## cdar2023

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### Leadership and strategic orientation
- Leadership messages:
  - CD is one of three IMF pillars alongside surveillance and lending (Gita Gopinath).
  - MCM is a global leader in CD delivery on monetary and financial sector issues (Gita Gopinath).
  - Report prepared by MCM’s Technical Assistance Strategy Division under Miguel Savastano and Oana Croitoru; core team listed.
- Strategic orientation:
  - MCM emphasizes tailored CD mainly to low- and middle-income countries with focus on fragile and conflict–affected states (FCS).
  - Development partners finance a critical share of CD (donor community financed nearly two-thirds of total CD activities in FY23).
  - “New normal” CD delivery combines in-person, hybrid, and virtual modalities to increase impact and efficiency.

### CD delivery modalities, scale, and expenditures (FY23)
- Delivery modalities and trends:
  - Mix of traditional in-person TA, hybrid/blended activities, resident advisors, virtual webinars, and online courses.
  - Hybrid modalities accounted for over 6 percent of total TA activities.
  - Use of virtual or hybrid engagements for short-term interactions before and after in-person missions increased effectiveness.
- Activity scale and reach:
  - Delivered over 900 country-tailored and demand–driven CD activities (Preface).
  - FY23 recorded 919 CD activities across 137 countries and 7 beneficiary institutions (SECTION I).
  - Reached more than 144 member countries and institutions (Preface).
- Spending:
  - CD expenditure in FY23 was US$43 million.
- Expert deployment:
  - 38 long-term experts (LTXs) deployed (peak number); LTXs accounted for 31 percent of all CD over the past five years and delivered 38 percent of CD in FCS.
  - An ever-increasing cadre of short-term experts (STXs) complements delivery.

### Workstreams, thematic coverage, and growth areas
- Major workstream shares and emphasis:
  - Nearly 80 percent of MCM CD activities in FY23 were in: financial sector supervision; central banking; financial market infrastructures; and debt management.
  - Financial supervision and regulation accounted for 39 percent of total CD.
  - Central bank operations accounted for 19 percent of total CD.
- Core and emerging areas:
  - Financial Supervision and Regulation: banking and non-bank supervision, conglomerate supervision, climate-related financial risk integration, bottom-up stress testing, IFRS17 implementation, crypto assets regulation, cybersecurity supervision, onsite supervision capacity.
  - Central Bank Operations: monetary and foreign exchange operations, central bank accounting, auditing, risk management, governance, transparency; development of tools to assess central bank balance sheet robustness (examples: Argentina, Sri Lanka).
  - Digital Money and FMIs: support for CBDC design and supervision; FY23 included 10 CBDC and 5 non-CBDC TA missions.
  - Debt Management and Capital Markets: TA provided to over 90 recipient countries and regional entities in FY23; support on institutional arrangements, local currency bond markets, debt recording/reporting/monitoring (with DMF support).
  - Monetary and Macroprudential Policies: Forecasting and Policy Analysis Systems (FPAS), macroeconomic modeling, macroprudential frameworks and tools, communications.
  - Financial Stability and Systemic Risk Analysis: macro-stress testing frameworks, risk heat maps, transition to multi-year scenario-based models; first bilateral climate stress testing TA conducted in Bangladesh.
  - Capital Flows and Crisis Management: legal frameworks for liberalization, resolution frameworks, deposit insurance, training on bank resolution and crisis preparedness.

### FY23 regional and recipient patterns
- Regional shares of MCM CD direct delivery in FY23:
  - Sub-Saharan Africa: 43 percent (up from 38 percent in FY22).
  - Asia and the Pacific Islands: 22 percent.
  - Middle East and Central Asia region: approximately 15 percent.
  - Western Hemisphere region: approximately 15 percent.
  - Europe: 5 percent (decline partly reflecting suspension of CD delivery to Ukraine).
- Top recipient country examples:
  - Mozambique: leading recipient in FY23 driven by an intense central bank modernization program financed by Norway.
  - Cambodia: large share due to new resident advisor financed by Japan.
  - The Gambia and Sierra Leone: increased CD from follow-up TA linked to FSSRs.
- Growth areas (FY22 to FY23 US$ delivery):
  - Climate Change, Debt Management, and Digital Money saw increases in direct CD delivery.

### Fragile and Conflict-Affected States (FCS) programmatic approach and outcomes
- FCS engagement and modality:
  - FCS accounted for 17 percent of MCM’s CD activities in FY23.
  - Pronounced increase in number of in-person engagements compared with previous fiscal year.
  - MCM adopted medium-term programmatic TA workplans tailored to each FCS’s priorities and constraints; examples developed for Democratic Republic of Congo (DRC), Somalia, and South Sudan.
- FCS workplan highlights:
  - DRC: three-year workplan launched in FY24 expected to run through FY26 across financial regulation, central bank operations, and macroprudential framework; activities include drafting regulations aligned with new banking law, implementing IFRS for central bank financial statements, establishing a financial stability unit, strengthening risk management, and advancing gender equality.
  - Somalia: two workstreams (financial regulation and central bank operations) under Somalia Country Fund starting 2021 and expected through 2025; modality combines in-person and virtual delivery; remote workshop on payments regulation organized early 2023.
  - South Sudan: extensive workplan across monetary policy operations, financial supervision, FMIs, crisis management, currency management, debt management, and central bank operations; emphasis on training, professional attachments, coordination with development partners, liquidity forecasting, debt recording/database, and implementing IFRS 9.
- FCS implementation observations:
  - LTXs delivered 38 percent of CD in FCS, exceeding HQ staff and STXs.
  - Core areas (financial supervision and central bank operations) accounted for majority of CD in FCS.
  - CD implementation in FCS remains weaker than in non-FCS, with more outcomes “not achieved” or “partially achieved.”

### Programmatic instruments and quality assurance
- FSSR program approach:
  - FSSR (Financial Sector Stability Review) anchors diagnostic-based programmatic TA, sequenced follow-up TA projects and coordination with donors.
  - Since 2017, 21 FSSR diagnostics completed; in FY23 three diagnostics completed (Nepal, Tajikistan, Vietnam) and one initiated (Eswatini); follow-up TA implementation continued in 13 countries.
- Results-based management (RBM):
  - About 85 percent of rated outcomes in FY23 were either partially or largely/fully achieved.
  - RBM log frames shared with authorities and integrated in TA assessment missions; pilots planned with closer recipient involvement.
- Quality and staffing:
  - MCM scaled up LTXs to 38 and emphasized recruitment of staff and experts with hands-on experience and strong quality control.

### Capacity building through training and digital learning
- Training composition:
  - Training accounted for 23 percent of all MCM CD activity in FY23.
  - Formats include classroom, bilateral and regional workshops, peer-to-peer platforms, LTX-supported sessions, and targeted advisory sessions; offered in Arabic, French, and Portuguese.
- Online and microlearning:
  - MTDSx online course (with World Bank, DMF-funded) available on EdX in English and French; trained over 3,000 learners, including almost 1,500 government officials.
  - “Debt Management, Debt Reporting, and Investor Relations” online course piloted January 2020 and anticipated to be completed by end-2023.
  - New online courses planned for local currency bond market development and implementing a debt management strategy through annual borrowing plans.
  - Microlearning piloted with 3–4 minute videos on debt management core concepts; additional videos planned for LICs and FCS.
- Course reach:
  - Supervisory and Regulatory Online Course (SROC) has trained about 2,000 government officials since launch.
  - Cyber Risk Supervision Online Course (CRSOC) has trained close to 1,000 government officials.
- CD dissemination:
  - MCM prepared more than 20 High-Level Summaries (HLSs); five published on IMF website; MCM published 14 TA reports in FY23.

### Cybersecurity engagement
- Sixth IMF Annual Cybersecurity Workshop (January 2023):
  - Attended by 180 participants from 66 countries; about 90 attended in person.
  - Thirty-five speakers over three days on themes including cyber resilience, cyber strategy, cyber risk supervision, cyber operational resilience, and cyber risks to FMIs.
- Feedback:
  - FSSR recipients’ feedback consistently positive; independent external evaluation found program relevant, well designed, impactful, and well-coordinated.

