## _101911

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### Executive Summary — Vision and Strategic Principles (FINE)
- FINE model for Fund TA:
  - Focused:
    - Confined to macro-relevant issues within the Fund’s core macro (economic and financial) mandate.
    - Depth includes strategic advice (“what to do”) and operationalization (“how to do it”), but not actual implementation (“doing it”).
  - Integrated:
    - TA integrated with surveillance and program responsibilities.
    - TA provided directly by HQ-based staff or contractual employees backstopped by HQ, not merely by managing external TA projects.
  - Nimble:
    - Able to provide prompt “fire-fighting” TA in crises and “preventive” TA with medium-term capacity-building orientation.
    - Preserve rapid response capability alongside medium-term programming.
  - Effective:
    - Outcome-focused, cutting-edge advice to all members; continuous upgrading of TA skills; demand-driven prioritization and procedures for assessing effectiveness.
- Four goals under the Articles of Agreement (Art. V, Section 2(b)) that TA fulfills:
  - Capacity building.
  - Specialized policy advice.
  - Information gathering and learning.
  - Outreach to members.

### Volume of TA Provision and Financing
- Donor financing and scale:
  - Donor financing (first for RTACs, increasingly for HQ activities and long-term resident advisors) has relaxed past budget constraints and enabled rapid growth in TA volume.
  - The Fund remains a relatively small TA provider compared with other institutions.
- Strategic constraints on scale:
  - FINE vision limits scope and depth; staff-based model and high-quality requirements constrain large-scale expansion.
  - Some areas (notably the financial sector) are harder to scale due to expert scarcity.
  - Major expansion to match other institutions’ TA levels would deviate from FINE.
- Split and complementarities between internal and external financing:
  - External and internal financing are not perfect substitutes: donor funds are not indifferent on allocation and are less flexible for “fire-fighting” TA.
  - Donor financing is expected to be “additional” to internal financing; internal financing must retain a central role.
- Current internal financing level and adequacy (exact figures preserved):
  - After the 2008 downsizing, internal TA financing fell to US$ 115-130 million or less than 14 percent of the Fund’s internal budget, and about 60 percent of total TA financing (against 80 percent before the downsizing).
  - Based on the last three years’ experience, this size appears adequate if topped up during crisis periods (as in FY11).
  - Further reduction of internal financing risks undermining the Fund model (e.g., maintaining adequate permanent staff for quick crisis response) and breaching understandings on donor additionality.
  - The medium-term budget provides recurring opportunities to reassess internal financing adequacy.

### Modalities of TA Delivery, HQ–RTAC Integration, and Costs
- Modalities of delivery:
  - Traditionally: missions from HQ, short- and long-term field advisors.
  - Decentralization: in-the-field location of experts via RTACs.
  - Remote TA: advice directly from HQ (e.g., review of draft laws).
  - Shift from single-mission concept toward medium-term engagement and regional “cross-country” TA.
- Division of responsibilities and backstopping:
  - RTACs and short/long-term advisors support implementation of HQ-defined policy strategies.
  - Backstoppers supervise and provide quality control, supplementary advice, and full coordination of TA delivery.
  - In practice, RTAC TA sometimes perceived as an alternative to HQ TA rather than integrated; role of backstoppers not always well-understood.
  - Critical conditions to maintain effective integration:
    - (i) planning of TA activities fully benefits from RTAC views;
    - (ii) backstopping remains fully financed;
    - (iii) key RTAC planning events timed to allow decisions consistent with RSNs.
- Centralization versus decentralization — pros and assessment:
  - Pros of decentralization: better local knowledge, more country “buy-in”, faster response, better follow-up, lower travel costs.
  - Pros of centralization: cross-country synergies, integration with other country work, economies of scale from pooling specialists, “fresh-pair-of-eyes”, lower cost of HQ staff.
  - Assessment:
    - A significant degree of centralization is appropriate for Fund TA given the centralized business model.
    - HQ-based TA pivotal for integration with other country work and FINE TA.
    - Share of decentralized TA has risen to 46 percent in the last three years, making integration challenging.
    - Improved communications permit delivery of some HQ services at higher frequency and lower cost; further increasing field presence beyond current plans does not seem appropriate.
- Costs, backstopping, donor financing (exact shares preserved):
  - Donors reluctant to cover all HQ costs of supporting RTACs; efficiency and value-for-money important for RTAC sustainability.
  - These costs are budgeted at about 15 percent of total, composed of:
    - about 8 percentage points for TA departments’ backstopping and project management (billed based on actual costs);
    - 7 percent for overheads (covering OTM, FIN and LEG trust fund management costs, billed as a lump sum).
  - Overheads in line with World Bank and IDB costs; scope for economies should be examined.
  - Encourage TA departments to seek cost reductions while maintaining high-quality backstopping; adopt more risk-based calibration of backstopping.
  - Facilitate HQ staff mobility to RTACs (requires addressing administrative problems).
  - Revamp high-cost TA reporting system (TAIMS) as resources permit.

### Programmatic and Multilateral TA
- Structural reform often multi-year; many TA activities extend beyond one year.
- Preventive TA increasingly follows a programmatic approach seeking government commitment to a medium-term TA program.
- Preconditions for effective medium-term TA:
  - (i) close ex ante area department involvement to develop a medium-term strategy;
  - (ii) continuity in government and political will;
  - (iii) flexibility, including by donors, to adjust programs.
- Multilateral TA (e.g., workshops) can permit economies of scale and knowledge-sharing; financing may be required to bring officials from poorer countries.

