IMF Executive Board Concludes the Review of the Fund’s Capacity Development Strategy

IMF News, April 9, 2024

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Canonical URL: IMF Executive Board Concludes the Review of the Fund’s Capacity Development Strategy

Press Release No. 24/111; April 9, 2024.
The Executive Board concluded the third quinquennial review of the Fund’s Capacity Development (CD) Strategy.
CD accounts for around one-third of the Fund’s direct work with member countries and supports them to develop human capacity and build institutions for sound macroeconomic policies.
The review builds on the 2013 and 2018 strategy reviews and responds to a changing global CD landscape characterized by elevated uncertainties from higher debt, geopolitical tensions, climate change and digitalization.
The review calls for CD to become more flexible, better integrated with the Fund’s economic analysis and lending activities and well-tailored to respond to member needs.
The review benefitted from the recent independent evaluation of Fund CD, internal and external consultations with CD stakeholders, surveys of recipients and development partners, staff background studies and recommendations of the External Advisory Group.

Directors welcomed the review and broadly supported proposals toward a more flexible, integrated, and tailored CD model.
Directors commended staff outreach efforts to build consensus and called for strengthening coordination and communication with other development partners.
Directors appreciated the quality and value added of Fund CD and noted its central role in supporting member countries; this importance was recognized by the IEO evaluation in 2022 and confirmed by recent surveys of CD stakeholders.
Directors endorsed an agile and demand-driven CD approach focused on the Fund’s comparative advantages and well integrated with surveillance and lending activities.
Directors urged careful management of risks and resource implications in a flat real budget environment and welcomed staff’s assessment that most costs could be achieved by re-prioritizing within current workstreams.
It is expected that the next review of the Fund’s CD strategy will be completed no later than April 2029.

Directors concurred that the current size of CD relative to surveillance and lending is broadly appropriate.
Prioritization is key to meeting evolving and most pressing member needs.
Directors underscored the need to closely collaborate with authorities in setting priorities to ensure ownership.
Importance of further deepening CD integration with the Fund’s surveillance and lending activities, including through improved coverage of those efforts in staff reports for heavy CD users.
Directors considered that CD delivery should be scaled up to address unmet demand from member countries in the Western Hemisphere.

Directors concurred that external funding has enabled the Fund to expand significantly its CD and better meet members’ needs.
Directors acknowledged risks associated with reliance on external financing but agreed external financing would continue to play a key role given internal budget constraints.
Directors encouraged staff to continue work on mitigating those risks and welcomed efforts to increase flexibility and diversity of funding sources, including through regional and thematic vehicles.
A number of Directors called for deployment of a larger share of internal resources.
Directors supported exploring the future establishment of a CD stabilization mechanism and called for additional work on its design, mechanisms, and funding sources.
Most Directors supported the proposed modification in the charging policy for CD delivery to lift the self-financing requirement for high-income members that are already contributors to Fund CD; a few Directors called for this requirement to be lifted for all high-income members.

Directors welcomed progress in enhancing monitoring and evaluation of Fund CD.
Directors concurred with proposed enhancements of the results management framework, including:
- seeking explicit agreement with country authorities on targeted results and resource commitments;
- developing strategic results frameworks at the project level.
Directors welcomed proposals to build standardized mechanisms for monitoring and evaluation results to directly inform CD priorities.
Directors emphasized coordination with other development partners as critical to enhancing the efficiency and impact of Fund CD.

Directors welcomed proposals to modernize CD implementation, such as combining in-person and virtual delivery and further integrating technical assistance and training.
While in-person CD delivery is a large and essential component of Fund CD, Directors welcomed increased effectiveness under mixed modalities supported by technological progress.
Choice of modalities should be tailored to country-specific circumstances and the authorities’ absorptive capacity, particularly in fragile and conflict-affected states and in small developing states.
Directors supported undertaking a review of the Fund’s external training curriculum to complement these approaches.

Directors agreed that field presence, in particular through the global network of Regional CD Centers (RCDCs), has become fundamental to the Fund’s CD model.
Directors supported proposals to clarify RCDC governance and regularly review RCDC coverage.
After careful consideration, Directors supported introducing modifications to RCDC financing and administrative frameworks, effectively adopting these centers as an integral part of the CD strategy to strengthen the effectiveness of this network.

Directors emphasized the importance of appropriate HR policies to maintain quality and continuity of CD expertise and to incentivize staffing in these areas.
Directors supported initiating a strategic review of the HR framework for staff working on CD over the medium term to complement existing HR initiatives, such as work on the local employment framework.
Directors emphasized desirability of increasing mobility and career progression possibilities for specialized economists and CD experts, including by adjusting and harmonizing policies and practices for these career streams.

International Monetary Fund — Press Release No. 24/111; April 9, 2024.

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