## _052113

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### EXECUTIVE SUMMARY — Background and high-level reforms
- Purpose: Outline reforms to increase effectiveness of the Fund’s capacity development (CD) program; build on 2008 and 2011 reviews of technical assistance (TA) and the 2008 review of training.
- Key actions:
  - Board endorsement in a few areas and staff implementation of next steps.
  - Bring TA and training under a single strategy to improve prioritization, delivery, evaluation, and governance.
- Historical/contextual notes:
  - The Fund’s CD program originated in the 1960s and has evolved with the Fund’s work; CD services increased sharply since 2009 aided by donor partnerships (references include Figure 1. IMF TA and Training, FY 1964–12).
- Proposals seeking Board endorsement:
  - Strengthen CD governance (update policy statement; mandate regular reviews of CD policies and activities).
  - Adopt a two-level prioritization principle: institutional level (Fund objectives) and country level (country demand).
  - Adopt three funding principles to guide Fund- and donor-financing of CD (ensure adequate funding in crises; allow donor financing when objectives coincide; rely on Fund financing when donor support is not available).
  - Enhance monitoring and evaluation to ensure systematic implementation of recommendations and feedback of lessons into prioritization and delivery.
- Staff operational next steps:
  - Draft policy statement and guidance notes; expand Results Based Management (RBM) coverage to all TA and training; exploit TA/training synergies and new technologies; leverage CD for outreach.

### Changes in the CD landscape — opportunities and challenges
- Donor funding and characteristics:
  - Donor funding now finances about 40 percent of the Fund’s annual CD activities in terms of output.
  - Donor funding: less fungible, geared toward medium-term projects, may not be available for all member countries, entails long gestation periods, and requires complementary Fund expenditures (governance and overhead).
- Crisis dynamics:
  - Need to mobilize quickly for short-term crisis-related CD needs (“curative TA”) and support institution-building to boost resilience (“preventive TA”).
  - Challenges: linking assessment of CD needs and allocation decisions more closely to Fund surveillance; deploying CD services for preventive as well as curative purposes.
- Technology and institutional change:
  - Advances in technology expand opportunities for knowledge sharing and training (online + face-to-face mixes).
  - Creation of the Institute for Capacity Development (ICD) in May 2012 with mandate to develop unified CD strategy, coordinate TA/training, strengthen donor partnerships, evaluate TA/training effectiveness, and seek Executive Board guidance.

### Objective of CD, delivery modes, and guiding principles
- Legal basis:
  - IMF’s Articles of Agreement (Article V, Section 2(b)) permit the Fund, upon request, to perform financial and technical services consistent with Article I purposes; services are voluntary for member and Fund.
- Main objective:
  - Help build institutions and capacity in member countries to formulate and implement sound economic and financial policies; CD services planned and implemented with full involvement and buy-in of the member country.
- Delivery modes:
  - Technical assistance (TA): specialized advice on Fund core mandate issues, often country-specific, may include on-the-job training or workshops.
  - Training: strengthen officials’ ability to analyze economic developments and manage macroeconomic and financial policies; typically targets groups with similar roles across countries.
- FINE model (applies to TA and training):
  - Focused, Integrated, Nimble, Effective.
- CD strategy guiding principles:
  - (i) allocate scarce resources in line with country demand and Fund priorities; (ii) rely on appropriate mix of internal and external financing; (iii) use effective and efficient delivery mechanisms; (iv) use systematic evaluations to improve CD and ensure objectives are met.

### Training in the CD strategy
- Objective: Strengthen analytical and technical capacities of member country officials for macroeconomic and financial policy.
- Current delivery:
  - Three quarters of IMF training offered through ICD-coordinated program delivered by ICD, STA, MCM, FAD, LEG, FIN and regional training institutes; remainder arranged independently by other departments and RTACs.
- Strategy elements:
  - Position Fund as focused and effective training provider; focus on knowledge essential to macroeconomic and financial management; integrate theory and real-world applications with Fund case studies.
  - Deliver global coverage with regional focus; include peer-to-peer exchanges; deliver at HQ, RTCs, and with partners.
  - Target primarily mid- to high-level officials from finance ministries, central banks, other government financial agencies, and statistical agencies.
  - Maintain dialogue with member countries, update curriculum in line with Fund policy agenda, include training in the RSN process.
  - Evaluate using participant evaluations, follow-up surveys, RTC partner input, and a triennial survey of sponsoring agencies.
  - Explore new technologies: online courses, pre-course e-learning modules, webinars, targeted workshops.

### Relative resource shares (Figure 2, FY 2012)
- Multilateral surveillance 21%
- Oversight of global system 10%
- Bilateral surveillance 23%
- Lending 19%
- Capacity development 23%
- Unallocated 4%

### Enhancing CD effectiveness — governance proposals and actions
- Work-practice changes proposed:
  - (i) improve governance of CD activities; (ii) better align CD with member needs and Fund objectives via strategic planning and enhancing the RSN process; (iii) clarify the funding model; (iv) make greater use of evaluations.
- Governance context and rationale:
  - Major past steps: Committee on Capacity Building (CCB) in 2006; ICD created in May 2012. Given rise in CD delivery and donor financing, further governance strengthening needed to support accountability, transparency, and clear responsibilities.
  - CD activity size comparable to bilateral surveillance, multilateral surveillance, or lending—CD governance should be on equal footing with other key output areas.
- Elements of strengthened CD governance:
  - Updated policy statement for CD services to replace April 2001 statement; incorporate principles from 2008 and 2011 reviews (focus on results, prioritization, efficient management, transparency, regular reviews/evaluations); reaffirm 2008 Board-approved principles on dissemination and voluntary publication of TA reports.
  - Regular reviews of CD policy and activities every three to five years; ICD to lead reviews with independent participants; develop follow-up action plans and track implementation.
  - Re-energized CCB with updated terms of reference: provide institutional priority guidance, review planned vs. actual results, and guide fundraising direction.
  - Incorporate donor-financed CD more fully into Fund planning and budget process; formalize approval of new fundraising initiatives to put externally-funded activities on par with internally-funded activities in priority setting and oversight.
- Proposals for Board endorsement:
  - Update the policy statement for CD.
  - Mandate regular reviews of CD to be scheduled every three to five years.
- Next steps for staff (governance):
  - Prepare a new policy statement for Board approval; draft new terms of reference for the CCB.

### Prioritization — aligning demand, strategy, and resources (including Box 4)
- Rationale:
  - Prioritization necessary because demand outstrips available resources even with donor support; country teams play a central role.
- Two-level prioritization principle (proposed for Board endorsement):
  - Institutional/aggregate level: decisions on size and composition of CD relative to other outputs via strategic planning (departmental accountability framework and budget).
  - Country/disaggregated level: RSN/RAP process capturing country-by-country demand and project-level allocation.
- Historical note on RSNs:
  - RSNs introduced in FY 2008; work relatively well for demand-driven prioritization at country/regional level but are less suited for aggregate-level prioritization across topics or regions; could be extended to better capture training (first steps in FY 2013).
- Capability Assessment Program (CAP) pilot:
  - Voluntary high-level assessment of institutional capacity for macroeconomic policymaking; intended to coordinate with other CD providers and focus CD provision on comparative advantage; pilot to be reviewed after initial assessments.
- Next steps for staff (prioritization):
  - Integrate CD activity into Fund’s strategic planning process.
  - Develop a guidance note for RSNs.
  - Pilot the CAP program and assess its value.

