## EXECUTIVE SUMMARY

## Source details

**Canonical URL:** [EXECUTIVE SUMMARY](https://www.imf.org/-/media/files/publications/pp/2022/english/ppea2022056.pdf)

## Other formats

- [Markdown version](/-/media/files/publications/pp/2022/english/ppea2022056.pdf.md)
- [Structured JSON version](/-/media/files/publications/pp/2022/english/ppea2022056.pdf.json)

---

### Introduction and purpose
- Capacity development (CD) is a core pillar of the Fund’s work alongside surveillance and lending and helps countries build strong institutions and boost skills to formulate and implement sound macroeconomic and financial policies.
- The 2023 CD Strategy review aims to enhance further the value and impact of Fund CD for members and will reassess the CD strategy in light of changes since the 2018 review.
- The review will be guided by an interdepartmental contact group and an independent External Advisory Group of 3-4 experts.
- Five background papers and engagements with recipients and other providers are envisaged to inform the review.
- The review is expected to conclude by the end of 2023.
- Document prepared by the Institute for Capacity Development (ICD) under the guidance of Michaela Erbenova and Matt Davies; staff team led by Anna Bordon and comprising Faisal Ahmed and Nathalie Carcenac.

### Progress since prior reviews (2013 and 2018)
- Objectives of prior reviews:
  - 2013: strengthen CD governance, prioritization, funding model, monitoring and evaluation; promote integration of technical assistance (TA) and training; improve delivery; leverage CD as outreach.
  - 2018: increase impact by strengthening integration between CD, surveillance, and lending; increase efficiency via improved CD processes and prioritization (including CDMAP).
- Major achievements over the past decade:
  - Strengthened strategic planning:
    - Updates to the CD policy statement; regular five-year CD reviews; active Committee on Capacity Building (CCB); introduction of regional strategy notes (RSNs) and CD country strategy notes (CD-CSNs); annual informal Board meeting on CD priorities since 2020.
  - Integration of CD, lending, and surveillance:
    - Area departments lead CD strategies and priorities, guided by policy dialogue and medium-term country strategies; CDDs responsible for CD design and delivery; more than 50 country teams have produced CD-CSNs.
    - Increased participation of area department teams in CD activities; CD experts joining surveillance and program missions.
    - New CD information dissemination policy to facilitate broader access to CD-related materials.
  - Prioritization:
    - CD-CSNs and RSNs incorporate authorities’ and area departments’ views into prioritization.
    - Top-down departmental envelopes and indicative allocations by workstreams and regions combined with bottom-up, area department-led project identification.
    - Since 2013, CD priorities are defined by the CCB and annually approved by management.
  - CD systems:
    - CDMAP harmonized and automated processes across departments, increasing transparency on demand, prioritization, implementation, and results.
    - Ongoing efforts to improve system performance and online training platform.
  - Monitoring and evaluation (M&E):
    - Unified Results-Based Management (RBM) Framework and a Common Evaluation Framework rolled out after 2013 and updated after 2018.
    - Pandemic led to fewer internally funded evaluations; efforts underway to revive them and ensure consistent dissemination of findings.
  - Funding:
    - Principles to guide internal vs external financing set out starting in 2014.
    - Implementation of a matrix model of multi-partner vehicles (regions and topics).
    - Progress toward broadening donor base; donor support enabled rapid response (e.g., COVID-19 Crisis Capacity Development Initiative).

### Independent Evaluation Office (IEO) findings and implications
- IEO reaffirmed that Fund CD is highly valued by Fund members and found that Fund CD is:
  - responsive and tailored to members’ needs;
  - valued by member countries;
  - of highest technical quality in the Fund’s core areas of expertise;
  - flexibly delivered through a range of modalities and vehicles;
  - well-prioritized and adaptive to changing circumstances.
- Evaluations noted CD is broadly effective and efficient but identified room for improvement to increase value to member countries.
- Common recommendation across recent evaluations: deepen integration across CD, surveillance, and lending to enhance effectiveness and traction with country authorities.

### Changing landscape and challenges since last review
- New and intensified member challenges:
  - multi-decade high inflation;
  - tighter financing conditions;
  - capital flow disruptions;
  - high debt.
- Expanded Board-approved Fund priorities: addressing climate change; fragile and conflict-affected states (FCS); mainstreaming gender; digital money.
- Pandemic effects:
  - Accelerated innovations in CD delivery and shifting recipient needs and priorities.
  - Travel restrictions temporarily froze field delivery; innovations were developed and refined.

### Fund CD at-a-glance (key statistics and characteristics)
- FY22 spending on CD: $242 million.
- Delivery accounted for a quarter of country operations in FY22.
- In FY22, the Fund implemented more than 1,800 CD projects through over 4,500 activities.
- In FY22, 166 of 190 member countries received some form of CD from the Fund.
- Low-income developing countries, FCS, and small states—around 50 percent of the recipient list—accounted for 64 percent of single country CD delivery.
- RBM catalog: Fund offers CD on 37 workstreams.
- The Fund’s 2022 training catalog:
  - 84 classroom courses offered in 7 languages;
  - 64 massive open online courses offered in 6 languages;
  - 207 microlearning videos available on YouTube.
- Intensity and cost:
  - A CD recipient in the top 25th percentile benefited from an average of 13 CD projects in FY22.
  - On average, a project to such a recipient costs 1.1 million USD and involves 16 activities.
  - Around 70 percent of projects are programmatic, with sequenced activities spanning several years.
  - The Fund produces close to 1,000 technical assistance (TA) reports every year and has written more than 100 how-to and COVID-19 notes since the pandemic outbreak.
- Modalities and delivery:
  - Field visits accounted for 5 percent of CD spending in FY22; resumption of travel increased field visits to 40 percent in the first 4 months of FY23.
  - In FY22, around 12 percent of CD projects were delivered using more than one modality.
- Funding composition in FY22:
  - External partners financed 58 percent of the total CD budget in FY22.
  - A single CD project may include Fund resources and one or more external partners via RCDCs, thematic funds, or bilateral accounts.
  - Fund resources can be flexibly reprogrammed for unexpected needs; external partner resources often support more programmatic multi-year CD.

