The International Monetary Fund’s (IMF) Technical Assistance (TA) aims to develop the productive resources of member countries by improving the effectiveness of economic policy and financial management. This involves strengthening capacity to formulate effective policy and assisting in the design of these policies. This report from the IMF’s Independent Evaluation Office evaluates the TA provided to member countries. It recommends more effective mechanisms for meshing the IMFs overall strategic objectives with a system for allocating TA resources in a country-driven framework.
The volume of IMF TA is quite small relative to bilateral donors but it seems to be well targeted towards low-income countries. The volume is also positively associated with the amount of external financing available, and whether the country is a post-conflict economy.
The effectiveness of the IMF’s TA is evaluated at three stages: (i) Prioritisation: how are TA needs identified? Does the process compare short and medium term needs across sectors and reallocate resources effectively, taking account of evidence on outcomes? (ii) The delivery process: How effective is delivery and what factors affect it, especially country specificity and domestic ownership? (iii) Monitoring progress and evaluating impact: How is progress tracked and what factors contribute to impact? What can be learned from this?
The evaluation uncovered a range of problems associated with partner country ownership, lack of medium-term planning and weak coordination with other donors.
- Priorities tend to be set by the specific needs of IMF programmes and initiatives rather than PRSPs or other medium-term country-based frameworks. These could set priorities across sectors, needs and initiatives and balance short-term policy needs with medium term capacity building needs.
- There is weak coordination with other donors, including the World Bank. PRSPs are not yet operational enough to play this role and as a result, the burden of coordinating donors’ efforts often falls to a major single donor or multilateral in each country. However, it is not always possible or appropriate for the IMF to take on this role.
- The involvement of partner countries in developing the terms of reference is usually passive. This reduces ownership and masks important differences in expectations and policy commitments that are needed to ensure TA success.
- Often there is a lack of awareness of the institutional, organisational and managerial features of partner countries. There are also problems associated with dysfunctional civil services and with political interference or lack of support for the agencies supported by TA.
The recommendations imply more staff-intensive approaches and therefore that the IMF may undertake fewer and more selective TA activities, with improved relevance and greater chance of success:
- The IMF should develop medium term planning frameworks, ideally using PRSPs if possible.
- It should also develop more systematic approaches to track progress on TA activities and to identify the reasons behind major shortfalls.
- Increased partner country involvement in the design of TA activities should be emphasised to improve ownership and commitment. This includes the need for mutually-agreed indicators for monitoring TA inputs.
- TA experts should make more effort to identify options and alternatives alongside local officials when drafting recommendations.
- There have been moves to widen the programme of ex-post TA and put in place more systematic procedures for disseminating lessons learned. This should be continued and strengthened.
- The current prioritisation filters should be replaced. More strategic direction by the IMF board and an internal resource allocation system to manage competing demands is required.
