharan Africa 30%
  - Asia and the Pacific 20%
  - Europe 9%
  - Middle East and Central Asia 12%
  - Western Hemisphere 13%
  - Multiple or no region specified 16%
- By Income Group (FY18):
  - AE 4%
  - EM 30%
  - LIDC 32%
  - Mixed & other 34%
- By CD Type (FY18):
  - TA 84%
  - Training 16%
- By Delivery Department (FY18):
  - RCDC 23%
  - FAD 39%
  - ICD 14%
  - LEG 5%
  - MCM 19%
  - STA 12%
  - Other including RTACs 18%
- Field versus HQ-based Spending (FY18):
  - HQ-based 58%
  - RCDC 42%
- Field Delivery Share (FTEs) highlights:
  - Fragile states 28%
- Priority country group shares and contributions to overall delivery (FY18):
  - Program countries 18.8%
  - Highly vulnerable countries 15.8%
  - Fragile states 4.6%
  - (Additional shares listed in figure: 2.1%, 11.6%, 11.9%, 3.6%, 31.6%)
- By Priority Topic (FY18) shares (examples from figure):
  - Domestic revenue mobilization (share and growth series)
  - Public financial management
  - Financial market deepening for LICs
  - Financial integrity (AML/CFT)
  - Financial supervision & regulation, incl. fintech & cyber risks, & monetary policy frameworks
  - Data: Closing gaps, improving quality, broadening dissemination
  - CD Management
  - Other spending including ICD macro training

### Projected Spending and Need for Prioritization (FY19–FY21)
- Finding: "Further, with CD spending projected to stabilize, prioritization takes on increased importance."
- Under the FY19–21 budget:
  - CD’s share of spending will level off at 31 percent following rapid growth based on external funding.
  - External funding is expected to stabilize at 58 percent of direct spending.
- Historical and projected spending indicators shown (Figure 6):
  - CD (plus indirect costs)/total spending (rhs) series includes values such as 25.9 and 30.9 (percent labels appear in figure).
  - Externally-financed (lhs) and Fund-financed (lhs) series plotted in millions of USD across FY13–FY21.
- Projected Growth Rate FY18–FY21 (Figure 7) indicates varying growth by region and by priority topics/country groups; specific plotted ranges include negative and positive percent changes across FY15–FY18 and projections to FY21.
- Note: "With demand continuing to exceed available resources, prioritization will be key to growth in critical areas."  
- Observation: "Growth in governance and anti-corruption work, not currently programmed, will need to be accommodated."

### Recommendations on Prioritization and Engagement
- Deepen strategic engagement with country authorities throughout the CD process.
- Area Departments to be in the leading role on overall country engagement, including through CSNs required for all heavy CD users (defined by a common metric).
- Strengthen efforts to expand and learn more systematically from best practices in integrating CD and surveillance.
- Explore further how to better integrate CD and surveillance in the context of the 2020 Comprehensive Surveillance Review, following on the findings of this review and experience from mainstreaming best practices.
- Strengthen the focus and monitoring of priorities by narrowing the list of priorities and building on better information systems.
- Take further steps to develop and operationalize a clear governance framework for RBM and the common evaluation framework.

### Enhancements to the Prioritization Framework (ongoing work)
- Medium-term orientation:
  - Move from an annual to a rolling three-year resource allocation cycle (initiated in 2017).
  - Focus on aggregates rather than missions; strategic overview discussed by department heads and approved by management.
  - Multi-year engagements through RCDCs, bilateral projects and multi-partner vehicles supporting anchoring of CD activities in multi-year results frameworks.
  - Implementation challenges: need to strengthen data (including on demand) and adopt a project-based mindset; recruitment lead times and headquarters-based "back-stoppers" affect short-term flexibility.
- More targeted medium-term Fund-wide priorities:
  - Benefits from streamlining priorities to better target areas where growth in CD delivery is particularly important and where CD share needs increase.
  - Need to monitor a broader range of topics and country types to support clearer trend analysis.
- Member needs should shape CD:
  - Recognition of the importance of good governance and anti-corruption frameworks; Fund is redefining involvement across its three core activities (see Box 4 in source).
  - CD in governance will be tailored to support surveillance and program priorities determined by the new assessment methodology.

### Monitoring, Evaluation, and Results-Based Management (RBM)
- Ongoing work to strengthen the monitoring and evaluation framework:
  - Need to solidify a consistent and comprehensive results-based framework; embedding results focus will take time and iterative effort.
  - Effective RBM requires greater engagement with authorities and buy-in on CD project objectives and milestones.
  - As more results data becomes available, RBM will help staff and authorities plan, monitor, adapt, evaluate, and prioritize delivery (including to countries with strong ownership).
  - Cautions: RBM is a management tool not an end; avoid excessive focus on scores or overly bureaucratic processes.
- Follow-up actions for evaluation framework:
  - Build a medium-term evaluation plan and a systematic response mechanism, including monitoring and reporting on follow-up.
  - Develop a central repository for evaluations and include a link to all published evaluations on the Fund’s website.
  - Bring evaluations into the prioritization process.