### Themes for the 2023 review
- Overarching goal: further increase the impact on the ground of Fund CD to member countries and contribute to institutional resilience.
- The review will assess progress on 2018 recommendations and focus on issues most critical for impact on members, less on internal processes.
- Four central themes:
  - A. Why?—Enhancing the Strategic and Prioritization Framework
  - B. What?—Ensuring the Size, Composition, and Funding of CD is in Line with the Proposed Strategic Framework
  - C. How?—Modernizing CD Delivery
  - D. To What Effect?—Assessing the Effectiveness and Impact of CD
- The review will address IEO recommendations: enhance prioritization and strategic framework; improve delivery and recipient ownership; better integrate M&E outputs into CD management; sustain funding; calibrate HR policies and incentives.

### Process and governance of the 2023 review
- Guided by an interdepartmental contact group and an independent External Advisory Group of 3-4 experts who will review staff analysis and recommendations.
- Five background papers and engagements with recipients and other providers are envisaged to inform the review.
- Expected timeline: conclude by the end of 2023.

---

### 9.      The strategic and prioritization framework sets out the objective and principles around

### Strategic objective and governing principles of Fund CD
- Main objective: help countries build strong institutions and boost skills to formulate and implement sound macroeconomic and financial policies.
- Principles listed in the 2019 IMF Policies and Practices on Capacity Development:
  - Core competence. The Fund provides CD in its core areas of competence.
  - Results and impact. All CD should target high-impact activities.
  - Demand. CD activities are driven by demand from its member countries.
  - Integration with other core activities. CD activities are integrated with the policy dialogue between member countries and the Fund that take place under surveillance or Fund-supported programs.
  - Comparative expertise. The Fund seeks to avoid duplication in coverage and to enhance complementarity with other CD providers.

### Need to update and clarify the framework (prioritization issues)
- Recent Board-approved strategies in transformation areas identified new macro-critical priorities for CD, including:
  - FCS
  - climate change
  - digital money
  - gender
- Challenges in prioritization where multiple principles apply or some principles are unmet:
  - Example questions raised:
    - When the budget constraint is binding, should CD to an FCS be prioritized despite weak implementation track records?
    - Should CD be pursued where surveillance judges financial sector statistics adequate but country buy-in for improvement is strong?
- Review will:
  - Update and propose more detailed guiding principles beyond current policies while retaining flexibility.
  - Define Board engagement to reinforce strategic and oversight roles.
  - Map out the Fund’s comparative expertise, accounting for evidence on impact, changing demand patterns, and complementarities with other providers.
  - Identify opportunities to collaborate with other CD providers to assess reforms needed to create preconditions and an enabling environment for institutional reforms.
  - Assess progress toward integrating CD with surveillance and lending; analyze synergies and trade-offs; propose practical avenues for improving member country engagements, including through CD strategy notes.
  - Indicate whether recommendations require further enhancement of CDMAP or Fund financial systems, in addition to outputs from the targeted review of CDMAP functionality and its underlying business processes set to take place in 2023.

### B. What? — Ensuring the Size, Composition, and Funding of CD is in Line with the Proposed Strategic Framework
- CD significance and funding context:
  - In FY22, CD is estimated at close to a quarter of total country operations.
  - External funding has enabled the Fund to meet rising member demand within a tight internal budget environment.
  - Dual funding model (internal + external) helps offset the risk that external financing would unduly drive CD prioritization and resource allocation.
  - Risks: donor funding may shift or decline; external funding is generally less fungible across regions and workstreams; requires continual fundraising and complex reporting; governance arrangements for donor-financed CD can be complicated.
- Review will:
  - Examine the desirable size of CD spending relative to other core Fund activities, given changing membership needs, evolving surveillance coverage, development of other providers, technological developments, and utilization of budgeted resources.
  - Explore how deep technical expertise in Fund CD can be delivered most impactfully to enhance institutional resilience in a shock-prone world, including by deepening CD integration with surveillance and lending.
  - Reflect on whether current CD composition aligns with the proposed new principles and whether country-level CD reflects surveillance and program priorities.
  - Review the CD funding model, including the policy of charging advanced economies; explore new funding options and modalities, including further increasing internal funding for CD; consider risk mitigating strategies to strengthen coordination with Fund fundraising activities and leverage external partner collaboration.

### C. How? — Modernizing CD Delivery
- Evolution of delivery:
  - Launched in 2013, the pioneering online training program complements synchronous classroom training.
  - With the onset of the COVID-19 pandemic, delivery shifted to virtual TA and virtual (synchronous) training; online (asynchronous) training ramped up.
  - Expansion of 17 regional capacity development centers (RCDCs) to provide on-the-ground assistance and differentiated implementation support, particularly in FCS and low-income countries.
- Review will consider effective combinations of modalities:
  - Modernized delivery models:
    - Blended training (self-paced courses + live instructor-led virtual sessions) showed high learner retention and course completion rates during the pandemic.
    - Combine virtual with in-person engagements to follow up on recommendations made or lessons transferred during in-person missions.
    - Review actions:
      - Explore options for improved delivery modalities leveraging lessons from remote engagements and blending, mindful of diversity of CD topics, local contexts, and technological constraints.
      - Assess whether mission and engagement practices should evolve toward more consistent sequencing from diagnostics to action plans to implementation, and more proactive dissemination of CD outputs to improve knowledge management and integration with surveillance and lending.
  - Field presence:
    - RCDC model: cornerstone of CD field presence; supports programmatic and decentralized CD, fosters country/regional engagement and ownership.
    - Governance and financing issues: RCDCs are effectively funding vehicles reliant on funding partners and beneficiary countries; have steering committees while directors report to area departments or ICD; long-term experts backstopped by CD departments; work programs developed as part of area department-led annual process allocating resources at the regional rather than RCDC level.
    - Review actions:
      - Assess relative costs and benefits of various engagement forms by HQ and field-based experts; explore policies (including HR and budget) to support deeper and flexible field presence that leverages collaboration with country teams and CDDs and knowledge sharing between RCDCs and HQ.
      - Explore whether changes are needed in mandates, internal governance, and financing structure of RCDCs while cognizant of institutional budgetary considerations.
  - HR policies:
    - Against the backdrop of the 2018 HR Strategy Update, review will identify measures to:
      - Raise recognition of CD work.
      - Increase opportunities for and retention of CD specialists, program managers and administrators (e.g., flexibility of location, greater fungibility across job streams).
      - Improve staff incentives to work on CD, including in new priority areas.

