## ppea2019009

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### Overview and Strategic Agenda
- FY 20 budget proposal set within long-standing objectives of financial sustainability and meeting membership needs; operationalized in the Managing Director’s Global Policy Agenda (GPA) and Board Work Program (BWP).
- Budget positioned against a weakened global outlook, financial volatility, and supports priorities to:
  - help members rebuild policy space,
  - strengthen resilience,
  - implement structural reforms,
  - review policies and strategies to enhance Fund advice and support multilateralism.

### Net and Gross Administrative Budget Envelopes — key figures
- FY 20 net administrative budget: $1,129 million in constant FY 19 dollars (defined in relation to the Fund’s global external deflator).
- FY 20 net administrative budget: $1,158 million in nominal terms (preliminary GED increase of 2.6 percent).
- FY 20 gross administrative budget: $1,397 million in nominal terms, reflecting $239 million in receipts.
- FY 20 capital budget: $86 million in nominal terms ($41 million building facilities; $45 million information technology).
  - Of the IT component, $30 million is for the Big 5 programs.
- Savings and demands: $33 million in constant FY 19 dollars of net additional structural demands, offset by reallocations and savings of the same amount.
- Proposal maintains same level of real administrative resources for the medium term (eighth year of flat real budget envelopes, excluding a ½ percentage point security related increase in FY 17).

### Reallocations, Transitional Resources, and Carry-forward
- Reallocations toward new needs and priorities: about 3 percent of the net budget.
- Carry-forward resources:
  - Expected FY 19 outturn fully utilizes the approved budget; carry-forward equivalent to 3 percent of the net budget would still be available (4 percent including OED and IEO).
  - Carry forward (upper limit) FY 19: 46; FY 20: 47.
  - Allocated up-front in FY 20 budget process: $25 million (some $6 million higher than last year); represents about 80 percent of the carry-forward ($25 million noted).
- Central contingency: $8 million.
- Reallocations within and across departments total $33 million in gross terms (close to 3 percent of total spending); about 30 percent of reallocations comes from operational efficiencies, streamlining and modernization, and travel savings.
- Initial savings from Streamlining and Modernization measures estimated at $2.2 million.

### Modernization: The Big 5 and Capital Investment
- Big 5 programs: 1HR, CDMAP, IDW (iDW), iDATA, KM — aim to replace/consolidate obsolete platforms and redesign processes for automation and productivity.
- FY 20 IT capital allocation for Big 5: $30 million; business cases and cost-benefit analyses (CBA) to be presented to the Board as finalized.
- Estimated total multi-year capital costs for Big 5: in the range of $92-110 million (including $36 million allocated through FY 19).
- Multi-year capital cost of pre-requisites: around $8 million (close to $3 million allocated through FY 19).
- Prerequisite IT projects (identity access management, cloud development/integration) require about 3½ million.
- Other FY 20 IT funding needs:
  - Critical IT security projects: around $4½ million.
  - Other priority needs: $4½ million.
  - Life-cycle infrastructure replacements: $6 million.
- Facilities capital highlights:
  - $16 million to reconfigure HQ2 space, decommission HQ2 data center, improve visitor entrances/way-finding, enhance HQ1 Atrium, clean HQ1 façade.
  - $5 million for HQ security enhancements; bollard installation currently estimated at $9 million in FY 21.
  - $16 million for replacement of furniture, audio-visual and end-of-life systems.
  - Starting FY 20: $1.2 million for regular replacement cost of the Fund’s fleet of around 140 vehicles.
- FY 20 capital budget totals (Millions of U.S. dollars): Total FY 20 Proposed 86; Building Facilities: 41; Information Technology: 45.
- Appendix VII and Appendix VIII document governance, timelines, and program status for Big 5.

### Big 5 Governance, Implementation Steps, and Program Status (selected items)
- Governance structure:
  - Program Sponsor (Department Director) accountable to Management (CAO/DMD).
  - Program Steering Committee (SC) with Directors of impacted departments, CIO, and OBP Director.
  - Corporate Program Management Office (PMO) for independent oversight; CBIT chaired by CAO/DMD links programs to Fund Management.
  - Change Management Network led by SPR; monthly CBIT reporting and PMO-managed risk register.
- Implementation decision points:
  - Pre-implementation funding follows CBIT approval for requirements development and market analysis.
  - Program teams finalize CBA and business case; SC approval precedes seeking CBIT implementation funding.
  - Departmental commitments to stated savings required upfront; savings capture plans to be developed with OBP and HRD.
- Status highlights:
  - 1HR: most advanced; business process re-engineering completed mid-2018; software selection completed; implementation started; CBA and finalized business case expected to be presented to the Board in the first quarter of FY 20; release phases scheduled Spring 2020 and Fall 2020.
  - CDMAP: scoping completed; pre-implementation phase; Board presentation could occur in Q2 or Q3 FY 20.
  - IDW: planning and design phases; strategy, solution selection, and implementation support to provide CBA; timeline longer.
  - KM: implementing Knowledge Exchange and auto-tagging; document management system timeline linked to IDW.
  - iDATA: requirements being redefined after initial software selection proved unsuccessful.

### Outputs, Inputs, and Capacity Development (CD)
- Fund-financed structural resources projected to shift slightly toward country work and away from internal support; some reallocation from policy advice/economic analysis to Fund policies.
- CD spending growth since FY 12:
  - CD share grew by 7 percentage points to reach 31 percent of total gross administrative expenditures (including indirect costs).
- Factors arguing for broadly containing CD at current levels:
  - Need to integrate CD with lending programs and surveillance and focus on Fund core mandate areas and comparative advantage.
  - Quality constraints: limited pool of experienced permanent staff to oversee and deliver CD; limited relief from hiring external experts.
  - Financing constraints: greater reliance on external funding increases volatility risk; externally financed CD creates indirect costs that Fund-financed budget must absorb.
  - Need for modernization: systems supporting CD budget, planning, and results monitoring require investment to match portfolio complexity.
- Donor financing for CD:
  - Based on an indicative annual breakdown, 67 percent of the five-year fundraising target has been committed by donors, and 75 percent of FY 20 funding goals secured.

### Near-term Priorities, Country Operations, and Program Support
- Near-term context: global growth has weakened; risks tilted to the downside with rising policy uncertainty and volatility.
- Priority areas: country operations, analytical work supporting policy advice, major Fund policy reviews (surveillance, lending, debt).
- Country engagement:
  - Staff expect an uptick in program work in FY 20; budget includes additional resources and reallocations toward where engagement is likely to pick up.
  - Emphasis on support to low-income countries (LICs) and fragile states, enhanced governance framework, and strengthening macro-financial surveillance.
  - Current number of formal Fund financial arrangements relatively low, particularly for PRGT and PSI facilities.
  - Short-term unforeseen pressures typically met through intra- and inter-departmental reallocations and use of contingency.
- Transitional resources for country engagement:
  - $10.7 million to fund increased program work in AFR and WHD, enhanced bilateral surveillance in APD, EUR, and MCD, governance work (FAD), better integration of FSAPs and Article IVs (MCM), and CD for SDG implementation and RBM training (FAD and ICD).
  - FY 19 provided $7.7 million for comparable needs.

### Gross Administrative Resource Allocations (selected figures from Table 2)
- Gross expenditures FY 19 Est. Outturn: 1,175
- FY 20 Total (structural + transitional): 1,193
- Country engagement FY 19 Est. Outturn: 467; FY 20 Total: 480
- Policy advice and economic analysis FY 19 Est. Outturn: 166; FY 20 Total: 167
- Contributions to global stability FY 19 Est. Outturn: 230.3; FY 20 Total: 230.5
- Fund policies FY 19 Est. Outturn: 260.7; FY 20 Total: 273.0
- IMF governance FY 19 Est. Outturn: 118.0; FY 20 Total: 120.8
- Internal organization/support FY 19 Est. Outturn: 335.8; FY 20 Total: 340.0
- Contingency: 12 (FY 19 and FY 20)
- Receipts FY 19 Est. Outturn: (40); FY 20 Total: (38)
- Net expenditures FY 19 Est. Outturn: 1,135; FY 20 Total: 1,155
- Carry forward (upper limit) FY 19: 46; FY 20: 47
- Allocated up-front in budget process FY 19: 19; FY 20: 25
- Total available resources FY 19: 1,181; FY 20: 1,176

### Transitional Resources and Intended Uses
- Upfront allocation of transitional resources for FY 20: $25 million.
  - More than half for country work (support intense engagement, enhanced governance framework, bridge financing as EUR structural downsizing continues).
  - Approximately one third for modernization projects, including the Big 5 and the Comprehensive Compensation and Benefits Review (CCBR).
- Transitional needs for country engagement: $10.7 million (FY 20) versus $7.7 million provided in FY 19.

