Navigating the Economic Obstacle Course While Addressing Long-Term Challenges: The Role of IMF Capacity Development

April 28, 2022

Thanks Dominic.

I am very pleased to preside over today’s important event, which is already becoming a bi-annual tradition. This dialogue, as you know, aims to further strengthen our partnership in capacity development to meet the immediate and long-term needs of countries. We look forward to hearing from you as well as sharing our experience and priorities with you, especially at a time when policy makers face immense challenges.

As we enter the third year of the pandemic, the global economy faces a combination of shocks and policy challenges rarely seen before.

In addition to severe human suffering, the war in Ukraine is creating major strains for the global economy, weakening post-pandemic recovery and jeopardizing macroeconomic stability. Six months ago, we now expected a consolidation of the recovery. Instead, decision-makers face an extremely complex policy environment that poses difficult trade-offs. The impact of clearly increased uncertainty, trade disruptions, rising energy, food and other commodity prices adding to inflationary pressures, refugees and tighter financial conditions are reverberating widely around the world, as evidenced by the IMF’s more restrained global economic outlook released last week.

Low-income countries are particularly vulnerable and the poorest are the most exposed.

To complicate matters, countries face unprecedented longer-term challenges such as increased inequality, escalating fragility and conflict, a growing digital divide and the existential threat of climate change.

Our CD is designed to be country specific and aligned with monitoring and lending priorities. assist member countries in addressing these immediate and longer-term challenges. We calibrate CD, country programs and financial assistance to help countries develop and refine policy tools while balancing these difficult trade-offs. We provide this support from our headquarters in Washington, via our 17 regional capacity development centers and our network of long-standing experts in the field.

Since the onset of the pandemic, we have leveraged technology and created hybrid delivery models to help countries mitigate the economic impact of the crisis and support their recovery. 178 member countries received a CD through more than 4,000 remote missions, the majority of which benefited low-income countries and fragile and conflict-affected states.

The COVID-19 Crisis Capacity Development Initiative (CCCDI), which we launched last year with several partners, has been the centerpiece of our short-term response to members’ emergency pandemic-related DC needs. CCIDC has enabled us to provide an additional CD in our core areas of expertise, including public financial management systems, budgeting and revenue administration, tax policy and governance.

Let me give you some examples of how we are responding to immediate country needs and building institutional resilience:

• We work with countries to strengthen their tax administrations, which provides them with sustainable funding for critical budget expenditures. At the same time, we are helping countries design targeted spending programs to mitigate the social and economic impact of the crisis. Recently, we have worked with many countries, for example Chad and Rwanda, to implement digital solutions to reduce physical interactions, improve tax collection and reduce fraud. And we have helped design business continuity plans to keep tax administrations running, for example in Bolivia, the Maldives and Mongolia.
• We are working with a number of countries to strengthen the targeting, tracking and auditing of emergency budget expenditures related to COVID. For example, we are supporting the Mozambican Supreme Audit Agency to identify legal and institutional constraints that impede the conduct, publication and monitoring of audits of emergency expenditures related to COVID-19.
• We work with central banks to modernize their exchange rate, inflation and debt management frameworks, which helps them respond to global inflationary shocks and tighter financial conditions. We work with them to strengthen their banking supervision, which improves financial stability in the face of large fluctuations in capital flows and supports financial inclusion. In 12 countries in Africa, for example, we have supported a regional peer-learning approach to compiling and reporting financial soundness indicators.
• We work with statistical agencies to improve the collection and dissemination of economic data, which is essential for informed policy-making in a rapidly changing global environment.

We are also stepping up our CD on transformational frameworks to help countries address longer-term challenges such as climate change and green and inclusive growth, including in fragile states and small island states. We are increasing our CD on climate change, gender and digital money. Kristina Kostial, the IMF’s Climate Coordinator, will talk about the IMF’s new climate strategy later in this meeting.

Following the adoption of our new strategy on fragile and conflict-affected states (FCS), we will intensify our support to these countries by expanding our presence on the ground and placing more experts in our regional centres..

All of this was possible thanks to your strong partnership and support, including financial, technical and strategic. When we consider the global nature of the challenges we face – from the lingering pandemic and fallout from war to climate change and digitalization – it is imperative that we team up to deliver an impactful CD to our members.

Today is an opportunity for us to listen to you and learn from your experiences. I look forward to hearing your views on how CD can help countries rebuild and strengthen institutions to meet the enormous challenges we face today, as well as lay the foundations for long-term resilience and green and inclusive growth.

I look forward to a very productive discussion.

Dominica, over to you.