## TAAR2024

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### PREFACE — Purpose, delivery highlights, and thematic focus
- IMF capacity development (CD) reinforces the Fund’s institutional mandate for global macroeconomic and financial stability by enhancing human capital and institutions in member countries and empowering them to make the best policy choices given their particular conditions.
- Third quinquennial review of the Fund’s CD strategy concluded in April 2024: called for more flexibility, better integration with surveillance and lending, and tailoring CD to country circumstances.
- FY24 delivery highlights and modalities:
  - MCM CD delivery in FY24 totaled 1,037 activities.
  - Modalities of direct delivery in FY24: In person: 52 percent; Virtual: 37 percent; Hybrid: 11 percent.
  - FY24 activity count includes direct delivery, management and administration, and analytics and development.
  - Note on comparability: CDMAP adoption in FY22 introduced a structural break; pre-COVID comparison made relative to FY20 (May 2019–April 2020). COVID years include FY21 and FY22.
- Top thematic and emerging areas:
  - Core topics: central bank operations; financial sector supervision and regulation; crisis management; debt management; monetary and macroprudential policy; financial stability analysis.
  - Emerging priorities: digital money, fintech, and climate-related financial risks.
- Regional distribution and historical spending (10-year period):
  - Total spending exceeded $0.4 billion.
  - Regional shares: Africa 40 percent; Asia and Pacific 20 percent; Western Hemisphere 17 percent; Middle East and Central Asia 15 percent; Europe 8 percent.
  - About a quarter of MCM CD spending channeled to fragile and conflict-affected states (FCS).
- Acknowledgements: expressed by Gita Gopinath and Tobias Adrian; core team listed.

### SECTION I — MCM CD DELIVERY IN FY24: scale, modalities, and outcomes
- Scale and resources:
  - Total activities: 1,037 activities across 143 countries in FY24, up from 919 across 137 countries in FY23.
  - Total CD spending: $52.1 million in FY24, up from $43.6 million in FY23 (nearly 20 percent increase).
  - Spending exceeded pre-COVID CD spending.
  - Resource Allocation Ratio = Direct Delivery/Management and Administration improved over three years.
- Delivery modalities and topical emphasis:
  - Technical assistance (TA) accounted for three quarters of MCM’s CD in FY24.
    - Top TA areas: financial supervision and regulation; central bank operations; debt management; monetary and macroprudential policy.
    - Emerging TA topics: climate and digital money.
  - Training represented one quarter of all direct CD delivery.
    - Training modalities: virtual 57 percent; in-person 36 percent; hybrid 7 percent.
    - Training focus: financial supervision and regulation (exceeding one-third of total direct delivery); emerging topics accounted for one-third of total training.
- Innovative and programmatic approaches:
  - Blended delivery (real-time engagement + asynchronous online learning) advanced in FY24.
  - Programmatic CD: sequenced, multi-year TA engagements (examples: Mozambique central bank modernization; Lao P.D.R. monetary policy framework; continuous CD in Somalia).
  - Flagship programmatic product: Financial Sector Stability Review (FSSR).
- Field presence and long-term experts (LTXs):
  - End of April 2024: 39 LTXs (25 in RCDCs and 14 in individual countries).
  - LTXs and STXs accounted for two-thirds of total MCM CD in FY24.
  - Tenth Annual LTX Workshop in November 2023: 39 experts from 21 duty stations; topics included FSSR, AI/ML prospects, fintech and crypto policy, cross-border payments and CBDCs, TA quality, blended modality.
- Topic-specific delivery (selected highlights):
  - Financial Supervision and Regulation: ~40 percent of MCM CD in FY24; covered Basel framework, IFRS9 and IFRS17, supervisory frameworks for cybersecurity and climate-related financial risks, risk-based supervision; top beneficiaries included The Gambia, Ghana, Democratic Republic of the Congo, Rwanda, and Cambodia.
  - Central Bank Operations: ~one-fourth of MCM CD; covered liquidity monitoring, monetary and FX operations, emergency liquidity assistance, governance, internal audit, reserves management; top recipients included Democratic Republic of the Congo, Seychelles, Cambodia, Uzbekistan.
  - Public Debt Management: MTDS, local currency bond market development, debt recording and reporting; main recipients included Mauritania, Oman, Bangladesh, Suriname, Solomon Islands.
  - Monetary and Macroprudential Policies: FPAS delivered to Sierra Leone, Uganda, and Tanzania; high demand for monetary policy analysis and communication.
  - Financial Stability and Systemic Risk Analysis: macro-stress testing for banks and non-bank financial institutions; recipients included Cabo Verde, India, Indonesia, Moldova, Sierra Leone, Uruguay.
  - Digital Money and Financial Markets Infrastructure: 21 CBDC TA missions and 4 regional training sessions in FY24; oversight/supervision of e-money, crypto assets, stablecoins; several chapters of the CBDC Virtual Handbook completed.
- Geographic and country focus:
  - Africa remained the main recipient in FY24; increased demand in Africa and Middle East and Central Asia compared to FY23.
  - CD delivery to Ukraine resumed in FY24.
  - Top recipients: Democratic Republic of the Congo (top recipient; creation of a Financial Stability Department), Cambodia (second; multiple large projects), Mozambique (central bank modernization program).
- Fragile and Conflict-Affected States (FCS):
  - FY24 FCS CD delivery: 185 CD activities across FCS; about one-fifth of MCM’s direct delivery.
  - Modalities in FCS: 54 percent delivered in person; increased reliance on hybrid modalities.
  - LTXs important for FCS delivery; two new resident advisors added for FCS.
  - Top FCS subject demand: financial supervision and regulation; central bank operations; debt management.
  - Strategic anchoring: CD work aligned with the Fund’s 2022 FCS Strategy; FSSR a key vehicle; medium-term workplans prepared for Guinea, Kosovo, Ukraine, and Yemen.
  - Note: time series break due to IMF-wide methodological change starting FY22.
- CD outcomes and monitoring:
  - Results-Based Management (RBM) framework used.
  - Aggregate ratings in FY24: 85 percent of rated CD outcomes were “partially” or “largely/fully” achieved.
  - Regional shares rated “partially” or “largely/fully” achieved: Africa 90 percent; Asia and Pacific 84 percent; Western Hemisphere 84 percent; EUR increased from 56 percent in FY23 to 76 percent in FY24.
  - Key factors for impact: strong ownership and trust-enhancing relationships.

### FSSR (Financial Sector Stability Review) — program design, funding, and FY24 progress
- FSSR: diagnostic of capacity to identify, monitor, and mitigate financial stability risks followed by multi-year TA program.
- Funding and phases:
  - Funded by the F S S F, a multi-partner trust fund established in 2017.
  - Phase I finalizes in December 2024.
  - Phase II started in May 2024 and continues until April 2029.
  - Overlap between May and December 2024 to facilitate transition.
- Phase I (as of April 2024) achievements:
  - 23 FSSR diagnostics delivered (11 in FCS).
  - 15 follow-up TA projects underway during FY24; 3 projects completed/closed (Sri Lanka, Uganda, West Bank and Gaza); 12 active follow-up projects at end-FY24.
  - Independent evaluation concluded Phase I broadly met objectives and supported renewal for Phase II.
- FSSF-supported CD execution and scale in FY24:
  - FSSF CD activities in FY24: $5.4 million, up from $4.1 million in FY23.
  - FSSF financed the work of seven LTXs and increased in-person CD delivery.
- Diagnostic and follow-up activity in FY24:
  - Two FSSR diagnostics completed: Burundi and Eswatini.
  - Work initiated on two diagnostics: Papua New Guinea and Somalia.
  - Multilateral complementary CD: sixth Supervisory and Regulatory Online Course; third Cyber Risk Supervision Online Course; seventh annual Cybersecurity Workshop targeted at LICs.

### Donor funding and partner contributions (FY24)
- Two-thirds of MCM CD spending was funded by partners in FY24.
- Nearly half of external financing supported CD delivered through RCDCs.
- Bilateral and topical trust funds represent 53.3 percent of total; non-RCDC 46.7 percent.
- TABLE 1 (partners, Millions of USD) — support (other than through RCDCs):
  - Japan 5 .19
  - Financial Sector Stability Fund 5.06
  - Debt Management Facility 1.90
  - Canada 1.56
  - Norway 0.97
  - Switzerland 0.88
  - China0.44
  - Others0.41
- Selected donor-enabled achievements:
  - Japan-financed projects: macroprudential toolkit for Bank of Mongolia; debt management in Sri Lanka, Maldives, Lao P.D.R.; CBDC CD and five CBDC Virtual Handbook chapters completed; IMF MD introduced virtual CBDC Handbook at Singapore Fintech Festival (66,000 participants).
  - Phase II of the FSSF approved and partner commitments secured.
  - Norway financing for Mozambique modernization: new RTGS, new banknote and coin series, fully functional macro stress testing model, renewed quarterly projection model.
  - Germany-supported climate CD: six regional engagements on supervision of climate-related financial risks and targeted results framework.
  - Continued debt management CD financed by Debt Management Facility, Japan, and The Netherlands.
  - External evaluation of the Somalia Country Fund finalized with excellent grades in relevance, coherence, and effectiveness.

