IMF Capacity Development

March 8, 2018

Capacity development is one of the three core functions of the IMF, along with lending to countries that experience balance of payment crises, and surveillance, i.e., tracking global economic developments and providing policy advice.

Capacity development activities account for 28 percent of IMF’s budget. It comprises technical assistance and training to member countries on economic issues to help governments build effective policies and institutions. The IMF’s capacity development efforts help countries strengthen their economies, improve inclusive growth, and create jobs.

Strengthening the capacity of institutions such as central bank and finance ministry results in more effective policies, leading to economic stability and growth. That is why, for more than 50 years, the IMF has worked with these institutions to provide technical assistance and training on economic issues, helping countries raise public revenues, modernize banking systems, develop strong legal frameworks, and enhance the reporting of macroeconomic and financial data.

The IMF’s CD support is delivered to countries through short-term staff missions from IMF headquarters (Washington, DC), long-term in-country placements of resident advisors, a network of regional CD centers, and via online learning. This effort is supported by bilateral and multilateral partners that presently finance about one half of all IMF CD efforts, including through their support of regional CD centers, thematic funds focused on developmental priorities, and bilateral projects. The IMF Executive Board reviews and amends the CD strategy periodically to improve its impact and effectiveness. The next review is currently underway.

The IMF’s CD efforts are demand driven, i.e., initiated upon the request of member countries. Thus far, the IMF has provided capacity development support to all 189 member countries in line with the priorities identified by them. In FY 2017 (April 2016 – May 2017), low-income developing countries received about half of all IMF technical advice. Emerging market and middle‑income economies received just over half of IMF policy‑oriented training

The IMF’s capacity development efforts focus on:

Fiscal Policy : Helping governments better mobilize revenues and effectively manage expenditure, via tax and customs policies, budget formulation, public financial management, domestic and foreign debt, and social safety nets. This enables governments to maintain fiscal sustainability, enhance infrastructure such as schools, roads and hospitals, improve social safety nets, and attract greater investments.

Monetary and Financial Sector Policies : Working with central banks to modernize their monetary and exchange rate frameworks and policies – and with financial sector regulators and supervisors to strengthen financial systems and banking supervision. This helps improve macroeconomic and financial stability in the country, fueling domestic growth and international trade.

Legal Frameworks : Aligning legal and governance frameworks to international standards so countries can develop sound fiscal and financial reforms, fight corruption and combat money laundering and terrorism financing.

Statistics : Helping countries compile, manage and report macroeconomic and financial data. This provides more accurate understanding of their economy and helps formulate informed policies.

Integrated with its advisory services is a broad array of training courses on macro‑financial linkages, monetary and fiscal policy, balance of payment issues, financial markets and institutions, and statistical and legal frameworks. The training curriculum and course offerings reflect changing needs of member countries and include hands-on, active learning techniques. They are advertised a year ahead in IMF’s online and published catalog.

Training is administered both in-person and online . The IMF has significantly scaled up online learning as a vehicle to deliver training to government officials. Online courses are also being made freely available to the public through massive open online courses (MOOCs). More than 12,600 government officials (and almost 11,000 members of the public from 192 countries) have successfully completed an online course since the launch of the program in late 2013.

The IMF’s capacity development work is increasingly helping countries tackle their developmental priorities. This includes:

Reducing Inequality : The IMF trains policymakers to implement inclusive policies such as expenditure and subsidy reform, progressive taxation and financial inclusion. It also provides analytical, operational and monitoring tools countries need to tackle inequality.

Gender Equality : The IMF compiles gender-specific data on financial access to enable countries to better understand the impact of their economic policies on women. It is also helping boost female labor market participation, providing training on gender budgeting, publicizing best practices, and empowering female government officials through training.

Climate Action : The IMF works with countries on environmental tax reform and efficient energy pricing to minimize the effects of climate change. It also helps create robust frameworks and public financial management plans to prepare countries for natural disasters and climate-related shocks.

Capacity development is integrated with IMF surveillance and lending.

Strengthening economic policies through CD helps increase the understanding of IMF policy advice in the country, keeps institutions up-to-date on global innovations and risks, and helps address crisis-related challenges and spillovers. Similarly, the IMF’s surveillance and lending work may identify areas in which CD activities can have the biggest impact in a country.

Robust monitoring and evaluation systems ensure that IMF’s capacity development work has a strong focus on results.

The IMF is strengthening its results-based management framework to facilitate systematic planning and improved monitoring of CD activities. This is being complemented by a new common evaluation framework to improve the ability to measure and compare the performance of different kinds of technical assistance and training across the IMF.

Evaluation will help determine, for example, the degree to which technical assistance has improved macroeconomic stability, public finance management systems, the quality of economic statistics, and financial governance. Similarly, it will help determine whether training has improved job performance of government officials, and improved their ability to analyze economic developments and assess policy effectiveness.