### D. To What Effect? — Assessing the Effectiveness and Impact of CD
- Existing M&E system:
  - Over the last decade, a monitoring and evaluation (M&E) framework was developed, including a RBM framework to define objectives, outcomes, and milestones for every CD project.
  - CDMAP recently started facilitating systematic collection of RBM information.
  - Most training courses include surveys and pre- and post-course tests to assess learners’ satisfaction and learning gains.
- Limitations and review objectives:
  - RBM and training data are informative at granular levels (e.g., ratings of specific milestones) but less so at higher aggregation levels because context and qualitative information are lost.
  - High-quality evaluations provide qualitative context but are typically costly.
  - Review will:
    - Propose mechanisms for more systematic usage of existing M&E tools (RBM data, evaluations, training surveys and test scores, and relevant mission outputs) to assess impact, ownership, traction, and value for money; consider whether improvements to the framework are needed, taking cost-benefit into account.
    - Report a summary of findings, recommendations, action plans (and progress) from CD evaluations; consider ways to use external and internal evaluations to better inform planning, design, and prioritization; investigate options to improve strategic planning and execution of internal evaluations.
    - Identify approaches to assess absorptive capacity and measures to promote country buy-in and commitment; improve tailoring and increase value of Fund CD to members through greater integration with surveillance and lending and closer collaboration among country teams, RCDCs and CDDs.

### Proposed framework for the review — governance, studies, timeline
- Interdepartmental contact group:
  - Composed of area departments, CD departments, the Strategy, Policy, & Review Department, and the Office of Budget & Planning; has started providing guidance on the review process and outputs.
- External advisory group:
  - A group of 3-4 independent experts with broad regional representation and policy experience will provide an independent view of staff analysis and recommendations.
- Background studies planned:
  - Review of delivery modalities and blended delivery models.
  - Review of field presence and the RCDC model, including mandate, governance, and funding structure; consideration of a field presence framework aided by adequate HQ support and complementarities with HQ activities and other providers.
  - Mapping of the Fund’s position vis-à-vis other CD providers in main areas of expertise to ascertain comparative advantage and potential duplication/complementarity.
  - Review of CD evaluations and impact, including empirical evidence using RBM and financial data from CDMAP; explore further M&E improvements.
  - Review of HR policies around CD (contract length, locational choice, mobility across departments) to foster flexibility, recognition, and incentives for CD experts.
- Stakeholder input:
  - Views from CD recipients and other providers/partners will be gathered through consultations and the Triennial Survey on Training, building on findings of the recent IEO evaluation and background surveys.
- Timeline:
  - External Advisory Group and staff will work from December 2022 to September 2023.
  - The review is expected to take most of 2023; the main CD strategy review paper and background studies are planned to be issued to the Board in late 2023.

### Issues for discussion (posed to Directors)
- Do Directors agree with the proposed themes? Are there other themes to include?
- Do Directors agree with the proposed methods that the review will employ?

---

### Annex I. Recommendations from Previous CD Strategy Reviews

### 2013 CD Strategy Recommendations (selected)
- Enhance the Effectiveness of CD
  - Update the governance structure
    - Prepare a new policy statement for Board approval — CD Policy statement issued August 2014
    - Draft new terms of reference for the CCB — Completed July 2013; regular meetings since November 2013. Also, established a regular dialogue on CD at heads of departments level starting in 2017.
  - Enhance prioritization
    - Integrate CD into Fund's strategic planning process — Greater attention to CD in Fund strategic documents (GPA; budget; work program; policy reviews). Medium-term CD priorities discussed annually by CCB based on country needs and broader Fund priorities.
    - Develop guidance for RSNs — RSN staff-level guidance issued in 2014.
    - Pilot & assess Capability Assessment Program (CAP) — CAP piloted for Tunisia and Libya. Staff review completed in 2015.
  - Clarify the funding model
    - Establish approval process for new donor initiatives — Staff-level guidance issued in May 2014.
    - Take up CD-related issues in Human Resources (HR) — department-led paper on categories of employment; CD issues reflected in October 2014 review on these issues. Further consideration expected in upcoming HR Strategy Review.
  - Strengthen monitoring and evaluation
    - Pursue work on RBM to enhance planning and managing of outcomes — RBM in use for all new projects since FY18; catalog (indicators and outcomes) in place.
    - Develop guidance for a common evaluation standard, based on principles for performance indicators, methodology, and dissemination — Framework in place; guidance issued.
- Seize Opportunities for CD Delivery and Outreach
  - Greater integration of TA and training
    - Seek further opportunity to coordinate TA and training, including through enhanced interdepartmental dialogue — Included training in the RSNs and Resource Allocation Plan (RAP).
    - Offer internal training that complements external training and TA so staff can support CD absorption — Internal Economics Training (IET) curriculum restructured in line with restructured external curriculum. Customized training provided to desks of countries receiving external training. The IET program is being adapted to staff training needs including in emerging areas with a more hands-on, operations-oriented approach.
    - Monitor Africa Training Institute (ATI) experience with integrating TA and training — Delivered substantial joint ATI-AFRITAC training. SARTTAC opened in 2017.
  - Exploit new technologies for delivery
    - Use advances in technology to enhance the effectiveness and expand the delivery of CD — Online learning launched in late 2013.
    - Experiment with webinars to aid high-level peer-to-peer exchanges and spread Fund institutional knowledge — Several webinars with chief economists in Western Hemisphere region in 2014–2015.
  - Leverage CD as outreach
    - Monitor impact of CD-related outreach — Created CD platforms on imf.org; active social media use; greater RCDC role.
    - Enhance communication among departments of CD-related outreach activities — CD communications group created; Fund-wide CD story competition and Postcard series launched.
    - Track progress on dissemination to various stakeholders of CD findings and evaluations — Initiated major reforms to strengthen information available to staff; mixed progress on increasing information to external stakeholders.