### Funding model: current state, guiding principles, figures, and implementation
- Observations:
  - Donors fund roughly forty percent of CD in dollar terms, mainly through multiyear trust fund commitments.
  - Donor channels: RTACs/RTCs (multi-donor, usually five-year cycles), Topical Trust Funds (TTFs) (typically five-year cycles), Bilateral Agreements (BAs).
  - Challenges: Fund and donor priorities not always aligned; donors do not cover overhead costs; donor financing can require a “co-pay” from Fund resources.
  - Integration imperative: donor-financed projects should be integrated into strategic planning and budgeting.
- Funding envelope figures (from Figure 5) — amounts in millions of U.S. dollars:
  - RTACs: 58
  - TTFs: 17
  - BAs: 42
  - RTCs: 11
- Table 1. Funding Model: Guiding Principles (verbatim)
  - Principle 1: The Fund should be responsible for financing CD in the following cases:
    - In countries or on topics where donor funding is not available, including program cases;
    - When a quick reaction is required;
    - When Fund expertise in particular areas needs to be maintained.
  - Principle 2: Donor funding of CD could be considered:
    - When donor interests are consistent with Fund priorities and objectives; and
    - When sufficient space is available in the Fund’s budget to cover co-financing costs.
  - Principle 3: External financing should result in additional delivery of CD to members:
    - Taking advantage of an increase in external funding to reduce the internal funding of CD activities could jeopardize the funding model as donors have stressed that their funding should be additional and not a substitute for Fund financing of CD.
- Implementation recommendations:
  - Strengthen planning so Fund- and donor-financed CD activities are fully integrated into strategic planning and budgeting; donor-financed budget formulation on roughly same schedule as Fund-financed budget.
  - Approval by management of donor financing for RTACs, RTCs, and TTFs at fundraising stage following interdepartmental consultation; annual implementation budgets based on donor commitments.
  - Better costing of CD to derive implications for internal funding; account for overheads not financed by donors.
  - Coordinate bilateral fundraising through ICD; consider approving bilateral financing on a topical/regional block basis to reduce administrative costs.
  - Develop budget and financial management tools (part of RBM project) for consolidated monitoring.

### Funding model: risks, employment implications, and mitigation
- Budgetary mitigant:
  - Current budget formulation sets aside 10 percent reserves to address unforeseen demands for TA; a similar training reserve to be set up for FY 2014.
- Reputational and funding risks:
  - Risk if Fund fails to fulfill donor agreements; mitigations: scaled up delivery capacity, monitoring by staff and steering committees, strengthened Fund-wide reviews.
  - Risk of decline in external funding: many arrangements are multi-year (delayed impact); donor financing is monitored; mid-term reviews positive; contingent planning still needed.
- Employment framework implications:
  - Departments hesitated to expand open-ended staff positions due to donor funding uncertainty, leading to increased reliance on contractual appointments.
  - Key statistics and observations:
    - Share of A9–A15 staff on contractual appointments (regular contractual, HQ-based experts, long-term field experts) reached one third in FY 2012.
    - This compares with 5 percent in area departments and 10 percent in other functional departments.
    - During FY 2009–12, contractual appointments contributed about one half of the roughly 30 percent employment growth for grades A9–15.
    - ICD and STA have hired mostly regular contractual employees.
    - Contractual appointments in FAD, LEG, and MCM have largely been HQ-based experts and long-term field experts with expatriate and other benefits not available to most contractual employees.
  - Identified problems: uneven use of employment types and prospects for conversion; reliance on short-term contractual appointments for long-term needs.
  - Proposed response: HRD-led paper on categories of employment will address HR issues.
- Proposals for Board endorsement:
  - The three guiding principles of the funding model (see Table 1).
- Next steps for staff (employment/funding model):
  - Establish approval process for new donor financing initiatives.
  - Take up CD-related issues in HRD-led paper on categories of employment.

### Strengthening Monitoring and Evaluation (Sections 40–48)
- Rationale:
  - Evaluation and regular reviews foster learning and accountability; past reviews noted need for more systematic approach and better follow-through.
- Current evaluation instruments:
  - TA evaluations since July 2002: Fund-wide evaluations, departmental self-assessments, RTAC/TTF external evaluations, evaluations for other donor-funded projects.
  - Training evaluations: end-of-course questionnaires; follow-up surveys one year to eighteen months after selected courses; triennial survey of sponsoring government agencies.
- Challenges:
  - Dissemination and implementation of evaluation findings have been irregular.
  - Rise in number of evaluations driven partly by donor requirements; donor reporting/evaluation formats differ, causing fragmentation.
  - Internally-funded CD less frequently evaluated than donor-financed CD.
- Recommended unified approach:
  - Establish framework for monitoring and evaluation and reach collective agreement with donors on the framework.
  - Greater evaluation with systematic reporting and monitoring of results to inform strategic planning; focus evaluations on selected strategic areas.
  - Agree with donors and country authorities on common methodology for measuring progress and success; adopt systematic procedures for disseminating lessons.
- Roles of evaluators:
  - Self-evaluations appropriate for improving policies/programs; independent evaluations better for assessing whether organization is “doing the right things.”
- Results Based Management (RBM):
  - RBM being adopted; implemented in RTACs and TTFs; when Fund-wide, will capture whether outcomes are achieved and lay foundation for evaluation.
  - Some analytic tools (e.g., fiscal transparency initiative) to help RBM; standardization across TA and training departments will assist project management.
- Monitoring implementation:
  - Mechanism needed to track implementation of recommendations from past evaluations and to distill policy lessons into TA and training.
- Common evaluation standard should include:
  - Principles for good performance indicators (with flexibility).
  - Principles for methodology based on international best practices (objective, criteria, ratings).
  - Principles for dissemination and utilization (accessibility and feedback into prioritization).
- Proposals for Board endorsement:
  - Strengthen monitoring and evaluation framework, including feedback into prioritization and delivery of CD.
- Next steps for staff (M&E):
  - Pursue RBM work to enhance planning/managing outcomes.
  - Develop guidance note to establish common evaluation standard.

### Seizing opportunities — integration of TA and training and regional delivery
- Rationale:
  - TA and training are complementary; synergies exploited within TA-providing departments but cross-department and regional coordination needs more routine planning.
- Delivery modalities and scale:
  - Fund delivers over half of CD activities through regional TA and training centers.
  - Decentralized TA accounts for about half of total TA delivery; regional training represents over 80 percent of IMF training.
- Africa Training Institute (ATI) opportunity:
  - ATI in Mauritius offers experiment with integrated regional CD centers co-located with AFRITAC South under unified management to integrate TA and training and yield administrative savings.
- Sub-Saharan Africa example (Box 6): interdepartmental collaboration produced TA and training events (operational research, high-level seminars, model-based forecasting training, workshops, MERP courses, conferences); planned follow-up training and online collaborative sites.
- Next steps for staff (integration):
  - Monitor ATI experience; seek further coordination of TA and training; offer internal training complementary to external training and TA to support absorption of TA advice.