### Country-Tailored Delivery Focused on Implementation
- Strategic shift: from providing technical advice ("what to do") to assistance with implementation ("how to do it"); from recommending reforms to partnering to design and implement reforms.
- Key elements to embed a results-focused, comprehensive, country-tailored approach:
  - Reinforcing diagnostics:
    - Build and deploy a robust toolkit to diagnose institutional capabilities; targeted diagnostic tools inform CD content and modalities.
  - Engaging fully on institutional readiness:
    - Consider organizational and decision-making aspects, leadership, resistance to change, resource constraints, human capacity limits, and political instability.
    - Require partnerships with other organizations for aspects beyond Fund expertise; shift from "best practice" to "best fit," especially in fragile and low-capacity countries.
  - Strengthening flexibility in delivery:
    - Move toward multi-year project engagements and knowledge sharing (peer-to-peer interactions, attachments).
    - Reduce emphasis on detailed TA reports; focus more on assisting implementation and related training for officials.
    - From training perspective, emphasize online training and targeted/customized classroom training for similar groups or specific organizations.
    - Recognize importance of delivery in languages other than English.
    - Adjust technical support mix combining field-based experts and HQ-based missions; RCDCs positioned to support flexible, needs-based models.
- Recommendations:
  - Strengthen strategic engagement and country ownership for RBM and CD project objectives.
  - Consider training and advice focused on building leadership, management, strategy development, and related skills, potentially through partnerships if the Fund cannot provide directly.

### Fragile States: Tailored CD Approaches and Findings
- Fragile states have been an institutional priority since 2014; they are heterogeneous (post-conflict, small and vulnerable states).
- Examples of adaptation and lessons:
  - 2015 stocktaking proposed a multi-year framework to improve integration of CD with surveillance and lending; multiple countries participating.
  - 2018 IEO Report recommended broader implementation of holistic country strategies bridging surveillance, lending, and CD through Article IV process; Management Implementation Plan calls for forward-looking country engagement strategies to integrate surveillance, lending, and CD.
  - RTACs cover 38 of the 43 fragile countries; CDOT serves Myanmar; Somalia and South Sudan have dedicated trust funds.
  - The 2017 Multi-Country Report on Building Fiscal Capacity in Fragile States emphasized targeting and sequencing TA to reflect institutional capability while yielding quick tangible results.
  - METAC shifted CD to offsite locations and intensified hands-on training during conflict stages; follow-up missions scheduled after authorities confirm completion of prior recommendations.
  - In Myanmar, TA experts blended training with TA, combining fundamental concepts with practical applications; surveillance team and CDOT cooperated closely during surveillance missions.
- Fragile states CD statistics (FY18):
  - 6 of the top 20 CD users are fragile states.
  - 42 of the 43 fragile states received CD in FY18.
- Fragile-states CD approach principles:
  - Mindful of limited absorptive capacity, local resource scarcity, political/security concerns.
  - Flexible, tailored, prioritization and sequencing, incremental reforms, hands-on/on-the-ground advice.
  - May require more direct field support through RCDCs or country-based experts and, in rare cases, temporary supplementation of local capacity.

*2018 CD STRATEGY REVIEW—OVERVIEW PAPER*

### Box 6. CD in Languages Other Than English

### Box 6. CD in Languages Other Than English

### Importance of working in other languages
- Working in languages other than English is critical to the Fund’s engagement with its members.
- Languages other than English are equally important for TA. CD departments maintain a strong roster of experts, often coming from agencies of other countries, who can operate in languages other than English.

### FY18 classroom and online delivery (exact figures)
- FY18: the Fund provided 28 courses in languages other than English to over 750 officials.
  - These represent 11 percent of courses and 10 percent of officials who received classroom training, respectively.
- About one quarter of classroom training was delivered with interpretation into another language—Arabic, Chinese, French, Spanish, Portuguese, and Russian—to over 1,850 officials (accounting for a quarter of classroom trainees).
- For online training, in FY18 over 1,025 government officials (21 percent of online trainees) were trained in languages other than English (French, Spanish, Russian, and Arabic).

### Operational constraint: TA report translation requirement
- Staff are considering how to address existing requirements for translation of TA reports to English prior to publication, which represents a constraint in some cases.

### Languages explicitly cited
- Arabic, Chinese, French, Spanish, Portuguese, Russian (classroom interpretation).
- French, Spanish, Russian, Arabic (online training).