### Case studies and multi-year engagements (selected)
- Lao P.D.R. (Bank of Lao P.D.R. — BOL):
  - Multi-year CD: introduced seven-day instrument to absorb liquidity at the policy rate; periodic issuance of three- and six-month BOL bills and deposits; liquidity monitoring framework and forecasting group; macroeconomic diagnostic tools and Near-Term Forecasting models.
- Somalia:
  - Reached HIPC completion point in December 2023.
  - MCM TA targeted currency reform, central bank operations, banking supervision; extensive training; legal reviews of Central Bank and Financial Institutions Law; TA in debt management, payment systems and mobile money oversight; planned FY25 FSSR diagnostic mission covering five areas.
- Mozambique (Bank of Mozambique modernization program, financed by Norway):
  - Project ran October 2017 to April 2024 (remaining areas to continue in FY25).
  - Achievements: FPAS now using robust nowcasting and projection models; upgraded liquidity management; macroprudential solvency stress testing capability; National Payment System introduced November 2023; new banknotes and coins; operational risk management framework improvements; risk appetite statement approved October 2023.
- Debt Management toolkit and results:
  - MTDS framework and Analytical Tool; Annual Borrowing Plan Tool; Local Currency Bond Market (LCBM) Development Framework; debt transparency and investor relations TA; MOOC under development.
  - Uzbekistan: able to borrow domestically equivalent of 30 percent of GDP after TA.
  - Bangladesh: programmatic CD on risk-based MTDS and LCBM.

### BOX 3 — FSSR engagement with Fragile and Low-Income Countries
- FSSR recipients at 2023 Capacity Development Talk expressed strong appreciation.
- Examples of FSSR diagnostics and follow-up:
  - Burundi: diagnostic found low oversight capacity at BRB due to high staff turnover; follow-up TA workplan being finalized to train new staff and transition to risk-based supervision.
  - Eswatini: diagnostic identified NBFIs as systemic risk sources; follow-up to provide TA on systemic risk monitoring, stress testing, financial safety nets, and NBFI supervision.
  - Follow-up TA projects continued in multiple countries including Cabo Verde, Cambodia, DRC, Djibouti, The Gambia, Guinea, Kosovo, Lesotho, Rwanda, Sierra Leone, Sri Lanka, Uganda, Uzbekistan, West Bank and Gaza, and Zimbabwe.

### SECTION II — Selected technical themes and country engagements
- Macroprudential policy and financial stability:
  - High demand for CD on macroprudential policy; FSSR diagnostics often require institutional modifications, macroprudential strategies, and calibration support.
- Democratic Republic of the Congo (DRC):
  - MCM TA supported CBC to establish a Financial Stability Department and macroprudential unit; assisted law for Financial Stability Committee; CBC designated macroprudential authority with collegiate decision-making structures involving Ministry of Finance.
- Sri Lanka:
  - MCM CD supported operationalizing macroprudential framework in line with CBSL Act; LTX allocated for macroprudential policy and stress testing; prepared implementation of countercyclical capital buffer, D-SIB buffer, borrower-based measures, sectoral capital measures.
- Mauritania:
  - TA supported interbank FX market introduction (electronic platform) in December 2023; developed short-term liquidity framework and created a Credit Department; remaining priorities include yield curve development and automating liquidity forecasting.
- Colombia:
  - MCM TA assisted SFC to develop an Expected Credit Losses (ECL) model compatible with IFRS 9; simulation-based model uses loan-level register data and simulates several thousands of macroeconomic scenarios; model may inform future countercyclical capital buffer considerations.
- Cyber risk programmatic approach:
  - Regional pilot in PFTAC and AFRITAC South combining training, regulation workshops, and on-the-job cyber examinations; AFS Phase 1 (mid-2021 to mid-2024) delivered practical outcomes and produced a transferable blueprint.
  - AFS Phase 1 outcomes: new cybersecurity prudential regulations in several countries; 75 supervisors trained in regulation development; 55 supervisors trained in supervision; 11 guided onsite examinations; cybersecurity strategy development in Mauritius, Mozambique, Namibia.
- METAC bank corporate governance:
  - Regional course in May 2024 with 33 participants from 12 countries; identified challenges (state-owned banks, family-owned banks, opaque ownership, weak governance infrastructure, supervisor stance, board independence and expertise, capacity constraints) and practical steps to strengthen governance and supervisory oversight.
- Climate risk CD (ATI and CARTAC):
  - Focus on supervision and regulation of climate-related financial risk, tools, information architecture, sustainable debt issuance.
  - CARTAC workshop highlighted Caribbean vulnerability to physical climate risks and promoted IMF’s three-stage approach: STAGE 1 Climate Risk Diagnostics; STAGE 2 Climate Scenarios Design; STAGE 3 Bank Stability Assessment (Bank Solvency Stress Test; NEW: Climate Module; Corporate & Household Sensitivity Analysis or Stress Test).

### SECTION II — Moldova: bank liquidation framework assistance
- Mission analyzed bank liquidation models and allocation of responsibilities among administrative authorities and courts.
- Key staff recommendations:
  - Preserve a significant role for the National Bank of Moldova (NBM) in bank liquidation.
  - Clearly define responsibilities for the courts within the liquidation framework.
  - Include legislative features to enhance the effectiveness of the liquidation framework.
- Mission dynamics: active engagement with Resolution Division staff; Board and management support was critical.

### SECTION III — Strategy, governance, and operational highlights
- 2024 CD Strategy Review (finalized April 2024) strategic aims:
  - (1) Flexibility: strengthen agility, monitoring, and reporting on CD.
  - (2) Integration: align CD with surveillance and program priorities.
  - (3) Tailoring: adapt CD to country circumstances and absorption capacity.
- Medium-term priorities (six areas): prioritization and integration; funding model enhancement; monitoring and evaluation; modernizing modalities; increasing field presence; reviewing HR policies for CD staff.
- Operational insights from Miguel Savastano:
  - FY24 first year MCM exceeded pre-pandemic FY20 CD delivery levels.
  - Core demand: bank supervision and regulation, bank resolution frameworks, central bank operations, exchange rate management.
  - Emerging demand: digital money, cyber risks, climate.
  - Programmatic TA workplans, FSSR transition to Phase II, development of MCM CD Manual and updated FSSR Handbook.
  - Supervisory and Regulatory Online Course (SROC) has trained well over 2000 government officials since launch.
  - About two-thirds of MCM CD financed by donors.

### Joint Banque de France—MCM Regional CD Forum, April 2024
- One-day forum in Paris: ~40 participants in person and 50 online.
- Objectives: enhance cooperation in CD delivery, peer-to-peer exchange, broaden expert roster.
- Outcomes: reinforced importance of partnerships, programmatic delivery benefits, and interest in broader collaboration and expert recruitment.

### APPENDICES — RCDCs, LTX placements, and contacts (selected)
- Regional capacity centers (RCDCs) and coverage listed for AFRITAC Central, AFRITAC South, AFRITAC West, AFRITAC West II, AFRITAC East; PFTAC, SARTTAC, CDOT; METAC, CCAMTAC; CARTAC, CAPTAC-DR; ATI, CEF, CICDC, JVI, STI.
- APPENDIX II — LTX placements as of April 30, 2024: 39 placements listed across regions and functions (examples: Bank of Mozambique — Central Bank Modernization — Norway; Central Bank of Congo — Macroprudential Policy — IMF Financial Sector Stability Fund; National Bank of Cambodia — Banking Supervision and Regulation — Japan).
- MCM TA contacts (selected):
  - 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
  - Regional Advisor—Africa and Western Hemisphere — John Nelmes — T. +(1) 202.623.6524 — jnelmes@IMF.org
  - Regional Advisor—Middle East, and Central Asia — Jihad Alwazir — T. +(1) 202.623.6658 — jalwazir@IMF.org
  - Regional Advisor—Europe and Asia and Pacific — Jennifer Elliott — T. +(1) 202.623.8804 — jelliott@IMF.org

*Source: TAAR2024 — Capacity Development Annual Report 2024 | Monetary and Capital Markets*

### PREFACE

### PREFACE

### Overview and purpose of IMF capacity development (CD)
- IMF’s capacity development (CD) reinforces the Fund’s institutional mandate for global macroeconomic and financial stability by enhancing human capital and institutions in member countries and empowering them to make the best policy choices given their particular conditions.
- As a global institution, the IMF has a duty to ensure that all members benefit from the latest knowledge and best practices and put them to best use for macroeconomic and financial stability, prosperity, and sustainability.
- The third quinquennial review of the Fund’s CD strategy, concluded in April 2024, called for continued efforts to make the Fund’s CD more flexible in responding to members’ emerging needs, integrating with surveillance and lending, and tailoring CD to countries’ circumstances.