### Advances in ICT and e-learning — pilots, partnerships, and webinars
- E-learning rationale:
  - Use ICT to expand CD delivery efficiently, reach more officials, shorten courses for busy high-level officials; online courses supplement (not replace) face-to-face training.
  - After initial investment, online delivery can scale at relatively low marginal cost.
- Partnerships and pilots:
  - Partnership with edX to deliver online courses designed with machine-graded assessments enabling dramatic scaling with maintained interactivity.
  - ICD piloting several courses and modules; Development of e-learning Financial Programming and Policies (FPP) course underway (footnote 16).
  - Three e-learning modules piloted in five courses with very positive feedback (footnote 17).
- Distance learning and peer examples (Box 7):
  - IMF FPP distance learning since 2000; World Bank e-Institute (launched 2011); FSI Connect (BIS); WTO e-learning program (since 2005).
- Webinars:
  - Webinars can reach broader audiences at relatively low cost; led by Fund experts on cutting-edge topics to spread knowledge and facilitate peer exchanges.
- Next steps for staff (technology):
  - Use advances in technology to enhance effectiveness and expand CD delivery; experiment with webinars for high-level peer exchanges.

### Leverage CD as outreach and dissemination
- Outreach objectives and target groups:
  - Wider stakeholders (academia, civil society, parliamentarians) and media: enhance understanding of economic policies and Fund’s work to improve buy-in.
  - General public and country officials: Open online courses (MOOCs) to increase familiarity with the Fund.
  - Donors: communicate effective use of contributions and provide recognition.
- ICD initiative:
  - E-learning FPP course to introduce basic tools of economic analysis used by the Fund.
- Dissemination and transparency:
  - Clear dissemination policy for CD findings and evaluations enhances Fund image as provider of public goods, fosters collaboration, promotes best practices, and mobilizes donor support.
  - Revised policy statement will reaffirm 2008 principles encouraging wider dissemination, balancing transparency with confidentiality, and publication of CD reports when appropriate.
- Next steps for staff (outreach):
  - Monitor impact of CD-related outreach; enhance departmental communication on outreach activities; track dissemination and publication of CD findings and evaluations.

### Resource implications — illustrative estimates and cost notes
- General characterization:
  - Proposals mainly evolutionary; affect governance and resource management rather than direct delivery.
  - Estimates subject to high uncertainty; illustrative only.
- Specific cost implications:
  - Governance: drafting new policy and review paper part of ICD’s ongoing work program; no additional costs envisaged.
  - Evaluation: proposals build on existing departmental work programs; Fund-wide CD review every three to five years part of ICD’s program; additional costs if external reviewers engaged.
  - RBM: capital IT RBM platform project underway and already in budget; area department participation time implications uncertain; CD departments to contribute thought and data—aggregate costs too early to estimate.
  - Comprehensive budget strategy: no additional costs anticipated (ongoing budget reforms).
  - E-learning: first-year e-learning pilot financing from Fund’s capital budget; additional operating costs to be covered by efficiency gains and donor contributions (footnote 18). Example: e-learning FPP will replace distance learning FPP and allow long HQ courses to be shortened.

### Selected empirical/contextual findings and pilots
- TA responsiveness in crisis contexts:
  - TA delivered in the year prior to crisis onset was much lower than in the following year for selected crisis countries (mid-1990s sample: Indonesia, Korea, Mexico, Thailand; recent crisis countries: Greece, Iceland, Latvia, Ukraine).
  - Spring 2008 Vulnerability Exercise for Emerging Markets (VEE) background work suggests vulnerability analysis was not always actively used for TA prioritization then; little difference in TA two years before vs. two years after “highly vulnerable” classification except for countries that entered Fund programs.
  - Fund ramped up internally-financed TA to European crisis countries quickly in FY 2010; donor-funded TA took longer; by FY 2013 EU provided funding for equivalent of five field experts.
  - Both Fund and donors finance TA in all regions, with bulk going to low- and middle-income countries.

### Issues for discussion (questions posed to Directors)
- Do Directors agree with overall strategy emerging from review?
- Do Directors endorse:
  - Strengthening CD governance (updating policy statement; mandating regular CD reviews)?
  - Two-level prioritization principle: (i) institutional level within Fund objectives and (ii) country level driven by demand?
  - Three funding principles guiding Fund- and donor-financing of CD (ensure adequate funding for crises; allow donor financing when objectives coincide; rely on Fund financing when donor support absent)?
  - Enhancement of monitoring and evaluation to ensure implementation of CD review recommendations and feedback of lessons into prioritization and delivery?
- Do Directors agree to foster greater integration of TA and training and exploit new technologies (e.g., e-learning)?
- Do Directors support leveraging CD to enhance Fund outreach?

*International Monetary Fund — Excerpt from “THE FUND’S CAPACITY DEVELOPMENT STRATEGY” (extracted content)._*

### EXECUTIVE SUMMARY

### EXECUTIVE SUMMARY

### Background
- This paper outlines reforms to increase the effectiveness of the Fund’s capacity development (CD) program.
- It builds on the 2008 and 2011 reviews of technical assistance (TA) and the 2008 review of training, which set in motion important changes to make CD more valuable to member countries.
- Reforms will involve Board endorsement in a few areas and implementation by staff of related next steps.
- The Fund’s CD program originated in the 1960s and has evolved with the Fund’s work; CD services have increased sharply since 2009 aided by donor partnerships.
- Figure and timeline references in the paper include: Figure 1. IMF TA and Training, FY 1964–12; references to FY 2012 and the period 1964–2012.

### Board endorsement (proposals seeking endorsement)
- Strengthening CD governance:
  - Update the policy statement for CD.
  - Mandate regular reviews of CD policies and activities.
- Principle of a two-level system of prioritization of CD activities:
  - Institutional level: within the context of the Fund’s key objectives, leading to the broad composition of CD activities across regions and topics.
  - Country level: driven by country demand.
  - Reason: Prioritization is needed because demand outstrips available resources.
- Three funding principles to guide Fund- and donor-financing of CD:
  - Ensure adequate funding for CD in crisis situations.
  - Allow donor financing when objectives coincide.
  - Rely on Fund financing when donor support is not available.
- Enhancement of monitoring and evaluation:
  - Ensure more systematic implementation of recommendations of CD reviews.
  - Promote feedback of lessons learned from evaluations into prioritization and delivery.

