Technical assistance benefits low-income countries

Technical assistance is one of the benefits of IMF membership. About 90 percent of IMF technical assistance goes to low and lower-middle income countries. Post-conflict countries are also major beneficiaries. Apart from the immediate benefit to recipient countries, by helping individual countries reduce weaknesses and vulnerabilities, technical assistance also contributes to a more robust and stable global economy. Further, technical assistance provided to emerging and industrialized economies in select cutting-edge areas helps provide traction to IMF policy advice, and keeps the institution up-to-date on innovations and risks to the international economy.

Integration of technical assistance with IMF surveillance and lending

Technical assistance contributes to the effectiveness of the IMF’s surveillance and lending programs, and is an important complement to these other core IMF functions. Specialized technical assistance from the IMF helps build capacity in countries for effective policymaking, including in support of surveillance or lending operations. Conversely, surveillance and lending work results in policy and other experiences that further inform and strengthen the IMF’s technical assistance program according to international best practices. In view of these linkages, achieving greater integration between technical assistance, surveillance, and lending operations is a key priority for the IMF.

Technical assistance covers core areas of IMF expertise

The IMF provides technical assistance in its areas of core expertise: macroeconomic policy, tax policy and revenue administration, expenditure management, monetary policy, the exchange rate system, financial sector sustainability, and macroeconomic and financial statistics. In particular, efforts in recent years to strengthen the international financial system have triggered additional demands for IMF technical assistance. For example, countries have asked for help to address financial sector weaknesses identified within the framework of the joint IMF-World Bank Financial Sector Assessment Program; adopt and adhere to international standards and codes for financial, fiscal, and statistical management; implement recommendations from off-shore financial centers assessments; and strengthen measures to combat money laundering and the financing of terrorism.

At the same time, there is a continuing demand for technical assistance to help low-income countries build capacity to design and implement poverty-reducing and growth programs, and to help heavily indebted poor countries undertake debt sustainability analyses and manage debt-reduction programs. The IMF also contributes actively to the Integrated Framework for trade-related technical assistance, which aims to assist low-income countries expand their participation in the global economy.

Technical assistance delivery takes a regional approach

The recipient country is fully involved in the entire process of technical assistance, from identification of need, to implementation, monitoring, and evaluation. The IMF delivers technical assistance in various ways. Depending on the nature of the assignment, support is often provided through staff missions of limited duration sent from headquarters, or the placement of experts and/or resident advisors for periods ranging from a few weeks to a few years. Assistance might also be provided in the form of technical and diagnostic studies, training courses, seminars, workshops, and “on-line” advice and support.

The IMF has increasingly adopted a regional approach to the delivery of technical assistance and training. It operates six regional technical assistance centers—in the Pacific; the Caribbean; East, West and Central Africa; and in the Middle East. In May 2009, the IMF opened a new center in Central America, and it is planning to open three additional regional centers—in Central Asia, and two further centers in Africa. In addition to training offered at the IMF Institute in Washington D.C., the IMF also offers courses, workshops, and seminars for country officials through a network of seven regional training institutes and programs.

The regional centers will be complemented by technical assistance financed through topical trust funds. The first such fund started operations in May 2009, concentrating on institution building in connection with anti-money laundering and combating the financing of terrorism.

Donors play a large role in financing technical assistance

Technical assistance accounts for about one-fifth of the IMF’s operating budget. It is financed by both internal and external resources, the latter comprising funds from bilateral and multilateral donors. Such cooperation and resource sharing with external donors has a few benefits: it leverages the internal resources available for technical assistance, helps avoid duplication of advice by different donors, and strengthens collaboration with donors and other technical assistance providers.

Bilateral donors to the IMF’s technical assistance program include Australia, Austria, Belgium, Brazil, Canada, China, Denmark, Finland, France, Germany, India, Ireland, Italy, Japan, the Republic of Korea, Luxembourg, the Netherlands, New Zealand, Norway, Portugal, Russia, Singapore, Sweden, Switzerland, the United Kingdom, and the United States. Multilateral donors include the African Development Bank, the Arab Monetary Fund, the Asian Development Bank, the European Commission, the Inter-American Development Bank, the United Nations, the United Nations Development Program (UNDP), and the World Bank. In FY 2008, external financing accounted for approximately a fifth of the IMF’s total technical assistance budget.