## ppea2022027

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---

### Executive Summary
- Context:
  - Membership and the Fund face an inflection point emerging from the COVID-19 crisis while addressing long-term global challenges with profound macroeconomic and financial implications.
  - April 2021 IMFC call: step up work to help members identify and manage macro-critical implications of climate change, digitalization, inequality, and fragility.
  - October 2021 IMFC: encouraged Executive Board to “consider the appropriate budget resources to ensure that the IMF has the staff and skills required to carry out its mandate.”
  - After a decade of real flat budgets, human and financial buffers have been exhausted; absence of additional resources would risk:
    - crippling timely and comprehensive efforts on new imperatives;
    - undesirable trade-offs with critical traditional work;
    - compromises in overall quality of work; and
    - persistent, unsustainable work pressures on staff.
- New imperatives and Fund role:
  - Strategies and deliverables (presented April–October 2021) for engagement on:
    - Climate change (Annex I): mitigation, transition to net zero, adaptation; leveraging fiscal, financial, and structural policies; supporting multilateral solutions.
    - Digital money (Annex II): implications for economic and financial stability and the international monetary system, in coordination with partners.
    - Macrofinancial surveillance (Annex III): respond more fully to macrofinancial needs and anchor macro-prudential policy advice.
    - Fragile and conflict-affected states (Annex IV): expand capacity, reinforced field presence, closer engagement with partners.
    - Inclusion and gender (Annex V): incremental investment to mainstream analysis of macro-critical aspects in country work.
- Budget augmentation proposal (overview):
  - Staff proposes annual increases in the real net administrative budget averaging 2 percent each year during FY 23 to FY 25 relative to FY 22, returning to a flat real budget trajectory thereafter.
  - Proposal:
    - Allows for ramp up in new areas while ensuring appropriate resources remain for existing workstreams.
    - Is consistent with projected income dynamics.
    - Will be accompanied by strict budget discipline through robust annual savings and reprioritization exercises.
  - Scope and context:
    - Issue areas covered represent less than 20 percent of the Fund’s $1,214 million net administrative budget (FY 22).
    - An additional $210 million in external financing mainly supports the Fund’s capacity development activities.
    - The Fund maintains a small structural buffer of 0.7 percent, and is dependent on temporary, one-off resourcing for flexibility in budget execution.
- Institutional observations and risks:
  - Average of about 4 percent of the aggregate envelope reprioritized in recent years within a flat real context.
  - Human buffers exhausted: increased overtime, underutilization of leave, increased average mission length in the virtual environment, significant off-hours work.
  - Augmentation protects against deep cuts but does not eliminate need for ongoing reprioritization at recent levels.

### Proposed Augmentation — Framework and Phasing
- Objective:
  - Board endorsement of a framework for augmentation to the Fund’s net administrative envelope to set the foundation for staff proposals for FY 23 through FY 25, with reversion to a real, flat envelope at the new, higher level thereafter.
- Phased augmentation and hiring:
  - Phased augmentation over three years to balance predictability and time for recruitment and readiness.
  - Slightly backloaded hiring drawing on Economist Program, mid-career pipeline, visiting scholar/expert tracks (predominantly specialist economists), and new markets for specialized skills.
  - Harder-to-fill positions (e.g., digital money specialists; certain field positions in FCS) to ramp up more slowly.
- Real resourcing averages 2 percent of the FY 22 net administration each year over three years, with slight backloading.
- Year-by-year real augmentation versus FY 22 (dollar resourcing presented in FY 22 dollars):
  - FY 23—Foundational: About 1.8 percent real augmentation versus FY 22 (about $22 million in FY 22 dollars). Focus: develop core tools, guidance, analytics; pilot country engagements; increased staffing in field offices over the three-year period; development and launch of recruitment and organizational support planning.
  - FY 24—Growth: About 2.1 percent real change versus FY 22 (about $25 million in FY 22 dollars). Focus: expanded recruitment and increased capacity to leverage expertise and analytics into direct country engagement.
  - FY 25—Stabilization: About 2.1 percent relative to FY 22 (about $26 million in FY 22 dollars). Ramp up continues and begins to stabilize. Budgets for FY 26 and forward maintained at the FY 25 level on a flat real basis.
- Allocation by activity and department type:
  - About 70 percent of resources expected to support direct country operations (surveillance, lending, and CD).
  - Remaining resources support analytic, policy and training-related functions, led mainly by functional departments.
- Reporting and oversight:
  - Board approval of the framework provides planning certainty.
  - Regular Board budget and HR review; periodic dedicated Board briefings on progress.

### Costing, Overhead, and Impact on Fund-financed CD
- Costing and overhead:
  - Personnel requirements derived from quantified deliverables using unit costs, existing resources, prospective external CD funding, and anticipated synergies.
  - An additional 5 percent discount applied to capture synergies and efficiencies.
  - Overhead costs recognized: workforce planning, recruitment, onboarding, HR administration, communications, support for greater field presence (security, real estate, HR, connectivity/IT), building operations, HQ office space assumed adequate under hybrid working model, purchase/expansion of software and IT-related licenses and expanded IT support.
- Impact on Fund-financed CD:
  - Direct spending on pre-crisis CD accounts for about 23 percent of the Fund’s overall spending (relative to 27 percent for bilateral surveillance and lending combined); over half of CD has been funded by donor partners in recent years.
  - Just less than 40 percent of economic department budgets in FY 21 (and 20 percent of Fund-financed budgets for these departments) went to CD operations.
  - Augmentation will support increased CD delivery: deeper integration with surveillance and lending, strengthened prioritization and monitoring, and enhanced evaluation.
  - Specifics:
    - About one-quarter of the augmentation ($17 million) will support CD-related activities, equivalent to about 11 percent of post-augmentation Fund-financed CD.
    - Augmentation largely additive in CD delivery, with $3 million to help stabilize running costs of RCDCs serving fragile states.
    - Half of the proposed increase for CD will focus on higher field presence in FCS and greater funding stability for key RCDCs; remainder to CD for climate change and digital money.
    - Increases in existing IMF02 envelopes for climate, digital money and FCS are proposed in related strategies.