### Next steps for staff (operational proposals)
- Draft a new policy statement for Board endorsement; prepare related staff guidance notes to be circulated to the Board for information.
- Expand Results Based Management (RBM) coverage to all TA and training to:
  - Focus CD planning on outcomes.
  - Provide information for evaluation.
- Enhance CD effectiveness by:
  - Exploiting TA and training synergies.
  - Harnessing new technologies.
- Leverage CD as an outreach tool for the Fund, noting CD is highly valued by the membership.

### Context, goals, and organization of the paper
- The paper follows up on prior work: the 2008 TA review, the 2008 training strategy paper, and the 2011 TA review (the “FINE” model: Focused, Integrated, Nimble, and Effective).
- Goal: bring TA and training under a single strategy and propose steps to make Fund CD as effective as possible.
- Strategy elements: setting priorities, allocating the budget, delivering CD, evaluating and monitoring results, and creating a feedback mechanism from evaluation to prioritization.
- Emphasis: anchor CD work in a transparent and accountable governance structure.
- Structure of the remainder of the paper:
  - Section II: new challenges and opportunities.
  - Section III: objectives of CD.
  - Section IV: key proposals to enhance CD effectiveness (governance, prioritization, funding model, monitoring and evaluation).
  - Section V: opportunities to expand CD delivery and outreach (integration of TA and training, new technologies, outreach).
  - Section VI: resource implications.
  - Section VII: issues for discussion.

### Notable references and supporting material mentioned
- Boxes and figures cited in the paper include:
  - Box 1. TA Success Stories: The Cases of the Philippines and Seychelles.
  - Box 2. Past Reviews on TA and Training.
  - Figure 1. IMF TA and Training, FY 1964–12.
  - Various other figures and tables referencing FY 2012 and selected historical periods (e.g., FY 1964–12).
- The paper is supported by The Fund’s Capacity Development Strategy—Better Policies through Stronger Institutions—Background Paper (the Supplement).

*Prepared under the overall guidance of Dominique Desruelle and John Green (ICD); led by Hali Edison (ICD). May 21, 2013.*

### 6.      Changes in the CD landscape have resulted in opportunities and challenges for the

### _052113 - 6.      Changes in the CD landscape have resulted in opportunities and challenges for the

### Changes in the CD landscape — opportunities and challenges
- Donor funding has continued to increase and now finances about 40 percent of the Fund’s annual CD activities in terms of output.
  - Donor funding is less fungible, more geared toward medium-term projects, may not be available for all member countries, entails long gestation periods (requiring long-term planning), and requires complementary Fund expenditures in the form of governance and overhead.
- The global crisis underscores the need to mobilize quickly for short-term crisis-related CD needs (“curative TA”) and to support institution-building to boost resilience (“preventive TA”).
  - Challenges highlighted include: (i) linking assessment of CD needs and allocation decisions more closely to Fund surveillance; and (ii) deploying Fund CD services for preventive as well as curative purposes.
- Advances in technology expand opportunities for knowledge sharing, particularly for training (e.g., combinations of online interactive technical material and face-to-face courses), meeting emerging demands, reaching more officials, and connecting with additional audiences.
- Institutional change: Following the 2011 TA review, management created a new department, the Institute for Capacity Development (ICD) (created in May 2012).
  - ICD’s mandate includes: developing a unified Fund strategy for CD; coordinating TA and training across departments; designing and delivering training reflecting member needs; strengthening donor partnerships; designing and coordinating processes for evaluating TA and training effectiveness; and seeking strategic guidance from the Executive Board through periodic reviews.
  - ICD is expected to work closely with area and functional departments and was created partly because past TA and training review recommendations had not always been consistently implemented, indicating a need for better CD governance and strengthened monitoring and evaluation.

### The objective of CD (legal mandate and modalities)
- Legal basis:
  - The IMF’s Articles of Agreement (Article V, Section 2(b)) allow the Fund to perform, upon request, financial and technical services, provided they are consistent with Article I purposes.
  - These services are voluntary for both the member (provided only if requested) and the Fund (no obligation to honor requests).
- Main objective:
  - Help build institutions and capacity in member countries to formulate and implement sound economic and financial policies.
  - CD services are a benefit of Fund membership and should be planned and implemented with full involvement and buy-in of the member country.
- Two delivery modes:
  - Technical assistance (TA): help governments put or keep in place effective institutions, legal frameworks, and policies; offers specialized advice on Fund core mandate issues; often provided to one country at a time and may include on-the-job training or workshops.
  - Training: strengthen officials’ ability to analyze economic developments and manage macroeconomic and financial policies; typically targets groups of individuals with similar roles across countries.
- FINE model (from the 2011 TA review) applies to both training and TA:
  - Focused on the Fund’s core macroeconomic and financial mandate.
  - Integrated with other core Fund responsibilities to contribute to economic stability and sustainable growth over the medium to long run.
  - Nimble in response to changing country needs and flexible to meet urgent needs (e.g., transition countries).
  - Effective in strengthening institutional capacity; training must provide high-quality, practical, outcome-focused knowledge and be well prioritized given resource constraints.
- CD strategy guiding principles:
  - (i) allocate scarce resources in line with country demand and Fund priorities within strategic planning and budgeting; (ii) rely on an appropriate mix of internal and external financing; (iii) use effective and efficient delivery mechanisms; (iv) use systematic evaluations to improve CD and ensure objectives are met.

### Training in the CD strategy (Box 3 highlights)
- Main objective of IMF training: strengthen analytical and technical capacities of member country officials to formulate and manage effective macroeconomic and financial policies.
- Current delivery:
  - Three quarters of IMF training is offered through an ICD-coordinated program delivered by staff of ICD, STA, MCM, FAD, LEG, FIN and regional training institutes.
  - The remainder is arranged independently by other Fund departments and RTACs.
- Training strategy elements:
  - Position the Fund as a focused and effective training provider.
  - Focus on knowledge essential to effective macroeconomic and financial management, including statistical and legal frameworks, integrating theory and real-world applications with Fund case studies.
  - Deliver a program global in coverage but regional in focus; include peer-to-peer exchanges; delivered at headquarters, RTCs, and with training partners.
  - Target primarily mid- to high-level officials from finance ministries, central banks, other government financial agencies, and statistical agencies with relevant duties.
  - Maintain regular dialogue with member countries to keep curriculum relevant and reflect regional diversity; update curriculum in line with the Fund’s policy agenda and evolving country needs; include training in the RSN process more effectively.
  - Evaluate regularly using participant evaluations, follow-up surveys, RTC partner input, and a triennial survey of sponsoring agencies.
  - Explore new technologies (e.g., online courses, pre-course e-learning modules, webinars, targeted workshops) to complement face-to-face training and extend reach.

