## fcdo-ar-june2025 — Prioritise knowledge synthesis and accessibility: In the year ahead, develop comprehensive technical

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---

### Priorities and strategic recommendations
- Prioritise knowledge synthesis and accessibility:
  - Develop comprehensive technical syntheses and policy briefs that synthesise 13 years of MRLIC research on climate resilience, debt sustainability, gender and inclusion, and structural transformation.
  - Design policy briefs for time-constrained policymakers with clear, actionable recommendations to demonstrate cumulative impact and support considerations about future phases.
- Leverage the November 2025 conference for strategic positioning:
  - Use the conference showcasing pathfinding papers to (i) convene potential co-funders and build a coalition for continued LIC macroeconomic research, (ii) demonstrate MRLIC's unique value through an "impact showcase", and (iii) facilitate discussion on future research priorities and delivery mechanisms.
  - Ensure engagement of key stakeholders from FCDO, IMF, other donors, and partner countries at senior levels.
- Develop a multi-donor funding strategy in the year ahead:
  - Actively develop partnerships with other bilateral donors, multilateral development banks, and foundations.
  - Create a compelling investment case based on the external evaluation findings, demonstrated impact, and alignment with global priorities.

### Theory of Change and progress towards outcomes
- Summary of the Theory of Change:
  - Programme initiated in 2012; implicit ToC summarised in logical framework and subsequent Annual Reviews.
  - Core logic: outputs (high-quality research, IMF research products, senior engagement, research capacity) → outcome (better engagement by IMF policymakers on LIC-specific macroeconomic issues) → impact (better macroeconomic policymaking in LICs leading to faster economic growth, job creation and poverty reduction).
  - ToC caveat: the assumption that greater visibility among IMF seniors would increase IMF funding for LIC research has not been fully validated; ToC should be revised to reflect limitations in achieving universal uptake through existing IMF channels and the importance of engagement with other agencies.
- Progress status:
  - Programme is on track to meet its expected outcome: Better engagement by IMF policymakers on LIC-specific macroeconomic issues.
  - Outcome indicator: 22 thematic areas of IMF policy influenced and made LIC-specific, meeting the target.
  - Year 13 demonstrated substantial evidence of improved engagement across multiple channels.
- Notable integrations and applications:
  - Key research outputs integrated into IMF's highest-level policy documents, including a full chapter in the April 2024 World Economic Outlook on medium-term growth prospects with specific analysis of LIC convergence challenges.
  - MRLIC tools, particularly DIGNAD, applied in 10 countries during Year 13, shaping climate resilience strategies and RSF programme design.
  - Conclusion of the multi-year FPAS project in Ghana as an example of MRLIC research translating into improvements in country-level monetary policy frameworks.
  - Continued strong demand for MRLIC training: 59 courses delivered with consistently positive feedback.
- Impact-level observations:
  - Direct attribution to economic growth, job creation, and poverty reduction is methodologically challenging; nevertheless:
    - Countries implementing MRLIC-supported reforms (e.g., Ghana's enhanced monetary policy framework) better positioned to maintain macroeconomic stability.
    - Widespread adoption of climate resilience planning through DIGNAD potentially helps countries avoid costly economic disruptions from natural disasters (example finding: in Tanzania, climate-resilient infrastructure could reduce post-disaster GDP losses by 2 percentage points while improving debt sustainability).
    - Research on gender complementarities and distributional impacts provides an evidence base for more inclusive policies.
- Risks and planned actions for the year ahead:
  - Risk: Uncertainty about sustaining and deepening outcomes without confirmed Phase V funding; momentum at risk after March 2026.
  - Planned actions:
    - External evaluation completion: independent evaluation launched in early 2024 to assess MRLIC’s outcomes and impact over its lifetime.
    - Pathfinding papers and November 2025 conference: five commissioned papers across core themes to identify emerging macroeconomic challenges and research priorities.
    - Knowledge synthesis: prioritise creation of accessible summaries of research findings to preserve the 13-year knowledge base.
    - Strategic engagement: use stakeholders’ engagement and evaluation to attract potential co-funders and build coalition support for continued LIC macroeconomic research.

### Output 1 — High quality, policy relevant research (Output Score: A+; Impact weighting: 34%)
- Indicators and results:
  - 1.1 Number of priority research papers:
    - Milestones: H (200 papers) / M (196 papers) / L (190 papers)
    - Progress: 209
    - Achieved (yearly progression shown): 151, 162, 178, 191, 209
  - 1.2 Number of research papers accepted in peer-reviewed journals:
    - Milestones: H (117 papers) / M (115 papers) / L (113 papers)
    - Progress: 118
    - Achieved (yearly progression shown): 90, 98, 105, 113, 118
  - Narrative: "The programme achieved 5 papers accepted in peer-reviewed journals, meeting expectations."
- Activities and evidence:
  - 18 working papers produced in Year 13 across topics including monetary policy frameworks (QPM), macro-financial linkages, resilience (four papers on fiscal tools for disaster resilience), structural change (ten papers), and innovative methodologies (machine learning, spatial general equilibrium).
  - Published papers include placements in European Journal of Political Economy, Journal of International Economics, forthcoming Feminist Economics, and forthcoming International Economics Review and AEA Papers and Proceedings.
- Progress on prior recommendations:
  - Improved documentation of policy influence (WEO integration, citations in speeches).
  - Final-year recommendation: prioritise synthesis of the 13-year research corpus into accessible policy briefs or evidence summaries.

### Output 2 — IMF research products and capacity building (Output Score: A+; Impact weighting: 33%)
- Indicators and results:
  - 2.1 Application and use of tools by authorities and country teams:
    - Milestones: H (233) / M (230) / L (227)
    - Progress: 236
    - Achieved (yearly progression shown): 183, 203, 213, 223, 236
  - 2.2 Courses offered:
    - Milestones: H (53) / M (51) / L (49)
    - Progress: 59
    - Achieved (yearly progression shown): 28, 38, 43, 52, 59
- Applications and examples:
  - DIGNAD used across Democratic Republic of Congo, Republic of Congo, Côte d'Ivoire, Guinea, Madagascar, Maldives, Tanzania, and others; used in RSF programme design.
  - FPAS and enhanced Quarterly Projection Model applied in Bank of Ghana operations.
  - MIMMI app applied in Guinea for Simandou project macroeconomic and social impact assessment.
- Training and outreach:
  - Seven high-quality training events reported; DIGNAD training rated 4.73/5 (November 2024 IMF staff course).
  - Climate in Macroeconomic Frameworks regional course (February 2025) reached representatives from 36 countries and received a 4.7/5 rating.
  - MathWorks Finance Conference outreach attracted approximately 1,400 registrants.
  - Example: Reserve Bank of Zimbabwe staff calibrated DIGNAD to Zimbabwe’s conditions after February 2024 training.
- Progress on prior recommendations:
  - Limited progress on systematic measurement of policy impact; recommendation for external evaluation to include (i) systematic follow-up with sampled training participants, (ii) brief surveys of IMF country teams, and (iii) creation of a simple database of policy reforms linked to MRLIC research.

### Output 3 — Engagement by senior IMF policymakers (Output Score: A)
- Indicator summary:
  - Strengthened engagement by senior IMF policymakers evidenced through research integration, high-level citations, and country-level application.
  - Indicator 3.1: High level conferences — H (60) M (59) L (58) — achieved 60.
  - Indicator 3.2: Research reflected in IMF Board discussion and policy papers — H (67) M (65) L (63) — achieved 66.
- Evidence of senior engagement:
  - Citations in speeches by IMF First Deputy MD Gita Gopinath and Bundesbank President Joachim Nagel.
  - Integration into WEO chapters and Executive Board discussions.
  - Pathways of influence documented though not yet systematically tracked across all applications.

### Case studies demonstrating outcome-level impact
- Ghana's Monetary Policy Transformation:
  - MRLIC-supported technical assistance contributed to the Bank of Ghana’s Quarterly Projection Model (QPM); by 2024 the QPM routinely informs interest rate decisions and inflation forecasts.
- DIGNAD Mainstreaming in Climate Planning:
  - DIGNAD applied in 10 countries in 2024/25 shaping national climate strategies and RSF programme design.
  - Tanzania example: climate-resilient infrastructure could reduce post-disaster GDP losses by 2 percentage points while improving debt sustainability.
  - Institutional mainstreaming: DIGNAD appears in Executive Board discussions, IMF training curricula, and independent applications by trained officials.

### Justification for continuation through March 2026
- Rationale:
  - Strong performance in Year 13 with targets met or exceeded across outputs justifies completing the approved extension period to March 2026.
  - Remaining year provides opportunity to maximise impact through knowledge synthesis, dissemination, external evaluation findings, and pathfinding papers to inform potential future programming.
- Key deliverables in the remaining period:
  - Completion of the independent external evaluation launched in early 2024.
  - Production of five pathfinding papers and convening of the November 2025 conference.
  - Delivery of comprehensive knowledge syntheses and policy briefs synthesising 13 years of research.

### D: Value for Money — key cost drivers, performance, and statistics
- Overall VfM judgement: MRLIC continues to deliver good value for money across FCDO’s VfM framework.
- Cost and output statistics:
  - One-year extension includes additional funding of £1.84m.
  - Working Papers: 209.
  - Published Papers: 118.
  - Total Staff/Contractual/VS Costs: $19,489,336.
  - Research Paper Costs: $14,617,002.
  - Country Applications Costs: $4,872,334.
  - Cost Per Working Paper: $69,938.
  - Cost per Published Paper: $123,873.
  - Cost per working paper (Years 1–13): approximately $70,000 (£53,000).
  - Cost per published paper (Years 1–13): approximately $124,000 (£93,000).
  - Comparison: both per-paper costs are below FCDO benchmark of £150,000 per paper.
  - Note: allocation between research papers (75%) and country applications (25%) is based on estimates and may overestimate true research time cost.
- Effectiveness evidence:
  - DIGNAD applications implemented across 10 countries in Year 13.
  - Citation metrics: 86.3% of publications cited, averaging 23.4 citations per article.
  - Average 962 downloads per working paper.
- Forward VfM actions:
  - External evaluation and pathfinding papers to improve impact attribution and dissemination strategies.
  - Need to crowd in funding from other donors if Phase V is pursued.