### Ensuring TA Effectiveness — Prioritization, RBM, and Evaluations
- Prioritization and allocation:
  - Management decided not to use TA charges as a prioritization tool; TA rooted in the Fund’s overall country strategy.
  - Current prioritization process:
    - Area departments define TA strategies through Regional Strategy Notes (RSNs) based on urgency, need to safeguard Fund resources, and likelihood of implementation; take account of TA departments and RTAC coordinators; FSAPs/ROSCs and PRSPs are important inputs.
    - TA departments operationalize RSNs; set budget allocations across departments (subject to Committee on Capacity Building (CCB) review); Regional Allocation Plans (RAPs) define sequencing, modalities, and financing.
    - Country authorities’ views and willingness to undertake reforms closely considered; request letter from authorities is key (in some cases oral request sufficient).
  - Improvements proposed:
    - Raise central reserve from 5 percent to 10-15 percent.
    - Strengthen TA strategic discussion in the medium-term budget; consider Board periodic report on TA.
    - Shift from annual to multi-year planning and revise RSN/RAPs calendar for better stakeholder consultation and RTAC integration.
  - Purchaser-provider model considered but judged to have limited value-added.
- Results-Based Management (RBM) and outcome measurement:
  - TA effectiveness ultimately measured by outcomes (policy/institutional change), though providers do not control outcomes directly.
  - Current tools focus on outputs; obstacles to outcome measurement include crisis constraints, long lags for institution-building, and attribution challenges.
  - RBM phasing in to systematize tracking progress toward outcome-based objectives using indicators:
    - “Log frames” will be developed where Fund TA is intensive and will cover activities of each RTAC and Topical Trust Funds (TTFs).
    - Log frame template aligned with international best practice; better RBM tools being introduced.
    - Avoid over-promising; be clear about exogenous constraints and lags.
    - Resource implications of RBM significant because most members lack typical RBM indicators.
  - Ex-post evaluations:
    - Supplement indicator-based approach with selective ex-post evaluations.
    - OTM could coordinate focused external evaluations of TA projects (including internally financed ones) guided by clear selection criteria to contain costs.
    - Evaluations to focus on outputs and outcomes, country cases and thematic areas (e.g., tax administration), and delivery modalities.
    - Financing of evaluations: centrally, by TA departments, or by donors.
    - Evaluations could assess whether TA projects remain within the boundaries of Fund TA and complement donor evaluations.

### Donor Involvement and Practical Challenges
- Donor contributions:
  - Donors finance TA and provide valuable information about country reform issues; donor reporting requirements drive TA assessment tool improvements.
- Challenges:
  - Donor financing only acceptable when projects fully align with staff and authorities’ priorities.
  - Uncertainties in donor disbursements could cause RTAC liquidity problems; need to minimize costs to member countries if disruptions arise.
  - Interaction with donors is costly; donor financing remains fragmented despite progress excluding micro-projects.
  - Better fund-raising planning and a consultative group process (presenting multi-year RSN/RAP strategy to donors every other year) might help secure priorities.
  - Different donor reporting standards costly; adopting a Fund standard RBM should help if designed to meet donors’ needs.

### Resource Issues, HR and Staffing Constraints
- Resource implications for HR policy and budget:
  - Some measures (e.g., strengthened evaluation) require new or reallocated resources.
  - HR challenges:
    - Ensuring cutting-edge knowledge on new topics; need to upgrade staff skills.
    - Limits to scaling up due to scarcity of specialized expertise.
    - Difficulties maintaining high-quality staffing of RTACs.
    - Need for fund-raising and project management expertise for donor partnerships.
- Recommendations and possibilities:
  - Draw more intensively on specialized knowledge in member governments and regional bodies by securing stronger commitments to lend specialists, supported by enhanced training and on-boarding.
  - Lift roadblocks to placing staff in RTACs to enhance quality control, lower backstopping costs, and create an avenue for specialized staff mobility.
  - Relax impediments to drawing on retired staff for temporary expert assignments.
  - Consider defining career streams suited to hiring project managers or clarify their career prospects in the Fund.
  - Allow departments to extend contracts of HQ-based consultants beyond the current four years (recognizing policy and legal issues).

### Synergies between TA and Training; INS/OTM Cooperation or Merger
- Distinctive features:
  - Training does not aim at providing policy advice directly to specific countries; uses mostly a regional approach; typically targeted at officials charged with policy execution.
- Three important synergies:
  - Donor financing overlap: coordinate fund-raising for TA and training.
  - Training can provide technical skills required for TA implementation; TA departments often organize cross-country training sessions following TA advice.
  - Location synergies: 80 percent of training courses are delivered in the field; Regional Training Centers have greater country coverage than RTACs—potential economies by combining facilities/mandates.
- Strengthening OTM/INS cooperation and possible merger:
  - Minimum action: intensify coordination in planning of OTM and INS.
  - More ambitious option: merge INS and OTM to:
    - develop a unified Fund agenda for capacity building;
    - realize economies of scale in fund-raising;
    - harmonize donor relations;
    - integrate planning and reporting.
  - Box 1 — Key responsibilities of a new capacity building department (INS/OTM merger rationale and functions):
    - Define capacity building strategy integrating TA and training, coordinate a joint medium-term TA and training program based on RSNs.
    - Provide centralized administrative services for capacity building, including monitoring processes.
    - Coordinate donor contacts and partnerships.
    - Design and coordinate TA and training effectiveness assessment processes, including RBM and external evaluations.
    - Jointly manage the network of regional training and technical assistance centers; evolve toward a global network.
    - Design training curriculum in cooperation with other departments and continue providing INS-covered training services.
    - Report to the Board through periodic reviews of capacity building.

### TA as Outreach and Visibility
- TA is the most appreciated form of Fund interaction with members, yet remains little known.
- Outreach targets:
  - Beneficiary countries to improve take-up and effectiveness.
  - Donors to maximize outside contributions and appreciation.
  - Wider stakeholder community and general public to improve IMF brand and appreciation.
- Possible initiatives to strengthen knowledge of Fund TA activities:
  - Remind country authorities that publication of TA reports is their prerogative; Fund would typically not object to publication.
  - Where authorities agree, incorporate TA information into Fund press releases.
  - Use Annual and Spring Meetings to showcase TA achievements (piloted in the 2011 Annual Meetings).
  - Consider topic publications with cross-country case-studies, enhanced web presence, and conferences with country authorities and donors; EXR to coordinate outreach in cooperation with OTM and TA departments.