### Impact on Income Dynamics and Key Financial Statistics
- The proposed augmentation is consistent with sustainable income-expense dynamics.
- Based on end-September Desk Survey on potential near-term new demand for Fund’s lending, operational income is expected to remain well above expenses even with the proposed augmentation and after accounting for PRGT reimbursement suspension and SCA-1 distribution.
- When fully implemented in FY 25, the proposed augmentation would absorb 2.1 percent of FY 25 projected operational income.
- The overall net administrative budget would absorb 37 percent of operational income.
- Impact on precautionary balance target:
  - Proposed augmentation would not materially impact timeline for achievement of precautionary balance target of SDR 25 billion.
  - Target projected to be achieved in early FY 25; with augmentation, still reached in FY 25.
- Operational income and expenses — key statistics (FY22–FY25):
  - Projected Operational Income:
    - FY22: 3.9
    - FY23: 4.4
    - FY24: 4.5
    - FY25: 3.8
  - Percent change (year-over-year):
    - FY22: 32.3
    - FY23: 13.7
    - FY24: 0.7
    - FY25: -15.4
  - Projected Net Administrative Budget incl. Augmentation:
    - FY22: 1.2
    - FY23: 1.3
    - FY24: 1.3
    - FY25: 1.4
  - Percent of Operational Income (Net Administrative Budget):
    - FY22: 31
    - FY23: 29
    - FY24: 30
    - FY25: 37
  - Proposed Augmentation in the Net Administrative Budget after FY23 (cumulative):
    - FY23: ...0.02
    - FY24: 0.05
    - FY25: 0.08
  - Proposed Augmentation as Percent of Operational Income:
    - FY23: 0.6
    - FY24: 1.1
    - FY25: 2.1

### Implementation, Workforce Planning, and Talent Sourcing
- Implementation overview:
  - Significant ramp-up in employees across departments and across HQ and field offices, under different categories of employment over short- and medium-term.
  - Budget and HR planning guided by an HRD/OBP-led interdepartmental Issues Group.
- Workforce planning will:
  - Support integrated consideration of budget and HR implications in a medium-term context.
  - Set new needs under individual issue strategies into the broader budget and HR context, recognizing crisis resourcing and increased retirements.
  - Allow structured consideration of HR-related imperatives and priorities.
- Staff allocation by department type:
  - Centralization recognized for knowledge hubs; direct resourcing to area departments to ensure region- and country-specific adaptation.
  - Initial allocations expected to lean toward resourcing functional departments, with area department country teams increasing over time.
  - Support departments receive allowances as part of overhead costs, highest needs in start-up phase and partial transitional funding.
- Talent sourcing:
  - Mix of approaches: “Building Talent” (train existing staff; expand ICD’s Structured Curriculum) and “Borrowing Talent” (secondments, swaps, visiting scholars).
  - For highly specialized skills (climate, digital money/payments) coordinate with other IFIs and governmental agencies on secondments and swaps and use temporary arrangements.

### Issue-Specific Strategies and Resourcing (key figures preserved)
- Overall allocation by issue area (summary):
  - Climate change: Just less than 40 percent of augmentation (summary allocation shown as 37 percent in Table 1).
  - Digital money: 20 percent of augmentation.
  - Macrofinancial surveillance: 12 percent of augmentation.
  - Fragile and Conflict-Affected States (FCS): 29 percent of augmentation.
  - Inclusion and gender: 3 percent of augmentation.
- Climate change:
  - Existing: $28 million, of which $1.6 million transitional. IMF02: About $2 million.
  - Augmentation (after synergies):
    - FY 23: $8.0 million.
    - FY 24: $9.3 million.
    - FY 25: $9.3 million.
  - Country support deliverables in steady state:
    - Coverage in some 45-50 Article IVs per year.
    - Every three years: mitigation policies for the 20 largest emitters of greenhouse gases.
    - Every four years: adaptation and resilience for the 60 most vulnerable countries.
    - Coverage of transition risk to a low-carbon economy prioritized by need (no universal/cyclical coverage).
    - 8 FSAPs per year covering climate risk, regulatory, and supervisory assessments.
    - In-depth CD coverage to increase by about 25 countries per year, as well as 5 CMAPs.
    - A climate-related macroeconomic course to be developed; climate modules included into existing courses, with supporting online tools and webinars.
  - Training and staff support: “Climate 101” course and a “Climate Bootcamp.”
  - Summary steady-state additional resource implication: additional $27 million in the steady state.
- Digital money:
  - Existing: $4 million, of which $0.3 million transitional. No IMF02 resources.
  - Augmentation (after synergies):
    - FY 23: $3.6 million.
    - FY 24: $5.0 million.
    - FY 25: $5.7 million.
  - Country support deliverables in steady state:
    - About 25 Article IVs to cover digital money issues every year.
    - Targeted coverage in about 12 FSAPs annually.
    - In-depth CD coverage to about 35 countries per year.
  - Other activities: participation to 4 international working groups per year; policy papers, reference notes and toolkits.
  - Training: Internal training (4 sessions per year).
- Macrofinancial surveillance:
  - Existing: $83 million for financial surveillance, of which $3.2 million transitional. No IMF02 resources.
  - Augmentation (after synergies):
    - FY 23: $3.9 million.
    - FY 24: $2.6 million.
    - FY 25: $2.2 million.
  - Country support focus: Over 80 percent of additional resources to provide direct country support to eliminate gaps in depth and integration of macrofinancial linkages, systemic risk analysis and macroprudential policy advice.
  - Training and tools: expanded use of the Systemic Risk Tracker, Growth-at-Risk, and training on financial development, inclusion, and integrity.
- Fragile and Conflict-Affected States (FCS):
  - Existing: $76 million, of which $3.8 million transitional. IMF02: About $28 million.
  - Augmentation (after synergies):
    - FY 23: $5.3 million.
    - FY 24: $7.4 million.
    - FY 25: $8.5 million.
  - Direct country support deliverables:
    - Additional resident representatives to grow coverage of FCS from current 22 to 26 (out of a 42 FCS).
    - Field-based staffing to increase to an average of 2 local economists per FCS field office.
    - Strengthened support for CD-surveillance integration, particularly for heavy CD users (an expected 30 FCS over the medium term).
    - Expansion of in-depth and regionally-provided CD support and backstopping capacity at HQ.
    - $3 million to cover administrative costs of RCDCs.
  - FTE summary steady state: total personnel working on FCS about 260 staff and contractuals, and about 70 local economists.
- Inclusion and gender:
  - Existing: $36 million. IMF02: About $1 million.
  - Augmentation (after synergies):
    - FY 23: $1 million.
    - FY 24: $1 million.
    - FY 25: None.
  - Focus: incremental resourcing to deepen coordination on inequality and strengthen analytical tools on gender issues.
  - Training and staff support: about 3 new internal training courses on inequality and gender.
  - Recruitment: frontloaded.
  - Summary: Total resources would increase by about $2 million, about 3 percent of the overall augmentation.