### Key FY24 delivery highlights and activity statistics
- MCM CD delivery in FY24 totaled 1,037 activities.
- Modalities of direct delivery in FY24:
  - In person: 52 percent
  - Virtual: 37 percent
  - Hybrid: 11 percent
- The FY24 activity count includes the following categories: direct delivery, management and administration, and analytics and development.
- Note on data comparability: In FY22, the IMF adopted a new administrative system for planning and tracking CD (Capacity Development Management and Administration Program (CDMAP)), which introduced methodological changes creating a structural break in FY22. The comparison with pre-COVID delivery is made relative to FY20 (comprising May 2019–April 2020). COVID years include FY21 and FY22.

### Modalities, programmatic approach, and delivery evolution
- MCM CD delivery adopted a “new normal” leveraging in-person activities as well as hybrid and blended modalities carried out by top experts for efficient and impactful outcomes.
- Progress with blended delivery (combining real-time engagement with asynchronous self-paced online learning) advanced in FY24; demand for this approach keeps growing, and measuring it accurately remains work in progress.
- CD delivery increasingly adopted a programmatic approach consistent with the current MCM CD strategy (2022–25), featuring well-sequenced activities aimed at achieving clear medium-term goals to sustainably build skills and capacity in the financial sector.
- CD continued to be tailored to meet the specific needs of members, optimizing impact and deepening integration with surveillance and lending.

### Top thematic areas, emerging priorities, and regional focus
- Core topics supported in FY24 included: central bank operations, financial sector supervision and regulation, crisis management, debt management, monetary and macroprudential policy, and financial stability analysis.
- Emerging priorities with increased demand included: digital money, fintech, and climate-related financial risks.
- Regional distribution and historical spending insights:
  - Over the last decade, spending on MCM’s CD has exceeded $0.4 billion.
  - Regional shares of that 10-year spending: Africa 40 percent; Asia and Pacific 20 percent; Western Hemisphere 17 percent; Middle East and Central Asia 15 percent; Europe 8 percent.
  - About a quarter of the spending on MCM’s CD delivery was channeled to fragile and conflict-affected states (FCS).
- The top 10 recipients over the 10-year period were: Ukraine, Myanmar, Cambodia, Mozambique, Ghana, Sierra Leone, Uganda, Democratic Republic of the Congo, Somalia, and Nigeria.
- FY24 regional top recipients: Africa remained the top CD recipient, followed by Asia and the Pacific Islands region, Middle East and Central Asia, Western Hemisphere, and Europe.

### Integration with surveillance and lending; country engagement
- MCM’s CD support continued to be integrated into Fund surveillance and lending and tailored to the evolving needs of member countries, especially low- and lower-middle-income countries (LLMICs) and fragile and conflict-affected states (FCS).
- Strong country ownership was noted as a key ingredient to successful CD outcomes.
- Presence of long-term experts on the ground expanded significantly since the pandemic to secure expertise for hands-on support.

### Governance, strategy, and acknowledgements
- MCM’s 2024 Annual Report provides an overview of MCM’s CD activities during fiscal year 2024, highlighting main achievements made possible by funding support from donor partners and presenting examples where MCM CD was particularly impactful.
- Expressions of gratitude and recognition:
  - Gita Gopinath (First Deputy Managing Director) expressed appreciation for MCM staff, long-term and short-term experts, donor partners, and recipient countries, emphasizing long-term commitment for building sustainable institutions.
  - Tobias Adrian (Financial Counsellor and Director, MCM) noted the report was prepared by staff from the Technical Assistance Strategy Division of the Monetary and Capital Markets Department under the guidance and supervision of Miguel Savastano and Oana Croitoru.
  - The core team comprised Dana Andreicut, Betty Afework, Veronica Bacalu, Beto Habe, Abdullah Haron, Sangeeta Nambi, Hazel Quinonez, Ibrahima Sangare, and Chloe Zhang.

*Source: PREFACE, TAAR2024 — Capacity Development Annual Report 2024 | Monetary and Capital Markets*

### SECTION I

### SECTION I

### MCM CD DELIVERY IN FY24
- Total activities: 1,037 activities across 143 countries in FY24, up from 919 across 137 countries in FY23.
- Total CD spending: $52.1 million in FY24, up from $43.6 million in FY23 (nearly 20 percent increase).
- Spending exceeded pre-COVID CD spending.
- Resource allocation improved over the last three years, measured by the Resource Allocation Ratio = Direct Delivery/Management and Administration (Figure 9).

### How did MCM deliver CD?
- Delivery modalities:
  - Technical assistance (TA): accounted for three quarters of MCM’s CD in FY24.
    - Top TA areas: financial supervision and regulation; central bank operations; debt management; monetary and macroprudential policy.
    - Emerging TA topics with increased delivery: climate and digital money.
  - Training: represented one quarter of all direct CD delivery.
    - Training modalities: virtual 57 percent; in-person 36 percent; hybrid 7 percent.
    - Training focus: financial supervision and regulation (exceeding one-third of total direct delivery); emerging topics accounted for one-third of total training.

### Innovative CD approaches
- Combined regional programs/courses with tailored bilateral follow-ups to disseminate knowledge and provide targeted support.
  - Examples: Africa Training Institute course on incorporating climate risk into regulatory and supervisory frameworks; programmatic MCM cyber risk regulation and supervision program.
- Central Bank Digital Currency (CBDC) Virtual Handbook rolled out as a disseminable resource, with the option for subsequent tailored TA.

### Programmatic CD
- Programmatic CD: sequenced, multi-year TA engagements that build capacity gradually and promote durable knowledge and skill transfer.
  - Examples: multi-year central bank modernization project in Mozambique; multi-year engagement on monetary policy framework in Lao P.D.R.; continuous CD in Somalia to rebuild financial system oversight.
- MCM’s flagship programmatic product: Financial Sector Stability Review (FSSR).

### Field presence and long-term experts (LTXs)
- End of April 2024: 39 LTXs (25 placed in RCDCs and 14 in individual countries).
- LTX distribution: majority stationed in Africa, followed by Asia and Pacific.
- Contribution to CD: LTXs and STXs accounted for two-thirds of total MCM CD in FY24 (Figure 13).
- LTX engagement with HQ: annual one-week workshop in Washington, D.C.; last workshop in November 2023 (Box 2).
  - Tenth Annual Workshop: 39 experts from 21 duty stations; sessions on CD strategic directions, new MCM programs (e.g., FSSR), AI/ML prospects, fintech and crypto policy, cross-border payments and CBDCs, TA quality practices, blended modality; Managing Director attended.

### On what topics did MCM deliver CD?
- Financial Supervision and Regulation:
  - Accounted for about 40 percent of overall MCM CD delivery in FY24.
  - Covered: Basel framework implementation; IFRS9 and IFRS17; supervisory frameworks for cybersecurity, climate-related financial risks, risk-based supervision (RBS).
  - Top beneficiaries included The Gambia, Ghana, Democratic Republic of the Congo, Rwanda, and Cambodia.
- Central Bank Operations:
  - Reached about one-fourth of MCM total in FY24.
  - Covered: liquidity monitoring tools, monetary and foreign exchange operations, emergency liquidity assistance, central bank governance, risk-based internal audit practices, foreign reserves management.
  - Top recipients: Democratic Republic of the Congo, Seychelles, Cambodia, Uzbekistan.
- Public Debt Management:
  - Areas: medium-term debt management strategies, development of local currency bond market, debt recording and reporting.
  - Main recipients: Mauritania, Oman, Bangladesh, Suriname, Solomon Islands.
- Monetary and Macroprudential Policies:
  - Focus: macroprudential frameworks; adoption of Forecasting and Policy Analysis Systems (FPAS).
  - FPAS delivered to Sierra Leone, Uganda, and Tanzania.
  - High demand for monetary policy analysis and communication.
- Financial Stability and Systemic Risk Analysis:
  - TA on macro-stress testing for banks and non-bank financial institutions; tools such as risk heat maps and models for solvency, liquidity, interconnectedness; household and corporate risk analysis; financial stability analyses and reports.
  - Recipients: Cabo Verde, India, Indonesia, Moldova, Sierra Leone, Uruguay.
- Capital Flow Management:
  - Assistance for measures related to liberalization of capital flow management.
- Crisis Management:
  - TA on crisis preparedness and management frameworks, bank resolution frameworks, enhancements to financial safety nets.
- Climate change-related CD:
  - Bulk delivered in financial supervision and regulation (Figure 14).
- Digital Money and Financial Markets Infrastructure:
  - CD on supervision and regulation of digital products and payments infrastructure (Figure 15).
  - CBDC activity: 21 TA missions and 4 regional training sessions in FY24.
  - Non-CBDC topics: oversight/supervision of e-money, crypto assets, stablecoins.
  - Several chapters of the CBDC Virtual Handbook completed.