### Key Empirical Data and Selected Figures (preserved exactly)
- Training decentralization:
  - "80 percent of training courses are delivered in the field."
- Distribution of TA by Country Groups and Regions, FY10-FY12 (In percent of in-field delivery)
  - By country groups:
    - Low-income countries: 33.7 32.7 34.1
    - Middle-income countries: 49.1 45.2 43.0
    - Advanced countries: 5.5 8.3 4.7
    - Cross-country/regional: 11.7 13.8 18.2
  - By regions:
    - Africa: 35.1 32.0 36.6
    - Asia and Pacific: 16.7 17.1 16.3
    - Europe: 11.8 10.8 10.0
    - Middle East and North Africa: 14.4 15.0 14.6
    - Western Hemisphere: 20.2 23.6 21.4
    - Cross-regional: 1.8 1.6 1.1
    - Total: 100.0 100.0 100.0
- Fund TA and financing (FY06–FY12 person-year sequence shown):
  - Fund TA: 176 196 172 174 164 184 237
  - Fund-financed: 144 156 131 132 115 120 141
  - Donor-financed: 32 40 41 42 49 64 96
  - Fund-financing as percent of total TA financing: 81.7 79.6 76.2 75.7 69.8 65.3 59.6
  - Fund-financing as percent of net administrative budget: 16.4 17.4 14.7 16.1 13.3 13.1 14.3
- Trust fund management fees — selected effective rates:
  - IMF nominal rate 7%; effective rate 7%; other IFIs listed with effective ranges (5.1 - 9.1%, 2.0 - 5.3%, 5.0 - 5.3%, 2.0 - 2.1%, 5.0 - 9.1%) and notes on fee bases.

### Conclusions and Issues for Discussion (paragraph 35 summary)
- Key components and points for Executive Directors:
  - TA to remain a core Fund activity, well integrated with surveillance and program work.
  - Clear definition of TA boundaries anchored by the Fund mandate.
  - Focus on strategic advice while increasing emphasis on implementation issues.
  - Recognition that internal and external financing are not perfect substitutes; maintain proper mix.
  - Current prioritization approach broadly valid but should be strengthened.
  - Balance between centralization and sufficient field resources.
  - Stronger TA assessment process with increasing emphasis on outcomes (RBM plus ex-post evaluations).
  - Increased attention to synergies between TA and training.
  - Stronger role for TA in Fund outreach.

### Main Components of the Fund’s TA Strategy (items preserved verbatim)
1. TA is a core Fund activity, serving various goals, including helping countries to build capacity to implement appropriate policies and strengthen institutions, and providing specialized policy advice.
2. Fund TA, including that financed by external resources, should be closely linked to its macro mandate: it should focus on the provision of advice on strategies and their operationalization.
3. Within these boundaries, the Fund should continue to upgrade the nature and quality of its TA in line with country needs, including by skill-building and hiring.
4. The Fund should remain a “focused/highly effective” player in the provision of TA.
5. Internal financing of TA should be broadly related to the size of the Fund’s operations: the level of internal financing reached after the downsizing (complemented by any crisis related financing needed) seems at the moment broadly adequate.
6. The extent of external financing should be constrained by the mandate of the Fund and the need to maintain the current business model and overall size of Fund operations. Some further expansion could, however, be tested depending on the circumstances of individual TA departments.
7. The current TA model involves a close integration between activities of HQ and of RTACs, with RTACs focused on advising on the implementation of reform strategies recommended by HQ. More needs to be done to ensure that this model is fully understood by all stakeholders.
8. It is critical to strike the right balance between maintaining a relatively high degree of centralization in TA and locating a sufficient amount of resources in the field. Following years of increased decentralization of Fund TA, a further shift in this direction does not seem appropriate at present. RTACs should continue to be funded with external resources, but if support wanes orderly exit strategies need to be agreed among financing partners.
9. Further efforts should be made to gather comparable information about the costs of backstopping and project management and to contain these costs, while recognizing that the Fund’s business model requires significant support from the center to provide guidance and ensure quality, given the potentially huge cost of macro policy mistakes.
10. The current approach to prioritization is broadly appropriate but can be improved by increasing the size of the central reserve to 10-15 percent, strengthening discussions of TA priorities in the Fund’s medium-term budget, shifting from annual to multi-annual RSNs and RAPs, and revising the timetable for the preparation of these documents. Consideration by the Board of a periodic report on TA would also help.
11. Structural reform is a multi-year activity and this justifies an increased focus on “programmatic” approaches (while ensuring sufficient resources to “fire-fighting” TA). Cross-country modalities of TA delivery (e.g., through workshops) should also be increasingly used.
12. RBM will be phased in. In-depth ex-post reviews conducted by external evaluators will be performed on a selective basis.
13. There is a need to work with donors in a more strategic and wholesale way to reduce administrative costs. An effort will also be made to ensure that donors accept a more standardized approach to reporting on the effectiveness of Fund TA.
14. Where possible, impediments to HR actions will be lifted, to accommodate new skill needs, facilitate access to scarce experts, and facilitate the assignment of staff to RTACs.
15. The synergies between TA and training will be better exploited, including through the merger of INS and OTM.
16. The role of TA in the Fund’s outreach strategy will be strengthened.

