## FY2023–FY2025 MEDIUM‑TERM BUDGET ## Source details **Canonical URL:** [FY2023–FY2025 MEDIUM‑TERM BUDGET](https://www.imf.org/-/media/files/publications/pp/2022/english/ppea2022025.pdf) ## Other formats - [Markdown version](/-/media/files/publications/pp/2022/english/ppea2022025.pdf.md) - [Structured JSON version](/-/media/files/publications/pp/2022/english/ppea2022025.pdf.json) --- ### Executive summary and context - Pandemic and war in Ukraine weigh on the global economy; uncertain monetary conditions complicate economic management. - Members face constrained policy space while needing durable, inclusive structural transformation to address macro‑financial implications of climate change, digital money, fragility, and inequality. - After a decade of flat real budgets, the FY23–FY25 framework includes a phased augmentation to ramp up work in areas of the Fund’s mandate, with reversion to a flat real envelope in FY26. - Temporary crisis resources are being wound down, carefully paced given risks to the outlook. - The Fund is adopting a hybrid work model and continuing to modernize operations and facilities. ### FY23 administrative budget — key figures and design - Proposed budget: $1,295 million, a 1.8 percent real increase versus FY22. - The 1.8 percent ($21.8 million) real increase relative to FY22 is built on extensive reprioritization and savings and represents the first phase of the augmentation. - Phased augmentation: annual augmentations averaging two percent over the next three years, returning to a flat real envelope thereafter. - Reprioritization history: - About 12 percent of budget resources were reprogrammed to crisis needs and new priorities in FY21. - An additional 9 percent were reprogrammed in FY22. - FY23 budget allocates resources to: climate, digital money, macrofinancial surveillance, fragility, inclusion, debt, governance, updates to the Fund’s financial infrastructure and risk framework, and support for a changing workplace. - The Board approved an increase in the limit and a carryforward mechanism for externally funded spending, linked to ramping up capacity development to support the Fund’s structural transformation agenda. ### External funding and carryforward policy - Proposed increase in the limit for external resources: four‑percent real increase to $230 million. - A carryforward mechanism for external financing is proposed to support externally funded spending as travel‑related capacity building picks up. - The maximum amount of unused budget resources that can be carried forward from previous years will be reduced from 8 to 7 percent of the underlying budget—an initial unwinding of exceptional temporary space for immediate Covid‑related crisis needs introduced in FY21. - Proposed IMF02 carryforward limit: 3 percent for FY23 (Annex III). ### FY23 capital budget and modernization - FY23 capital budget: US$78 million, a reduction of 1.3 percent from FY22. - Capital spending moderated to allow critical investments while taking on board lessons from the remote environment and recent modernization experience. - The new cloud‑capital equivalent (CCE) framework recognizes the changing nature of IT investment and provides a transparent framework for reporting on this spending. - FY23 capital envelope (including CCE): $78 million (proposal); capital budget total in Decision package: US$77.9 million broken down as: - Building facilities: US$18.9 million - Information Technology: US$44.0 million - IT Cloud Capital Equivalent: US$15.0 million - FY22 capital and cloud spending estimated at $84.1 million (direct capital $74.6 million; cloud licenses $9.5 million). ### Sustainability, risks, and operational posture - FY23–FY25 budget is consistent with the Fund’s medium‑term income position and precautionary balance target. - Income projections remain well above spending under a scenario incorporating new Fund financing as projected by the desk survey scenario; precautionary balance target of SDR25 billion in FY25 cited. - Identified elevated risks: - Uncertainty in program demand. - Early stage of work to support members’ structural transformation. - Implementation of the new hybrid work model. - Inflation developments. - Mitigations include strengthened enterprise risk management, periodic risk updates, phased hybrid approach, and stepped-up governance for modernization programs. ### FY22 spending, utilization, and operational adjustments (key figures) - FY22 aggregate budget envelope: $1,315 million (including agreed transitional and crisis resources). - Structural Budget / Proj. Outturn / Utilization (percent): - Gross Expenditures: 1,249 / 1,204 / 96 - Personnel: 938 / 985 / 105 - Travel: 81 / 18 / 22 - Buildings and Other: 218 / 201 / 92 - Contingency: 12 / ... / ... - Receipts: -36 / -26 / 73 - Net Expenditures: 1,214 / 1,178 / 97 - FY22 administrative spending (rebased to exclude travel) expected to increase across most workstreams, drawing on temporary crisis-related resourcing. - Overall direct country engagement estimated to increase by 9 percent year-on-year. - Externally financed CD spending projected at $163 million (planning assumption $165 million; approved envelope $210 million). - FY22 structural utilization of the net administrative budget projected at 97 percent (95 percent in FY21; 99 percent in FY20). - Recruitment accelerated in FY22; vacancy rates near precrisis levels in economics departments. - Travel: about half of travel-related resources were reprogrammed; projected travel outturn reflects selected in-person missions and some evacuations. - Receipts: FY22 receipts projected $10 million below budget, largely due to extended pause in parking fees and lower Concordia occupancy. ### FY23–FY25 medium-term priorities and phasing - Country operations priorities: - Bilateral surveillance aligned with the Comprehensive Surveillance Review and FSAP Review to better integrate macro‑financial aspects, risk assessment and contingency planning, spillovers, and CD. - Lending driven by upper credit tranche (UCT) arrangements and RST-supported operations. - CD to focus on core expertise, better integration with surveillance and lending, and deeper partnerships; updated CD strategy to commence. - Phasing of augmentation: - FY23—Foundation: policy and analytical work, internal training, recruitment and onboarding, organizational planning. - FY24—Growth: shift more heavily to direct country support. - FY25—Stabilization: final ramp-up of resources and staffing; FY26 onward budgets maintained at FY25 level on a flat real basis. - Box 2 principles: budget prudence (5 percent discount up front for strategy work), focus on mandate, phased implementation, sustainability considering medium-term income and precautionary balance objectives. ### Augmentation Framework and allocations (FY23 specifics) - First tranche of augmentation: $21.8 million (FY23). - Augmentation allocation shares (FY23 increments and percent of FY23 augmentation): - Climate: 8.0 — 36.7 percent of FY23 augmentation - Digital Money: 3.5 — 16.0 percent - Macrofinancial: 3.5 — 16.2 percent - FCS: 5.3 — 24.3 percent - Inclusion/Gender: 1.4 — 6.5 percent - Steady state allocation intentions: - About 40 percent of augmentation to climate change work. - About 30 percent to digital money and macro‑financial surveillance. - About 30 percent to enhance support to FCS. - About 70 percent of augmentation resources to strengthen direct country support, including about 25 percent for Fund-financed CD. - FY23 key deliverables (selected): - Climate: 15-20 Article IVs with in-depth climate coverage; 2 FSAPs with in-depth climate component; CD in about 10 countries; models/toolkits development. - Digital money: about 5 Article IVs with in-depth CBDC coverage; 3-4 FSAP deep dives; CD to 10 additional countries on CBDC. - Macrofinancial surveillance: cross-departmental coordination group with secretariat in MCM; upgraded Surveillance Guidance Note; in-reach and tools dissemination. - FCS: prepare about 10 additional Country Engagement Strategies; 1 resident representative in Papua New Guinea; 10 local economists; 3 additional resident advisors in METAC and AFRITACs. - Inclusion/Gender: central unit; gender strategy to be discussed by the Board in June 2022; gender data hub; coverage in about 11 country reports in FY23. ### Resilience and Sustainability Trust (RST) — context and budget implications - SDR allocation of $650 billion prompted interest to channel part of allocations voluntarily to the RST and a new lending instrument. - Board expressed broad support for staff’s proposed RST design to provide affordable long-term financing supporting macro‑critical reforms. - Set-up costs included in FY23 proposal: final design, fundraising, IT configuration, development of policies and guidance. - Preliminary estimate for steady state gross direct costs: $15 million, including $5-6 million in trust management costs. - Staff proposed a management fee to cover budgeted trust management costs; fee would be budget receipts and affect gross administrative budget with net administrative budget unchanged. - Operational costs to be funded through reprioritization; largest impact expected in area departments. - Overall budgetary impact of RST-related activities to be monitored with a review after sufficient experience is gained. ### Post‑Pandemic Workplace and HQ planning - Hybrid work model pilot roughly four months in duration (barring health disruptions); Crisis Management Team and Hybrid Readiness Group to engage with the Board. - Blended delivery: departments to develop tools to blend remote/asynchronous and face-to-face engagements; upfront and recurring costs anticipated. - Field operations: increased field presence, especially to support FCS, with associated local infrastructure and benefit alignment costs. - HQ2 planning: FY23–25 planning and design work for HQ2 building and systems lifecycle update; HQ2 investments to reflect hybrid experience, accessibility, and greening operations. - HQ2 building will require sizeable investment as it approaches 20 years in FY25. ### Budget space, savings, and reprioritization - Overall FY23 budget space