### Illustrative stakeholder comments (verbatim)
- “As opposed to what occurred in the past, where organizations focused on training selected individuals, the focus has changed noticeably to enhancing the overall capacity of the organization.” I. Coomaraswamy, Governor of the Central Bank of Sri Lanka
- “You have really been there for Liberia and in helping us to move forward notwithstanding the challenges and lingering effects of Ebola.” E. Stewart Tamba, Former Commissioner General, Liberia
- “What we appreciate about IMF regional centers: their proximity, their timely advice, their hands-on support for reform implementation” M. Nsanzabaganwa, Deputy Governor of the National Bank of Rwanda

*Source: Box 6. CD in Languages Other Than English — 2018 CD STRATEGY REVIEW—OVERVIEW PAPER*

### 31.      Staff would welcome Directors’ views on the following questions:

### 2018 CD STRATEGY REVIEW—OVERVIEW PAPER

### Questions for Directors (paragraph 31)
- Do Directors agree with the main findings and key themes emerging from this review?
- Do Directors endorse the strategic objectives set out in this report?
- Do Directors consider that the specific operational recommendations would support these broader strategic objectives:
  - Clearer roles and responsibilities among various stakeholders;
  - Continued strengthening of prioritization and monitoring;
  - Better tailoring and modernization of CD delivery with a focus on implementation;
  - Greater internal consultation and sharing of CD information; and
  - Further progress in external coordination, communication, and dissemination of information.
- Do Directors consider that the strategic objectives and recommendations proposed in this review will mitigate identified institutional risks related to the CD strategy?
- Do Directors have other suggestions to enhance the impact and efficiency of CD?

### Annex I — Recommendations of the 2018 CD Strategy Review (Box 1)
Staff work in the coming period will consider concrete steps to advance the report’s recommendations. This work will build upon ongoing activities and incorporate behavioral insights highlighted in Box 3.

- Clarify roles and responsibilities
  - Deepen strategic engagement with country authorities throughout the CD process.
  - Area Departments to be in the leading role on overall country engagement, including through CSNs for all heavy CD users (defined by a common metric).
  - Strengthen efforts to expand and learn from best practices in integrating CD and surveillance.
  - Explore further how to better integrate CD and surveillance in the context of the 2020 Comprehensive Surveillance Review, following on the findings of this review and experience from mainstreaming best practices.

- Better prioritization and monitoring
  - Strengthen the focus and monitoring of priorities by narrowing the list of priorities and building on better information systems.
  - Take further steps to develop and operationalize a clear governance framework for RBM and the common evaluation framework.

- Enhance country-tailored delivery focused on implementation
  - CD departments to build on existing departmental strategies to continue moving towards greater modernization, modularity, flexibility, and agility in CD delivery as well as to bring about medium-term shifts in expertise as CD priorities change over time.
  - Continue experimentation with new technologies to support more flexible delivery.
  - Follow up on the Management Implementation Plan for the 2018 IEO Report on the IMF and Fragile States.
  - Strengthen operational support for RCDCs.

- More effective internal consultation and sharing of information
  - Implement ongoing initiatives to enhance knowledge management (KMU project) and improve internal access to data, analytical tools, and productivity tools (Digital Workspace).
  - Implement CDMAP.
  - Continue the practice of informal Board briefings on CD activities and find other opportunities to inform and engage the Executive Board more regularly on CD.

- Improved external coordination and communication
  - Better leverage existing good practices on coordination in collaboration with other providers.
  - Pursue innovative CD communications approaches to raise awareness of the Fund’s CD work.
  - Improve the presentation of recommendations in TA reports to senior authorities and other nontechnical users. Engage local stakeholders on key TA recommendations as part of surveillance and outreach.
  - Publish more topical notes in specialized areas of interest to policymakers, bringing in cross-country learning.
  - Implement forthcoming recommendations of the working group on TA report publication.
  - Continue to increase the sustainability and fungibility of external financing.

### Annex II — Select Past CD Strategic Work and Reviews
- The 2018 CD Strategy Review builds on earlier work on CD and on staff and IEO reviews on related topics. Previous assessments reviewed various aspects of TA, training, and/or summarized lessons from various TA project evaluations, including:
  - The 2005 IEO Report and 2014 Update;
  - The 2008 Paper on Training as Part of Capacity Building;
  - The 2008 Report on Enhancing the Impact of Fund Technical Assistance;
  - The 2011 Report of the Task Force on the Fund’s Technical Assistance Strategy;
  - The 2013 CD Strategy Paper.
- These earlier reviews highlighted the importance of improving the CD framework including CD prioritization, delivery, funding, monitoring, and evaluation. The 2011 TA review emphasized the key attributes of Fund TA presented as the “FINE model,” while the 2013 CD Strategy brought TA and training under one umbrella.
- The review also draws on other recent strategic work of relevance to CD, including:
  - The 2018 Interim Surveillance Review, which highlighted the need for better integration of CD with surveillance to help achieve surveillance goals;
  - The 2018 Data and Statistics Strategy, which highlighted key elements needed to enable the Fund and its members to better meet evolving data needs for surveillance priorities in a digital world;
  - The Review of the 1997 Guidance Note on Governance, which highlighted the importance of anchoring the Fund’s CD work in the areas of governance and corruption within a longer-term framework;
  - The 2018 IEO Report on Fragile States, which provided specific recommendations to increase the impact of CD in fragile states, including through increasing on-the-ground support and employing realistic impact assessment tools.

*2018 CD STRATEGY REVIEW—OVERVIEW PAPER — INTERNATIONAL MONETARY FUND*

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_Source: https://www.imf.org/-/media/files/publications/pp/2018/pp1002182018reviewfunds-cdstrategyoverview.pdf_