### E: Risk — overview and specific risk categories
- Overall risk level: Minor; risk register last updated April 2025.
- One-year extension to March 2026 approved with additional funding of £1.84m; reduces immediate funding uncertainty.
- Main risks (all assessed MINOR unless stated):
  - External context: research mainly at IMF HQ using secondary datasets; limited exposure to LIC context — MINOR.
  - Delivery: established delivery systems; sustained demand — MINOR.
  - Operational: experienced management at FCDO and IMF — MINOR.
  - Fiduciary: funds spent directly by IMF under IMF financial controls — MINOR.
  - Reputational: low reputational risk; high academic standards — MINOR.
  - Safeguarding: limited contact with vulnerable persons; external researchers managed per IMF procedures — MINOR.
- Due diligence and assurance:
  - December 2021 Central Assurance Assessment (CAA) confirming IMF as low-risk partner remains valid.
  - Light-touch due diligence July 2023 remains appropriate.
- Climate and environment risk:
  - Climate/environment risks assessed as low; programme contributes to climate resilience research and tools (e.g., DIGNAD).
- Equalities:
  - Meets Gender Equality Duty and Public Sector Equality Duty; no adverse impacts on protected characteristics identified.
- Medium-term risk: funding uncertainty beyond March 2026; external evaluation and pathfinding papers are crucial to shaping a potential Phase V.
- Relevant dates: risk register updated April 2025; light-touch due diligence July 2023; CAA December 2021.

### F: Programme management — delivery, commercial & financial performance
- Partnership performance:
  - FCDO–IMF partnership shows strong programme delivery and financial management with regular coordination.
- Financial status and reporting:
  - As of April 2025, $27.5 million drawn from the subaccount against a total approved budget of $29.5 million.
  - Last narrative financial report: May 2025.
  - Date of last audited annual statement: August 2024.
- Delivery performance:
  - Met or exceeded high targets for six of seven output indicators.
  - One-year extension to March 2026 with additional funding of £1.84m, managed efficiently.
- Quality and value:
  - Direct project management costs approximately 1% of total budget.
  - Outputs meet IMF publication standards; many published in high-ranking peer-reviewed journals.
- Financial aggregates (selected as of April 30, 2025):
  - Contributions (cumulative): 30,402,298
  - Interest Earned (cumulative): 453,949
  - Total Cash Available: 30,856,247
  - Expenses Paid: 27,461,258
  - Cash Balance: 3,394,989
  - Grand Total approved budget (detailed projects): 28,435,090
  - Remaining budget (detailed projects): 973,833

### G: Monitoring, evidence and learning
- Monitoring and reporting:
  - IMF MRLIC team reports annually to FCDO against the log-frame.
  - Quarterly updates provided on the programme’s website and quarterly e-newsletters reaching more than 1500 academics, policymakers, central bank staff, and government representatives.
  - All publicly available working and published papers uploaded to the R4D portal on the FCDO website; “Gold access” assigned to journal publications.
- Evaluation and external review:
  - FCDO conducts a yearly evaluation of the programme.
  - Ongoing external evaluation by Shanta Devarajan and Stephen A. O'Connell, expected to be completed before the end of 2025.

### Work plan and thematic research agenda (selected highlights)
- Modelling policy choices:
  - Open Economy HANK model for LICs; findings on monetary policy stance vs fiscal transfers for poorer households.
  - Quarterly Projection Model extensions for Bank of Ghana; nowcasting GDP growth for Kenya; fiscal multipliers project using NLP and LLMs; fiscal guardrails analysis using SDN data covering over 120 economies.
- Understanding macro-financial linkages:
  - FIMIDa database covering 181 countries (1960-2023).
  - Studies on capital inflow booms (85 countries 1975–2019), remittance patterns (Rwanda), and bilateral financial flows to LICs using triple-indexed panels.
- Building resilience:
  - DIGNAD applications across multiple countries (Gambia, Kiribati, Marshall Islands, Micronesia, Liberia, Palau, Sao Tome and Principe, Vietnam).
  - Energy resilience incorporated into DIGNAD; GVAR model on climate uncertainty; private sector investment responses to large natural disasters.
- Promoting structural change and institutional development:
  - BiTS database on bilateral services trade (1985–2023, up to 245 entities).
  - Models on trade (dis-)integration, industrial policies with knowledge diffusion, migration and knowledge diffusion, and AI impacts on LICs.
- Enhancing inclusion:
  - The Armistice of the Sexes: evidence that female and male labor are not perfect substitutes; allocation of talent and income differences; demographics, female labour force participation, and digitalisation research.

### Dissemination, citations, and usage metrics
- Research quality and citation performance:
  - 86.3 percent of MRLIC-supported publications have been cited.
  - Average citations per article: 23.4 citations per article.
  - Average downloads per working paper: 962 downloads per paper.
  - The IMF Library team conducted citation and social media analysis; download counts provided by IMF’s Communication Department.
- Social media and visibility:
  - "Changing Global Linkages: A New Cold War?" generated 61 posts on X from 57 accounts within four months of January 2025 release and was cited in speeches by senior IMF management.
- Newsletters and outreach:
  - E-newsletters issued: June 2024, September 2024, December 2024, March 2025.
  - External presentations and blogs (examples): VoxEU Blog May 2024; F&D Articles September 2024.

### Selected empirical papers and event summaries (high-level findings)
- Foreign Aid and (Big) Shocks: Evidence from Natural Disasters:
  - Bilateral aid commitments increase following natural disasters; humanitarian commitments tend to precede structural commitments; no evidence of faster disbursement after disasters.
  - Policy implications: improve targeting mechanisms, depoliticise aid allocation where state capacity is low, coordinate short-term relief with structural assistance, and address operational bottlenecks delaying disbursement.
- The Armistice of the Sexes: Gender Complementarities in the Production Function:
  - Male and female labor are far from perfect substitutes; greater gender inclusiveness implies larger macroeconomic payoffs than standard models estimate.
- DIGNAD Training in Palau — November 12-14, 2024:
  - Three DIGNAD trainings held in Koror and at Graduate School USA.

*Source: MRLIC Annual Review (Year 13); FCDO Annual Report (June 2025), MRLIC programme materials.*

### 1. Prioritise knowledge synthesis and accessibility: In the year ahead, develop comprehensive technical

### fcdo-ar-june2025 - 1. Prioritise knowledge synthesis and accessibility: In the year ahead, develop comprehensive technical

### Priorities and strategic recommendations
- Prioritise knowledge synthesis and accessibility:
  - Develop comprehensive technical syntheses and policy briefs that synthesise 13 years of MRLIC research on climate resilience, debt sustainability, gender and inclusion, and structural transformation.
  - Design policy briefs for time-constrained policymakers with clear, actionable recommendations to demonstrate cumulative impact and support considerations about future phases.
- Leverage the November 2025 conference for strategic positioning:
  - Use the conference showcasing pathfinding papers to (i) convene potential co-funders and build a coalition for continued LIC macroeconomic research, (ii) demonstrate MRLIC's unique value through an "impact showcase", and (iii) facilitate discussion on future research priorities and delivery mechanisms.
  - Ensure engagement of key stakeholders from FCDO, IMF, other donors, and partner countries at senior levels.
- Develop a multi-donor funding strategy in the year ahead:
  - Actively develop partnerships with other bilateral donors, multilateral development banks, and foundations.
  - Create a compelling investment case based on the external evaluation findings, demonstrated impact, and alignment with global priorities.

### Theory of Change and progress towards outcomes
- Summary of the Theory of Change (ToC):
  - Programme initiated in 2012; implicit ToC summarised in logical framework and subsequent Annual Reviews.
  - Core logic: outputs (high-quality research, IMF research products, senior engagement, research capacity) → outcome (better engagement by IMF policymakers on LIC-specific macroeconomic issues) → impact (better macroeconomic policymaking in LICs leading to faster economic growth, job creation and poverty reduction).
  - The ToC assumption that greater visibility among IMF seniors would increase IMF funding for LIC research has not been fully validated; ToC should be revised to reflect limitations in achieving universal uptake through existing IMF channels and the importance of engagement with other agencies.
- Progress status:
  - Programme is on track to meet its expected outcome: Better engagement by IMF policymakers on LIC-specific macroeconomic issues.
  - Outcome indicator: 22 thematic areas of IMF policy influenced and made LIC-specific, meeting the target.
  - Year 13 demonstrated substantial evidence of improved engagement across multiple channels.
- Notable integrations and applications:
  - Key research outputs integrated into IMF's highest-level policy documents, including a full chapter in the April 2024 World Economic Outlook on medium-term growth prospects with specific analysis of LIC convergence challenges.
  - MRLIC tools, particularly DIGNAD, applied in 10 countries during Year 13, shaping climate resilience strategies and RSF programme design.
  - Conclusion of the multi-year FPAS project in Ghana as an example of MRLIC research translating into improvements in country-level monetary policy frameworks.
  - Continued strong demand for MRLIC training: 59 courses delivered with consistently positive feedback.
- Impact-level observations:
  - Direct attribution to economic growth, job creation, and poverty reduction is methodologically challenging; nevertheless:
    - Countries implementing MRLIC-supported reforms (e.g., Ghana's enhanced monetary policy framework) better positioned to maintain macroeconomic stability.
    - Widespread adoption of climate resilience planning through DIGNAD potentially helps countries avoid costly economic disruptions from natural disasters (example finding: in Tanzania, climate-resilient infrastructure could reduce post-disaster GDP losses by 2 percentage points while improving debt sustainability).
    - Research on gender complementarities and distributional impacts provides an evidence base for more inclusive policies.
- Risks and planned actions for the year ahead:
  - Risk: Uncertainty about sustaining and deepening outcomes without confirmed Phase V funding; momentum at risk after March 2026.
  - Planned actions:
    - External evaluation completion: independent evaluation launched in early 2024 to assess MRLIC’s outcomes and impact over its lifetime.
    - Pathfinding papers and November 2025 conference: five commissioned papers across core themes to identify emerging macroeconomic challenges and research priorities.
    - Knowledge synthesis: prioritise creation of accessible summaries of research findings to preserve the 13-year knowledge base.
    - Strategic engagement: use stakeholders’ engagement and evaluation to attract potential co-funders and build coalition support for continued LIC macroeconomic research.