### 2018 CD Strategy Review Recommendations (selected)
- Clarify Roles and Responsibilities
  - Deepen strategic engagement with country authorities throughout the CD process — CD country strategies discussed with the authorities in the context of surveillance and lending.
  - Area departments to be in the leading role on overall country engagement, including through CD-CSNs for all heavy users (defined by a common metric) — Completed guidelines to CD-CSN, with CD-CSNs reflected in several country reports.
  - Strengthen efforts to expand and learn from best practices in integrating CD and surveillance — Completed staff guidelines on the integration of CD with surveillance and lending, reflecting best practices.
  - Explore further how to better integrate CD and surveillance in the context of the 2020 Comprehensive Surveillance Review (CSR), following on the findings of this review and experience from mainstreaming best practices — Covered CD-surveillance integration in the 2021 CSR and provided staff guidance.
- Better Prioritization and Monitoring
  - Strengthen the focus and monitoring of priorities by narrowing the list of priorities and building on better information systems — Narrowed priorities list and aligned it with overall Fund priorities; prioritization framework built into the CDMAP system.
  - Take further steps to develop and operationalize a clear governance framework for RBM and the common evaluation framework — Updated policies and guidelines on RBM governance and evaluations; strategic evaluation workplan updated every year.
- Enhance Country-Tailored Delivery Focused on Implementation
  - CD departments to build on existing departmental strategies to continue moving towards greater modernization, modularity, flexibility, and agility in CD delivery as well as to bring about medium-term shifts in expertise as CD priorities change over time — Developed department-level strategies on CD delivery, refined further and tested during the pandemic.
  - Continue experimentation with new technologies to support flexible delivery — Developed fully virtual mode of delivery, with ongoing experimentation of blended delivery.
  - Follow up on the Management Implementation Plan for the 2018 IEO Report on the IMF and Fragile States — CD a key component of the IMF strategy for FCS.
  - Strengthen operational support for RCDCs — Enhanced harmonization and efficiency in administrative, financial management, and reporting procedures; increased Fund resources for administrative expenditures.
- More Effective Internal Consultation and Sharing of Information
  - Implement ongoing initiatives to enhance knowledge management (KMU project) and improve internal access to data, analytical tools, and productivity tools (Digital Workplace) — TA reports disseminated to staff and Board via Knowledge Exchange countries; CD data available in CDMAP and related dashboards; ongoing progress on modules under the Digital Workplace.
  - Implement CDMAP — Formal close of the CDMAP project (on budget) with ongoing work to strengthen end-user interfaces.
  - Continue the practice of informal Board briefings on CD activities and find other opportunities to inform and engage the Executive Board more regularly on CD — Regular informal board meetings on CD priorities (February); occasional briefings by CD departments; CD regularly covered in regional briefings by area departments; topical briefings: evaluation and impact, information dissemination, fundraising.
- Improved External Coordination and Communication
  - Better leverage existing good practices on coordination in collaboration with other providers — CD partnership forums and dialogues, as well as regular steering committees, have helped to coordinate the overall country engagement across CD providers. Forums such as the Platform for Collaboration on Tax have also been useful for such coordination.
  - Pursue innovative CD communications approaches to raise awareness of the Fund’s CD work — A wide range of initiatives have boosted the impact of CD communications: an expanded social media presence; modernized and harmonized branding; elevated CD events; new campaigns (e.g., #IMFPartners); leveraged wide interest in the online learning program; regular CD stories on internal and external communications vehicles; and more audiovisual content on CD.
  - Improve the presentation of recommendations in TA reports to senior authorities and other nontechnical users; Engage local stakeholders on key TA recommendations as part of surveillance and outreach — Introduced high-level summaries, as a new publication series, focused on findings and recommendations of TA reports.
  - Publish more topical notes in specialized areas of interest to policymakers, bringing in cross-country learning — Since 2019, published around 20 policy notes that offer practical advice to policymakers on important issues. Around 100 special series notes on pandemic-related policy responses (COVID-19 notes) were published between April 2020 and March 2022 to help members address the economic effects of the pandemic.
  - Implement forthcoming recommendations of the working group on TA report publication — Updated the CD information dissemination policy. Enhanced the Partners Connect platform.
  - Continue to increase the sustainability and fungibility of external financing — The COVID-19 Crisis CD Initiative was an important step in increasing the flexibility and agility of external funding; Ongoing work to develop broader and medium-term agreements with partners are also supporting the sustainability of funding.

### CD Overview (selected quantitative points from Annex II)
- During FY22, the Fund delivered CD to 166 IMF members countries.
- The Fund offered assistance on 37 CD workstreams.
- Training delivery:
  - 84 courses delivered in a classroom setting.
  - 48 courses delivered online.
- An average project for heavy CD users (top 25th percentile):
  - costs 1.1 million USD,
  - include about 16 activities,
  - is delivered through a range of modalities, based on member needs and absorptive capacity.

