Public Information Notice No. 05/113

Public Information Notice: IMF Concludes Review of the Fund's Regional Technical Assistance Centers

August 12, 2005

On July 27, 2005, the Executive Board of the International Monetary Fund (IMF) concluded the review of the Fund's regional technical assistance centers.

Background

Regional technical assistance centers (RTACs) have become an increasingly important modality for Fund technical assistance (TA). Since 1993, the Fund has used RTACs to provide TA to groups of countries that are likely to derive added benefits from a field-based, regional approach to TA delivery. In this way, the Fund aims to assist member countries to strengthen institutions and develop the skills needed for effective economic and financial management. The Pacific Financial Technical Assistance Center (PFTAC) was established in 1993 to serve Pacific Island countries. The Caribbean Regional Technical Assistance Center (CARTAC) followed in 2001 to provide TA to countries in the Caribbean. In 2002 and 2003, respectively, two Africa Regional Technical Assistance Centers (AFRITACs) were established to serve countries in East and West Africa, and in 2004 the Middle East Regional Technical Assistance Center (METAC) was opened to serve countries and territories in the Middle East region.

The purpose of the review was to (i) present the lessons learned from the recent independent evaluations of the AFRITACs, CARTAC, and PFTAC; (ii) provide an assessment of the effectiveness and the implications of the RTACs as a delivery modality, based on these lessons and other information; and (iii) discuss strategic options concerning the future use of the RTACs in the delivery of TA. Effectiveness was assessed from two main perspectives: value added and cost effectiveness. The analysis was complemented by a review of the financial and organizational implications of the RTAC model.

Executive Board Assessment

Executive Directors welcomed the opportunity to review the effectiveness of the Fund's regional technical assistance centers (RTACs), building on the findings of the independent evaluations and other information concerning this increasingly important technical assistance (TA) delivery modality. Directors noted that the review provided a useful starting point for developing an overall strategy for the RTACs, and for decentralizing the Fund's operations in general, in the context of the medium-term strategic direction of the Fund.

Directors took note of the positive conclusions of the independent evaluations of the centers, and agreed that the RTACs have proven to be an important and useful addition to the Fund's TA program, providing significant benefits to the countries they serve. They saw RTACs as providing a niche role, offering practical technical assistance based on a knowledge of, and sensitivity to, regional circumstances, while providing access to donor financing. Directors also noted the positive role played by the RTACs in supporting the Fund's activities more broadly. However, Directors stressed the need to further enhance the effectiveness of the RTACs, along the lines mentioned by the independent evaluations, and to fully develop their potential to assist member countries in formulating a medium-term technical assistance strategy and in implementing such a strategy in the context of PRSPs.

Directors had wide-ranging discussions on the organizational and management challenges raised by the establishment and the operation of the RTACs, and the staff's proposals for dealing with them, while recognizing that the RTACs represent a departure from the traditional Fund TA delivery modalities. Directors considered that the main priority is to consolidate the achievements of the RTACs thus far, and to strengthen their management, organization, and financing modalities. In particular, they underscored the need to develop the strategy and framework for RTACs in line with the Fund's strategic priorities; to clarify staff and other stakeholder responsibilities; to improve and harmonize work planning and coordination with headquarters; and to reduce the financial risks to the Fund stemming from the RTACs' heavy reliance on external financing. Directors stressed that, in making the adjustments that may be necessary to face the underlying challenges of the RTAC model, it would be important to preserve the advantages associated with the RTACs' field presence—in particular the ability to strengthen countries' ownership—and to provide rapid and flexible TA to member countries.

Directors concurred that RTAC activities should be complementary to other forms of Fund TA and that they are an integral component of the Fund's overall TA program. They thus expressed support for a closer integration of RTAC activities with the Fund's TA program and agreed on the need to ensure appropriate quality control and accountability for all TA activities delivered by the RTACs.