### Where did MCM deliver CD?
- Regional focus: Africa remained the main recipient in FY24 (Figure 16).
- Increased demand in Africa and Middle East and Central Asia compared to FY23.
- CD delivery to Ukraine resumed in FY24.
- Top recipients:
  - Democratic Republic of the Congo: top recipient; strong support via Central Africa RCDC, IMF HQ, and a bilateral LTX; major achievement: creation of a Financial Stability Department within Banque Centrale du Congo.
  - Cambodia: second largest recipient; National Bank of Cambodia received TA under three large projects (two financed by Japan for bank regulation/supervision and monetary operations; one financed by the Financial Sector Stability Fund (FSSF) to create macroprudential and financial stability functions).
  - Mozambique: top recipient due to a central bank modernization program supported by Norges Bank (Norway); program started in 2017, second phase concluded in April 2024; FY24 included 16 engagements under the program; Mozambique also received CD on banking supervision and debt management.

### Working with Fragile and Conflict-Affected States (FCS)
- FY24 FCS CD delivery: 185 CD activities across FCS; accounted for about one-fifth of MCM’s direct delivery (Figure 18).
- Modalities in FCS:
  - 54 percent of CD to FCS delivered in person (in the field).
  - Increased reliance on hybrid modalities.
- Resources and staffing:
  - LTXs played an important role in FCS delivery (Figure 19).
  - MCM added two new resident advisors for FCS: one on financial supervision and regulation (based in METAC) and one on monetary and foreign exchange operations (based in AFRITAC Central).
- Subject areas in FCS:
  - Strongest demand: financial supervision and regulation, followed by central bank operations, then debt management (Figure 21).
  - Top FCS recipient: Democratic Republic of the Congo (intense activity in banking regulation and supervision and financial stability).
- Strategic anchoring:
  - CD work anchored in the Fund’s 2022 FCS Strategy.
  - FSSR remained a key strategic vehicle for delivery to FCS and LICs.
  - Medium-term TA workplans prepared in FY24 for Guinea, Kosovo, Ukraine, and Yemen.
  - Country Engagement Strategies by Area Departments supported cross-department collaboration.
- Note: Break in time series due to IMF-wide methodological change starting FY22 (discontinued distribution of multi-country CD to individual countries) and annual changes in FCS lists.

### CD outcomes and monitoring
- Results-Based Management (RBM) framework used to assess CD results in collaboration with country authorities.
- Aggregate ratings in FY24:
  - 85 percent of rated CD outcomes were “partially” or “largely/fully” achieved.
  - Regional shares of outcomes rated “partially” or “largely/fully” achieved:
    - Africa: 90 percent.
    - Asia and Pacific: 84 percent.
    - Western Hemisphere: 84 percent.
    - EUR: increased from 56 percent in FY23 to 76 percent in FY24.
- Factors for impact: strong ownership by authorities and trust-enhancing relationships between authorities and MCM staff.

### Financial Sector Stability Review (FSSR)
- FSSR: MCM’s flagship CD program; programmatic approach beginning with diagnostic of capacity to identify, monitor, and mitigate financial stability risks, followed by multi-year TA program developed in partnership with recipient country and CD providers.
- Funding and phases:
  - Funded by the F S S F, a multi-partner trust fund established in 2017.
  - Phase I finalizes in December 2024.
  - Phase II started in May 2024 and continues until April 2029.
  - Overlap between phases from May to December 2024 to facilitate transition.
- Phase I achievements (as of April 2024):
  - 23 FSSR diagnostics delivered (11 in FCS).
  - 15 follow-up TA projects underway during FY24; 3 projects completed/closed (Sri Lanka, Uganda, West Bank and Gaza); 12 active follow-up projects at end-FY24.
  - Independent evaluation of Phase I concluded the program broadly met its objectives and supported renewal for Phase II.
- FSSF-supported CD execution and scale in FY24:
  - FSSF CD activities in FY24: $5.4 million, up from $4.1 million in FY23.
  - Increase driven by strong execution of FSSR follow-up TA projects.
  - FSSF financed the work of seven LTXs and increased in-person CD delivery.
- Diagnostic and follow-up activity in FY24:
  - Two FSSR diagnostics completed: Burundi and Eswatini.
  - Work initiated on two diagnostics: Papua New Guinea and Somalia.
  - Complementary multilateral CD: sixth Supervisory and Regulatory Online Course; third Cyber Risk Supervision Online Course; seventh annual Cybersecurity Workshop targeted at LICs.
  - Multilateral courses/trainings provided foundational knowledge and trained hundreds of government officials efficiently.

*Source: SECTION I, Capacity Development Annual Report 2024 — Monetary and Capital Markets*

### BOX 3. CAPACITY DEVELOPMENT TALK: STRENGTHENING FINANCIAL SECTOR STABILITY IN FRAGILE

### BOX 3. CAPACITY DEVELOPMENT TALK: STRENGTHENING FINANCIAL SECTOR STABILITY IN FRAGILE AND LOW-INCOME COUNTRIES

### Capacity Development Talk (2023 Annual Meetings)
- Recipients of FSSRs expressed strong appreciation for the program at the Capacity Development Talk held during the 2023 Annual Meetings in Marrakesh.
- Central bank governors highlighted the FSSR diagnostic work:
  - Governor Buah Saidy (The Gambia) welcomed the diagnostics and strongly encouraged other LICs to take advantage of the FSSR’s medium-term capacity building approach to strengthen financial sector oversight.
  - Governor Ibrahim Stevens (Sierra Leone) commended the multi-step structure of the FSSR for enabling identification of key gaps, establishment of priorities, and a well-prioritized sequence for addressing them; he noted the extreme benefit of having received a resident advisor to support CD implementation.

### FSSR Activities and FY24 Developments
- FIGURE 23. FSSR ACTIVITIES, AS OF FY24
  - Note: Countries highlighted as FCS are based on their FCS status at the time of their FSSR diagnostics.
  - Listed countries engaged in FSSR activities include (as presented): Nicaragua; Cabo Verde; The Gambia; Lesotho; Eswatini; Zimbabwe; Guinea; Sierra Leone; DRC; Uganda; Rwanda; Burundi; Djibouti; Kosovo; Moldova; Uzbekistan; Tajikistan; Bangladesh; Nepal; Vietnam; Cambodia; Sri Lanka; West Bank and Gaza.
- BOX 4. FSSR: DEVELOPMENTS DURING FY24 — Diagnostics and follow-up
  - Burundi:
    - Diagnostic identified low oversight capacity at the Banque de la République du Burundi (BRB) due to high staff turnover, frequent management changes, and significant skill gaps after many years of instability and conflict.
    - Despite significant CD delivered to BRB during 2014–20, high staff turnover affected knowledge transfer and slowed absorption.
    - Authorities decided to hire qualified staff in key functions.
    - MCM will support by providing intensive training to new staff, preparing them for a gradual transition towards risk-based supervision, and later providing training on asset valuation and provisioning and systemic risk analysis, including stress testing.
    - The FSSR follow-up TA workplan, a well-prioritized and sequenced multi-year program of TA, is currently being finalized.
  - Eswatini:
    - Diagnostic found large non-bank financial institutions (NBFI) were an important source of systemic risk.
    - Concluded that household indebtedness and the strong sovereign-financial nexus in both the bank and NBFI sectors warrant close monitoring.
    - FSSR follow-up TA workplan will provide TA on systemic risk monitoring, stress testing and scenario analysis, financial safety nets and crisis management, and supervision and regulation of insurance companies.
  - Follow-up TA projects continued in FY24 in: Cabo Verde, Cambodia, Democratic Republic of Congo, Djibouti, The Gambia, Guinea, Kosovo, Lesotho, Rwanda, Sierra Leone, Sri Lanka, Uganda, Uzbekistan, West Bank and Gaza, and Zimbabwe.