### Phasing, Organization, Risks, and Mitigations (by issue area)
- Climate:
  - Phasing: Year one focus on policy and training; year two ramp to country support; year three scaling completed and stabilized.
  - Organization: strengthen climate teams in FAD, MCM, RES, and SPR; STA build data resources; area departments scale up.
  - Recruitment: about two-thirds of additional FTEs fungible macroeconomists; climate/operational experts and legal experts in functional departments.
  - Risks: feasibility of hiring climate macroeconomists; integration and training of new hires.
  - Mitigations: HRD and strategy coordination on pipelines; early investment in training curriculum; cross-departmental climate advisory group.
  - Reporting: regular Board updates; resource mobilization under IMF02 initiated in parallel; interim CSR in FY 24 to assess progress.
- Digital money:
  - Phasing: hiring over three years with backloading; Year One builds analytical foundations; Years Two and Three expand surveillance and CD.
  - Organization: Fund-wide coordination group and external advisory group; technology learning environment with World Bank.
  - Recruitment: mix of fungible macroeconomists and specialists (payment systems, technology risk, lawyers, data specialists, statisticians); mix of contractual and staff appointments.
  - Risks: need to share knowledge widely; hire talent early; invest to close knowledge gaps.
  - Reporting: report progress to Executive Board once per year.
- Macrofinancial surveillance:
  - Phasing/Organization: recruit to close macrofinancial analysis gaps over three years; split steady-state direct country support between ADs and FDs.
  - Risks: contingent on finding suitable candidates with macrofinancial talent.
  - Mitigations: draw on Economist Program and mid-career pipeline; onboarding and training to transmit skills across area departments.
  - Reporting: progress reported in interim Surveillance Review expected for FY 24.
- FCS:
  - Phasing: backloaded recognizing recruitment and security considerations; Year One builds centralized policy support and initiates field recruitment, Years Two and Three accelerate recruitment.
  - Risks: sensitivity to security conditions; reliance on local economist positions and IMF02 resources.
  - Mitigations: phased implementation and allowance for alternative locations for staffing; reassessment based on early experience.
  - Reporting: strategy formally presented to the Board for approval by end of calendar year 2021; regular updates via dedicated briefings.
- Inclusion and gender:
  - Phasing: resourcing frontloaded; Year One establish central unit and develop gender-focused work and training; Years Two and Three flexible use across inclusion and gender issues.
  - Risks: membership demand may exceed Fund’s capacity given targeted resources; ability to attract staff with necessary skills.
  - Mitigations: central unit to prioritize engagements; use established recruitment channels, internal training, and slow pace if needed.
  - Next steps: Board discussion of gender proposal in Q4 of fiscal year; annual progress updates during implementation.

### Resource Distribution and Outputs
- Activity split:
  - About 70 percent of augmentation resources expected to support direct country operations (surveillance, lending, CD).
  - Remaining resources to support analytic, policy, and training-related functions.
- CD specifics reiterated:
  - About one-quarter of augmentation ($17 million) to CD-related activities (~11 percent of post-augmentation Fund-financed CD).
  - $3 million to stabilize RCDC running costs serving fragile states.
  - Half of CD increase to higher field presence in FCS and funding stability for key RCDCs; remainder to CD for climate change and digital money.

### Risks, Monitoring, and Proposed Decision
- Risks and mitigation (summary):
  - Resourcing risks: mismatch between available budget envelope and calls to expand work; inaction risks piecemeal responses, reduced capacity to anticipate risks, increased staff pressures.
  - Implementation risks: scale (need for workforce planning, hybrid work model, phased hiring), expertise (agile recruitment and training), and delivery (matching absorption capacity and coordination with other IFIs).
  - Mitigations: phased hiring, centralization of hiring efforts, robust monitoring, training infrastructure, leveraging IFI collaboration, regular reporting to Board.
- Proposed decision (adoptable by a majority of votes cast):
  - “The Executive Board endorses the scope and modalities for a structural budget augmentation set out in EBAP/21/52 and summarized in paragraph 9 of EBAP/21/52 and asked staff to prepare budgets for the three cycles beginning with the FY 23-25 medium-term budget on the basis of the proposals in the paper for annual augmentations during FY 23 to FY 25.”

### Reporting and Oversight Arrangements
- Regular Board budget and HR review for ongoing oversight.
- Periodic dedicated Board briefings on progress in individual issue areas.
- Operational and organizational implementation aspects covered in annual recruitment and retention strategy updates, HRD briefings, and medium-term budget and outturn reports.

_Italic: Source — ppea2022027 (EXECUTIVE SUMMARY; SECTION III. PROPOSED AUGMENTATION; Annexes I–V; Impact on income dynamics), November 12, 2021._

### EXECUTIVE SUMMARY

### EXECUTIVE SUMMARY

### Context
- The membership and the Fund face an inflection point emerging from the COVID-19 crisis while addressing long-term global challenges with profound macroeconomic and financial implications.
- In April 2021, the IMFC called on the IMF to step up work to help members identify and manage macro-critical implications of climate change, digitalization, inequality, and fragility, and in October 2021 encouraged the Executive Board to “consider the appropriate budget resources to ensure that the IMF has the staff and skills required to carry out its mandate.”
- After a decade of real flat budgets, human and financial buffers have been exhausted; absence of additional resources would risk:
  - crippling timely and comprehensive efforts on new imperatives;
  - undesirable trade-offs with critical traditional work;
  - compromises in overall quality of work; and
  - persistent, unsustainable work pressures on staff.

### New imperatives and Fund role
- Following the 2021 Comprehensive Surveillance Review (CSR) and the 2021 FSAP Review, the Fund presented strategies and identified deliverables and resource implications for engagement on:
  - Climate change (Annex I): assisting members on mitigation, transition to net zero, adaptation; leveraging fiscal, financial, and structural policies; supporting multilateral solutions.
  - Digital money (Annex II): analyzing and helping members address implications for economic and financial stability and the stability of the international monetary system, in coordination with partners.
  - Macrofinancial surveillance (Annex III): responding more fully to macrofinancial needs and better anchoring macro-prudential policy advice.
  - Fragile and conflict-affected states (Annex IV): expanding capacity, reinforced field presence, closer engagement with partners.
  - Inclusion and gender (Annex V): incremental investment to mainstream analysis of macro-critical aspects in country work.
- Strategies were presented to the Board during April–October 2021 and reaffirm the importance of strengthening macro-financial surveillance.

### Budget augmentation proposal
- Staff proposes a budget augmentation implemented through annual increases in the real net administrative budget averaging 2 percent each year during FY 23 to FY 25 relative to FY 22, returning to a flat real budget trajectory thereafter.
- The proposed augmentation:
  - Allows for ramp up in new areas while ensuring appropriate resources remain for existing workstreams.
  - Is consistent with projected income dynamics.
  - Will be accompanied by strict budget discipline through robust annual savings and reprioritization exercises, even as new workstreams are built up.
- Scope and context:
  - Issue areas covered by the proposed augmentation currently represent less than 20 percent of the Fund’s $1,214 million net administrative budget (FY 22).
  - An additional $210 million in external financing mainly supports the Fund’s capacity development activities.
  - The Fund maintains a small structural buffer of 0.7 percent, and is dependent on temporary, one-off resourcing for flexibility in budget execution.
- Past shifts in the Fund’s budget:
  - Transition economies: FY 92–94 real expenditures grew by an average of 14 percent (year-over-year); average annual real increase over the full decade was 5 percent.
  - Global financial crisis and aftermath: spending grew by about 2 percent annually from FY 10 to FY 12 using temporary resources; temporary resourcing was made structural and formed the baseline for the real flat budget anchor over the last decade.