projected at $173.3 million (about 14 percent of the FY22 NAB). - Overall savings/reprioritization provide $64.6 million (5.3 percent of NAB); crisis unwinding brings this total to $89 million (7.4 percent). - Breakdown of savings: - Departments: 74 percent of total savings/reprioritization (including 27 percent of crisis unwinding). - HR Policies: 8 percent — structural savings of about $7.5 million from Staff Retirement Plan changes beginning in FY23. - Travel: 18 percent — temporary repurposing of portion of baseline travel in FY23 (25 percent, relative to 50 percent in FY22). - Carryforward and reserves: - FY23 carryforward limit proposed at 7 percent of the general net administrative budget (versus 8 percent in FY22). - About $25.0 million reserved for continued crisis needs in FY24–25; remainder allocated for FY23 spending. - General carryforward: $79.1 million total; Allocated FY23: $54.2 million; Reserve FY24-25: $25.0 million. - Overall FY23 (ceiling): 92.8 (memorandum item); General FY22 (ceiling): 88.4. ### Budget by output — key figures and planned shifts (FY23) - Country operations: - Bilateral surveillance and lending: $395 million (increase of $23 million, including $6.5 million from augmentation). - CD: $58 million (increase of $8 million, including $4.5 million from augmentation). - Proposal to increase the limit on external funding and introduce a carryforward mechanism for externally funded CD. - Policy and analytics: $135 million (increase of $5.3 million, including $4.2 million in augmentation). - Fund governance and finances: $144 million (including a $9.3 million increase). - Internal support: $400 million (with a $47.6 million increase, including $4.2 million from augmentation resources); additional resources include $31.9 million in transitional resources. ### CD delivery composition and evolution (FY22–FY25 highlights) - FY22 projections: - Overall CD activity projected at $277 million. - Fund-financed CD projected to fall by $17 million to $114 million. - Externally funded CD projected to rise to $163 million (about 20 percent below budget space). - FY23 proposed CD budget: - Budgeted Fund-financed CD will increase by $11 million (8 percent). - Some $5 million in FY23 and about $17 million through FY25 comes from the budget augmentation. - Envelope for externally funded CD will increase by $9 million (4 percent) in FY23 and $19 million through FY25 (9 percent). - Fund-financed CD will remain about 40 percent of total CD. - Total CD (including indirect costs) expected to return to about 30 percent of Fund outputs. - Planning assumption for FY23 IMF02 spending: $180 million versus a $230 million envelope. ### Departmental allocations and augmentation emphasis (FY23) - Area departments: $28 million increase (including $5.1 million from augmentation). - Non-CD functional departments: $24 million increase (including $4.4 million from augmentation). - CD departments: $30 million increase (including $8.4 million from augmentation). - Support departments: $27 million increase (including $2.9 million from augmentation). - Augmentation allocation by department reflects roles in strategies; final allocations to support bilateral surveillance, lending, FCS, climate, digital money, and macrofinancial surveillance. ### SECTION V — Capital budget governance and FY23 proposal (highlights) - Strengthening capital governance: - Formation of TRM to consolidate project management, change management, and knowledge management; TRM to be supported by cross-departmental working group. - ITD to stabilize transition to Managed Services Provider (MSP) model. - FY22 capital highlights: - Total capital and cloud spending in FY22 estimated at $84.1 million (direct capital $74.6 million; cloud $9.5 million). - Facilities spending FY22 estimated at $20.4 million; FY21 outturn $26.0 million. - IT capital outturn projected at $55 million. - Closeout activities on HQ1 Renewal nearing completion; remaining $15 million budget projected to be returned in early FY23. - FY23 capital proposal (including CCE): - Overall envelope: $78 million (relative to $79 million in FY22). - Facilities proposed: $18.9 million (lifecycle replacements $12.7 million; $4 million workplace redesign). - IT proposed (including CCE): $59 million (cloud subscriptions $15 million; IT capital investments $44 million). - New investments total $13.0 million in FY23, including $3.0 million in information security investments. - Key IT project timelines and notes: CDMAP third release live November 2021; 1HR stabilization and close-out to be completed in early FY23; iData phase 2 expected April 2022; DM releases through September 2022; migration from Box to OneDrive by end-FY22. ### Cloud costs and the Cloud Capital Equivalent (CCE) - Introduction of the CCE has helped bring visibility and transparency to rising cloud costs. - ITD and OBP will manage cloud costs via a more deliberate cloud strategy, consolidation, and license cost optimization. - CCE implementation steps: OBP and ITD updated systems, procedures established specifying eligible expenses and roles, change management activities conducted; early experience to be monitored and processes updated as relevant. - In FY23, cloud subscriptions projected to increase to $15 million. ### Sustained risks (Section VI) and mitigations - Core country activity risks: pandemic duration, inflation, war in Ukraine; mitigations include periodic risk updates, risk-based resource allocation. - Travel uncertainty: mitigations include close monitoring, departmental prioritization, interdepartmental working group. - Implementation of augmentation strategies: mitigations include multipronged HR strategy, dovetail with crisis unwinding, coordinated cross-departmental work. - Hybrid work model risks: phased hybrid approach, training, standard IT package for work at home. - CD fundraising risk: mitigations include donor diversification, focus on high‑demand areas, extending phases, shifting some administrative costs to Fund budget. - Information security: mandatory cybersecurity training; modernization of infrastructure. - Modernization risk: stepped-up governance with OIA support; TRM-led effort to strengthen oversight. - Budgeting in inflation uncertainty: OBP to manage related risks; issues to be explored in FY22 Outturn report. ### Summary proposal and Executive Board decisions (key figures) - Net administrative budget (total): US$1,294.6 million. - General (other administrative expenditures): US$1,207.3 million. - OED: US$80.1 million. - IEO: US$7.2 million. - Receipts: US$270.9 million (General: US$269.4 million; OED: US$1.5 million; IEO: US$0.0 million). - FY22 Fund-financed carryforward (upper limit): US$93.0 million (General: US$79.1 million; OED: US$13.6 million; IEO: US$0.3 million). - Other transitional resources: US$9.5 million (General). - Total gross expenditures (limit): US$1,668.0 million (General: US$1,565.3 million; OED: US$95.2 million; IEO: US$7.5 million). - Capital budget total: US$77.9 million (Building facilities US$18.9 million; IT US$44.0 million; Cloud US$15.0 million). - Memorandum items: - Net administrative budget in mil. of FY22 U.S. dollars: US$1,235.3 million. - Fund-financed carryforward, upper limit (in percent): General 7.0; OED 5.0; IEO n.a. - Externally-financed carryforward, upper limit (in percent): 3.0 - Proposed Executive Board decisions include: - Decision 1. Approve appropriations for net administrative expenditures for FY23 totaling US$1,294.6 million and authorize carryforward up to US$93 million (with sublimits). - Decision 2. Approve capital budget appropriations for FY23 totaling US$77.9 million applied to building facilities, IT, and IT Cloud Capital Equivalent. - Decision 3. Adopt new carryforward mechanism for externally funded CD expenditures as set out in Annex III. *Source: ppea2022025 - FY2023–FY2025 MEDIUM‑TERM BUDGET (selected sections).* ### 1.8 percent ($21.8 million) real increase relative to FY22. The maximum amount of unused ### FY2023–FY2025 MEDIUM‑TERM BUDGET ### Executive summary and context - Pandemic and war in Ukraine weigh on the global economy; uncertain monetary conditions complicate economic management. - Members face constrained policy space while needing durable, inclusive structural transformation to address macro‑financial implications of climate change, digital money, fragility, and inequality. - After a decade of flat real budgets, the FY23–25 framework includes a phased augmentation to ramp up work in areas of the Fund’s mandate, with reversion to a flat real envelope in FY26. - Temporary crisis resources are being wound down, carefully paced given risks to the outlook. - The Fund is adopting a hybrid work model and continuing to modernize operations and facilities. ### FY23 administrative budget — key figures and design - Proposed budget: $1,295 million, a 1.8 percent real increase versus FY22. - The 1.8 percent ($21.8 million) real increase relative to FY22 is built on extensive reprioritization and savings and represents the first phase of the augmentation. - Phased augmentation: annual augmentations averaging two percent over the next three years, returning to a flat real envelope thereafter. - Reprioritization history: - About 12 percent of budget resources were reprogrammed to crisis needs and new priorities in FY21. - An additional 9 percent were reprogrammed in FY22. - FY23 budget allocates resources to: climate, digital money, macrofinancial surveillance, fragility, inclusion, debt, governance, updates to the Fund’s financial infrastructure and risk framework, and support for a changing workplace. - The Board approved an increase in the limit and a carryforward mechanism for externally funded spending, linked to ramping up capacity development to support the Fund’s structural transformation agenda. ### External funding and carryforward policy - Proposed increase in the limit for external resources: four‑percent real increase to $230 million. - A carryforward mechanism for external financing is proposed to support externally funded spending as travel‑related capacity building picks up. - The maximum amount of unused budget