### Selected country case findings, recommendations, and outcomes
- Bangladesh — Climate stress testing and RSF-related TA:
  - First-ever IMF TA on climate risk analysis (early 2023) proposing a tailored climate risk assessment framework focused on banking-sector impact from physical climate risk (river and coastal floods).
  - TA structured in three pillars: risk assessment options and analytical tools; data availability and legal/confidentiality issues; coordination mechanisms between climate and financial experts.
  - Proposed three assessment alternatives: two borrower-level (micro) options and one country-level (macro) option.
- Chad — Debt management operations and outcomes:
  - Remote and in-person TA in 2022 supported an updated issuance calendar and investor relations practices.
  - Authorities successfully refinanced the stock of government securities maturing in 2022.
  - Reduced the share of government debt maturing in one year by 41 percent.
  - Institutional improvements included creation of a new Treasury division for government securities and systematic publication of the issuance calendar.
- Bosnia and Herzegovina — Central bank balance sheet TA:
  - June 2022 mission provided foreign reserves risk management tools.
  - CBBH reduced portfolio duration, decreased share of bonds, and sold part of gold holdings; coverage ratio bottomed out at a relatively safe level and began recovering.
- Angola — Transition to inflation targeting:
  - June 2022 review recommended modernizing monetary policy: enhanced conduct of monetary and FX operations, development of FPAS models to inform interest rate path, lengthening/averaging reserve requirements, development of trigger-based FX intervention policy, and publishing a coherent communications strategy.
- Kenya — FPAS improvements:
  - April 17–21, 2023 mission improved nowcasting platform, expanded nowcasting to disaggregated GDP components, and assessed survey-based balance-of-opinion indicators.
- Yemen — IFRS technical assistance:
  - Virtual sessions began July 2022, replaced by intensive one-week in-person training in May 2023 in New Cairo; CBY expects to approve 2016–20 statements in 2023 and engage an audit firm for 2021–25.
- Cambodia — Monetary policy modernization via resident advisors:
  - Joint CDOT and MCM advisors supported interest rate corridor streamlining, reserve requirements, FX operations, liquidity forecasting, and interbank market monitoring; collaboration with JICA on peer learning and data collection.
- Morocco — Supervisory Review Process (SRP) development:
  - METAC supported BAM to develop an SRP inspired by ECB methodology, piloted a comprehensive SRP manual, and introduced Pillar II capital requirement links to ratings; outreach to regional central banks followed.
- Jordan — CBDC capacity development:
  - Multi-phase TA since late 2021: knowledge-sharing seminars, peer-learning workshops, and fieldwork; resulted in two TA reports and a published high-level summary of retail CBDC findings.
- India — Stress testing TA (April 2023):
  - Reviewed RBI’s solvency, liquidity, and balance-sheet connectedness model suite; found strong network and contagion model capacity; recommended improvements in credit risk, market risk, and macro-financial scenario design.
- Additional country engagements and testimonials noted across Africa, Caribbean, Eastern Europe, and Asia (selected examples include Mozambique, Cambodia, Mauritania, Morocco, Bangladesh, Sri Lanka, Uganda, Uzbekistan, West Bank and Gaza).

### Operational practice and partnerships
- Field presence and RTAC/RTC roles:
  - Most LTXs placed in RTACs serving regional groups and providing region-wide training and bilateral assistance; LTX roles expanded to high-demand topics including macroprudential policy, debt management, FMIs, and financial stability.
  - LTXs convene annually in Washington, DC for a week-long workshop to strengthen collaboration; latest workshop in late November 2022.
- Partner-financed resident advisors and programs:
  - Example: Eastern and Southern Africa Debt Management Program funded by Government of Canada with a resident DM advisor (October 2022) covering 21 countries.
- Coordination with development partners:
  - Emphasized for FCS and large programmatic workplans to reduce overlap and improve data sharing (examples: DRC, Somalia, South Sudan; coordination with World Bank, ADB, Switzerland referenced in FSSR follow-up contexts).

### Policy recommendations and operational priorities
- Modalities and delivery:
  - Combine in-person, hybrid, and virtual modalities to maximize impact and cost-effectiveness.
  - Use programmatic medium-term workplans tailored to country capacity constraints, sequencing priorities, and flexible delivery methods (including peripatetic visits).
- Capacity and quality:
  - Scale and sustain LTX deployments and STX engagement to maintain specialized country-level support.
  - Apply RBM log frames and strengthen recipient involvement in CD design and monitoring.
- Thematic policy priorities:
  - Integrate climate-related financial risk analysis into supervision and stress testing frameworks.
  - Develop CBDC handbooks and analytical guidance; offer four CD products on CBDC (bilateral TA; regional workshops; analytical work; reviews of country CBDC projects).
  - Strengthen FPAS, nowcasting, and macro-financial scenario design to support monetary policy transitions (e.g., inflation targeting roadmaps).
  - Improve debt management practices, debt transparency, and local currency bond market development to mitigate refinancing risks.
  - Enhance cyber resilience and supervision of cyber risks for financial market infrastructures.
- Coordination and dissemination:
  - Strengthen alignment of CD with surveillance and lending to ensure CD addresses priority risks and enriches policy dialogue.
  - Expand online courses, microlearning, and publication/dissemination of CD outputs (HLSs, TA reports).

*Source: Capacity Development Annual Report 2023 — Monetary and Capital Markets (cdar2023).*

### PREFACE

### PREFACE

### Leadership messages
- Gita Gopinath, First Deputy Managing Director, International Monetary Fund:
  - Capacity Development (CD) is one of the three IMF pillars that help foster macroeconomic and financial stability, together with surveillance and lending.
  - The IMF’s Monetary and Capital Markets (MCM) Department is a global leader in CD delivery on monetary and financial sector issues.
  - CD support is tailored to member countries’ needs, targeted mainly to low- and middle-income countries, with a strong emphasis on fragile and conflict–affected states (FCS).
  - Development partners play a critical role in making this support possible.
- Tobias Adrian, Financial Counsellor and Director, Monetary and Capital Markets Department:
  - This report was prepared by the staff from MCM’s Technical Assistance Strategy Division under the guidance and supervision of Miguel Savastano and Oana Croitoru.
  - The core team comprised Abdullah Haron, Brenda Sylvester, Chloe Zhang, Cortney Johnson, Hazel Quinonez Guevara, Joannes Mongardini, and Moses Kitonga.

### CD delivery modalities and the "new normal"
- The tapering of the global pandemic in fiscal year 2023 allowed MCM to resume in-person CD activities while enabling new ways of engagement, including virtual or hybrid CD delivery.
- Combining modalities—technical assistance, training (in person or online), peer-to-peer learning, and workshops—has improved the effectiveness of CD delivery and established a “new normal” for CD delivery going forward.

### Achievements, scope, and thematic coverage
- MCM CD provides both core and emerging-area support:
  - Examples cited: enhancing financial conglomerate supervision in Chile and climate-related stress testing in Bangladesh.
- Fiscal year 2023 activity highlights:
  - Delivered over 900 country-tailored and demand–driven CD activities.
  - Reached more than 144 member countries and institutions.
  - Covered traditional CD areas such as financial supervision, central bank operations, and debt management.
  - Expanded into new and emerging areas including digital money and finance, climate, and fintech.

### Field presence, staffing, and partnerships
- Field presence and expert deployment:
  - 38 long-term experts (LTXs) stationed in 12 regional technical assistance centers or placed bilaterally in targeted countries.
  - An ever-increasing cadre of short-term experts (STXs).
- Donor support:
  - Donor community financed nearly two-thirds of total CD activities in FY23.
- Continuous dialogue with member countries enables prompt response to demand and better alignment with real issues on the ground.

### Challenges, commitments, and direction
- MCM staff remain committed to excellence in technical advice and assistance amid global challenges including inflationary pressures, higher debt burdens, and the Russia’s war in Ukraine.
- Under the “new normal” combining in-person, hybrid, and virtual modalities, MCM aims to:
  - Increase the impact of capacity building.
  - Further strengthen links between CD, surveillance, and policy advice.

### Closing acknowledgements
- Heartfelt thanks and gratitude expressed to MCM staff, long-term experts in the field, and short-term experts who tailored the new normal to member needs.