### Output 1 — High quality, policy relevant research (Output Score: A+; Impact weighting: 34%)
- Indicators and results:
  - 1.1 Number of priority research papers produced on the five MRLIC themes:
    - Milestones: H (200 papers) / M (196 papers) / L (190 papers)
    - Progress: 209
  - 1.2 Number of research papers accepted for publication in appropriate high-quality peer-reviewed journals:
    - Milestones: H (117 papers) / M (115 papers) / L (113 papers)
    - Progress: 118
  - Narrative also reports: "The programme achieved 5 papers accepted in peer-reviewed journals, meeting expectations," and cites examples of journal placements and forthcoming publications.
- Activities and evidence:
  - Working papers: 18 working papers produced in Year 13; contributions across monetary policy frameworks (including Ghana's Quarterly Projection Model), macro-financial linkages, resilience (four papers on fiscal tools for disaster resilience and related topics), structural change (ten papers), and innovative methodologies including machine learning and spatial general equilibrium models.
  - Published papers: examples include papers in the European Journal of Political Economy, Journal of International Economics, and a forthcoming paper in Feminist Economics; additional forthcoming pieces in International Economics Review and AEA Papers and Proceedings.
- Progress on prior recommendations:
  - Improved documentation of policy influence (WEO integration, citations in speeches by senior officials).
  - Recommendation for the final year: prioritise synthesis of the 13-year research corpus into accessible policy briefs or evidence summaries, especially on topics not covered by pathfinding papers.

### Output 2 — IMF research products and capacity building (Output Score: A+; Impact weighting: 33%)
- Indicators and results:
  - 2.1 Application and use of tools and frameworks by country authorities and country teams:
    - Milestones: H (233) / M (230) / L (227)
    - Progress: 236
  - 2.2 Courses offered to country authorities and IMF staff:
    - Milestones: H (53) / M (51) / L (49)
    - Progress: 59
- Applications and examples:
  - DIGNAD applications across Democratic Republic of Congo, Republic of Congo, Côte d'Ivoire, Guinea, Madagascar, Maldives, Tanzania, and others; used in RSF programme design.
  - FPAS/Forecasting and Policy Analysis System and enhanced Quarterly Projection Model applied in Bank of Ghana operations and policy formulation.
  - MIMMI app applied in Guinea to assess Simandou mining project macroeconomic and social impacts.
- Training and outreach:
  - Seven high-quality training events reported in narrative; DIGNAD training rated 4.73/5 for November 2024 IMF staff course.
  - Climate in Macroeconomic Frameworks regional course in February 2025 reached representatives from 36 countries and received a 4.7/5 rating.
  - Outreach event at MathWorks Finance Conference attracted approximately 1,400 registrants.
  - Example of training impact: Reserve Bank of Zimbabwe staff member calibrated DIGNAD to Zimbabwe's conditions following February 2024 training.
  - MRLIC delivered DIGNAD training for FCDO staff and collaborated with FCDO on debt sustainability issues.
- Progress on prior recommendations:
  - Limited progress on systematic measurement of policy impact; recommendation for external evaluation to include (i) systematic follow-up with sampled training participants, (ii) brief surveys of IMF country teams, and (iii) creation of a simple database of policy reforms linked to MRLIC research.

### Output 3 — Engagement by senior IMF policymakers (Output Score: A)
- Indicator summary:
  - The programme reports strengthened engagement by senior IMF policymakers on LIC issues through research integration, high-level citations, and country-level application (details and scores appear in the review).
- Evidence of senior engagement:
  - Citations in speeches by IMF First Deputy MD Gita Gopinath and the Bundesbank President.
  - Integration of MRLIC research into WEO chapters and Executive Board discussions.
  - Pathways of influence documented though not yet systematically tracked across all applications.

### Case studies demonstrating outcome-level impact
- Ghana's Monetary Policy Transformation:
  - MRLIC-supported technical assistance contributed to the Bank of Ghana’s Quarterly Projection Model (QPM), enabling a shift to forward-looking, model-based policymaking; by 2024 the QPM routinely informs interest rate decisions and inflation forecasts.
- DIGNAD Mainstreaming in Climate Planning:
  - DIGNAD evolved from a research tool to an operational cornerstone of IMF climate work in LICs; in 2024/25 applications across ten countries shaped national climate strategies and RSF programme design.
  - Tanzania example: climate-resilient infrastructure could reduce post-disaster GDP losses by 2 percentage points while improving debt sustainability.
  - Institutional mainstreaming: DIGNAD features in Executive Board discussions, IMF training curricula, and independent applications by trained officials.

### Justification for continuation through March 2026
- Rationale:
  - Strong performance in Year 13 with targets met or exceeded across outputs justifies completing the approved extension period to March 2026.
  - Remaining year provides opportunity to maximise impact through knowledge synthesis, dissemination, external evaluation findings, and pathfinding papers to inform potential future programming.
- Key deliverables in the remaining period:
  - Completion of the independent external evaluation launched in early 2024.
  - Production of five pathfinding papers and convening of the November 2025 conference.
  - Delivery of comprehensive knowledge syntheses and policy briefs synthesising 13 years of research.

*Source: MRLIC Annual Review (Year 13).*

### 3.1  High level policy

### fcdo-ar-june2025 — 3.1 High level policy

### Summary of scores and overall assessment
- The output assesses how engagement by senior IMF policymakers on LIC issues was strengthened through the MRLIC project and scores an A.
- Indicator 3.1: High level conferences — H (60) M (59) L (58) — achieved 60.
- Indicator 3.2: Research reflected in IMF Board discussion and other IMF policy papers — H (67) M (65) L (63) — achieved 66.
- Conclusion: The programme continued to influence high-level policy discussions and shape IMF positions on macroeconomic issues affecting LICs.

### Indicator 3.1 — High level conferences (activities and findings)
- MRLIC organised and contributed to four high-level conferences:
  - "Rethinking Economic Policy: Steering Structural Change", April 2024 — explored policy to navigate structural transformations with inclusive benefits for developing economies.
  - AERC-IMF Visiting Scholars Workshop, September 2024 — six researchers from Sub-Saharan Africa presented and received one-on-one mentorship with IMF economists.
  - "Transforming Industries for Growth in a Fragmented World", November 2024 — disseminated MRLIC findings on economic diversification strategies in developing countries.
  - ASSA 2025 session on "Policy Uncertainty and Economic Activity", co-organised with Stanford University — featured four papers analysing global trade and fiscal uncertainty, including applications of the World Uncertainty Index.

### Indicator 3.2 — Research reflected in IMF Board discussions and policy papers (visibility and uptake)
- MRLIC research visibility in high-level IMF policy documents and events:
  - April 2024 World Economic Outlook included a full chapter titled "Slowdown in Global Medium-Term Growth: What Will It Take to Turn the Tide?" with implications for LIC convergence, plus two MRLIC-contributed boxes on distributional implications and trade fragmentation effects.
  - MRLIC research on financial flows to developing countries featured in the Board paper on the 4th Financing for Development Conference.
  - Findings cited in speeches by senior officials including IMF First Deputy Managing Director Gita Gopinath and Bundesbank President Joachim Nagel.
- Policy influence extended beyond publications into senior management positions and global policy discourse on geoeconomic fragmentation, growth prospects, and development financing.

### Progress on previous recommendations and forward recommendations
- 2024 review recommended revising indicators to focus on senior official exposure/engagement and capturing research influence; indicators remain unchanged but documentation of influence improved.
- Recommendations for the extension period:
  - Leverage high-level conferences and pathfinding papers to strengthen senior stakeholder engagement for a potential Phase V.
  - Ensure pathfinding paper authors include influential policy voices who can champion continued LIC macroeconomic research.
  - Use the November 2025 conference to convene senior IMF, FCDO, and potential co-funding partners.
  - Develop a concise "impact showcase" highlighting 13 years of policy influence to support resource mobilisation.
  - Enhance digital dissemination of materials to amplify reach to senior audiences at minimal cost.

### D: Value for Money — key cost drivers, performance, and statistics
- Overall VfM judgement: MRLIC continues to deliver good value for money across FCDO’s VfM framework, producing high-quality policy-relevant research at competitive costs with substantial policy impact.
- Economy and efficiency highlights:
  - One-year extension includes additional funding of £1.84m.
  - Cost per working paper (Years 1–13): approximately $70,000 (£53,000), a slight decrease from the previous year's $72,000.
  - Cost per published paper (Years 1–13): approximately $124,000 (£93,000), stable and below FCDO benchmark of £150,000 per paper.
  - Working Papers: 209.
  - Published Papers: 118.
  - Total Staff/Contractual/VS Costs: $19,489,336.
  - Research Paper Costs: $14,617,002.
  - Country Applications Costs: $4,872,334.
  - Cost Per Working Paper: $69,938.
  - Cost per Published Paper: $123,873.
  - Note: the estimates may overestimate true research time cost; allocation between research papers (75%) and country applications (25%) is based on estimates.
- Effectiveness evidence:
  - DIGNAD applications implemented across 10 countries in Year 13, informing climate resilience strategies and RSF programme design.
  - Citation and download metrics: 86.3% of publications cited, averaging 23.4 citations per article; average 962 downloads per working paper.
  - Example policy uptake: Ghana’s transformation of its monetary policy framework through MRLIC-supported FPAS development.
- Equity and thematic impact:
  - Year 13 included research on gender complementarities in production functions indicating larger gains from gender inclusiveness than standard models estimate.
  - Tools such as the MIMMI app used for distributional analysis (e.g., Guinea’s Simandou project assessment).
- Overall cost-effectiveness:
  - Direct project management costs approximately 1% of budget.
  - The programme leverages IMF infrastructure, expertise, and convening power across most LICs.
- Forward VfM actions:
  - External evaluation and pathfinding papers during the extension to improve impact attribution and dissemination strategies.
  - Need to crowd in funding from other donors if Phase V funding is pursued.