### Implementation
- Following endorsement of an overall framework for the three-year ramp-up in resourcing, resource allocations will be set out in the annual budgets approved by the Board, starting in FY 23.
- Carefully calibrated workforce planning and recruitment will support implementation of the issue strategies.
- Staff will regularly report to the Board on progress in implementing strategies for individual issue areas to ensure transparency and accountability.
- The proposal recognizes parallel efforts to modernize the Fund and integrate lessons from virtual operations into the Future of Work at the Fund (including considerations of hybrid workforce model, global presence, HQ operations and facilities, and Executive Board modernization).
- New ways of working may enable scope for substitution of travel with virtual engagement over time, supported by investments in technologies, but in-person engagement remains central for traction, effectiveness, and efficiency.

### Strategic and budget principles guiding the proposal
- Ongoing budget prudence: reprioritization and savings remain core; reversion to a flat-real budget trajectory following the augmentation.
- Focus: new work framed by robust, issue-specific strategies driven by the Fund’s mandate and expertise, preserving resources for existing workstreams and collaborating with partners.
- Sound implementation: phased approach matching strategic requirements with organizational, HR, and budget needs consistent with absorption capacity.
- Sustainability: augmentation consistent with medium-term income outlook, precautionary balances objectives, and the risk management framework.

### Key institutional observations and risks
- Extensive reprioritization has been a feature of Fund budgets in recent years, with an average of about 4 percent of the aggregate envelope reprioritized to meet evolving needs within a flat real context.
- Crisis and recovery needs were met through reprioritization and temporary savings (including reduced travel), supported by a temporary expansion in unspent resources to be unwound as crisis needs abate.
- Human buffers are exhausted: indicators include increased overtime, underutilization of leave, increased average mission length in the virtual environment, and significant off-hours work driven by time differences.
- The augmentation is designed to protect against deep cuts in ongoing activities but does not eliminate the need for ongoing reprioritization at levels in line with recent years, including preserving space for potential new crisis lending and continued work on debt, medium-term fiscal and monetary frameworks, international taxation, governance, and other priorities.

*Source: EXECUTIVE SUMMARY — BUDGET AUGMENTATION FRAMEWORK (ppea2022027), November 12, 2021.*

### SECTION III. PROPOSED AUGMENTATION

### SECTION III. PROPOSED AUGMENTATION

### A. Overview and proposed augmentation framework
- Objective: Board endorsement of a framework for an augmentation to the Fund’s net administrative envelope to set the foundation for staff proposals for FY 23 through FY 25, with reversion to a real, flat envelope at the new, higher level thereafter.
- Phased augmentation and implementation:
  - Phased augmentation over three years to balance predictability for strategic planning and time for effective recruitment and organizational readiness.
  - Hiring approach:
    - Slightly backloaded hiring drawing on existing channels (Economist Program, mid-career pipeline, visiting scholar and expert tracks—predominantly specialist economists) and new markets for specialized skills.
    - Harder-to-fill positions (e.g., digital money specialists; certain field positions in FCS) to ramp up more slowly.
- Scale and vetting:
  - Scale reflects initial resourcing proposals by each issue strategy team, vetting consistent with prudent budget principles, and input from Executive Directors (Box 3).
  - Real resourcing averages 2 percent of the FY 22 net administration each year over three years, with slight backloading.
- Year-by-year real augmentation versus FY 22 (dollar resourcing presented in FY 22 dollars):
  - FY 23—Foundational: About 1.8 percent real augmentation versus FY 22 (about $22 million in FY 22 dollars). Focus: develop core tools, guidance, analytics; pilot country engagements; increased staffing in field offices over the three-year period; development and launch of recruitment and organizational support planning.
  - FY 24—Growth: About 2.1 percent real change versus FY 22 (about $25 million in FY 22 dollars). Focus: expanded recruitment and increased capacity to leverage expertise and analytics into direct country engagement.
  - FY 25—Stabilization: About 2.1 percent relative to FY 22 (about $26 million in FY 22 dollars). Ramp up continues and begins to stabilize. Budgets for FY 26 and forward maintained at the FY 25 level on a flat real basis.
- Allocation by issue area (overall):
  - Just less than 40 percent of the augmentation would support expansion of the Fund’s work on climate change.
  - About 30 percent each to support efforts related to the changing financial landscape and strengthening work in fragile and conflict-affected states (FCS).
  - Incremental resources will support more effective leveraging of the Fund’s work on inclusion and gender.
  - Precise breakdown by issue area set out in annual budgets reflecting ongoing strategy review.
- Allocation by activity and department type:
  - About 70 percent of resources are expected to support direct country operations (surveillance, lending, and CD).
  - Remaining resources support analytic, policy and training-related functions, led mainly by functional departments.
- Reporting and oversight:
  - Board approval of the framework provides planning certainty for deliberate, strategic, and efficient implementation.
  - Regular Board budget and HR review for ongoing oversight.
  - Periodic reporting to the Board on progress in individual issue areas through dedicated Board briefings.
  - Operational and organizational implementation aspects covered in annual recruitment and retention strategy updates, other HRD briefings, and medium-term budget and outturn reports.

### A.1. Costing and overhead (Box 3)
- Objectives and deliverables:
  - For each issue area, objectives and concrete deliverables were discussed by the Board. Formal strategy discussion on FCS and updates on inclusion and gender planned during FY 22.
- Direct resource implications:
  - Personnel requirements derived from quantified deliverables using relevant unit costs, existing resources, prospective external CD funding, and anticipated synergies between issue areas.
  - An additional 5 percent discount applied to capture synergies and efficiencies.
- Overhead costs and indirect activities recognized, including:
  - Workforce planning, recruitment, onboarding, HR administration, and career support.
  - Communications (broadcast, digital communications, design, language services, membership engagement).
  - Support for greater field presence (security, real estate, HR, connectivity/IT support).
  - Building operations and field-based office and housing costs; HQ office space assumed adequate under hybrid working model.
  - Purchase/expansion of software and IT-related licenses and expanded IT support for increased headcount.
- Feedback:
  - Based on Board feedback, overall scale of request and deliverables was moderated while protecting core objectives supported by Executive Directors.

### A.2. Impact on Fund-financed CD (Box 4)
- Current context:
  - Direct spending on pre-crisis CD (not including support costs) accounts for about 23 percent of the Fund’s overall spending (relative to 27 percent for bilateral surveillance and lending combined), over half of which has been funded by donor partners in recent years.
  - Just less than 40 percent of economic department budgets in FY 21 (and 20 percent of Fund-financed budgets for these departments) went to CD operations.
  - The augmentation will support increased CD delivery as part of strengthening Fund CD: deeper integration with surveillance and lending, strengthened prioritization and monitoring, and enhanced evaluation.
- Specifics of augmentation impact on CD:
  - About one-quarter of the augmentation ($17 million) will support CD-related activities, equivalent to about 11 percent of post-augmentation Fund-financed CD.
  - Augmentation is largely additive in CD delivery, with $3 million to help stabilize running costs of RCDCs serving fragile states, freeing resources for other purposes.
  - Increases in existing IMF02 envelopes for climate, digital money and FCS are also proposed in the related strategies.
  - Half of the proposed increase for CD will focus on higher field presence in FCS and greater funding stability for key RCDCs facing financing issues.
  - The remainder would help increase CD related to climate change and digital money as integral parts of respective strategies.