*International Monetary Fund — 2023 CD STRATEGY REVIEW—CONCEPT NOTE (EXECUTIVE SUMMARY, November 15, 2022)*

### EXECUTIVE SUMMARY

### EXECUTIVE SUMMARY

### Introduction and purpose
- Capacity development (CD) is a core pillar of the Fund’s work alongside surveillance and lending and helps countries build strong institutions and boost skills to formulate and implement sound macroeconomic and financial policies.
- The 2023 CD Strategy review aims to enhance further the value and impact of Fund CD for members and will reassess the CD strategy in light of changes since the 2018 review.
- The review will be guided by an interdepartmental contact group and an independent External Advisory Group of 3-4 experts.
- Five background papers and engagements with recipients and other providers are envisaged to inform the review.
- The review is expected to conclude by the end of 2023.
- Document prepared by the Institute for Capacity Development (ICD) under the guidance of Michaela Erbenova and Matt Davies; staff team led by Anna Bordon and comprising Faisal Ahmed and Nathalie Carcenac.

### Progress since prior reviews (2013 and 2018)
- Objectives of prior reviews:
  - 2013: strengthen CD governance, prioritization, funding model, monitoring and evaluation; promote integration of technical assistance (TA) and training; improve delivery; leverage CD as outreach.
  - 2018: increase impact by strengthening integration between CD, surveillance, and lending; increase efficiency via improved CD processes and prioritization (including CDMAP).
- Major achievements over the past decade:
  - Strengthened strategic planning:
    - Updates to the CD policy statement; regular five-year CD reviews; active Committee on Capacity Building (CCB); introduction of regional strategy notes (RSNs) and CD country strategy notes (CD-CSNs); annual informal Board meeting on CD priorities since 2020.
  - Integration of CD, lending, and surveillance:
    - Area departments lead CD strategies and priorities, guided by policy dialogue and medium-term country strategies; CDDs responsible for CD design and delivery; more than 50 country teams have produced CD-CSNs.
    - Increased participation of area department teams in CD activities; CD experts joining surveillance and program missions.
    - New CD information dissemination policy to facilitate broader access to CD-related materials.
  - Prioritization:
    - CD-CSNs and RSNs incorporate authorities’ and area departments’ views into prioritization.
    - Top-down departmental envelopes and indicative allocations by workstreams and regions combined with bottom-up, area department-led project identification.
    - Since 2013, CD priorities are defined by the CCB and annually approved by management.
  - CD systems:
    - CDMAP harmonized and automated processes across departments, increasing transparency on demand, prioritization, implementation, and results.
    - Ongoing efforts to improve system performance and online training platform.
  - Monitoring and evaluation (M&E):
    - Unified Results-Based Management (RBM) Framework and a Common Evaluation Framework rolled out after 2013 and updated after 2018.
    - Pandemic led to fewer internally funded evaluations; efforts underway to revive them and ensure consistent dissemination of findings.
  - Funding:
    - Principles to guide internal vs external financing set out starting in 2014.
    - Implementation of a matrix model of multi-partner vehicles (regions and topics).
    - Progress toward broadening donor base; donor support enabled rapid response (e.g., COVID-19 Crisis Capacity Development Initiative).

### Independent Evaluation Office (IEO) findings and implications
- IEO reaffirmed that Fund CD is highly valued by Fund members and found that Fund CD is:
  - responsive and tailored to members’ needs;
  - valued by member countries;
  - of highest technical quality in the Fund’s core areas of expertise;
  - flexibly delivered through a range of modalities and vehicles;
  - well-prioritized and adaptive to changing circumstances.
- Evaluations noted CD is broadly effective and efficient but identified room for improvement to increase value to member countries.
- Common recommendation across recent evaluations: deepen integration across CD, surveillance, and lending to enhance effectiveness and traction with country authorities.

### Changing landscape and challenges since last review
- New and intensified member challenges:
  - multi-decade high inflation;
  - tighter financing conditions;
  - capital flow disruptions;
  - high debt.
- Expanded Board-approved Fund priorities: addressing climate change; fragile and conflict-affected states (FCS); mainstreaming gender; digital money.
- Pandemic effects:
  - Accelerated innovations in CD delivery and shifting recipient needs and priorities.
  - Travel restrictions temporarily froze field delivery; innovations were developed and refined.

### Fund CD at-a-glance (key statistics and characteristics)
- FY22 spending on CD: $242 million.
- Delivery accounted for a quarter of country operations in FY22.
- In FY22, the Fund implemented more than 1,800 CD projects through over 4,500 activities.
- In FY22, 166 of 190 member countries received some form of CD from the Fund.
- Low-income developing countries, FCS, and small states—around 50 percent of the recipient list—accounted for 64 percent of single country CD delivery.
- RBM catalog: Fund offers CD on 37 workstreams.
- The Fund’s 2022 training catalog:
  - 84 classroom courses offered in 7 languages;
  - 64 massive open online courses offered in 6 languages;
  - 207 microlearning videos available on YouTube.
- Intensity and cost:
  - A CD recipient in the top 25th percentile benefited from an average of 13 CD projects in FY22.
  - On average, a project to such a recipient costs 1.1 million USD and involves 16 activities.
  - Around 70 percent of projects are programmatic, with sequenced activities spanning several years.
  - The Fund produces close to 1,000 technical assistance (TA) reports every year and has written more than 100 how-to and COVID-19 notes since the pandemic outbreak.
- Modalities and delivery:
  - Field visits accounted for 5 percent of CD spending in FY22; resumption of travel increased field visits to 40 percent in the first 4 months of FY23.
  - In FY22, around 12 percent of CD projects were delivered using more than one modality.
- Funding composition in FY22:
  - External partners financed 58 percent of the total CD budget in FY22.
  - A single CD project may include Fund resources and one or more external partners via RCDCs, thematic funds, or bilateral accounts.
  - Fund resources can be flexibly reprogrammed for unexpected needs; external partner resources often support more programmatic multi-year CD.