### Appendix 3 — Quality Control Practices (summarized)
- Quality control of outputs:
  - Strong departmental review processes for TA reports involve country authorities and area departments.
  - Direct feedback sought during/after country visits and at Annual/Spring Meetings.
  - Interim and in-depth end-of-project assessments prepared for externally financed projects, reporting against objectives and indicators.
  - Department-specific practices:
    - FAD: questionnaires and ex-post quality reviews of random TA reports.
    - STA: missions identify 2-3 specific benchmark actions to be taken by authorities before committing follow-up assistance.
    - Country authorities asked to complete self-assessments on progress and sustainability of mission recommendations.
- Quality control of outcomes (departmental initiatives):
  - Outcome evaluations infrequent due to cost and resource constraints after downsizing.
  - MCM: enhanced TA Evaluation Program with (i) independent ex-post TA evaluations; (ii) beneficiary country surveys; (iii) systematic reviews of project assessments.
  - LEG: tracks draft laws and related documents to see enactment/implementation and changes during the process.
  - FAD: reduced stand-alone TA evaluation activities; assesses reform outcomes within analytical work, but attribution to FAD TA not usually assessed.
- Evaluation tools used by donors:
  - Program design and monitoring: donors prepare documentation, results frameworks, and risk assessments requiring Fund input; Fund typically submits annual progress reports.
  - Evaluations apply DAC criteria: relevance, efficiency, effectiveness, impact and sustainability; donors focusing on value for money and reporting of results.
  - Three categories of evaluations:
    - Ad hoc evaluations for specific or contentious questions.
    - Legally mandated independent evaluations (e.g., periodic evaluations of trust funds, mid-term RTAC/TTF reviews) financed by donors.
    - Evaluations of Fund TA within broader donor strategies, determining funding levels.
  - Consequences of expanding externally financed TA:
    - Growing demand on staff for information and evaluation management.
    - Challenges in securing effective coverage, avoiding duplication, and ensuring take-up of recommendations.

*Source: Excerpt from IMF staff document on TA modalities, integration, effectiveness, donor involvement, and resource issues.*

### Executive Summary ......................................................................................................

### Executive Summary

### Introduction
- Fund technical assistance (TA) has undergone major changes: increased demand for longer-term, implementation-oriented TA and new topics; increased donor financing; increased delivery through experts located in the field.
- These developments call for reassessing the Fund’s TA strategy to preserve core strengths and respond to evolving country needs.

### A Vision for TA in the Fund’s Mandate (FINE)
- The paper proposes a FINE model for Fund TA:
  - Focused: on the Fund’s core macro (economic and financial) mandate; scope confined to macro-relevant issues; depth includes both strategic advice (“what to do”) and operationalization (“how to do it”), but not actual implementation (“doing it”).
  - Integrated: with surveillance and program responsibilities; TA is provided directly by HQ-based staff or contractual employees backstopped by HQ, rather than by merely managing external TA projects.
  - Nimble: able to provide prompt “fire-fighting” TA in crises and “preventive” TA with medium-term capacity-building orientation; rapid response capability must be preserved even as medium-term programming increases.
  - Effective: outcome-focused, cutting-edge advice to all members; continuous upgrading of TA skills; demand-driven prioritization and procedures for assessing effectiveness.
- TA fulfills four goals under the Articles of Agreement (Art. V, Section 2(b)):
  - Capacity building.
  - Specialized policy advice.
  - Information gathering and learning.
  - Outreach to members.

### Volume of TA Provision and Its Financing
- Key observations:
  - Donor financing (first for RTACs, increasingly for HQ activities and long-term resident advisors) has relaxed past budget constraints and enabled rapid growth in TA volume.
  - The Fund remains a relatively small TA provider compared with other institutions (see Appendix 1, Table 2 referenced).
- Strategic constraints on scale:
  - FINE vision limits both scope and depth of TA; staff-based model and high-quality requirements constrain a large-scale expansion; some areas (notably the financial sector) are harder to scale due to expert scarcity.
  - A major expansion to match other institutions’ TA levels would fundamentally deviate from the FINE vision.
- Split between internal and external financing:
  - External and internal financing are not perfect substitutes:
    - Donor funds are not indifferent on allocation; relying only on external financing would not allow TA to all members.
    - External financing is less flexible for “fire-fighting” TA required in crises.
  - Donor financing is expected to be “additional” to internal financing; internal financing must therefore retain a central role.
- Current internal financing level and adequacy:
  - After the 2008 downsizing, internal TA financing fell to US$ 115-130 million or less than 14 percent of the Fund’s internal budget, and about 60 percent of total TA financing (against 80 percent before the downsizing).
  - Based on the last three years’ experience, this size appears adequate if topped up during crisis periods (as in FY11).
  - Further reduction of internal financing risks undermining the Fund model (e.g., maintaining adequate permanent staff for quick crisis response) and breaching understandings on donor additionality.
  - The medium-term budget provides recurring opportunities to reassess internal financing adequacy.

### Modalities of TA Delivery
- Field deployment benefits and trade-offs:
  - Increased field presence of TA experts has yielded important benefits.
  - Need to strike the right balance between centralized (HQ) and decentralized (field/RTAC) TA to preserve coordination with surveillance and program work.
- HQ–RTAC relationship:
  - Effective integration between HQ and regional TA centers is critical.
  - RTACs should focus on implementation of strategic advice provided by HQ.
- New modalities emerging:
  - Programmatic approach for sustained policy dialogue.
  - Multilateral TA to facilitate peer learning.
- Cautions on donor financing modalities:
  - Donor funds are often less flexible across countries and may carry donor-member priority dissonance.
  - Donor financing volatility argues for caution in scaling up externally financed TA.

### Ensuring the Effectiveness of TA
- TA providers cannot guarantee outcomes, but good prioritization and quality control are key determinants of effectiveness.
- Current prioritization process is valid but should be strengthened by:
  - A larger TA reserve.
  - Shift to multi-year planning and a revised calendar.
  - Better coordination with other TA providers.
- Increased emphasis on outcomes is needed in assessing effectiveness.
- Proposed evaluations: ex-post evaluations to determine whether TA remained within appropriate boundaries and adhered to FINE criteria.

### Resource Issues
- Reforms envisaged require resource implications including:
  - More flexible HR policies to support new delivery modalities and skill upgrading.
  - Potential resource reallocation if TA scale or scope changes substantially.
- If reforms cannot be funded by reallocation, a reassessment of TA scale and financing would be required.