### Donor Partners’ Support and Funding
- MCM commitment to support members’ efforts to preserve monetary and financial stability is facilitated by strategic partnerships with many donor partners.
- In FY24:
  - Two-thirds of MCM CD spending was funded by partners.
  - Nearly half of the external financing received by MCM supported the CD delivered through RCDCs (Figure 24).
  - Bilateral and topical trust funds represent 53.3 percent of total; non-RCDC 46.7 percent.
- TABLE 1. SUPPORT OF MCM PARTNERS IN FY24 (OTHER THAN THAT PROVIDED THROUGH RCDCS) — Partners (Millions of USD)
  - Japan 5 .19
  - Financial Sector Stability Fund 5.06
  - Debt Management Facility 1.90
  - Canada 1.56
  - Norway 0.97
  - Switzerland 0.88
  - China0.44
  - Others0.41
  - Source: CDMAP.
- FIGURE 24. MCM’S DONOR-FUNDED CD SPENDING, FY24 (PERCENT OF TOTAL) — selected destination/source percentages and figures shown in source:
  - 7.8
  - 6.7
  - 5.9
  - 5.8
  - 5.5
  - 4.5
  - 4.0
  - 3.7
  - 1.6
  - 1.0
  - 2.2
  - 5.4
  - 4.4
  - 2.8
  - 2.5
  - 1.3
  - 2.4
  - 2.3
  - 1.2
  - 46.7
  - 14.4
  - 14.8

### Selected Achievements Made Possible by Donor Partners (FY24)
- Japan-financed projects approved in FY24 enabled:
  - Support for the Bank of Mongolia’s efforts to expand its macroprudential policy toolkit.
  - Strengthening public debt management in Sri Lanka, Maldives, and Lao P.D.R.
  - Delivery of CD on CBDC to many regions and countries, and completion of five chapters of the CBDC Virtual Handbook.
  - In November 2023, the IMF Managing Director introduced the virtual CBDC Handbook at the Singapore Fintech Festival, which was attended by 66,000 participants.
- Phase II of the FSSF:
  - Steering Committee approved Phase II and firm partner commitments enabled planning of FSSR diagnostics and TA workplans to meet strong demand.
- Norway financing for Mozambique central bank modernization:
  - Major FY24 achievements included:
    - Launch of a new real-time gross settlement system.
    - Introduction of a new banknote and coin series.
    - A new fully functional macro stress testing model.
    - A renewed quarterly projection model to support monetary policy decision making.
- Germany-supported initiative to increase MCM CD delivery on climate-related issues:
  - During FY24, MCM conducted six regional engagements on supervision of climate-related financial risks, provided TA for establishing climate risk analysis frameworks, and developed a targeted results framework for monitoring related CD activities.
- Continued CD on debt management financed by the Debt Management Facility and additional support from Japan and The Netherlands.
- External evaluation of the Somalia Country Fund finalized in FY24; the initiative received excellent grades in relevance, coherence, and effectiveness.

### Case Studies and Illustrative Multi-Year Engagements
- Lao P.D.R. (Bank of Lao P.D.R. — BOL):
  - Multi-year CD engagement facilitated by CDOT focused on:
    - Bolstering monetary policy implementation (tools to align market conditions with the desired policy stance).
    - Improving the monetary policy framework (pre-FPAS) by refining decision-making processes.
  - Since endorsing the multi-year workplan in July 2023, key achievements include:
    - Introduction of a seven-day instrument to absorb liquidity at the policy rate.
    - Periodical issuance of three- and six-month BOL bills and deposits.
    - Reducing the ratio of eligible bonds maintenance in the reserve requirement.
    - Establishing a liquidity monitoring framework and a liquidity monitoring and forecasting group to estimate one-week ahead liquidity demand.
    - Development of macroeconomic diagnostic tools, inflation analysis and Near-Term Forecasting models.
  - The BOL established an internal core group, led by the Deputy Governor, to maintain active engagement with CDOT advisors.
- Somalia:
  - Reached the HIPC completion point in December 2023.
  - MCM TA (mostly funded through the Somalia Country Fund) targeted currency reform, central bank operations, and banking supervision.
  - MCM organized extensive training programs for central bank staff covering foundations of central bank operations, accounting and auditing, banking supervision, and financial stability assessments.
  - MCM and the IMF Legal Department reviewed amendments to the 2012 Central Bank of Somalia Act and revisions to the 2012 Financial Institutions Law.
  - MCM is delivering TA in debt management, payment systems and mobile money oversight; CD is closely coordinated with the World Bank.
  - Planned FY25 FSSR diagnostic mission will cover five areas: (i) mapping the financial system; (ii) regulation and supervision of banks and microfinance institutions; (iii) mobile money oversight and financial innovation; (iv) oversight of payment and settlements systems; and (v) compiling monetary and financial statistics and financial soundness indicators.
- Mozambique (Bank of Mozambique modernization program, financed by Norway):
  - Project ran from October 2017 to April 2024, with remaining areas to continue in FY25.
  - Five notable CD program design features: comprehensive scope across central bank functions; long horizon for delivery; trusted Norges Bank experts as advisors; generous support in resources and modalities; strong commitment by BM management and staff.
  - Considerable progress:
    - FPAS: now using robust nowcasting, near-term forecasting, and a medium-term quarterly projection model to support monetary policy decision making.
    - Monetary policy implementation and operations: upgraded liquidity management framework enabling effective sterilization of excess liquidity and strengthening monetary transmission.
    - Financial stability: BM staff now able to conduct macroprudential solvency stress tests and produce reports for BM management.
    - National Payment System: successful introduction in November 2023.
    - Cash currency management: new series of banknotes and coins introduced; new cash currency policy framework giving a more prominent role to commercial banks to enhance cash cycle efficiency.
    - Central bank governance: operational risk management framework improvements, including a risk appetite statement approved by the BM Board in October 2023 and a methodology document approved in September 2023, defined processes for Risk and Control Self-Assessments, incident management, and improved reporting of operational risks and incidents.
- Debt Management: current themes and tools
  - MCM CD toolkit includes:
    - Medium-Term Debt Management Strategy (MTDS) framework and Analytical Tool for comprehensive analysis of debt portfolio costs and risks.
    - Annual Borrowing Plan Tool to translate the MTDS into an actionable borrowing plan.
    - Local Currency Bond Market (LCBM) Development Framework to diagnose six pillars of domestic capital markets and propose prioritized, sequenced reform plans; supported by an analytical tool, regional training, microlearning videos, and a MOOC under development.
    - Debt transparency and investor relations TA, including publication of debt bulletins and a newly developed MOOC on debt management, debt reporting and investor relations.
  - Country examples:
    - Uzbekistan: After MCM and World Bank TA on MTDS and LCBM, Uzbekistan has been able to borrow domestically the equivalent of 30 percent of GDP in just a few years.
    - Bangladesh: Programmatic CD on a risk-based MTDS and LCBM to strengthen debt management framework and enhance debt portfolio resilience amid declining access to concessional external financing.

*Source: Capacity Development Annual Report 2024.*

### SECTION II  |  27Capacity Development Annual Report 2024  |  Monetary and Capital Markets

### DEMOCRATIC REPUBLIC OF THE CONGO AND SRI LANKA: MACROPRUDENTIAL POLICY IN ACTION

### Demand and overarching approach
- Demand for CD on macroprudential policy and financial stability remains strong, including from LICs.
- Closing gaps identified by FSSR diagnostics often requires:
  - modifying institutional arrangements to make room for macroprudential policy;
  - developing a macroprudential strategy tailored to the country;
  - assisting with the calibration of specific tools.
- MCM has provided advice in these areas to many countries, sometimes with the support of LTXs.

### Strengthening financial stability in DRC
- MCM TA supported the Central Bank of the Congo (CBC) to:
  - establish a Financial Stability Department and a macroprudential unit;
  - comment on the law for establishing and organizing the Financial Stability Committee (FSC).
- Outcomes and design:
  - Work followed recommendations of the 2022 FSSR.
  - New decision-making structures on macroprudential policies are being established alongside an agreement between the Ministry of Finance and the CBC.
  - The new framework designates the CBC as the macroprudential authority and specifies collegiate decision-making structures involving the Ministry of Finance.
  - MCM TA contributed to aligning the macroprudential policy framework of DRC with international standards and prepared the ground for implementing macroprudential policy tools.

### Operationalizing macroprudential policy in Sri Lanka
- MCM CD assisted the Central Bank of Sri Lanka (CBSL) to implement a remaining recommendation of the 2019 FSSR, including allocation of an LTX for macroprudential policy and stress testing.
- Two strands of work:
  - Operationalizing the macroprudential framework in line with the CBSL Act, including concrete proposals to divide roles and responsibilities between macroprudential and banking supervision authorities and positioning the Financial Stability Committee at the center of coordination.
  - Data, indicators, and tools to calibrate macroprudential instruments.
- Preparedness and tools:
  - CD helped authorities prepare for implementation of:
    - the countercyclical capital buffer;
    - capital surcharges for systemically important banks (D-SIB buffer);
    - borrower-based measures;
    - sectoral capital measures.
  - Result: authorities are now well prepared to implement macroprudential policies.