resources that can be carried forward from previous years will be reduced from 8 to 7 percent of the underlying budget—an initial unwinding of exceptional temporary space for immediate Covid‑related crisis needs introduced in FY21. ### FY23 capital budget and modernization - FY23 capital budget: US$78 million, a reduction of 1.3 percent from FY22. - Capital spending moderated to allow critical investments while taking on board lessons from the remote environment and recent modernization experience. - The new cloud‑capital equivalent framework approved last year recognizes the changing nature of IT investment and provides a transparent framework for reporting on this spending. ### Sustainability, risks, and operational posture - FY23–25 budget is consistent with the Fund’s medium‑term income position and precautionary balance target. - Risks to the budget remain elevated due to: - Uncertainty in program demand. - Early stage of work to support members’ structural transformation. - The new hybrid work model. - Inflation developments. - Enterprise risk management is being strengthened. - The Fund will remain nimble and reallocate budget resources within year as needed. ### Institutional and procedural notes - The unwinding of temporary crisis staffing will be initiated in FY23 but paced prudently given uncertainty about the duration of COVID‑19 crisis needs and the regional/global impact of the war in Ukraine. - External funding is expected to continue recovering as travel‑related capacity building resumes. - Additional information referenced: staff paper on the FY23–25 Medium‑Term Budget and the Augmentation Framework Paper. *FY2023–FY2025 MEDIUM‑TERM BUDGET (excerpt).* ### 7. Building forward better. The COVID- ### 7. Building forward better. The COVID- ### Crisis response and temporary resourcing - A total $59.3 million in temporary resourcing, including 135 net positions, were allocated to departments, supported by repurposing of travel budgets and other non-urgent expenditures, and continuation of a temporary increase in the limit on carryforward of unused funds from previous years. - Crisis resourcing supported: increased lending (shifting from emergency to medium-term operations), resumption of FSAPs and Article IV consultations, prioritized CD support for crisis-related issues (strengthening payment systems to monitor and report on crisis spending, expanding the revenue base, enhancing revenue administration). - The Fund has played a lead role in the Global Health and Pandemic Response vaccine taskforce. ### Key achievements in FY22 - Country Operations: - 22 financing operations approved (47 active, including 6 emergency operations) as of mid-March, with debt service relief to 30 countries. - 122 Article IV consultations and 5 FSAPs planned through April. - 178 countries benefitted from single-country CD delivery. - Implementation of the G20 DSSI debt service relief and the Common Framework for debt treatments. - Multilateral Surveillance: - Flagships focused on pandemic response, crypto assets, public finances, and global imbalances. - Multilateral Leaders Task Force established. - COVID-19 Vaccine Supply Tracker. - Final Covid policy tracker update. - Policy/Financial: - Comprehensive Surveillance Review completed. - FSAP Review completed. - Review of the Institutional View on Capital Flows. - Climate change strategy approved. - Digital money strategy approved. - FCS strategy approved. - Inclusion and gender strategy discussed with formal presentation in June. - SDR allocation of $650 billion approved. - Initial work—Resilience and Sustainability Trust. - Internal Support: - Investment in risk framework. - Budget augmentation framework approved. - Hybrid work model and broader modernization. ### FY22 spending, utilization, and operational adjustments - FY22 administrative spending (rebased to exclude travel) is expected to increase across most workstreams, drawing on temporary crisis-related resourcing. - Overall direct country engagement is estimated to increase by 9 percent year-on-year, driven by lending and surveillance operations. - Externally financed CD spending: - Projected at $163 million, broadly in line with the planning assumption of $165 million, below the approved envelope ($210 million). - Reflects a $42 million recovery versus FY21. - FY22 structural utilization and projections: - FY22 structural utilization of the net administrative budget projected at 97 percent, compared to 95 percent in FY21 and 99 percent in FY20 (pre-crisis). - No use of carryforward resources expected in FY22. - Personnel and vacancies: - Recruitment accelerated in FY22, with vacancy rates near precrisis levels in economics departments. - Execution is expected to exceed the structural personnel budget but remain within the overall available envelope (overall utilization of 98 percent), reflecting allocation of temporary resources mainly for crisis staffing. - Travel: - About half of travel-related resources were reprogrammed in case conditions allowed faster travel resumption. - Projected travel outturn reflects selected in-person missions, increased hiring-related travel, and some evacuations. - Buildings and other services: - Spending projected about 8 percent below budget due to reduced contractual service expenses and accounting changes related to the cloud-capital equivalent mechanism. - Receipts: - FY22 receipts projected $10 million below budget, largely due to extended pause in parking fees and lower Concordia occupancy; publication sales continue to decline. ### FY22 Utilization (table figures preserved) - FY22 aggregate budget envelope of $1,315 million, including agreed transitional and crisis resources. - Structural Budget / Proj. Outturn / Utilization (percent) - Gross Expenditures: 1,249 / 1,204 / 96 - Personnel: 938 / 985 / 105 - Travel: 81 / 18 / 22 - Buildings and Other: 218 / 201 / 92 - Contingency: 12 / ... / ... - Receipts: -36 / -26 / 73 - Net Expenditures: 1,214 / 1,178 / 97 ### FY23–FY25 medium-term budget context and priorities - The global recovery is expected to moderate amid monetary developments in major markets, deepening divergence, episodic resurgences of virus variants, and the war in Ukraine’s reverberations (displacement, food security impacts). - The FY23–25 budget will continue to support members calibrating policies to evolving pandemic conditions, counter growing divergence, and limit scarring; Covid-related needs and those arising from the war in Ukraine will be met by reprioritization and use of carryforward resources, supported by the temporary increase in the carryforward limit. - Country operations priorities: - Bilateral surveillance aligned with the Comprehensive Surveillance Review and the Review of the Financial Sector Assessment Program to better integrate macro-financial aspects, risk assessment and contingency planning, spillovers, and CD. - Lending driven by upper credit tranche (UCT) arrangements and RST-supported operations; FY22 lending projected to include 22 operations (versus 35 active requests in the FY22-24 budget and an additional 15 informal expressions of interest), including 16 UCT operations (versus 25 in FY21). - CD activity focus on core expertise, better integration with surveillance and lending, deeper partnerships; work on an updated CD strategy will commence, drawing on a forthcoming IEO review. - Multilateral surveillance and standards: - Flagships to continue considering complex economic and financial trade-offs; staff to finalize foundational work for updating the Balance of Payments Manual and System of National Accounts in FY23. - Policy and analytical work: - Address debt vulnerabilities, inequality, governance; operationalize RST-linked lending policies; review effectiveness of policies underlying existing instruments. - Unwinding crisis resources: - Crisis resourcing to be unwound over the three-year budget period, beginning in FY23, recognizing the one-off nature of underlying funding and risks from the uneven recovery. ### Augmentation Framework and longer-term transformation - The Augmentation Framework approved in December anticipates real augmentation of about 2 percent per year during FY23-25 before reverting to a flat real trajectory. - Key parameters and allocations: - In steady state, about 40 percent of augmentation resources will support an expansion of climate change work. - About 30 percent will support work on digital money and strengthening macro-financial surveillance. - About 30 percent will enhance support to FCS. - About 70 percent of augmentation resources will strengthen direct country support, including about 25 percent for Fund-financed CD. - Remaining funds will support foundational analytical and policy work, multilateral surveillance, and internal training. - Support departments (CSF, HRD, ITD, etc.) will be reinforced to sustain implementation. - Phasing: - FY23—Foundation: focus on policy and analytical work, internal training, recruitment and onboarding, organizational planning. - FY24—Growth: shift more heavily to direct country support; close monitoring of resources allocated to functional departments. - FY25—Stabilization: final ramp-up of resources and staffing to stabilize deliverables; budgets for FY26 onward maintained at FY25 level on a flat real basis. - Implementation and principles: - Box 2 principles: budget prudence (5 percent discount up front for work under these strategies), focus on mandate, phased implementation over three years, sustainability considering medium-term income outlook and precautionary balance objectives. - Strategy teams refining organizational frameworks, strengthening cross-departmental handoffs and coordination, HRD reinforcing recruitment strategy with attention to diversity, ICD incorporating strategic priorities into annual CD planning. - Issue strategies and reporting timeline (board updates expected): - Climate Strategy: FY23 Q4. - Digital Money Strategy: FY23 Q4. - Macrofinancial Surveillance Strategy: FY24 Q4. - FCS Strategy: FY23 Q4. - Inclusion and Gender Strategies: FY23 Q3. *Source: ppea2022025 - 7. Building forward better. The COVID-* ### 13. Fund