### E: Risk — overview and specific risk categories
- Overall risk level: Minor; risk register last updated April 2025.
- One-year extension to March 2026 approved with additional funding of £1.84m; reduces immediate funding uncertainty.
- Main risks and status (all assessed MINOR):
  - External context: research mainly at IMF HQ using secondary datasets; limited exposure to LIC context — MINOR.
  - Delivery: strong established delivery systems; sustained demand — MINOR.
  - Operational: experienced management at FCDO and IMF ensuring continuity — MINOR.
  - Fiduciary: funds spent directly by IMF under IMF financial controls — MINOR.
  - Reputational: low reputational risk; high academic standards — MINOR.
  - Safeguarding: limited contact with vulnerable persons; external researchers managed per IMF procedures — MINOR.
- Due diligence and assurance:
  - December 2021 Central Assurance Assessment (CAA) confirming IMF as low-risk partner remains valid.
  - Light-touch due diligence July 2023 remains appropriate.
- Climate and environment risk:
  - Climate/environment risks assessed as low; programme contributes to climate resilience research and tools (e.g., DIGNAD).
- Equalities:
  - Meets Gender Equality Duty and Public Sector Equality Duty; no adverse impacts on protected characteristics identified.
- Medium-term risk: funding uncertainty beyond March 2026; external evaluation and pathfinding papers are crucial to shaping a potential Phase V.
- Relevant dates: risk register updated April 2025; light-touch due diligence July 2023; CAA December 2021.

### F: Programme management — delivery, commercial & financial performance
- Partnership performance:
  - FCDO–IMF partnership shows strong programme delivery and financial management.
  - Regular coordination through progress meetings and output summaries.
- Financial status and reporting:
  - As of April 2025, $27.5 million drawn from the subaccount against a total approved budget of $29.5 million.
  - Last narrative financial report: May 2025.
  - Date of last audited annual statement: August 2024.
- Delivery performance:
  - Met or exceeded high targets for six of seven output indicators.
  - One-year extension to March 2026, additional funding of £1.84m, managed efficiently.
- Quality and value:
  - Average cost per working paper approximately $70,000 (£53,000); per published paper $124,000 (£93,000); both below £150,000 benchmark.
  - Direct project management costs approximately 1% of total budget.
  - Outputs meet IMF publication standards; many published in high-ranking peer-reviewed journals.
- Notable strong performance areas:
  - Consistent delivery against ambitious outputs.
  - Low per-paper costs with high quality.
  - Adaptation to evolving LIC needs and global challenges.
  - Institutional knowledge retention despite funding uncertainties.
- Commercial arrangements:
  - Grant arrangement (not a commercial contract); standard commercial KPIs and codes not applicable.
- Oversight:
  - Evaluation conducted by the FCDO programme team.

### G: Monitoring, evidence and learning
- Monitoring and reporting:
  - IMF MRLIC team reports annually to FCDO against the log-frame.
  - Quarterly updates provided on the programme’s website and quarterly e-newsletters reaching more than 1500 academics, policymakers, central bank staff, and government representatives.
  - All publicly available working and published papers uploaded to the R4D portal on the FCDO website; “Gold access” assigned to journal publications.
  - IMF and FCDO project members conduct regular video conference calls as needed.
- Evaluation and external review:
  - FCDO conducts a yearly evaluation of the programme.
  - Ongoing external evaluation by Shanta Devarajan (Georgetown University) and Stephen A. O'Connell (Swarthmore College), expected to be completed before the end of 2025.

*Source: FCDO Annual Report (June 2025), MRLIC programme section*

### Annex A: Summaries of working papers and publications under output 1

### Annex A: Summaries of working papers and publications under output 1

### Output 1.1 – Working Papers (by topic)

- Topic 1. Modelling and understanding policy choices
  - 1. Quarterly Projection Model for the Bank of Ghana: Extensions and Applications
  - 2. Transport Frictions and the Pass-Through of Global Price Shocks in a Spatial Model of Low-Income Countries

- Topic 2. Understanding macro-financial linkages
  - 3. Global Contagion of Financial Reforms
  - 4. Bilateral Trade in Services and Exchange Rates: Evidence of Dominant Currency Pricing

- Topic 3. Building resilience
  - 5. The Macroeconomic and Welfare Benefits of Building Resilience in Disaster-Prone Developing Countries
  - 6. Foreign Aid and (Big) Shocks: Evidence from Natural Disasters
  - 7. Foreign Aid and Conflicts: The Effects of 9/11 on Donor Behavior
  - 8. The Urgency of Conflict Prevention – A Macroeconomic Perspective

- Topic 4. Promoting structural change and institutional development
  - 9. At the Threshold: The Increasing Relevance of the Middle-Income Trap
  - 10. Dynamic Development Accounting and Relative Income Traps
  - 11. Productive Capacities, Economic Vulnerability and Growth Volatility in Sub-Saharan Africa
  - 12. Economic Diversification in Developing Countries: Lessons from Country Experiences with Broad-Based and Industrial Policies
  - 13. Knowledge Diffusion Through FDI: Worldwide Firm-Level Evidence
  - 14. Changing Global Linkages: A New Cold War?
  - 15. Can Mobile Technologies Enhance Productivity? A Structural Model and Evidence from Benin Food Suppliers
  - 16. Regime-Switching Factor Models and Nowcasting with Big Data
  - 17. Shocks and Shields: Macroeconomic Institutions During Commodity Price Swings
  - 18. State Capacity and Growth Regimes

- Topic 5. Enhancing inclusion
  - We have no working papers under this topic this year.

### Output 1.2 – Published Papers (by topic)

- Topic 1. Modelling and understanding policy choices
  - We have no publication under this topic this year.

- Topic 2. Understanding macro-financial linkages
  - 1. Policy Contagion: What Do We Learn from Financial Reforms? — International Economics Review, forthcoming

- Topic 3. Building resilience
  - We have no publication under this topic this year.

- Topic 4. Promoting structural change and institutional development
  - 2. Political institutions and output collapses — European Journal of Political Economy
  - 3. Changing global linkages: A new Cold War? — Journal of International Economics
  - 4. Changing Global Linkages: Bridging Geopolitical Fragments — AEA Papers and Proceedings

- Topic 5. Enhancing inclusion
  - 5. The Armistice of the Sexes: Gender Complementarities in the Production Function — Feminist Economics, forthcoming

### Thematic highlights and key analytical contributions

- Modelling and understanding policy choices
  - Two IMF Working Papers:
    - One enhances the Bank of Ghana’s Quarterly Projection Model (QPM) for forward-looking monetary policy and shock simulations.
    - One develops a spatial model analyzing welfare impacts of global price shocks and highlights the need for tailored fiscal responses.

- Understanding macro-financial linkages
  - A paper in International Economics Review finds 1990s financial reforms were driven by geopolitical influence and learning; post-crisis reversals after the global financial crisis reflected changing views on growth benefits.
  - IMF Working Papers analyze drivers of global financial reforms and reversals and examine how dominant currency pricing and exchange rates shape trade patterns.

- Building resilience
  - Four IMF Working Papers address:
    - Fiscal tools for disaster resilience and macroeconomic benefits of building resilience in disaster-prone developing countries.
    - Foreign aid responses to natural disasters.
    - Shifts in donor behavior following 9/11.
    - The role of macroeconomic policy in conflict prevention.

- Promoting structural change and institutional development
  - Three peer-reviewed papers and ten IMF Working Papers cover:
    - Links between political regimes and output collapses (European Journal of Political Economy).
    - Political regimes and fragmentation of global trade (Journal of International Economics).
    - How ‘connector’ countries absorb redirected trade and investment amid U.S.–China trade tensions (AEA Papers and Proceedings).
    - IMF Working Papers explore income and poverty traps, enablers of structural transformation (TFP, institutions, industrial policies), FDI spillovers, digital adoption in Africa, nowcasting with big data, and institutional responses to commodity shocks.

- Enhancing inclusion
  - A paper in Feminist Economics shows male and female labor are not perfect substitutes, implying larger gains from gender inclusiveness than standard models suggest.

*Source: FCDO/IMF "Macroeconomic Research in Low-Income Countries" Thirteenth Year Annual Report (for period April 2024—March 2025), prepared by IMF Research and Strategy, Policy and Review Departments, June 6, 2025.*

### 2.3 Challenges and opportunities

### 2.3 Challenges and opportunities

### Evolving challenges facing low-income countries (LICs)
- The MRLIC program identifies escalating geoeconomic tensions, declining development assistance, climate change, demographic shifts, and advancement in digitalization and AI as rapidly evolving challenges with important macroeconomic implications for LICs.
- The one-year extension of the MRLIC program, including a comprehensive review by two external experts and commissioned pathfinding papers, provides an opportunity to:
  - Assess past experiences on the effectiveness and impact of the MRLIC program.
  - Better understand the challenges facing LICs in the current global context.
  - Identify gaps for macroeconomic research in LICs and priorities for a potential Phase V.

### Log-frame outputs and FY2025 performance
- The research project evaluates outputs across four main categories:
  1. Produce high quality, policy-relevant research on macroeconomic issues affecting LICs.
  2. Promote and increase usage of IMF research products generated under this project by IMF country teams and partner authorities.
  3. Strengthen engagement by senior IMF policymakers on issues affecting LICs.
  4. Strengthen capacity-building by expanding the network of LIC researchers.
- FY2025 program performance:
  - Met or exceeded the high target for all indicators for year 13 of the program, except for one indicator where performance is above the medium target.