### A.3. Issue-specific strategies and resourcing (Table 1 — key figures preserved)
- Climate change:
  - Summary allocation: 37 percent of augmentation.
  - Existing: $28 million, of which $1.6 million transitional. IMF02: About $2 million.
  - Augmentation (after synergies):
    - FY 23: $8.0 million.
    - FY 24: $9.3 million.
    - FY 25: $9.3 million.
  - Country support deliverables in steady state:
    - Coverage in some 45-50 Article IVs per year.
    - Every three years: mitigation policies for the 20 largest emitters of greenhouse gases.
    - Every four years: adaptation and resilience for the 60 most vulnerable countries.
    - Coverage of transition risk to a low-carbon economy prioritized by need (no universal/cyclical coverage).
    - 8 FSAPs per year covering climate risk, regulatory, and supervisory assessments.
    - In-depth CD coverage to increase by about 25 countries per year, as well as 5 CMAPs.
    - A climate-related macroeconomic course to be developed; climate modules included into existing courses, with supporting online tools and webinars.
  - Training and staff support: “Climate 101” course and a “Climate Bootcamp.”
- Digital money:
  - Summary allocation: 20 percent of augmentation.
  - Existing: $4 million, of which $0.3 million transitional. No IMF02 resources.
  - Augmentation (after synergies):
    - FY 23: $3.6 million.
    - FY 24: $5.0 million.
    - FY 25: $5.7 million.
  - Country support deliverables in steady state:
    - About 25 Article IVs to cover digital money issues every year.
    - Targeted coverage in about 12 FSAPs annually.
    - In-depth CD coverage to about 35 countries per year.
  - Other activities: increased Fund contributions to G7 and G20 efforts (participation to 4 international working groups per year), policy papers, reference notes and toolkits.
  - Training: Internal training (4 sessions per year) via courses, workshops and seminars.
- Macrofinancial surveillance:
  - Summary allocation: 12 percent of augmentation.
  - Existing: $83 million for financial surveillance, of which $3.2 million transitional. No IMF02 resources.
  - Augmentation (after synergies):
    - FY 23: $3.9 million.
    - FY 24: $2.6 million.
    - FY 25: $2.2 million.
  - Country support focus:
    - Over 80 percent of the additional resources to provide direct country support to eliminate gaps in depth and integration of macrofinancial linkages, systemic risk analysis and macroprudential policy advice.
  - Training and tools: expanded use of the Systemic Risk Tracker, Growth-at-Risk, and training on financial development, inclusion, and integrity.
- Fragile and Conflict-Affected States (FCS):
  - Summary allocation: 29 percent of augmentation.
  - Existing: $76 million, of which $3.8 million transitional. IMF02: About $28 million.
  - Augmentation (after synergies):
    - FY 23: $5.3 million.
    - FY 24: $7.4 million.
    - FY 25: $8.5 million.
  - Direct country support deliverables:
    - Additional resident representatives to grow coverage of FCS from current 22 to 26 (out of a 42 FCS).
    - Field-based staffing to increase to an average of 2 local economists per FCS field office.
    - Strengthened support for CD-surveillance integration, particularly for heavy CD users (an expected 30 FCS over the medium term).
    - Expansion of in-depth and regionally-provided CD support and backstopping capacity at HQ.
    - $3 million to cover administrative costs of RCDCs.
  - Other activities: centralized analysis of drivers of fragility (including climate change and natural disasters), sharing experience and frameworks, collaboration with partners; leverage existing resources to support FCS teams on governance reforms.
  - Training and staff support: dedicated FCS curriculum for Fund staff.
  - Local economist hires to be undertaken over time, with some frontloading.
- Inclusion and gender:
  - Summary allocation: 3 percent of augmentation.
  - Existing: $36 million. IMF02: About $1 million.
  - Augmentation (after synergies):
    - FY 23: $1 million.
    - FY 24: $1 million.
    - FY 25: None.
  - Focus: incremental resourcing to deepen internal and external coordination on inequality and strengthen analytical tools on gender issues to support targeted country work.
  - Training and staff support: about 3 new internal training courses on inequality and gender.
  - Recruitment: frontloaded.

### A.4. Organizational and implementation phasing highlights (across issue areas)
- Climate:
  - Early years focus on developing policies and training; as policies mature, resources shifted toward increased country support.
- Digital money:
  - Initial implementation focus on building analytical foundations (policies, tools, review capacity, training); surveillance and CD ramp up soon after.
- Macrofinancial surveillance:
  - Recruitment paced to close the gap in macrofinancial analysis in a three-year period; splitting steady-state direct country support between ADs and FDs.
- FCS:
  - Hiring for ADs and field positions will begin upfront but be phased recognizing recruitment time; work expected to be somewhat backloaded to adjust to experience.
- Inclusion and gender:
  - Central coordinating function to be established within SPR to leverage analytics and progressively support country engagement; recruitment frontloaded.

### A.5. Resource distribution and outputs
- CD-related share and specifics:
  - About one-quarter of the augmentation ($17 million) directed to CD-related activities (~11 percent of post-augmentation Fund-financed CD).
  - $3 million to stabilize running costs of RCDCs serving fragile states.
  - Half of CD increase to higher field presence in FCS and funding stability for key RCDCs; remainder to CD for climate change and digital money.
- Activity split:
  - About 70 percent of augmentation resources expected to support direct country operations (surveillance, lending, CD).
  - Remaining resources to support analytic, policy, and training-related functions.

### A.6. Reporting and oversight arrangements
- Regular Board budget and HR review for ongoing oversight.
- Periodic dedicated Board briefings on progress in individual issue areas.
- Operational aspects covered in annual recruitment and retention strategy updates, HRD briefings, and medium-term budget and outturn reports.

### B. Affordability
- (Section heading present in source; substantive affordability analysis text not included in the supplied content.)

_Italic: Source — ppea2022027 - SECTION III. PROPOSED AUGMENTATION (excerpt)._

### 10.       Impact on income dynamics. The proposed augmentation is consistent with  sustainable

### ppea2022027 - 10.       Impact on income dynamics. The proposed augmentation is consistent with  sustainable

### Impact on income dynamics
- The proposed augmentation is consistent with sustainable income-expense dynamics.
- Based on the end-September Desk Survey on potential near-term new demand for Fund’s lending, operational income is expected to remain well above expenses even with the implementation of the proposed augmentation and after accounting for the impact of recent policy changes related to the PRGT reimbursement suspension and SCA-1 distribution.
- When fully implemented in FY 25, the proposed augmentation would absorb 2.1 percent of FY 25 projected operational income.
- The overall net administrative budget would absorb 37 percent of operational income.

### Impact on precautionary balance target
- The proposed augmentation would not materially impact the timeline for achievement of the precautionary balance target of SDR 25 billion.
- The precautionary balance target is projected to be achieved in early FY 25, after considering the impact of the recent policy decisions on PRGT reimbursement suspension and SCA-1 distribution.
- With the proposed augmentation, this target would still be reached in FY 25.
- The forthcoming Interim Review of Adequacy of the Fund’s Precautionary Balances will provide additional details.