### Spending on Fragile and Conflict States (Box 3)
- Spending averaged around $96 million per year in real terms since FY 15 (10 percent of total direct spending).
- Over 40 percent of fragile states spending is CD, including external financing.
- Spending varies widely: some fragile states receive below $200,000 per year; others receive several million per year.
- FY 20 projections:
  - Budget discussions indicate country work on fragile states will increase by $1.2 million, mostly for AFR countries.
  - FAD plans to shift six fiscal economists to LICs and fragile states from other countries.
  - Based on FY 19 outturn, spending on fragile states outside of CD expected to increase by 8 percent in FY 19 on a base of around $59 million.
  - If spent as planned, FY 20 would see an additional rise of 2 percent in real terms.

### Financial Surveillance (Box 2) — resource focus and changes
- Spending on Financial Surveillance (FS) estimated at around $40 million:
  - Direct spending on MCM for GFSR and analysis: around $10 million.
  - Within bilateral surveillance: $30 million (contrasts to around $200 million in direct spending on overall bilateral surveillance).
- FY 20 allocation to MCM to enhance bilateral FS: $1.7 million (5½ percent increase).
- Savings from GFSR streamlining: $0.9 million.
- Financial Sector Stability Review (FSSR) diagnostics: around five diagnostics each year; spending around $1.5 million in FY 19; FY 20 projected FSSR spending: $1.8 million (22 percent increase).
- MCM Monetary Modeling Unit expected to consist of 6.5 FTE positions (one contractual); funded mostly through reallocation and cost-effective travel; one additional FTE initially financed with transitional funds.

### Board Work Program (BWP) — scope, footprint, and funded items (Box 5)
- BWP covers non-country items: economic analysis, Fund policies, flagships/REOs, IMF governance, finances, and operational/administrative items.
- Estimated cost:
  - Fall 2018 non-recurrent items: 72 FTEs, roughly $23 million.
  - Total BWP estimated cost (including recurring items): around $68 million (around 30 percent of non-country work).
- Specific funded BWP items:
  - $2.4 million for Framework for Enhanced Engagement on Governance implementation.
  - $1.8 million for the Comprehensive Surveillance Review (CSR).
  - $0.3 million for follow-up to Review of AML/CFT.
  - $0.5 million to develop the integrated policy framework.

### Internal Support, Departmental Budgets, and FTEs
- Internal pressures: modernization, cyber security, staff and building safety, HQ1 Renewal needs, language services.
- Net structural: net savings of $2.9 million for FY 20 in internal support.
- Transitional needs for internal support: $9.5 million (around half to support CCBR and 1HR); $1.8 million for project coordination and change management.
- Departmental FTEs (selected):
  - FY 19 Approved Budget total FTEs: 2,868; Structural Adjustments 9; Total FY 19 2,878.
  - FY 20 Proposed Transitional FTEs: 31; FY 20 Proposed net change: 44.
  - Area departments FY 19 Approved Budget: 785 FTEs; FY 20 proposed incremental FTEs: 12 structural, 18 transitional.
  - Functional CD departments FY 19 Approved Budget: 717 FTEs; FY 20 proposed incremental FTEs: 10 structural, 8 transitional.
  - Support departments FY 19 Approved Budget: 510 FTEs; FY 20 proposed incremental FTEs: 3 structural, 7 transitional.

### Budget Input Structure, Deflator, and Key Budget Concepts (Appendix I)
- Financial year (t): May 1(t-1) to April 30(t). Example: FY 19 = May 1, 2018 to April 30, 2019.
- Administrative budget identity: Gross − Receipts = Net. Total Available Resources = Net + Carry Forward.
- Carry forward caps: 3 percent of net administrative budget for staff, 5 percent for IEO, 20 percent for OED.
- Global External Deflator (GED): personnel component 70 percent (Board approved compensation adjustment of 2.7 percent), non-personnel component 30 percent (tied to projected U.S. CPI).
- Capital budgets available for three years; inclusion criteria: acquisition of building/IT equipment, construction/major renovation/repairs, major IT software development or infrastructure projects.

### FY 19 Projections and Utilization Metrics
- FY 19 Gross Budget: 1,371; Receipts: 1,135; Net Budget: 236 (as presented).
- Projected FY 19 outturn:
  - Upfront allocation of transitional funding: $19 million.
  - Reallocation efforts: about $25 million (2.5 percent of net budget).
- Workload indicators:
  - Average Fund-wide overtime rate around 11 percent; median around 6 percent.
  - Average Fund-wide staff vacancy rate projected to end year just below zero percent.
  - Travel budget utilization projected around 90 percent.
  - Cost per mile (international travel) rose from $0.37 to $0.38 in first six months of the year.
- Receipts (FY 19 projected outturn):
  - Total: 236
  - Externally-financed capacity development (direct cost only): 192
  - General receipts: 36 (administrative and trust fund management fees: 13; publications income: 1; fund-sponsored sharing agreements: 3; HQ lease: 2; Concordia: 3; parking: 3; Group Life Insurance refund: 2).
- Capital spending projected FY 19: $159 million (Facilities 37; IT 38; HQ1 Renewal 85).
  - HQ1 Renewal projected completion: Fall 2019; approved funding exception available until April 2025.
  - Approximately $6 million in earmarked capital funding for security enhancements will expire at end of FY 19.

### Risks, Contingencies, and Mitigations
- Near-term risks and reduced buffers: higher budget utilization and increased upfront allocation of transitional funds reduce shock absorption capacity; main near-term risks include unforeseen program demand, price shocks (travel, data), information security incidents.
  - Near-term mitigations: reprioritization, temporary overtime, departmental contingency measures, central contingency; persistent shocks could require increasing budget envelope.
- Medium-term risks from modernization: uncertainty over scope, phasing, and cost of Big 5 initiatives; administrative staff time required.
  - Mitigations: detailed project plans, PMO oversight, robust CBAs, regular monitoring, upfront commitments for savings to return to center for reallocation.
- Donor financing risks: 67 percent of five-year fundraising target committed by donors; 75 percent of FY 20 funding goals secured; ICD continues mitigation efforts.
- Specific risk items and mitigations summarized in Risk Preparedness Matrix (items include increased program demand, donor shortfalls, price increases, information security breaches, modernization overruns, and failed efficiency gains).

### FY 20 Summary Appropriations and Proposed Decisions
- Proposed net administrative budget totals (Millions of U.S. dollars):
  - Net administrative budget total: 1,158.4
  - Other: 1,076.6
  - OED: 75.3
  - IEO: 6.4
- Receipts: 238.9 (Other: 237.6; OED: 1.4; IEO: 0.0)
- FY 19 carry forward (upper limit): 46.9 (Other: 31.5; OED: 14.8; IEO: 0.6)
- Total gross expenditures (limit): 1,444.2 (Other: 1,345.6; OED: 91.5; IEO: 7.1)
- Capital budget total: 85.8 (Information Technology: 45.0; Building facilities: 40.8)
- Proposed Decisions (high-level):
  - Decision No. 1: Approve net administrative appropriations for FY 2020 totaling US$1,158.4 million with sub-limits (OED up to US$75.3 million; IEO up to US$6.4 million; other up to US$1,076.6 million). Authorize carry forward of unspent FY 2019 net administrative expenditures up to US$46.9 million with sub-limits.
  - Approve a limit on gross administrative expenditures in FY 2020 of US$1,444.2 million with sub-limits.
  - Decision No. 2: Approve capital budget appropriations for FY 2020 totaling US$85.8 million, applied as: (i) Information Technology: US$45.0 million; (ii) Building Facilities: US$40.8 million.

*Source: ppea2019009 - FY2020–FY2022 Medium-Term Budget (Executive Summary, Sections and Appendices cited), April 2, 2019.*

### EXECUTIVE SUMMARY

### EXECUTIVE SUMMARY

### Overview and Strategic Agenda
- The FY 20 budget proposal is formulated within the context of long-standing objectives of financial sustainability and meeting the membership’s evolving needs.
- The budget is positioned against a weakened global outlook and financial volatility and supports a strategic agenda to:
  - help members rebuild policy space,
  - strengthen resilience,
  - implement structural reforms,
  - review policies and strategies to enhance Fund advice and support multilateralism.
- The proposal is operationalized in the Managing Director’s Global Policy Agenda (GPA) and Board Work Program (BWP).

### Net and Gross Administrative Budget Envelopes
- The net administrative budget for FY 20 remains unchanged in real terms relative to the Fund budget deflator, representing the eighth year in a row of flat real budget envelopes (excluding a ½ percentage point security related increase in FY 17).
- Key numeric budget items:
  - FY 20 net administrative budget: $1,129 million in constant FY 19 dollars (defined in relation to the Fund’s global external deflator).
  - FY 20 net administrative budget: $1,158 million in nominal terms (preliminary GED increase of 2.6 percent).
  - FY 20 gross administrative budget: $1,397 million in nominal terms, reflecting $239 million in receipts.
  - Savings and demands: $33 million in constant FY 19 dollars of net additional structural demands, offset by reallocations and savings of the same amount.
  - FY 20 capital budget: $86 million in nominal terms, comprising $41 million for building facilities and $45 million for information technology.
  - Of the IT component, $30 million is for the Big 5 programs.