Directors suggested that a clearer definition of the roles and responsibilities of the stakeholders would be instrumental to cope with the challenges raised by the RTAC delivery modality. They noted that it is inevitable that tensions would arise given the number of stakeholders involved, but suggested that this in some respects reflected a broader need for a more consultative TA delivery process. In revisiting the organizational structure, it was therefore considered important that the sense of shared ownership be preserved and that the specific characteristics of each RTAC be taken into account to retain its particular comparative advantages and benefits. Directors suggested that the findings from the recent IEO evaluation of TA could provide useful guidance regarding the respective roles of area and functional departments in the organizational structure of the RTACs. They agreed that area departments should have a strategic role in defining the overall TA priorities of the RTACs, and functional departments should be responsible for the technical aspects of the centers' work.

Directors supported the idea that the role of the Steering Committees should be better defined to clarify the roles and responsibilities of all stakeholders, and in order to strengthen their role in providing guidance, setting priorities, and monitoring the performance of the RTACs. In this context, Directors also stressed the need to preserve existing effective practices and to avoid rigid, one-size-fits-all solutions. They acknowledged that the RTAC delivery modality carries inherent tensions between Fund control over TA priorities and delivery modalities, and countries' ownership and donor interests, and that it is important to find an appropriate balance that preserves the advantages of the RTAC delivery modality while ensuring proper accountability and quality control of TA delivered.

Directors noted that the RTACs have been relatively costly but recognized that their field presence provides important qualitative benefits that would be difficult to quantify. It was therefore difficult to compare the cost effectiveness of the RTACs with other traditional delivery modalities. Directors stressed that it is important that the selection of the most suitable TA delivery modality be done on a case-by-case basis taking into account the cost and advantages of the different options. Several Directors offered suggestions for achieving further cost savings, including through strengthening interaction between RTAC staff and resident representatives, reducing trips from headquarters, and relying more on local expertise. They also drew attention to the importance of avoiding duplication with activities of other TA providers.

Directors acknowledged that the RTAC modality has been particularly beneficial in mobilizing external contributions for TA and leveraging the Fund's resources. However, Directors pointed out that the RTACs are heavily reliant on external finance, which entails significant risks for the Fund. To avoid any potentially damaging disruption in external financing, Directors suggested that a clear strategy, including options for alternative financing arrangements and an exit financing strategy, should be developed within the context of the Fund's medium-term budget framework. In the meantime, Directors agreed that, where feasible, steps should be taken to mitigate the financial risk for the Fund. These would include, for example, extending the funding cycle of the RTACs and raising the threshold commitment for the establishment of new centers or for the renewal of funding cycles for existing centers.

Many Directors felt that, while the comprehensive strategy for the use of the RTACs was being developed, the establishment of new centers could be considered cautiously and on a case-by-case basis, after a rigorous assessment of the business case for establishing the proposed center, and assurances that the necessary internal Fund resources and full external financing had been secured. In particular, the possibility of establishing a center in the Central African region was mentioned. A number of other Directors, however, called for a more cautious approach, suggesting that no new RTACs should be considered until a comprehensive medium-term strategy for RTACs is in place, and improvements in their governance structures can be consolidated.

In sum, Directors concurred that the Fund would need to develop a clear and comprehensive strategy for the use of the RTAC model that would be set in the context of the Fund's broader medium-term strategy. The strategy for the RTACs should propose a clear framework consistent with the Fund's overall priorities and include a thorough assessment of the resource, management, and organizational implications of the continued use and possible expansion of the RTAC model. The aim should be to maximize the benefits of the RTAC model, while ensuring better integration and coordination with the Fund's overall TA program and other regional activities. In view of the significant work involved, many Directors agreed that the RTAC strategy should be reviewed by the Board in two years' time. Some Directors were of the view that a three-year cycle would be more appropriate in line with the Fund's medium-term budget cycle and to allow the centers adequate time to become fully operational.

More generally, Directors have made several other valuable suggestions regarding the work of the RTACs, which the staff will take into account going forward.