### Operational income and expenses — key statistics (FY22–FY25)
- Projected Operational Income:
  - FY22: 3.9
  - FY23: 4.4
  - FY24: 4.5
  - FY25: 3.8
- Percent change (year-over-year):
  - FY22: 32.3
  - FY23: 13.7
  - FY24: 0.7
  - FY25: -15.4
- Projected Net Administrative Budget incl. Augmentation:
  - FY22: 1.2
  - FY23: 1.3
  - FY24: 1.3
  - FY25: 1.4
- Percent of Operational Income (Net Administrative Budget):
  - FY22: 31
  - FY23: 29
  - FY24: 30
  - FY25: 37
- Proposed Augmentation in the Net Administrative Budget after FY23 (cumulative):
  - FY23: ...0.02
  - FY24: 0.05
  - FY25: 0.08
- Proposed Augmentation as Percent of Operational Income:
  - FY23: 0.6
  - FY24: 1.1
  - FY25: 2.1

### Implementation overview and workforce planning
- The proposed augmentation entails a significant ramp-up in employees across departments and across HQ and field offices, under different categories of employment and over the short- and the medium-term.
- Budget and HR planning and implementation will be guided by an HRD/OBP-led interdepartmental Issues Group.
- Workforce planning will:
  - Support integrated consideration of budget and HR implications in a medium-term context.
  - Set new needs under individual issue strategies into the broader budget and HR context, recognizing crisis resourcing and increased retirements.
  - Allow structured consideration of HR-related imperatives and priorities.
- Staff allocation by department type:
  - Centralization of resources is recognized for knowledge hubs to support coordination and consistency.
  - Direct resourcing to area departments is recognized to ensure region- and country-specific adaptation, timely response, and feedback into policy and analytic work.
  - Initial allocations are expected to lean toward resourcing functional departments, with relative scale for Area Department country teams increasing over time.
  - Support departments will receive allowances as part of broader overhead costs, with highest needs in the start-up phase and partial transitional funding.

### Talent sourcing
- Sourcing strategy will use a mix of approaches focused on needed skills; HRD will consult with strategy teams and implementing departments to develop recruitment strategies for fungible and specialist economists.
- “Building Talent”:
  - Leverage gained expertise to train existing staff and mainstream new workstreams into core work.
  - ICD’s Structured Curriculum is being expanded to cover new issue areas; training will reinforce mainstreaming through structured teams and mobility assignments.
- “Borrowing Talent”:
  - For highly specialized skills (e.g., climate, digital money/payments), the Fund will coordinate with other international financial institutions and governmental agencies on secondments and swaps and use temporary arrangements (e.g., visiting scholars).

### Risks and mitigation
- Resourcing risks:
  - The augmentation request seeks to mitigate mismatch between available budget envelope and ambitious calls to expand work in new areas.
  - Inaction risks piecemeal responses, reduced capacity to anticipate risks, increased staff work pressures, crowding out critical traditional work, and unsustainable staff workloads.
  - The augmentation strategy calls for deliverables scaled consistent with available resources to safeguard core work and manage human resources.
- Implementation risks and mitigation measures:
  - Scale:
    - Requirements include organizational and workforce planning, adoption of hybrid work model and space utilization strategies, phased hiring, centralization of hiring efforts, and robust monitoring with readiness for remedial measures.
  - Expertise:
    - Requirements include an agile recruitment, onboarding, and training infrastructure; maintaining a strong pipeline of candidates; use of employment framework flexibility; and prioritizing quality over speed when supply bottlenecks occur.
  - Delivery:
    - Ramp-up must match the Fund’s and membership’s absorption capacity and time needed for coordination with other IFIs.
    - Mitigations include close monitoring of field-based ramp up, security issues, leveraging collaboration opportunities with partners, and regular reporting on implementation and IFI coordination to confirm focus on areas where the Fund is best placed to deliver.

### Proposed decision
- Proposed Executive Board decision (adoptable by a majority of votes cast):
  - “The Executive Board endorses the scope and modalities for a structural budget augmentation set out in EBAP/21/52 and summarized in paragraph 9 of EBAP/21/52 and asked staff to prepare budgets for the three cycles beginning with the FY 23-25 medium-term budget on the basis of the proposals in the paper for annual augmentations during FY 23 to FY 25.”

### Annex I — Climate Strategy: steady-state deliverables and resourcing
- Overview:
  - Climate change is a critical macroeconomic and financial policy challenge; it increases frequency and intensity of natural disasters and affects macroeconomic and financial stability via fiscal positions, asset prices, trade flows, and real interest and exchange rates.
  - The IMF has increased engagement on climate-related issues, but a more systematic and strategic integration is needed.
- Steady-State Deliverables and Related Resourcing:
  - Country Operations (Roughly 60 percent of dollar resources)
    - Surveillance and Lending (About 50 percent)
      - Article IV consultations would systematically cover climate-related policies where climate change triggers macro-critical policy challenges; coverage in about 45 Article IV consultations per year is targeted.
      - This implies mitigation policies of the 20 largest emitters would be covered on average every three years, and adaptation/resilience for the 60 most climate vulnerable countries every four years.
      - Coverage of managing the transition to a low-carbon economy would be needs-based and prioritized.
      - FSAPs: Exposure to climate risk and policy options would become integral in two thirds of FSAPs (about 8 per year, out of a total of 12-13 FSAPs conducted annually).
    - CD (Just under 15 percent):
      - Single-country CD scaled up to about 25 countries receiving CD on specific climate-topics per year.
      - Additional CD activities of about $6 million, beyond a current base of about $2 million, are expected to be funded by donor support.
      - CMAPs: About 5 countries would be supported through the Climate Macroeconomic Assessment Program (CMAP).
      - External training: one full-fledged climate-related macroeconomic course delivered 4 times a year across the Fund’s training centers.
  - Multilateral and regional surveillance (About 10 percent):
    - Flagships would include high-impact climate-related chapters about once or twice a year; regional reports and staff climate notes would be expanded.
  - Policy & Related Analytics (About 20 percent):
    - Develop and review IMF policy across areas (e.g., transition risk for oil exporters, financial stability implications), about one paper per year, plus how-to notes, models, toolkits, templates, and expanded debt sustainability analyses to incorporate climate risk.
  - Support functions (Just over 5 percent):
    - Staff Training: “Climate 101” course offered 4 times per year; “Climate Bootcamp” offered 2 times per year; about 5 peer-to-peer learning events per year.
    - Data: Support for maintaining and upgrading the climate data dashboard and forward-looking, granular, sectorized and geo-spatial data on physical and transition risks.
  - Summary:
    - Overall, the revised strategy implies an additional $27 million in the steady state.  