### Reallocations, Transitional Resources, and Carry-forward
- The proposal reflects reallocations of some 3 percent of the net budget toward new needs and priorities.
- As the expected FY 19 outturn fully utilizes the approved budget, carry-forward resources equivalent to 3 percent of the net budget would still be available (4 percent including the Offices of Executive Directors (OED) and the Independent Evaluation Office (IEO)).
- Of the carry-forward, some 80 percent ($25 million) is proposed to be allocated up front in the FY 20 budget process; this is $6 million higher than last year and reflects unusually elevated temporary needs (noted as temporary modernization costs).
- The increased upfront distribution of carry-forward resources reduces buffers for unexpected resource needs, increasing the importance of careful departmental budget management.

### Modernization: The "Big 5" and Capital Investment
- The FY 20 capital envelope supports modernization efforts intended to transform institutional operations across backbone systems and frontline work such as capacity development (CD).
- The so-called “Big 5” projects aim to improve processes and capabilities in areas including human resources, capacity development, and data and knowledge management.
- $30 million of FY 20 IT capital is allocated for the Big 5; business cases and cost-benefit analyses will be presented to the Board as finalized.
- Robust cost-benefit analyses and proactive change management are emphasized to ensure satisfactory returns on up-front capital and administrative investments.

### Medium-term Resource Assumptions and Uncertainties
- The same level of real administrative resources is assumed over the medium term, without prejudging:
  - the outcome of the Comprehensive Compensation and Benefits Review (CCBR),
  - the modernization initiatives,
  - new workstreams the Fund may be asked to undertake.
- These factors could significantly impact resource needs and allocation over the medium term.

### Outputs, Inputs, and Capacity Development (CD)
- Fund-financed structural resources are projected to shift slightly toward country work and away from internal support; some reallocation between work on policy advice and economic analysis and Fund policies is envisaged.
- Capacity development (CD) spending has grown since FY 12:
  - CD share has grown by 7 percentage points to reach 31 percent of total gross administrative expenditures (including indirect costs).
- Factors arguing for broadly containing CD at current levels include:
  - The need to integrate CD with lending programs and surveillance and focus on areas of the Fund’s core mandate and comparative advantage.
  - Quality constraints: limited pool of experienced permanent staff to oversee and deliver CD; limited relief from hiring external experts.
  - Financing constraints: greater reliance on external funding increases volatility risk and externally financed CD creates indirect costs that the Fund-financed budget must absorb.
  - Need for modernization: systems supporting CD budget, planning, and results monitoring require investment to match portfolio complexity.

### Risks and Budget Management
- Increased use of externally financed CD and other external funding sources introduces volatility and contingent pressures on the Fund-financed budget.
- The reduced buffer from allocating a larger share of carry-forward resources up front heightens the need for:
  - careful departmental budget management,
  - strengthened internal capacity to cost the Fund’s work,
  - better prioritization of available resources to reduce risk of overruns.

### Key Dates and Administrative Notes
- Document date: April 2, 2019.
- The paper describes the FY2020–FY2022 medium-term budget and includes appendices covering Budget Concepts and Methodology, Projected FY 19 Outturn, Evolution of the Budget, Strategic Planning Timeline, Mapping of outputs, Implementation status of streamlining and modernization measures, Long-term Capital Investment Plan, Big 5 Program details, and statistical tables.

*Source: ppea2019009 - EXECUTIVE SUMMARY (FY2020–FY2022 MEDIUM-TERM BUDGET), April 2, 2019.*

### 3.      In the near term, the budget is set within the priorities laid out in the GPA and fleshed

### 3.      In the near term, the budget is set within the priorities laid out in the GPA and fleshed out more fully in the BWP.

### Near-term priorities and context
- Global growth has weakened, and risks are increasingly tilted to the downside amid growing policy uncertainty, mounting vulnerabilities, and greater volatility.
- Priority areas for the current budget cycle include: country operations, analytical work to support policy advice, and major Fund policy reviews of surveillance, lending, and debt issues.

### Country operations and program support
- The GPA calls for the Fund to help members face global economic challenges by providing advice on macroeconomic policies tailored to their circumstances, including program support and intensive surveillance of countries and regions, as well as CD provision.
- The current number of formal Fund financial arrangements is relatively low, particularly for the PRGT and PSI facilities.
- Staff expect an uptick in program work in FY 20; these expectations have been built into the budget proposal with additional resources.
- The budget provides for a reallocation of resources to where engagement is most likely to pick up—reflecting the type of arrangements for which a similar amount of staff resources is expected, some of which may be non-financial arrangements such as PCI, PSI, or PPM.
- Short-term unforeseen pressures are typically met through intra- and inter-departmental reallocations and use of the contingency.
- Priorities include strengthening support to low-income countries (LICs) and fragile states, implementing the enhanced governance framework, and strengthening macro-financial surveillance.

### Analytical work to support policy advice
- The GPA outlines areas for further analysis: supporting efforts toward a strengthened, rules-based multilateral trade system through work on trade; contributing to the international tax debate; work on the digital economy; and work on public debt.
- Resources are proposed for BWP items such as Fintech and digitalization, social spending, and work under development such as the integrated policy framework.

### Major policy reviews and surveillance
- Major Fund policy reviews include surveillance (Comprehensive Surveillance Review (CSR), FSAP review, data provision), lending (conditionality, LIC facilities), and debt issues (debt limits).

### Modernization efforts and the “Big 5”
- Several major modernization efforts are underway to improve the quality of the Fund’s outputs, with increased emphasis on results.
- The “Big 5” transformational programs:
  - 1HR: transformation of the HR system and operating model.
  - CDMAP: reformed Capacity Development Management and Administration Processes.
  - IDW: Integrated Digital Workplace (iDW).
  - iDATA: next generation economic data platform.
  - KM: knowledge management.
- Common benefits: replacement and consolidation of obsolete technology platforms, mitigation of operational and reputational risks, updated features and functionality from modern and mobile technology, opportunities to redesign and streamline processes to exploit automation and productivity enhancements.
- FY 20 administrative budget includes close to $4 million in transitional resources for project management activities for the Big 5.
- Medium-term capital budget includes funding for technology and consulting components specific to each program and foundational IT elements; in FY 20, the initial capital budget allocation for the Big 5 has been set at $30 million, but additional resources may be required.
- Each program team is preparing a comprehensive business case and cost-benefit analysis to document performance indicators and quantify expected cost reductions and efficiency gains; savings resulting from the programs can be used to finance other priorities.

### Overall budget shifts and resource allocation
- Two main longer-term output trends between FY 12 and FY 19:
  - Country work shifted from lending toward bilateral surveillance; share of policy work declined; other outputs broadly unchanged.
  - The share of spending on internal support has grown, reflecting corporate modernization efforts and pressures on physical and IT security and other services.
- The FY 20 budget provides increased resources for country work ($13 million) and for internal support ($6.7 million), mostly through transitional funding.
- Within the flat structural budget, resources will be reallocated from internal support to country work and to IMF governance ($2.9 million net reallocation), and from policy advice and economic analysis to work on Fund policies (roughly $1.3 million net reallocation).
- Carry forward resources are currently projected at about $30 million (excluding OED and IEO).
- For FY 20, an upfront allocation of $25 million in transitional funds is planned (this is some $6 million higher than last year).
- Central contingency is $8 million.
- Reallocations within and across departments total $33 million in gross terms (close to 3 percent of total spending); about 30 percent of reallocations comes from operational efficiencies, streamlining and modernization, and savings from travel.
- Initial savings from implementing Streamlining and Modernization measures are estimated at $2.2 million.

### Gross administrative resource allocations (selected figures from Table 2)
- Gross expenditures FY 19 Est. Outturn: 1,175
- FY 20 Total (structural + transitional): 1,193
- Country engagement FY 19 Est. Outturn: 467; FY 20 Total: 480
- Policy advice and economic analysis FY 19 Est. Outturn: 166; FY 20 Total: 167
- Contributions to global stability FY 19 Est. Outturn: 230.3; FY 20 Total: 230.5
- Fund policies FY 19 Est. Outturn: 260.7; FY 20 Total: 273.0
- IMF governance FY 19 Est. Outturn: 118.0; FY 20 Total: 120.8
- Internal organization/support FY 19 Est. Outturn: 335.8; FY 20 Total: 340.0
- Contingency: 12 (FY 19 and FY 20)
- Receipts FY 19 Est. Outturn: (40); FY 20 Total: (38)
- Net expenditures FY 19 Est. Outturn: 1,135; FY 20 Total: 1,155
- Carry forward (upper limit) FY 19: 46; FY 20: 47
- Allocated up-front in budget process FY 19: 19; FY 20: 25
- Total available resources FY 19: 1,181; FY 20: 1,176

### Transitional resources and intended uses
- Upfront allocation of transitional resources for FY 20: $25 million.
- More than half of transitional resources are for country work, to support more intense engagement, implementation of the enhanced governance framework, and to provide bridge financing as EUR continues its structural downsizing.
- Approximately one third of transitional funds will support modernization projects, including the Big 5 and for the CCBR.
- Transitional needs for country engagement: $10.7 million to fund increased program work in AFR and WHD, enhanced bilateral surveillance in APD, EUR, and MCD, work on governance (FAD), and better integration of FSAPs and Article IVs (MCM). In CD, transitional resources are envisaged for SDG implementation (FAD), and training and RBM oversight and development (FAD and ICD). This compares to $7.7 million provided in FY 19.

