IMF technical assistance

31 March 2014 | Inside the institutions

Technical assistance is a form of non-financial assistance provided by the IMF as a way of sharing its expertise with member countries. According to the IMF, the overarching aim of technical assistance is to “help improve the design and implementation of members’ economic policies, by strengthening skills in institutions, such as finance ministries, central banks, and statistical agencies.” By attempting to improve countries’ economic policies, the IMF believes that this will lead to better economic outcomes whilst also creating a more stable global economy. Technical assistance is one of the Fund’s three main pillars of activity, and is considered by the Fund to be complementary to its other core functions of surveillance and lending in order to improve the overall implementation of economic policies.

 IMF provision of technical assistance tends to cover four core areas of expertise:

1)    monetary and financial policies, for example, providing banking system supervision and restructuring, supervising foreign exchange management and operations, and clearing settlement systems for payment;

2)    fiscal policy and management, including tax and customs policies and administration, budget formulation, expenditure management and debt management;

3)    macroeconomic statistical data compilation, management, dissemination, and improvement; and

4)    economic and financial legislation.

Evolution of technical assistance

Over the years, technical assistance has been subject to a series of evaluations and reforms to help strengthen its effectiveness and delivery. In 2005 the Independent Evaluation Office (IEO) of the IMF published a report reviewing technical assistance which included recommendations, such as the need to develop systematic approaches to track assistance progress; a new framework for setting technical assistance priorities; greater involvement by authorities in the design of technical assistance activities; and the removal of the prioritisation filters which inform how projects are chosen. Not all of these IEO recommendations were adopted. For example, the recommendation to discontinue the prioritisation filters was dropped, as the IMF believed it would have negative implications for the speed and effectiveness of the delivery of technical assistance.

In 2008, technical assistance underwent reform. Changes introduced included country charges; performance indicators to assess results; strengthening partnerships with donors through fundraising; and better costing of technical assistance to improve the allocation of resources (see Update 61). In 2012, the Office of Technical Assistance Management joined with the IMF Institute to become the Institute for Capacity Development, aiming to promote collaborations and better coordination between IMF technical assistance, training and other elements of capacity development.

A June 2013 policy paper builds upon the 2008 reform strategy, suggesting the need to bring technical assistance and training under a single strategy, as well as the introduction of further reforms, such as the improvement of governance and the need to strengthen the evaluation of capacity development. In addition to this, a June 2013 update of a 2008 policy paper was released providing staff guidelines on how to widely disseminate technical assistance information, following 2008 suggestions that wider dissemination of technical assistance information would help to reinforce coordination with donors and other providers.

When is technical assistance delivered?

According to the IMF, technical assistance is often requested by recipient countries governments to help implement macroeconomic policies. Additionally, the need to implement technical assistance can often be recognised and requested during discussions with country authorities, when designing IMF funded programmes or through IMF surveillance. Eligibility to receive technical assistance is determined using IMF guidelines in the form of prioritisation filters. Requests are prioritised based upon filters such as programme areas, policy initiatives, impact and commitment, availability of external financing and regional diversity. Once the request meets the guidelines, technical assistance is delivered.

The Fund delivers its technical assistance in several ways. The IMF believes that central to the provision of technical assistance is the idea of country ownership, in which the recipient country is directly involved in the process of technical assistance, from the early stages of identification to later stages of implementation and evaluation. Assistance is often provided through staff missions in which experts are sent to the recipient country for periods of time, ranging from a few weeks to a few years. Other forms of assistance include training courses, seminars, workshops and online support.

Since 1993, the IMF included a regional approach towards technical assistance, establishing nine regional centres across the world, allowing for the quicker dissemination of assistance as well as for specific tailoring of assistance to meet the needs of the region. The first of these regional centres was established in the Pacific region in 1993, followed by the establishment of the Caribbean regional centre. Since 2002, five further centres were established in the Sub-Saharan Africa region as part of the IMF’s Africa Capacity Building Initiative, to improve the coordination of capacity building technical assistance in the Poverty Reduction Strategy Paper (PRSP) process. Two further regional centres were established in the Middle East in 2004 and in Central America and the Dominican Republic in 2009.

Who receives technical assistance?

Technical assistance accounts for about one-quarter of the IMF’s operating budget. The IMF annual report measures the delivery of technical assistance in person years, referring to the number of people working full time on technical assistance per year. Between the financial years 2008 and 2013, overall technical assistance has increased from 180 person years to 280 person years.

In 2013 approximately two-thirds of total technical assistance was delivered to low-income and lower-middle-income countries, with post conflict countries being significant beneficiaries.  There was also an increase in technical assistance to IMF programme countries such as Greece, Cyprus and Portugal. Much of the technical assistance given in 2013 focused on fiscal issues, policies and management.

How is technical assistance funded?

Technical assistance is funded by both the IMF, as well as by both its recipients and donors, the latter comprising of approximately 40 bilateral donors, such as Japan, the UK, Canada and Switzerland; and multilateral donors, such as the Asian Development Bank, the European Union and the Islamic Development Bank.  In financial year 2013, external funding accounted for 80 per cent of technical assistance field missions.

In 2008 charging for technical assistance was introduced, however in 2011 the Fund decided to reverse these charges having found that charges would complicate the management of technical assistance.