afrol News, 5 October - The International Monetary Fund (IMF), and Germany have signed an agreement today to enhance cooperation in the area of capacity building, in particular in developing and transition countries.

Under the agreement, Germany will support IMF technical assistance, training and related activities, through both increased funding and enhanced information exchange on issues of mutual interest.

The agreement was signed by Dominique Strauss-Kahn, Managing Director of IMF and Erich Stather, State Secretary of Germany’s Federal Minister for Economic Cooperation and Development.

“By signing this cooperation agreement, we are very pleased to set the stage for a more important and broader partnership between the German Federal Ministry for Economic Cooperation and Development and the IMF, to the benefit of our members,” Mr Strauss-Kahn said during the signing ceremony in Istanbul, where the IMF is holding its 2009 Annual Meetings.

Under the agreement, the German Federal Ministry for Economic Cooperation and Development (BMZ) will increase its support and financing for IMF technical advice and training in the IMF's core area of expertise, including financial sector stability, fiscal, monetary and exchange rate policies, and macroeconomic and financial statistics. The BMZ has already provided €3 million (about $4.4 million) in support for the IMF’s Regional Technical Assistance Centers in Africa since their inception, and is planning to scale up its contribution with an additional €9 million ($13 million) over the coming years for these centers, as well as the recently launched Regional Technical Assistance Center for Central America, Panama and the Dominican Republic and the IMF’s new multidonor Initiative on Tax Policy and Administration.

On tax policy and administration, the IMF and BMZ agree that transparent and effective revenue systems are central to long-term development and stability goals, especially in the current world financial and economic crisis. Where appropriate, the IMF and BMZ will also consider cooperation in technical assistance activities in bilateral programs with developing and transition countries.

"This agreement will facilitate a closer dialogue between the Fund and the German Federal Ministry for Economic Cooperation and Development on our capacity building strategies all over the world. It will also provide critical synergies in line with the Paris Declaration on Aid Effectiveness, including through closer information-sharing and improved coordination of technical assistance efforts," Mr Strauss-Kahn also underscored.

Demand for the IMF’s technical assistance is rising in light of the current global economic and financial crisis as countries work on strengthening their institutions. To meet this rising demand as well as to better coordinate assistance delivery, the Fund strengthens its partnerships with donors by engaging them on a broader, longer-term, and more strategic basis.

As a part of these efforts, the IMF recently opened the Central America, Panama, and the Dominican Republic Regional Technical Assistance Center and intends to open three additional Regional Technical Assistance Centers (RTACs) in Central Asia, and Southern and Western Africa.

Complementing the regional perspective of the RTACs, Topical Trust Funds (TTFs) will provide a global geographical coverage with a specialised topical scope. The IMF launched its first TTF on Anti-Money Laundering and Combating the Financing of Terrorism in May 2009. The roll-out of other TTFs is planned over the next year in the areas of natural resource management, tax policy and administration, public financial management, development of sustainable debt strategies, and compilation of statistics relevant to financial crises.

By staff writer

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