## EXECUTIVE SUMMARY

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**Canonical URL:** [EXECUTIVE SUMMARY](https://www.imf.org/-/media/files/publications/pp/2019/ppea2019038.pdf)

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---

### INTRODUCTION
- Purpose: Consolidate guiding principles endorsed by the Executive Board with policies and practices within management authority for IMF capacity development (CD) activities; useful to IMF staff, Executive Directors and their staff, country authorities, and donors; reference for future reviews of IMF CD activities.
- Context and recent changes:
  - Marked rise in CD delivery to around one-third of the Fund’s total annual spending.
  - Sharp expansion of donor financing.
  - Increased recognition of integrating CD with Fund surveillance and lending operations.
  - Greater flexibility in delivery modalities and more explicit attention to results—improved outcomes in member countries.
- Evolution of focus:
  - Post-global financial crisis: ramped up CD to countries with financial arrangements to facilitate implementation of crisis-resolving measures.
  - Subsequent shift toward CD to strengthen policies and institutional frameworks to boost resilience to shocks.
  - Continued support for the 2030 Sustainable Development Goals (SDGs) by enhancing institutional and policy-making capacity, especially in low-income countries, fragile, and small states.
- Date: October 18, 2019

### MANDATE AND OBJECTIVES
- Legal basis:
  - IMF’s Articles of Agreement: Article V, Section 2(b) allows IMF to provide, upon request, “financial and technical services” consistent with Article I purposes.
  - Services are voluntary for both the member and the Fund.
  - Footnote: Fund CD services can also be provided to non-members and to international organizations, with the prior approval of the Executive Board.
- Main objective:
  - Help member countries build strong institutions and boost skills to formulate and implement sound macroeconomic and financial policies.
  - Deepen dialogue between Fund and member country experts on specialized macroeconomic and financial policy issues, complementing surveillance and Fund-supported programs.
  - Strong institutions and skilled officials promote economic stability and sustainable growth as envisaged in the Fund’s Articles of Agreement.

### SCOPE AND MODALITIES
- Dual focus of CD:
  - Strengthening institutional capacity: put in place or enhance effective institutions, legal frameworks, and policies to promote economic stability and growth; enable in-depth exchanges on policy design and implementation.
  - Building individual capability: strengthen skills of officials to analyze economic developments and formulate/manage effective macroeconomic and financial policies; enhances Fund dialogue and peer-to-peer learning.
  - Complementarity: institutional strengthening and skills development are often combined; synergies sought by combining delivery modalities.
- Core areas of Fund CD (will continue to account for the bulk of CD delivery):
  - Revenue administration, public financial management, macroeconomic statistics, financial supervision and regulation, macroeconomic frameworks, central bank operations, tax policy, and financial integrity.
  - All Fund CD should target high-impact activities.
- Demand-driven approach:
  - CD activities are driven by demand from member countries; planning and implementation require full involvement and buy-in of recipient countries.
  - Implementation of past recommendations and changes in country circumstances are inputs to decisions on additional CD.
  - Collaborative evaluation and monitoring can enhance country ownership.
- Integration with surveillance and programs:
  - As per the 2018 Review of the Fund’s Capacity Development Strategy (approved November 2018), CD activities should be integrated with policy dialogue under surveillance or Fund-supported programs.
  - Policy dialogue can identify areas where CD is most useful (examples: raising domestic revenue, adopting a more robust monetary policy framework, macroprudential measures).
  - CD can reveal capacity constraints relevant for assessing policy options and enrich Fund policy advice.
- Delivery and quality control:
  - The Fund delivers its own CD services in the form of advice and training and exercises quality control.
  - Footnote: The Fund neither funds other CD providers nor delegates delivery of CD services to independent contractors.
- Cooperation with other CD providers:
  - Coordination aims to avoid duplication and enhance complementarity given limited resources and focus on core expertise.
  - Steering Committee structures (for RCDCs and Thematic Funds) facilitate strategic dialogue and coordination.
  - Fund considers whether other providers are engaged in similar efforts when deciding on CD provision.