governance and finances. Priorities will be completing the 16 ### 13. Fund governance and finances. Priorities will be completing the 16 ### Resilience and Sustainability Trust (RST) - Context - The $650 billion SDR allocation prompted interest from many members to channel part of their allocation voluntarily to help sustain recoveries in poor and vulnerable countries through the RST and a new lending instrument. - In January, the Board expressed broad support for staff’s proposed design to provide affordable long-term financing to support countries undertaking macro-critical reforms to reduce risks to prospective balance of payment stability. - A formal meeting to establish the RST is scheduled in April. - Budget implications - Additional expenses would be incurred to support the RST’s set-up and ongoing management and operations. - Set-up costs are included in the FY23 proposal and include work on the final design of the RST, fundraising, IT system configuration, and the development of policies and guidance to govern lending under the trust. - Recurring costs would include: - a) trust management, including the execution of financial transactions under the trust, reporting and audit, and periodic comprehensive financial and safeguard policy reviews; and - b) operational work, consisting of country program design and review, including economic policy analysis and program negotiations, collaboration with the World Bank and other agencies, and operational policy reviews. - The RST paper provides a preliminary estimate for steady state gross direct costs of $15 million, based on assumptions for demand, and including $5-6 million in trust management costs. - Staff has proposed a management fee to cover budgeted trust management costs; this fee would be reviewed periodically. As with management fees under CD, the resources would constitute budget receipts and would affect the gross administrative budget, with the net administrative budget unchanged. - Operational costs will be funded through the regular budget process through reprioritization, with the largest impact expected in area departments. - The overall budgetary impact of RST-related activities will be monitored with a review of relevant arrangements after sufficient experience is gained. ### Post-Pandemic Workplace - Overview - SF, HRD, and ITD, with support from OIC, are supporting a transition in the Fund’s workplace, prioritizing members’ needs while accommodating a growing headcount in a cost-effective manner and maintaining the Fund as an attractive workplace. - Agility is emphasized given pandemic unpredictability; priorities include recruiting and retaining high-quality diverse staff, productivity and staff satisfaction, and reducing the Fund’s carbon footprint. - Key elements - Hybrid work model - The Fund is initiating a hybrid work model pilot lasting roughly four months, barring health disruptions. The Crisis Management Team and the cross-departmental Hybrid Readiness Group will engage with the Board to monitor and incorporate lessons. - Blended delivery - Departments will develop tools to blend remote (including asynchronous) and face-to-face engagements. While some savings will result from remote engagements, there will be upfront and recurring costs to develop and maintain toolsets. - Field operations - A growing workforce and focus on enhancing support to the membership will change the mix between HQ and field operations. - Increased resources devoted to FCS will result in additional and expanded field offices and costs associated with local infrastructure. - Field office operations will be strengthened, initially through better alignment of some local employee benefits with those of HQ contractual employees; a broader review of field presence will be undertaken over time. - HQ based operations - The HQ2 building will require sizeable investment as it approaches 20 years in FY25; investments must be planned to reflect future needs, accessibility, and greening operations. ### Fund’s Income Position and Budget - Sustainability - The FY23–25 budget framework is consistent with a projected surplus in the Fund’s medium-term income position and continued progress towards the precautionary balance target. - Income projections remain well above spending under a scenario incorporating new Fund financing as projected by the desk survey scenario. This scenario would maintain adequate accumulation of reserves for precautionary balances to reach the medium-term target of SDR25 billion in FY25. - In a conservative scenario with no additional arrangements beyond those approved by end-March, operational income would remain twice expenses at the end of the projection period. ### FY23 Administrative Budget — Overview and Key Figures - FY23 NAB and capital - The proposed FY23 NAB totals $1,235 million in FY22 dollars ($1,295 million in current prices), including a $21.8 million real augmentation ($23 million in current prices). - The proposed FY23 capital budget totals $78 million, including $63 million in direct capital spending and $15 million in cloud-related licenses. - The FY23 budget deflator is set at 4.8 percent. - Inflation developments point to elevated risks that actual inflation will materially exceed projection in FY22 (and possibly FY23); these issues will be examined in the FY22 Outturn report. - By expense category - Personnel spending represents about 75 percent of the gross administrative budget (unchanged from FY22). - Travel is budgeted to ramp up to about 75 percent of pre-crisis travel levels. - Building and other expenses are budgeted to be lower than pre-crisis levels, though uncertainty exists as the Fund shifts towards a hybrid work model. - Externally funded expenditures follow a similar pattern for personnel and travel. ### Overall budget space and savings - Overall budget space - FY23 budget space is projected at $173.3 million (about 14 percent of the FY22 NAB). - Major drivers of the budget space are carryforward resources along with savings and reprioritization excluding crisis unwinding. - Savings and reprioritization - Overall savings/reprioritization provide $64.6 million (5.3 percent of NAB). - Crisis unwinding brings this total to $89 million (7.4 percent). - Breakdown highlights: - Departments: 74 percent of total savings and reprioritization (including 27 percent of crisis unwinding). Savings reflect completion of work on the Institutional View on capital flows, phasing out the COVID policy tracker, efficiencies in facilities, Fund financial systems, vendor contract services, and unwinding crisis resources. - HR Policies: 8 percent. Implementation of the five-year review of the Staff Retirement Plan, including changes to the grossing-up formula, lowers the annual Fund contribution to the Plan, resulting in structural savings of about $7.5 million beginning in FY23. - Travel: 18 percent. Temporary repurposing of a portion of the baseline travel budget continues in FY23 (25 percent, relative to 50 percent in FY22). Two departments (FAD; STA) have made structural reductions in baseline travel budgets. - Augmentation and carryforward - First tranche of the augmentation is $21.8 million and will be channeled to relevant strategic areas under the augmentation framework. - FY23 carryforward limit is proposed at 7 percent of the general net administrative budget (versus 8 percent in FY22). - About $25.0 million has been reserved for continued crisis needs in FY24–25, with the remainder allocated for FY23 spending. - General carryforward: $79.1 million total; Allocated FY23: $54.2 million; Reserve FY24-25: $25.0 million. - Overall FY23 (ceiling): 92.8 (memorandum item); General FY22 (ceiling): 88.4. ### Budget Change by Priority Topics and Augmentation Allocations - Priority areas - The FY23 budget provides additional resources for work on debt and governance through reprioritization, and augmentation-driven funding for climate, digital money, macrofinancial surveillance, FCS, and inclusion/gender. - New resources and planned allocations (FY23 increments) - Debt: $4.9 million — continuation of work on debt transparency, a new DSA for market access countries, and granular policy guidance on debt management transparency practices; roll-out of the Sovereign Risk and Debt Sustainability Framework (SRDSF) will continue, including natural-disaster and exhaustible-resource modules. - Governance/anti-corruption: $2.5 million — support elevated engagements mainly linked to Fund lending; review governance commitments in crisis spending and the 2018 framework for Enhanced Engagement on Governance; refine governance assessment framework for tax administration; develop a customs framework; expand fiscal transparency work. - Augmentation areas (including associated overhead costs) - Climate: $8 million — foundational work on integration into core IMF activities, piloting in country engagement, policy guidance, tools and models, data subscriptions, climate-related indicators, CMAP pilots, review processes for evenhandedness, and coordination with partners. - Digital Money: $3.5 million — build foundations for engaging members, analytic and legal frameworks for CBDCs, multilateral work on implications for the international monetary system, how-to notes, CD and surveillance pilots. - Macrofinancial surveillance: $3.5 million — deepen macrofinancial analysis, recruit fungible economists with macrofinancial expertise into MCM, rotate MCM staff to area departments, expand toolkit for macrofinancial analysis (e.g., Growth-at-Risk) and how-to notes. - FCS: $5.3 million — increased field presence (resident representative in Papua New Guinea, 10 local economists, 3 LTXs, and $1 million for administrative costs of RCDCs serving FCS members); support HQ-based integration of CD and surveillance by country teams; strengthen centralized policy and analytical support for FCS strategy; develop FCS-focused internal training curriculum. - Inclusion/Gender: $1.4 million — develop internal and external coordination on inequality work; guidance note for gender complemented by models and toolkits; a new gender-related data hub; internal training course to support