### Mauritania: enhancing central bank operations in the context of a Fund program
- Context:
  - TA to the Central Bank of Mauritania (CBM) supported the country's commitment under a three-year IMF program approved in January 2023 to adopt a more flexible exchange rate regime.
- Program design and delivery:
  - Multi-year TA program focused on creating conditions for an interbank market for foreign exchange and developing liquidity management capacity at the CBM.
  - Delivered through a peripatetic expert program with periodic onsite STX missions augmented by virtual calls.
  - Close coordination maintained with the country team.
- Key achievements to date:
  - Introduction of an interbank foreign exchange (FX) market operated through an electronic platform in December 2023.
  - Since introduction, CBM has intervened occasionally to keep exchange rate movements within a pre-set band; the FX market has functioned smoothly.
  - Development of a robust short-term liquidity framework underpinning substantial absorption of excess liquidity through conventional and Islamic monetary policy tools.
  - Creation of a Credit Department dedicated to rating private credit claims; financial statements of large corporates from several banks received; BCM finalized the regulatory framework for mobilization of credit claims including the rating methodology.
- Remaining priorities:
  - Assistance with development of a yield curve in the domestic money market.
  - Support for automating the liquidity forecasting framework, including:
    - evaluation of banks’ precautionary reserves;
    - development of a system for a quick overview of the CBM balance sheet and banks’ reserves;
    - improving data visibility and understanding.

### Colombia: improving modeling of Expected Credit Losses (ECLs)
- Objective:
  - MCM TA assisted the Superintendencia Financiera de Colombia (SFC) to develop and operationalize a model for estimation of Expected Credit Losses (ECLs).
- Adoption and usage:
  - Colombian authorities plan to adopt an ECL provisioning regime compatible with IFRS 9 using the new model.
  - Most Colombian banks do not have their own models for provisioning; the proposed new model may replace the SFC’s current models for provisioning.
  - Banks will be encouraged to develop and employ their own IFRS 9-compatible ECL models; the SFC will benchmark and approve/disapprove them based on comparative assessment.
- Model features:
  - Simulation-based, combining macro and micro bank data.
  - Leverages SFC’s historical loan-level credit register data.
  - Simulates many macroeconomic scenarios (several thousands) translated into bank-portfolio-specific risk parameter distributions, producing distributions of expected credit losses at the bank-portfolio level.
- Policy linkages:
  - Authorities are considering introducing a countercyclical capital buffer in the future and potentially retiring the current countercyclical provisioning scheme.
  - The new ECL model can inform provision requirements now and be informative for countercyclical capital considerations in the future.
- Note: A subset of banks in Colombia is referred to as credit institutions; these were also within the scope of the model development.

### Cyber risk: programmatic approach to CD on regulation and supervision
- Rationale:
  - Rising cybersecurity risk threatens financial stability through disruption of ICT systems used by financial institutions.
- Programmatic multi-year approach:
  - Focus on regional coordination and cooperation.
  - Piloted in Pacific Financial Technical Assistance Center (PFTAC) member jurisdictions with an approach that combined:
    - introductory cyber risk training for supervisors;
    - a joint regulation development workshop;
    - on-the-job sub-regional cyber risk examination support training sessions with onsite examinations.
  - Supervisors rotated to gain hands-on experience; most jurisdictions in the pilot passed cyber risk regulation based on common core guidance.
- AFRITAC South (AFS) pilot:
  - Added a financial sector cyber strategy development component for Botswana, Mauritius, Mozambique, Namibia, Zambia, and Zimbabwe.
  - Phase 1 started in mid-2021 and was completed in mid-2024.
  - On-the-job training delivered individually to each country due to diversity and size.
- Blueprint:
  - Experience from PFTAC and AFS produced a blueprint applicable to other regions.

### Key Phase 1 outcomes—AFS region (cybersecurity)
- Cyber Risk Regulation Capacity Development:
  - New cybersecurity prudential regulations developed:
    - Botswana and Mauritius: Issued May 2023
    - Mozambique: Draft undergoing stakeholder consultation
    - Namibia: Draft undergoing final review—expected to be issued in 2024
    - Zambia: Issued June 2023
    - Zimbabwe: Draft undergoing final review—expected to be issued in 2024
  - Supervisors trained: 75 supervisors trained in the development of effective cybersecurity prudential regulation
- Cyber Risk Supervision Capacity Development:
  - Fifty-five supervisors trained in effective prudential supervision of cybersecurity.
  - Eleven guided onsite cybersecurity examinations conducted across six countries.
  - Cybersecurity risk onsite examination manual developed as part of the overall IMF MCM cyber toolkit, for AFS Cyber Group to use.
- Cyber Strategies for the Financial Sector:
  - Cybersecurity strategies developed for Mauritius, Mozambique, and Namibia, together with establishment of cybersecurity councils, information sharing mechanisms and incident reporting.
- Creating Regional Expertise:
  - Workshop on Prudential Supervision of Cybersecurity, June 2022 and IMF Approach to Cyber Resilience, July 2022.

### METAC: strengthening bank corporate governance
- Context and demand:
  - Rising demand in METAC countries for capacity building on bank corporate governance to promote financial stability.
- Regional course:
  - METAC and IMF Center for Economics and Finance organized a regional course on “Bank Corporate Governance and Board Effectiveness” in May 2024.
  - Attendees: 33 participants from 12 countries (including 10 METAC members): Algeria, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Morocco, Tunisia, Saudi Arabia, Syria, and Yemen.
- Identified challenges in the region:
  - State-Owned Banks: Lack of board independence when directors appointed by finance ministries and central banks; lack of experience or qualifications in banking; potential conflicts of interest.
  - Family-Owned Banks: Dominant, politically connected major shareholders influence board functioning.
  - Identification of Ultimate Beneficiary Owner: Opaque ownership structures, especially common in FCS, pose supervisory challenges.
  - Weak Governance Infrastructure: Lack of legal, regulatory, and institutional foundations outside banking perimeter slows governance progress.
  - The Stance of Supervisors: Supervisors may be reluctant to improve corporate governance absent political support due to potential conflicts and uncertain outcomes.
  - Lack of Board Independence and Expertise: Difficulty attracting independent and experienced directors due to low candidate capacity or undermined board roles.
  - Capacity of Supervisor and Banking Sector Staff: Need to enhance supervisors’ knowledge and expertise on corporate governance best practices.
- Practical steps discussed:
  - Strengthen regulatory requirements on board independence and fit and proper criteria.
  - Enhance supervisory interventions through thematic reviews of corporate governance.
  - Increase frequency of contact and discussions with board members.
  - Empower supervisors through sufficient independent and adequate training.
- Consensus:
  - Well-governed banks contribute to efficient and cost-effective supervision, require less intervention, and allow supervisory resources to focus on key emerging risks.

### ATI and CARTAC: climate risk CD in action
- Focus areas:
  - Supervision and regulation of climate-related financial risk;
  - Tools to identify and assess climate-related risk and their impact on the financial sector;
  - Climate risk information architecture;
  - Sustainable debt issuance.
- FY24 regional activities:
  - December 2023: ATI course on incorporating climate risk into regulatory and supervisory frameworks.
  - February 2024: CARTAC regional workshop on increasing awareness of climate-related risks to financial stability.
- ATI course outcomes:
  - Guidance on concrete steps to establish climate-related risk supervision covering:
    - application of regulatory frameworks for effective supervision;
    - preparing data surveys for banks;
    - establishing reporting frameworks;
    - discussing climate risk issues with banks;
    - developing supervisory tools for capturing climate-related financial risks.
  - Emphasis on consistent application of international standards, notably Basel Committee for Banking Supervision standards, the Network of Central Banks and Supervisors for Greening the Financial System guides, and International Sustainability Standards Board disclosure standards.
- CARTAC workshop insights:
  - Caribbean region particularly vulnerable to physical climate risks due to high frequency and severity of events.
  - Workshop promoted regional cooperation and awareness of physical and transition risks and implications for financial stability.
  - Introduced IMF’s three-stage approach to climate risk analysis: climate risk diagnostics, climate scenarios design, and bank stability assessment.
  - Discussed prerequisites, essential data, and practical concepts tailored to country circumstances and data availability.
  - Key challenges identified:
    - long-term horizons and high data granularity requirements (geography of physical hazards and sectoral impact of carbon pricing);
    - modeling complexity and uncertainty;
    - vast differences in country capacities to conduct robust climate risk assessments independently;
    - data scarcity, low technical expertise, and limited human and financial resources.
  - Highlighted the importance of interdisciplinary collaboration among economists, financial sector experts, and climate scientists.
- Three-stage approach to climate risk analysis (as presented):
  - STAGE 1: Climate Risk Diagnostics
  - STAGE 2: Climate Scenarios Design (Physical Risk Scenarios; Transition Risk Scenarios; Macro (& Sectoral) Scenario Risk Factors)
  - STAGE 3: Bank Stability Assessment (Bank Solvency Stress Test; NEW: Climate Module; Corporate & Household Sensitivity Analysis or Stress Test)