*PREFACE — Gita Gopinath and Tobias Adrian, Capacity Development Annual Report 2023, Monetary and Capital Markets*

### SECTION I

### SECTION I

### The New Normal: CD delivery modalities and strategic orientation
- With the end of the COVID-19 travel restrictions, on-the-ground delivery of CD resumed strongly in fiscal year 2023 (FY23), enabling the Monetary and Capital Markets (MCM) Department to strengthen existing collaborative relationships and build new ones more effectively.
- MCM employed a mix of delivery modalities tailored to recipient requirements: traditional in-person TA, hybrid or blended CD activities, resident advisors, virtual webinars, and online courses—moving to a “new normal” combining these channels.
- Demand for MCM CD remained high and is expected to continue growing in FY24 and beyond, driven by:
  - the need to ensure financial and price stability and debt sustainability as interest rates have risen globally;
  - rapid growth in member requests on climate-related financial regulations and risk analysis, cyber risks, and digital money.
- MCM continues to build expertise and produce analytical work in emergent areas and embed those areas in the work of central banks, supervisory agencies, and debt managers.

### MCM capacity building focus areas and activities in FY23
- Nearly 80 percent of MCM CD activities in FY23 were delivered in the areas of:
  - financial sector supervision,
  - central banking,
  - financial market infrastructures, and
  - debt management.
- Core workstreams and notable FY23 highlights:
  - Financial Supervision and Regulation:
    - Intensive capacity building on regulation and supervision of banks and non-banks.
    - Increased demand beyond core supervisory areas to climate impact, conglomerate supervision, supervision of non-banks, bottom-up stress testing, and implementation of IFRS17.
    - Renewed focus on boosting onsite supervision capacity and growing demand for crypto assets regulation and cybersecurity supervision.
    - Growing work on integrating climate-related financial risks into risk-based supervision frameworks.
  - Central Bank Operations:
    - Continued work on monetary and foreign exchange operations, central bank accounting, auditing, risk management, governance, and transparency.
    - Development of new tools to help central banks assess the robustness of their balance sheets; FY23 work included Argentina and Sri Lanka, with more requests for FY24.
  - Digital Money and Financial Market Infrastructure:
    - Support for assessing, designing, experimenting with, and supervising CBDCs and other forms of digital money such as e-money.
    - FY23 delivery included 10 CBDC and 5 non-CBDC TA missions.
  - Debt Management and Capital Markets:
    - Support on sovereign debt management institutional arrangements, strategies, local currency bond markets, and debt recording, reporting, and monitoring, with Debt Management Facility (DMF) support.
    - TA on debt management provided to over 90 recipient countries and regional entities in FY23.
  - Monetary and Macroprudential Policies:
    - Increased focus on Forecasting and Policy Analysis Systems (FPAS), macroeconomic modeling, macroprudential policy frameworks and tools, and monetary and financial stability communications.
  - Financial Stability and Systemic Risk Analysis:
    - Significant work on macro-stress testing frameworks, risk heat maps, financial stability analysis, and financial stability reports.
    - Notable demand for transitioning from static stress testing models to multi-year, scenario-based models; first bilateral TA on climate stress testing conducted in Bangladesh.
  - Capital Flows:
    - Advice on modernizing legal frameworks, preparing liberalization roadmaps, and implementing liberalization measures amid increased market volatility.
  - Crisis Management:
    - Support for bank resolution, deposit insurance, institutional arrangements, and operational capacity to resolve failing banks and manage financial crises.
    - Continued demand for training on bank resolution and crisis preparedness, including an online bank resolution course offered with the Bank for International Settlements’ Financial Stability Institute and the International Association of Deposit Insurers.

### CD delivery scale, modalities, and expenditures in FY23
- Total CD activity levels:
  - FY23 recorded 919 CD activities across 137 countries and 7 beneficiary institutions.
- Spending and growth:
  - CD expenditure in FY23 was US$43 million.
  - This reflected a significant increase of 54 percent in activities and in-person delivery compared with the previous fiscal year.
- Delivery modalities:
  - MCM moved to a mix of in-person, hybrid, and virtual CD delivery in FY23, leveraging lessons from the pandemic to increase efficiency and impact.

### Regional and recipient patterns
- Regional shares of MCM CD direct delivery in FY23:
  - Sub-Saharan Africa: 43 percent (up from 38 percent in FY22).
  - Asia and the Pacific Islands: 22 percent (recovered after a decline).
  - Middle East and Central Asia region: approximately 15 percent.
  - Western Hemisphere region: approximately 15 percent.
  - Europe: 5 percent (decline partly reflecting suspension of CD delivery to Ukraine).
- Top FY23 recipient countries (high CD spending examples):
  - Mozambique was the leading recipient in FY23, driven by an intense central bank modernization program financed by Norway.
  - Cambodia received a large share of CD delivery, reflecting activities of a new resident advisor financed by Japan.
  - Other African countries with increased CD included The Gambia and Sierra Leone, due to follow-up TA programs linked to Financial Sector Stability Reviews (FSSRs).
- Workstream shares (FY23):
  - Financial supervision and regulation accounted for 39 percent of total CD (largest share).
  - Central bank operations accounted for 19 percent of total CD.
  - Other workstreams included debt management, monetary and macroprudential policies, financial crisis management, payments and infrastructure, systemic risk analysis, and capital flow management.
- Growth areas (FY22 to FY23 US$ delivery):
  - Climate Change: increase in direct CD delivery.
  - Debt Management: increase in direct CD delivery.
  - Digital Money: increase in direct CD delivery.
  - (Figure reference shows FY2022 vs FY2023 amounts in millions of USD; specific numeric bars presented in the source.)

### Capacity development in Fragile and Conflict-Affected States (FCS)
- FCS engagement:
  - In FY23, FCS accounted for 17 percent of MCM’s CD activities.
  - There was a pronounced increase in the number of in-person engagements compared with the previous fiscal year.
  - LTXs delivered 38 percent of CD in FCS, exceeding the share delivered by HQ staff and STXs.
- Focus within FCS:
  - Core areas accounted for the majority of CD: financial supervision and regulation was over one-third of total CD provided to FCS, followed by central bank operations.
  - High demand for CD on monetary policy frameworks and tools, and the development of sovereign debt markets.

*Source: CDMAP data and IMF Staff, Capacity Development Annual Report 2023 — Monetary and Capital Markets (SECTION I).*

### BOX 1. THE FCS STRATEGY

### BOX 1. THE FCS STRATEGY

### Key challenges and programmatic response
- Key challenges to building capacity in FCS include severe capacity constraints, inadequate internet connectivity, low staff complement, and insecurity, which often require in-person missions conducted in a third country.
- MCM adopted a medium-term programmatic approach to TA delivery, based on each country’s priorities and specific challenges, consistent with the IMF’s overall FCS strategy.
- Medium-term TA workplans aim at sequencing the authorities’ extensive TA priorities while mindful of capacity limitations and are delivered through a flexible combination of methods.
- TA workplans were developed in FY23 for the Democratic Republic of Congo, Somalia, and South Sudan. These plans were customized to each country’s unique needs and challenges to ensure traction.

### Democratic Republic of the Congo (DRC) workplan
- Developed following the publication of the 2022 Financial Sector Stability Review (FSSR), which conducted a diagnostic review of the oversight framework and proposed the TA priorities.
- A three-year workplan, developed and agreed with authorities, was launched in FY24 and is expected to run through FY26.
- Features three MCM workstreams: financial regulation, central bank operations, and a macroprudential framework.
- Primary TA activities focus on:
  - supporting drafting regulations in line with the new banking law;
  - implementing IFRS for recently audited central bank financial statements;
  - establishing a financial stability unit;
  - strengthening risk management at the central bank;
  - enhancing the supervisory framework and moving to risk-based banking supervision;
  - fortifying monetary policy and macroprudential regulations;
  - advancing gender equality at the BCC and in the financial sector.
- Most activities will include three to six peripatetic visits to effectively build capacity and ensure progress.

### Somalia workplan
- MCM TA activities under the Somalia Country Fund include two workstreams—financial regulation and central bank operations; activities started in 2021 and are expected to last until 2025.
- The scope for the two workstreams is broad since the operating frameworks are nascent.
- Financial regulation workstream activities to date:
  - developing prudential regulations for commercial banks;
  - building technical capacity in commercial bank licensing, prudential regulation, and supervision;
  - improving transparency to encourage sound commercial banking practices and financial intermediation.
- Central bank operations priorities include:
  - upgrading central bank governance, transparency, and organization;
  - strengthening central bank accounting, internal audit, and risk management functions.
- TA modality combines in-person and virtual delivery, including training new central bank staff on foundational concepts.
- In early 2023, MCM organized a remote workshop to build capacity on payments regulation, supervision, and oversight—first engagement with the Central Bank of Somalia as part of a two-year project to assist operationalizing the newly established payment system department.

