IMF – Managing Director’s Statement on the Role of Fund Engagement in Fragile and Conflict-Affected States

Global Financial Governance – Fragile, Conflict Contexts

IMF – Managing Director’s Statement on the Role of Fund Engagement in Fragile and Conflict-Affected States
October 4, 2018
In light of the recent Independent Evaluation Office report on The IMF and Fragile States and to ensure that we deliver our best to these countries in terms of capacity development (CD), policy advice, and financial support, I seek endorsement by the IMF membership of an ambitious package of interlinked actions to further strengthen the effectiveness of our engagement and to underline the importance of our work in FCS.

The IMF is a global institution with a responsibility to address the risks and fragilities that threaten economic stability in each member, to the best of its ability. In addition, supporting countries in fragile and conflict situations (FCS) is an international priority that affects all Fund members, including through rising migration, forced displacement, trafficking, and terrorism.

The IMF is committed to put in place HR policies, in the context of a new HR strategy, that would ensure staff expertise and experience are appropriate to effectively meet FCS needs including by introducing stronger career incentives to work on FCS and low-income countries. These actions, along with staff training and consideration in the budget of additional resources to provide appropriate staffing in FCS missions, will lay the foundation for more effective support to these members.

As institutional weakness is a defining characteristic of fragility, CD must be front and center in our engagement. Each FCS country team will articulate a succinct engagement strategy that identifies the nature of fragility, surveillance and, where applicable, program priorities, where and how CD can be best delivered in the short and medium term to address identified institutional weaknesses in areas of Fund competence, complemented by, as warranted, Fund financial support. The country strategies will be discussed with country authorities and as needed with development partners as part of the Article IV consultation process and in new program requests. It will underpin alignment of the Fund engagement strategy with the authorities’ needs while also improving CD coordination.

We will continue to look for ways to make our CD in FCS more impactful, by reaping benefits from our investment in results-based management, learning lessons from our FCS engagement in financial sector and statistical capacity development, taking stock of the existing Capacity Building Framework pilots, stepping up training on macro policies in FCS, and aiming to raise adequate funding for CD provision in FCS, particularly long-term experts in-country or in the region, that are able to help country authorities implement CD recommendations.

We are committed to continue to improve and tailor financing facilities to FCS needs, recognizing the strong catalytic role of Fund’s financing. The ongoing Review of Facilities for LICs explores proposals to raise access, and to both extend the duration of arrangements and provide shorter-term options for countries meeting specified criteria.

To deliver on these plans, a high-level interdepartmental Committee on FCS, reporting to Management, will assess progress made in delivering this Management Implementation Plan (MIP) through end-2020. The Committee will be supported by a Technical Taskforce comprising of staff from departments engaged in FCS work, that will review the MIP implementation, revisit FCS guidance, and conduct policy and analytical work on FCS issues. These efforts will be complemented by stronger Fund staff engagement with agencies, country groupings, and other organizations that tackle FCS issues including OECD, World Bank, United Nations, bilateral agencies, G7+, Think Tanks, and CSOs.

As is often the case, the combined impact of these actions should be significantly greater than the sum of the parts—so this is a package deal where success is measured across many dimensions, by efforts of many staff across the IMF. We will report to the Board on progress in 2019 and 2020.

In closing, let me thank the IEO for bringing these long-standing issues to the fore, and the Board for acknowledging that the Fund needs to be more agile and integrated in its support of members in fragile and conflict situations.