### Country engagement / country work (overview and shifts)
- Engagement with member countries accounts for half of total spending.
- Bilateral surveillance culminates in the Article IV consultation; fiscal space and macro-structural issues are generally expected to be covered in surveillance, with coverage of gender, climate, and inequality based on macro-criticality. No new resources requested for work on gender, climate or inequality issues in FY 20.
- Spending on FSAPs fluctuates due to the cycle of mandatory FSAPs for systemically important financial jurisdictions.
- Departments forecast an increase in program cases for FY 20 relative to FY 19.
- All members are eligible to receive CD; the vast majority is focused on low and middle-income members. The Fund limits Fund-financed CD to advanced economies to avoid crowding out CD to countries that could not otherwise afford it.
- Two policy modifications for FY2020 (Working Group on Cost-Recovery for Externally Financed Activities):
  - Introduction of a minimum threshold for charging for TA in eligible countries.
  - Determination that the top two deciles of countries ranked by GNI per capita (using World Bank data) was a better measure of capacity to pay than the WEO classification of Advanced Economies. The policy does not apply to crisis situations where no other source of funding is available.

### Financial surveillance (Box 2) — resource focus and changes
- Spending on FS is estimated at around $40 million:
  - (i) Direct spending on MCM for GFSR and analysis of vulnerabilities and imbalances: around $10 million.
  - (ii) Within bilateral surveillance: $30 million (contrasts to around $200 million in direct spending on overall bilateral surveillance).
- FY 20 allocation to MCM to enhance bilateral FS: $1.7 million (5½ percent increase).
- Savings from implementation of modernization measures (GFSR streamlining): $0.9 million.
- Financial Sector Stability Review (FSSR) diagnostics: around five diagnostics each year; about $1.5 million in FY 19. In FY 20, projected FSSR spending increases to $1.8 million (22 percent increase).
- MCM is establishing a Monetary Modeling Unit expected to consist of 6.5 FTE positions (one contractual); funded mostly through reallocation and more cost-effective travel by MCM, together with one additional FTE initially financed with transitional funds.
- Further consideration of resource increases for FS deferred until CSR and FSAP reviews are completed in 2020.

*International Monetary Fund — FY2020–FY2022 Medium-Term Budget (excerpt: Section 3 and related boxes and tables).*

### Box 3. Spending on Fragile and Conflict States

### Box 3. Spending on Fragile and Conflict States

### Spending overview
- Spending on fragile states has averaged around $96 million per year in real terms since FY 15 (10 percent of total direct spending).
- Over 40 percent of spending for fragile states is CD, including external financing.
- The set of over 40 countries designated as fragile is diverse and includes small islands, high security risk locations, and surveillance and program countries.
- Spending varies widely across fragile states:
  - Some countries with little engagement due to security risks receive below $200,000 per year.
  - Countries with intense engagement receive several million dollars per year.

### FY 19–FY 20 developments and projections
- In FY 20, increased resources for fragile states could come from:
  - An internal reallocation of existing departmental resources.
  - Net new resources provided to departments.
- Budget discussions indicate country work on fragile states will increase by $1.2 million, mostly for AFR countries.
- FAD plans to shift six fiscal economists to LICs and fragile states from other countries.
- Based on the outturn so far, spending on fragile states outside of CD is expected to increase by 8 percent in FY 19, on a base of around $59 million.
- If spent as planned, FY 20 would see an additional rise of 2 percent in real terms.
- CD to fragile states is a priority and should also increase.

### Capacity development context (as related in the Box)
- CD constitutes a substantial share of spending on fragile states (over 40 percent including external financing).
- Given CD is a priority for fragile states, increases in CD spending for these countries are expected alongside the noted increases in non-CD spending.

*Box 3. Spending on Fragile and Conflict States.*

### Box 5. The Board Work Program and Resource Allocation

### Box 5. The Board Work Program and Resource Allocation

### Board Work Program (BWP) — scope and process
- The strategic planning cycle is updated twice a year as the GPA and the IMFC Communiqué (issued during the Spring/Annual Meetings) are translated into a Board Work Program that covers the subsequent twelve-month period.
- The BWP covers non-country items: economic analysis to support policy advice; work on Fund policies; multilateral surveillance products (flagships, the External Sector Report, and REOs); IMF governance; IMF finances; and operational/administrative items (HR issues, risk, budget).
- Internally, BWP priorities feed into Management’s Key Goals and the Accountability Frameworks that set departmental objectives and shape budget priorities.

### Costs and estimated resource footprint of the BWP
- Since 2016, staff have been costing non-recurrent policy and administrative items of the BWP; in 2018 this was broadened to include recurring items (flagships and REOs costs already captured in ACES).
- In the Fall 2018 BWP, the estimated cost of non-recurrent items was 72 FTEs, or roughly $23 million.
- Together with the cost of items recurring annually or more frequently, the total cost of the BWP is estimated at around $68 million.
- The $68 million represents around 30 percent of non-country work.

### Specific BWP-related budget proposals and funded workstreams
- $2.4 million to support implementation of the recently adopted Framework for Enhanced Engagement on Governance, mainly to functional departments for a structured assessment process and area departments’ support.
- $1.8 million for work on the Comprehensive Surveillance Review which will span BWPs.
- $0.3 million for follow-up to the recent Review of AML/CFT.
- $0.5 million to develop the integrated policy framework.

### Influence of the BWP on resource allocation
- The BWP influences allocation through leads and lags: policy reviews may require extensive analytical or exploratory work ahead of Board discussion and may span several BWPs; follow-up work can stretch over several years.
- The budget proposal includes funding for several BWP-related workstreams (see amounts listed above).

### Contributions to Global Stability — summary of FY 20 adjustments
- Net Structural: No change.
- Demands: Demands of $0.4 million, including for work on trade (SPR).
- Savings: Savings of $0.4 million with the completion of some policy work (e.g., on SDGs).
- Transitional needs: $0.5 million for support to the G-7 and G-20 presidencies (SPR), and work on trade (LEG). Overall, this compares to $0.3 million provided in FY 19.

### Fund Policies — overview and FY 20 shifts
- Fund policy work includes mandated regular policy reviews on multi-year cycles and topical policy issues reflected in the BWP; FIN, LEG and SPR undertake most policy work.
- Net Structural: Net structural needs increase by $1.3 million (0.2 percent) in FY 20.
- Demands: Funding of $7.2 million for Fund policy reviews in surveillance and debt policy (e.g., the CSR, debt limits policy), and follow-up work such as on the enhanced governance framework and on natural disasters.
- Savings: Savings of $5.9 million from mostly completed analysis required for the reviews of debt policy (MAC DSF), conditionality, and LIC facilities.
- Transitional needs: $0.9 million to fund work on debt policy (restructuring cases, including a database, and data transparency) and updating the policy on small and fragile states. Overall, this compares to $0.7 million provided in FY 19.

### IMF Governance — overview and FY 20 shifts
- Governance work supports the Board of Governors, the Executive Board, Management, and internal functions (risk management, internal audit); it covers quota and voice.
- Net Structural: $0.6 million (increase of 0.5 percent) in FY 20.
- Structural demands: $0.8 million for operations of the Annual and Spring Meetings.
- Savings: $0.4 million from the work on quota and voice, following intense analytical work in FY 19.
- Transitional needs: $0.8 million to supplement structural resources for the Annual and Spring Meetings.

### Internal Support (Internal Organization in BWP) — pressures, modernization, and FY 20 adjustments
- Pressures: modernization (data, knowledge and risk management), cyber security defenses, staff and building safety, increased demand for creative solutions and language services, and HQ1 Renewal-related needs.
- Net Structural: Net savings of $2.9 million for FY 20.
- Structural needs include higher spending on information security ($1.5 million) and revenue reductions from the recently expired World Bank lease in HQ2, and reduced publications income data due to digitalization (combined $1.6 million).
- Savings identified:
  - $4.0 million from more cost-effective IT support delivery, including transitioning to a managed service model for IT infrastructure ($2.1 million) and implementing a revised strategy for sourcing IT providers ($1.9 million).
  - $0.4 million from rationalization of translation volume and other streamlining initiatives.
  - Shifting acquisition cost of the Fund’s fleet to the capital budget will free up $1 million in the administrative budget.
- Transitional needs: $9.5 million (around half to support the CCBR and 1HR), with $1.8 million for project coordination and change management (digital workplace and iData) and other supporting services (e.g., iLab and internal justice offices). Overall, this compares to $8.5 million provided in FY 19.