### Synergies between TA and Training
- TA and training are complementary components of capacity building.
- Greater exploitation of synergies recommended to enhance impact and efficiency.

### TA as Outreach
- TA plays a role in strengthening relationships with members and public outreach through dialogue less structured than surveillance and program discussions.
- TA should have a stronger role in outreach to members and the public at large.

### Conclusions and Issues for Discussion
- The Fund should remain a highly effective, focused TA provider consistent with the FINE model.
- Internal financing must not fall below a floor to preserve flexibility, even as externally financed TA expands.
- Expansion of externally-financed TA must:
  - Respect FINE delivery criteria.
  - Avoid dissonance between donor and member priorities.
  - Be cautious given donor funding uncertainties and volatility.
- Key operational priorities include:
  - Strengthening prioritization and quality control.
  - Enhancing HQ–RTAC integration and the balance of centralized vs. decentralized delivery.
  - Adopting multi-year TA planning and a larger TA reserve.
  - Upgrading skills and HR flexibility.
  - Intensifying outcome-focused assessment and ex-post evaluation.

*Executive Summary — IMF Technical Assistance Strategy Task Force report*

### 12.      Fund TA is delivered through various modalities. Traditionally TA has been

### 12.      Fund TA is delivered through various modalities.

### Modalities of delivery
- Traditionally TA has been delivered by missions from HQ, as well as short- and long-term field advisors.
- In-the-field location of experts (decentralization) has become more common, with the opening of RTACs.
- Communications improvements have allowed an expansion of “remote TA”—advice directly from HQ, for example the review of draft laws.
- The concept of TA as a single mission is changing: structural reforms require a more medium-term engagement.
- New modalities are being explored, such as regional “cross-country” TA.

### Division of responsibilities and integration
- Two features aim to ensure synergies between delivery modalities:
  - A division of responsibilities, with RTACs and other short/long-term advisors responsible for supporting implementation of policy strategies defined by HQ. HQ increasingly delivers implementation-related advice via missions and “remote TA,” particularly where RTAC involvement may not be feasible.
  - Close integration across all modalities of delivery, a key role of backstoppers responsible for supervision and quality control of experts and for full coordination of TA delivery.
- In practice, RTAC TA is sometimes perceived as an alternative to HQ TA rather than part of an integrated model; the role of backstoppers in quality control, supplementary advice, and integration is not well-understood.
- To maintain effective integration of RTACs and HQ it will be critical to ensure:
  - (i) planning of TA activities (see Section V) fully benefits from the views of RTACs;
  - (ii) backstopping remains fully financed; and
  - (iii) key RTAC planning events are timed to allow decisions consistent with RSNs (see Section V).

### Decentralization versus centralization
- Pros of decentralization:
  - Better knowledge of local realities and possibly more “buy-in” by member countries (RTACs are often seen as “belonging” to the countries covered).
  - Faster response to requests and better follow-up due to lower travel costs.
- Pros of centralization:
  - Exploits synergies from cross-country experiences and better integration across various aspects of TA.
  - Possibility of economies of scale from pooling specialists; multi-skilled RTAC advisors are hard to find.
  - HQ missions may provide a “fresh-pair-of-eyes” important for evaluating reform progress.
  - Cost considerations: cost of staff in the field is much higher than the cost of HQ staff.
- Assessment:
  - A significant degree of centralization is appropriate for Fund TA because the Fund’s business model is centralized to keep Fund operations on a relatively small scale.
  - HQ-based TA plays a pivotal role in integration with other country work and FINE TA.
  - The share of decentralized TA has risen to 46 percent in the last three years (see Appendix 1, Figure 4), making integration challenging.
  - Improved communications permit delivery of some HQ services at higher frequency and lower cost; further increasing field presence beyond current plans does not seem appropriate.

### Costs, backstopping, and donor financing
- Donors show reluctance to cover all HQ costs of supporting RTACs; demonstrated efficiency and value-for-money are important for sustainability of the RTAC model.
- These costs are budgeted at about 15 percent of total, composed of:
  - about 8 percentage points for TA departments’ backstopping and project management (billed based on actual costs);
  - 7 percent for overheads (covering OTM, FIN and LEG trust fund management costs, billed as a lump sum).
- Overheads are in line with World Bank and IDB costs (see Appendix 1, Table 3), though scope for economies should be examined.
- TA departments should be encouraged to seek cost reductions while maintaining high-quality backstopping; a more risk-based approach to backstopping—calibrating it more closely to need—may be possible.
- Facilitating HQ staff mobility to RTACs would assist implementation (requires addressing administrative problems).
- The high-cost TA reporting system (TAIMS) should be revamped as resources permit.

### Programmatic and multilateral TA
- Many TA activities extend well beyond one year; structural reform is a multi-year endeavor.
- For “preventive” TA staff increasingly follow a programmatic approach—seeking commitment from governments to a medium-term TA program.
- Preconditions for effective medium-term TA include:
  - (i) close ex ante area department involvement to develop a medium-term strategy;
  - (ii) continuity in government and political will; and
  - (iii) flexibility, including by donors, to adjust programs to changing circumstances.
- Departments have explored “multilateral TA” in the form of workshops; boundaries between conference outreach and TA can be blurred.
  - Multilateral TA permits economies of scale and knowledge-sharing across countries.
  - Financing may be required to permit participation of officials from poorer countries in such workshops.