### South Sudan workplan
- The TA workplan is extensive and involves both the Bank of South Sudan and the Ministry of Finance.
- A recent MCM mission in June 2023 reached agreement with authorities on TA priorities in the following workstreams: monetary policy operations, financial supervision, financial market infrastructure, crisis management, currency management, debt management, and central bank operations.
- Two key considerations in designing the workplan:
  - CD activities must be complemented by training sessions and professional attachments to provide foundational and practical knowledge for new and experienced staff, given capacity constraints.
  - TA activities need coordination with development partners to reduce potential overlap and improve data sharing between the central bank and the ministry of finance to facilitate activities such as liquidity forecasting.
- Primary activities are:
  - following up on cash currency management to analyze currency stock depletion and currency in circulation, including analyzing optimal denomination structure;
  - improving liquidity forecasting to support monetary policy operations;
  - developing a debt recording and management database, including a framework to analyze debt statistics;
  - implementing IFRS 9 for the central bank’s balance sheet.
- Other priorities were scheduled for the second year of the medium-term workplan.

### MCM CD delivery in FY23: modalities and composition
- Technical assistance:
  - TA accounted for 77 percent of all CD activities and rose significantly in dollar terms compared with the previous fiscal year.
  - Most TA activity was in financial supervision and regulation, followed by central bank operations, debt management, and monetary and macroprudential policy.
  - New TA areas growing in relevance include central bank digital currencies and, for the first time, climate stress testing.
  - Country-specific TA was delivered flexibly: remote TA work was complemented by in-person missions, engaging either LTXs or STXs, backstopped by MCM functional divisions.
  - Hybrid modalities accounted for over 6 percent of total TA activities.
  - The greater use of virtual or hybrid engagements for short-term interactions before and after in-person missions enriched delivery and effectiveness of programmatic TA.
- Training:
  - Training accounted for 23 percent of all MCM CD activity in FY23.
  - Formats include classroom settings, bilateral and regional workshops and seminars, peer-to-peer platforms, LTXs supported by HQ staff, and targeted advisory sessions.
  - Training expanded across all RTACs and RTCs and is offered in multiple languages, including Arabic, French, and Portuguese.
  - Multi-country training in new growth areas (central bank digital currency, climate finance, cyber risk supervision, debt management, e-money) is often followed by bilateral TA.
  - MCM is expanding online and virtual platforms for training delivery, increasingly integrating these with TA.

### Field presence, LTXs and STXs
- Experts (LTXs and STXs) are pivotal to delivering specialized advice across topics and regions.
- Over the past five years, the contribution of LTXs has grown significantly, accounting for 31 percent of all CD.
- With the resumption of travel, LTXs largely returned to in-person CD delivery.
- The number of LTXs recently reached its peak at 38, reflecting an upward trend in their deployment.
- Five new LTX positions were created in FY23 to support FSSR follow-up TA projects and new bilateral partnerships.
- Seven LTXs were replaced at the end of their contracts, reflecting continued strong country demand.
- Most LTXs are placed in an RTAC and serve a group of countries in the region, providing region-wide training and bilateral assistance.
- RTAC LTXs work in high-demand areas such as financial supervision, central banking, governance of state-owned banks, macroprudential policy, debt management, financial market infrastructures, and financial stability.
- Other LTXs are placed in central banks, ministries of finance, or supervisory agencies for hands-on support.
- STXs—drawn from partner central banks, debt management offices, ministries of finance and financial supervision agencies, and individual consultants—complement MCM staff expertise and expand delivery capacity.
- Every year, LTXs convene in Washington, DC, for a week-long workshop with HQ staff; the latest workshop in late November 2022 strengthened collaboration, peer learning, and information sharing.

*Source: BOX 1. THE FCS STRATEGY, Capacity Development Annual Report 2023 — Monetary and Capital Markets.*

### BOX 4. PROGRESS IN IMPLEMENTING MCM’S CD STRATEGY 2022–25

### BOX 4. PROGRESS IN IMPLEMENTING MCM’S CD STRATEGY 2022–25

### Guiding principles and delivery modalities
- MCM’s “CD Strategy 2022-25: Supporting Financial Sector Resilience Through Disruption and Change” lays out seven guiding principles (Elements 1–7):
  - Element 1: provide demand-driven and country-tailored CD. Demand for MCM CD remained strong in FY23, across all workstreams of financial stability and all regions.
  - Element 2: provide highly expert and specialized CD and develop new expertise for traditional and emerging areas. MCM continued to provide highly specialized expertise in FY23.
  - Element 3: ensure high-quality CD output via recruitment of staff and experts with significant hands-on experience and strong quality control. In FY23, MCM scaled up support, reaching a total of 38 LTXs—an upward trend in their deployment.
  - Element 4: integrate CD with surveillance and IMF program activities and align CD with IMF priorities. MCM continued increasing CD relevance by providing support to area departments’ surveillance and lending programs in FY23.
  - Element 5: employ a full range of CD modalities. MCM adapted to a new normal of CD delivery modalities in FY23, as COVID-19 travel restrictions were lifted.
  - Element 6: build on external and internal partnerships to access and expand skills and resources. MCM continued to build partnerships in FY23.
  - Element 7: utilize feedback processes for continuous improvement. In FY23, MCM promoted the RBM logical framework approach (log frames) to map CD needs and identify gaps.

### Results-based management (RBM) outcomes and implications
- Global RBM results:
  - About 85 percent of rated outcomes in FY23 were either partially or largely/fully achieved.
- Regional and country-group observations:
  - The percentage of partially rated outcomes is relatively high in some regions; plausible reasons include: (i) work in progress as authorities refocus from pandemic response to longer-term reforms; (ii) weaker results in FCS, where follow-up on project implementation is more difficult; and (iii) newer projects still in early stages of implementation.
  - CD implementation in FCS remains weaker than in other countries: compared with the non-FCS group, FCS have a larger number of outcomes “not achieved” or “partially achieved.”
  - The FCS group has a lower number of rated outcomes, reflecting tailoring of CD to lower implementation capacity and deliberate mitigation strategies that limit rated outcomes per project.
- Operational practice:
  - RBM log frames are shared with authorities before each CD engagement to ensure linkage between CD delivery, recommendations, RBM outcomes, and milestones.
  - MCM has recently integrated RBM log frame discussions into TA assessment needs missions (example countries: Mauritius and Seychelles) and plans pilots with closer recipient involvement in CD design, including RBM log frames and results.

### Alignment with area departments’ surveillance and lending
- In FY23 MCM further aligned CD activities with area departments’ surveillance and lending activities by:
  - working with area departments to identify and prioritize CD needs based on risks and vulnerabilities from surveillance and program discussions; and
  - allowing technical issues from CD activities to enrich policy dialogue in surveillance and program discussions.
- Testimonials highlighted increased integration and expanded topics, including greening the financial sector, fintech and digital currencies, and payment systems efficiency.

### Scaling CD through online learning and microlearning
- MOOCs and online learning:
  - MTDSx online course (collaboration with the World Bank, funded by the DMF) is available on EdX in English and French and has trained over 3,000 learners, including almost 1,500 government officials.
  - “Debt Management, Debt Reporting, and Investor Relations” online course was piloted in January 2020 and is anticipated to be completed by end-2023.
  - New online courses planned in local currency bond market development and implementing a debt management strategy through annual borrowing plans.
- Microlearning:
  - Piloted a new series of microlearning videos on debt management (3–4 minutes each) covering core concepts; additional videos will focus on basic skills for debt managers in LICs and FCS.

### CD dissemination and transparency
- Publication activity and dissemination:
  - MCM has prepared more than 20 High-Level Summaries (HLSs) of CD activities; five have been published on the IMF’s external website, with several finalized for imminent publication.
  - MCM published 14 TA reports in FY23.
  - MCM will strengthen initiatives to implement the new IMF CD information dissemination policy and its operational guidelines.

