## ppea2023022

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**Canonical URL:** [ppea2023022](https://www.imf.org/-/media/files/publications/pp/2023/english/ppea2023022.pdf)

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---

### EXECUTIVE SUMMARY — Overview and purpose and Strategic focus
- This Management Implementation Plan (MIP) proposes actions in response to the Board-endorsed recommendations provided by the Independent Evaluation Office (IEO)’s report on IMF and Capacity Development (CD).
- Staff has already begun addressing some IEO recommendations; several actions in this MIP reflect initiatives in train.
- Resource implications expected manageable in the near term as actions have mostly been incorporated into departmental work plans and budgets for fiscal year (FY) 2024.
- Medium-term resource implications will be discussed in the context of the FY 2025-FY 2026 medium-term budget proposals.
- The MIP addresses seven IEO recommendations focusing on:
  - Enhancing strategic framework (CD Strategy review in 2023; CD Guidance Note in 2024).
  - Strengthening Executive Board strategic and oversight role (formal mid-point progress report in May 2026; reporting dashboards; CD coverage in Article IV staff reports per CD Guidance Note).
  - Promoting ownership by authorities (measures in CDSR and Guidance Note).
  - Leveraging and sustaining Regional Capacity Development Centers (RCDC) (governance and financing assessed in CDSR).
  - Enhancing Monitoring and Evaluation (M&E) and Results-Based Management (RBM) (RBM dashboard; RBM e-learning; CDMAP review; assess M&E in CDSR).
  - Enhancing stability and flexibility of funding (review funding model and risk mitigation in CDSR).
  - Calibrating Human Resources (HR) policies and incentives (partially considered during CDSR against the 2017 HR Medium-term Strategy).
- Two key deliverables:
  - 2023 CD Strategy Review (CDSR) — targeted for December 2023.
  - CD Guidance Note — targeted for end of 2024 to operationalize CDSR recommendations and consolidate guidance.
- Several short-term actions included in implementation matrix (Annex).

### EXECUTIVE SUMMARY — IEO recommendations (concise restatement)
- Recommendation 1: Further enhance the strategic framework for IMF CD to provide clearer guidance for prioritization and allocation of IMF CD.
- Recommendation 2: Further develop the Executive Board’s strategic and oversight role through increased engagement and provision of information.
- Recommendation 3: Reinforce measures to promote CD ownership, tighten integration with surveillance and lending, tailor to country circumstances, and promote collaboration.
- Recommendation 4: Further leverage advantages of RCDCs and put them on a sustainable footing.
- Recommendation 5: Further enhance the M&E system and fully exploit it to drive improvement in CD prioritization, design, and delivery.
- Recommendation 6: Consider further steps to enhance stability and flexibility of CD funding to sustain support for member countries.
- Recommendation 7: Calibrate HR policies and incentives to maintain and enhance quality and continuity of CD expertise and ensure CD priority in country engagement.

### EXECUTIVE SUMMARY — Implementation highlights and timing
- CDSR (2023):
  - Informed by IEO findings and other policy/strategy reviews (FCS Strategy, Comprehensive Surveillance Review, Strategy to Address Climate Change Policy Related Challenges, Digital Money Strategy, Strategy Toward Mainstreaming Gender).
  - CDSR aims to:
    - Update guiding principles on Fund CD objectives.
    - Map Fund’s comparative CD expertise.
    - Assess integration progress with surveillance and lending and propose improvements.
    - Examine desirable size of CD spending relative to other core activities.
    - Reflect on CD composition vs principles and country alignment with surveillance and program priorities.
  - Targeted issuance: December 2023.
- CD Guidance Note (end-2024):
  - Will replace the 2019 IMF Policies and Practices on Capacity Development.
  - Will operationalize CDSR recommendations; integrate/update staff guidelines on CD delivery and management, CD-surveillance integration, M&E, and RBM; update guidance on Country Strategy Notes (CSNs) and Regional Strategy Notes (RSNs).
  - Targeted completion: end of 2024.
- Board oversight and reporting:
  - Formal mid-point progress report on CD strategy implementation: approximately May 2026 (2.5 years after completion of the 2023 CDSR).
  - Documents seeking Board approval of new external funding vehicles to include discussion of alignment with institutional objectives and CD strategy starting in 2024.
  - Reporting dashboards based on improved CDMAP data to include CD delivery and results by country, region, and workstream; dashboards to be available by end-2023 using data as at the end of FY23.
  - Staff to review coverage of CES in staff reports for FCS and small developing states (SDS) in context of new CD Guidance Note.
- Committee on Capacity Building (CCB):
  - Staff will update ToR for the CCB by May 2023 to strengthen strategic decision-making and leverage enhanced M&E information.

### EXECUTIVE SUMMARY — Ownership, integration, and country tailoring
- CDSR and Guidance Note will:
  - Promote strengthened buy-in and tailoring of CD to country circumstances.
  - Provide updated guidance on integration with surveillance and program work.
  - Consider adoption and implementation progress of Country Engagement Strategies (CES) for Fragile and Conflict-Affected States (FCS) and whether further adoption for other members is appropriate.
- Short-term IEO-suggested steps include:
  - Deepening engagement with recipient authorities in CSN development and CD project design/planning.
  - Enhancing guidance on navigating CD in a program context to support CD ownership.
  - Clarifying staff (especially resident representatives) expectations to support authorities in leading and coordinating CD providers.

### EXECUTIVE SUMMARY — M&E and RBM
- Planned enhancements:
  - Develop RBM dashboard and other information tools to facilitate planning and prioritization.
  - Develop RBM e-learning for continuous staff training.
  - Conduct CDMAP review to improve processes and functionality.
  - Assess Fund’s M&E in CDSR for strategic use in CD planning, delivery, and results reporting.
- Dashboards to be available by end-2023 using data as at the end of FY23.