*Source: ppea2022027 - 10.       Impact on income dynamics. The proposed augmentation is consistent with  sustainable*

### 2. Phasing. Overall resources will be slightly backloaded over the three years, as highlighted in

### 2. Phasing. Overall resources will be slightly backloaded over the three years, as highlighted in

### Phasing (Climate ramp-up)
- Overall resources will be slightly backloaded over the three years, as highlighted in Table 1 of the main report.
- The pace of upscaling would reflect market conditions and the Fund's own absorption capacity:
  - Year one: Fund staff focus on policy and support work, including developing and launching training, to build the foundations for a rapid scaling up of climate expertise within the institution. In areas where expertise already exists—for example, climate change mitigation—bilateral work would scale up.
  - Year two: Focus shifts to ramping up direct country support.
  - Year three: The scaling up would be completed. Staffing would benefit from review of early experience. Stabilization and ongoing strengthening of engagement within the new resource envelope would be ongoing.

### Organization (Climate)
- Ramp-up builds on existing structures, strengthening climate teams in four functional departments—FAD, MCM, RES, and SPR—to support country teams in the conduct of Article IV consultations, FSAPs, CD, and policy development, with support from LEG and other functional departments.
- STA will continue to build out data related resources and area departments will scale up to support integration of climate work in regional and bilateral engagement.
- Recruitment:
  - About two-thirds of the additional FTEs would be fungible macroeconomists, with the composition varying across departments as noted in the main report.
  - For new fungible economists, prior knowledge of climate issues would be ideal but will be complemented with training, given limitations in the supply of climate macroeconomists on the market.
  - Climate/operational experts (the latter particularly for CD activities) and legal experts would be housed in functional departments.
  - Following the first year, experiences with hiring would be reviewed and lessons incorporated.

### Risks (Climate)
- Key risks include:
  - Feasibility of hiring macroeconomists with climate expertise within the planned timeframe.
  - Integrating new hires into staff, including any necessary climate-specific training, to support timely contributions to the Fund’s work.
- Mitigation measures include:
  - HRD, strategy team, and departmental coordination in building pipelines, including through existing networks.
  - Early investment in the training curriculum by ICD and relevant functional departments.
  - Robust cross-departmental work processes for functional departments supporting bilateral area department work or review.
  - Cross-departmental climate advisory group to plan and oversee implementation.

### Reporting (Climate)
- Staff will update the Board regularly on implementation of the climate strategy.
- Resource mobilization under IMF02 would be initiated in parallel with the ramping up over three years.
- Ongoing climate initiatives will continue, including:
  - IMF’s participation in the COP26 conference in the fall,
  - Issuance of guidance on climate change in bilateral surveillance,
  - Development of the CCPA.
- The interim CSR, planned for FY 24, will include an assessment progress integrating macro-structural issues, including climate.

*Prepared from the supplied content.*

### Annex II. Digital Money Strategy

### Overview
- New digital forms of money, issued by the public and private sectors, are rapidly emerging.
- Adoption raises opportunities and challenges for economic and financial stability and integrity, efficiency and inclusion of financial systems, and the international monetary system.
- The Fund must widen and deepen its work on digital money across core functions, in close collaboration with other institutions, in particular, the Bank for International Settlement.

### Steady-State Deliverables and Related Resourcing
- Country operations (Just above 60 percent of dollar resources)
  - Surveillance/Lending (About 30 percent): Planned ramp up would support participation in about 25 Article IVs in steady state, and targeted coverage in 12 FSAPs annually.
  - CD (About 30 percent): Increase in resources would allow support for about 35 countries on topics such as central bank digital currencies, cyber security, legal frameworks, financial integrity, payment strategies, fiscal policy, and financial statistics as relate to digital money. Complemented by regional training events and peer learning (about 5 per year). In the steady state, an equivalent ramp up would be targeted to be funded through IMF02 and to be led out of RCDCs.
- Multilateral surveillance (About 7 percent): Augmentation will allow for more proactive representation and organization of related workshops (roughly 4 per year). Digital money issues will be incorporated into multilateral surveillance products each year.
- Policy & related analytics (About 20 percent): Augmentation would allow ramp-up of analytical and methodological foundations of Fund policy advice and multilateral surveillance—about 4 cross-departmental policy papers per year, plus reference notes and toolkits. Tools, models, and frameworks require regular updating. Strengthened structure to support information sharing and coordination across departments and with other organizations.
- Support functions (Just over 10 percent): Resources would allow the Fund to provide a publicly available data hub for policymakers and standard setters for digital money (rates of adoption, usage, costs, and cross border flows). Also provide 4 sessions of internal training per year.
- Summary:
  - Strategy implies additional staff and contractual positions in steady state.
  - One-off investments to reach steady state were excluded from estimates and special care taken not to double count.
  - Synergies sought with existing macro-financial expertise, conventional financial market infrastructure expertise, financial statistics expertise, and other new workstreams (foundational work in fragile states, climate team assessing carbon footprint of digital money, use of digital payments to enhance delivery of social transfers).

### Phasing (Digital money)
- Hiring would occur over the next three years, with backloading in recognition of the need for some time to recruit effectively.
- Year One: Initial investment will focus on building analytical foundations to engage with countries on digital money, with more modest ramp up in surveillance and capacity development.
- Year Two and Three: Growth in surveillance and CD will advance, building on increasingly stronger analytical foundations. Capacity development sees growth in both Fund financed and donor financed activities.

### Organization (Digital money)
- Fund-wide coordination group established (supported by a dedicated online platform); external advisory group to be created and regularly consulted.
- Technology learning environment to be developed jointly with the World Bank. Active seminar series to be developed.
- Recruitment:
  - Mix of fungible macroeconomists and experts (payment system specialists; technology and digital risk experts; lawyers; data specialists; statisticians).
  - Mix of contractual and staff appointments for flexibility.
  - Opportunities to enlarge candidate pool via rotations from other organizations or central banks.
- Training:
  - Internal training via regular courses, workshops, and seminars to mainstream analysis of digital money and build understanding of technologies.
  - Emphasis on information sharing and coordination of digital money workstreams.

### Risks (Digital money)
- Lessons from ramp up in macroprudential policy advice highlight need to:
  - Share knowledge widely among departments.
  - Hire talent to accelerate expertise build-up.
  - Invest early to close knowledge gaps.
  - Learn from country engagements and spread lessons efficiently.
  - Learn continuously including through unstructured “brainstorming” across departments, as outlined in the 2021 CSR.

### Reporting (Digital money)
- Staff plans to report progress to the Executive Board once per year, approximately coinciding with the budget cycle.

*Prepared from the supplied content.*

### Annex III. Macrofinancial Surveillance Strategy

### Overview
- CSR found progress and areas for improvement in integrating macrofinancial analysis into Article IV consultations.
- Assessment focused on depth and integration of systemic risk analysis and macroprudential policy advice.
- Limitations in macrofinancial expertise and competing priorities in surveillance slowed progress.
- Called for additional staff with macrofinancial skill; directors agreed on need to deepen macrofinancial analysis and further integrate it into bilateral surveillance.

### Steady-state Deliverables and Related Resourcing Needs
- Country operations (Over 80 percent of dollar resources): CSR found about half of Article IV staff reports in the covered period had gaps related to depth and integration of systemic risk analysis and macroprudential policy advice. Incremental resources would fill this gap, combined with further training of existing staff.
- Policy and related analysis (About 20 percent): Remaining resources to deepen macrofinancial policy advice and analysis, expand toolkit for macrofinancial analysis, training, and offer additional support through internal review process.

