Technical Notes and Manuals
Technical Notes and Manuals are produced by IMF departments to expand the dissemination of their technical assistance advice. These papers present general advice and guidance, drawn in part from unpublished technical assistance reports, to a broader audience. This new series launched in September 2009.
2020
November 10, 2020
Tax Administration: Designing a Business Continuity Plan for an Epidemic
Description: This technical note and manual (TNM) addresses the following questions: What is a business continuity plan (BCP) and what are its main components? What are a BCP’s key design considerations for an epidemic? What are the organizational and management arrangements for a BCP? How does a BCP maintain a tax agency’s critical functions during an epidemic? and How does a tax agency keep its BCP current and ready for deployment?
2019
December 13, 2019
The Role of Bank Diagnostics in IMF-Supported Programs
Description: Diagnostic studies are essential to IMF programs in situations of significant bank weakness and when regular disclosures are not reliable. Restoring bank solvency is key to maintaining financial stability and, therefore, the ultimate policy objectives of a Fund-supported program. Bank diagnostics aim to ensure that existing potential losses and capital needs are identified in a timely manner and, in case public support is needed, the relevant cost is prudently incorporated in the program financing envelope. Diagnostic studies provide assurances that financial stability risks are reasonably quantified and provide information essential to: (i) understanding the scale and scope of banking sector problems; (ii) executing strategies for bank resolution and restructuring, including quantifying recapitalization needs; and (iii) estimating any financing needs with reasonable certainty. There is no single template for diagnostic studies that fits all cases. Though an asset quality review (AQR) will always be a central component, there are other aspects, such as stress tests or reviews of bank viability and funding structures, whose relevance depends on country circumstances. While a diagnostic exercise provides a point-in-time snapshot, it can go further and be seen as part of a process of discovery and remediation of the factors at the root of the banks’ problems. Diagnostics are undertaken by local authorities based on a robust governance structure that provides credibility and quality assurance through independent, external participation. Diagnostics should consider local conditions and, where resources are available and qualified, be performed with local participation to enhance ownership and political acceptance. Communication is a key consideration, with the level of information released publicly often being dictated by circumstances. This note provides practical guidance, drawing on experience. Rather than looking at diagnostics as a narrow capital compliance event, the note advocates a building block approach to assessing banking businesses, and to enable forming a view on long-term viability as a basis for action with respect to each institution reviewed. Features of observed international practice are also summarized, drawing on recent diagnostic studies in Europe, and on extensive earlier experiences in a range of emerging and developing country contexts.
May 15, 2019
Medium-Term Debt Management Strategy Analytical Tool: Data Preparation Manual
Description: Medium-Term Debt Management Strategy Analytical Tool: Data Preparation Manual
May 15, 2019
Medium-Term Debt Management Strategy: Analytical Tool Manual
Description: This report provides guidance on using the Analytical Tool of the Medium-Term Debt Management Strategy (MTDS). The MTDS framework consists of a methodology, published as the ‘Guidance Note for Developing a Medium-Term Debt Management Strategy’, and an associated analytical tool (AT) that can be used to assess the cost-risk trade-offs of alternative strategies to help identify the preferred strategy. The MTDS framework supported by the AT quantitative analysis helps to determine the financing strategy. The chosen debt management strategy sets out the financing composition path to meet the debt management objective(s). The profile of future interest payments and the amortizations of new debt are driven by the debt management strategy. The MTDS AT is based on annual cash flow. Although this assumption is enough for analyzing alternative debt management strategies, in some cases, particularly for countries that are heavily dependent on short-term securities with maturities of less than a year, it would be helpful to work with cash flows with higher frequency.