### Relative resource shares (Figure 2, FY 2012)
- Multilateral surveillance 21%
- Oversight of global system 10%
- Bilateral surveillance 23%
- Lending 19%
- Capacity development 23%
- Unallocated 4%

### Enhancing the effectiveness of CD — proposals and governance
- Proposed changes to work practices:
  - (i) improve governance of CD activities; (ii) better align CD with member needs and Fund objectives by bringing all CD into the strategic planning framework and enhancing the RSN process; (iii) clarify the funding model; (iv) make greater use of evaluations.
- Governance context:
  - Major past governance actions: establishment of the Committee on Capacity Building (CCB) in 2006; creation of ICD in May 2012.
  - Given the rise in CD delivery and donor financing, further governance strengthening is justified to support accountability, transparency, and clear responsibilities for prioritizing, delivering, and evaluating CD.
  - CD activity size is similar to bilateral surveillance, multilateral surveillance, or lending, suggesting CD governance must be on equal footing with other key output areas.
- Elements of strengthened CD governance:
  - An updated policy statement for CD services to replace the April 2001 statement prepared after the 1999 TA review.
    - The new statement would contain principles from the 2008 and 2011 TA reviews, revised as appropriate, including focus on results, prioritization, efficient management, transparency, and regular reviews and evaluations.
    - The policy would reaffirm 2008 Board-approved principles encouraging wider dissemination of TA information and the principle of voluntary publication of TA reports.
  - Regular reviews of the CD policy statement and CD activities every three to five years (similar frequency as reviews of surveillance and conditionality).
    - ICD, in partnership with area and functional departments, would lead reviews, develop follow-up action plans, and track implementation.
    - Reviews should include suitably qualified independent participants to strengthen accountability and transparency.
  - A re-energized CCB with updated terms of reference to reflect rise of donor funding and synergies between TA and training.
    - Expectations for the committee: (i) complement the demand-driven RSNs by providing clear guidance to departments on institutional priorities for CD to improve allocation of CD resources; (ii) review results (planned vs. actual); (iii) provide explicit guidance on direction of fundraising activities.
  - Incorporate donor-financed CD activities more fully into the Fund’s planning and budget process and formalize approval of new fundraising initiatives to put externally-funded activities on par with internally-funded activities in priority setting and oversight.

Proposals for Governance (explicit items)
- For Board endorsement: Update the policy statement for CD.
- For Board endorsement: Mandate regular reviews of CD to be scheduled every three to five years.

Next Steps for Staff
- Prepare a new policy statement for Board approval.
- Draft new terms of reference for the CCB.

### Prioritization — aligning demand, strategy, and resources
- Prioritization is key and country teams play a fundamental role; necessary because resources cannot meet all country requests even with donor support.
- A well-functioning framework should allocate scarce resources across regions, countries, topic areas, and between short- and medium-term needs, reflecting Fund institutional objectives and feeding into strategic planning so tradeoffs across CD and other activities can be made.
- Historical context:
  - Past prioritization tools pre-RSN were too broad, inflexible, costly, or susceptible to delivering inappropriate signals; failures often reflected insufficient buy-in or guidance on optimal use.
- Two levels of prioritization:
  - Aggregate level: decisions on size of CD relative to other key output areas and composition across regions and topics via the Fund’s strategic planning process (departmental accountability framework and budget).
  - Disaggregated level: RSN/RAP process capturing country-by-country demand for detailed allocation by country and project.
- Institutional objectives:
  - More explicit incorporation of the Fund’s strategic objectives into planning could improve alignment of CD with surveillance and lending priorities.
  - This requires CCB guidance on institutional priorities and fundraising to be integrated into the process that sets Fund-wide priorities, departmental accountability, and budget formulation.

*Source: _052113 - 6.      Changes in the CD landscape have resulted in opportunities and challenges for the (extracted content).*

### Box 4. Integrating CD into the Fund’s Strategic Planning Process

### Box 4. Integrating CD into the Fund’s Strategic Planning Process

### Integration of CD into the planning cycle
- Key new elements proposed:
  - putting donor-financed budget formulation on roughly the same schedule as the Fund-financed budget;
  - reviewing fundraising activities by the CCB; and
  - reviewing CD outcomes and evaluations of CD activities.

- Proposed annual cycle:
  1. Setting Fund-wide priorities (September/October; November)
     - September/October:
       - Management’s strategic priorities are elaborated in the context of the global policy agenda (GPA).
       - Country officials discuss CD needs with area and functional departments at the Annual Meetings.
       - ICD updates the donor financing envelope.
     - November:
       - CCB updates guidance for CD objectives and priorities based on the GPA and institutional objectives for the coming year.
  2. Strategic planning (December–January)
     - Departments discuss with management accountability frameworks, including CD activities.
  3. Budget formulation (February–May)
     - Committee on the Budget discusses the upcoming medium-term budget, including donor-financed CD.
     - Area departments update their regional strategy notes to reflect country requests at the Spring Meetings and CCB guidance on institutional objectives.
     - Area and functional departments agree on the RAP.
     - Board approves budget and budget is recorded in the financial system.
     - CCB reviews fundraising activities over previous year and set objectives for period ahead.
     - RSN and RAP finalized.
  4. Review and evaluation (June–August)
     - Budget outturn paper issued with enhanced section on CD.
     - CCB reviews CD outcomes relative to the RAP for the previous fiscal year and summary of evaluation papers prepared during that year. This review provides a starting point for the next cycle, incorporating lessons learned. The CCB establishes an evaluation plan for the upcoming year.

- Donor financing envelope definition (footnote):
  - The donor financing envelope includes monies deposited in, or committed to, trust accounts plus pledged and prospective funds that are judged likely to become available. For budgeting purposes, multi-year funding is allocated to annual envelopes as described in program documents or spread equally over the time period.

### Prioritization, RSNs, and the CAP pilot
- Observations on prioritization and RSNs:
  - RSNs introduced in FY 2008 and together with the Resource Allocation Plan (RAP) provide the basis for prioritizing Fund TA.
  - RSNs work relatively well for demand-driven prioritization at country and regional level but are not well suited for aggregate-level prioritization across topics or regions.
  - Area departments have raised questions about the opacity of resource allocation across regions by functional departments.
  - Difficulties exist in shifting resources across topics and regions, partly because flexibility is constrained by past decisions on staffing and fundraising.
  - RSNs could be extended to better capture training; first steps taken in FY 2013.
  - Health checks suggest RSNs need greater clarity on how prioritization is set within each region and within countries.

- Capability Assessment Program (CAP) pilot:
  - The CAP is voluntary and uses a high-level assessment process to evaluate the extent to which institutions at the core of macroeconomic policymaking are able to fulfill their mandates, to deliver on their objectives, and to respond to the most pressing macroeconomic policy challenges.
  - The CAP would serve as a framework for coordination with other CD providers and help avoid overlaps and focus provision of CD on comparative advantage.
  - Once a few assessments have been conducted, the pilot program will be reviewed, including determining whether the assessments provide good value for money.

- Proposals for Prioritization
  - For Board endorsement: The principle of a two-level prioritization system that would (i) account for the Fund’s key objectives, and (ii) center on CD activities that are driven by individual country demand.

- Next Steps for Staff
  - Integrate CD activity into the Fund’s strategic planning process.
  - Develop a guidance note for RSNs.
  - Pilot the CAP program and assess its value.