### Ensuring the effectiveness of TA — allocating resources to priority tasks
- Ensuring TA effectiveness involves appropriate allocation of resources to priority activities and quality control/ex-post result evaluation using appropriate assessment tools.
- Management decided not to use TA charges as a prioritization tool; the current approach roots TA in the Fund’s overall country strategy.
- Current prioritization process:
  - Area departments define TA strategies through Regional Strategy Notes (RSNs) based on urgency of country needs, need to safeguard Fund resources, and likelihood of implementation; they take account of TA departments and RTAC coordinators. FSAPs/ROSCs and PRSPs are important inputs.
  - TA departments operationalize RSNs: set budget allocations across departments (subject to Committee on Capacity Building (CCB) review); Regional Allocation Plans (RAPs) define sequencing, modalities, and financing to meet TA requests.
  - Country authorities’ views and willingness to undertake reforms are closely considered; the requirement of a request letter from authorities is key to ensure demand-driven TA (in some cases an oral request is considered sufficient).
- The current process is broadly appropriate; assigning prioritization to area departments ensures resources are allocated across countries and TA areas.
- Scope for improvement to respond to changing priorities:
  - The central reserve of 5 percent should be raised to 10-15 percent.
  - Strengthen discussion of TA strategic priorities in the medium-term budget; Board consideration of a periodic report on TA with forward-looking and backward-looking elements could help.
  - Shift from annual to multi-year planning to accommodate the increase in multi-year delivery.
  - Revise the RSN/RAPs calendar to allow adequate consultation of stakeholders and better integration of RTAC considerations while maintaining consistency with the budget process.
- A purchaser-provider model (area departments bid for TA services) was considered but judged to have limited value-added for the Fund given emergency needs, specialization constraints, administrative duplication, and misfit with the FINE vision.

### Quality control: assessing effectiveness and results-based management (RBM)
- TA effectiveness should ultimately be measured by outcomes (policy/institutional change), though TA providers do not control outcomes directly.
- Current TA evaluation tools focus primarily on outputs, not outcomes.
- Obstacles to outcome measurement include:
  - crisis-response advice given under financial and political constraints;
  - institution-building advice taking many years to bear fruit;
  - attribution challenges with many actors in the reform process.
- The Fund is phasing in results-based management (RBM) to systematize tracking progress toward objectives defined in terms of outcomes using indicators.
  - “Log frames” will be developed where Fund TA is intensive and will cover activities of each RTAC and Topical Trust Funds (TTFs).
  - The Fund’s log frame template is being aligned with international best practice; better tools to manage RBM are being introduced.
  - Avoid over-promising in objectives; be clear about exogenous political and other constraints and lags to realizable outcomes.
  - Resource implications of RBM are significant because most members lack the indicators typical in RBM applications.
- An indicator-based approach should be supplemented with selective ex-post evaluations:
  - OTM could coordinate focused external evaluations of TA projects (including internally financed ones), guided by clear selection criteria to contain costs.
  - Evaluations would focus on outputs and outcomes, cover country cases and thematic areas (such as tax administration) and delivery modalities.
  - Financing options: centrally, by TA departments, or by donors, depending on budgetary considerations.
  - Evaluations could assess whether TA projects remain within the boundaries of what Fund TA should cover and complement donor evaluations.

### Donor involvement
- Donors contribute financing and valuable information about country reform issues; donor reporting requirements provide momentum to improve the Fund’s TA assessment tools.
- Challenges in interacting with donors:
  - Donor financing can be accepted only when projects are fully in line with priorities of staff and authorities.
  - Uncertainties on the timing of donor disbursements could cause RTAC liquidity problems; thought is needed on minimizing costs to member countries if disruptions arise.
  - Interacting with donors is costly for both sides; donor financing remains too fragmented despite progress in excluding micro-projects that are too costly to manage.
  - Better planning of fund-raising and a consultative group process (presenting multi-year RSN/RAP TA strategy to donors every other year) might help secure funding priorities.
  - Meeting different donor reporting standards is costly; adopting a Fund standard RBM should help if its design meets donors’ needs.

### Resource issues
- Resource implications arise for HR policy and the budget; some measures (e.g., strengthened evaluation) require new or reallocated resources and must be considered versus other Fund priorities or efficiency gains.
- HR challenges include:
  - Ensuring availability of cutting-edge knowledge on new topics (staff skills need upgrading).
  - Limits to scaling-up due to scarcity of specialized expertise.
  - Difficulties in maintaining high-quality staffing of RTACs.
  - Need for fund-raising and project management expertise for effective donor partnerships.
- Recommendations and possibilities:
  - Draw more intensively on specialized knowledge available in member governments and regional bodies by securing stronger commitments to lend specialists, supported by enhanced training and on-boarding.
  - Lift roadblocks to placing staff in RTACs to enhance quality-control, lower backstopping costs, and create another avenue for specialized staff mobility.
  - Relax impediments to drawing on retired staff for temporary expert assignments.
  - Consider defining career streams suited to hiring project managers or clarify their career prospects in the Fund.
  - Allow departments to extend contracts of HQ-based consultants beyond the current four years (recognizing policy and legal issues relating to employment categories).

*Source: Excerpt from IMF staff document on TA modalities, integration, effectiveness, donor involvement, and resource issues.*

### 31.      While TA and training are different, synergies arise that could be better

### _101911 - 31.      While TA and training are different, synergies arise that could be better

### Synergies between Technical Assistance (TA) and Training
- Distinctive features: training (i) does not aim at providing policy advice directly to specific countries; (ii) uses mostly a regional approach; and (iii) is typically targeted at officials charged with policy execution, rather than to decision-makers.
- Three important synergies identified:
  - First, both activities are often financed by donors, and it would seem important to realize any potential synergies from coordinating fund-raising for both.
  - Second, the implementation of TA advice often requires the acquisition of technical skills by country officials that training could usefully provide. TA departments often organize cross-country training sessions that follow directly from advice provided under TA activities. Both TA and training need to respond to priorities coming from member countries as identified by RSNs. Closer coordination of TA agendas and training course programs for country officials could make TA advice more likely to endure. Likewise the internal training curriculum should reflect and anticipate likely country needs so that staff is well-prepared to confront emerging issues.
  - Third, there are “location synergies”: training preceded TA in decentralization: 80 percent of training courses are delivered in the field, and Regional Training Centers have greater country coverage than RTACs. Hence it is opportune to ask whether combining the plant and even mandate of the two types of decentralized Fund institution could lead to economies of scale and enhance the reach of TA.