### Themes for the 2023 review
- Overarching goal: further increase the impact on the ground of Fund CD to member countries and contribute to institutional resilience.
- The review will assess progress on 2018 recommendations and focus on issues most critical for impact on members, less on internal processes.
- Four central themes:
  A. Why?—Enhancing the Strategic and Prioritization Framework
  B. What?—Ensuring the Size, Composition, and Funding of CD is in Line with the Proposed Strategic Framework
  C. How?—Modernizing CD Delivery
  D. To What Effect?—Assessing the Effectiveness and Impact of CD
- The review will address IEO recommendations: enhance prioritization and strategic framework; improve delivery and recipient ownership; better integrate M&E outputs into CD management; sustain funding; calibrate HR policies and incentives.

### Process and governance of the 2023 review
- Guided by an interdepartmental contact group and an independent External Advisory Group of 3-4 experts who will review staff analysis and recommendations.
- Five background papers and engagements with recipients and other providers are envisaged to inform the review.
- Expected timeline: conclude by the end of 2023.

*International Monetary Fund — 2023 CD STRATEGY REVIEW—CONCEPT NOTE (EXECUTIVE SUMMARY, November 15, 2022)*

### 9.      The strategic and prioritization framework sets out the objective and principles around

### 9.      The strategic and prioritization framework sets out the objective and principles around

### Strategic objective and governing principles of Fund CD
- Main objective: help countries build strong institutions and boost skills to formulate and implement sound macroeconomic and financial policies.
- Principles listed in the 2019 IMF Policies and Practices on Capacity Development:
  - Core competence. The Fund provides CD in its core areas of competence.
  - Results and impact. All CD should target high-impact activities.
  - Demand. CD activities are driven by demand from its member countries.
  - Integration with other core activities. CD activities are integrated with the policy dialogue between member countries and the Fund that take place under surveillance or Fund-supported programs.
  - Comparative expertise. The Fund seeks to avoid duplication in coverage and to enhance complementarity with other CD providers.

### Need to update and clarify the framework (prioritization issues)
- Recent Board-approved strategies in transformation areas identified new macro-critical priorities for CD, including:
  - FCS
  - climate change
  - digital money
  - gender
- Challenges in prioritization where multiple principles apply or some principles are unmet:
  - Example questions raised:
    - When the budget constraint is binding, should CD to an FCS be prioritized despite weak implementation track records?
    - Should CD be pursued where surveillance judges financial sector statistics adequate but country buy-in for improvement is strong?
- Review will:
  - Update and propose more detailed guiding principles beyond current policies while retaining flexibility.
  - Define Board engagement to reinforce strategic and oversight roles.
  - Map out the Fund’s comparative expertise, accounting for evidence on impact, changing demand patterns, and complementarities with other providers.
  - Identify opportunities to collaborate with other CD providers to assess reforms needed to create preconditions and an enabling environment for institutional reforms.
  - Assess progress toward integrating CD with surveillance and lending; analyze synergies and trade-offs; propose practical avenues for improving member country engagements, including through CD strategy notes.
  - Indicate whether recommendations require further enhancement of CDMAP or Fund financial systems, in addition to outputs from the targeted review of CDMAP functionality and its underlying business processes set to take place in 2023.

### B. What? — Ensuring the Size, Composition, and Funding of CD is in Line with the Proposed Strategic Framework
- CD significance and funding context:
  - In FY22, CD is estimated at close to a quarter of total country operations.
  - External funding has enabled the Fund to meet rising member demand within a tight internal budget environment.
  - Dual funding model (internal + external) helps offset the risk that external financing would unduly drive CD prioritization and resource allocation.
  - Risks: donor funding may shift or decline; external funding is generally less fungible across regions and workstreams; requires continual fundraising and complex reporting; governance arrangements for donor-financed CD can be complicated.
- Review will:
  - Examine the desirable size of CD spending relative to other core Fund activities, given changing membership needs, evolving surveillance coverage, development of other providers, technological developments, and utilization of budgeted resources.
  - Explore how deep technical expertise in Fund CD can be delivered most impactfully to enhance institutional resilience in a shock-prone world, including by deepening CD integration with surveillance and lending.
  - Reflect on whether current CD composition aligns with the proposed new principles and whether country-level CD reflects surveillance and program priorities.
  - Review the CD funding model, including the policy of charging advanced economies; explore new funding options and modalities, including further increasing internal funding for CD; consider risk mitigating strategies to strengthen coordination with Fund fundraising activities and leverage external partner collaboration.

### C. How? — Modernizing CD Delivery
- Evolution of delivery:
  - Launched in 2013, the pioneering online training program complements synchronous classroom training.
  - With the onset of the COVID-19 pandemic, delivery shifted to virtual TA and virtual (synchronous) training; online (asynchronous) training ramped up.
  - Expansion of 17 regional capacity development centers (RCDCs) to provide on-the-ground assistance and differentiated implementation support, particularly in FCS and low-income countries.
- Review will consider effective combinations of modalities:
  - Modernized delivery models:
    - Blended training (self-paced courses + live instructor-led virtual sessions) showed high learner retention and course completion rates during the pandemic.
    - Combine virtual with in-person engagements to follow up on recommendations made or lessons transferred during in-person missions.
    - Review actions:
      - Explore options for improved delivery modalities leveraging lessons from remote engagements and blending, mindful of diversity of CD topics, local contexts, and technological constraints.
      - Assess whether mission and engagement practices should evolve toward more consistent sequencing from diagnostics to action plans to implementation, and more proactive dissemination of CD outputs to improve knowledge management and integration with surveillance and lending.
  - Field presence:
    - RCDC model: cornerstone of CD field presence; supports programmatic and decentralized CD, fosters country/regional engagement and ownership.
    - Governance and financing issues: RCDCs are effectively funding vehicles reliant on funding partners and beneficiary countries; have steering committees while directors report to area departments or ICD; long-term experts backstopped by CD departments; work programs developed as part of area department-led annual process allocating resources at the regional rather than RCDC level.
    - Review actions:
      - Assess relative costs and benefits of various engagement forms by HQ and field-based experts; explore policies (including HR and budget) to support deeper and flexible field presence that leverages collaboration with country teams and CDDs and knowledge sharing between RCDCs and HQ.
      - Explore whether changes are needed in mandates, internal governance, and financing structure of RCDCs while cognizant of institutional budgetary considerations.
  - HR policies:
    - Against the backdrop of the 2018 HR Strategy Update, review will identify measures to:
      - Raise recognition of CD work.
      - Increase opportunities for and retention of CD specialists, program managers and administrators (e.g., flexibility of location, greater fungibility across job streams).
      - Improve staff incentives to work on CD, including in new priority areas.