### EXECUTIVE SUMMARY — Funding stability and flexibility
- CDSR will review options for evolving funding model and risk mitigating strategies to enhance CD funding stability/flexibility.
- Documents seeking Board approval of new external funding vehicles will explain contribution to Fund’s CD strategy beginning in 2024.

### EXECUTIVE SUMMARY — Human resources and incentives
- HR issues partially considered during CDSR against ongoing implementation of the 2017 HR Medium-term Strategy.
- Recommendation to calibrate HR policies and incentives to support CD expertise and ensure CD priority in country engagement.

---

### Board reactions — integration of CD in program context and Implementation Plan
- Directors stressed importance of enhanced staff guidance on integrating CD in a program context and encouraged addressing these issues in the upcoming Review.
- Staff has invested in strengthening:
  - authorities’ ownership,
  - integration with surveillance,
  - tailoring to country context.
- Recent staff guidance embodying recommendations includes:
  - RBM operational guidelines,
  - FCS guidance note,
  - Operational Guidelines for Integrating CD with Surveillance and Lending,
  - Guidance Note for Comprehensive Surveillance Under Article IV Consultations.
- The 2023 CDSR will:
  - identify approaches to assessing absorptive capacity,
  - propose measures to promote country buy-in and commitment through enhanced tailoring.
- The CD Guidance Note will operationalize recommendations on integration in program and surveillance contexts.

### Board reactions and implementation — RCDCs
- Executive Board agreed with Recommendation 4 to further leverage RCDCs and put them on a sustainable footing; specific proposals to be discussed in CDSR.
- IEO short-term suggested steps for MIP consideration:
  - Clarify HQ and RCDC roles; strengthen RCDC governance.
  - Move toward coherent geographic coverage, more consistent deployment of fully integrated centers, greater balance in funding across regions.
  - Stronger IMF financing of RCDCs to stabilize overhead funding so donor resources can focus on CD activities.
- Board highlighted field presence and RCDC governance; many Directors called for increased Fund financing of RCDCs; some noted resource dependence.
- Implementation commitments:
  - CDSR to assess financing (centers reliant on partners and member countries; some face significant financing gaps), HQ vs field roles, HR/budget policies to support deeper field presence, potential changes to mandates/governance/financing.
  - Budget augmentation strategy approved by the Board provides a structural increase of $3 million over FY23-25 to support field presence.
  - Additional IMF financing for RCDCs would need to consider trade-offs implied by a flat real budget.
  - CD Guidance Note will include guidance on RCDC governance, HQ and field roles, and knowledge exchange mechanisms.

### Board reactions and implementation — M&E, RBM, and CDMAP
- Executive Board broadly agreed with Recommendation 5 to enhance M&E and exploit it to drive CD improvements.
- IEO short-term suggested steps:
  - Thorough assessment of CDMAP; fine-tune for user friendliness.
  - Develop institution-wide CD evaluation strategy endorsed by CCB.
  - Streamlined project assessment reports at project conclusion to include broadly applicable lessons and authority comments.
- Directors encouraged:
  - Thorough CDMAP assessment and operational fine-tuning.
  - Continued efforts to improve RBM quality and consistency and closer communication between area and CD departments and with authorities.
  - CCB to pursue coherent evaluation strategy and strategic use/synthesis of externally mandated evaluations.
- Implementation actions and timelines:
  - Concept Note for CDSR to propose systematic usage of M&E tools (RBM data, project assessments, evaluations, training surveys, test scores) to assess impact, ownership, traction, and value for money.
  - Guidance Note by end 2024 to update/operationalize guidance on RBM and M&E issues.
  - Short-term initiatives in 2023:
    - (i) develop RBM dashboard for results and delivery reporting (to facilitate planning/prioritization);
    - (ii) launch RBM e-learning for continuous staff training and access to RBM requirements/good practices;
    - (iii) undertake review of CDMAP to improve performance, user experience, and functionality.
  - Follow-up capital project targeted for early 2024 to incorporate CDMAP review lessons and CDSR recommendations.

### Board reactions and implementation — CD funding and stability
- Executive Board broadly agreed with Recommendation 6 to enhance CD funding stability/flexibility.
- IEO short-term suggested steps:
  - Enhance management of current external funding model.
  - Explore alternatives to increase funding: targeted increases from higher-income recipients, internal stabilization mechanism, larger internal contributions.
  - Enhance communication across departments on donor engagement.
- Directors recognized progress: broadened donor base, buffers for CD demand surges, carryforward policy for multi-year CD programs and expenditure optimization.
- Some Directors open to increased charging for CD services; others doubted feasibility.
- Many Directors open to exploring larger contributions from internal Fund sources.
- Implementation plan:
  - CDSR to review CD funding model and options, including potential for increased internal funding consistent with Fund income model, charging advanced economies policy, new funding modalities, and risk mitigating strategies.
  - Review will focus on RCDC sustainability and leverage external partner collaboration; feasibility of stronger IMF financing to be considered.
  - Scope for significant increases in internal funding subject to prioritization within medium-term budget process and flat real budget trade-offs.

### Board reactions and implementation — Human resources (HR) and incentives
- Executive Board agreed with Recommendation 7 to calibrate HR policies/incentives to preserve and strengthen CD expertise.
- IEO short-term suggested steps:
  - Energize development and implementation of an expert track with budgetary resources.
  - Complete workforce planning and talent inventory initiatives.
  - Build on pandemic-era innovations to attract diverse experts.
  - Re-examine HR policies to balance flexibility and continuity.
- Directors stressed delivering on talent inventory and expert track initiatives; some timing depends on broader HR reforms; scope for flexible working arrangements on a trial basis.
- Implementation plan and timelines:
  - CDSR will consider retention and career-track issues for CD specialists, program managers, and administrators.
    - By: December 2023
    - Responsible: ICD with ICG and EAG.
  - Finalize proposal for enhanced expert track.
    - By: May 2025
    - Responsible: HRD.
  - Complete enhancement of the Talent Inventory to include macro-financial experience and continue enhancing CD Strategy.
    - By: May 2025
    - Responsible: HRD.
  - Update workforce planning materials for selected CD management job families/functions and incorporate CD department feedback into Adaptive Insights.
    - By: April 2024
    - Responsible: HRD with ICD and CD departments.
  - Short- to medium-term measures:
    - Establish expert track and talent inventories to commence in FY25.
    - HRD and Institute for Capacity Development to collaborate on updating workforce planning materials.