*Source: Capacity Development Annual Report 2024 — Monetary and Capital Markets (SECTION II).*

### SECTION II  |  39Capacity Development Annual Report 2024  |  Monetary and Capital Markets

### MOLDOVA: REVISING THE BANK LIQUIDATION FRAMEWORK

### Mission and analysis
- The National Bank of Moldova (NBM) requested assistance from MCM and the IMF’s Legal Department (LEG) to assist in the design of a new bank liquidation framework.
- The MCM/LEG mission analyzed different bank liquidation models and focused on the distribution of responsibilities among administrative authorities and courts.
- Staff recommended that the new framework preserved a significant role for the NBM in bank liquidation, alongside clearly defined responsibilities for the courts.
- Staff also recommended that the legislation includes features to enhance the effectiveness of a liquidation framework (see the report).

### Stakeholder engagement and mission dynamics
- Meetings with NBM staff were engaging; discussions were candid and open.
- Staff of the Resolution Division of the NBM participated very actively in all the meetings, which allowed the MCM/LEG mission to better understand the pressure points of the liquidation framework in Moldova—critical for tailoring the Fund’s advice on best practices to Moldova’s context.
- The mission was supported by the Board of Directors and management of the NBM, whose knowledge and interest in the topics discussed were critical for the success of the mission.

### Key recommendation summary (as presented by staff)
- Preserve a significant role for the National Bank of Moldova (NBM) in bank liquidation.
- Clearly define responsibilities for the courts within the liquidation framework.
- Include legislative features to enhance the effectiveness of the liquidation framework.

*italicized attribution: Source: Capacity Development Annual Report 2024 — Monetary and Capital Markets (SECTION II).*

### MCM CAPACITY DEVELOPMENT STRATEGY AND ACTIVITIES (SELECTED HIGHLIGHTS FROM SECTION III)

### 2024 CD Strategy Review (Box 5) — strategic aims and medium-term priorities
- The 2024 CDSR was finalized in April 2024 and will guide MCM’s future CD work.
- The 2024 CDSR builds on past reforms and aims to make Fund CD more flexible, better integrated with the Fund’s surveillance and lending activities, and well-tailored to members’ needs as follows:
  - (1) Flexibility aims to strengthen the Fund’s agility to help members address changing economic challenges and respond to their new priorities, including through better monitoring and reporting on CD;
  - (2) Integration calls for aligning CD with policy priorities identified in surveillance and program engagements;
  - (3) Tailoring ensures CD is consistent with the country circumstances and absorption capacity and coordinated with other partners.
- The strategic vision recognizes elevated uncertainties from higher indebtedness, geopolitical tensions, climate change, and the digital revolution.
- The medium-term horizon outlines further work in six key areas:
  - strengthening CD prioritization and integration to respond to members’ evolving needs,
  - enhancing the funding model to reduce risks,
  - strengthening monitoring and evaluation to measure the impact of Fund CD,
  - modernizing modalities,
  - increasing field presence to strengthen the effectiveness of the global network of RCDCs,
  - reviewing human resources policies for staff working on CD.

### Interview with Miguel Savastano, MCM Deputy Director — operational insights (SECTION III.B)
- FY24 context and delivery
  - FY24 started soon after the March 2023 banking sector turmoil amidst continued inflationary pressures, growing debt vulnerabilities, and geopolitical fragmentation.
  - FY24 was the first year in which MCM exceeded the pre-pandemic levels of CD delivery of FY20.
  - MCM combined delivery modalities: in-person, hybrid, and virtual missions.
- Demand and core areas
  - Areas in highest demand: bank supervision and regulation, bank resolution frameworks, central bank operations, exchange rate management.
  - Emerging topics creating new demand: digital money, cyber risks, climate.
- Programmatic and governance improvements
  - Consolidated TA workplans now better define the country-specific programmatic approach to MCM TA delivery.
  - Increased visibility of CD and strengthened partnerships, including a CD Forum organized jointly with Banque de France in April 2024.
  - Development of an MCM CD Manual to strengthen CD governance and updated Handbook for the FSSR (flagship programmatic CD for low and lower-middle-income and fragile countries).
  - FY24 marked the transition between Phase I and Phase II of the FSSF, the trust fund financing FSSRs.
- Modalities: when in-person matters vs. virtual
  - Fragile and Conflict-Affected States: in-person delivery is critical due to severe absorption capacity constraints and connectivity challenges; LTXs are invaluable.
  - Virtual delivery: effective for broad training and scalable offerings (example: SROC).
- Training and reach
  - The Supervisory and Regulatory Online Course (SROC), delivered jointly with the Financial Stability Institute of the BIS, has trained well over 2000 government officials since its launch.
  - An analogous online course on Banking Resolution was developed with the BIS.
- Prioritization and sequencing of CD
  - MCM centralizes CD management in a dedicated division; each country has a dedicated country manager who oversees CD demands and delivery.
  - Ongoing senior-level dialogue between MCM management and central bank governors and ministers of finance (Spring and Annual Meetings and other forums).
  - TA workplans require a programmatic approach; mandatory following delivery of an FSSR and being rolled out more broadly.
  - LTXs provide first-hand insights from the ground used to inform sequencing and prioritization.
- Measuring success
  - CD success is difficult to measure in short horizons; rely on results-based management frameworks embedded in each CD project.
  - Every CD project has a logical framework with objectives, outcomes, and milestones; experts discuss indicators and monitor them periodically.
  - Information from IMF country teams supplements monitoring.
- Funding and donor engagement
  - About two-thirds of all CD MCM delivers is financed from donors.
  - MCM has regular engagements with partners and works with the IMF’s Institute for Capacity Development on fundraising and partner coordination.

### Joint Banque de France—MCM Regional CD Forum, Paris, April 2024 (Box 6)
- Event purpose and attendance
  - One-day Regional CD Forum organized in collaboration with Banque de France in April 2024.
  - Outreach and recruitment initiative aimed at enhancing international cooperation in CD delivery, facilitating peer-to-peer knowledge exchange across CD providers, and broadening the MCM expert roster.
  - The event was attended by about 40 participants in person and 50 participants online; many of MCM’s LTXs joined online.
- Themes and outcomes
  - Participants discussed the impact of building capacity in monetary and financial stability and how best to collaborate in leveraging expertise and experience in a fast-evolving world.
  - Strong sense that partnerships among central banks, the IMF, and other suppliers of technical assistance are increasingly important to ensure complementarity and increase synergies in addressing emerging challenges (e.g., cyber and climate risk, fintech innovations).
  - Recipient central bank governors emphasized benefits of programmatic TA delivery via the FSSF and beyond for entrenching expertise and building local capacity over the medium and long term.
  - Post-workshop interest: numerous attendees expressed interest in joining the MCM expert roster; several central banks expressed interest in developing a more systematic approach to TA collaboration with MCM.

*italicized attribution: Source: Capacity Development Annual Report 2024 — Monetary and Capital Markets (SECTION III).*

### SECTION III  |  47Capacity Development Annual Report 2024  |  Monetary and Capital Markets

### SECTION III  |  47Capacity Development Annual Report 2024  |  Monetary and Capital Markets

### APPENDIX I — IMF Regional Capacity Development Centers (RCDCs comprise Regional Technical Assistance Centers and Regional Training Centers)

- Regional Technical Assistance Centers (RTACs) — AFRICA
  - AFRITAC Central (Central Africa Regional Technical Assistance Center) — Libreville, Gabon
    - Burundi, Cameroon, Central African Republic, Chad, Congo, Democratic Republic of the Congo, Equatorial Guinea, Gabon, and São Tomé and Príncipe.
  - AFRITAC South (Regional Technical Assistance Center for Southern Africa) — Ebene Cybercity, Mauritius
    - Angola, Botswana, Comoros, Eswatini, Lesotho, Madagascar, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Zambia, and Zimbabwe.
  - AFRITAC West (West Africa Regional Technical Assistance Center) — Abidjan,  Côte d’Ivoire
    - Benin, Burkina Faso, Côte d’Ivoire, Guinea, Guinea-Bissau, Mali, Mauritania, Niger, Senegal, and Togo.
  - AFRITAC West II (second African Regional Technical Assistance Center in West Africa) — Accra, Ghana
    - Cabo Verde, The Gambia, Ghana, Liberia, Nigeria, and Sierra Leone.
  - AFRITAC East (Regional Technical Assistance Center for East Africa) — Dar es Salaam, Tanzania
    - Eritrea, Ethiopia, Kenya, Malawi, Rwanda, South Sudan, Tanzania, and Uganda.