### Strengthening OTM/INS cooperation and possible merger
- Minimum action: intensify coordination in the planning of OTM and INS.
- More ambitious option: merge the two operations to:
  - develop a unified Fund agenda for capacity building;
  - realize economies of scale in fund-raising;
  - harmonize donor relations;
  - integrate planning and reporting.
- Box 1 — Key responsibilities of a new capacity building department (INS/OTM merger rationale and functions):
  - Defining a capacity building strategy for the Fund and ensuring that departments coordinate the provision of TA and training services in the most effective way. The strategy for TA defined in this report would be integrated with a consistent training strategy to form a capacity building strategy that is updated over time in response to the evolving needs of Fund members. Coordinating the preparation of a joint medium-term TA and training program (the training program already has a strong medium-term orientation and this paper recommends the same approach for TA) based on RSNs covering both aspects of capacity building.
  - Providing centralized administrative services for capacity building, including appropriate processes for monitoring capacity building activities.
  - Coordinating contacts with donors. An INS/OTM merger could be accompanied by an enhanced partnership with donors and other key stakeholders to underscore that the Fund is moving to modernize and increase the efficiency and effectiveness of capacity building.
  - Designing and coordinating processes for assessing the effectiveness of TA and training activities, including the phasing in of RBM approaches complemented by external evaluations.
  - Managing jointly the network of regional training and technical assistance centers. Over time, this network could evolve into a global network of capacity building centers.
  - Designing the training curriculum in cooperation with other departments and continuing to provide training services in the areas traditionally covered by INS.
  - Reporting to the Board through periodic reviews of capacity building.

### TA as outreach
- TA is the most appreciated form of Fund interaction with members, yet it remains little known.
- Outreach should be enhanced in three directions:
  - to beneficiary countries to improve take-up, traction and overall effectiveness;
  - to donors to maximize outside contributions and appreciation of Fund TA work;
  - to the wider stakeholder community and general public to improve the general IMF brand and appreciation of the value of the institution.
- Possible initiatives to strengthen knowledge of Fund TA activities:
  - Remind country authorities that publication of TA reports is their prerogative, since the Fund would typically not object to publication; such publication could usefully inform the public about the authorities’ reforms.
  - Where the authorities agree, incorporate TA information into Fund press releases.
  - Use Annual and Spring Meetings to showcase TA achievements (piloted in the 2011 Annual Meetings).
  - Consider topic publications with cross-country case-studies, enhanced web presence, and conferences with country authorities and donors. EXR should coordinate these outreach activities, in cooperation with OTM and TA departments.

### Key empirical data on TA delivery (selected figures preserved exactly as in source)
- Training decentralization: "80 percent of training courses are delivered in the field."
- Table: Distribution of TA by Country Groups and Regions, FY10-FY12 (In percent of in-field delivery)
  - By country groups:
    - Low-income countries: 33.7 32.7 34.1
    - Middle-income countries: 49.1 45.2 43.0
    - Advanced countries: 5.5 8.3 4.7
    - Cross-country/regional: 11.7 13.8 18.2
  - By regions:
    - Africa: 35.1 32.0 36.6
    - Asia and Pacific: 16.7 17.1 16.3
    - Europe: 11.8 10.8 10.0
    - Middle East and North Africa: 14.4 15.0 14.6
    - Western Hemisphere: 20.2 23.6 21.4
    - Cross-regional: 1.8 1.6 1.1
    - Total: 100.0 100.0 100.0
- Fund TA and financing (selected lines):
  - Fund TA (FY06–FY12 person-year sequence shown): 176 196 172 174 164 184 237
  - Fund-financed: 144 156 131 132 115 120 141
  - Donor-financed: 32 40 41 42 49 64 96
  - Fund-financing as percent of total TA financing: 81.7 79.6 76.2 75.7 69.8 65.3 59.6
  - Fund-financing as percent of net administrative budget: 16.4 17.4 14.7 16.1 13.3 13.1 14.3
- Trust fund management fees — selected effective rates: IMF nominal rate 7%; effective rate 7%; other IFIs listed with effective ranges (5.1 - 9.1%, 2.0 - 5.3%, 5.0 - 5.3%, 2.0 - 2.1%, 5.0 - 9.1%) and notes on fee bases.

### Conclusions and issues for discussion (paragraph 35 summary)
- Key components and strategic points for Executive Directors to discuss:
  - a continued role of TA as a core Fund activity, which should remain well integrated with surveillance and program work;
  - a clear definition of the boundaries of TA, anchored by the Fund mandate;
  - a focus on strategic advice, although an increasing emphasis on implementation issues is needed to meet members’ expectations;
  - the recognition that internal and external financing are not perfect substitutes and a proper mix between the two is needed;
  - the continued validity of the current approach to prioritizing TA delivery, which should, however, be strengthened in some respects;
  - the need to strike the right balance between maintaining a relatively high degree of centralization in TA and locating a sufficient amount of resources in the field;
  - a stronger TA assessment process, with increasing emphasis on outcomes, based on RMB complemented by ex-post evaluations;
  - an increased attention to exploiting the synergies between TA and training;
  - a stronger role for TA in the Fund’s outreach strategy.