### Resource implications
- Immediate MIP actions manageable within existing resource constraints.
- Main actions (CDSR and CD Guidance Note) covered by current departmental budgets.
- Other short-term actions to be absorbed within departmental budgets.
- Recommendations from CDSR could have significant resource implications; these will be quantified during the review and considered in the broader budget context.

---

### Annex I — Management Implementation Plan (Recommendation highlights and timelines)
- Recommendation 1 — Enhance strategic framework:
  - CDSR deliverables include: propose guiding principles; map comparative expertise; assess CD-surveillance-program integration; examine CD spending size; develop explicit allocation principles and holistic framework with external expert input.
  - Follow-up actions:
    - New CD Guidance Note to operationalize CDSR recommendations.
      - By: December 2023
      - Responsible: ICD with ICG and EAG.
    - Revise CCB ToR.
      - By: December 2024
      - Responsible: Lead ICD.
    - Update CSN and RSN guidance; take stock of CES implementation.
      - By: December 2024 (CSN/RSN guidance); By: May 2023 (stock take)
      - Responsible: ICD.
- Recommendation 2 — Strengthen Executive Board oversight:
  - Follow-up actions:
    - Mid-point review of CDSR for Board guidance.
      - By: May 2026
      - Responsible: ICD lead.
    - Provide Board access to CD results via reporting dashboards based on CDMAP.
      - By: December 2023
      - Responsible: ICD with SEC and ITD.
    - Explore harmonized approaches to CD coverage in Article IV staff reports; reflect in CD Guidance Note.
      - By: December 2024
      - Responsible: Lead ICD.
    - Documents seeking Board approval of external funding vehicles to describe contribution to CD strategy.
      - By: December 2023
      - Responsible: ICD.
- Recommendation 3 — Promote ownership and integration:
  - CDSR and CD Guidance Note to enhance CD ownership and integration with surveillance and lending.
    - By: December 2023 (CDSR); By: December 2024 (Guidance Note)
    - Responsible: ICD with ICG and EAG.
- Recommendation 4 — Leverage RCDCs and ensure sustainability:
  - CDSR to recommend actions on field presence, RCDC governance, and financing.
    - By: December 2023
    - Responsible: ICD with ICG and EAG.
  - CD Guidance Note to include RCDC guidance.
    - By: December 2024
    - Responsible: Lead ICD with area and functional departments.
- Recommendation 5 — Enhance M&E and RBM:
  - CDSR to recommend M&E enhancements; Guidance Note to provide operational RBM guidance.
    - By: December 2023 (CDSR); By: December 2024 (Guidance Note)
    - Responsible: ICD with ICG and EAG.
  - Develop RBM Dashboard.
    - By: July 2023
    - Responsible: ICD.
  - Launch RBM e-learning.
    - By: June 2023
    - Responsible: ICD.
  - Undertake advisory review of CDMAP.
    - By: December 2023
    - Responsible: OIA with ICD.
  - Prepare follow-up CDMAP capital project to incorporate review lessons.
    - By: December 2024
    - Responsible: ICD.
- Recommendation 6 — Enhance CD funding stability:
  - CDSR to review funding model, explore internal funding potential, charging policy, new options, and risk mitigation with focus on RCDC sustainability.
    - By: December 2023
    - Responsible: ICD with ICG and EAG.
- Recommendation 7 — Calibrate HR policies and incentives:
  - CDSR to consider retention, career tracks, and staff incentives while accounting for HR policy interdependencies.
    - By: December 2023
    - Responsible: ICD with ICG and EAG.
  - Finalize expert track proposal.
    - By: May 2025
    - Responsible: HRD.
  - Enhance Talent Inventory and workforce planning materials.
    - By: May 2025 (Talent Inventory); By: April 2024 (workforce planning)
    - Responsible: HRD with ICD and CD departments.

*Source: ppea2023022 - EXECUTIVE SUMMARY (May 10, 2023).*

### EXECUTIVE SUMMARY

### EXECUTIVE SUMMARY

### Overview and purpose
- This Management Implementation Plan (MIP) proposes actions in response to the Board-endorsed recommendations provided by the Independent Evaluation Office (IEO)’s report on IMF and Capacity Development (CD).
- Staff has already begun addressing some of the IEO recommendations and several of the actions proposed in this MIP reflect initiatives in train.
- Resource implications are therefore expected to be manageable in the near term as these actions have mostly been incorporated into departmental work plans and budgets for fiscal year (FY) 2024.
- Medium-term resource implications will be discussed in the context of the FY 2025-FY 2026 medium-term budget proposals.

### Strategic focus and key deliverables
- The MIP addresses seven recommendations of the IEO evaluation, which aim at:
  - Enhancing the strategic framework, by reviewing the Fund’s CD Strategy in 2023 and subsequently, operationalizing its recommendations through the development and publication of a CD Guidance Note in 2024.
  - Strengthening the Executive Board’s strategic and oversight role by introducing a formal mid-point progress report in May 2026 on the five-year implementation of CD Strategy; enhanced provision of information through reporting dashboards and more consistent coverage of CD issues in Article IV staff reports required in the CD Guidance Note; and enabling better linkages between financing agreements and broader CD strategy.
  - Promoting ownership by the authorities through measures established in the CD Strategy Review (CDSR) and the pursuant Guidance Note towards strengthened buy-in and tailoring of CD to specific country circumstances and updated guidance on integration with surveillance and program.
  - Leveraging and sustaining Regional Capacity Development Centers (RCDC) by ensuring strategic governance and financing issues are assessed as part of CDSR, and related recommendations are operationalized through the pursuant Guidance Note.
  - Enhancing the Monitoring and Evaluation (M&E) Framework through a results-based management (RBM) dashboard and other information dissemination tools to facilitate planning and prioritization; developing RBM e-learning to enable continuous staff training; conducting a review of the Capacity Development Management and Administration Program (CDMAP) to improve its processes and functionality; as well as an assessment of the Fund’s M&E in CDSR to ensure its strategic use for CD planning, delivery, and results reporting.
  - Enhancing the stability and flexibility of funding through a review of the options for further evolving the funding model and risk mitigating strategies as part of the upcoming CDSR.
  - Calibrating Human Resources (HR) policies and incentives to support the Fund’s CD expertise by partially considering HR issues during the CDSR against the backdrop of the ongoing implementation of the 2017 HR Medium-term Strategy.