### CD GOVERNANCE AT THE FUND
- Roles:
  - Executive Board: strategic direction and oversight, including overall envelope for externally financed CD and size of CD relative to other outputs via (i) regular reviews and policy guidance; (ii) the budget process; (iii) risk management process.
  - Management: conducts operations related to CD activities and establishes CD policies in some areas in consultation with the Board.
- Executive Board engagement:
  - Five-year CD strategy reviews provide information on key features, implementation, and evaluations; Board sets strategic direction and decisions on policy changes.
  - Annual budget process provides Board information on CD outturns, planned CD financing, priorities and delivery.
  - Board has regular opportunity to discuss multi-year CD priorities and integration with Fund-wide priorities during budget formulation.
  - Staff periodically provide information and engage with the Board through informal briefings by CD and area departments.
  - Conclusions of Board reviews, this statement, and budget discussions provide multi-year top-level guidance.
  - Consistent with the Guidance Note for Surveillance under Article IV Consultation, CD activities are increasingly and systematically integrated into Article IV consultations and program reviews.
- Management and internal processes:
  - Management translates Board strategic direction and budget into procedures governing CD through an integrated Fund-wide process for setting priorities and budget formulation, including annual approval of medium-term CD priorities and a strategic summary of the medium-term Resource Allocation Plan (RAP).
  - Committee on Capacity Building (CCB), chaired by a Deputy Managing Director, is integral; reviews CD annually in light of demand and Fund priorities.
  - CCB monitors delivery against metrics (e.g., core topics, regions, country-groupings, growth areas) and sets areas targeted for growth for the coming three-year period.
  - CCB allocates space for externally financed CD to departments in keeping with CD priorities and the overall envelope set by the Board in the Medium-Term Budget.
  - CCB meets regularly to:
    - Review delivery against plans and results-based management (RBM) outcomes.
    - Consider CD evaluation results and set future evaluation agenda.
    - Review fundraising activities and set objectives.
    - Address other issues from Board reviews and experience.
  - Institute for Capacity Development (ICD) provides the CCB secretariat.
- Planning and delivery responsibilities:
  - Area departments, in consultation with CD departments, prepare medium-term regional strategy notes (RSNs) and, for heavy users, country strategy notes (CSNs).
  - Based on RSNs and CSNs, CD and area departments develop a medium-term RAP detailing delivery by region, country, funding source, and CD department.
  - CD departments are responsible for actual CD delivery (including through RCDCs) and CD quality control.

### PRIORITIZATION
- Need: Resources are insufficient to meet all country requests even with donor support; a framework based on country demand and Fund strategic priorities should guide allocation across regions, countries, topics, and time horizons.
- Objectives for prioritization:
  - Ability to mobilize quickly resources for short-term, crisis-related CD needs (“curative CD”).
  - Support building sound institutions to boost resilience to shocks (“preventive CD”).
  - Sustain developmental efforts to develop capacity in member countries, particularly low-income countries, fragile, and small states (“developmental CD”).
- Principles:
  - Board provides strategic direction and oversight on CD priorities (paragraph 13 reference).
  - Institutional-level decisions on size and composition of CD relative to other outputs are made through strategic planning and medium-term budget processes, with CCB guidance integrated into departmental accountability and budgets.
  - Country-level prioritization should reflect country demand and the country’s own CD strategy; area departments lead overall country engagement and establishment of CD priorities considering absorptive capacity.
  - Area departments, resident representatives, and RCDC directors/coordinators engage member countries on CD needs and convey demand information to CD departments; CD departments maintain frequent dialogue with member countries regarding CD needs.
- Annual process:
  - Annual CD prioritization exercise overseen by the CCB translates membership views, individual requests, and Board budget decisions into specific deliverables via RSNs, CSNs, and the RAP.

### DONOR PARTNERSHIPS AND FUNDING
- Funding sources:
  - CD activities are funded by both the Fund’s own resources and donor financing.
  - The Fund’s overall budget process considers Fund- and donor-financed CD together; Fund-financed CD amount derived from overall budget and competing demands.
- Benefits of donor partnerships:
  - Allow the Fund to scale up CD delivery to meet increasing demands, particularly in low-income and lower-middle-income countries.
  - Donors value the high quality and continuity of Fund CD and its consistency and complementarity with Fund surveillance and lending.
  - Partnerships promote accountability of the Fund for both resources and results and allow donors to integrate Fund CD with their own planning and resource allocation, increasing overall effectiveness.
- Limitations:
  - Internal and external financing are not perfect substitutes; external financing is influenced by donors’ preferences for particular countries, regions, topics, or vehicles.