- Regional Technical Assistance Centers (RTACs) — ASIA AND PACIFIC
  - PFTAC (Pacific Financial Technical Assistance Center) — 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, Vanuatu.
  - SARTTAC (South Asia Regional Training and Technical Assistance Center) — New Delhi, India
    - Bangladesh, Bhutan, India, Maldives, Nepal, and Sri Lanka.
  - CDOT (IMF Capacity Development Office in Thailand) — Bangkok, Thailand
    - Myanmar, Cambodia, Lao P.D.R., and Vietnam. Select capacity development projects based in CDOT also cover other countries in Southeast Asia and the Pacific Island region.

- Regional Technical Assistance Centers (RTACs) — MIDDLE EAST
  - METAC (Middle East Regional Technical Assistance Center) — Beirut, Lebanon
    - Afghanistan, Algeria, Djibouti, Egypt, Iraq, Jordan, Lebanon, Libya, Morocco, Sudan, Syria, Tunisia, West Bank and Gaza, and Yemen.
  - CCAMTAC (Caucasus, Central Asia, and Mongolia Technical Assistance Center) — Almaty, Kazakhstan
    - Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyz Republic, Mongolia, Tajikistan, Turkmenistan, and Uzbekistan.

- Regional Technical Assistance Centers (RTACs) — WESTERN HEMISPHERE
  - CARTAC (Caribbean Regional Technical Assistance Centre) — Bridgetown, Barbados
    - Anguilla, Antigua and Barbuda, Aruba, The Bahamas, Barbados, Belize, Bermuda, British Virgin Islands, Cayman Islands, Curacao, 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 (Central America, Panama and the Dominican Republic Regional Technical Assistance Center) — Guatemala City, Guatemala
    - Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and Panama.

- Regional Training Centers and Other RCDCs
  - ATI (Africa Training Institute) — Port Louis, Mauritius
    - ATI started operations in June 2013. Courses are offered in English and French and are open to officials from 45 sub-Saharan African member countries.
  - CEF (IMF-Middle East Center for Economics and Finance in Kuwait) — Kuwait City, Kuwait
    - CEF started operations in 2011. Courses are for officials from Arab League member countries. They are offered in Arabic or English (generally with interpretation into Arabic). The CEF also leads conferences, symposia, and seminars to foster discussion among a broad audience on pressing economic policy challenges facing the Arab world.
  - CICDC (China–IMF Capacity Development Center) — Beijing, China
    - CICDC started operations in April 2018. These courses serve officials in China and other countries, including those part of the “Belt and Road” Initiative.
  - JVI (Joint Vienna Institute) — Vienna, Austria
    - Established in 1992, JVI organizes courses for officials from countries in Central, Eastern, Southeastern Europe, the Caucasus and Central Asia, and other countries. It has further expanded its offerings to include more advanced courses in macroeconomics and finance.
  - STI (IMF-Singapore Regional Training Institute) — Singapore
    - In collaboration with the Government of Singapore, STI was established in 1998 and organizes courses for officials from countries in the Asia-Pacific region.

### APPENDIX II — MCM Long-Term Resident Expert Placement (as of April 30, 2024)

- AFE & AFST — Tanzania — Debt Management — IMF COVID_19 Crisis Capacity Development Initiative/Canada
- AFRITAC Central — Gabon — Banking Supervision and Regulation — Multi-Donor
- AFRITAC Central — Gabon — Debt Management — Debt Management Facility  (joint IMF/World Bank)
- AFRITAC East — Tanzania — Banking Supervision and Regulation — Multi-Donor
- AFRITAC East — Tanzania — Monetary and Foreign Exchange Operations, and Financial Market Infrastructures and Payments — Multi-Donor
- AFRITAC South — Mauritius — Banking Supervision and Regulation — Multi-Donor
- AFRITAC South — Mauritius — Monetary and Foreign Exchange Operations — Multi-Donor
- AFRITAC South — Mauritius — Payment Systems / Financial Market Infrastructures / Fintech — Multi-Donor
- AFRITAC West — Côte D’Ivoire — Banking Supervision and Regulation — Multi-Donor
- AFRITAC West — Côte D’Ivoire — Debt Management — Japan
- AFRITAC West 2 — Ghana — Banking Supervision and Regulation — Multi-Donor
- AFRITAC West 2 — Ghana — Monetary and Foreign Exchange Operations — Multi-Donor
- Banque Centrale de Djibouti — Djibouti — Financial Supervision and Regulation — IMF Financial Sector  Stability Fund
- Bank of Ghana — Ghana — Financial Supervision and Regulation — State Secretariat for Economic Affairs of Switzerland
- Bank of Mozambique — Mozambique — Central Bank Modernization — Norway
- Bank of Sierra Leone — Sierra Leone — Banking Supervision and Regulation — IMF Financial Sector  Stability Fund
- Bank of Sierra Leone — Sierra Leone — Monetary Policy and Financial Stability — Financial Sector Reform  and Strengthening Initiative
- CAPTAC-DR — Guatemala — Banking Supervision and Regulation — Multi-Donor
- CARTAC — Barbados — Banking Supervision and Regulation — Multi-Donor
- CARTAC — Barbados — Public Debt Management and Climate Finance — Multi-Donor/Canada
- CARTAC — Barbados — Financial Stability — Multi-Donor
- CCAMTAC — Kazakhstan — Monetary and Foreign Exchange Operations — Multi-Donor
- CCAMTAC — Kazakhstan — Financial Supervision and Regulation — Multi-Donor
- CDOT — Thailand — Monetary and Foreign Exchange Operations — Japan
- Central Bank of Congo, Dem. Rep. — Congo,  Dem. Rep. — Macroprudential Policy — IMF Financial Sector  Stability Fund
- Central Bank of Mongolia — Mongolia — Monetary Policy — Japan
- Central Bank of The Gambia — The Gambia — Banking Supervision and Regulation — IMF Financial Sector  Stability Fund
- METAC — Lebanon — Banking Supervision and Regulation — Multi-Donor
- METAC — Lebanon — Monetary and Foreign Exchange Operations — Multi-Donor
- METAC — Lebanon — Banking Supervision and Regulation — Multi-Donor
- National Bank of Cambodia — Cambodia — Banking Supervision and Regulation — Japan
- National Bank of Cambodia — Cambodia — Macroprudential Policy/Stress Testing — IMF Financial Sector  Stability Fund
- National Bank of Cambodia — Cambodia — Central Bank Operations — Japan
- National Bank of Rwanda — Rwanda — Banking Supervision and Regulation — IMF Financial Sector  Stability Fund
- National Bank of Uzbekistan — Uzbekistan — Macroprudential Policies — IMF Financial Sector  Stability Fund
- PFTAC — Fiji — Financial Sector Supervision — Multi-Donor
- SARTTAC — India — Monetary and Foreign Exchange Operations — Multi-Donor
- SARTTAC — India — Banking Supervision and Regulation — Multi-Donor
- SARTTAC — India — Public Debt Management — Japan

### MCM TA Contacts

- 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) 202.623.6524
  - jnelmes@IMF.org
- Regional Advisor—Middle East, and Central Asia — Jihad Alwazir
  - T. +(1) 202.623.6658
  - jalwazir@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 (photo caption and team members)
- From left to right: Beto Habe, Sébastien Clanet, Sangeeta Nambi, Kateryna Botsu, Piedad Jacome, Joannes Mongardini, Jahanara Zaman, Veronica Bacalu, Oana Croitoru, Sipho Makamba, Betty Afework, Anastassiya Marina, Jose Roberto Effio, and Cortney Johnson.
- See you next year! — MCM TA Team
- [Team Members, continued]: From left to right: Moses Kitonga, Susan George, Attila Csajbok, Hazel Quinonez, Zsolt Ersek, Dana Andreicut, Abdullah Haron, Brenda Sylvester, Ibrahima Sangare, Natalia Naryshkina, Chloe Zhang.**
  - **Not pictured, Vassili Prokopenko, Tsegereda Mulatu.

*Source: Capacity Development Annual Report 2024 — Monetary and Capital Markets (Appendices as provided).*

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_Source: https://www.imf.org/-/media/files/publications/technical-assistance-annual-report/taar2024.pdf_