External Relations Department
International Monetary Fund, Washington, D.C. 20431 U.S.A.
The increased attention being placed on the promotion of better governance, and on creating or maintaining conditions for sustainable and equitable growth, highlights the need to pay greater attention to strengthening governments’ human resource and institutional capacities for effective economic management. Member countries and the IMF believe that the timely provision of effective technical assistance can help support the reform process and bolster a country’s commitment to adjustment and reform.
In 1964, in response to requests from a number of newly independent African and Asian nations that sought help in establishing their own central banks and ministries of finance, the IMF began to extend technical assistance to its member countries. By the end of the decade, the IMF’s technical assistance work had grown rapidly, to almost 70 person-years in 1970. By the mid-1980s, the staffing resources devoted to technical assistance had nearly doubled, and by the end of the 1980s the emphasis had moved from long-term to short-term expert assignments, advisory missions, and training seminars. By 1990, the large number of countries seeking to move from command to market-oriented economies placed additional demands on the IMF’s capacity to provide technical assistance. In addition, in recent years, the IMF has mounted significant coordinated efforts to provide prompt policy and operational advice to countries that have had to re-establish governmental institutions following severe civil unrest. Today, the IMF provides approximately 300 person-years of technical assistance to its member countries.
Types of Technical Assistance
The IMF provides technical assistance in three broad areas; (a) design and implementation of fiscal and monetary policies; (b) institution building, such as the development of central banks, treasuries, tax and customs departments, and statistical services; and (c) drafting and review of economic and financial legislation.
The IMF also attaches great importance to the training of officials through specially designed courses at its headquarters in Washington, the Joint Vienna Institute, the Singapore Training Institute, and at other regional or subregional locations. Technical assistance missions and expert assignments provide countries with advice and hands-on support to help resolve monetary, fiscal, and statistical problems that often lie at the heart of macroeconomic imbalances.
In recent years, technical assistance projects have grown both larger and more complex as time horizons have lengthened, and multiple sources of financing have often been needed to underwrite costs. Large projects now commonly involve more than one IMF department and more than one donor.
Given the ever-increasing demand for its technical assistance, the IMF must prioritize its technical assistance activities, to allocate technical assistance resources among member countries and regions in the most efficient manner. The IMF’s area (regional) departments play a major role in identifying countries’ technical assistance needs in broad terms. Prioritization is also facilitated by an interdepartmental committee of senior IMF staff, the Technical Assistance Committee, that reviews member countries’ experience with successful technical assistance. The IMF identifies the following key conditions as crucial to successful implementation of its technical assistance:
– commitment of the country authorities to policy and institutional reforms;
– a stable and cohesive macroeconomic environment;
– adequate absorptive capacity of the country’s administrative structure, and appropriate skill level of local counterparts.
Examples of IMF Technical Assistance
The IMF’s technical assistance operations range from one- or two-person missions responding at short notice to emergency requests, to large-scale, integrated, multiyear technical assistance programs cofinanced with other donors. Examples of the latter have been implemented in postconflict situations such as Angola, Cambodia, Lebanon, Namibia, Haiti, Rwanda, and Yemen. Plans are under preparation for a similar approach for Nigeria and Eritrea. Such programs are usually closely coordinated with, and cofinanced by, the UNDP, and often involve a number of bilateral donors.
The IMF is also developing a regional approach, where appropriate, to the delivery of technical assistance and training services, as for instance the Pacific Financial Technical Assistance Centre in Fiji covering 15 countries in the Pacific area with financing from UNDP, Australia, New Zealand, the Pacific Forum and the Asian Development Bank, and the Singapore Training Institute, which is cofinanced by the Government of Singapore
With financial support provided by the Government of Switzerland, the IMF is, inter alia, helping the Central Bank of Bolivia modernize monetary and foreign exchange operations, strengthen its capacity to monitor the soundness of financial institutions, and improve the payments system.
External Cooperation and Coordination
In the late 1980s, the IMF began to explore leveraging opportunities through parallel financing, fund-raising, and external financing. In 1989, the IMF took formal steps to coordinate and cooperate with other multilateral and bilateral agencies to avoid conflicting advice and redundant activities. This cooperation has led to a more integrated approach to planning and implementation of technical assistance. External financing provided by a number of donors, such as the UNDP, the Government of Japan, the Government of Switzerland, the World Bank, and the European Union, now supports nearly one third of the IMF’s technical assistance and approximately one half of the cost of long- and short-term experts in the field. The Government of Japan provides generous annual contributions to IMF technical assistance programs and scholarship support. A number of other bilateral donors have supported IMF technical assistance either by making contributions to UNDP/IMF projects, or directly through special-purpose Sub-accounts of the Technical Assistance Framework Account. To date, Australia, Denmark, France, Rwanda, and Switzerland, in addition to Japan, have opened such Sub-accounts.