### Departmental budget and FTE adjustments — trends and FY 20 highlights
- Trends: Resources reallocated over time away from area departments to non-CD functional departments after the global financial crisis; more recently shifts to support departments for physical and IT security, and economic data and knowledge management initiatives.
- FY 20 reverses the recent trend slightly: net structural reduction in support departments (mostly due to TransformIT savings) and net structural increase to area and functional departments.
- Central funding adjustments: $4.5 million of central savings/reallocations fund net structural increases (IT cost recovery from donor-funded CD, holding travel budget constant in nominal terms, U.S. Tax Reform effects on personnel costs, and moving vehicle acquisition to capital budget).
- All departments receive transitional funds; roughly one-third each provided to area and support departments.

Key departmental highlights (selected figures from Table 3 and Table 4):
- Total Departments/offices, FY 19 Approved Budget: 1,012.1 (Millions of FY 19 U.S. dollars) with Transitional Resources of 19.3 and Net Structural Increase 2.7; Transitional Resources provided: 24.9.
- Total (including OED, IEO, others and Other): Total 1,135.2 (FY 19 Approved Budget) with Transitional Resources 19.3, New Structural Needs 33.0, Structural Savings & Reallocations 33.0, Transitional Resources 25.4.
- FTE totals (Table 4): FY 19 Approved Budget total 2,868 FTEs; Structural Adjustments 9; Total FY 19 2,878; FY 20 Proposed Transitional 31; FY 20 Proposed 44 (full-time equivalents, excluding donor funding).
- Area departments FY 19 Approved Budget: 785 (FTEs); FY 20 Proposed incremental FTEs: 12 structural, 18 transitional.
- Functional CD departments FY 19 Approved Budget: 717 (FTEs); FY 20 Proposed incremental FTEs: 10 structural, 8 transitional.
- Support departments FY 19 Approved Budget: 510 (FTEs); FY 20 Proposed incremental FTEs: 3 structural, 7 transitional.

### Budget input structure and FY 20 administrative envelope (selected figures)
- The flat real budget is translated into a nominal budget using the Global External Deflator (GED): personnel component 70 percent (Board approved compensation adjustment of 2.7 percent), non-personnel component 30 percent (tied to projected U.S. CPI).
- Net administrative budget (in FY 19 U.S. dollars): FY 19 Approved Budget 1,135; FY 19 Transitional demands 1,154; FY 20 Proposed Net administrative budget 1,158; FY 20 Proposed with transitional demands 1,184.
- Total Gross (nominal terms): FY 19 Approved 1,371; FY 20 Proposed 1,397; FY 20 with transitional demands 1,444.
- Fund-financed Gross administrative budget: FY 19 Approved 1,175; FY 20 Proposed 1,194; Fund-financed Gross with transitional demands 1,223.
- Personnel (Fund-financed): FY 19 Approved 870; FY 20 Proposed 828; with transitional demands 941.
- Travel (Fund-financed): FY 19 Approved 87; FY 20 Proposed 88; with transitional demands 118.
- Buildings and other expenses (Fund-financed): FY 19 Approved 205; FY 20 Proposed 121; with transitional demands 216.
- Receipts: -40 (FY 19 Approved) and -39 (FY 20 Proposed).

### FY 20–22 Capital Budget — overview and selected facility and IT investments
- The proposed capital budget appropriation for FY 20 is about $15 million (21 percent) higher than assumed in the FY 19–21 Medium-Term Budget.
- Table 6 medium-term capital totals (Millions of U.S. dollars): Total FY 19 Approved 71; FY 20 Proposed 86; FY 21 Estimated 96; FY 22 Estimated 82.
- Building Facilities: FY 19 Approved 36; FY 20 Proposed 41; FY 21 Estimated 49; FY 22 Estimated 33.
- Information Technology: FY 19 Approved 36; FY 20 Proposed 45; FY 21 Estimated 47; FY 22 Estimated 48.
- Of the IT budget, Big 5 programs & prerequisites: FY 19 Approved 26; FY 20 Proposed 30; FY 21 Estimated 31; FY 22 Estimated 16.
- Facilities capital highlights:
  - $16 million to reconfigure space in HQ2 following HQ1 Renewal, decommission the HQ2 data center and reclaim the space, improve visitor entrances and way-finding, enhance the HQ1 Atrium (completion of the digital wall), and clean the exterior façade of HQ1.
  - $5 million for enhancements to HQ security to replace aging blast protection film on HQ1 windows and conduct feasibility studies for bollards (bollard installation currently estimated at $9 million in FY 21).
  - $16 million for replacement of furniture, audio-visual and other systems that have reached end-of-life.
  - Starting in FY 20, $1.2 million for regular replacement cost of the Fund’s fleet of around 140 vehicles in field offices and at HQ, including armoring where necessitated by security conditions.
- Medium-term facilities capital needs:
  - Outer years include approximately $20 million for replacement of aging HQ1 building systems (mainly chillers, electrical substations, backup generator) not included in HQ1 Renewal.
  - The long-term facilities capital plan was updated to include an additional $36 million for HQ1 building systems replacement needs beyond amounts included for FY 20–22.
- The Big 5 governance structure has been established; business cases and cost-benefit analyses will be presented to the Board as they become available, and the Board will be kept informed of implementation progress.

*Source: OBP estimates, ACES and Fall 2018 BWP; Office of Budget and Planning.*

### Appendix VII provides the updated long-term plans for both facilities and IT infrastructure.

### ppea2019009 - Appendix VII provides the updated long-term plans for both facilities and IT infrastructure

### Information Technology capital budget and priorities
- Proposed IT capital budget appropriation for FY 20: $45 million (which is $8 million higher than what was assumed in last year’s budget paper).
- Two-thirds of the proposed FY 20 IT capital budget is to support modernization of systems and work practices as part of the Big 5, with a large portion expected to support implementation of the 1HR system that began in FY 19.
- Remaining FY 20 IT capital aims: improve information security, replace end-of-life infrastructure, and prepare for replacement of other legacy systems.
- From the FY 20 IT capital envelope, pre-requisite projects (identity access management, cloud development and integration platforms) will require about 3½ million to enable migration to the cloud and provide integration, data management, and security controls.

### Big 5 program governance and implementation process
- Governance structure established to ensure accountability, budget/schedule adherence, and risk management:
  - Each program has a Department Director as Program Sponsor accountable to Management (the Chief Administrative Officer (CAO)/DMD) and a program management team led by an experienced senior staff member with subject matter experts and external consultants.
  - A Program Steering Committee (SC) exists for each program, comprising Directors of impacted departments, the Chief Information Office (CIO), and the Director of the Office of Budget and Planning (OBP).
  - A corporate Program Management Office (PMO) provides independent oversight, best practice project management guidance (risk/budget management, scope/change control, schedule tracking, dependency management, governance), participates in operational meetings and SC activities, and links programs to Fund Management via the Committee on Business and Technology (CBIT) chaired by the CAO/DMD.
  - A Change Management Network led by SPR emphasizes change management and communication.
  - Monthly progress reporting to CBIT and a PMO-managed risk register are in place to identify and mitigate budget, schedule, and scope risks early.

- Implementation steps and decision points:
  - Pre-implementation funding allocated after CBIT approval of business need for requirements development, process redesign, market analysis, and implementation partner selection.
  - Program teams finalize the Cost-Benefit Analysis (CBA) quantifying all costs and benefits (including IT cost savings and productivity gains) as the basis for return on investment and final investment decisions.
  - Program Sponsors present CBA and finalized business case for SC approval before seeking CBIT approval of implementation funding.
  - Departmental commitments to stated savings required upfront; savings capture plans to be developed with OBP and, where needed, HRD.

### Status of each Big 5 program (high-level)
- 1HR:
  - Most advanced of the Big 5.
  - Business process re-engineering completed in mid-2018.
  - Software platform selection completed and implementation has recently started.
  - 1HR CBA is being finalized; CBA and finalized business case expected to be presented to the Board in the first quarter of FY 20.
- CD Management and Administration Program (CDMAP):
  - Scoping phase finalized; in pre-implementation phase including solution selection.
  - Implementation partner selection to follow; CBA work proceeding in parallel.
  - Board presentation could occur in the second or third quarter of FY 20.
- Integrated Digital Workplace (IDW):
  - In planning and design phases, reviewing work processes for country and other workstreams.
  - Strategy development, software solution selection, and implementation support selection will provide basis for CBA; timeline will take more time.
- Knowledge Management Program (KM):
  - Implementing supporting tools: enhanced Knowledge Exchange, auto-tagging of documents, upgrading enterprise search tool.
  - Planning and system solution selection underway for new document management system; overall KM timeline not yet decided due to linkages to IDW.
- iDATA:
  - Requirements being redefined; initial software selection unsuccessful given Fund’s unique needs.
  - Work underway with developers and systems integrators and simplifying requirements; expected to take some time.