### Output 1 — Research production (FY2025)
- Total outputs:
  - 18 working papers produced.
  - 5 papers published in academic journals.
- Working papers by topic:
  - Topic 1: Modelling and understanding policy choices
    - "Quarterly Projection Model for the Bank of Ghana: Extensions and Applications"
    - "Transport Frictions and the Pass-Through of Global Price Shocks in a Spatial Model of Low-Income Countries"
  - Topic 2: Understanding macro-financial linkages
    - "Global Contagion of Financial Reforms"
    - "Bilateral Trade in Services and Exchange Rates: Evidence of Dominant Currency Pricing"
  - Topic 3: Building resilience
    - "The Macroeconomic and Welfare Benefits of Building Resilience in Disaster-Prone Developing Countries"
    - "Foreign Aid and (Big) Shocks: Evidence from Natural Disasters"
    - "Foreign Aid and Conflicts: The Effects of 9/11 on Donor Behavior"
    - "The Urgency of Conflict Prevention – A Macroeconomic Perspective"
  - Topic 4: Promoting structural change and institutional development
    - "At the Threshold: The Increasing Relevance of the Middle-Income Trap"
    - "Dynamic Development Accounting and Relative Income Traps"
    - "Productive Capacities, Economic Vulnerability and Growth Volatility in Sub-Saharan Africa"
    - "Economic Diversification in Developing Countries: Lessons from Country Experiences with Broad-Based and Industrial Policies"
    - "Knowledge Diffusion Through FDI: Worldwide Firm-Level Evidence"
    - "Changing Global Linkages: A New Cold War?"
    - "Can Mobile Technologies Enhance Productivity? A Structural Model and Evidence from Benin Food Suppliers"
    - "Regime-Switching Factor Models and Nowcasting with Big Data"
    - "Shocks and Shields: Macroeconomic Institutions During Commodity Price Swings"
    - "State Capacity and Growth Regimes"
  - Topic 5: Enhancing inclusion
    - No working papers under this topic in FY2025.
- Published papers by topic:
  - Topic 2: Understanding macro-financial linkages
    - "Policy Contagion: What Do We Learn from Financial Reforms?" — International Economics Review, forthcoming
  - Topic 4: Promoting structural change and institutional development
    - "Political institutions and output collapses" — European Journal of Political Economy
    - "Changing global linkages: A new Cold War?" — Journal of International Economics
    - "Changing Global Linkages: Bridging Geopolitical Fragments" — AEA Papers and Proceedings
  - Topic 5: Enhancing inclusion
    - "The Armistice of the Sexes: Gender Complementarities in the Production Function" — Feminist Economics, forthcoming
  - Topic 1 and Topic 3: No publications under these topics in FY2025.

### Output 2 — Uptake by authorities and IMF country teams (FY2025)
- Aggregate uptake and capacity-building:
  - 13 uptakes by country authorities and IMF country teams.
  - 7 courses offered to country authorities and IMF staff.
- Country applications and examples (Output 2.1):
  - FPAS framework
    - Ghana — Technical Assistance mission to develop FPAS processes at the Bank of Ghana.
    - Ghana — Technical Assistance Report: Report on Developing the Forecasting and Policy Analysis System (FPAS) at the Bank of Ghana (BOG).
  - Natural disasters / DIGNAD
    - Democratic Republic of Congo — Requests for an Arrangement Under the Extended Credit Facility and an Arrangement Under the Resilience and Sustainability Facility: Press Release; Staff Report; and Statement by the Executive Director for the Democratic Republic of Congo.
    - Republic of Congo — Republic of Congo: Selected Issues.
    - Côte d’Ivoire — Côte d’Ivoire: Request for an Arrangement Under the Resilience and Sustainability Facility: Press Release; Staff Report; and Statement by the Executive Director for Côte d’Ivoire.
    - Guinea — 2024 Article IV Consultation and Request for Disbursement Under the Rapid Credit Facility: Press Release; Staff Report; and Statement by the Executive Director for Guinea.
    - Guinea — Guinea: Selected Issues.
    - Madagascar — Republic of Madagascar: Request for an Arrangement Under the Extended Credit Facility and Cancellation of the Current Arrangement Under the Extended Credit Facility and Request for an Arrangement Under the Resilience and Sustainability Facility: Press Release; Staff Report; Staff Supplement; Staff Statement; and Statement by the Executive Director for Republic of Madagascar.
    - Maldives — DIGNAD results are presented to country authorities.
    - Tanzania — United Republic of Tanzania: Third Review Under the Extended Credit Facility Arrangement and Request for Extension of the Extended Credit Facility Arrangement and Rephasing of Access, and Request for an Arrangement Under the Resilience and Sustainability Facility: Press Release; Staff Report; and Statement by the Executive Director for the United Republic of Tanzania.
  - Income and Gender Inequality
    - Guinea — 2024 Article IV Consultation and Request for Disbursement Under the Rapid Credit Facility: Press Release; Staff Report; and Statement by the Executive Director for Guinea.
    - Guinea — Guinea: Selected Issues.
  - Food insecurity
    - Sierra Leone — Sierra Leone: Selected Issues.
- Courses to authorities and IMF staff (Output 2.2):
  1. Workshop: Modelling Climate Risks and Policies — July 2024.
  2. Workshop: Macro-Climate Modelling with DIGNAD — July 2024.
  3. Course: Compilation of Macro-Relevant Environment and Climate Change Statistics — August 2024.
  4. The DIGNAD Model: Applications and a New Toolkit — MathWorks Finance Conference 2024 — October 2024.
  5. Course: DIGNAD: User’s Guide to the Model and Toolkit — November 2024.
  6. DIGNAD Training in Palau — November 2024.
  7. Course: Climate in Macroeconomic Frameworks — February 2025.

### Output 3 — Engagement by senior IMF policymakers (FY2025)
- High-level policy conferences attended or contributed to (Output 3.1):
  1. "Rethinking economic policy: Steering structural change" — April 2024.
  2. "Workshop: AERC-IMF Visiting Scholars Workshop 2024" — September 2024.
  3. "Transforming Industries for Growth in a Fragmented World" — November 2024.
  4. "Session ASSA 2025: Policy Uncertainty and Economic Activity" — January 2005.
- Research reflected in IMF policy papers and outputs discussed at the IMF Executive Board (Output 3.2):
  1. Chapter: World Economic Outlook: Slowdown in Global Medium-Term Growth: What Will it Take to Turn the Tide?
  2. Box: World Economic Outlook: Distributional Implications of Medium-Term Growth Prospects.
  3. Box: World Economic Outlook: Fragmentation Is Already Affecting International Trade.
  4. The 4th Financing for Development Conference — Contribution of the IMF to the International Financing for Development Agenda.
- Outcome Indicator 1 — Thematic areas of IMF policy influenced and made LIC-specific:
  - Relationship between foreign aid, big shocks, and conflicts.

### Other dissemination and external presentations
- E-newsletters issued:
  - June 2024 Newsletter
  - September 2024 Newsletter
  - December 2024 Newsletter
  - March 2025 Newsletter
- Blogs, articles, and press:
  - VoxEU Blog — May 2024: "Global gender gaps may never close on their own"
  - F&D Article — September 2024: "Back to Basics: Total Factor Productivity"
  - F&D Article — September 2024: "Eliminating the Productivity Drag"
- External presentations of MRLIC-supported papers and tools include multiple conferences and seminars across 2024 and January–March 2025 (detailed listings of presentation venues and events).

### Outcomes and impacts — Examples of country uptake (Section 6.1)
- Côte d’Ivoire
  - DIGNAD was discussed in the Executive Board meeting for Côte d’Ivoire in December 2024 in the context of supporting climate adaptation efforts as part of the RSF arrangement; the Board emphasized strengthening climate resilience and noted expectation that quantitative models such as DIGNAD will effectively support these efforts.
- Ghana
  - MRLIC-supported multi-year Technical Assistance strengthened the Bank of Ghana’s macroeconomic forecasting and policy analysis through development and integration of a modern FPAS; project concluded in 2024 with a mission to enhance the Quarterly Projection Model (QPM).
  - A TA Report documents outcomes; an IMF Working Paper co-authored by IMF and BoG staff documents QPM extensions and applications.
- Guinea
  - MIMMI app and DIGNAR model applied in the 2024 Article IV and selected issues paper to assess the Simandou project’s macroeconomic and distributional impacts.
  - Findings highlight that realizing the project’s growth, equity, and climate benefits depends on proactive policies and investment in infrastructure and education.
  - MRLIC work enhanced the MIMMI app, expanding capacity to assess multidimensional policy options.
- Rwanda
  - In Rwanda’s Executive Board Meeting in December 2024, a joint statement welcomed use of quantitative analytical tools (DIGNAD and Debt Sustainability Analysis) as important inputs underpinning RSF program design and policy assessments.

### Capacity development insights (Section 6.2)
- Trainings delivered:
  - Seven trainings for IMF staff, government officials, and broader audiences, primarily on policy applications of the DIGNAD model.
- IMF staff training example:
  - DIGNAD training in November 2024:
    - Attended by 21 participants.
    - Rated 4.73/5.
    - Feedback emphasized strong relevance and practical value for operational work.
- Government officials and stakeholders training example:
  - Course "Climate in Macroeconomic Frameworks" in 2025:
    - Participants from 36 countries, including 7 LICs.
    - Rated 4.7/5.
    - Participants highlighted relevance to Ministry of Finance work, complementarity to natural disasters assessment, and hands-on DIGNAD training.
  - Reserve Bank of Zimbabwe staff participated in a DIGNAD-related training in February 2024 and calibrated the model to Zimbabwe’s conditions in a policy paper with MRLIC support.
- Dissemination to broader audiences:
  - DIGNAD toolkit showcased at the 2024 MathWorks Finance Conference (around 1,400 participants), engaging private sector experts, academia, and policymakers.