mainstreaming. The Board will discuss the gender strategy in June 2022. - Augmentation totals and shares (FY23) - Total augmentation: 21.8 (millions of dollars) in FY23 under the Budget Augmentation Framework. - Illustrative allocations in the Augmentation Framework table (FY23, millions of dollars and percent of total) include: - Climate: 8.0 (36.7 percent of FY23 augmentation) - Digital Money: 3.5 (16.0 percent of FY23 augmentation) - Macrofinancial: 3.5 (16.2 percent of FY23 augmentation) - FCS: 5.3 (24.3 percent of FY23 augmentation) - Inclusion/Gender: 1.4 (6.5 percent of FY23 augmentation) ### Box 4 — Augmentation: FY23 Key Deliverables (selected items) - Climate change (FY23 Proposed Allocation) - 15-20 Article IVs will have in-depth climate coverage. About 5 will discuss mitigation policies for large emitters. The remainder will cover adaptation and/or transition management, including for fossil fuel exporters. - 2 FSAPs will have an in-depth climate component, covering physical or transition risks, based on stress testing to inform supervision and regulation, complemented by an assessment of how supervisory frameworks integrate climate risks. - The 2022 Surveillance Guidance Note will define the expected coverage of mitigation, adaptation, and transition management. - A review of the Climate Macroeconomic Assessment Program will be followed by 2 further country pilots. - CD in about 10 countries will focus on climate work, including Public Investment Management Assessments (e.g., in Chad, Ecuador, St. Vincent, and the Maldives). Workshops will cover supervision and regulation of climate risks, including a joint IMF/WB/FRB event. CD will also cover ESG bonds and debt management issues. - Staff is developing models/toolkits for multilateral and bilateral applications to analyze the macroeconomic, sectoral, trade and competitiveness effects of climate change and mitigation policies. Internal training clinics and a climate change bootcamp will follow up on the compulsory climate 101 course. - Digital money (FY23 Proposed Allocation) - About 5 Article IVs will have in-depth coverage on CBDC benefits and risks, policy implications (financial stability, financial integrity, cross-border payments, capital flows and currency substitution), and the regulation of privately issued digital forms of money. - 3-4 FSAPs will have a deep dive on financial stability risks from digital money adoption. - 10 additional countries will receive CD on CBDC (design choices, pilot design, policy implications), complemented by regional workshops and training courses out of RCDCs. - Staff will participate in 4 international working groups with the Financial Stability Board, Committee for Payments and Market Infrastructures, and Bank for International Settlements on the G20 Roadmap to enhance cross border payments. - Analytical work will focus on CBDC best practices, banking sector disintermediation, monetary policy transmission, monetary operations, cyber security, crypto asset regulation, and capital flow management. *Source: FY2023–FY2025 Medium-Term Budget (excerpt).* ### Box 4. Augmentation—FY23 Key Deliverables (concluded) ### Box 4. Augmentation—FY23 Key Deliverables (concluded) ### Macrofinancial surveillance - Cross-departmental coordination group established, with a secretariat in MCM; the secretariat will establish guidelines to cooperate with partner institutions. - Surveillance Guidance Note will upgrade guidance on the integration of macrofinancial analysis in Article IVs. - SPR and MCM will conduct in-reach to help disseminate and familiarize desks with tools and models for macrofinancial analysis, as well as the updated guidance. - Additional staffing aims to eliminate gaps in the depth and integration of macrofinancial analysis (found in about 60 Article IVs at the time of the CSR), particularly in systemic risk analysis and macroprudential policy advice. - Area Departments will work with MCM and SPR to close this gap during the augmentation period, with periodic reporting to the Board by MCM and SPR on progress. ### Fragile and conflict-affected states (FCS) — FY23 proposed allocation and deliverables - Strengthen CD-surveillance integration and prepare about 10 additional Country Engagement Strategies: six in AFR, 1 in APD (Solomon Islands), and 4 in MCD (Iraq, Libya, Somalia, Yemen). - One additional resident representative will be placed in Papua New Guinea. - 10 additional local economists (4 in AFR, 4 in MCD, and 2 in APD) to support program work (e.g., Lebanon), cover new priority areas (e.g., climate change in Iraq), coordinate scaling up of CD, and strengthen on-the-ground partnerships (e.g., Yemen). - Fund’s field presence further supported through additional resources to RCDCs serving FCS countries in AFR, APD, and MCD. - 3 additional FCS resident advisors in METAC and the AFRITACs to focus on payment systems, government finance statistics, and a fiscal workstream. - More extensive CD delivery anticipated in 10-12 additional countries. - A comprehensive learning curriculum will be delivered to enhance skills and expertise of Fund staff engaged in fragile and conflict-affected states. ### Inclusion and gender — FY23 proposed allocation and deliverables - A central unit will coordinate inclusion and gender work, strengthen analytics, and enhance internal training. - The gender strategy will be discussed by the Board in June, followed by a guidance note on integration in country work. - Staff will develop models/tools and a new gender data hub to support country teams analyze the impact of shocks and macroeconomic policies on gender outcomes; the gender data hub will bring together macro-relevant gender data, drawing from existing sources and surveys. - External training on gender was launched in January (ATI) and February (SARTTAC). An internal IMF clinic on gender equality and macroeconomics will be launched in FY23. - Leveraging the guidance note, new tools/models and data hub, gender issues are expected to be covered in about 11 country reports in FY23. ### Other needs and operational context - Continued temporary budget resources dedicated to the Fund’s response to COVID-19 variants and associated economic disruptions. - FY23 priorities include investments in stabilization of the Workday platform and HR service delivery model; continued implementation of CCBR-linked reforms; enhancements to the Fund’s Dispute Resolution System; response to the Diversity and Inclusion survey; developing and implementing the RST and related operations; and continued implementation of the hybrid work model. - Fund will remain agile to respond to changing needs in an uncertain environment. ### Budget by output — key figures and planned shifts (FY23) - Country operations: - Bilateral surveillance and lending: $395 million (an increase of $23 million, including $6.5 million from augmentation resources). - CD: $58 million (represents an increase of $8 million, including $4.5 million from augmentation). - Proposal to increase the limit on external funding to support enhanced CD related to the Fund’s structural transformation agenda; introduce a carryforward mechanism for externally funded CD. - Policy and analytics: $135 million (an increase of $5.3 million, including $4.2 million in augmentation resources). - Fund governance and finances: $144 million (including a $9.3 million increase). - Internal support: $400 million (with a $47.6 million increase, including $4.2 million from augmentation resources). Additional resources include $31.9 million in transitional resources. ### CD delivery composition and evolution (Box 5) — FY22–FY25 highlights - FY22 projections: - Overall CD activity projected to reach $277 million. - Fund-financed CD projected to fall by $17 million to $114 million. - Externally funded CD projected to rise to $163 million (about 20 percent below budget space due to continued constraints on travel and spending on short-term experts). - FY23 proposed CD budget: - Budgeted Fund-financed CD will increase by $11 million (8 percent). - Some $5 million in FY23 and about $17 million through FY25 comes from the budget augmentation. - The envelope for externally funded CD will increase by $9 million (4 percent) in FY23 and $19 million through FY25 (9 percent) for expanded CD supporting the structural transformation agenda. - Fund-financed CD will remain about 40 percent of total CD. - Total CD (including indirect costs) is expected to return to about 30 percent of Fund outputs. - Recovery and planning assumptions: - CD spending expected to rebound after resumption of travel, with downside risk. - Planning assumption for FY23 IMF02 spending is $180 million versus a $230 million envelope. - Composition and regional impacts: - All regions will see increases in CD. - Greater field presence associated with the FCS strategy will benefit AFR, APD, and MCD. - Increased delivery on climate change will focus mainly in APD and WHD. - Return to travel has a larger impact on APD. - Workstream composition: core areas continue to dominate; shares of CD on macroeconomic statistics, macroeconomic frameworks, public financial management, and revenue mobilization expected to recover. Climate, digital money, governance, and FCS would grow with augmentation and increased IMF02 envelope. - Carryforward: A carryforward for externally financed expenditure will be introduced in FY23 to reduce incentives for hurried end-year spending and support management of multi-year undertakings (details in Annex III). ### Departmental allocations and augmentation emphasis - Area departments: $28 million increase (including $5.1 million from augmentation). AFR focus on program work and FCS; APD linking to Indonesia’s 2 22 and India’s 2 2 2 Presidency to advise on debt, green growth and CBDCs; EUR reorienting emergency financing analysis toward debt vulnerabilities and macro-financial linkages; MCD calibrating policy advice and receiving transitional resources for relocation of IMF offices and METAC-related facilities; WHD focused surveillance and financial support to crisis-hit or vulnerable members. - Non-CD functional departments: $24 million