- The MIP is focused around two key deliverables:
  - The 2023 CD Strategy Review (CDSR) (targeted for December 2023).
  - A subsequent formal Guidance Note (targeted for end of 2024) that will operationalize the recommendations of the CDSR and consolidate and streamline existing governance materials.
- Several short-term actions are also proposed and are included in the implementation matrix in the Annex.

### IEO recommendations (concise restatement)
- Recommendation 1: Further enhance the strategic framework for IMF CD to provide clearer guidance for a more intentional and transparent approach to the prioritization and allocation of IMF CD.
- Recommendation 2: Further develop the Executive Board’s strategic and oversight role through increased engagement and provision of information.
- Recommendation 3: Reinforce measures to promote CD ownership, along with tighter integration with surveillance and lending, tailoring to country circumstances and promoting collaboration, as key drivers of CD effectiveness.
- Recommendation 4: Leverage further the advantages of Regional Capacity Development Centers (RCDC) and put them on a sustainable footing.
- Recommendation 5: Further enhance the Monitoring and Evaluation (M&E) system and fully exploit it to drive improvement in CD prioritization, design, and delivery.
- Recommendation 6: Consider further steps to enhance the stability and flexibility of CD funding in order to sustain support for the CD needs of member countries.
- Recommendation 7: Calibrate Human Resources (HR) policies and incentives to ensure that the IMF maintains and enhances the quality and continuity of CD expertise, and that CD receives appropriate priority as an integral aspect of country engagement.

### Implementation highlights and timing
- CDSR (2023)
  - The CDSR will be informed by the IEO evaluation findings and other policy and strategy reviews (including the FCS Strategy, Comprehensive Surveillance Review, Strategy to Address Climate Change Policy Related Challenges, Digital Money Strategy, and Strategy Toward Mainstreaming Gender).
  - CDSR aims to:
    - Update and propose more detailed guiding principles on the objectives of Fund CD.
    - Map out the Fund’s comparative expertise in the CD space.
    - Assess progress toward integrating CD with surveillance and lending and propose practical avenues for improvement.
    - Examine the desirable size of CD spending relative to other core activities.
    - Reflect on how current CD composition compares with proposed principles and country-level alignment with surveillance and program priorities.
  - CDSR is targeted to be issued in December 2023.

- CD Guidance Note (end-2024)
  - Will replace the 2019 IMF Policies and Practices on Capacity Development.
  - Will operationalize the CDSR recommendations and integrate/update staff guidelines related to CD delivery and management, including CD-surveillance integration, monitoring and evaluation, and RBM.
  - Will update staff guidelines on country strategy notes (CSNs) and regional strategy notes (RSNs).
  - Targeted completion: end of 2024.

- Board oversight and reporting
  - A formal mid-point progress report on implementation of the CD strategy will be delivered approximately in May 2026 (2.5 years after completion of the 2023 CDSR).
  - Documents seeking Board approval of new external funding vehicles will include a discussion of alignment with the Fund’s institutional objectives and CD strategy starting in 2024.
  - Staff will develop reporting dashboards based on improved CDMAP data; dashboards to include information on CD delivery and results by country, region, and workstream; dashboards should be available by end-2023 and will use data as at the end of FY23.
  - In the context of the new CD Guidance Note, staff will review coverage of CES in staff reports for FCS and small developing states (SDS) and consider additional requirements for adequate coverage of CD issues in surveillance and program staff reports.

- Committee on Capacity Building (CCB)
  - Staff will update the ToR for the CCB to further strengthen its strategic decision-making role by May 2023, focusing the CCB on strategic issues and leveraging enhanced M&E information.

### Ownership, integration, and country tailoring
- The CDSR and the Guidance Note will:
  - Promote strengthened buy-in and tailoring of CD to specific country circumstances.
  - Provide updated guidance on integration with surveillance and program work.
  - Consider adoption and implementation progress of Country Engagement Strategies (CES) for Fragile and Conflict-Affected States (FCS) and whether further adoption for other members is appropriate.
- Short-term IEO-suggested steps to be considered include:
  - Deepening engagement with recipient authorities in the development of CSNs and in the design and planning of CD projects.
  - Enhancing guidance to staff on navigating CD in a program context to support CD ownership.
  - Clarifying expectations for staff, especially resident representatives, on supporting country authorities to lead and coordinate CD providers.

### Monitoring and Evaluation (M&E) and RBM
- Enhancements planned:
  - Develop a results-based management (RBM) dashboard and other information dissemination tools to facilitate planning and prioritization.
  - Develop RBM e-learning to enable continuous staff training.
  - Conduct a review of CDMAP to improve its processes and functionality.
  - Assess the Fund’s M&E in the CDSR to ensure strategic use for CD planning, delivery, and results reporting.
- Staff is developing reporting dashboards based on improved data generated by CDMAP; dashboards to be available by end-2023 using data as at the end of FY23.