### Financial Sector Stability Review (FSSR): diagnostics to implementation
- Program approach and financing:
  - The FSSR anchors a programmatic approach: a diagnostic of country capacity to identify, monitor, manage, and mitigate financial stability risks that anchors follow-up TA projects implemented with recipient countries and other CD providers.
  - Since launch in 2017, 21 FSSR diagnostics have been completed and almost all countries with diagnostics received follow-up TA projects.
- FY23 FSSR delivery:
  - Three FSSR diagnostics were completed in FY23: Nepal, Tajikistan, and Vietnam.
  - One FSSR diagnostic was initiated in FY23: Eswatini.
  - Implementation of follow-up TA projects continued in 13 countries.
  - Bilateral CD delivery was driven by seven LTXs and the resumption of in-person STX missions after COVID-19 travel restrictions were lifted.
- Multi-country and online modules:
  - A new edition of the Supervisory and Regulatory Online Course (SROC) was delivered jointly with the Financial Stability Institute (BIS).
  - A new Cyber Risk Supervision Online Course (CRSOC) was developed and launched.
  - The SROC has trained about 2,000 government officials since launch.
  - The CRSOC has trained close to 1,000 government officials.
  - Both courses will continue to be offered on the IMFx platform.

### FSSR diagnostics and follow-up TA highlights (selected country findings and projects)
- Diagnostics completed in FY23:
  - Nepal: gaps identified in bank regulation and supervision, stress testing, crisis management, payment system oversight, financial inclusion framework, and financial sector statistics; oversight of microfinance institutions and savings and credit cooperatives needs stepping up. Follow-up TA expected to align with the Extended Credit Facility arrangement and coordinate with the World Bank.
  - Tajikistan: recommended enhancing supervisory tools (including risk-based prudential requirements for banks), improving systemic risk analysis, strengthening crisis contingency plans, and planning oversight and supervision of the national payment system. Funding of follow-up TA under consideration by Switzerland; coordination with World Bank and Asian Development Bank important.
  - Vietnam: concluded authorities lack operational independence and sufficient legal protection of bank supervisors; recommended upgrading cross-sectoral coordination, group-level supervision, financial safety net, and enhancing supervision and stress testing methodologies. Funding of follow-up TA under consideration by Switzerland; coordination with World Bank and Asian Development Bank critical.
- Follow-up TA projects (examples of progress in FY23):
  - Cambodia: LTX supported financial stability/systemic risk analysis, macroprudential policy, and stress testing.
  - Democratic Republic of Congo: March 2023 mission agreed on a sequenced three-year workplan to implement FSSR recommendations.
  - Djibouti, The Gambia, Rwanda, Sierra Leone, and Zimbabwe: focus on stepping up banking regulation and supervision; solid progress with LTX placements in Djibouti, The Gambia, and Sierra Leone.
  - Guinea: new Banking Law—a precondition for follow-up TA in several areas—is expected to be enacted by end-2023; MCM/LEG TA mission on bank resolution took place in February 2023.
  - Kosovo: follow-up work on insurance supervision and regulation, stress testing framework, and central bank board governance training.
  - Sri Lanka: LTX support to strengthen macroprudential policy framework.
  - Uganda: focus on implementing risk-based supervision (RBS).
  - Uzbekistan: focus on improving macroprudential policy framework and stress testing.
  - West Bank and Gaza: mission assisted Palestinian Monetary Authority in drafting a proposal for a new special resolution regime.

### Cybersecurity engagement
- Sixth IMF Annual Cybersecurity Workshop (January 2023):
  - Attended by 180 participants from 66 countries; about 90 attended in person.
  - Thirty-five speakers participated over the three-day event.
  - Workshop theme: “Cyber Resilience—Delivering Through Disruption.”
  - Key topics covered: (i) the cyber threat landscape and cybersecurity during conflict; (ii) a macro perspective of cyber and developing cyber strategy; (iii) cyber implications of the structural transformation of the financial sector; (iv) legal and institutional mechanisms to achieve cyber resilience; (v) effective regulation and supervision of cyber risks; (vi) achieving cyber operational resilience; (vii) cyber information sharing and incident reporting; and (viii) cyber risks and financial market infrastructures.
- Feedback and evaluation:
  - FSSR recipients’ feedback is consistently positive; demand for additional CD remains strong.
  - An independent external evaluation (conducted by Consulting Base Limited using OECD-DAC criteria) concluded the program is relevant, well designed, impactful, and well-coordinated, and recommended improvements supporting an extension of the project.

*Source: BOX 4. PROGRESS IN IMPLEMENTING MCM’S CD STRATEGY 2022–25, Capacity Development Annual Report 2023.*

### SECTION IV

### SECTION IV 
VIEWS FROM THE FIELD

### Role and value of MCM LTXs (long-term experts)
- Account for about one-third of all advisory services.
- Instrumental in operationalizing MCM’s programmatic approach to CD delivery and bolstering integration of CD with Fund surveillance and program activities.
- Proximity to CD recipients enables continuous engagement and dialogue as well as follow-up on CD recommendations.
- Facilitate sharing of country experiences through regional workshops and peer-to-peer engagements.
- Work closely with MCM staff and area departments to ensure consistency in policy advice.
- Add value to discussions with authorities during the IMF Annual and Spring Meetings.
- Support: selected LTXs profiled with supporting testimonials (Figure 16).

### EASTERN AND SOUTHERN AFRICA: DEBT MANAGEMENT PROGRAM
- MCM response to pressing CD needs in public debt management in Sub-Saharan Africa focuses on:
  - Strengthening debt management practices and governance frameworks.
  - Improving debt transparency.
  - Developing local currency bond markets to mitigate vulnerabilities.
- With financing from the government of Canada, MCM appointed a resident debt management (DM) advisor who assumed duties in October 2022.
- Arrangement provides public debt management CD to 21 countries:
  - Angola, Botswana, Comoros, Ethiopia, Eritrea, Eswatini, Kenya, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Rwanda, Seychelles, South Africa, South Sudan, Tanzania, Uganda, Zambia, and Zimbabwe.
- Outcomes and benefits:
  - Strengthened field presence enabling responsive on-the-ground debt management support tailored to recipient needs.
  - Fostered greater country/regional engagement and ownership.
  - Enhanced capacity to identify and act on need for follow-up CD by strengthening relationships with authorities and increasing awareness of progress and conditions on the ground.
  - Contributed to CD traction across AFRITAC East (AFE) and AFRITAC South (AFS).

- Testimonial (excerpt)
  - Stella Rusine Nteziryayo, Director General, Debt Management Directorate, Ministry of Finance, Rwanda: praised IMF/AFRITAC East seminar on Debt Sustainability Analysis Framework for Low Income Countries (LIC DSF) as providing practical approaches, experience in making wise borrowing decisions that promote economic growth, financial stability, and sustainable development.

### CAMBODIA: Advancing monetary policy modernization through collaboration
- CDOT advisor (Giorgi Barbakadze) has worked with the National Bank of Cambodia (NBC) since January 2021.
- MCM bilateral advisor in Monetary and FX Operations (Yury Achkasov) started in Cambodia in October 2022.
- CD programs are supported by Government of Japan through Japan Subaccount (JSA) funding programs.
- Division of responsibilities:
  - CDOT advisor leads design and development of monetary operations: streamlining the interest rate corridor (IRC), reserve requirements, official exchange rate, and FX operations.
  - Bilateral MCM advisor leads liquidity forecasting and interbank market monitoring (requires daily interaction with central bank staff).
- Joint activities:
  - Both advisors participated in the Interest Rate Corridors workshop organized by CDOT for NBC staff in April 2023.
  - Collaboration with JICA delivers synergetic effects: JICA focuses on peer learning (e.g., Bank of Japan), interbank market data collection, and research for monetary policy decision-making.
- Testimonial (excerpt)
  - Mr. Chea Chanto, Governor of National Bank of Cambodia: “The IMF Technical Assistance (TA) has an important role in supporting the effectiveness of the National Bank of Cambodia’s (NBC) monetary framework. This has led to better policy decisions and has helped to promote macroeconomic stability in Cambodia.”