### Risks
- Proposed pace of hiring contingent on finding suitable candidates with adequate macrofinancial talent willing to join the Fund and work on bilateral surveillance.
- Recruitment can largely draw on the Economist Program and mid-career pipeline.
- New staff will be allocated to country teams where gaps in macrofinancial analysis are highest.
- Onboarding and training will facilitate wider skills transmission as staff are rotated to area departments.

### Next steps / Reporting
- In addition to regular budget updates, staff will report on progress in the context of the interim Surveillance Review expected for FY 24.

*Prepared from the supplied content.*

### Annex IV. Fragile and Conflict-Affected States Strategy

### Overview
- FCS Strategy discussed by the Board on July 6, 2021 and October 22, 2021, equips the Fund with a renewed vision for engagement with FCS.
- Strategy draws on recent experience, the 2018 IEO report on fragile states and the subsequent Management Implementation Plan, and recent briefings.
- Strategy aims to enhance effectiveness in supporting FCS to achieve macroeconomic stability, exit from fragility and strengthen resilience, including recognizing significant vulnerability to climate change and natural disasters.
- Emphasizes long-term engagement and working with development partners, leveraging comparative advantages and complementarity.

### Key Steady-State Deliverables and Related Resourcing
- Country Operations (100 percent of dollar resources). (Country Operations (95 percent of dollar resources) further detailed)
  - Surveillance and Lending (About 52 percent):
    - Add Resident Representative posts in FCS—expanding coverage to 60 percent of FCS—and local economists to equip each office with 2 local economists.
    - Area Department teams at HQ would receive an estimated 10 additional resources.
  - CD (43 percent):
    - Ten additional long-term advisors either in RCDCs or in-country to tailor and increase responsiveness to FCS-specific CD needs.
    - Field-based CD providers supported by additional backstopping at HQ.
    - Additional funding through IMF02 expected to fund additional CD experts in RCDCs or directly to FCS, along with related HQ-based backstopping.
- Policy and Analytical Support:
  - Incremental shifts in existing resource base to reinforce functional departments’ support to FCS teams on governance reforms and analysis of drivers of fragility (including climate change and natural disasters).
- Training:
  - Enhanced staff training through incremental investments in an FCS-related curriculum.
- FTE Summary:
  - Overall increase would bring total personnel working on FCS (about a quarter of the membership) to about 260 staff and contractuals, and about 70 local economists.
- RCDC administrative expenses:
  - Strategy envisages an envelope of US$3.0 million per annum (in steady state) to strengthen stability of funding for RCDC administrative expenses.

### Phasing (FCS)
- Backloaded in recognition of time needed for effective planning and recruiting, allowing recalibrating hiring plans as function of experience and evolving security situation.
  - Year One:
    - Initial hiring includes centralized policy and analytical support to lay foundations for growth of FCS engagement, including work on an FCS-focused training curriculum.
    - Recruitment for field-based positions and HQ-based country teams initiated in parallel through the Economist Program and the mid-career pipeline.
    - Local economist recruitment will tap into available pools of local talent.
  - Years Two and Three:
    - Recruitment accelerates as the FCS strategy is rolled out.

### Risks (FCS)
- Strategy reflects strong reliance on local economist positions and continued leveraging of IMF02 resources to deliver cost-effectively.
- Key risk involves sensitivity of the Fund’s engagement with FCS to security conditions.
- Phased implementation and allowance for alternative locations for staffing will allow reassessment based on early experience.

*Prepared from the supplied content.*

### 5. Reporting. The strategy will  be formally presented to the Board for approval by the end of

### 5. Reporting. The strategy will  be formally presented to the Board for approval by the end of 

### Reporting
- The strategy will be formally presented to the Board for approval by the end of calendar year 2021, integrating policy recommendations emanating from informal consultations with the Board on the FCS strategy and the lending toolkit in October.
- The Board will be regularly updated on progress through dedicated briefings during the implementation period.

### Annex V. Inclusion and Gender Work — Overview
- The proposed workplan on inclusion and gender was discussed by the Executive Board on July 12, 2021.
- Current plans focus on incremental strengthening of the coordination framework and analytical foundations to support mainstreaming over time.
- The workplan, supported by incremental resources, focuses on leveraging the existing resource base to address increased demand from members for advice in these areas in the context of the pandemic and long-term economic trends.
- The Fund will continue to focus on macro-critical aspects of these issues and will collaborate closely with partners (World Bank and regional development banks, ILO, WFP, UN Women, bilateral development institutions, and academia) to leverage their micro and sectoral work.

### Deliverables
- A central coordination unit would serve as the main vehicle to build out this work and build on synergies with other workstreams, including distributional impact of climate change, digitalization, and technological change.
- Policy and analytical work (Just over 85 percent of dollar resources):
  - Located in a central unit.
  - Focus on developing policy, analysis, and tools to support country teams and enhance internal and external coordination to further leverage existing resources on inequality issues.
  - Early work will include development of a gender strategy.
  - The unit will facilitate sharing of knowledge and expertise on inequality and gender issues, identify emerging issues, and forge internal and external collaboration.
- Training (Just less than 15 percent):
  - About 3 new internal training courses, with new or updated content, would be offered per year to allow current and new staff to acquire relevant skills to provide policy analysis and advice on inequality and gender as envisaged in the strategy.
- Summary:
  - Total resources would increase by about $2 million, about 3 percent of the overall augmentation.
  - The increased resources would be centered in functional departments and would complement the $36 million in existing resources for these issues.

### Phasing
- The resourcing is frontloaded to allow more effective early use given the targeted scale.
- Year One:
  - The central unit will develop stronger internal and external coordination.
  - Work on models and toolkits for country teams, with an initial focus on gender.
  - Develop an internal training course on gender.
- Years Two and Three:
  - Resources will be used flexibly over time to cover a broad range of inclusion and gender issues.

### Risks and Mitigations
- Key risk: Demands from the membership—particularly for designing smart fiscal consolidations that protect the vulnerable and not undermine social stability—may exceed the Fund’s ability to respond given the targeted resource base.
  - Mitigation: The central unit can help prioritize engagements to reduce this risk.
- Second risk: Ability to attract staff with the necessary skills.
  - Mitigation: Rely on established recruitment channels in close coordination with HRD, use internal training, and possibly slow the pace of the work plan.

### Next steps
- The Board will discuss a proposal for the Fund’s work on gender in Q4 of this fiscal year.
- Staff will update the Board on progress annually during the implementation phase of the proposed enhanced engagement strategy; thereafter, updates will also be provided as part of surveillance or program reviews.

*Source: ppea2022027 - 5. Reporting. The strategy will  be formally presented to the Board for approval by the end of; IMF PDF content.*

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_Source: https://www.imf.org/-/media/files/publications/pp/2022/english/ppea2022027.pdf_