### Funding stability and flexibility
- The CDSR will include a review of options for evolving the funding model and risk mitigating strategies to enhance the stability and flexibility of CD funding.
- Documents seeking Board approval of new external funding vehicles will explain how these vehicles and CD activities contribute to the Fund’s CD strategy beginning in 2024.

### Human resources and incentives
- HR issues will be partially considered during the CDSR against the backdrop of the ongoing implementation of the 2017 HR Medium-term Strategy.
- Recommendation to calibrate HR policies and incentives to support the Fund’s CD expertise and ensure CD receives appropriate priority as part of country engagement.

### Short-term actions already underway (selected)
- Implementation of the Guidance Note for Comprehensive Surveillance Under Article IV Consultations (June 2022) emphasizing strengthening the coverage of CD in appropriate Board country documents.
- New CD information dissemination policy to facilitate broader access to CD-related materials.
- Development of reporting dashboards from CDMAP data with availability by end-2023 and using data as at the end of FY23.

*Source: ppea2023022 - EXECUTIVE SUMMARY (May 10, 2023).*

### 12. Board reactions. Directors stressed the importance of enhancing the guidance to staff on

### ppea2023022 - 12. Board reactions. Directors stressed the importance of enhancing the guidance to staff on

### Board reactions — integration of CD in program context
- Directors stressed the importance of enhancing the guidance to staff on how to integrate CD in a program context.
- Directors encouraged addressing these issues in the context of the upcoming Review.

### Implementation Plan — integration, absorptive capacity, and country buy-in
- Staff has invested significant efforts in strengthening:
  - authorities’ ownership,
  - integration with surveillance,
  - tailoring to country context.
- Recent staff guidance cited as embodying the recommendation includes:
  - RBM operational guidelines,
  - FCS guidance note,
  - Operational Guidelines for Integrating CD with Surveillance and Lending,
  - Guidance Note for Comprehensive Surveillance Under Article IV Consultations.
- The 2023 CDSR will:
  - seek to identify approaches to assessing absorptive capacity,
  - propose measures to promote country buy-in and commitment, including through enhanced tailoring to country conditions.
- The CD Guidance Note will operationalize recommendations on integration in program and surveillance contexts.

### RCDCs — Board reactions and implementation
- Executive Board agreed with Recommendation 4 to further leverage advantages of RCDCs and put them on a sustainable footing; specific proposals to be discussed during the upcoming review of the CD Strategy.
- Possible short-term steps identified by IEO for MIP consideration:
  - Clarifying the roles of headquarters (HQ) and RCDCs and strengthening the governance structure of RCDCs.
  - Moving toward more coherent geographic coverage, more consistent deployment of fully integrated centers, and greater balance in funding across regions.
  - A stronger role for IMF financing of RCDCs to ensure a more stable source of funds for overhead costs, enabling donor resources to be focused on financing specific CD activities.
- Board reactions (paragraph 16):
  - Directors highlighted enhancing field presence and RCDC governance, including clarifying HQ and RCDC roles, as central elements in the upcoming Review.
  - Many Directors called for increasing Fund financing of RCDCs and noted exploration of a stronger role for IMF internal financing.
  - Other Directors observed implementation depends on resource availability.
- Implementation Plan (paragraph 17):
  - Staff will consider field presence and the role of RCDCs in the 2023 CDSR.
  - The review will assess financing (centers reliant on partners and member countries; some centers face significant financing gaps), roles/responsibilities of HQ vs field-based experts and centers, policies (including HR and budget) to support deeper field presence, and potential changes to mandates, governance, and financing structure of RCDCs.
  - The budget augmentation strategy approved by the Board provides a structural increase of $3 million over FY23-25 to support field presence.
  - Additional IMF financing for RCDCs would need to consider trade-offs implied by a flat real budget.
- The CD Guidance Note will include guidance on:
  - RCDC governance,
  - roles and responsibilities (HQ and field),
  - good practices on knowledge exchange mechanisms,
  - other issues from the IEO and strategy recommendations.

### Monitoring & Evaluation (M&E), RBM, and CDMAP
- Executive Board broadly agreed with Recommendation 5 to further enhance the M&E system and exploit it to drive improvement in CD prioritization, design, and delivery.
- Possible short-term steps identified by IEO for MIP consideration:
  - A thorough assessment of CDMAP progress and remaining challenges; fine-tuning CDMAP to ensure user friendliness.
  - Developing a coherent institution-wide strategy for CD evaluation to be endorsed by the CCB, covering internal and external evaluations, guiding what will be evaluated and by whom.
  - Streamlined project assessment reports at project conclusion to include lessons learned with broad applicability and comments from relevant authorities.
- Board reactions (paragraph 19):
  - Directors encouraged thorough assessment of CDMAP progress and fine-tuning operational practices.
  - Directors encouraged continued efforts to improve RBM quality and consistency, including closer communication between area and CD departments and with authorities.
  - Directors emphasized the CCB should strive for a coherent and effective evaluation strategy to learn lessons for maximum CD impact.
  - Directors suggested strategic use and synthesis of findings from three already extensive externally mandated evaluation programs.
  - Directors noted options to strengthen strategic planning and execution of internal evaluations, mindful of cost-benefit trade-offs.
- Implementation Plan (paragraph 20):
  - The Board-endorsed Concept Note for the 2023 CDSR will:
    - propose more systematic coverage and usage of M&E tools (RBM data, project assessments, evaluations, training surveys and test scores) to assess impact, ownership, traction, and value for money;
    - enhance strategic selection and use of evaluations for CD prioritization;
    - report a summary of findings, recommendations, action plans (and progress) from previous evaluations and consider ways to enhance their impact on strategy, prioritization and delivery.
  - The Guidance Note to be produced by end 2024 will update and operationalize guidance on RBM and other M&E issues raised by the IEO and the CDSR.
- Short-term initiatives in 2023 (paragraph 21):
  - (i) developing an RBM dashboard for results and delivery reporting to facilitate planning and prioritization;
  - (ii) launching RBM e-learning for continuous staff training and access to RBM requirements and good practices;
  - (iii) undertaking a review of CDMAP to improve performance, user experience, and functionality.
  - A follow-up capital project targeted for early 2024 will incorporate lessons from the CDMAP review and possible recommendations from CDSR.