### FINANCING PRINCIPLES AND GUIDANCE
- Board-approved principles guide decisions on using internal or donor financing for CD.
- Fund’s role:
  - Fund financing of CD should be considered in the following cases: (i) in countries or on topics where donor funding is not available, including program cases; (ii) when a quick reaction is required; or (iii) when Fund expertise in particular areas needs to be maintained.
- Donors’ role:
  - Donor financing of CD should be considered in the following cases: (i) when donor interests are consistent with Fund priorities and objectives; (ii) when sufficient space is available in the Fund’s budget to cover related indirect costs; and (iii) when sufficient space exists under the overall limit for externally financed CD expenditure set by the Board in the context of the Medium-Term Budget.
- Additionality:
  - Donor financing should result in additional delivery of CD to members.
- Charging and contributions:
  - The Fund does not charge recipient countries for delivery of CD services except for high-income countries (for CD that is not deemed critical and that costs above a minimum threshold).
  - In some cases, countries make voluntary contributions to finance CD services they receive from the Fund.
  - Depending on the circumstances, a high-income country may receive both Fund-financed CD and CD financed by its own contributions to the Fund.
- New donor-financed initiatives:
  - Subject to an interdepartmental review and management clearance process to ensure alignment with the Fund’s institutional objectives and internal budget constraints and to provide assurances to donors that the Fund will be ready to use such financing.
- External financing risks and trends:
  - Sustainability and fungibility of external financing is critical; related risks need to be closely monitored and managed.
  - The Fund has been moving toward greater flexibility of external financing through broader and more strategic partnerships, promotion of multi-partner and umbrella agreements, and securing financing upfront before carrying out CD activity.

### DELIVERY OF CD SERVICES AND QUALITY CONTROLS
- Modalities and program structure:
  - CD services are delivered at the request of Fund member countries through various modalities, normally as part of multi-year CD programs to an individual Fund member country or group of countries (provided either from headquarters or one of the Fund’s RCDCs).
  - Modalities include field assignment of experts for periods ranging from days to years; individual missions from headquarters; online, classroom, and customized training; peer-to-peer learning and technical workshops; and discussions at Fund headquarters or remotely from headquarters.
  - A close integration of all modalities of delivery should be sought when feasible.
- Delivery guidelines:
  - Fund CD activities, regardless of mode of delivery, are planned with the full involvement of recipient countries’ authorities.
  - Fund CD activities are subject to quality controls. Experts in the field have direct access to the wide expertise embedded in Fund staff. Their work is facilitated by strong quality control processes, including backstopping of experts and regular supervision by the relevant CD department and the review process.
  - Experts work in consultation with area departments to develop an understanding of countries’ circumstances and offer appropriate advice.
  - Fund CD is delivered by either staff or by external experts that are selected, contracted, and backstopped by the Fund. The Fund maintains a roster of experts with a proven track record and familiarity with international best practices in areas specific to the Fund’s CD activities.
  - The Fund retains full control on selection of CD experts and content of CD advice, regardless of mode of delivery or source of financing.
  - Fund CD represents advice or training of the highest quality, reflecting international best practices and complemented by the Fund’s analytical work; it is tailored to the country’s needs and reflective of its absorptive capacity and builds in a follow-up process to help ensure implementation and a sustainable impact.
- Modernization and agility:
  - Departments are building on existing strategies to move toward greater modernization and agility in CD delivery, including through RCDCs and continued experimentation with innovative technologies.
  - Staff are expected to use advances in information and communication technology, such as video conferences, online courses, webinars, mobile and cloud-based technology, and big data, to expand CD delivery efficiently and sustain interaction with member countries on CD needs and activities. These activities are expected to complement face-to-face CD.