### Funding model: current state and guiding principles
- Observations on donor financing
  - Donors now fund roughly forty percent of CD in dollar terms, mainly through multiyear trust fund commitments.
  - Donors finance CD through three channels:
    - Regional technical assistance centers (RTACs) and regional training centers (RTCs) — multi-donor vehicles, usually in five-year cycles.
    - Topical trust funds (TTFs) — multi-donor vehicles, as a rule five-year funding cycles, focused on a single strategic subject area.
    - Bilateral agreements (BAs) — support initiatives matching priorities of the Fund, donors, and recipient countries; often provide niche financing.
  - Rapid growth in donor funding has benefits and challenges:
    - Donor funding was crucial in responding to pressing demands for CD amid internal budget constraints.
    - Fund and donor priorities are not always aligned, so the Fund cannot rely too heavily on donor funding.
    - Donors do not cover overhead costs (e.g., use of HQ physical facilities); use of donor financing can require a “co-pay” from the Fund’s own resources.
  - Integration imperative:
    - Donor-financed projects should be fully integrated into the institution’s strategic planning and budget process.
    - Use of donor financing needs to be considered together with use of internal financing.

- Funding envelope figures (from Figure 5)
  - RTACs: 58 (In millions of U.S. dollars)
  - TTFs: 17 (In millions of U.S. dollars)
  - BAs: 42 (In millions of U.S. dollars)
  - RTCs: 11 (In millions of U.S. dollars)

- Table 1. Funding Model: Guiding Principles (presented verbatim)
  - Principle 1: The Fund should be responsible for financing CD in the following cases:
    - In countries or on topics where donor funding is not available, including program cases;
    - When a quick reaction is required;
    - When Fund expertise in particular areas needs to be maintained.
  - Principle 2: Donor funding of CD could be considered:
    - When donor interests are consistent with Fund priorities and objectives; and
    - When sufficient space is available in the Fund’s budget to cover co-financing costs.
  - Principle 3: External financing should result in additional delivery of CD to members:
    - Taking advantage of an increase in external funding to reduce the internal funding of CD activities could jeopardize the funding model as donors have stressed that their funding should be additional and not a substitute for Fund financing of CD.

- Implementation observations and recommended steps toward integration
  - Strengthen planning so Fund- and donor-financed CD activities are fully integrated into the Fund’s strategic planning and budgeting framework; donor-financed budget formulation would follow roughly the same schedule as for the Fund-financed budget.
  - Donor financing for RTACs, RTCs, and TTFs would be approved by management at the fundraising stage, following an interdepartmental consultation to ensure alignment with institutional objectives and consistency with internal budget decisions; annual implementation budgets for RTACs, RTCs, and TTFs would be fully based on commitments made to donors during the fundraising process.
  - Better costing of CD activities to derive implications for internal funding of external funding; overhead costs not financed by donors may vary significantly by type of CD activity.
  - Donor financing through bilateral agreements with individual members should reflect institutional objectives, budget constraints, and commitments to donors; bilateral fundraising should be coordinated through ICD to provide a one-stop window for donors and to ensure consistency with the overall donor financing strategy. To reduce administrative costs, bilateral financing could be approved on a topical or regional block basis.
  - Budget and financial management tools are being developed, including as part of the RBM project, to help manage resources and provide consolidated monitoring information.

### Selected empirical and contextual findings
- Examination of TA delivered in selected crisis countries indicates the Fund may have been more reactive than proactive; TA delivered in the year prior to crisis onset was much lower than in the following year (comparison samples: mid-1990s crisis countries — Indonesia, Korea, Mexico, Thailand; recent crisis countries — Greece, Iceland, Latvia, Ukraine).
- Background work using the Spring 2008 Vulnerability Exercise for Emerging Markets (VEE) results suggests vulnerability analysis was not always actively used for TA prioritization at that time; little difference in level of TA received two years before and two years after being classified as “highly vulnerable” except for countries that subsequently entered a Fund-supported program.
- The Fund ramped up internally-financed TA to European crisis countries quickly in FY 2010; donor-funded TA took longer to materialize, and by FY 2013 the European Union provided funding for the equivalent of five field experts.
- Both the Fund and donors finance TA in all regions, with the bulk going to low- and middle-income countries.

*Source: _052113 - Box 4. Integrating CD into the Fund’s Strategic Planning Process*

### 38.      The funding model involves risks to delivery, but mitigation measures are in place.

### _052113 - 38.      The funding model involves risks to delivery, but mitigation measures are in place.

### Funding model: risks and mitigation
- Current budget formulation sets aside 10 percent reserves to address unforeseen demands for TA. A similar training reserve will be set up for FY 2014.
- Reputational risk: If the Fund does not fulfill its donor agreements there could be a reputational risk. Mitigations in place:
  - The Fund has scaled up delivery capacity to meet its commitments.
  - Delivery is monitored by staff and steering committees.
  - Strengthening Fund-wide reviews will add an institutional check.
- Risk of decline in external funding:
  - Many arrangements are multi-year, so impact of a decline would be delayed.
  - Donor financing is carefully monitored and mid-term reviews indicate that recipients and donors are pleased with our outputs.
  - Further contingent planning is needed in case agreements are not renewed.

### Employment framework and implications of donor financing (Box 5 and related text)
- As donor financing ramped up, departments hesitated to expand open-ended staff positions because of uncertain durability and specialization of assignments.
- Consequence: CD departments increasingly relied on contractual appointments, producing unintended adverse impacts on turnover, perceptions of fairness, and transparency.
- Key employment statistics and observations:
  - The share of A9–A15 staff on contractual appointments (regular contractual, HQ-based experts, and long-term field experts) reached one third in FY 2012.
  - This compares with 5 percent in area departments and 10 percent in other functional departments.
  - During FY 2009–12, contractual appointments contributed about one half of the roughly 30 percent employment growth for grades A9–15.
  - ICD and STA have hired mostly regular contractual employees.
  - Contractual appointments in FAD, LEG, and MCM have largely been in the form of HQ-based experts and long-term field experts, who receive expatriate and other benefits not available to most contractual employees.
- Identified problems:
  - Use of employment types and prospects for conversion to staff appointments are uneven across departments.
  - Reliance on short-term contractual appointments for long-term business needs.
- Proposed response:
  - The forthcoming HRD-led paper on categories of employment will address these HR issues.
  - For Board endorsement: The three guiding principles of the funding model.
- Next steps for staff (employment/funding model):
  - Establish an approval process for new donor financing initiatives.
  - Take up CD-related issues in HRD-led paper on categories of employment.