### CHAD: Supporting reduction of domestic refinancing pressures
- Context:
  - Chad is an FCS with debt management challenges: sustaining debt over medium term and building a domestic marketable debt portfolio resilient to shocks.
  - Part of the regional government bond market in Central Africa.
- Timeline and actions:
  - January 2022: regional DM advisor at AFRITAC Central provided remote support to prepare a time-sensitive action plan to reduce rollover risk and avoid domestic default.
  - March 2022: face-to-face follow-up CD mission authorized to update the issuance calendar and provide operational guidance on investor relations practices.
  - Subsequent months: close remote engagements to monitor implementation, propose adjustments to refinancing plan.
  - Second in-person mission: on-the-job training on issuance calendar preparation/implementation and guidance on operationalizing first quarterly meeting with investors.
- Results:
  - Authorities successfully refinanced the stock of government securities maturing in 2022.
  - Significantly reduced the share of government debt maturing in one year by 41 percent.
  - Institutional improvements:
    - Creation of a new division in the Treasury Department to oversee government securities activities and investor relations.
    - Systematic publication of the issuance calendar and regular consultation with investors ahead of auctions.

### CAPTAC-DR: Monetary and foreign exchange operations challenges and expanded scope
- Central bank functions like lender of last resort and emergency liquidity assistance (ELA) require coordination across multiple divisions (financial stability, financial regulation, operations, risks, legal).
- Having a dedicated MCM LTX in the field enhances:
  - Efficiency in coordinating TA activities.
  - Firsthand understanding of authorities’ needs to map requests to MCM’s RBM framework.
  - Trusted advisory role and communication channel between authorities and the Fund.
  - Opportunities to improve internal processes and keep TA closer to member country needs.
- Example: recognition of demand beyond central bank operations led to expansion of LTX terms of reference to include macroeconomic models and the Forecasting and Policy Analysis Systems (FPAS).
- Testimonial (excerpt)
  - Jose Alfredo Blanco, Vice president, Banco de Guatemala: highlighted CAPTAC-DR’s crucial role in Banco de Guatemala’s transition to an inflation-targeting regime and development of macroeconomic models to support interest rate decisions.

### MAURITANIA: Debt management in low-income countries
- Pre-TA challenges:
  - Domestic government securities market limited to short-term instruments not exceeding one year.
  - Investor base dominated by public companies.
  - Treasury bill interest rates lacked transparency.
  - Decline in stock of public securities and bank retreat from the market.
- November 2022 AFRITAC West (AFW) TA mission recommendations (short-term/urgent actions):
  - (i) Abandon Treasury’s policy of administered rates in favor of market rates.
  - (ii) Establish and publish annual and quarterly issuance calendars.
  - (iii) Introduce Treasury bonds (T-bonds) by issuing suggested two-year maturity T-bonds in the second quarter of 2023.
  - (iv) Organize a communications operation toward the market to present the issuance calendar.
- January 2023 follow-up mission findings:
  - Rise of interest rates on Treasury bills (T-bills) indicating gradual change toward market rates.
  - Worked with Treasury and Central Bank of Mauritania (BCM) to draft an annual issuance calendar for 2023 and a quarterly issuance calendar for Q2 2023.
  - 2023 annual calendar included regular issuance of four-, 13-, and 26-week T-bills for conventional banks in line with the IMF ECF-EFF program.
  - Annual calendar also includes issuance of T-bonds for the first time in June 2023.
  - Treasury and central bank committed to organizing regular consultation meetings with commercial banks.

### MOROCCO: Developing the Supervisory Review Process (SRP)
- METAC supported Bank Al Maghrib (BAM) to develop the Supervisory Review Process (SRP), inspired by the European Central Bank (ECB) methodology.
- Objectives and features:
  - Establish forward-looking review of banks’ business model, governance, and risk management in addition to capital and liquidity adequacy.
  - Proportionate and tailored to size, complexity, business model, and risks of the Moroccan banking system.
  - Introduced new rating areas and enhanced implementation of Basel Pillar II.
  - Reinforced integration of stress testing in the risk assessment process.
  - Feature: additional Pillar II capital requirements linked to bank ratings.
- Development process:
  - Project started in June 2021 with presentation of ECB Single Supervisory Mechanism methodology.
  - July 2022 field mission reviewed BAM draft SRP and proposed quantitative analysis in three stages:
    - (i) Gathering information.
    - (ii) Developing an anchoring score with predefined indicators.
    - (iii) Performing in-depth analysis and expert judgment using quantitative and qualitative indicators within a supervisory judgment matrix.
  - Comprehensive SRP manual developed and pilot tested.
  - November 2022 field mission reviewed final SRP manual and pilot test process.
  - Combination of frequent virtual missions and in-person missions ensured continuous coordination and follow-up.
- Outreach and regional impact:
  - BAM organized a January 2023 outreach event to share SRP success with METAC member countries and development partners.
  - Resulting interest:
    - Central Bank of Jordan embarked on a project with METAC to develop similar rating methodologies.
    - Central Bank of Algeria expressed interest in developing its own SRP and enhancing risk-based supervision framework.
- Testimonial (excerpt)
  - Mrs. Hiba Zahoui, Director of Banking Supervision, Bank Al-Maghrib: thanked METAC for assistance in implementing the new SRP methodology and supporting evaluation of the regulation on the Internal Capital Adequacy Assessment Process (ICAAP), praising the quality of work and engagement.

*Source: IMF Staff, SECTION IV — VIEWS FROM THE FIELD, Capacity Development Annual Report 2023 | Monetary and Capital Markets*

### SECTION V

### SECTION V

### Chile: Conglomerate Supervision Capacity Development (Comisión para el Mercado Financiero)
- Ongoing MCM TA since 2015 to reinforce conglomerate supervision framework.
- Outputs and modalities:
  - Drafted a strategic white paper on conglomerate supervision reviewed by an MCM mission in FY23.
  - Mission delivery included virtual and in-person missions, desk review, and training.
  - MCM conducted a desk review of the draft framework and communicated findings in several virtual meetings.
  - Organized training workshops bringing together experts from different regions to share country experiences on consolidated supervision.
  - In-person embedded workshop used local case studies with CMF departments overseeing consolidated supervision to develop implementation approaches and broaden cooperation across CMF departments.
- Follow-up:
  - A follow-up mission held in January 2023 reviewed supervisory practice and provided guidance on deepening it, focusing on: (i) supervisory indicators; (ii) the supervisory risk matrix; and (iii) capital reviews.
  - Agreement reached on next steps once the CMF completes implementing recommendations; MCM to continue engagement through periodic virtual meetings.

- Testimonial:
  - “Chile’s Financial Market Commission (CMF) is grateful for the invaluable contributions provided by the IMF through the MCM Department. All technical assistance has been vital in helping us strengthen not only our financial regulation and supervision but also our corporate governance.” — Ms. Solange Bernstein, Chairwoman, Financial Market Commission of Chile

### Indonesia, Malaysia, and Thailand: Monetary Modeling (DSGE for policy mix analysis)
- Motivation:
  - EMEs face difficult output-inflation trade-offs due to large exchange rate pass-through and/or relatively shallow debt and FX markets.
  - During volatile capital flow episodes, central banks used multiple policy tools; Malaysia and Thailand requested IMF TA in early 2020 to develop a DSGE model for integrated policy analysis; Bank Indonesia requested a review in 2022.
- Model features:
  - Full-fledged two-country New Keynesian open economy model including a small open economy with frictions in international financial markets, FX mismatches, and an occasionally binding debt limit.
  - Frictions cause deviations from uncovered interest parity and can produce private borrowing spread spikes during a “sudden stop” episode, motivating occasional use of foreign exchange intervention (FXI).
  - Includes standard nominal and real rigidities and allows for imperfect anchoring of inflation expectations.
- Implementation and outcomes:
  - Estimated model captures country-specific characteristics.
  - MCM team discussed estimation results with central bank staff, transferred data and model codes, and trained staff to run the model, generate inflation forecasts and policy scenarios, and analyze policy tradeoffs.
  - Related CD activities supported bilateral surveillance; model codes and scenarios were shared with country teams and included in IMF staff reports.