### Overall capital cost estimates and FY 20 appropriation rationale
- Estimated total multi-year capital costs for Big 5 (based on current estimates): in the range of $92-110 million, including $36 million allocated through FY 19.
- Multi-year capital cost of pre-requisites estimated at around $8 million, of which close to $3 million has been allocated through FY 19.
- Considering institutional delivery capacity, a prudent IT capital budget appropriation for Big 5 and pre-requisites for FY 20 is $30 million.
- Note: If planning and design phases progress more quickly, FY 20 capital resource needs could increase and the trade-off between delaying implementation and seeking a supplemental appropriation must be weighed.

### Other IT funding needs (FY 20)
- Critical IT security-related projects: around $4½ million (to strengthen privileged access management and replace an obsolete system); includes funding for relocation of the Business Continuity Center (BCC).
- Other priority needs: $4½ million (preparatory work on legacy systems such as IMF.org platform and member banking system, a Big Data platform, improvements to donor portal).
- Life-cycle infrastructure replacements: $6 million (lower than FY 19–21 MTB due to longer mobile device life expectancies and lower storage needs from cloud migration).

### Medium-term IT outlook
- Elevated medium-term IT capital needs expected due to continued Big 5 funding and funding for other critical legacy systems reaching end of life (member banking, administrative financial, travel management systems).
- These projects aim to implement best-in-class IT solutions, streamline processes, and identify efficiencies to provide adequate return on investment.
- Migration to cloud-based solutions should eventually lead to lower capital needs because cloud platforms remain up-to-date and avoid periodic costly upgrades.

### Risks to the budget and mitigation
- Near-term risks and reduced budgetary buffers: higher budget utilization and increase in upfront allocation of transitional funds in FY 20 reduce ability to absorb shocks; main near-term risks include unforeseen demand for Fund programs, shocks related to price factors (travel, data), and information security incidents.
  - Near-term mitigation: reprioritization, temporary rise in overtime, departmental contingency measures, and central contingency; persistent shocks could require increasing the budget envelope.
- Medium-term risks from modernization:
  - Uncertainty over scope, phasing, and cost of Big 5 initiatives; implementation requires administrative staff time.
  - Mitigations: detailed project plans, PMO oversight, robust CBAs, regular monitoring, upfront commitments for savings to be returned to center for reallocation.
- Donor financing for Capacity Development:
  - Funding mobilized on a rolling five-year horizon; based on an indicative annual breakdown, 67 percent of the five-year fundraising target has been committed by donors, and 75 percent of FY 20 funding goals secured.
  - Staff view financing risks for donor financed activities as manageable; ICD efforts to mitigate external funding risks continue.
- Specific risk items and mitigations (from Risk Preparedness Matrix):
  - Increased demand for Fund programs: reallocation, increased overtime, contingency use, increased funding as last resort.
  - Shortfalls in donor funding: careful fundraising planning, alignment with Fund priorities via CCB.
  - Price increases (travel, data): internal reprioritization, central contingency, identification of offsetting savings; STA-led working group to review budget formulation for commercial data.
  - Information security breach: use of central contingency and ongoing efforts to reduce information security risks.
  - Modernization projects costlier/longer than expected: robust business cases, regular monitoring, upfront savings commitments.
  - Modernization efforts do not yield expected efficiencies: seek institutional consensus, emphasize change management, pursue further modernization opportunities.

### FY 20 summary appropriations and capital budget decisions
- Proposed net administrative budget totals and components (Millions of U.S. dollars):
  - Net administrative budget total: 1,158.4
  - Other: 1,076.6
  - OED: 75.3
  - IEO: 6.4
- Receipts: 238.9 (Other: 237.6; OED: 1.4; IEO: 0.0)
- FY 19 carry forward (upper limit): 46.9 (Other: 31.5; OED: 14.8; IEO: 0.6)
- Total gross expenditures (limit): 1,444.2 (Other: 1,345.6; OED: 91.5; IEO: 7.1)
- Capital budget total: 85.8
  - Information Technology: 45.0
  - Building facilities: 40.8
- Memorandum: FY 19 Net administrative budget: 1,135.1 (Other: 1,052.6; OED: 76.2; IEO: 6.4)
- Carry forward, upper limit (in percent): 3.0 (Other), 20.0 (OED), 10.0 (IEO)

- Proposed Decisions (high-level):
  - Decision No. 1: Approve net administrative appropriations for FY 2020 totaling US$1,158.4 million with sub-limits (OED up to US$75.3 million; IEO up to US$6.4 million; other up to US$1,076.6 million). Authorize carry forward of unspent FY 2019 net administrative expenditures up to US$46.9 million with sub-limits.
  - Approve a limit on gross administrative expenditures in FY 2020 of US$1,444.2 million with sub-limits.
  - Decision No. 2: Approve capital budget appropriations for FY 2020 totaling US$85.8 million, applied as: (i) Information Technology: US$45.0 million; (ii) Building Facilities: US$40.8 million.

*Source: Appendix VII, ppea2019009*

### Appendix I. Key Budget Concepts and Deflator

### Appendix I. Key Budget Concepts and Deflator

### Financial year
- Financial year (t): May 1(t-1) to April 30(t)  
- Example: FY 19 = May 1, 2018 to April 30, 2019

### Administrative budget and Total Available Resources
- Administrative budget identity:
  - Gross (total spending envelope)
  - (minus) Receipts (donor funding + revenue)
  - = Net (spending that needs funding)
- Total Available Resources = Net + Carry Forward

### Carry forward (CF)
- Definition: The right to spend budget allocations beyond the period for which budgetary authority is normally granted (12 months).
- CF caps by unit: 3 percent of the net administrative budget for staff, 5 percent for IEO, and 20 percent for OED.
- Operational rule:
  - CF_t = min (U_t, x B_t)
  - Where:
    - U_t = underspend in current FY (B_t + CF_{t-1} – E_t)
    - B_t = net administrative budget in current FY
    - CF_{t-1} = carry forward from previous FY
    - E_t = net expenditures in current FY
    - x = ratio limit of CF (3, 5, or 20%)

### Global external deflator
- Price index applied to administrative budget (formulated in real terms) to obtain nominal budget.
- Two components:
  - Personnel component (70 percent) — Board approved structure adjustment for Fund salaries; determined exogenously as the outcome of the Fund’s rules-based compensation system.
  - Non-personnel component (30 percent) — based on an index reflecting travel, facilities, and IT; measured by the projected U.S. CPI in the most recently published World Economic Outlook (WEO).

### Capital budget
- Purpose: finance one-off investments in information technology, building improvements and repairs, and other fixed assets.
- Availability: capital budgets are available for a period of three years, after which unspent appropriations lapse (except noted exceptions).
- Inclusion criteria (project is included in the capital budget if it is for):
  - the acquisition of building or IT equipment;
  - construction, major renovation, or repairs;
  - major IT software development or infrastructure projects.

### FY 19 Administrative Budget — key figures and composition
- FY 19 Gross/Receipts/Net (Millions USD):
  - Gross Budget: 1,371
  - Receipts: 1,135
  - Net Budget: 236
- Composition of gross spending (Including donor-financed capacity development) — (Millions USD / categories as presented):
  - Personnel: 1,009
  - Travel: 135
  - Building and Other Expenses: 215
  - Contingencies: 12
  - OED: 76
  - IEO: 6
  - All Others: 1,289

### Projected FY 19 outturn — strategic allocations and shifts
- Upfront/transitional and reallocations:
  - Upfront allocation of transitional funding: $19 million
  - Reallocation efforts of about $25 million (2.5 percent of the net budget)
- Direction of spending:
  - Projected shift toward country work and away from internal support.
  - Increased spending on bilateral surveillance, non-financial instruments, FSAPs, and monetary and financial policy analysis (examples: central bank digital currency, Bali Fintech Agenda).
- Budget utilization and workload indicators:
  - Under a flat real budget since FY 12, budget utilization has steadily increased.
  - Average Fund-wide overtime rate has remained at around 11 percent and the median rate at about 6 percent.
  - The average Fund-wide staff vacancy rate has continued to decline and is projected to end the year just below zero percent.
  - Overtime: uncompensated overtime rates remain constant; all departments, except for one, are below the 15 percent threshold.
- Personnel and staffing:
  - Personnel spending is projected to slightly exceed the structural budget.
  - Departments projected to end year with an average vacancy rate of just below zero percent (aggregate: structural vacancies filled with some spillover into transitional positions).
  - The actual average salary is projected to be lower than the average mid-point salary in the FY 19 budget.
  - The annual merit envelope is capped at 1.9 percent of actual salaries of eligible staff.
  - Individual merit increases are tied to performance ratings and paid July 1 of the following year.

### Travel
- Utilization of the travel budget is projected to be around 90 percent.
- Cost per mile (international travel) rose from $0.37 to $0.38 in the first six months of the year.
- FY 19 budget included $6 million for travel to the Annual Meetings in Indonesia.
- Travel budget policy: travel budget will be held constant in nominal terms for FY 20.