increase (including $4.4 million from augmentation). FIN to set up RST, secure PRGT/CCRT resources, support 16th Quota Review and SDR valuation review; RES to continue pandemic impact assessment, develop climate modules, reinforce External Sector Report; SPR to strengthen risk-based surveillance and implement RST; COM to center messaging on crisis-response and transformational agenda. - CD departments: $30 million increase (including $8.4 million from augmentation). FAD to advise on uneven recovery and fiscal risks; ICD to expand internal economics training and multi-country external training; LEG to support UCT transition, RST implementation, debt, governance, IT Security and data privacy, and digital money; MCM to work on digital money, IPF, capital flow management, monetary policy frameworks, non-bank financial intermediaries, and climate-related financial sector policy; STA to increase methodological work and target CD toward climate, digital money, FCS, and inclusion/gender. - Support departments: $27 million increase (including $2.9 million from augmentation). CSF to unwind pandemic response and drive transition to hybrid work model; ITD to implement modernization projects and stabilize operating model; HRD to receive significant temporary resources to adapt 1HR implementation and stabilize HR delivery model; SEC to support policy reviews, budget augmentation implementation, and strengthen internal governance; TRM began stand-up activities on March 1st, 2022, with staffing drawn from existing personnel and small newly recruited cadre. - Augmentation allocation by department reflects roles in the strategies and FY23 as a foundational year; resources for bilateral surveillance and lending allocated to area and functional departments; funds to AFR and MCD mainly focused on FCS; resources to FAD and MCM reflect roles in climate, digital money, and macrofinancial surveillance; augmentation for support departments to strengthen recruiting and onboarding. *Source: ppea2022025 - Box 4. Augmentation—FY23 Key Deliverables (concluded)* ### SECTION V. CAPITAL BUDGET ### SECTION V. CAPITAL BUDGET ### A. FY22 Capital Spending - Total capital and cloud spending in FY22 is estimated at $84.1 million, including: - $74.6 million in direct capital spending - $9.5 million in cloud-related licenses - FY21 outturn was $77.5 million. - Facilities: - FY22 facilities spending is estimated at $20.4 million compared to $26.0 million in FY21. - Expenditures focused on building-lifecycle updates and hybrid work needs (including enhanced audio-visual capabilities), office reconfiguration to accommodate staff growth, and piloting of collaboration workspaces. - Closeout activities on the HQ1 Renewal project are nearing completion, with the remaining $15 million budget (including $12.9 million in reserves) projected to be returned in early FY23. - An estimated $54 million in unspent funding from previous years is projected to be available in FY23 and is largely allocated to ongoing projects for HQ1 building systems, tenant renovations, conference room acoustics improvements, and audio-visual equipment replacements. - Approximately $8 million in funding will expire under the three-year appropriation rules, largely due to the pause in office furniture replacements. - Information Technology (IT): - IT capital outturn is projected at $55 million (on par with FY21). - Approximately $23 million in unused funding allocated to ongoing projects is expected to be available in FY23. - Transformation projects: third release of CDMAP went live in November 2021; initial progress in iData, document management (DM), and introduction of the Teams collaboration tool. The 1HR project has implementation challenges; a remediation plan is being finalized to stabilize and close-out early releases and reassess remaining scope. - Capital Cloud Equivalent (CCE): Cloud license spending in FY22 is expected to be $9.5 million. OBP and ITD have established budgetary procedures for CCE operations following Board approval in April last year. ### Strengthening Capital Governance - Management actions and organizational changes: - Work underway to strengthen implementation of the Capital Investment Framework approved by the Board in FY21. - Formation of TRM to consolidate project management, change management, and knowledge management functions and build capacity to support IT-intensive capital investments. - TRM to benefit from OIA advisory work and be supported by a cross-departmental working group comprising PMO, ITD, OBP, ORM, OIC, OIA, and CSF. - A review is underway of governance and program management procedures. - ITD is working to stabilize transition to the new Managed Services Provider (MSP) model. - TRM and ITD will aim to strengthen timeliness and depth of reporting to the Board on large transformation programs. ### Box 7 — Implementation of the Cloud Capital Equivalent (CCE) - CCE adoption: - Migration from “purchase build and maintain” to cloud-hosted subscription model would reduce capital spending and increase administrative spending if budget treatment were unchanged. - Board approved an OIA-endorsed change establishing the CCE envelope in April 2021 to address this. - CCE reduced pressures on the administrative budget and increased transparency of institutional cloud license costs within overall capital investments. - Implementation: - OBP and ITD updated systems to enable use of, and reporting on, CCE budget and expenses. - Procedures established specifying eligible expenses, roles and responsibilities, and steps for CCE budget formulation, execution, and monitoring, consistent with OIA recommendations. - Change management activities were conducted to socialize new procedures; OBP and ITD are monitoring early experience and will update processes as relevant. ### B. FY23 Capital Spending (Proposed) - Overall envelope: - The proposed FY23 capital envelope (including CCE) is $78 million, relative to $79 million in FY22. - Envelope supports initial investments for hybrid work and staff growth, critical lifecycle investments, and priority projects related to security and ongoing transformation work. - Proposal scales down new IT-intensive transformation investments to allow a period of stabilization while governance framework and ITD reorganization are strengthened. - Facilities (FY23 proposed): - Proposed facilities budget of $18.9 million, about $5 million lower than FY22 and $2 million below last year’s FY2 estimate. - Large share of facilities request is for lifecycle replacements and repairs ($12.7 million), audiovisual updates, and critical HQ1 building systems replacements. - Proposal includes $4 million in new investments for workplace redesign and HQ space optimization. - IT (FY23 proposed, including CCE): - Proposed IT capital budget (including CCE) is $59 million, compared to about $56 million in FY22. - Increase reflects an increase in the cost of cloud subscriptions $15 million, partially offset by a slight reduction in IT capital investments $44 million. - IT capital investments cover lifecycle replacements, a scaled down transformation envelope focused on completing ongoing modernization projects, and targeted investments in information security and key business systems. - Lifecycle replacements and IT infrastructure total $9.0 million for FY23 (remote office infrastructure, network equipment, servers and storage capacity, business continuity center transition to cloud, and a portion of computer replacements). - Pre-requisite projects total $2.3 million for FY23 (completion of IAM and implementation of phase 2 of Corporate Data Warehouse). - Transformation projects budgeted at $19.7 million for FY23, focusing on advancing ongoing programs (CDMAP close to completion; modernization update report to Board). - 1HR: Stabilization and close-out of original 1HR project to be completed in early FY23; associated update to the CBA and a revised plan with independent validation to be presented to the Board in Q1 FY23. - iData: First development phase completed; phase 2 expected to be completed in April 2022; subsequent phases to span FY23 and FY24. - DM: Release 1 deployed in November 2021; Release 2 and 3 expected by May 2022 and September 2022 respectively; final program completion scheduled for early 2023. - iDW-related modules and document workflow work: scoping and implementation planning continue; timelines being reassessed as part of portfolio review. - Microsoft Teams launched; migration from Box to OneDrive expected to be completed by end-FY22. - Implementation phase of the Intranet project reset to February 2022 following a pause; vendor onboarded and validating requirements and developing design and architecture. - New Investments total $13.0 million in FY23, including $3.0 million in information security investments. - CCE: In FY23, cloud subscriptions are projected to increase to $15 million, reflecting continued transition to cloud as part of modernization. *Source: ppea2022025 - SECTION V. CAPITAL BUDGET* ### introduction of the CCE has helped bring visibility and transparency to the rising cloud costs. ### ppea2022025 - introduction of the CCE has helped bring visibility and transparency to the rising cloud costs. ### Cloud costs and Cloud Capital Equivalent (CCE) - Introduction of the CCE has helped bring visibility and transparency to the rising cloud costs. - ITD and OBP will continue to work on managing the sustainability of overall cloud costs through: - a more deliberate cloud strategy, - consolidation, - license cost optimization. - Cloud Capital Equivalent (CCE) is a sub-category within the capital budget for cloud subscription costs, introduced following the Fund’s migration from a “purchase build and maintain” software model to cloud-hosted platforms with subscription costs. ### Medium-term capital projects and HQ2 - FY23–25 planning and design work will be completed for the HQ2 building and systems lifecycle update. - The HQ2 project will: - incorporate hybrid work model experience and smart building technologies, - design a facility that meets future business needs, - transform the workplace experience, - ensure