### COORDINATION, COMMUNICATION, AND DISSEMINATION
- Internal coordination:
  - Effective internal consultation and information sharing on CD activities is critical to support the country-centered model of CD delivery.
  - The Fund is investing in better processes and information systems, including through the Digital Workplace, Knowledge Management Initiatives, and the CD Management and Administration Program (CDMAP) to strengthen access to data, documents and tools across departments and workstreams.
- Coordination with other CD providers:
  - Systematizing existing good practices on coordination with other CD providers, notably with the World Bank, regional development banks and key bilateral aid agencies, is critical to support efficiency gains, sustain impact, ensure consistency of policy advice, mitigate duplication, and better leverage resources and expertise.
- Benefits of dissemination:
  - Dissemination of CD information and related communication have several benefits: (i) the membership (and the public at large) gains from a better understanding of best practices and the Fund’s experience in the provision of CD services; (ii) coordination with donors and other CD providers is facilitated, which in turn eases the absorption of CD advice by countries and also prioritization of the Fund’s CD delivery; and (iii) governments, legislators, and taxpayers in donor countries can more easily account for the use of their funds.
  - Fund policy now provides for wider dissemination of CD information, combined with safeguarding confidential information and the candor of Fund advice, including through pursuing innovative approaches to raise awareness of the Fund’s CD work.
- Operational guidelines and consent rules:
  - The Staff Operational Guidelines on Dissemination of Technical Assistance Information spell out current procedures to enhance dissemination of CD information to various constituencies, including the recipient agency and other agencies within the recipient country, Executive Directors’ offices, Fund staff, World Bank staff, donors and other CD providers, as well as the general public.
  - Dissemination of final TA advice to Executive Directors’ offices (other than the Executive Director representing the CD recipient country) or to donors and other CD providers with legitimate interest requires consent of the TA recipient. This consent is obtained if the TA recipient explicitly provides it or if it does not object to dissemination within 60 days of the transmission of the final TA advice.
  - The current guidelines also stipulate that publication of TA reports is encouraged.

### MONITORING AND EVALUATION (M&E)
- Purpose and integration:
  - Monitoring and evaluation is used to review CD activities to ensure accountability; to assess their relevance, efficiency, effectiveness, and impact; and to distill lessons on how to strengthen future activities.
  - Regular reviews of CD content are expected to be an integral part of CD-delivering departments’ work processes.
  - All monitoring and evaluation activities should seek input from recipient authorities to ensure that their views are fully taken into account.
- RBM framework:
  - Staff should continue developing a systematic approach to monitoring and evaluation. One key component is the RBM framework, which aims to systematize the tracking of outcomes using indicators and is expected to play an increasingly larger role in monitoring and evaluation.
  - The RBM framework applies to all CD activities, whether internally or externally financed, and should assist in steering and managing projects, ensure that staff and authorities remain focused on goals, and lay the foundation for evaluation.
- Evaluation instruments and frameworks:
  - Evaluation relies on a number of different instruments including: (i) Fund-wide evaluations to assess overall policies and activities; (ii) departmental evaluations to assess the impact of CD activities; (iii) donor-mandated evaluations; and (iv) evaluations by the Fund’s Independent Evaluation Office (IEO).
  - Departmental and donor-mandated evaluations should apply the Fund’s Common Evaluation Framework (CEF), and evaluation results should be used to support learning and accountability.
- Fund-wide reviews and departmental/donor evaluations:
  - Fund-wide evaluations: The Fund conducts policy review of CD activities every five years. Such a review should have backward- and forward-looking components:
    - Backward-looking component: consider the prioritization, funding, delivery, and monitoring and evaluation of CD as set out in this statement.
    - Forward-looking component: provide the opportunity to outline reforms to increase the impact of CD, with emphasis on making CD more effective and efficient while building on its strengths.
  - Departmental evaluations: Departments undertake formal and informal evaluations guided by clear criteria for selection of relevant topics and, for project-based evaluations, the CEF. Focus may be on country cases or thematic areas. Techniques include surveys following CD activities and visits to countries that are large recipients of CD services. Evaluations may be conducted by staff and external subject-matter experts.
  - Donor-mandated evaluations: Evaluations of RCDCs and TFs are mandated and conducted by external evaluators usually midway through each arrangement’s five-year funding cycle. In addition, evaluations are conducted on other donor-financed projects.