### CD funding and stability
- Executive Board broadly agreed with Recommendation 6 to consider further steps to enhance the stability and flexibility of CD funding to sustain support for member countries’ CD needs.
- Possible short-term steps identified by IEO for MIP consideration:
  - Further enhancements in the management of the current external funding model to enhance effectiveness and efficiency.
  - Exploring potential alternatives to increase funding, such as a targeted increase in contributions from higher income recipients, an internal stabilization mechanism or larger contributions from internal resources.
  - Enhancing communication across departments regarding requests and engagement with donors.
- Board reactions (paragraph 22):
  - Directors recognized progress including broadening the donor base, creating buffers for CD demand surges, and instilling a carryforward policy for multi-year CD programs and expenditure optimization.
  - Directors saw benefit in continuing to explore new options but noted limited scope/speed given pressures on Fund and donor budgets.
  - Some Directors were open to exploring increased charging for CD services; others doubted feasibility due to administrative difficulty and limited member appetite.
  - Many Directors were open to exploring larger contributions from internal Fund sources.
  - Directors suggested a review of the CD funding model, including external funding vehicles, with careful consideration of merit and practicality in light of the Fund’s income model and donors’ preferences.
- Implementation Plan (paragraph 23–25):
  - Staff will review the CD funding model as part of the 2023 CDSR, exploring:
    - potential for further increasing internal funding for CD consistent with principles underlying the Fund’s income model,
    - the policy of charging advanced economies,
    - new funding options and modalities,
    - risk mitigating strategies including coordination with the Fund’s other fundraising activities.
  - The review will pay particular attention to sustainability of RCDCs and risk mitigating strategies to leverage external partner collaboration and the feasibility of a stronger role for IMF financing.
  - The review builds on progress already made (broadening donor base, creating buffers, carryforward policy). The scope for significant increases in internal funding remains subject to prioritization within the Fund’s medium-term budget process and trade-offs from a flat real budget.

### Human resources (HR) and incentives for CD expertise
- Executive Board agreed with Recommendation 7 to calibrate HR policies and incentives to maintain and enhance quality and continuity of CD expertise and ensure CD is an integral aspect of country engagement.
- Possible short-term steps identified by IEO for MIP consideration:
  - Energizing development and implementation of an ambitious expert track to enhance career opportunities by providing additional budgetary resources.
  - Completing workforce planning and talent inventory initiatives to better track and plan CD expertise across the Fund.
  - Building on pandemic-era innovations to appeal to a broader candidate pool and attract high-quality and diverse experts.
  - Re-examining HR policies and practices to balance flexibility and continuity in CD expertise.
- Board reactions (paragraph 26):
  - Directors stressed delivering on talent inventory and expert track initiatives in the HR strategy.
  - Timing of some elements depends on broader HR reforms; some scope to consider flexible working arrangements on a trial basis.
  - Directors looked forward to MIP proposals on staff incentives to work in CD.
  - Raising recognition and opportunities for CD specialists requires behavioral and cultural changes.
- Implementation Plan (paragraph 27–28):
  - Staff will partially consider HR issues during the CDSR.
  - The review will identify areas to raise recognition of CD work, increase opportunities and retention of CD specialists, program managers and administrators (e.g., flexibility of location, greater fungibility across job streams), and improve staff incentives to work on CD, including in new priority areas.
  - Implementation of many measures requires a comprehensive review of Fund-wide HR employment policies.
  - Behavioral and cultural changes (e.g., more CD specialists assigned to country teams) are needed alongside HR policy changes.
  - Short- to medium-term measures:
    - Work on establishing an expert track and talent inventories will commence in FY25.
    - Human Resources Department and Institute for Capacity Development will collaborate on updating workforce planning materials for CD management staff to ensure scope for career development.

### Resource implications
- Immediate actions in the MIP will be manageable within existing resource constraints.
- Main actions (conducting the CDSR and developing the subsequent CD Guidance Note) are covered by current departmental budgets.
- Other short-term actions will be absorbed within existing departmental budgets.
- Recommendations from the CDSR could have more significant resource implications; these will be quantified during the review and considered in the broader budget context.