accessibility, - reduce environmental impact. - Medium-term IT capital projects will be informed by IT product roadmaps, delivery capacity, and stabilization of the ITD delivery model. - Establishment of TRM will support strengthened governance and support framework for IT-intensive capital projects. - Pipeline projects include financial systems, budget modernization, economic data projects, and travel. ### Sustained risks (Section VI) - Significant residual budget risks remain due to external drivers that can only be partly addressed ex ante. - Identified sustained risks and mitigation measures: - Core country activity: - Large uncertainties on pandemic duration, inflation developments in major markets, and the war in Ukraine. - Projections during the FY23 budget formulation process are for baseline program work to remain elevated around more complex UCT programs. - Mitigations: periodic risk updates on program activity scenarios; incorporation of risk considerations into budget planning; risk-based resource allocation. - Travel uncertainty: - Faster receding pandemic and lifted travel restrictions could create pressures for rapid resumption of in-person missions. - Budget allocates resources to ramp up travel in line with health improvements. - Mitigations: close monitoring of travel costs; departments to prioritize travel needs; interdepartmental working group to review travel budgets and pandemic lessons. - Implementation of strategies supported by the augmentation: - Risks: delays in acquiring/onboarding requisite skillsets; demand from countries rising faster than Fund capacity. - Mitigations: multipronged human resources strategy; dovetailing with unwinding of crisis positions; coordinated cross-departmental work; balanced resource allocation between area and functional departments; transparent governance and accountability measures. - Hybrid work model: - Operational risks: working from home challenges, high work pressures, constrained office space. - Mitigations: phased hybrid approach; flexibility and empowerment; training combining in-person and virtual work; adoption of new technology to improve virtual meetings; standard IT package for work at home. - CD fundraising: - Risk of shortfall in fundraising for externally financed CD over the medium term. - Mitigations: diversify donor support; focus fundraising where member demand is highest and/or expected to grow (climate, gender, digitalization, FCS); bring more flexibility to resources; extend phases to reduce funding pressures; shift some administrative costs for R D focused on F S to the Fund’s budget to reduce funding risk and free donor resources for direct CD delivery. - Information security: - Risk of a large-scale cyberattack remains significant, including in the hybrid model context. - Mitigations: modernize technology infrastructure; promote awareness of information security policies; mandatory cybersecurity training. - Modernization: - Risk of delays and cost overruns in transformational modernization programs that could reduce scope for reallocation and envisaged savings. - Mitigations: stepped-up governance framework with OIA support; TRM-led cross-departmental effort to strengthen governance, oversight, and project management for IT-intensive modernization programs. - Budgeting in a period of inflation uncertainty: - Greater inflation uncertainty and sharp near-term shifts complicate budget management. - OBP will need to carefully manage related risks; issues to be explored in more detail in the FY22 budget outturn report. ### Summary proposal for FY23 (Section VII) — key figures and structure - Net administrative budget (total): US$1,294.6 million. - General (other administrative expenditures of the Fund): US$1,207.3 million. - OED: US$80.1 million. - IEO: US$7.2 million. - Receipts: US$270.9 million (General: US$269.4 million; OED: US$1.5 million; IEO: US$0.0 million). - FY22 Fund-financed carryforward (upper limit): US$93.0 million (General: US$79.1 million; OED: US$13.6 million; IEO: US$0.3 million). - Other transitional resources: US$9.5 million (General). - Total gross expenditures (limit): US$1,668.0 million (General: US$1,565.3 million; OED: US$95.2 million; IEO: US$7.5 million). - Capital budget total: US$77.9 million, broken down as: - Building facilities: US$18.9 million - Information Technology: US$44.0 million - Cloud: US$15.0 million - Memorandum items: - Net administrative budget in mil. of FY22 U.S. dollars: US$1,235.3 million (General: US$1,152.0 million; OED: US$76.4 million; IEO: US$6.8 million). - Fund-financed carryforward, upper limit (in percent): General 7.0; OED 5.0; IEO n.a. - Externally-financed carryforward, upper limit (in percent): 3.0 ### Proposed decisions for Executive Board - Decision 1. Administrative Budget for FY23: - A. Approve appropriations for net administrative expenditures for FY23 in total amount of US$1,294.6 million: - up to US$80.1 million for OED administrative expenditures, - up to US$7.2 million for IEO administrative expenditures, - up to US$1,207.3 million for other administrative expenditures of the Fund. - B. Authorize carryforward of amounts appropriated for net administrative expenditures for FY22 that have not been spent by April 30, 2022, up to US$93 million with sub limits: - US$13.6 million for OED, - US$0.3 million for IEO, - US$79.1 million for other administrative expenditures. - C. Approve a limit on gross administrative expenditures in FY23 in total amount of US$1,668.0 million, with sub limits: - US$95.2 million for OED, - US$7.5 million for IEO, - US$1,565.3 million for other administrative expenditures. - D. Appropriations will be increased by the amount of OED excess underspend above carryforward limits and IEO underspend above carryforward limit, as determined in FY22 year-end closure. - Decision 2. Capital Budget Appropriations for FY23: - Approve appropriations for capital projects underway or beginning in FY23 in total amount of US$77.9 million applied to: - (i) Building Facilities: US$18.9 million - (ii) Information Technology: US$44 million - (iii) IT Cloud Capital Equivalent: US$15 million - Decision 3. Carryforward mechanism for externally funded expenditures: - Adopt new carryforward mechanism for externally funded CD expenditures as set out in Annex III of EBAP/22/14, 04/01/22 (paragraphs 1–6). ### Annex I — Projected FY22 outturn and FY22 budget developments (selected figures) - Net Underspend, FY12–22 shown relative to Fund-Financed approved budget (charts in source). - Budget and Carryforward, FY12–22 shown in Millions of FY22 U.S. dollars (charts in source). - Table 1. Net Administrative Budget: Estimated Outturn, FY21–22 (Millions of U.S. dollars): - Gross expenditures (Budget): 1,429; Outturn: 1,460 - Total (Fund-financed) (Budget): 1,268; Outturn: 1,204 - Total (Donor-financed) (Budget): 1,249; Outturn: 163 - Personnel (Budget): 1,055; Outturn: 1,074 - Travel (Budget): 133; Outturn: 134 - Buildings and other expenses (Budget): 230; Outturn: 239 - Receipts (Budget): -243; Outturn: -246 - Net expenditures (Budget): 1,186; Outturn: 1,214 - Travel (FY22): - Business Travel: 123 (Outturn), 14 (Proj.), 127 (FY19) - Settlement Travel: 10 (Outturn), 10 (Proj.), 8 (FY19) - Miscellaneous Travel: 1 (Outturn), 2 (Proj.), 1 (FY19) - Total Travel FY22 Outturn: 134 - Receipts, FY21–22 (Millions of FY22 U.S. dollars): - Total FY21 Outturn: 141.7; FY22 Budget: 246.0; FY22 Projected outturn: 189.0 - Externally financed CD (direct cost only): FY21 Outturn 118.4; FY22 Budget 210.4; FY22 Projected outturn 163.0 - General receipts: FY21 Outturn 23.3; FY22 Budget 35.6; FY22 Projected outturn 26.0 - Administrative and TFMF 1/: FY21 Outturn 8.3; FY22 Budget 14.7; FY22 Projected outturn 11.4 - Publications income: FY21 Outturn 0.1; FY22 Budget 2.7; FY22 Projected outturn 0.2 - Fund-sponsored sharing agreements 2/: FY21 Outturn 2.9; FY22 Budget 4.1; FY22 Projected outturn 2.3 - HQ2 lease 3/: FY21 Outturn 0.6; FY22 Budget 1.4; FY22 Projected outturn 1.0 - Concordia: FY21 Outturn 0.5; FY22 Budget 3.9; FY22 Projected outturn 2.2 - Parking: FY21 Outturn 0.1; FY22 Budget 3.5; FY22 Projected outturn 0.0 - Corporate, Travel and P-cards: FY21 Outturn 0.0; FY22 Budget 0.5; FY22 Projected outturn 0.0 - Memorandum Item: CD Outturn assumed for planning: 165.0 - Notes: - Trust fund management fee of 7 percent is noted. - Reimbursements principally from the World Bank. - Includes Credit Union and retail tenants. - Travel spending is expected to be well below the pre-crisis level in FY19. - Building occupancy remains below pre-pandemic levels despite some pick up with early implementation of the hybrid work model. - Accounting changes related to CCE reflected in IT spending. *Source: FY2023–FY2025 MEDIUM-TERM BUDGET (selected sections).