*Source: IMF POLICIES AND PRACTICES ON CAPACITY DEVELOPMENT — Extracted from ppea2019038, October 18, 2019.*

### EXECUTIVE SUMMARY

### EXECUTIVE SUMMARY

### INTRODUCTION
- Purpose: Consolidate guiding principles endorsed by the Executive Board with policies and practices within management authority for IMF capacity development (CD) activities; useful to IMF staff, Executive Directors and their staff, country authorities, and donors; reference for future reviews of IMF CD activities.
- Context and recent changes:
  - Marked rise in CD delivery to around one-third of the Fund’s total annual spending.
  - Sharp expansion of donor financing.
  - Increased recognition of integrating CD with Fund surveillance and lending operations.
  - Greater flexibility in delivery modalities and more explicit attention to results—improved outcomes in member countries.
- Evolution of focus:
  - Post-global financial crisis: ramped up CD to countries with financial arrangements to facilitate implementation of crisis-resolving measures.
  - Subsequent shift toward CD to strengthen policies and institutional frameworks to boost resilience to shocks.
  - Continued support for the 2030 Sustainable Development Goals (SDGs) by enhancing institutional and policy-making capacity, especially in low-income countries, fragile, and small states.

*October 18, 2019*

### MANDATE AND OBJECTIVES
- Legal basis:
  - IMF’s Articles of Agreement: Article V, Section 2(b) allows IMF to provide, upon request, “financial and technical services” consistent with Article I purposes.
  - Services are voluntary for both the member and the Fund.
  - Footnote: Fund CD services can also be provided to non-members and to international organizations, with the prior approval of the Executive Board.
- Main objective:
  - Help member countries build strong institutions and boost skills to formulate and implement sound macroeconomic and financial policies.
  - Deepen dialogue between Fund and member country experts on specialized macroeconomic and financial policy issues, complementing surveillance and Fund-supported programs.
  - Strong institutions and skilled officials promote economic stability and sustainable growth as envisaged in the Fund’s Articles of Agreement.

### SCOPE AND MODALITIES
- Dual focus of CD:
  - Strengthening institutional capacity: put in place or enhance effective institutions, legal frameworks, and policies to promote economic stability and growth; enable in-depth exchanges on policy design and implementation.
  - Building individual capability: strengthen skills of officials to analyze economic developments and formulate/manage effective macroeconomic and financial policies; enhances Fund dialogue and peer-to-peer learning.
  - Complementarity: institutional strengthening and skills development are often combined; synergies sought by combining delivery modalities.
- Core areas of Fund CD (will continue to account for the bulk of CD delivery):
  - Revenue administration, public financial management, macroeconomic statistics, financial supervision and regulation, macroeconomic frameworks, central bank operations, tax policy, and financial integrity.
  - All Fund CD should target high-impact activities.
- Demand-driven approach:
  - CD activities are driven by demand from member countries; planning and implementation require full involvement and buy-in of recipient countries.
  - Implementation of past recommendations and changes in country circumstances are inputs to decisions on additional CD.
  - Collaborative evaluation and monitoring can enhance country ownership.
- Integration with surveillance and programs:
  - As per the 2018 Review of the Fund’s Capacity Development Strategy (approved November 2018), CD activities should be integrated with policy dialogue under surveillance or Fund-supported programs.
  - Policy dialogue can identify areas where CD is most useful (examples: raising domestic revenue, adopting a more robust monetary policy framework, macroprudential measures).
  - CD can reveal capacity constraints relevant for assessing policy options and enrich Fund policy advice.
- Delivery and quality control:
  - The Fund delivers its own CD services in the form of advice and training and exercises quality control.
  - Footnote: The Fund neither funds other CD providers nor delegates delivery of CD services to independent contractors.
- Cooperation with other CD providers:
  - Coordination aims to avoid duplication and enhance complementarity given limited resources and focus on core expertise.
  - Steering Committee structures (for RCDCs and Thematic Funds) facilitate strategic dialogue and coordination.
  - Fund considers whether other providers are engaged in similar efforts when deciding on CD provision.