### Strengthen Monitoring and Evaluation (Sections 40–48)
- Rationale:
  - Evaluation and regular reviews foster learning and accountability.
  - Past reviews noted need for a more systematic approach to evaluation and better follow-through on implementation.
  - Training evaluations to date focus on participant satisfaction and benefits; evaluations have been less successful in measuring impact.
- Current evaluation instruments:
  - TA evaluations since July 2002 include: (i) Fund-wide evaluations; (ii) departmental self-assessments; (iii) RTAC/TTF evaluations by external evaluators; and (iv) evaluations for other donor-funded projects.
  - For training, ICD uses: (i) end-of-course questionnaires; (ii) follow-up surveys one year to eighteen months after selected courses; (iii) a triennial survey of sponsoring government agencies.
  - Dissemination and implementation of evaluation findings have been irregular.
- Trends and challenges:
  - Rise in number of evaluations in recent years, partly driven by donor requirements (Supplement 1.G).
  - Donor reporting/evaluation formats differ across donors, leading to fragmentation.
  - Internally-funded CD is less frequently evaluated than donor-financed CD.
- Recommended unified approach:
  - Establish a framework for monitoring and evaluation and reach a collective agreement with donors on the framework.
  - Greater evaluation of CD with systematic reporting and monitoring of results to inform strategic planning.
  - Focus evaluations on selected areas chosen on the basis of strategic priorities.
  - Agree with donors and country authorities on a common methodology for measuring progress and success.
  - Adopt systematic procedures for disseminating lessons.
- Roles of evaluators:
  - Self-evaluations (originating department) are appropriate for improving policies and programs.
  - Independent evaluations are better for assessing whether the organization is “doing the right things.”
- Operational proposals:
  - Conduct a regular review of CD activities every three to five years, with the new proposed policy statement serving as the basis.
  - The CCB would consider this evaluation and other evaluations to provide feedback into prioritization and delivery of CD.
- Results Based Management (RBM):
  - RBM is being adopted within the Fund and has been implemented in RTACs and TTFs.
  - RBM principles are being used in some departments and, when Fund-wide, will capture whether outcomes are being achieved and lay the foundation for evaluation.
  - Some analytic tools (e.g., fiscal transparency initiative) are being developed that will help RBM.
  - Standardization across TA and training departments will assist with project management.
- Monitoring implementation of recommendations:
  - A mechanism is needed to monitor implementation of recommendations from past country or topical evaluations and to distill policy lessons to feed back into TA and training.
- Common evaluation standard (aspects to include):
  - Principles for good performance indicators, with flexibility for selection/modification.
  - Principles for methodology—based on international best practices—including the basis for the evaluation (objective), the criteria (scope and relevance), and ratings (rules).
  - Principles for dissemination and utilization, including accessibility of results and utilization of recommendations and how they feed back to prioritization.
  - Note: This is an outstanding recommendation of the 2005 IEO Evaluation of TA that has not been implemented.
- Proposals for Monitoring and Evaluation:
  - For Board endorsement: Strengthen the monitoring and evaluation framework, including feedback into prioritization and delivery of CD.
- Next Steps for Staff (M&E):
  - Pursue work on RBM to enhance planning and managing of outcomes.
  - Develop a guidance note to establish a common evaluation standard, based on principles for good performance indicators, methodology, and dissemination.

### Seizing opportunities for CD delivery and outreach — Integration of TA and training (Sections 49–56 and Box 6)
- Rationale:
  - TA and training are complementary and share the objective of strengthening human and institutional capacity to formulate and implement sound macroeconomic, financial, and structural policies.
  - Synergies have been best exploited within TA-providing departments; coordination across departments and regional centers requires more careful planning to be routine.
- Delivery modalities and scale:
  - The Fund delivers over half of its CD activities through a wide network of regional TA and training centers.
  - Decentralized TA accounts for about half of total TA delivery and offers advantages: greater country ownership, clearer local understanding, and closer follow-up of TA implementation.
  - Regional delivery of training represents over 80 percent of IMF training; it is cost effective, focused on regional needs, and facilitates peer-to-peer exchanges and cross-country networks.
- Opportunity: Africa Training Institute (ATI)
  - Opening of ATI in Mauritius presents an opportunity to experiment with an integrated model of regional CD centers, co-located with AFRITAC South under unified management, to integrate TA and training and yield administrative savings.
- Examples of TA-training synergies (Box 6: Sub-Saharan Africa case)
  - Policy need: many SSA countries seek more forward-looking monetary policies due to significant swings in inflation and challenges with monetary aggregates.
  - Interdepartmental collaboration (AFR, ICD, RES, SPR, MCM, STA) produced TA and training events, including:
    - Operationally-oriented research on monetary policy transmission, role of food prices, hybrid regimes (RES and SPR with AFR; DFID support).
    - High-level seminar hosted by AFR with central bank governors at 2012 Spring Meetings; pilot program training policymakers at Central Bank of Kenya.
    - RES-hosted seminar (Nov 2012) in Washington DC to train central bank and Fund staff on model-based forecasting and policy analysis; participants from Mozambique, Tanzania, Rwanda, Uganda, Zambia.
    - Two-week workshop with forecasting teams from Uganda and Rwanda.
    - ICD delivered MERP course at East AFRITAC in June–July 2012; international conference on monetary policy frameworks in July 2012 in Kigali.
  - Next steps (SSA):
    - RES plans to identify new countries for similar efforts.
    - Collaboration with central banks will continue, with RES training sessions planned for Kenya, Rwanda, and Uganda in 2013.
    - Online collaborative sites established by ICD and RES to facilitate peer-to-peer learning.
    - Internal training and support for AFR desk economists via ICD/RES Monetary Policy Analysis (MPA) course in May–June 2013.
    - ICD, with RES and AFR, to deliver MERP course for East AFRITAC higher-level officials in 2013 and a more advanced MPA course in 2014.
    - RES to organize a conference in 2013 on new approaches to monetary policy analysis and forecasting in SSA.
- Next Steps for Staff on Integration of TA and Training:
  - Monitor ATI experience with integrating TA and training.
  - Seek opportunities to coordinate further TA and training, including enhanced communication across departments.
  - Offer internal training that complements external training and TA so staff can support absorption of TA advice.

*Source: _052113 - 38.      The funding model involves risks to delivery, but mitigation measures are in place.*

### 56.      Advances in information and communication technology could be used to expand

### _052113 - 56.      Advances in information and communication technology could be used to expand

### Advances in ICT and e-learning: findings and pilots
- Advances in information and communication technology could be used to expand delivery of CD efficiently, addressing unmet demands, reaching more officials, and shortening courses for busy high-level officials.
- Courses would be designed such that, after an initial investment, delivery can be expanded at relatively low marginal cost.
- Online courses would not replace, but would supplement, face-to-face courses which include hands-on workshops and peer-to-peer exchanges that country officials value highly.
- Online courses and webinars can facilitate the integration of TA and training by bringing relevant training to TA recipients as described above.
- E-learning developments noted:
  - The Fund has recently entered into a partnership with edX, a nonprofit organization founded by the Massachusetts Institute of Technology and Harvard University, to deliver online courses.
  - These are unlike ICD’s current distance learning courses or the facilitated courses offered by others that require intensive use of instructor time; rather, they are designed with machine-graded assessments that permit dramatic scaling up of delivery while retaining a high level of interactivity and interchange among participants.
  - ICD is piloting several courses and modules, which are being made available to country officials as part of the regular program of courses.
- Footnoted pilots and results:
  - Development of an e-learning Financial Programming and Policies (FPP) course is underway. (footnote 16)
  - E-learning delivered through short pre-course modules can enhance the effectiveness of face-to-face training by ensuring that participants arrive well-prepared. Three e-learning modules have been piloted in five courses with very positive feedback from participants and requests for more e-learning content. (footnote 17)