April 4, 2019
Revenue Administration: Short-Term Measures to Increase Customs Revenue in Low-Income and Fragile Countries
Description: This note discusses administrative measures that can be implemented by customs administrations of low-income and fragile countries in a short period (about a year) to improve traders’ compliance and improve revenue collection. These suggested actions have been identified based on the experience acquired through the International Monetary Fund’s (IMF) Fiscal Affairs Department’s (FAD) technical assistance (TA), particularly the findings and recommendations of TA missions to sub-Saharan African countries. Strengthening low-capacity customs administrations requires structural reforms to support the effective implementation of defined strategies. Developing core operational functions such as risk management, audit, investigation and intelligence are good examples of such reforms. Modernizing human resource management policies or achieving a fully automated environment in a customs administration are longer-term reform projects. Long-term reforms are not addressed here. The note focuses on targeted actions with a potential to increase trade revenue in the short term, and which can be taken without mobilizing large resources or engaging in a broad reorganization. It is hoped that the suggestions in this note will help stakeholders, including country authorities, customs management, donors and TA partners, area departments of the IMF, FAD, and the IMF regional TA centers, identify, design, and implement short-term changes in customs administrations. If implemented effectively, these changes should contribute to a noticeable improvement of revenue performance.
2018
December 27, 2018
The Macrofiscal Function and its Organizational Arrangements
Description: The Macrofiscal Function and its Organizational Arrangements
October 25, 2018
An Algorithm to Balance Supply and Use Tables
Description: A Supply and Use Table (SUT) serve to increase the quality of GDP and related aggregates by providing a framework to detect and resolve inconsistencies in data sources. SUTs are also a powerful analytical tool that permit users to access information on detailed production functions, consumption, export, and import baskets, or to derive input-output tables. SUT compilation is data intensive and requires a balancing process. The balancing procedure is labor intensive and generally requires several long and sometimes tedious iterations, which has an adverse effect on timeliness. This note describes a basic algorithm developed by the IMF to balance supply and use tables automatically, allowing a much faster SUT balancing process. For training purposes, this algorithm has been implemented as an Excel tool SUTB, making it operational almost globally. The optimization process is illustrated with an example.
September 12, 2018
Estimating the Corporate Income Tax Gap: The RA-GAP Methodology
Description: The IMF Fiscal Affairs Department's Revenue Administration Gap Analysis Program (RA-GAP) aims to provide a quantitative analysis of the tax gap between potential revenues and actual collections, and this technical note explains the concept of the tax gap for corporate income tax (CIT), and the methodology to estimate CIT gaps. It includes detailed steps to derive the potential CIT base and liability with careful consideration for the theoretical differences between the coverage of statistical macroeconomic data and the actual tax base of CIT, and then compare the estimated results with actual declarations and revenues. Although the estimated gaps following the approach will have margins of errors, it has the advantage of using available data without additional costs of collection and suits initial evaluations of overall CIT noncompliance in a country.
August 16, 2018
Resolution Funding: Who Pays When Financial Institutions Fail?
Description: A key element of the international reform agenda since the Global Financial Crisis has been to strengthen resolution regimes and make government bailouts the last, not first, resort. A new international standard prescribes a range of tools, powers, and funding arrangements needed to resolve “any financial institution that could be systemically significant or critical if it fails.” It recommends having resolution funding arrangements set up in advance, “so that authorities are not constrained to rely on public ownership or bail-out funds as a means of resolving firms.” It leaves open significant flexibility with respect to the arrangements that would provide the resources authorities will need to carry out effective resolution. This paper offers a framework for weighing the relative advantages of different resolution funding options that could meet the standard. It presents the main developments to date and discusses the advantages and disadvantages of different options.
2017
June 5, 2017
A Toolkit to Assess the Consistency Between Real Sector and Financial Sector Forecasts
Description: e develop a toolkit to assess the consistency between real sector and financial sector forecasts. The toolkit draws upon empirical regularities on real sector and financial sector outcomes for 182 economies from 1980 to 2015. We show that credit growth is positively correlated with real sector performance, in particular when credit growth is unusually high or low. However, the relationship between credit growth and inflation is weak. These results hold for different country groups, including advanced economies, emerging markets and low-income countries. Combining credit growth with other variables such as house prices and the output gap helps to understand real sector outcomes. But including the financial account balance does not make a difference.