* ### Annex III. Proposed Policy for Externally Funded Carryforward ### Annex III. Proposed Policy for Externally Funded Carryforward ### Key features and relationship to IMF01 - The IMF02 carryforward policy will share key features of the IMF01 policy. - Any IMF02 carryforward will not become part of the budget baseline, departmental or Fund-wide, to ensure firm control of the Fund’s overall budgetary envelope. ### Differentiation of carryforward types - The IMF02 carryforward will differentiate between staff costs and other administrative costs. - Underruns related to staff Group in the Fund’s budget structure can be carried forward will remain in the central allocation managed by ICD. - Recognizing the interaction between Fund and external spending on Group 1, ICD and OBP will coordinate on calculating this carry-forward. - Underruns in other expense categories (Group 2-5, and for CD, typically expert contracts and travel) will remain with departments and will be fungible (within some constraints). ### Integration with CD planning and allocation process - Planning of spending associated with the carryforward will be integrated into the CD planning process. - Departments will formulate their medium-term workplan taking into account a projected level of carryforward in addition to their structural budget. - At the beginning of the new fiscal year, carryforward resources will be allocated based on: - a) confirmation of departmental allocations of underspend of non-staff budgets; and - b) allocation to a central pool of staff-related underspend that is eligible for carryforward. - This process will be led by ICD, guided by the decisions of the Committee for Capacity Building. - Departments would make any final adjustments to workplans following this process. ### Constraints on spending and donor terms - Spending associated with the carryforward will be constrained by parameters of available external funding. - The proposed carryforward would not create new financing needs, nor would it change the purpose for which partners have provided resources to the Fund. - The carryforward would increase, at the margin, the amount of money the Fund is authorized to spend within a given year utilizing the resources provided by donors and would not change the terms and conditions of specific funding agreements. - Consultations on workplans with partners would continue through existing mechanisms. ### Fund-wide limit and governance - The Fund-wide IMF02 carryforward will be limited to a fixed proportion of the overall IMF02 budget. - At the end of each fiscal year, the difference between actual overall IMF02 expenditure and the IMF02 budget, up to a set percentage of the IMF02 budget, would be allowed to be carried forward and spent during future fiscal year. - Limiting the size of the carryforward is warranted to avoid volatility in budget allocations. - The limit will be set by the Board and is proposed to be 3 percent for FY23. *Annex III. Proposed Policy for Externally Funded Carryforward* ### 6. ICD will report on the IMF02 carryforward annually. As with the IMF01 carryforward, the ### ppea2022025 - 6. ICD will report on the IMF02 carryforward annually. As with the IMF01 carryforward, the ### IMF01 and IMF02 carryforward policy design and governance - Purpose of the carryforward (CF): - IMF01: Allow unspent resources in IMF01, up to a limit, to be carried forward to the next financial year. - IMF02: Allow unspent resources in IMF02, up to a limit, to be carried forward to the next financial year. - Limit: - IMF01: Set annually. 7 percent in FY23 on an exceptional basis. Has varied by historic level of 3 percent. - IMF02: 3 percent for FY23. - Calculation: - IMF01: Central CF: Underspending in Group I. Department’s F: Underspending in Groups II-VI of its budget less any Group 1 overspend. - IMF02: Central CF: Underspending in Group I. Department’s F: Underspending in Groups II-VI of its budget. Group 1 overspend can lead to an adjustment of this amount for non-staff expenditures. - Assessment: Broadly similar between IMF01 and IMF02. - Allocation of central CF among departments: - IMF01: Fund temporary needs in departments, including temporary FTEs. - IMF02: Fund temporary needs for reprioritization in workstreams or departments, to absorb unexpected demand shocks. - Assessment: Broadly similar. - Fungibility rule: - Both: Consistent with temporary resource needs approved in the budget paper, no constraints on the use of central CF across expenditure group. Full fungibility of department’s F across expenditures in Groups II-IV. - Assessment: Same. - Deflator: - Both: CF will not be adjusted by the deflator or be part of the base when moving from one year to the next. - Assessment: Same. - Reporting and approval: - ICD will report on the IMF02 carryforward annually. - The Medium-Term Budget paper will present an estimate of carryforward from the current fiscal year and seek approval in the formal decision, with the actual carryforward based on final end-year outturn up to the limit. - The final outturn for the previous fiscal year and the actual amount carried forward for IMF02 into the new fiscal year will be presented in the Budget Outturn paper. - Financial statement effects and budgetary impact: - The use of carryforward budget resources would not affect the presentation of expenses in the Fund’s audited financial statements. - The estimated cost of implementing a carryforward policy is expected to be minimal and will be absorbed by the existing ICD and OBP budgets. ### Definitions (as used in the tables) - Group I—personnel costs for staff. - Group II—costs of HQ-based experts, and Long- and Short-Term Experts in the field. - Group III—costs of various contractual employees and overtime expenditure. - Group IV—discretionary departmental expenditures such as Travel and Seminar etc. - Group V—costs allocated to specific department for Fund-wide services (e.g., publication, facilities costs). - Group VI—covers revenues (including Trust Management Fee from external partners). ### Key budget and expenditure figures (as presented) - Selected aggregated budget lines (presented as sequences in the source): - Personnel: 934 922 969 962 1,009 995 1,025 1,028 1,055 1,049 1,074 1,107 - Travel: 123 115 126 121 135 126 134 97 133 16 134 25 - Buildings and other expenditures: 205 218 209 226 215 224 224 225 230 203 239 235 - Contingency 1/: 110 110 120 140 110 120 - Total Gross Expenditures: 1,273 1,255 1,315 1,309 1,371 1,346 1,397 1,350 1,429 1,268 1,460 1,367 - Less: Receipts: 200 189 211 211 236 214 239 199 243 142 246 189 - Total Net Expenditures: 1,072 1,066 1,104 1,099 1,135 1,131 1,158 1,150 1,186 1,126 1,214 1,178 - Travel subcomponents (selected rows as shown): - Business travel: 98 88 99 92 111 99 107 72 103 1 103 13 - Transportation: 98 49 99 52 111 56 102 41 98 1 91 10 - Per diem: ... 39 ... 40 ... 43 6 31 5 0 12 3 - Seminars & other: 14 15 15 18 14 18 16 14 19 1 20 1 - Other travel: 12 11 12 11 10 10 10 10 10 14 11 11 - Buildings and other expenses subcomponents: - Buildings and other expenses: 205 218 209 226 215 224 224 225 230 203 239 235 - Building occupancy: 59 65 63 68 67 69 70 69 73 68 77 64 - Information technology: 61 65 65 69 69 66 72 67 73 67 75 66 - Subscriptions and printing: 19 21 21 22 20 21 14 20 21 18 21 19 - Communications: 7 8 8 8 8 8 8 8 8 7 8 7 - Supplies and equipment: 6 6 4 7 4 6 4 5 4 2 4 4 - Miscellaneous 1/: 52 53 50 52 46 55 57 56 52 41 54 74 - Receipts breakdown: - Receipts: 200 189 211 211 236 214 239 199 243 142 246 189 - Externally-financed: 160 153 172 174 196 178 200 168 206 118 210 163 - General receipts 1/: 40 35 39 37 40 36 39 31 37 23 36 26 ### Programmatic spending (FY20–22 tables, selected lines and exact figures) - Fund-Financed Gross Administrative Spending Estimates by Output (Est. Resources / Proj. Outturn; total shown): - Total: 1,238 1,196 1,249 1,204 100.0 100.0 100.0 100.0 - Multilateral surveillance: 271 283 329 313 21.9 23.7 26.3 26.0 - Global economic analysis: 128 130 141 134 10.3 10.8 11.3 11.1 - Tools to prevent and resolve systemic crises: 75 85 115 109 6.1 7.2 9.2 9.1 - Bilateral surveillance: 327 259 288 314 26.5 21.7 23.1 26.0 - Lending (incl. non-financial instruments): 211 240 242 219 17.0 20.1 19.4 18.2 - Capacity development: 241 224 174 154 19.5 18.7 13.9 12.8 - Miscellaneous 2/: 33 32 20 20 2.7 2.7 1.6 1.7 - Total Gross Administrative Spending Estimates by Output (Total 1,414 1,297 1,460 1,367; percent of total shown): - Total: 1,414 1,297 1,460 1,367 100.0 100.0 100.0 100.0 - Multilateral surveillance: 271 283 349 328 19.2 21.8 23.9 24.0 - Bilateral surveillance: 328 259 288 314 23.2 20.0 19.7 22.9 - Capacity development: 411 338 355 293 29.0 26.0 24.3 21.4 - Miscellaneous 2/: 39 20 28 28 2.8 1.5 1.9 2.1 - Fund-Financed Gross Administrative Spending Estimates by Output (direct costs): - Direct total: 1,238 1,196 1,249 1,204 100.0 100.0 100.0 100.0 - Multilateral surveillance (direct): 180 187 214 204 14.6 15.7 17.1 17.0 - Bilateral surveillance (direct): 220 165 173 204 17.8 13.8 13.9 16.9 - Lending (direct): 138 155 165 145 11.1 13.0 13.2 12.1 - Capacity development (direct): 145 134 62 50 11.8 11.2 4.9 4.1 - Support and Governance (direct): 433 423 493 462 35.0 35.3 39.4 38.4 - Miscellaneous 2/: 22 32 20 20 1.8 2.7 1.6 1.7 ### Capital expenditures and appropriations (FY16–22, selected aggregates) - IT Cloud / Information Technology / Capital Equivalent / HQ1 Renewal / Total (selected fiscal-year snapshots): - FY 16: - New appropriations(16): (16)14.4 27.7 13 2.0 3/174.1 - Total funds available(17)= (15)+(16): 44.5 40.6 34.9 43 34.5 - Expenditures(18): 14.6 25.8 90.1 130.5 - Lapsed funds 1/(19): 0.4 0.1 0.0 0.6 - Remaining funds 2/(20) = (17)-(18)-(19): 29.4 14.7 25 9.2 303.4 - FY 17: - New appropriations(21): 32.5 28.0 0.0 60.5 - Total funds available(22)= (20)+(21): 62.0 42.7 259.2 363.9 - Expenditures(23): 17.9 27.9 76.3 122.1 - Lapsed funds 1/(24): 5.4 0.2 0.0 5.6 - Remaining funds 2/(25) = (22)-(23)-(24): 38.7 14.6 18 2.9 236.2 - FY 18: - New appropriations(26): 31.4 35.0 0.0 66.4 - Total funds available(27)= (25)+(26): 70.1 49.6 182.9 302.6 - Expenditures(28): 22.3 31.4 62.3 116.0 - Lapsed funds 1/(29): 0.3 0.0 0.0 0.3 - Remaining funds(30) = (27)-(28)-(29): 47.4 18.2 120.6 186.3 - FY 19: - New appropriations(31): 35.5 35.9 0.0 71.4 - Total funds available(32)= (30)+(31): 82.8 54.1 120.6 257.5 - Expenditures(33): 28.7 30.9 81.6 141.2 - Lapsed funds 1/(34): 5.9 0.0 0.0 5.9 - Remaining funds(35) = (27)-(28)-(29): 48.1 23.2 39.0 110.4 - FY 20: - New appropriations(36): 40.8 45.0 0.0 85.8 - Total funds available(37)= (35)+(36): 88.9 68.2 39.0 196.2 - Expenditures(38): 41.8 42.2 22.8 106.8 - Lapsed funds 1/(39): 1.8 0.0 0.0 1.8 - Remaining funds(40) = (38)-(39)-(39): 45.4 26.0 16.2 87.6 - FY 21: - New appropriations(41): 42.4 56.3 0.0 98.7 - Total funds available(42)= (40)+(41): 87.8 82.3 16.2 186.3 - Expenditures(43): 25.7 49.7 1.5 76.9 - Lapsed funds 1/(44): 2.5 0.0 0.0 2.5 - Remaining funds(45) = (42)-(43)-(44): 59.6 32.6 14.7 106.9 - FY 22: - New appropriations(46): 23.5 46.0 9.5 0.0 79.0 - Total funds available(47)= (45)+(46): 83.1 78.6 9.5 14.7 185.9 - Expenditures (Est.)(48): 20.4 55.0 9.5 -0.8 4/84.1 - Lapsed funds 1/(49): 8.3 0.0 0.0 8.3 - Remaining funds (Est.) 2/(50) = (47)-(48)-(49): 54.4 23.6 0.0 15.5 93.5 *Prepared by ICD (extract from FY2023–FY2025 MEDIUM-TERM BUDGET, Annex IV: Statistical Tables).* --- _Source: https://www.imf.org/-/media/files/publications/pp/2022/english/ppea2022025.pdf_