## Forecasts into Action — Building Capacity in Macroeconomic Policy Analysis

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**Canonical URL:** [Forecasts into Action — Building Capacity in Macroeconomic Policy Analysis](https://www.imf.org/-/media/images/imf/capacity-development/english-forecasts-into-action.pdf)

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### Overview and Purpose
- The Institute for Capacity Development (ICD) at the International Monetary Fund (IMF) strengthens government institutions’ ability to forecast and analyze policy options to address volatile inflation, elevated debt, and sluggish growth.
- ICD supports development, adaptation, and effective use of macroeconomic frameworks tailored to country needs to:
  - Make better informed decisions
  - Communicate policies more clearly
  - Strengthen institutional resilience

### Evolution and Milestones
- 1964: IMF Institute established to build core analytical skills in macroeconomic policy and management, including macroeconomic frameworks.
- 1992: Joint Vienna Institute (JVI) launched; today a global network of 17 Regional Capacity Development Centers provides tailored assistance.
- 2012: IMF Institute renamed Institute for Capacity Development (ICD), shifting from training alone to structured, hands-on technical assistance.
- 2014: Training curriculum overhauled to address financial crises, natural disaster–related risks, and digital transformation.
- 2016: Customized training introduced enabling on-the-job learning in real institutional contexts.
- 2024: AI-Powered Learning rolled out to expand access, personalize training, and boost real-world impact.

### Guiding Principles for Effective Impact
- Country-led approach: Authorities take the lead, with ICD support through targeted training and technical assistance.
- Tailored solutions: Macroeconomic frameworks adapted to each country’s context and policy priorities.
- Coaching-based technical assistance: Hands-on coaching during and between missions to reinforce capacity and ownership.
- Embedded in policy: Frameworks are integrated into policymaking to inform and strengthen economic decisions.
- Built to last: ICD equips authorities to independently adapt and use models and tools, documented through manuals and guides to ensure continuity during staff transitions.
- Peer learning: Communities of practice connect officials across countries, fostering shared learning and long-term partnerships.

### Technical Assistance Goals, Frameworks, and Supporting Tools
- Goals: Developing forecasting & policy analysis systems; public debt sustainability analysis; integrating natural disaster–related risks and macrofinancial linkages.
- Macroeconomic frameworks:
  - Financial Programming Frameworks
  - Model-Augmented Financial Programming Frameworks
  - Semi-Structural Models
  - Structural (DSGE) Models
- Supporting tools and models:
  - Comprehensive Adaptive Expectations Model (CAEM)
  - Natural Disasters in Macroframework Tool (ND_MT)
  - Public Debt Dynamics Tool (DDT)
  - Debt-Investment-Growth and Natural Disasters (DIGNAD)
  - Natural Disasters Public Debt Dynamics Tool (ND-DDT)
  - Forecasting Model of Internal and External Balance (FINEX)
  - Global 3-region Projection Model (G3MOD)
  - Macroframework Foundations Tool (MFT)
  - Nowcasting (NWC)
  - Potential Output Estimation Tool (POET)
  - Quarterly Macroeconomic Forecasting Framework (QMFF)
  - Quarterly Projection Model (QPM)
  - Standard Macroframework Template (SMT)
  - Structural Analysis of Macroeconomic Policies (STAMP) Model

### From Request to Delivery: ICD Engagement Process
- Country request received: Country Authorities → IMF HQ / Regional Centers
- Initial review & pre-scoping: Early request assessment, funding availability, alignment — IMF HQ + Regional Centers
- Needs assessment & scoping: Collaborative review to identify technical priorities — IMF HQ + Regional Centers
- Co-design workplan: Time-bound plan developed together with authorities — IMF HQ + Regional Centers
- Develop & implement tools: Custom models and tools are created and applied — IMF HQ + Regional Centers
- Project completion: Outcomes achieved and tools handed over to authorities — Country Authorities + IMF HQ
- Monitoring & evaluation: Follow-up and feedback to measure outcomes and ensure sustainability — IMF HQ + Country Authorities

### Country Outcomes and Selected Case Examples
- Mongolia — Ministry of Finance
  - Enhanced forecasting capacity using the CAEM.
  - Financial and Fiscal Research Department refined projections and developed alternative scenarios.
  - Resulted in more credible forecasts and approval for ten new analyst positions.
  - Framework embedded into medium-term budget planning as a core tool for fiscal policy analysis.

- Mauritania — Ministry of Economy and Finance and National Committee on Public Debt
  - Strengthened debt analysis with a customized Public Debt Dynamics Tool (DDT) for resource-rich economies.
  - Enabled detailed projections and scenario-based reports including shocks from commodity prices and natural disasters.
  - Rapid capacity gains through collaboration with IMF, World Bank, and AFRITAC West.
  - DDT institutionalized through regular public debt reporting.

- Lao PDR — Multi-Agency Group
  - Formation of a Core Macroeconomic Group led by the Macroeconomic Research Institute.
  - ICD supported creation of a shared database and customization of the Macroframework Foundations Tool (MFT).
  - MFT is used across agencies for forecasting and planning, embedding economic analysis into the state budget and development plans.

- Ghana — Central Bank (Bank of Ghana)
  - FPAS Technical Assistance Project developed key modeling tools, especially the Quarterly Projection Model (QPM), for real-time forecasts and policy scenarios.
  - Improved internal communication, external messaging, and alignment of monetary policy practice with central bank best practices.

- Solomon Islands — Central Bank (CBSI)
  - Modernized monetary policy process with model-based forecasting tools: nowcasting, near-term forecasting, and QPM.
  - Redesigned internal procedures, introduced a formal Forecasting Calendar, and created a Technical Subcommittee reporting to the Monetary Policy Committee.
  - Strengthened external communication through forward-looking policy statements and press releases.
  - FPAS fully embedded in CBSI’s policy preparation supporting a structured and data-driven approach.

### Institutional Capacity and Partnerships
- ICD teams:
  - HQ staff: Lead analytical and technical work, provide strategic oversight, engage stakeholders.
  - Regional advisors: Provide local knowledge, agile tailored responses, and strong relationships with counterparts.
  - Short-term experts: Offer specialized expertise to address technical issues.
- Partnerships:
  - Regional Capacity Development Centers deliver tailor-made training and technical assistance regionally.
  - Thematic and country funds provide flexible, targeted resources.
  - Bilateral partners (e.g., Japan) contribute about one-third of IMF’s Capacity Development funding, often focused on specific countries, regions or projects.
  - Regional partners (e.g., AMRO, WAIFEM, CEMLA) facilitate knowledge sharing and co-host training.

### Document Numeric Markers
- 89.56
- 83.45
- 88.22
- 75.33
- 20.15
- 23.43
- 25.33
- 50.77
- 48.89
- 55.93

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_Source: https://www.imf.org/-/media/images/imf/capacity-development/english-forecasts-into-action.pdf_