### Feedback from senior IMF staff and external researchers (Section 6.3)
- Andrew Berg (Deputy Director of the IMF’s Institute for Capacity Development) highlighted MRLIC’s role in bridging gaps between academic macroeconomics and development economics, producing high-quality research useful to policymakers in LICs and IMF partners; cited areas of recent work including implications of natural disasters for monetary policy and debt sustainability, and role of macroeconomic institutions during commodity price swings.
- Rabah Arezki (Visiting Scholar collaborator) emphasized MRLIC’s value in filling literature gaps and operationalizing macroeconomic research in LICs; noted examples including macroeconomic implications of natural disasters and strengthening monetary policy frameworks; recommended continuation given current challenges: geoeconomic and trade tensions, high debt levels, tight global financial conditions, weak medium-term growth prospects, climate change, and rapid progress in digitalization and generative AI.
- Vimal Thakoor (Resident Advisor on Macroeconomics and Climate, IMF’s Africa Training Institute) emphasized DIGNAD’s contribution to SSA countries’ investment and resilience decisions:
  - DIGNAD helps compare (standard- and climate-resilient) investment options, financing mixes (grants, loans, domestic revenue mobilization, and debt), and public financial management implications for macroeconomic outcomes and debt paths.
  - DIGNAD’s appeal stems from its excel-based interface and a responsive technical team in IMF Research Department.
  - DIGNAD is used in both Article IV surveillance and lending (Resilience and Sustainability Fund) and extensively at the IMF’s Africa Training Institute, where officials from around 40 SSA countries have been trained; some participants have independently calibrated DIGNAD for their countries and produced working papers.
  - Strong ongoing interest in DIGNAD training and technical assistance in the region.

*Source: MRLIC program annual report (FY2025).*

### 6.4 Citations, downloads, and mentions in social media

### 6.4 Citations, downloads, and mentions in social media

### Research quality and citation performance
- 86.3 percent of MRLIC-supported publications have been cited.
- Average citations per article: 23.4 citations per article.
- Publications are relevant to Sustainable Development Goals: SDG 1, SDG 2, SDG 4, SDG 5, SDG 7, SDG 8, SDG 9, SDG 10, SDG 11, SDG 12, SDG 13, SDG 15, SDG 16, and SDG 17.
- The IMF Library team (Gladys K. H. Mitchell) conducted the analysis on citations and social media.

### Social media attention and notable uptake
- MRLIC-supported product ‘Changing Global Linkages: A New Cold War?’ generated 61 posts on X (formerly Twitter) from 57 accounts within four months of its January 2025 release.
- The same product has been cited in speeches by senior IMF management (speech by Gita Gopinath—First Deputy Managing Director) and by policymakers (speech by Joachim Nagel—President of the Deutsche Bundesbank).

### Downloads and usage statistics
- The average number of downloads of MRLIC-related IMF Working Papers increased by 14 percent.
- Average downloads per paper: 962 downloads per paper.
- The number of downloads of the IMF Working Papers was provided by the IMF’s Communication Department (Axana Abreu Panfilova, and John Sonnick).

### Methodology and data provenance
- Citation and social media analysis performed by the IMF Library team (Gladys K. H. Mitchell).
- Download counts provided by the IMF’s Communication Department (Axana Abreu Panfilova, and John Sonnick).
- Figure source: IMF Library and authors’ calculations.

*IMF Library and authors’ calculations.*

### 8. WORK PLAN AND TIMETABLE

### 8. WORK PLAN AND TIMETABLE

### (1) Modelling policy choices
- A Monetary Policy Framework for Low Income Countries
  - Present an Open Economy HANK model with features for low-income countries, such as hand-to-mouth consumers and subsistence, calibrated for an average low-income country.
  - Finding: When assessing monetary policy in the presence of a shock to external prices (such as food), a less aggressive monetary policy stance does not make much of a difference for the welfare of poorer households, but fiscal transfers are powerful to address inequality issues.
- Monetary Policy Transmission in the Household Sector: Evidence from Uganda's Credit Registry Data
  - Use granular loan-amount and rate data from Uganda's credit reference bureau to isolate credit supply from demand effects at the individual borrower-bank level.
  - Finding: Loan-level analysis controlling for borrower and bank heterogeneity suggests monetary tightening is associated with a significant reduction in new loan amounts and increase in loan interest rates.
  - Finding: Significant evidence that government domestic borrowing crowds out bank credit to households.
  - Dissemination: Expected presentation at a conference on “From Micro to Macro: Leveraging Microdata to Address Macroeconomic Issues” in Bogotá, Colombia, on August 5-6, 2025.
- Nowcasting GDP Growth for Kenya
  - Develop a transparent and flexible dynamic factor model framework to nowcast GDP growth in Kenya, exploiting high-frequency economic indicators to provide early estimates of economic activity.
  - Objective: Serve as a blueprint for other low-income countries seeking nowcasting frameworks.
- Climate change and domestic debt costs
  - Investigate the effect of climate shocks on the cost of domestic debt, noting that domestic borrowing may rise when foreign borrowing is constrained after natural disasters and that domestic debt is difficult to restructure.
- Who shoulder the burden of rising debt: channels and policy implications
  - Identify past episodes of large public-debt rises and subsequent reductions; decompose debt changes into growth, real interest rate, exchange rate, fiscal adjustment and other factors using methodologies similar to the DSA.
  - Assess distributional implications of each component using incidence analyses from EURO-MOD, CEQ, and the World Bank.
  - Policy discussion: How to tackle high debt levels after COVID-19 while addressing inequality and supporting growth; potential important role for taxation.
- Country work on distributional impacts of structural and fiscal policy reforms.
- Fiscal multipliers project
  - Develop a toolkit to extract and classify discretionary fiscal actions from narrative sources (e.g., EIU reports) using NLP and large language models.
  - Produce quarterly time series of fiscal policy measures disaggregated by instrument and classified by intent and exogeneity across a broad set of countries.
  - Intended coverage: initially at least 60 countries with balanced representation of advanced, emerging, and low-income economies; eventual extension could be to over 100 countries.
  - Outputs to support applied policy research, operational work, and a toolkit for country authorities and IMF staff.
- Fiscal Guardrails against High Debt and Looming Spending Pressures
  - Analysis shows a risk-based framework with robust correction mechanisms can mitigate sovereign spreads and improve compliance.
  - Supportive fiscal institutions (linking fiscal rules to medium-term frameworks, independent fiscal council oversight) improve incentives for compliance.
  - Policy guidance: excluding expenditures from fiscal rules is not advisable; low-debt countries could relax tight rules within debt-stabilizing limits for additional investment; high-debt countries should adjust to contain debt buildup.
  - Note: SDN includes fiscal rule data for over 120 economies, including multiple LICs.
- Applying the Integrated Policy Framework (IPF) to Low Income Countries (LICs): Shocks, Frictions, and Policy Considerations
  - Produce an interdepartmental note on applying the IPF to LICs to guide joint use of FX intervention, macroprudential measures, capital flow management, monetary and fiscal policies.
  - Emphasize interactions of shocks with shallow FX markets, currency mismatches, weakly-anchored inflation expectations.
  - Highlight LIC-specific factors: exchange rate regime, coherence of policy frameworks, limits to FX reserves, institutional capacity constraints, medium-term development agenda.
  - Aim: Improve quality of IMF policy advice and Article IV consultations for LICs.

### (2) Understanding macro-financial linkages
- Capital Allocation and Firm Dynamics in Small Open Economies
  - Identify capital inflow booms in 85 countries between 1975 and 2019 using balance of payments data.
  - Findings: Episodes associated with persistent increases in private credit and transient output booms, but coincide with sustained declines in total factor productivity (TFP).
  - Firm-level data for 30 countries show robust, short-lived firm booms and significant reallocation of capital and debt toward high MRPK firms.
  - Use a small open economy firm dynamics model with heterogeneity and financial frictions to match aggregate TFP responses via general equilibrium entry/exit adjustments.
- Remittances and Rwanda
  - Joint analysis with the National Bank of Rwanda using novel transaction-level remittances data to explore remittance patterns and effects on Rwanda's economy and investments.
- Global Financial Flows Revisited: Trends and Dynamic Interaction
  - Introduce FIMIDa, a new database covering 181 countries to analyze evolving composition of global financial inflows; highlight remittances' growing role as private and official flows decline post-2011–12.
  - Finding: Increasing segmentation in global finance, implying tailored policies to manage external inflow dynamics across income groups.
- Financial Inflows, Macroeconomic, and Institutional Database (FIMIDa)
  - Present FIMIDa: harmonized panel of financial-inflow, macroeconomic, and institutional variables for 181 countries (1960-2023) enabling cross-source comparisons and crisis-period analysis.
  - Uses: disentangle impacts of different types of financial inflows; trace crisis-driven flow dynamics; link governance quality to capital composition; power interactive dashboards.
- Counting Aid: How Measurement Choices Shape Evidence on Official Finance to Developing Countries
  - Contrast OECD-defined Official Development Assistance (ODA) versus balance-of-payments (BoP) proxies; document that measurement choice alters empirical and policy conclusions about aid.
- Bilateral Financial Flows to LICs: A Multi-Country Analysis of Frictions and Margins
  - Build a triple-indexed (source–destination–time) panel and structural gravity model to quantify how distance, information asymmetries, taxes, and institutional quality shape extensive and intensive margins of FDI, portfolio, official flows, and remittances to LICs.
  - Focus on counterfactual reductions in information and institutional barriers among LICs to offer policy targets for deeper financial integration.
- Remittance Costs Around Natural Disasters
  - Investigate how natural disasters affect pricing of remittance services by RSPs.
  - Research questions: Do remittance costs rise, fall, or remain stable after disasters? Do effects vary by disaster type, provider characteristics, transaction speed, market competition, media coverage, and country income level?
  - Method: Empirical model augmented with natural disaster data.
- Drivers of Exchange Rates in EMDEs – Implications for Foreign Exchange Intervention
  - Outline three use cases for FX intervention; focus on when FX movements are amplified by frictions in currency markets.
  - Propose UIP premia as a diagnostic to distinguish premia driven by frictions versus fundamentals; note measurement challenges in real time and discuss CIP as a more accessible alternative.
  - Include study of country experiences, including a LIC case.