### Distance learning examples (Box 7)
- International Monetary Fund
  - The Fund introduced its first Financial Programming and Policies course through distance learning in 2000 and offers it four times a year in English and French.
  - The course includes many online elements, but study guides are also sent to participants and much communication takes place by email, hence its broader classification as “distance learning.”
  - The distance segment is followed by a two-week residential segment.
  - The course restricted to government officials from selected agencies in member countries.
- World Bank
  - The e-Institute was launched in 2011 and runs about 60 facilitated online courses, 15 free self-paced online courses, and 20 webinars a year.
  - Topics include climate change, governance, growth and competitiveness, health systems, and urban development.
  - E-Institute courses are open to the public; most facilitated courses charge a fee.
- Financial Stability Institute (FSI), Bank for International Settlements (BIS)
  - FSI Connect offers over 200 self-paced online tutorials for financial sector supervisors in topics such as capital standards, credit and market risk, accounting, and insurance.
  - FSI Connect is available by paid subscription to all central banks, supervisory authorities, and deposit insurers.
- World Trade Organization (WTO)
  - The WTO e-learning program began in 2005 and currently offers 15 online (facilitated) courses and 18 self-paced online modules about the WTO and trade policy.
  - E-learning courses serve as prerequisites for attendance at more advanced regional training activities.
  - Courses are offered free of charge, but restricted to government officials from developing and least-developed countries that are members or observers of the WTO.

### Webinars and immediate next steps for staff
- Webinars present another avenue for exploring the use of technology to reach a broader audience and actively engage stakeholders at relatively low cost.
- Webinars led by Fund experts on cutting-edge topics can spread the institution’s knowledge and provide a forum for peer-to-peer exchanges, expanding the reach of IMF multilateral surveillance.
- Next Steps for Staff on Exploiting New Technologies:
  - Use advances in technology to enhance the effectiveness and expand the delivery of CD.
  - Experiment with webinars to facilitate high-level peer-to-peer exchanges and to spread the Fund’s institutional knowledge.

### Leverage CD as outreach: objectives and actions
- CD presents important opportunities for outreach to enhance the effectiveness of the Fund’s policy advice.
- Outreach target groups and expected benefits:
  - Wider stakeholder community (academia, civil society, and parliamentarians) and the media: enhance understanding of economic policies and the Fund’s work, potentially improving buy-in and overall traction for improved policies.
  - General public and country officials: Open online courses can increase familiarity with the Fund; ICD plans to make selected courses available to the general public as massive open online courses (MOOCs) following an initial pilot period.
  - Donors: outreach communicates that contributions are used effectively and gives donors due recognition.
- Specific ICD initiative:
  - ICD’s e-learning Financial Programming and Policies course will provide an introduction to some of the basic tools of economic analysis used by the Fund.
- Dissemination and transparency:
  - A clear policy of dissemination of CD findings and evaluations can enhance the image of the Fund as a provider of public goods.
  - Transparency fosters collaboration among TA providers, promotes best practices, and mobilizes donor support.
- The revised policy statement will reaffirm the 2008 principles for dissemination of TA information, which encourage:
  - wider dissemination of CD information to donors, other CD providers, and different agencies within recipient countries;
  - balancing transparency with the need to safeguard confidentiality; and
  - publication of CD reports when appropriate.
- Next Steps for Staff on Leveraging CD as Outreach:
  - Monitor impact of CD-related outreach.
  - Enhance communication among departments of CD-related outreach activities.
  - Track progress on dissemination and publication of CD findings and evaluations.

### Resource implications (illustrative estimates and cost notes)
- The estimates of the resources required to implement the proposals in this paper are subject to a high degree of uncertainty and are provided here for illustrative purposes.
- General characterization:
  - Proposals in this paper are mainly evolutionary. They will affect governance and resource management rather than direct delivery.
- Specific cost implications noted:
  - Governance: Drafting a new policy statement and a policy review paper would involve ICD staff, departmental review, and Board time. No additional costs are envisaged, as this is part of the ongoing work program of ICD.
  - Evaluation (except RBM): Some evaluations are already undertaken by CD departments and these will continue. Proposals to strengthen evaluation will build on work already in department work programs, and summarizing these is already part of ICD’s work program. The Fund-wide CD review that will be undertaken every three to five years is part of the ongoing work program of ICD. If there are resource implications going forward this may be discussed at the CCB. Additional costs would be incurred if external reviewers are engaged.
  - Results Based Management (RBM):
    - Fund-wide IT RBM platform: A capital project to implement RBM is now underway. It includes a new IT platform, training, and financial management tools. It is already in the budget and should not require additional resources.
    - Area department participation: Area department teams, including resident representatives, already devote significant time to CD prioritization when conveying country demands through the RSN process. Current plans envisage leveraging RSNs to provide input into RBM, but it is too early to estimate the net additional time requirement.
    - CD departments: CD providers will need to contribute thought and data to RBM and participate in evaluations. Some teams—in particular those in RTACs and those participating in TTFs—have started to contribute, but it is too early to estimate aggregate costs.
  - Comprehensive budget strategy: No additional costs are anticipated as this is part of the ongoing budget reforms.
  - E-learning: Financing for the e-learning pilot for the first year will be covered by the Fund’s capital budget. Additional operating costs going forward (e.g. web hosting) will be covered by efficiency gains in streamlining other ICD products and through donor contributions. (footnote 18)
  - Footnote example: For example, the e-learning FPP will replace the distance learning FPP and will allow long HQ courses to be shortened.

### Issues for discussion (questions for Directors)
- Do Directors agree with the overall strategy emerging from this review?
- Do Directors endorse:
  - Steps to strengthen CD governance, including updating the policy statement and mandating regular reviews of CD policies and activities?
  - The principle of a two-level system of prioritization of CD activities: (i) the institutional level, within the context of the Fund’s key objectives leading to the broad composition of CD activities across regions and topics and (ii) the country level, driven by country demand. Prioritization is needed because demand outstrips available resources.
  - Three funding principles that guide Fund- and donor- financing of CD. The principles aim to ensure adequate funding for CD in crisis situations, to allow donor financing when objectives coincide, and to rely on Fund financing when donor support is not available.
  - The enhancement of monitoring and evaluation to ensure more systematic implementation of recommendations of CD reviews and to promote feedback of lessons learned from evaluations into prioritization and delivery.
- Do Directors agree that there are opportunities to foster greater integration of TA and training and to exploit new technologies, such as e-learning to bolster effectiveness?
- Do Directors support leveraging CD to enhance the Fund’s outreach efforts?

*International Monetary Fund — Excerpt from “THE FUND’S CAPACITY DEVELOPMENT STRATEGY”*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2013/_052113.pdf_