*Source: MIP on IEO’s Evaluation on IMF and CD (pp. 11–16).*

### Annex I. The IMF and Capacity Development—Management

### Annex I. The IMF and Capacity Development—Management Implementation Plan

### Recommendation 1 — Enhance strategic framework for IMF capacity development (CD)
- IEO short-term suggested steps:
  - More clearly articulating the role of CD in meeting the IMF’s goals; the synergies between CD, surveillance and programs at the institutional and country levels; and the trade-offs between the objectives of, and guiding principles for CD.
  - Enhancing the empirical/analytical basis for informing trade-offs in allocating CD.
  - Strengthening the role of the Committee on Capacity Building (CCB) including through updating its Terms of Reference (ToR).
  - Clarifying departmental roles and responsibilities vis-à-vis CD, to avoid overlaps, inconsistencies, and any potential incompatibility in responsibilities.
  - Ensuring that Country Strategy Notes (CSNs) are regularly and consistently produced for all heavy users of CD.
- IEO medium-term consideration:
  - Extending Country Engagement Strategies (CES) to all heavy CD users.
- Directors’ summary:
  - Directors broadly supported Recommendation 1; noted the Review will consider synergies and trade-offs between CD, surveillance, and program work, and reflect on overall size of CD.
  - Agreed strengthening CCB role and updating ToR important.
  - RSNs should continue to drive country-level prioritization while improving rigor, consistency, and member engagement.
  - Some Directors open to CES for all heavy CD users; others raised cost and sequencing concerns (noting FCS Strategy experience).
- CDSR deliverables (selected):
  - Propose more detailed guiding principles on the objectives of Fund CD.
  - Map the Fund’s comparative expertise in the CD space, taking into account evidence on impact, the changing pattern of demand, and complementarities with other providers.
  - Assess progress toward integrating CD with surveillance and lending, analyze synergies and trade-offs between CD, surveillance, and program work, and propose practical avenues for further improving strategic aspects of member country engagements.
  - Examine the desirable size of CD spending relative to other core activities of the Fund.
  - Developing explicit guiding principles on how to balance competing considerations in allocating CD resources and the use of internal vs external funding.
  - Developing a holistic framework to examine roles, synergies and tensions across CD, surveillance and program work in different country contexts with input from an external expert group.
- Follow-up actions, accountability, and timelines:
  - Prepare a new CD Guidance Note that will operationalize recommendations of the CDSR and update/integrate existing staff guidelines on CD, including CD‑surveillance integration and results-based management (RBM).
    - By: December 2023
    - Responsible: ICD in consultation with the Interdepartmental Contact Group (ICG) and External Advisory Group (EAG).
  - Revise CCB ToR in line with the IEO recommendations to further strengthen CCB’s strategic decision-making.
    - By: December 2024
    - Responsible: Lead ICD in consultation with departments.
  - Update staff guidance on CSN and RSN in line with findings of CDSR and include in CD Guidance Note; guidance on CES covered in the FCS staff guidance note.
    - By: December 2024
    - Responsible: ICD in consultation with departments.
  - In developing the new CD Guidance Note, staff will take stock of implementation progress through reviewing the coverage of CES in staff reports for FCS and CSNs for other heavy CD users.
    - By: May 2023
    - Responsible: ICD in consultation with departments.

### Recommendation 2 — Strengthen Executive Board strategic oversight and engagement
- IEO short-term suggested steps:
  - Introducing a formal Board midpoint review on implementation of CD Strategy and including progress reports in annual briefings on CD priorities.
  - Requiring all surveillance and program country documents for heavy CD users to include a short but substantive discussion of the CD strategy for the subject country.
  - Explaining in documents seeking Board approval of new external funding vehicles how these vehicles and CD activities contribute to the Fund’s CD strategy.
- Directors’ summary:
  - Directors concurred and supported introducing a formal mid-point progress report on implementation of the CD strategy.
  - Agreed to strengthen coverage of CD in appropriate Board country documents, in line with CSR guidance, and continue exploring information provision to the Board on CD effectiveness and value for money.
- Follow-up actions, accountability, and timelines:
  - Establish a mid-point review of the CDSR to provide the Board with an opportunity to offer strategic guidance in between five-year reviews.
    - By: May 2026
    - Responsible: ICD lead in consultation with departments.
  - Provide the Board with access to CD results information through new regularly updated reporting dashboards based on CDMAP data.
    - By: December 2023
    - Responsible: ICD in collaboration with SEC and ITD.
  - Take stock of CSR and CES implementation and explore harmonized approaches to ensuring adequate coverage of CD issues in Article IV staff reports; reflect approaches in the CD Guidance Note.
    - By: December 2024
    - Responsible: Lead ICD in consultation with departments.
  - Documents seeking Board approval of new external funding vehicles will set out how these vehicles contribute to the Fund’s CD strategy.
    - By: December 2023
    - Responsible: ICD.

- IEO medium-term consideration:
  - Developing a reporting format to routinely provide more information and analysis to the Board of the results, impact, and value for money of CD activities.

### Recommendation 3 — Promote CD ownership; tighten integration with surveillance and lending; tailor to country circumstances
- IEO short-term suggested steps:
  - Deepening engagement with recipient authorities in development of CSNs and in design and planning of CD projects.
  - Enhancing guidance to staff on how to navigate challenges of CD in a program context to support rather than hinder CD ownership.
  - Clarifying expectations and guidance for staff, especially resident representatives, on supporting authorities to lead and coordinate CD providers; collect and disseminate evidence on best practices in coordination.
- IEO medium-term consideration:
  - Exploring options for recipient authorities to signal their ownership, for example through requiring sign-off of ToR for CD projects, and commitment of resources to working with the Fund; exploring ways to measure and assess ownership systematically.
- Directors’ summary:
  - Directors stressed importance of enhancing staff guidance on integrating CD in a program context and encouraged addressing these issues in the upcoming Review.
- Follow-up actions, accountability, and timelines:
  - CDSR will make recommendations to enhance CD ownership, surveillance, and program integration and coordination with CD providers.
    - By: December 2023
    - Responsible: ICD in consultation with the ICG and EAG.
  - Prepare a CD Guidance Note to operationalize CD Strategy recommendations and enhance guidance on integration of CD with surveillance and lending, including measures on leveraging and navigating challenges of CD in a program context.
    - By: December 2024
    - Responsible: Lead ICD in consultation with departments.

### Recommendation 4 — Leverage Regional Capacity Development Centers (RCDCs) and ensure sustainability
- IEO short-term suggested steps:
  - Clarify roles of headquarters (HQ) and RCDCs and strengthen RCDC governance.
  - Move toward more coherent geographic coverage, more consistent deployment of fully integrated centers, and greater balance in funding across regions.
  - Strengthen IMF financing of RCDCs to ensure a more stable source of funds for overhead costs so donor resources can focus on financing specific CD activities.
- IEO medium-term consideration:
  - Enhance knowledge exchange across RCDCs and between centers and HQ about best practices.
- Directors’ summary:
  - Directors agreed with Recommendation 4; highlighted enhancing field presence and clarifying HQ vs RCDC roles as central.
  - Many Directors called for increasing Fund financing of RCDCs; some noted resource-dependence of implementation.
- Follow-up actions, accountability, and timelines:
  - CDSR will make recommendations to enhance field presence, strengthen RCDC governance and place financing issues on a more sustainable footing.
    - By: December 2023
    - Responsible: ICD in consultation with the ICG and EAG.
  - Prepare a CD Guidance Note including guidance on RCDC governance, roles of HQ and field, good practices on knowledge exchange and other issues from IEO and strategy recommendations.
    - By: December 2024
    - Responsible: Lead ICD in consultation with area and functional departments.