### (3) Building resilience
- Macroeconomic framework of climate adaptation
  - Build a small open economy model analyzing climate adaptation needs in developing economies with slow-moving climate risks and frictions (financial, labor market).
  - Model features endogenous entry and adaptation choice in land-intensive agriculture; firms are neoclassical in manufacturing and services.
  - Study how government policies can help achieve first-best level of private adaptation (e.g., adoption of green technology).
- The Macroeconomic Effects of Climate Change and Policies in Developing Countries: The Case of Niger
  - Apply the macroeconomic adaptation framework to Niger, addressing how to incorporate adaptation into macro frameworks.
- Energy resilience and debt sustainability in developing countries
  - Incorporate energy production into the DIGNAD model to analyze debt-investment-growth nexus and natural disasters.
  - Firms in energy sector endogenously choose between brown and green technology based on relative prices, productivity, and fixed costs.
  - Use model to analyze debt sustainability under various energy scenarios and trade-offs between energy security investment and resilience.
- Series of DIGNAD applications: Gambia, Kiribati, Marshall Islands, Micronesia, Liberia, Palau, Sao Tome and Principe, and Vietnam
  - Gambia (Article IV Annex): Pre-emptive resilient infrastructure investments (per DIGNAD) can positively affect post-disaster output growth and public debt; enhance public investment and tax collection efficiencies.
  - Kiribati (Selected Issues Paper): Build resilience to natural disasters, rising sea levels and extreme weather impacting fragile ecosystems and livelihoods.
  - Marshall Islands (Article IV Annex): Rising sea levels threaten approximately half of buildings in Majuro; high flood risk requires resilience-building measures.
  - Micronesia (Article IV Annex): Enhancing public investment management to boost efficiency as FSM increases public investment through foreign grants; calibrate DIGNAD for natural disasters and consider labor migration, remittances, structural reforms.
  - Liberia (Selected Issues Paper): Build resilience to floods and storms to safeguard infrastructure and public health.
  - Palau (Working Paper): Evaluate saving-investment and resilience strategies; DIGNAD finds prioritizing climate adaptation investments is more beneficial for growth and fiscal sustainability than easing fiscal stance in favor of transfers or tax cuts.
  - Sao Tome and Principe (STP): Calibrate DIGNAD to simulate a one-time flooding and policy options; show how climate-resilient investment and public investment efficiency can increase resilience.
  - Vietnam (Selected Issues Paper): Scale up public infrastructure investments alongside structural and market reforms to enhance growth, competitiveness, and resilience.
- Course: DIGNAD: Introduction to Debt-Investment-Growth and Natural Disasters Model and Toolkit
  - Provide Excel-based interface toolkit built on DIGNAD for users to run model simulations on macro-fiscal impacts of natural disasters and resilience investments.
- How Does Climate Uncertainty Impact the Macroeconomy?
  - Develop a Global Vector Autoregressive (GVAR) model incorporating climate uncertainty through stochastic volatility and temperature risk.
  - Analyze impact of temperature volatility on growth, inflation, exchange rates, and heterogeneity between low-income and other countries; identify channels and adaptive strategies.
- Private sector investment response to low frequency large natural disasters
  - Explore how private sector investment responds to large natural disasters using country and enterprise level data; analyze role of public investment.
- On the Frequency and Saliency of Natural Disasters and Consequences on Foreign Aid
  - Test for trend increases in natural disasters across development levels and document media saliency; assess how frequency and saliency drive foreign aid allocation.
- Natural Disasters and Cost of External Borrowing
  - Explore impact of natural disasters on cost of external borrowing, mediated by governance, initial conditions, fiscal frameworks, and financial arrangements.
  - Provide policy recommendations for maintaining capital market access and enhancing resilience and governance to mitigate borrowing-cost effects.

### (4) Promoting structural change and institutional development
- Trade (Dis-)Integration and the Trade Balance
  - Develop a neoclassical model to study impact of trade barriers on the trade balance in the short and long run.
  - Finding: At prevailing levels of trade integration, very large increases in trade barriers would be required to dent trade imbalances.
- BiTS: A New Database on Bilateral Trade in Services
  - Assemble bilateral services trade flows dataset (BPM6-compatible) covering 1985-2023 and up to 245 countries and geographic entities.
  - Uses: analyze drivers of services trade, relation to economic growth, role of dominant currencies, and impact of geoeconomic fragmentation.
- Geoeconomic Fragmentation in Services? Evidence from a New Database (VoxEU e-book chapter)
  - Use BiTS to investigate whether foreign policy alignment's influence on services trade has intensified.
  - Finding: Contrary to goods trade, influence has not intensified overall; however, fast-growing modern services categories are more sensitive to geopolitical alignment.
- Growth strategies and diversification for Pacific Island Countries (PIC)
  - Quantify tourism's contribution to growth with panel regressions and compute additional tourism needed to match comparators.
  - Identify diversification spurts with synthetic control method and quantify benefits.
  - Outline framework to detect binding constraints and design growth strategies for PICs.
- Industrial Policies in a Quantitative Model with Knowledge Creation and Diffusion
  - Study optimal trade and industrial policy in dynamic environment with knowledge diffusion; consider fiscal implications and optimal debt.
- Eastern Caribbean migrations in the XXIth Century (working paper)
  - Empirical overview of migrant and remittance flows before and after the pandemic.
- Migration, Knowledge Diffusion, and Development in Small Open Economies
  - Build semi-endogenous growth model where diasporas provide financial and social remittances (knowledge transfers); solve analytical equilibrium and conditions under which migration's dynamic benefits outweigh brain drain.
- Does climate change lead to structural transformation? Empirical evidence from developing countries
  - Explore atypical structural change where climate shocks reduce agricultural productivity and reallocate labor to industry and services; use sectoral disaggregated dataset and structural transformation measures.
- The Economic Impacts of Firms' and Households' Access to Data
  - Assess economic impact of data centers' physical locations in Africa using network, launch dates of African data centers, and geo-coded economic activity data for firms and households.
- Forging Strength: Exploring the Dynamic Interplay between Institutions and State Capacity
  - Examine effects of state capacity and institutional quality on growth across 110 countries for 1970–2015.
  - Policy insights: Low-income countries should pursue simultaneous state capacity and institutional reforms; advanced economies should fine-tune governance to avoid overregulation.
- Growth Interrupted: How Crisis Delay Global Convergence
  - Introduce Markov chain framework to study how crises affect income convergence dynamics.
  - Findings: Conflict and debt crises help explain persistence of low relative income; recent faster global convergence partly due to fewer and shorter crises.
- Impact of Artificial Intelligence on Low-Income Countries: Bridging the Developmental Divide with Advanced Economies
  - Explore how AI may widen or narrow inequality and the development gap, focusing on access, labor markets, productivity, and macroeconomic dimensions; identify where AI can support inclusive growth.

### (5) Enhancing inclusion
- The Allocation of Talent and Income Differences Across Countries
  - Derive outcomes-based measure of discriminatory labor market barriers facing women and ethnic minorities.
  - Finding: Removing these barriers would yield significant income and productivity gains in major emerging and developing economies.
- Revisit of GDP growth and inequality relationship
  - Motivated by varying patterns over past two decades: growth had no relation with inequality for low-income economies; associated with decrease in inequality in emerging economies; associated with increase in inequality in advanced economies.
  - Use a heterogeneous agent model of structural transformation based on Comin, Lashkari and Mestieri (2021) to examine joint evolution of inequality and structural change.
- Demography, Female Labor Force Participation and Growth in Latin America
  - Use microdata from Latin American household surveys to document labor participation patterns.
  - Build a model to quantify how dependency ratios and children shape household labor supply and how increasing female labor force participation can mitigate demographic headwinds.
- The Economic Dimensions of Digitalization
  - Literature review on digitalization's link with productive dynamics: economies of scale, productivity gains, market efficiencies, expansion in trade, investment, cross-border flows, and digital finance.
  - Highlight gaps in theoretical literature for macroeconomic modelling of digitalization.
- Support for country teams: modeling and recalibration of tools (DIG-Labor and MIMMI App) to address specific policy questions.

*Source: fcdo-ar-june2025 — 8. WORK PLAN AND TIMETABLE*

### 9. RISK

### 9. RISK

### Program-level risks
- Budgetary uncertainties, including cuts, disbursement delays, and overall funding unpredictability, pose a very high risk to the program, affecting its ability to:
  - deliver key outputs;
  - attract and retain competitive staff;
  - engage in effective short to medium-term planning.
- Financial instabilities undermine the program's operational integrity and hinder its capacity to meet objectives and maintain a high level of performance.
- Strategic-alignment risk: potential changes in strategic priorities of the IMF in the aftermath of elections in major economies, which may not be as well aligned with the strategic direction of the program.

---

### 10. MONITORING AND EVALUATION

### Monitoring arrangements
- IMF reports to FCDO annually regarding the outputs included in the log-frame.
- Quarterly public updates provided via the project website.
- Quarterly e-newsletters reach an audience of more than 1500 academics, policymakers, central bank staff, and government representatives; e-newsletters are posted on the project website.
- All publicly available working and published papers are uploaded to the R4D portal on the FCDO website.
- “Gold access” is provided to journal publications produced through the grant.
- Video conference calls are conducted between IMF and FCDO project members when deemed necessary.

### Evaluation arrangements
- FCDO conducts a yearly evaluation of the program.
- An ongoing external evaluation by Shanta Devarajan (Georgetown University) and Stephen A. O'Connell (Swarthmore College) is expected to be completed before the end of 2025.