### Caribbean: CARTAC Climate Finance Regional Workshop (Miami, February 2–3, 2023)
- Purpose:
  - Support Caribbean countries to access climate finance for adaptation and mitigation while preserving debt sustainability.
- Participation:
  - 37 participants from 17 countries attended panel discussions.
- Focus areas:
  - Share country experiences and successful practices.
  - Explore regional solutions to widen access to climate financing and manage cost and risk of debt.
  - Discuss public and private climate finance benefits and the Fund’s Resilience and Sustainability Trust and TA needs to improve access to private climate finance.
- Notable quote:
  - Tobias Adrian: “climate change is likely to be the most critical macroeconomic challenge IMF members will face over the coming decades. Climate finance represents a significant opportunity for the Caribbean countries to tackle this challenge.”

### Bangladesh: Climate Stress Testing and RSF-related TA
- Context:
  - Bangladesh is highly vulnerable to climate change and natural disasters; rising temperatures and more frequent severe floods threaten macroeconomic and financial stability and disproportionately affect the poor and vulnerable.
- TA objective:
  - Support RSF-related reforms and capacity to meet RSF conditions on climate risk stress testing required for program disbursement by end-2024.
- Mission and analytical pillars:
  - First-ever IMF TA on climate risk analysis conducted in early 2023 proposing a climate risk assessment framework tailored to available data focused on banking-sector impact from physical climate risk (river and coastal floods).
  - TA divided into three pillars: (i) proposing risk assessment options and analytical tools; (ii) assessing financial and climate data availability, including legal/confidentiality and data sharing issues; and (iii) establishing coordination mechanisms between climate and financial sector experts.
- Proposed assessment alternatives:
  - Three alternatives based on current and future data availability:
    - First two alternatives: borrower-level assessment (micro approach).
    - Third alternative: country-level assessment (macro approach) focusing on aggregate, economy-wide effects of climate scenarios.
- Next steps:
  - Authorities to evaluate the three alternatives considering data availability and trade-offs between data granularity and analysis quality.

### Bosnia and Herzegovina: Central Bank Balance Sheet Technical Assistance (CBBH)
- Context:
  - CBBH operates a currency board; summer 2022 saw rising inflation and expectations of major ECB tightening, surging market yields, and mark-to-market revaluation losses that pressured capital and the currency board coverage ratio.
- TA response:
  - MCM mission visited Sarajevo in June 2022 and delivered tools for foreign reserves risk management decision-making.
- Actions taken by CBBH (following mission advice):
  - Reduced duration of its investment portfolio and overall foreign reserves portfolio.
  - Decreased share of bond portfolio in overall portfolio aligned with estimated risk tolerance.
  - Sold a portion of gold holdings to lower potential negative effects of gold price volatility on capital.
- Outcome:
  - These measures supported currency board stability; the coverage ratio bottomed out at a relatively safe level and started gradually recovering.
- Testimonial:
  - Senad Softić, Governor, praised IMF cooperation and noted timely decisions to reduce interest rate risk and align exposure to risk tolerance, supporting currency board stability.

### Jordan: CBDC Capacity Development
- TA scope and phases (starting late 2021):
  - Aim: Explore possible Central Bank Digital Currency (CBDC) and prepare a feasibility study in line with MCM’s CBDC Strategy.
  - Phase 1 — Knowledge-sharing seminars: two months of weekly virtual seminars covering conceptual and operational issues including opportunities, challenges, design options, technology and cybersecurity risks, legal and regulatory frameworks, and macro financial implications.
  - Phase 2 — Peer-learning workshops: virtual workshops with four guest speakers from other central banks sharing CBDC experiment experiences.
  - Phase 3 — Fieldwork: virtual and in-person analysis of use cases, opportunities, and challenges with market participants and relevant authorities in Amman; resulted in two TA reports on key findings and recommendations covering payment landscape and pain points; wholesale and retail CBDC opportunities and challenges; technology, cybersecurity, legal, and regulatory requirements; and a recommended medium-term course of action.
- Dissemination:
  - A high-level summary of the retail CBDC report has been published.
- Testimonial:
  - Adel Al-Sharkas, Governor, Central Bank of Jordan, expressed appreciation for IMF assistance and noted improved positioning to address the digital divide and plans for further collaboration.

### CBDC Strategy (Box 7)
- IMF Digital Money Strategy endorsed July 2021 mandates IMF to help ensure digital money, including CBDC, fosters domestic and international economic and financial stability.
- Demand and CD offerings:
  - Over 40 requests for assistance from low-income countries and emerging market economies across all regions have been received since 2020.
  - Four CD products offered: (i) bilateral TA; (ii) regional workshops; (iii) analytical work; and (iv) reviews of country CBDC projects.
- Analytical and capacity development plans:
  - IMF to launch a CBDC Handbook as a basis for CD engagement to document emerging experiences and analytical work.
  - Handbook envisaged to contain about 20 chapters over the next four to five years and will be a “living” document updated annually to reflect evolving experiences, findings, and policy views.
- Testimonial:
  - Harvesh Kumar Seegolam, Governor, Bank of Mauritius, noted proactive and strategic IMF support in designing a CBDC and building necessary capacity.

### India: Stress Testing Technical Assistance (Reserve Bank of India, April 2023 mission)
- Mission objectives:
  - Review RBI’s analytical capacity and model suite for solvency risk analysis, liquidity risk analysis, and balance sheet connectedness of banks and non-bank financial institutions.
  - Provide an overview of best practices and a primer on climate risk analysis (data, analytical tools, and models).
- Findings:
  - RBI’s network and contagion model capacity is strong and it generally handles internal and supervisory data well.
- Key recommendations:
  - Improvements suggested mainly in credit risk, market risk, and macro-financial scenario design.

*Source: SECTION V, Capacity Development Annual Report 2023 | Monetary and Capital Markets (cdar2023 - SECTION V).*

### SECTION V

### SECTION V

### ANGOLA: TRANSITION TO INFLATION TARGETING
- Background and TA:
  - In June 2022, MCM conducted a comprehensive review of the National Bank of Angola’s (BNA) existing reserve money targeting framework and provided a strategy to modernize monetary policy and transition to an inflation targeting (IT) regime.
  - Key components of the roadmap to IT include enhancements in the conduct of monetary and foreign exchange (FX) operations, the use of FPAS models to inform policy decisions, and how BNA policies are communicated to the public.
- Monetary policy operations — findings and recommendations:
  - Supporting reforms should bolster the effectiveness of the BNA’s monetary operations.
  - The liquidity forecasting framework should be further developed to improve the calibration of open market operations (OMOs).
  - The maintenance period for reserve requirements (RR) should be lengthened and averaging RR would be desirable.
- Foreign exchange operations — findings and recommendations:
  - The BNA should take further steps to clarify and reduce its role in the FX market.
  - It should develop a trigger-based intervention policy that provides clear guidance for when it will intervene in the FX market.
- Forecasting and Policy Analysis System (FPAS) — findings and recommendations:
  - The FPAS and the policy formulation process need to be refocused on determining an interest rate path that will bring future inflation in line with the inflation objective.
- Communications — findings and recommendations:
  - Further improvement of communications will be key to supporting the IT regime.
  - Developing and publishing a coherent communications strategy that outlines the objectives and operational modalities of BNA communications is a priority.
- Testimonial:
  - Mr. Sebastião Tuma, Head of the Economic Research Department, National Bank of Angola: “We would like to express our gratitude for the technical support that the IMF has been providing to the BNA, through the Monetary and Capital Markets Department, for the preparation of a successful transition from the current monetary policy regime (monetary targets) to inflation targeting. The mission made it possible to identify the conditions already met, the necessary steps to be taken to guarantee the efficient functioning of the transmission mechanism through interest rates, as well as the revision of the FPAS model. The technical assistance has been very useful in terms of the knowledge transfer.”

### KENYA: IMPROVING THE FORECAST AND POLICY ANALYSIS SYSTEM
- TA mission:
  - An MCM mission visited Nairobi, Kenya, during April 17–21, 2023, to assist the authorities with improving their Forecasting and Policy Analysis System (FPAS).
- Mission deliverables and assessments:
  - Assessed the correlation between the survey-based balance of opinion indicators and quarterly GDP growth.
  - Improved the nowcasting platform.
  - Expanded the nowcasting framework to predict disaggregated components of GDP.
- Delivery mode and impact:
  - The mission highlighted the importance of the in-person TA, where highly interactive technical sessions, hands-on exercises, and timely feedback contributed to a more engaged and effective TA delivery.
- Testimonial:
  - Prof. Robert Mudida, Director, Research Department, Central Bank of Kenya: “We are grateful for the well-organized Technical Assistance (TA) workshop on Improving the Business Surveys and the Nowcasting Framework held in April 2023 at the Kenya School of Monetary Studies (KSMS). The workshop was very helpful as it not only highlighted areas of improvement but also provided inputs and insights towards refining our MPC surveys and nowcasting framework. It also provided new ideas and techniques for analyzing survey data, some of which we have already started incorporating in our presentations to the Monetary Policy Committee (MPC). Thank you!”