### CD GOVERNANCE AT THE FUND
- Roles:
  - Executive Board: strategic direction and oversight, including overall envelope for externally financed CD and size of CD relative to other outputs via (i) regular reviews and policy guidance; (ii) the budget process; (iii) risk management process.
  - Management: conducts operations related to CD activities and establishes CD policies in some areas in consultation with the Board.
- Executive Board engagement:
  - Five-year CD strategy reviews provide information on key features, implementation, and evaluations; Board sets strategic direction and decisions on policy changes.
  - Annual budget process provides Board information on CD outturns, planned CD financing, priorities and delivery.
  - Board has regular opportunity to discuss multi-year CD priorities and integration with Fund-wide priorities during budget formulation.
  - Staff periodically provide information and engage with the Board through informal briefings by CD and area departments.
  - Conclusions of Board reviews, this statement, and budget discussions provide multi-year top-level guidance.
  - Consistent with the Guidance Note for Surveillance under Article IV Consultation, CD activities are increasingly and systematically integrated into Article IV consultations and program reviews.
- Management and internal processes:
  - Management translates Board strategic direction and budget into procedures governing CD through an integrated Fund-wide process for setting priorities and budget formulation, including annual approval of medium-term CD priorities and a strategic summary of the medium-term Resource Allocation Plan (RAP).
  - Committee on Capacity Building (CCB), chaired by a Deputy Managing Director, is integral; reviews CD annually in light of demand and Fund priorities.
  - CCB monitors delivery against metrics (e.g., core topics, regions, country-groupings, growth areas) and sets areas targeted for growth for the coming three-year period.
  - CCB allocates space for externally financed CD to departments in keeping with CD priorities and the overall envelope set by the Board in the Medium-Term Budget.
  - CCB meets regularly to:
    - Review delivery against plans and results-based management (RBM) outcomes.
    - Consider CD evaluation results and set future evaluation agenda.
    - Review fundraising activities and set objectives.
    - Address other issues from Board reviews and experience.
  - Institute for Capacity Development (ICD) provides the CCB secretariat.
- Planning and delivery responsibilities:
  - Area departments, in consultation with CD departments, prepare medium-term regional strategy notes (RSNs) and, for heavy users, country strategy notes (CSNs).
  - Based on RSNs and CSNs, CD and area departments develop a medium-term RAP detailing delivery by region, country, funding source, and CD department.
  - CD departments are responsible for actual CD delivery (including through RCDCs) and CD quality control.

### PRIORITIZATION
- Need: Resources are insufficient to meet all country requests even with donor support; a framework based on country demand and Fund strategic priorities should guide allocation across regions, countries, topics, and time horizons.
- Objectives for prioritization:
  - Ability to mobilize quickly resources for short-term, crisis-related CD needs (“curative CD”).
  - Support building sound institutions to boost resilience to shocks (“preventive CD”).
  - Sustain developmental efforts to develop capacity in member countries, particularly low-income countries, fragile, and small states (“developmental CD”).
- Principles:
  - Board provides strategic direction and oversight on CD priorities (paragraph 13 reference).
  - Institutional-level decisions on size and composition of CD relative to other outputs are made through strategic planning and medium-term budget processes, with CCB guidance integrated into departmental accountability and budgets.
  - Country-level prioritization should reflect country demand and the country’s own CD strategy; area departments lead overall country engagement and establishment of CD priorities considering absorptive capacity.
  - Area departments, resident representatives, and RCDC directors/coordinators engage member countries on CD needs and convey demand information to CD departments; CD departments maintain frequent dialogue with member countries regarding CD needs.
- Annual process:
  - Annual CD prioritization exercise overseen by the CCB translates membership views, individual requests, and Board budget decisions into specific deliverables via RSNs, CSNs, and the RAP.

### DONOR PARTNERSHIPS AND FUNDING
- Funding sources:
  - CD activities are funded by both the Fund’s own resources and donor financing.
  - The Fund’s overall budget process considers Fund- and donor-financed CD together; Fund-financed CD amount derived from overall budget and competing demands.
- Benefits of donor partnerships:
  - Allow the Fund to scale up CD delivery to meet increasing demands, particularly in low-income and lower-middle-income countries.
  - Donors value the high quality and continuity of Fund CD and its consistency and complementarity with Fund surveillance and lending.
  - Partnerships promote accountability of the Fund for both resources and results and allow donors to integrate Fund CD with their own planning and resource allocation, increasing overall effectiveness.
- Limitations:
  - Internal and external financing are not perfect substitutes; external financing is influenced by donors’ preferences for particular countries, regions, topics, or vehicles.