---

### 11. FURTHER INFORMATION

### Phase V planning
- Team has started brainstorming on a Phase V proposal to improve analytical and policy tools to bolster the economic resilience of LICs amid increasingly frequent and large shocks.
- The proposal will be informed by several pathfinding papers across 5 broad themes commissioned to leading academic researchers.
- The pathfinding papers will be presented at an IMF-FCDO conference in November 2025.

---

### Log-frame and Output Performance (selected indicators and achieved values)

### Impact indicators (selected baselines and targets)
- Impact Indicator 1 — Proportion of people living in extreme poverty in MRLIC countries:
  - Planned (2018) MRLIC countries: 28.5%
- Impact Indicator 2 — Economic growth rates in MRLIC countries:
  - Planned (2019) MRLIC countries: 4.0%

### Outcome Indicator 1 — Evidence of improved IMF policymaking and integration of LIC-specifics
- Planned March 2020 baseline: (12)
- Targets by March 2025:
  - H (22) M (21) L (20)
- Achieved (yearly progression shown): 16, 18, 20, 21, 22

### Inputs (memorandum)
- Total (£): £6.1 million
- FCDO: £5.1 million
- Govt: £1.0 million
- FCDO SHARE (%): 84
- Note: "Other" is USD 1.2 million for FY2022 from the IMF's COVID-19 Crisis Capacity Development Initiative (CCCDI). Exchange: U.K. £1 = USD 1.219950 (as of May 13, 2022).

---

### Output 1 — Research papers (Indicator 1.1 and 1.2)

### Output Indicator 1.1 — Number of priority research papers (five research themes)
- Planned March 2020 baseline: (130)
- By March 2025 targets:
  - H (200 papers) M (196 papers) L (190 papers)
- Achieved (yearly progression shown): 151, 162, 178, 191, 209
- Five research themes:
  1) Modelling and understanding policy choices
  2) Understanding macro-financial linkages
  3) Building resilience
  4) Promoting structural change and institutional development
  5) Enhancing inclusion

### Output Indicator 1.2 — Number of research papers accepted in peer-reviewed journals
- Planned March 2020 baseline: (77)
- By March 2025 targets:
  - H (117 papers) M (115 papers) L (113 papers)
- Achieved (yearly progression shown): 90, 98, 105, 113, 118
- Impact weighting for publications: 34%

---

### Output 2 — Policy tools, courses, and application (Indicators 2.1 and 2.2)

### Output Indicator 2.1 — IMF research products used by country teams and partner authorities
- Planned March 2020 baseline: (161)
- By March 2025 targets:
  - H (233) M (230) L (227)
- Achieved (yearly progression shown): 183, 203, 213, 223, 236
- Source: IMF reporting on evidence of number of country teams applying policy tools and frameworks

### Output Indicator 2.2 — Courses offered to country authorities and IMF staff
- Planned March 2020 baseline: (20)
- By March 2025 targets:
  - H (53) M (51) L (49)
- Achieved (yearly progression shown): 28, 38, 43, 52, 59
- Impact weighting for these outputs: 33%

---

### Output 3 — Engagement by senior IMF policymakers (Indicators 3.1 and 3.2)

### Output Indicator 3.1 — High-level policy conferences attended by senior IMF staff
- Planned March 2020 baseline: (40)
- By March 2025 targets:
  - H (60) M (59) L (58)
- Achieved (yearly progression shown): 42, 50, 53, 56, 60

### Output Indicator 3.2 — Results reflected in IMF Board discussions and papers
- Planned March 2020 baseline: (41)
- By March 2025 targets:
  - H (67) M (65) L (63)
- Achieved (yearly progression shown): 49, 54, 59, 62, 66
- Impact weighting for these outputs: 33%

---

### Financial highlights (selected aggregated figures as of April 30, 2025)

- Contributions (cumulative): 30,402,298
- Interest Earned (cumulative): 453,949
- Total Cash Available: 30,856,247
- Expenses Paid: 27,461,258
- Cash Balance: 3,394,989
- Grand Total approved budget (detailed projects): 28,435,090
- Total Outflows shown (detailed projects): 27,461,258
- Remaining budget (detailed projects): 973,833

---

### Selected working-paper summaries (Topic highlights)

### Topic 1 — Modelling and understanding policy choices
- Quarterly Projection Model for the Bank of Ghana: Extensions and Applications
  - Extended QPM decomposes GDP to separate agriculture and oil sectors from non-agriculture non-oil activities; accounts for inter-sectoral price spillovers; includes impulse response functions and counterfactual simulations to evaluate policy choices.

- Transport Frictions and the Pass-Through of Global Price Shocks in a Spatial Model of Low-Income Countries
  - Spatial dynamic general equilibrium model shows strong spatial heterogeneity in consumption responses to global food, fuel and fertilizer price shocks; urban vs remote rural households face different exposures and welfare implications.

### Topic 2 — Understanding macro-financial linkages
- Global Contagion of Financial Reforms
  - Database covering 90 countries (1973–2014) and a structural model find geopolitical influence and cross-country learning drove the 1990s wave of reforms; post-global financial crisis reversals in developing countries were driven by shifts in beliefs about reform impacts on growth.

- Bilateral Trade in Services and Exchange Rates: Evidence of Dominant Currency Pricing
  - Novel dataset covering 245 countries (1985–2022) across twelve service sectors: services trade value is more associated with US dollar exchange rates than bilateral rates, with variation by service category; tourism shows larger role for bilateral exchange rates on volume.

### Topic 3 — Building resilience
- The Macroeconomic and Welfare Benefits of Building Resilience in Disaster-Prone Developing Countries
  - Multi-sector DSGE model with developing-country features finds investing in resilience capital improves welfare despite high cost; welfare outcomes depend on the financial instrument used to mobilize revenue.

---

*International Monetary Fund — United Kingdom: Project on Macroeconomic Research in LICs (Annual Report materials and appendices, as of April 30, 2025).*

### 6.   Foreign Aid and (Big) Shocks: Evidence from Natural Disasters

### 6.   Foreign Aid and (Big) Shocks: Evidence from Natural Disasters

### Main findings
- The paper finds that bilateral aid commitments statistically significantly increase following natural disasters.
- Humanitarian aid commitments tend to precede structural aid commitments in the aftermath of natural disasters.
- The average effect of disasters on aid commitments is quantitatively significant, but the poorest countries or countries facing the most damaging natural disasters do not necessarily receive the most aid.
- There is no evidence that foreign aid disburses faster following natural disasters.

### Mechanisms and heterogeneity
- Political alignment with major donors in recipient countries with low state capacity emerges as an important driver of aid allocation to disaster-affected countries.
- The timing pattern—humanitarian first, structural later—suggests donors prioritize immediate relief before longer-term reconstruction or development assistance.
- The distributional result (poorest or most damaged countries not receiving the most aid) highlights heterogeneity across recipients and suggests donor selection is influenced by factors beyond measured need.

### Methodology (brief)
- Natural disasters are used as natural experiments to identify the causal effect of large shocks on bilateral aid allocation patterns.
- The analysis distinguishes between humanitarian aid and structural (development) aid and examines commitment and disbursement dynamics.

### Policy implications
- Donor responses to natural disasters increase commitments but do not automatically channel greater resources to the neediest or most affected countries, indicating scope for improving targeting mechanisms.
- Because political alignment with major donors matters—especially where recipient state capacity is low—efforts to depoliticize aid allocation in disaster contexts could improve equity of aid flows.
- The observed sequencing (humanitarian before structural) supports designing coordinated short-term relief and follow-on structural assistance packages to ensure timely transitions from emergency response to recovery and resilience building.
- Given no evidence of faster disbursement after disasters, donors and implementers should assess operational bottlenecks that delay fund release and consider mechanisms to accelerate disbursement when timely funding is critical.

*Rabah Arezki, Youssouf Camara, Patrick A. Imam, and Kangni R Kpodar.*

### 5.   The Armistice of the Sexes: Gender Complementarities in the Production Function

### 5. The Armistice of the Sexes: Gender Complementarities in the Production Function

### Research question and methods
- Objective: Estimate the elasticity of substitution (ES) between female and male labor to test the common macroeconomic assumption that male and female workers are perfectly substitutable in the aggregate production function.
- Data and techniques:
  - Applied linear and non-linear techniques.
  - Used firm-level data, cross-country sectoral data, and cross-country aggregate data.

### Key empirical findings
- Women and men are far from being perfect substitutes in production.
- The finding is consistent with much microeconomic evidence but has not permeated macroeconomics.

### Implications for growth accounting and measurement
- Standard growth accounting exercises that assume perfect gender substitutability are likely to misattribute gains:
  - Many gains currently attributed to technological progress may instead reflect the impact of greater gender inclusiveness in the labor force over time.
- Conclusion: The gains from gender inclusiveness are likely to be much larger than standard economic models estimate.

### Policy relevance and interpretation
- Recognition of imperfect gender substitutability implies:
  - Policies that increase female labor participation and inclusion can have larger macroeconomic payoffs than suggested by models that treat male and female labor as perfect substitutes.
  - Reassessing growth drivers may require adjusting attribution between technology and labor composition effects.

*Raphael A. Espinoza, Jonathan D. Ostry and Chris Papageorgiou; Feminist Economics.*

### 6.   DIGNAD Training in Palau – November 2024

### 6. DIGNAD Training in Palau – November 2024

### Overview
- The event was held November 12-14, 2024.
- Three trainings of the DIGNAD toolkit took place in Palau during November 12-14, 2024.

### Trainings delivered
- DIGNAD toolkit workshop at ADB office in Koror, Palau.
- DIGNAD application to Palau workshop at Asian Development Bank office in Palau.
- DIGNAD presentation at the Graduate School USA in Palau.

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_Source: https://www.imf.org/-/media/files/topics/lics/macro-research-for-development/annual-reports/fcdo-ar-june2025.pdf_