Thematic Funds for Capacity Development (CD)

February 28, 2020

The IMF maintains a limited number of thematic funds that cover critical areas in IMF capacity development, and are complemented by the IMF’s extensive network of regional capacity development centers. External partners help finance these funds.

Improving revenue mobilization, fiscal and natural resource management

Revenue Mobilization Thematic Fund (RMTF) : The RMTF was launched in 2011 to support low-income and lower-middle-income countries as they design and administer effective tax systems. Well-designed tax systems help generate sustainable revenue to pay for essential infrastructure and the social spending needed to meet growth and development objectives. The RMTF’s second phase began in 2016, and current partners include the European Union, Belgium, Japan, Australia, Switzerland, Norway, the Netherlands, Sweden, Denmark, Luxembourg, Germany, Korea, and the United Kingdom.

Tax Administration Diagnostic Assessment Tool (TADAT) : TADAT was launched in 2014 to provide an objective and standardized performance assessment of a country’s tax administration system. By helping identify administrative strengths and weaknesses and facilitating shared views among all stakeholders, the tool helps develop a reform agenda that can manage, monitor, and evaluate progress. TADAT’s second phase began in May 2019, and its current partners are the United Kingdom, the European Union, the Netherlands, Norway, Switzerland, Japan, and Germany.

Managing Natural Resource Wealth (MNRW) : Many resource-rich countries fail to realize the full development potential of their natural resource wealth. The MNRW was launched in 2011 to support resource-rich countries in their efforts to mobilize and manage their natural resource wealth effectively. The MNRW also helps build capacity to design and implement macroeconomic and macroprudential policies in countries that are highly dependent on large and volatile resource revenues. This thematic fund’s second phase began in 2017 with the European Union, Switzerland, Norway, the Netherlands, Australia, and the United Kingdom as partners.

Thematic funds promoting financial sector stability and access, and addressing debt issues

Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT): Money laundering and the financing of terrorist activities can undermine the soundness and stability of financial institutions and systems, discourage foreign investment, and distort international capital flows. Established in 2009, this thematic fund supports countries as they strengthen the integrity and stability of their financial sectors, which facilitates their integration into the global financial system, improves fiscal governance, and boosts revenue mobilization. Currently the AML/CFT thematic fund is at the end of its second phase. Current partners are Switzerland, the Netherlands, Luxembourg, the United Kingdom, Qatar, Norway, Japan, France, and Saudi Arabia. With continued strong demand, the IMF intends to launch a third phase for this thematic fund covering the period from July 2020 through April 2026.

Financial Sector Stability Fund (FSSF) : The FSSF was launched in November 2017 to support low- and lower-middle-income countries as they assess and address risks and vulnerabilities in the financial sector, and to help promote financial development and inclusion. The FSSF supports Financial Sector Stability Reviews (FSSRs)—a standardized diagnostic assessment that can yield valuable technical guidance—as well as provides capacity development to enhance financial sector statistics. Current partners include Sweden, Switzerland, Italy, China, the United Kingdom, Luxembourg, Saudi Arabia, Germany, and the European Investment Bank.

Debt Management Facility III (DMF III) : DMF III, which helps countries adapt to emerging debt management challenges, was launched in July 2019. Partners include Germany, Switzerland, Austria, the Netherlands, Russia, Norway, the European Union, the African Development Bank, Japan, and the United Kingdom. It is a joint IMF-World Bank thematic fund that builds on the successes of DMF I and II (launched in 2008 and 2014, respectively). With support from the DMF, more than 75 countries have assessed and strengthened their debt management capacities, actively planned for future debt operations, and ensured that their debt levels are sustainable. Given increasing concerns about debt transparency, DMF III will expand in scale and launch new activities in support of debt transparency, including a focus on fiscal risks and contingent liabilities.

Financial Sector Reform and Strengthening Initiative (FIRST) : The FIRST is a joint IMF-World Bank thematic fund that promotes financial sector development in low- and middle-income countries. Established in 2002, FIRST supports a broad range of financial sector reforms, including banking, insurance, capital markets, pensions, and crisis preparedness. Current partners include the Netherlands, Switzerland, the United Kingdom, Germany, and Luxembourg.

Thematic fund to strengthen economic decision making through better statistics

Data for Decisions (D4D) : Improving the availability, quality, coverage, timeliness, and dissemination of macroeconomic statistics enables better policy making. Launched in June 2018, D4D has supported low and lower-middle-income countries in these efforts, particularly by working with them to develop the necessary infrastructure to compile and report on many Sustainable Development Goals indicators, and also by delivering the Financial Access Survey (FAS). The FAS is used as the source for one indicator measuring progress for Sustained and Inclusive Growth and includes gender-disaggregated data. D4D is now supported by Japan, Luxembourg, Germany, the Netherlands, Switzerland, the European Union, Norway, Korea, and China.

Thematic funds supporting fragile states

Fragile State Country Funds : Building sound economic institutions and developing skills are key priorities for fragile states. South Sudan and Somalia each have a dedicated fund to strengthen their operating and technical capacity to make economic and financial institutions more effective, transparent, and accountable. The South Sudan Country Fund was established in 2012, and its current phase is financed by Norway. This fund was will be discontinued in April 2020, when South Sudan joins the regional capacity development fund, AFRITAC East. The Somalia Country Fund started its first phase in 2015 and is currently supported by the Arab Fund for Economic and Social Development, Canada, the United Kingdom, the European Union, the United States, and Italy. Its second phase will run from May 2020 to end April 2024. In parallel, the IMF is increasingly utilizing its regional centers to provide flexible and targeted capacity development support to fragile states members.