Public Information Notice: IMF Executive Board Approves the FY2007 Administrative and Capital Budgets
June 1, 2006
Public Information Notices (PINs) form part of the IMF's efforts to promote transparency of the IMF's views and analysis of economic developments and policies. With the consent of the country (or countries) concerned, PINs are issued after Executive Board discussions of Article IV consultations with member countries, of its surveillance of developments at the regional level, of post-program monitoring, and of ex post assessments of member countries with longer-term program engagements. PINs are also issued after Executive Board discussions of general policy matters, unless otherwise decided by the Executive Board in a particular case.
June 1, 2006
On April 28, 2006, the Executive Board of the International Monetary Fund (IMF) approved the IMF's FY2007 administrative and capital budgets, which covers the financial year ending April 30, 2007. In addition, the Executive Board took note of indicative administrative budgets for FY2008 and FY2009 and the three-year capital plan for the FY2007-FY2009 period. The Board discussions on the budgets—the first covering multiple financial years—were linked to the staff paper The FY2007-FY2009 Medium-Term Administrative and Capital Budgets.
Background
The IMF's administrative budget provides financial resources for personnel costs, travel, and buildings and other expenses. The capital budget provides for building facilities projects (including certain expenditures to enhance security) and information technology (IT) development projects. The administrative budget is approved on a net basis: that is, it excludes expenditures that are financed from receipts—mainly external donor contributions for capacity building (technical assistance and training of member country officials). The net budget is funded from the IMF's operational income (see Review of the Fund's Income Position for FY2006 and FY2007). The Executive Board also sets a ceiling on the gross budget, which reflects expenditures inclusive of those financed from receipts.
Executive Board Decisions on the FY2007 Budget
The Executive Board approved the following on April 28, 2006:
• net administrative expenditures for FY2007 in the total amount of US$911.9 million;
• a limit on gross administrative expenditures in the total amount of US$987.1 million; and
• an appropriation for capital projects beginning in FY2007 in the total amount of US$48.1 million applied to the following project categories:
|
I. Building facilities |
US$19.8 million | |
|
II. IT development |
US$28.3 million |
The Board also took note of the indicative net administrative budgets of US$929.6 million and US$952.8 million for FY2008 and FY2009 respectively, and the three-year capital plan of US$141.0 million.
The Administrative Budget for FY2007
The FY2007 budget marks the introduction of a three-year medium-term budget and supporting budget framework. The key changes in the budget process are a greater focus on the net budget, in order to strengthen the link between the administrative budget and its financing through the Fund's operational income; indicative budget limits for the outer two years; and the use of an external price index in setting the nominal budget envelope. Further reforms are planned, including the introduction of performance indicators for the delivery of certain services, starting in FY2008.
The FY2007 budget was formulated against the background of a changing institutional and financial environment, which included the development of the Medium-Term Strategy (MTS);1 a review of the Fund's employment, compensation, and benefits framework; and a changing income position for the Fund.2 The budget approved by the Executive Board will lead to a reduction in the size of the Fund's real administrative resource envelope over the medium-term, with zero real growth in the FY2007 administrative budget, and 1 percent real reductions in each of FY2008 and FY2009 (as measured against the external price index).
Notwithstanding this reduction in real resources, the budget has been designed to deliver the Fund's existing mandate and the implementation of new initiatives approved under the IMF's MTS. The impact of the changes envisaged under the MTS will be budget neutral, with increased resources for regional and financial sector surveillance and for work on low-income countries being accommodated by streamlining measures elsewhere. In FY2007, a series of targeted efficiency exercises will also be undertaken to examine the Fund's service delivery model in specific areas and, where possible, identify scope for reducing the cost of providing Fund services.
The Medium-Term Capital Plan and the Capital Budget for FY2007
The budget provides appropriations of US$48.1 million for capital projects beginning in FY2007, and a medium-term capital plan of US$141.0 million for FY2007-FY2009. This marks the beginning of a downward trend in capital spending over the medium term. The reduction in the capital budget reflects the completion of several one-off projects, including the new headquarters building in FY2006, and the substantive completion of security measures and the IT high availability program by FY2008.
1 See http://www.imf.org/external/np/omd/2005/eng/091505.pdf.
2 See http://www.imf.org/external/np/pp/eng/2006/041206.pdf.
IMF EXTERNAL RELATIONS DEPARTMENT
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