### Main components of the Fund’s TA strategy (Table 1 items preserved verbatim)
1. TA is a core Fund activity, serving various goals, including helping countries to build capacity to implement appropriate policies and strengthen institutions, and providing specialized policy advice.
2. Fund TA, including that financed by external resources, should be closely linked to its macro mandate: it should focus on the provision of advice on strategies and their operationalization.
3. Within these boundaries, the Fund should continue to upgrade the nature and quality of its TA in line with country needs, including by skill-building and hiring.
4. The Fund should remain a “focused/highly effective” player in the provision of TA.
5. Internal financing of TA should be broadly related to the size of the Fund’s operations: the level of internal financing reached after the downsizing (complemented by any crisis related financing needed) seems at the moment broadly adequate.
6. The extent of external financing should be constrained by the mandate of the Fund and the need to maintain the current business model and overall size of Fund operations. Some further expansion could, however, be tested depending on the circumstances of individual TA departments.
7. The current TA model involves a close integration between activities of HQ and of RTACs, with RTACs focused on advising on the implementation of reform strategies recommended by HQ. More needs to be done to ensure that this model is fully understood by all stakeholders.
8. It is critical to strike the right balance between maintaining a relatively high degree of centralization in TA and locating a sufficient amount of resources in the field. Following years of increased decentralization of Fund TA, a further shift in this direction does not seem appropriate at present. RTACs should continue to be funded with external resources, but if support wanes orderly exit strategies need to be agreed among financing partners.
9. Further efforts should be made to gather comparable information about the costs of backstopping and project management and to contain these costs, while recognizing that the Fund’s business model requires significant support from the center to provide guidance and ensure quality, given the potentially huge cost of macro policy mistakes.
10. The current approach to prioritization is broadly appropriate but can be improved by increasing the size of the central reserve to 10-15 percent, strengthening discussions of TA priorities in the Fund’s medium-term budget, shifting from annual to multi-annual RSNs and RAPs, and revising the timetable for the preparation of these documents. Consideration by the Board of a periodic report on TA would also help.
11. Structural reform is a multi-year activity and this justifies an increased focus on “programmatic” approaches (while ensuring sufficient resources to “fire-fighting” TA). Cross-country modalities of TA delivery (e.g., through workshops) should also be increasingly used.
12. RBM will be phased in. In-depth ex-post reviews conducted by external evaluators will be performed on a selective basis.
13. There is a need to work with donors in a more strategic and wholesale way to reduce administrative costs. An effort will also be made to ensure that donors accept a more standardized approach to reporting on the effectiveness of Fund TA.
14. Where possible, impediments to HR actions will be lifted, to accommodate new skill needs, facilitate access to scarce experts, and facilitate the assignment of staff to RTACs.
15. The synergies between TA and training will be better exploited, including through the merger of INS and OTM.
16. The role of TA in the Fund’s outreach strategy will be strengthened.

*Source: _101911 - 31.      While TA and training are different, synergies arise that could be better*

### Appendix 3.   Quality Control Practices

### Appendix 3.   Quality Control Practices

### Quality control of outputs
- Reviewing the quality of advice is an integral part of departmental processes.
- Departments have strong review processes in place for TA reports, which involve country authorities and area departments.
- Direct feedback from TA recipients is sought during and after country visits and in discussions at the Annual/Spring Meetings.
- Departments prepare interim and in-depth end-of-project assessments for externally financed projects, which include reporting against project objectives and indicators.
- Other department-specific practices:
  - FAD seeks additional feedback from country authorities through questionnaires and conducts ex-post quality reviews of a random selection of TA reports.
  - STA missions identify 2-3 specific benchmark actions to be taken by the authorities before the department commits follow-up assistance.
  - Country authorities are asked to complete a self-assessment, indicating the progress achieved in the implementation of previous mission recommendations, their sustainability, and factors that may have hindered their accomplishment.

### Quality control of outcomes
- Departmental outcome evaluations have generally been infrequent, reflecting cost considerations and competing demands on departments’ resources, in particular after the downsizing.
- Department-specific initiatives to assess outcomes:
  - MCM is instituting an enhanced TA Evaluation Program that incorporates:
    - (i) independent ex-post TA evaluations;
    - (ii) beneficiary country surveys for feedback on outcomes and overall TA quality; and
    - (iii) systematic reviews of project assessments to distill cross-cutting themes and to report on outcomes.
  - LEG’s method of evaluating outcomes includes tracking draft laws and other documents in which the department has been involved to see when and whether they are enacted or implemented and what changes are made during the process.
  - FAD has reduced its stand-alone TA evaluation activities, but assesses reform outcomes in the context of its analytical work. Most such assessments are based on the findings and lessons learned from FAD’s TA, but they do not usually assess the extent to which the results can be attributed to FAD's TA.

### Evaluation tools used by donors to assess the effectiveness of Fund TA
- Donors rely on two forms of tools when assessing whether their funding of Fund TA achieves the objectives:
  - Program design and monitoring:
    - At the outset of a new project, donors normally prepare extensive documentation against which performance is monitored on a regular, mostly annual, basis.
    - This includes results frameworks and detailed risk assessments.
    - These documents are internal to the donor but often require significant input from the Fund to develop and to report against.
    - The Fund is typically required to submit annual progress reports.
    - In many cases, wider donor objectives diverge slightly from those of the Fund, resulting in requests for additional information that is outside the scope of the project.
  - Evaluations:
    - Evaluations seek to address the standard Development Assistance Committee (DAC) criteria of relevance, efficiency, effectiveness, impact and sustainability.
    - Donors are increasingly focusing on: (i) value for money/cost-effectiveness; and (ii) reporting of results achieved.
    - Three broad categories of evaluations:
      - Ad hoc evaluations intended to: (i) clarify more narrowly defined or contentious questions; or (ii) complement regular reporting and/or compensate for deficiencies in reporting.
      - Legally mandated independent evaluations of specific TA projects, for example periodic evaluations of trust fund activities or mid-term evaluations of RTACs and TTFs. These evaluations are financed by donors, conducted by independent experts, and supported by OTM.
      - Evaluations of Fund TA within the broader context of donor strategies, which assess the effectiveness of Fund TA and its alignment with donor development objectives. The outcome of such evaluations determines the level of funding for Fund TA.
    - With the expansion of externally financed TA, the number of evaluations is continuing to grow, resulting in:
      - A substantial and growing demand on staff, both in responding to information requests and managing the evaluation.
      - Challenges in securing effective coverage of evaluations, including avoiding duplication, and in the take-up of recommendations from donor evaluation.

*Source: Appendix 3. Quality Control Practices*

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