*Source: EXECUTIVE SUMMARY — ppea2019038, October 18, 2019.*

### 25.      Consequently, the Fund needs to make decisions on whether to finance CD activities

### Consequently, the Fund needs to make decisions on whether to finance CD activities

### Financing principles and guidance
- Board-approved principles guide decisions on using internal or donor financing for CD.
- Fund’s role:
  - Fund financing of CD should be considered in the following cases: (i) in countries or on topics where donor funding is not available, including program cases; (ii) when a quick reaction is required; or (iii) when Fund expertise in particular areas needs to be maintained.
- Donors’ role:
  - Donor financing of CD should be considered in the following cases: (i) when donor interests are consistent with Fund priorities and objectives; (ii) when sufficient space is available in the Fund’s budget to cover related indirect costs; and (iii) when sufficient space exists under the overall limit for externally financed CD expenditure set by the Board in the context of the Medium-Term Budget.
- Additionality:
  - Donor financing should result in additional delivery of CD to members.
- Charging and contributions:
  - The Fund does not charge recipient countries for delivery of CD services except for high-income countries (for CD that is not deemed critical and that costs above a minimum threshold).
  - In some cases, countries make voluntary contributions to finance CD services they receive from the Fund.
  - Depending on the circumstances, a high-income country may receive both Fund-financed CD and CD financed by its own contributions to the Fund.
- New donor-financed initiatives:
  - Subject to an interdepartmental review and management clearance process to ensure alignment with the Fund’s institutional objectives and internal budget constraints and to provide assurances to donors that the Fund will be ready to use such financing.
- External financing risks and trends:
  - Sustainability and fungibility of external financing is critical; related risks need to be closely monitored and managed.
  - The Fund has been moving toward greater flexibility of external financing through broader and more strategic partnerships, promotion of multi-partner and umbrella agreements, and securing financing upfront before carrying out CD activity.

### Delivery of CD services and quality controls
- Modalities and program structure:
  - CD services are delivered at the request of Fund member countries through various modalities, normally as part of multi-year CD programs to an individual Fund member country or group of countries (provided either from headquarters or one of the Fund’s RCDCs).
  - Modalities include field assignment of experts for periods ranging from days to years; individual missions from headquarters; online, classroom, and customized training; peer-to-peer learning and technical workshops; and discussions at Fund headquarters or remotely from headquarters.
  - A close integration of all modalities of delivery should be sought when feasible.
- Delivery guidelines:
  - Fund CD activities, regardless of mode of delivery, are planned with the full involvement of recipient countries’ authorities.
  - Fund CD activities are subject to quality controls. Experts in the field have direct access to the wide expertise embedded in Fund staff. Their work is facilitated by strong quality control processes, including backstopping of experts and regular supervision by the relevant CD department and the review process.
  - Experts work in consultation with area departments to develop an understanding of countries’ circumstances and offer appropriate advice.
  - Fund CD is delivered by either staff or by external experts that are selected, contracted, and backstopped by the Fund. The Fund maintains a roster of experts with a proven track record and familiarity with international best practices in areas specific to the Fund’s CD activities.
  - The Fund retains full control on selection of CD experts and content of CD advice, regardless of mode of delivery or source of financing.
  - Fund CD represents advice or training of the highest quality, reflecting international best practices and complemented by the Fund’s analytical work; it is tailored to the country’s needs and reflective of its absorptive capacity and builds in a follow-up process to help ensure implementation and a sustainable impact.
- Modernization and agility:
  - Departments are building on existing strategies to move toward greater modernization and agility in CD delivery, including through RCDCs and continued experimentation with innovative technologies.
  - Staff are expected to use advances in information and communication technology, such as video conferences, online courses, webinars, mobile and cloud-based technology, and big data, to expand CD delivery efficiently and sustain interaction with member countries on CD needs and activities. These activities are expected to complement face-to-face CD.