### D. To What Effect? — Assessing the Effectiveness and Impact of CD
- Existing M&E system:
  - Over the last decade, a monitoring and evaluation (M&E) framework was developed, including a RBM framework to define objectives, outcomes, and milestones for every CD project.
  - CDMAP recently started facilitating systematic collection of RBM information.
  - Most training courses include surveys and pre- and post-course tests to assess learners’ satisfaction and learning gains.
- Limitations and review objectives:
  - RBM and training data are informative at granular levels (e.g., ratings of specific milestones) but less so at higher aggregation levels because context and qualitative information are lost.
  - High-quality evaluations provide qualitative context but are typically costly.
  - Review will:
    - Propose mechanisms for more systematic usage of existing M&E tools (RBM data, evaluations, training surveys and test scores, and relevant mission outputs) to assess impact, ownership, traction, and value for money; consider whether improvements to the framework are needed, taking cost-benefit into account.
    - Report a summary of findings, recommendations, action plans (and progress) from CD evaluations; consider ways to use external and internal evaluations to better inform planning, design, and prioritization; investigate options to improve strategic planning and execution of internal evaluations.
    - Identify approaches to assess absorptive capacity and measures to promote country buy-in and commitment; improve tailoring and increase value of Fund CD to members through greater integration with surveillance and lending and closer collaboration among country teams, RCDCs and CDDs.

### Proposed framework for the review — governance, studies, timeline
- Interdepartmental contact group:
  - Composed of area departments, CD departments, the Strategy, Policy, & Review Department, and the Office of Budget & Planning; has started providing guidance on the review process and outputs.
- External advisory group:
  - A group of 3-4 independent experts with broad regional representation and policy experience will provide an independent view of staff analysis and recommendations.
- Background studies planned:
  - Review of delivery modalities and blended delivery models.
  - Review of field presence and the RCDC model, including mandate, governance, and funding structure; consideration of a field presence framework aided by adequate HQ support and complementarities with HQ activities and other providers.
  - Mapping of the Fund’s position vis-à-vis other CD providers in main areas of expertise to ascertain comparative advantage and potential duplication/complementarity.
  - Review of CD evaluations and impact, including empirical evidence using RBM and financial data from CDMAP; explore further M&E improvements.
  - Review of HR policies around CD (contract length, locational choice, mobility across departments) to foster flexibility, recognition, and incentives for CD experts.
- Stakeholder input:
  - Views from CD recipients and other providers/partners will be gathered through consultations and the Triennial Survey on Training, building on findings of the recent IEO evaluation and background surveys.
- Timeline:
  - External Advisory Group and staff will work from December 2022 to September 2023.
  - The review is expected to take most of 2023; the main CD strategy review paper and background studies are planned to be issued to the Board in late 2023.

### Issues for discussion (posed to Directors)
- Do Directors agree with the proposed themes? Are there other themes to include?
- Do Directors agree with the proposed methods that the review will employ?

*Source: 2023 CD STRATEGY REVIEW—CONCEPT NOTE, International Monetary Fund*

### Annex I. Recommendations from Previous CD Strategy Reviews

### Annex I. Recommendations from Previous CD Strategy Reviews

### 2013 CD Strategy Recommendations
- Enhance the Effectiveness of CD
  - Update the governance structure
    - Prepare a new policy statement for Board approval — CD Policy statement issued August 2014
    - Draft new terms of reference for the CCB — Completed July 2013; regular meetings since November 2013. Also, established a regular dialogue on CD at heads of departments level starting in 2017.
  - Enhance prioritization
    - Integrate CD into Fund's strategic planning process — Greater attention to CD in Fund strategic documents (GPA; budget; work program; policy reviews). Medium-term CD priorities discussed annually by CCB based on country needs and broader Fund priorities.
    - Develop guidance for RSNs — RSN staff-level guidance issued in 2014.
    - Pilot & assess Capability Assessment Program (CAP) — CAP piloted for Tunisia and Libya. Staff review completed in 2015.
  - Clarify the funding model
    - Establish approval process for new donor initiatives — Staff-level guidance issued in May 2014.
    - Take up CD-related issues in Human Resources (HR) — department-led paper on categories of employment; CD issues reflected in October 2014 review on these issues. Further consideration expected in upcoming HR Strategy Review.
  - Strengthen monitoring and evaluation
    - Pursue work on RBM to enhance planning and managing of outcomes — RBM in use for all new projects since FY18; catalog (indicators and outcomes) in place.
    - Develop guidance for a common evaluation standard, based on principles for performance indicators, methodology, and dissemination — Framework in place; guidance issued.