### Buildings and other expenses; security
- Spending on buildings and other expenses is projected to be above the approved budget.
  - Drivers: HQ Guard services contract, utilities and leases, temporary vendor support for legacy data systems, increased contractual services (legal, audit, HR-related initiatives).
- Table 3 highlights (Millions of U.S. dollars):
  - Total Buildings and other Expenditures: Budget 209 (FY 18), Outturn 226 (FY 18), Budget FY 19 215, Projected Outturn FY 19 233
  - Building occupancy, Information technology, Contractual services, Subscriptions and printing, Communications, Supplies and equipment, Other — as categorized in the source.
- Security spending:
  - Overall projected security spending for FY 19: about $37 million.
  - Variability due to one-off and cyclical costs (evacuations, armored vehicles, improvements to systems or assets).
  - Increased IT security spending for admin access management and penetration testing; offset by lower Field and HQ security personnel spending and lower-than-planned field security alterations and evacuations.

### Receipts (FY 19 projected)
- Receipts (Millions of U.S. dollars, FY 19 Projected Outturn):
  - Total: 236
  - Externally-financed capacity development (direct cost only): 192 (projected outturn)
  - General receipts: 36 (projected outturn)
    - Administrative and trust fund management fees: 13
    - Publications income: 1
    - Fund-sponsored sharing agreements: 3
    - HQ lease: 2
    - Concordia: 3
    - Parking: 3
    - Group Life Insurance refund: 2 (refund of $2 million from the Group Life Insurance (GLI) Premium Stabilization Reserve)
- Externally funded receipts projected to grow by about 11 percent compared with FY 18, reflecting increased capacity development activities.
- Overall shortfall in general receipts projected due to lower publication sales and lower Concordia occupancy.

### Capital investments (FY 19 projections)
- Total capital spending projected for FY 19: $159 million.
- Breakdown (Millions of U.S. dollars):
  - Facilities — FY 19 Spending (Projected): 37
  - Information Technology — FY 19 Spending (Projected): 38
  - HQ1 Renewal — FY 19 Spending (Projected): 85
  - Total FY 19 Spending (Projected): 159
- HQ1 Renewal status:
  - On schedule with projected FY 19 spending of 85.
  - All public spaces open; office space through the 10th floor reoccupied; construction underway for remaining floors and ancillary projects.
  - Project expected to be completed by Fall 2019.
  - HQ1 Renewal approved funding availability exception: available until April 2025.
- After projected FY 19 spending of $159 million, remaining unspent appropriations from prior years are largely earmarked for completion of HQ1 Renewal and related projects.
- Approximately $6 million in earmarked capital funding for security enhancements will expire at the end of FY 19 due to additional time required for feasibility analysis.

*Source: Office of Budget and Planning, Corporate Services and Facilities Department, and IMF internal budget appendices as presented in the source content.*

### 2.      Reallocation to support new priorities. Even though the budget was flat in real terms between

### ppea2019009 - 2.      Reallocation to support new priorities. Even though the budget was flat in real terms between

### Reallocation to support new priorities
- Even though the budget was flat in real terms between FY 12 and FY 16, over 100 additional staff positions were created from non-personnel savings achieved through adjustments in benefits, not applying a deflator to travel budgets, the release of central margins, and efficiencies in departments.
- An additional 40 positions were funded by donors, helping to support the strong expansion in CD activities.
- New outputs introduced during this period included the External Sector Report and spillover work.
- The implementation of the Categories of Employment reform explains most of the rise in budgeted FTE positions during FY 16–18 by 120 staff positions, for work that was previously done by contractual employees.
- In FY 16, the budget included a package of cross-cutting streamlining measures of about $20 million to fund new demands such as better integrating macro-financial surveillance, fiscal space analysis, and enhanced macro-structural analysis as well as to begin work on new topics such as Fintech.

*The Board paper FY2017–FY2019 Medium-Term Budget provides additional details.*

### Thematic Categories (FTCs) and ACES mapping
- The budget document presents proposed resource allocation according to the Fund’s Thematic Categories (FTC) to better align the budget process with strategic planning (GPA and BWP).
- Previously, resource use by output area was based on the Fund’s Analytic Costing and Estimation System (ACES), which allocates gross administrative expenditures to five outputs: multilateral surveillance (MS), oversight of global systems (OGS), bilateral surveillance (BS), lending (L), and capacity development (CD).
- FTC work aims to improve knowledge management and establish a common corporate taxonomy; FTCs are still work in progress, with finalization expected in 2019.
- A preliminary mapping between ACES and FTCs is used in the paper and will likely be revised after FTC finalization.
- Notable changes in mapping:
  - Country work will combine bilateral surveillance, lending, and CD activities (while still being able to distinguish between them).
  - Policy advice and economic analysis will encompass most of MS (flagships, work on vulnerability and cross cutting analysis) and part of OGS (other monetary, financial and capital markets issues).
  - Contributions to Global Stability will include work with other international bodies (G7, G20, G24, Financial Stability Board, WB, WTO).
  - Fund policies will form a separate category (remainder of OGS).
  - IMF governance will encompass the work of the IMFC, Executive Board, SEC, and management.
  - General outreach activities, currently in MS in ACES, would move into Internal Support/Organization.

### Time reporting system and ACES update
- Staff have begun work on a new time reporting system that integrates the FTCs and allows for greater granularity, underpinned by more modern technology and connected more directly with other workflows.
- This is part of 1HR implementation, is a complicated project that will take some time, and will be followed by work on updating ACES to reflect the FTCs while ensuring comparability with the current output structure.

### Implementation status of streamlining and modernization measures
- In mid-2018, Management endorsed a broad-based package of modernization and streamlining measures aimed at modernizing operations and work practices, leveraging opportunities for greater traction, and modernizing back-office functions.
- Many measures could be implemented immediately:
  - Country teams are taking a more focused and selective approach in bilateral surveillance coverage and communication (e.g., alternatives to Selected Issues Papers).
  - A more strategic internal review process supports prioritization.
  - Shorter and more reader-friendly flagships and REOs are enhancing impact.
  - Board Work Program showed 51 policy items in the Fall 2018 program, down from nearly 70 in the Spring 2018 program.
  - Steps to “go green”: eliminating statistical publications in print, reducing internal printing, aiming to eliminate all print subscriptions.
  - Better use of lower-cost telecoms (e.g., VOIP) and video options can contribute small savings.
- Measures requiring further analysis and consultation:
  - Addressed in Big 5 programs: CDMAP to improve CD-related resource management; 1HR and other HR reforms to streamline HR processes and related staffing.
  - Exploring modernization of non-CD resource management (e.g., the budget function) and increasing impact of engagement through large conferences and management outreach.
  - Back-office assessment of relocating, outsourcing, and/or automating processes.
  - Robotic process automation (RPA) pilots planned in FIN and ICD to assess potential savings from automating routine tasks (e.g., processing invoices and purchase orders); other support departments considering applications.
- Expected savings and investments:
  - For FY 20, savings of about $2.2 million are expected from these measures.
  - Roughly half of these savings stem from streamlined multilateral surveillance (GFSR and REOs); about a quarter relate to publications, printing, and other such measures; the remainder stems from streamlining Board engagement and SIPs.
  - Over the longer term, reforms related to support services could yield larger savings, but significant upfront investments in staff resources and systems will likely be needed; these needs are reflected in the higher capital budget proposal for the year.

### Long-Term Capital Investment Plan — facilities and IT
- Long-term facilities capital plan (LTP) covers replacement of equipment, critical building systems and major renovations for HQ1, HQ2 and Concordia; informed by third-party Facilities Condition Assessments (FCA) conducted every three to five years.
- Updated LTP is based on a 2018 FCA which was campus-wide, except assets inaccessible due to HQ1 construction.
- Current projections indicate a higher level of investment in the first few years, mainly due to the inclusion of $36 million for projects to replace or renovate certain HQ1 assets (mainly cooling and electrical systems) that are now reaching end of life.
- Spikes in FY 25–26 mark when HQ2 reaches 20 years and renovations are anticipated; timing subject to uncertainty given higher occupancy in HQ2 during HQ1 renewal which can shorten expected life of building systems and other assets.
- IT infrastructure long-term plan covers networks, servers and storage, and end-user devices:
  - Updated LTP indicates continued smoothing of expenditure needs, where there used to be periodic spikes, and an overall reduction in later years due to migrations to cloud platforms.
  - End-of-life replacement assumptions for personal computers and laptops: with transition to Office 365 this dependency has been eliminated; beginning with a portion of the inventory in FY 21, laptops and PCs can be replaced on a rolling cycle, smoothing investments.
  - The plan reflects a reduction in cost of network, server and storage equipment resulting from migration to cloud platforms; some cost may shift to the administrative budget as higher annual licensing and subscription fees to be quantified in cost-benefit analyses.
  - Purchase of mobile devices shows a steady trend in the long-term; useful life for current fleet has been longer than anticipated and planned refresh postponed until FY 21.