### Coordination, communication, and dissemination
- Internal coordination:
  - Effective internal consultation and information sharing on CD activities is critical to support the country-centered model of CD delivery.
  - The Fund is investing in better processes and information systems, including through the Digital Workplace, Knowledge Management Initiatives, and the CD Management and Administration Program (CDMAP) to strengthen access to data, documents and tools across departments and workstreams.
- Coordination with other CD providers:
  - Systematizing existing good practices on coordination with other CD providers, notably with the World Bank, regional development banks and key bilateral aid agencies, is critical to support efficiency gains, sustain impact, ensure consistency of policy advice, mitigate duplication, and better leverage resources and expertise.
- Benefits of dissemination:
  - Dissemination of CD information and related communication have several benefits: (i) the membership (and the public at large) gains from a better understanding of best practices and the Fund’s experience in the provision of CD services; (ii) coordination with donors and other CD providers is facilitated, which in turn eases the absorption of CD advice by countries and also prioritization of the Fund’s CD delivery; and (iii) governments, legislators, and taxpayers in donor countries can more easily account for the use of their funds.
  - Fund policy now provides for wider dissemination of CD information, combined with safeguarding confidential information and the candor of Fund advice, including through pursuing innovative approaches to raise awareness of the Fund’s CD work.
- Operational guidelines and consent rules:
  - The Staff Operational Guidelines on Dissemination of Technical Assistance Information spell out current procedures to enhance dissemination of CD information to various constituencies, including the recipient agency and other agencies within the recipient country, Executive Directors’ offices, Fund staff, World Bank staff, donors and other CD providers, as well as the general public.
  - Dissemination of final TA advice to Executive Directors’ offices (other than the Executive Director representing the CD recipient country) or to donors and other CD providers with legitimate interest requires consent of the TA recipient. This consent is obtained if the TA recipient explicitly provides it or if it does not object to dissemination within 60 days of the transmission of the final TA advice.
  - The current guidelines also stipulate that publication of TA reports is encouraged.

### Monitoring and evaluation (M&E)
- Purpose and integration:
  - Monitoring and evaluation is used to review CD activities to ensure accountability; to assess their relevance, efficiency, effectiveness, and impact; and to distill lessons on how to strengthen future activities.
  - Regular reviews of CD content are expected to be an integral part of CD-delivering departments’ work processes.
  - All monitoring and evaluation activities should seek input from recipient authorities to ensure that their views are fully taken into account.
- RBM framework:
  - Staff should continue developing a systematic approach to monitoring and evaluation. One key component is the RBM framework, which aims to systematize the tracking of outcomes using indicators and is expected to play an increasingly larger role in monitoring and evaluation.
  - The RBM framework applies to all CD activities, whether internally or externally financed, and should assist in steering and managing projects, ensure that staff and authorities remain focused on goals, and lay the foundation for evaluation.
- Evaluation instruments and frameworks:
  - Evaluation relies on a number of different instruments including: (i) Fund-wide evaluations to assess overall policies and activities; (ii) departmental evaluations to assess the impact of CD activities; (iii) donor-mandated evaluations; and (iv) evaluations by the Fund’s Independent Evaluation Office (IEO).
  - Departmental and donor-mandated evaluations should apply the Fund’s Common Evaluation Framework (CEF), and evaluation results should be used to support learning and accountability.
- Fund-wide reviews and departmental/donor evaluations:
  - Fund-wide evaluations: The Fund conducts policy review of CD activities every five years. Such a review should have backward- and forward-looking components:
    - Backward-looking component: consider the prioritization, funding, delivery, and monitoring and evaluation of CD as set out in this statement.
    - Forward-looking component: provide the opportunity to outline reforms to increase the impact of CD, with emphasis on making CD more effective and efficient while building on its strengths.
  - Departmental evaluations: Departments undertake formal and informal evaluations guided by clear criteria for selection of relevant topics and, for project-based evaluations, the CEF. Focus may be on country cases or thematic areas. Techniques include surveys following CD activities and visits to countries that are large recipients of CD services. Evaluations may be conducted by staff and external subject-matter experts.
  - Donor-mandated evaluations: Evaluations of RCDCs and TFs are mandated and conducted by external evaluators usually midway through each arrangement’s five-year funding cycle. In addition, evaluations are conducted on other donor-financed projects.

*IMF POLICIES AND PRACTICES ON CAPACITY DEVELOPMENT — Extracted from the provided content unit.*

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_Source: https://www.imf.org/-/media/files/publications/pp/2019/ppea2019038.pdf_