- Seize Opportunities for CD Delivery and Outreach
  - Greater integration of TA and training
    - Seek further opportunity to coordinate TA and training, including through enhanced interdepartmental dialogue — Included training in the RSNs and Resource Allocation Plan (RAP).
    - Offer internal training that complements external training and TA so staff can support CD absorption — Internal Economics Training (IET) curriculum restructured in line with restructured external curriculum. Customized training provided to desks of countries receiving external training. The IET program is being adapted to staff training needs including in emerging areas with a more hands-on, operations-oriented approach.
    - Monitor Africa Training Institute (ATI) experience with integrating TA and training — Delivered substantial joint ATI-AFRITAC training. SARTTAC opened in 2017.
  - Exploit new technologies for delivery
    - Use advances in technology to enhance the effectiveness and expand the delivery of CD — Online learning launched in late 2013.
    - Experiment with webinars to aid high-level peer-to-peer exchanges and spread Fund institutional knowledge — Several webinars with chief economists in Western Hemisphere region in 2014–2015.
  - Leverage CD as outreach
    - Monitor impact of CD-related outreach — Created CD platforms on imf.org; active social media use; greater RCDC role.
    - Enhance communication among departments of CD-related outreach activities — CD communications group created; Fund-wide CD story competition and Postcard series launched.
    - Track progress on dissemination to various stakeholders of CD findings and evaluations — Initiated major reforms to strengthen information available to staff; mixed progress on increasing information to external stakeholders.

### 2018 CD Strategy Review Recommendations
- Clarify Roles and Responsibilities
  - Deepen strategic engagement with country authorities throughout the CD process — CD country strategies discussed with the authorities in the context of surveillance and lending.
  - Area departments to be in the leading role on overall country engagement, including through CD-CSNs for all heavy users (defined by a common metric) — Completed guidelines to CD-CSN, with CD-CSNs reflected in several country reports.
  - Strengthen efforts to expand and learn from best practices in integrating CD and surveillance — Completed staff guidelines on the integration of CD with surveillance and lending, reflecting best practices.
  - Explore further how to better integrate CD and surveillance in the context of the 2020 Comprehensive Surveillance Review (CSR), following on the findings of this review and experience from mainstreaming best practices — Covered CD-surveillance integration in the 2021 CSR and provided staff guidance.

- Better Prioritization and Monitoring
  - Strengthen the focus and monitoring of priorities by narrowing the list of priorities and building on better information systems — Narrowed priorities list and aligned it with overall Fund priorities; prioritization framework built into the CDMAP system.
  - Take further steps to develop and operationalize a clear governance framework for RBM and the common evaluation framework — Updated policies and guidelines on RBM governance and evaluations; strategic evaluation workplan updated every year.

- Enhance Country-Tailored Delivery Focused on Implementation
  - CD departments to build on existing departmental strategies to continue moving towards greater modernization, modularity, flexibility, and agility in CD delivery as well as to bring about medium-term shifts in expertise as CD priorities change over time — Developed department-level strategies on CD delivery, refined further and tested during the pandemic.
  - Continue experimentation with new technologies to support flexible delivery — Developed fully virtual mode of delivery, with ongoing experimentation of blended delivery.
  - Follow up on the Management Implementation Plan for the 2018 IEO Report on the IMF and Fragile States — CD a key component of the IMF strategy for FCS.
  - Strengthen operational support for RCDCs — Enhanced harmonization and efficiency in administrative, financial management, and reporting procedures; increased Fund resources for administrative expenditures.

- More Effective Internal Consultation and Sharing of Information
  - Implement ongoing initiatives to enhance knowledge management (KMU project) and improve internal access to data, analytical tools, and productivity tools (Digital Workplace) — TA reports disseminated to staff and Board via Knowledge Exchange countries; CD data available in CDMAP and related dashboards; ongoing progress on modules under the Digital Workplace.
  - Implement CDMAP — Formal close of the CDMAP project (on budget) with ongoing work to strengthen end-user interfaces.
  - Continue the practice of informal Board briefings on CD activities and find other opportunities to inform and engage the Executive Board more regularly on CD — Regular informal board meetings on CD priorities (February); occasional briefings by CD departments; CD regularly covered in regional briefings by area departments; topical briefings: evaluation and impact, information dissemination, fundraising.

- Improved External Coordination and Communication
  - Better leverage existing good practices on coordination in collaboration with other providers — CD partnership forums and dialogues, as well as regular steering committees, have helped to coordinate the overall country engagement across CD providers. Forums such as the Platform for Collaboration on Tax have also been useful for such coordination.
  - Pursue innovative CD communications approaches to raise awareness of the Fund’s CD work — A wide range of initiatives have boosted the impact of CD communications: an expanded social media presence; modernized and harmonized branding; elevated CD events; new campaigns (e.g., #IMFPartners); leveraged wide interest in the online learning program; regular CD stories on internal and external communications vehicles; and more audiovisual content on CD.
  - Improve the presentation of recommendations in TA reports to senior authorities and other nontechnical users; Engage local stakeholders on key TA recommendations as part of surveillance and outreach — Introduced high-level summaries, as a new publication series, focused on findings and recommendations of TA reports.
  - Publish more topical notes in specialized areas of interest to policymakers, bringing in cross-country learning — Since 2019, published around 20 policy notes that offer practical advice to policymakers on important issues. Around 100 special series notes on pandemic-related policy responses (COVID-19 notes) were published between April 2020 and March 2022 to help members address the economic effects of the pandemic.
  - Implement forthcoming recommendations of the working group on TA report publication — Updated the CD information dissemination policy. Enhanced the Partners Connect platform.
  - Continue to increase the sustainability and fungibility of external financing — The COVID-19 Crisis CD Initiative was an important step in increasing the flexibility and agility of external funding; Ongoing work to develop broader and medium-term agreements with partners are also supporting the sustainability of funding.

### CD Overview (selected quantitative points from Annex II)
- During FY22, the Fund delivered CD to 166 IMF members countries.
- The Fund offered assistance on 37 CD workstreams.
- Training delivery:
  - 84 courses delivered in a classroom setting.
  - 48 courses delivered online.
- An average project for heavy CD users (top 25th percentile):
  - costs 1.1 million USD,
  - include about 16 activities,
  - is delivered through a range of modalities, based on member needs and absorptive capacity.

*Source: IMF 2023 CD Strategy Review — Annex I and Annex II content as provided in the source PDF.*

---


_Source: https://www.imf.org/-/media/files/publications/pp/2022/english/ppea2022056.pdf_