### Recommendation 5 — Enhance Monitoring and Evaluation (M&E) and exploit it for CD prioritization, design, delivery
- IEO short-term suggested steps:
  - Conduct a thorough assessment of CDMAP progress and remaining challenges; fine-tune CDMAP to be as user-friendly as possible.
  - Develop a coherent institution-wide strategy for CD evaluation to be endorsed by the CCB, covering internal and external evaluations and guiding what will be evaluated and by whom.
  - Ensure streamlined project assessment reports at project conclusion include lessons learned with broad applicability and comments from relevant authorities to build broader evaluations.
- IEO medium-term considerations:
  - Develop framework/processes to assess CD effectiveness and impact at country and institutional levels, and synergies between CD, surveillance, and lending.
  - Ensure five-yearly CDSR is informed by a comprehensive assessment of performance and actual outcomes and impact.
  - Explore how systematic use of RBM results could enhance assessment of CD effectiveness and cost-effectiveness and aid prioritization/allocation decisions.
- Directors’ summary:
  - Directors broadly agreed and encouraged improving RBM quality and consistency, closer communication between area and CD departments and with authorities.
  - Emphasized CCB should pursue a coherent evaluation strategy; suggested strategic use and synthesis of externally mandated evaluations and strengthening internal evaluations subject to cost-benefit considerations.
- Follow-up actions, accountability, and timelines:
  - CD strategy will make recommendations to enhance the Fund’s M&E system, including strategic selection and use of evaluations and synthesis of evaluation findings.
    - By: December 2023
    - Responsible: ICD in consultation with the ICG and EAG.
  - Prepare a CD Guidance Note providing operational guidance on RBM and other M&E issues raised in the strategy review.
    - By: December 2024
    - Responsible: Lead ICD in consultation with area and functional departments.
  - Develop an RBM Dashboard available to staff to improve results reporting and delivery coverage and to aid in CD planning and prioritization.
    - By: July 2023
    - Responsible: ICD.
  - Launch RBM e-learning to improve staff’s access to RBM requirements and best practice.
    - By: June 2023
    - Responsible: ICD.
  - Undertake advisory review of CDMAP processes and functionality to identify opportunities for efficiency and user experience gains.
    - By: December 2023
    - Responsible: OIA in consultation with ICD and other departments.
  - Prepare and propose a follow up CDMAP capital project to incorporate lessons of review and incorporate implementation requirements of CDSR to improve system performance and user experience.
    - By: December 2024
    - Responsible: ICD.

### Recommendation 6 — Enhance stability and flexibility of CD funding
- IEO short-term suggested steps:
  - Further enhancements in management of current external funding model to improve effectiveness and efficiency.
  - Explore alternatives to increase funding: targeted increase in contributions from higher-income recipients, an internal stabilization mechanism, or larger contributions from internal resources.
  - Enhance communication across departments regarding requests and engagement with donors.
- Directors’ summary:
  - Directors broadly agreed with Recommendation 6; noted limited scope or speed for significant gains given pressures on Fund and donor budgets.
  - Many Directors suggested a review of the CD funding model, including external funding vehicles; merit and practicality must consider Fund income model and donors’ preferences.
- Follow-up actions, accountability, and timelines:
  - CDSR will consider funding issues including flexibility and sustainability, especially for RCDCs. The Review will:
    - Review the CD funding model and explore new funding options, including further increasing internal funding for CD and consider risk mitigating strategies.
    - Assess relative costs and benefits of various HQ vs field engagement forms; explore policies (including HR and budget) to support deeper field presence.
    - Explore whether changes are needed in mandates, internal governance, and financing structure of RCDCs.
    - By: December 2023
    - Responsible: ICD in consultation with the ICG and EAG.

### Recommendation 7 — Calibrate HR policies and incentives to preserve and strengthen CD expertise
- IEO short-term suggested steps:
  - Energize development and implementation of an ambitious expert track to enhance career opportunities by providing additional budgetary resources.
  - Complete workforce planning and talent inventory initiatives to allow better tracking and planning of CD expertise across the Fund.
  - Build on pandemic-introduced innovations to appeal to a broader candidate pool and attract high-quality and diverse experts.
  - Re-examine HR policies and practices to balance flexibility and continuity in CD expertise.
- IEO medium-term consideration:
  - Consider extent to which HR policies/practices for CD staff are appropriately calibrated to balance tension between flexibility and continuity.
- Directors’ summary:
  - Directors agreed with Recommendation 7; timing of some elements should align with broader HR reforms.
  - Some Directors suggested scope to consider flexible working arrangements on a trial basis.
  - Noted raising recognition and opportunities for CD specialists requires behavioral and cultural changes.
- Follow-up actions, accountability, and timelines:
  - CDSR will consider issues related to retention and career tracks of CD specialists, program managers and administrators, and improvement of staff incentives to work on CD; review will account for interdependencies with other HR policies and initiatives.
    - By: December 2023
    - Responsible: ICD in consultation with the Interdepartmental Contact Group and External Advisory Group.
  - Finalize proposal for establishing enhanced expert track.
    - By: May 2025
    - Responsible: HRD.
  - Complete enhancement of the Talent Inventory to include macro-financial experience of fungible economists and continue to enhance the CD Strategy.
    - By: May 2025
    - Responsible: HRD.
  - Further update workforce planning materials for selected CD management job families/functions and incorporate CD department feedback into the workforce planning tool (Adaptive Insights).
    - By: April 2024
    - Responsible: HRD in consultation with ICD and CD departments.

*Annex I. The IMF and Capacity Development—Management Implementation Plan*

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_Source: https://www.imf.org/-/media/files/publications/pp/2023/english/ppea2023022.pdf_