*Source: FY2020–FY2022 MEDIUM-TERM BUDGET (excerpts provided).*

### Appendix VIII.  Big 5 Program Objectives, Timelines, and

### Appendix VIII.  Big 5 Program Objectives, Timelines, and Governance

### 1HR—A Transformation of The Fund’s Human Resource (HR) Processes and Systems
- Context:
  - The business processes that support the Fund’s HR function are out of date and increasingly manually intensive and inefficient.
  - The Fund’s technical HR environment is comprised of 25+ major systems (e.g., PeopleSoft, TalentPlus, Payroll, the Learning Portal, HRWeb) that are outdated, not well integrated, costly to maintain, and some are approaching the end of their useful life and will become ineligible for continued vendor support.
  - Legacy business practices have contributed to weak internal controls, increasing risks, costs, and potential for errors.
- Goals of the 1HR Program:
  - Modernize, simplify, and automate HR business processes.
  - Increase agility and ability to adapt to future policy changes with ease.
  - Enhance the user experience by improving the administration and delivery of HR services through well-integrated, cloud-based, modern, and mobile-enabled portals.
  - Improve data accuracy while providing enhanced data analytics, to enable more value-added activities and improved resource management.
  - Improve controls and reduce operational and long-term risks.
  - Lower the total cost of ownership.
- Expected shifts in HR experience:
  - A client-focused operation with simplified processes, embedded controls, and clear accountabilities.
  - An improved user experience based on redesigned HR business processes and practices.
  - Managers being fully supported in their roles with accurate, intuitive, and actionable data.
  - Data-driven HR decisions delivered in real-time with information that is accurate and can be easily understood and shared.
  - Mobile, modern, and engaging HR experiences.
- Governance:
  - Cross-departmental team with representatives from HRD/FIN/ITD/OBP/SEC; consultants hired for external assistance.
  - Oversight by the Director of HRD as Program Sponsor, and by the Chief Administrative Officer/DMD as Executive Sponsor.
- Timeline:
  - Multi-year initiative.
  - First phase: streamlining business processes, agnostic of the software to be used (Fall 2017 – Summer 2018).
  - Selection of the software platforms (Summer 2018), and Implementation Partner was selected (Fall 2018).
  - Implementation began in earnest in January 2019 and the new system will be released in phases, scheduled for Spring 2020 and Fall 2020.

### Capacity Development Management and Administration Program (CDMAP)
- Context:
  - CD activities have grown roughly 10 percent annually since 2011, driven by an average annual increase of 16 percent in external funding, and constitute some 30 percent of total Fund spending, of which more than half is externally financed.
  - Processes and systems to support CD budget, planning, and performance monitoring, as well as related reporting, have not kept pace with the large and complex portfolio.
  - Earlier related capital projects launched a consistent results-based management (RBM) framework, but Fund-wide processes and systems remain fragmented, difficult to use, often ad hoc and unsupported by the corporate IT framework, with ongoing gaps in availability, timeliness, and accuracy of CD administrative and performance data.
  - CDMAP was initiated in April 2018 to address these shortcomings.
- Goals of CDMAP:
  - Provide a comprehensive view of CD operations for staff across the Fund.
  - Support better and more efficient management and targeting of CD resources.
  - Reduce silos and enable more effective coordination between CD and surveillance and program work.
  - Allow informed strategic decision-making and reporting.
- Governance:
  - Cross-departmental steering committee formed with representatives from CD and Area Departments, ITD, SPR and OBP.
  - Oversight provided by the Director of ICD as Program Sponsor, and by the CAO/DMD as Program Executive.
  - A full time Program Manager appointed, supported by a small team in ICD, interdepartmental teams focused on specific workstreams, and the Fund’s corporate program management office.
  - Built on recommendations from a March 2018 OIA Advisory Review.
- Timeline:
  - Phase 1: “Scoping” completed in January 2019 with approval of the conceptual program framework.
  - Phase 2: “Bridging” currently underway focusing on contracting and pre-implementation preparations.
  - Phase 3: “Implementation” will be completed in stages with the final timeline currently under review.

### Integrated Digital Workplace (IDW)
- Context:
  - The Fund has a fragmented approach to business processes adversely affecting staff productivity and information exchange.
  - Fragmented platforms and poor information retrieval contribute to inefficiencies and loss of productivity.
  - IDW was initiated to provide all staff with a modern, personalized digital experience and consistent, automated workflow solutions to reduce inefficiencies and boost productivity.
  - The project will provide analytics and metadata enabling Management and Senior Staff to have a more strategic and holistic view of the Fund’s direction and resource use.
- Goals of IDW:
  - Operational Efficiency:
    - Strengthening efficiency of workflows, including integrating IT systems and data platforms, and connecting knowledge and people.
    - Designing an agile platform that can easily adapt to future change.
  - Operational Productivity:
    - Improving knowledge sharing and access (when, how, and why staff need information), in collaboration with KMU.
    - Boosting staff collaboration across work streams.
    - Enabling Management and Senior Staff to have a more strategic and holistic view of the Fund’s direction and resource use.
  - The main gateway for the IDW is a cloud-based IT architecture.
- Governance:
  - Run by a full-time Program Manager, supported by a small team from ITD, SPR and the PMO.
  - Oversight by the Director of SPR as the Program Sponsor, and by the CAO/DMD as the Executive Sponsor.
  - Interdepartmental Steering Committee approves proposed scope, budget, and timeline.
  - External consultant hired to provide strategic advice and technical know-how.
  - Interdepartmental Advisory Group formed to provide regular insights, feedback, and advice.
- Timeline:
  - Expected to be a two-year initiative implemented using an incremental, collaborative, and inclusive approach.
  - Program started in May 2018 with a short planning phase (May through September 2018).
  - Followed by a scoping phase (November 2018 through August 2019).
  - Final phase is the implementation phase with a timeline to be determined.

### Knowledge Management Capital Program (KM)
- Context:
  - Without efficiency gains, it would be harder to undertake analysis requiring diverse information, to disseminate evolving macroeconomic policy guidance speedily, and to provide added value to country authorities.
  - KM program delivers modern systems to address fragmentation of Fund knowledge and difficulties in finding information.
  - Consists of four inter-related projects: Document Management and Knowledge Exchange (content management), Autocategorization (richer and more consistent tags and filters), and Enterprise Search (robust findability).
  - Successful implementation requires three supporting pillars: (i) strong governance and accountability framework with an efficient KM structure; (ii) changes in incentives and behavior regarding knowledge sharing; and (iii) well-crafted communications and training.
  - Support provided by KMU through a work program broader than capital projects and with inter-departmental support.
- Goals of KM Capital Portfolio:
  - Allow staff to take full advantage of the Fund’s rich experience, deploying cross-country knowledge across member countries and across workstreams, more effectively integrating capacity development, surveillance, and lending.
  - Reduce the cost of producing, packaging, and disseminating information for internal use and for the membership by repackaging internal online knowledge more easily and efficiently for external use.
  - Reduce time spent searching for information stored in documents, websites, or other platforms, or time spent identifying in-house expertise.
- Governance:
  - Cross-departmental steering committee with representatives from AFR, COM, ITD, OBP, and SPR, with clear terms of reference and decision-making processes.
  - Head of KMU is the Program Sponsor; each capital project supported by a Project Manager from ITD and the PMO.
- Timeline:
  - Strengthening Knowledge Exchange and Auto-categorization are under implementation.
  - Selection of the technology platform and implementation partners are pending for Document Management (DM) and Enterprise Search.
  - While the timeline for DM is under review, the full KM capital portfolio is expected to be integrated and come online in 2020.

### iDATA—Next Generation Economic Data Platform
- Context:
  - The Economic Outlook Suite (EcOS) was first developed for the WEO in 2008 and expanded over ten years to other cross-country data products (REOs, Common Surveillance Database (CSD), Fiscal Monitor, STA’s databases, etc.).
  - In 2009, the Economic Data Dissemination (EDD) system was developed as the Fund’s Free Data delivery and external data dissemination platform.
  - The software platform underpinning both EcOS and EDD is outdated and poses significant operational risks to the Fund’s data management operations and data dissemination.
- Goals of iDATA:
  - Implement a modern economic data lifecycle management platform in support of the Overarching Strategy on Data and Statistics—securing seamless access and sharing of high-quality data.
  - Replace the Fund’s current data management system and dissemination solution to mitigate operational risks and address functional deficiencies and operational pain points.
- Specific objectives:
  - Deliver a modern economic data lifecycle management platform to facilitate integration of data management and meet growing business needs for structured databases for multilateral surveillance and economic research.
  - Reduce operational and reputational risks by implementing an end-to-end business solution with robust application support.
  - Integrate with the Integrated Digital Workplace (IDW) by enabling IDW to automatically surface economic data in users’ dashboards.
- Governance:
  - Across-departmental steering committee with senior staff representatives from FAD, ITD, RES, SPR, STA, and an Area Department.
  - Oversight provided by the Directors of ITD and STA as Program Sponsors.
- Timeline:
  - Requirements are being redefined following an initial software selection process that proved unsuccessful.
  - The timeline will be clearer once this work has been completed.

*Source: Appendix VIII. Big 5 Program Objectives, Timelines, and Governance (excerpts).*

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_Source: https://www.imf.org/-/media/files/publications/pp/2019/ppea2019009.pdf_