### YEMEN: IFRS TECHNICAL ASSISTANCE
- Background and need for TA:
  - Prior to the conflict, the Central Bank of Yemen (CBY) had applied International Financial Reporting Standards (IFRS).
  - The conflict forced relocation of the CBY headquarters in 2016 from Sana’a to Aden, resulting in a significant loss of technical and operational know-how and aggravated by lack of connectivity.
  - The CBY reached out to the IMF in early 2022 for technical assistance to rebuild capacity in the application of IFRS while simultaneously engaging an audit firm to produce outstanding financial statements from 2016 to 2020 in compliance with IFRS.
- TA delivery and adaptations:
  - A virtual training program of monthly sessions began in July 2022.
  - By early autumn, the team suggested replacing the virtual sessions with an in-person delivery mission because the desired effect was not being achieved.
  - In May 2023, an intensive one-week, in-person training program was delivered in New Cairo, Egypt, notwithstanding substantial logistical obstacles.
  - The CBY sent 12 representatives from accounting, auditing, reserve management, operations, and supervision.
- Outcomes and impact:
  - Compared with the virtual sessions, the in-person sessions were lively, with many thoughtful debates and questions; discussions among peers and across departments strengthened working relationships and reinforced knowledge transfer.
  - Based on the training sessions, CBY staff hope to apply the learnings and take further ownership of drafting the CBY financial statements going forward.
  - A summary report highlighting the key takeaways from each session was shared with the CBY as a reference tool.
  - The CBY is expecting to approve the 2016-20 statements in 2023 and is in the process of engaging an audit firm to examine the financial statements from 2021 to 2025, respecting the legally allowable five-year term.
  - Overall, this was an impressive step forward in rebuilding capacity at the CBY.
- Testimonial:
  - Mr. Saleh Fadhl, Assistant Deputy for Accounting and IT Sector, Central Bank of Yemen: “The IMF training mission on IFRS was one of the most highlighted and valuable training programs among the capacity-building courses offered to CBY employees since the relocation of the CBY head office to Aden.”

### APPENDICES — KEY LISTINGS AND CONTACTS (selected substantive items)
- IMF Regional Capacity Development Centers (RCDC) — examples of locations and member coverage:
  - AFRITAC Central, Libreville, Gabon — Burundi, Cameroon, Chad, Central African Republic, Congo, Democratic Republic of the Congo, Gabon, Equatorial Guinea, and São Tomé and Príncipe.
  - AFRITAC South, Ebene Cybercity, Mauritius — Angola, Botswana, Comoros, Eswatini, Lesotho, Madagascar, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Zambia, and Zimbabwe.
  - AFRITAC West, Abidjan, Côte d’Ivoire — Benin, Burkina Faso, Côte d’Ivoire, Guinea, Guinea-Bissau, Mali, Mauritania, Niger, Senegal, and Togo.
  - AFRITAC West II, Accra, Ghana — Cabo Verde, The Gambia, Ghana, Liberia, Nigeria, and Sierra Leone.
  - East AFRITAC, Dar es Salaam, Tanzania — Eritrea, Ethiopia, Kenya, Malawi, Rwanda, South Sudan, Tanzania, and Uganda.
  - PFTAC, Suva, Fiji — The Cook Islands, Federated States of Micronesia, Fiji, Kiribati, Republic of the Marshall Islands, Nauru, Niue, Palau, Papua New Guinea, Samoa, Solomon Islands, Timor-Leste, Tokelau, Tonga, Tuvalu, and Vanuatu.
  - SARTTAC, New Delhi, India — Bangladesh, Bhutan, India, Maldives, Nepal, and Sri Lanka.
  - METAC, Beirut, Lebanon — Afghanistan, Algeria, Djibouti, Egypt, Iraq, Jordan, Lebanon, Libya, Morocco, Sudan, Syria, Tunisia, West Bank and Gaza, and Yemen.
  - CCAMTAC, Almaty, Kazakhstan — Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyz Republic, Mongolia, Tajikistan, Turkmenistan, and Uzbekistan.
  - CARTAC, Bridgetown, Barbados — Anguilla, Antigua and Barbuda, Aruba, The Bahamas, Barbados, Belize, Bermuda, British Virgin Islands, Cayman Islands, Curaçao, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, Sint Maarten, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Suriname, Trinidad and Tobago, and Turks and Caicos Islands.
  - CAPTAC-DR, Guatemala City, Guatemala — Costa Rica, The Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and Panama.
- MCM Long-Term Resident Expert placements (as of April 30, 2023) — sample entries:
  - AFRITAC Central, Gabon — Banking Supervision and Regulation (Multi-Donor); Debt Management (DMF).
  - AFRITAC East, Tanzania — Banking Supervision and Regulation (Multi-Donor); Forecasting and Policy Analysis Systems (Multi-Donor); Monetary and Foreign Exchange Operations, and Financial Market Infrastructures (FMIs) and Payments (Multi-Donor).
  - Bank of Mozambique, Mozambique — Central Bank Modernization (Norway).
  - Bank of Sierra Leone, Sierra Leone — Banking Supervision and Regulation (FSSF); Monetary Policy and Financial Stability (FIRST).
  - CCAMTAC, Kazakhstan — Monetary and Foreign Exchange Operations (Multi-Donor); Financial Supervision and Regulation (Multi-Donor).
  - CDOT, Thailand — Monetary and Foreign Exchange Operations (Japan).
  - Central Bank of Sri Lanka, Sri Lanka — Macroprudential Policy and Stress Testing (FSSF).
  - National Bank of Cambodia, Cambodia — Banking Supervision and Regulation (Japan); Macroprudential Policy/Stress Testing (FSSF).
  - PF TAC, Fiji — Banking Supervision and Regulation (Multi-Donor); Debt Management (Japan).
  - SAR T TAC, India — Monetary and Foreign Exchange Operations (Multi-Donor); Banking Supervision and Regulation (Multi-Donor).
- MCM TA contact points — main IMF staff for requesting MCM TA (names and direct contact details provided in the source):
  - Director Tobias Adrian — T. +(1) 202.623.5372 — tadrian@IMF.org
  - Deputy Director Miguel Savastano — T. +(1) 202.623.8545 — msavastano@IMF.org
  - Technical Assistance Strategy Division Chief Oana Croitoru — T. +1 (202) 623 9432 — onedelescu@IMF.org
  - Deputy Division Chief Veronica Bacalu — T. +(1) 202.623.4816 — vbacalu@IMF.org
  - Deputy Division Chief Sipho Makamba — T. +(1) 202.623.4729 — smakamba@IMF.org
  - Deputy Division Chief Joannes Mongardini — T. +(1) 202.623.8569 — jmongardini@IMF.org
  - Regional Advisor—Africa and Western Hemisphere John Nelmes — T. +(1) 202.361.1835 — jnelmes@IMF.org
  - Regional Advisor—Middle East, and Central Asia Sumiko Ogawa — T. +(1) 202.623.4288 — sogawa@IMF.org
  - Regional Advisor—Europe and Asia and Pacific Jennifer Elliott — T. +1 (202) 623.8804 — jelliott@IMF.org
  - Mailing Address: Monetary and Capital Markets Department, International Monetary Fund, 700 19th Street, NW, Washington, DC 20431
- MCM TA Team — staff listing and photos noted in the source (names included as listed): Piedad Jacome; Kateryna Botsu; Abdullah Haron; Miguel Savastano; Zsolt Ersek; Brenda Sylvester; Tsegereda Mulatu; Beto Habe; plus additional staff coordinators and team members named in the source.

*Source: SECTION V, Capacity Development Annual Report 2023 — Monetary and Capital Markets*

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_Source: https://www.imf.org/-/media/files/publications/technical-assistance-annual-report/cdar2023.pdf_