1. In this chapter, we examine the effects of pro-
longed use on institutional development within the
borrowing countries and on the IMF’s financial and
human resources.
Implications for the Borrower:
Impact on Institutional Development1
2. There are two possible channels through which
prolonged use of IMF resources could have an im-
pact on a country’s institutional development: (i) it
may help, or hinder, the development of technical
skills within the departments involved in the negotia-
tion of IMF programs; and (ii) it may foster or un-
dermine the country’s policy formulation process;
including the process of policy closure, that is, the
way in which the political and bureaucratic system
reaches consensus on a final strategy. The second
channel is closely linked to the issue of ownership of
IMF-supported programs.
Impact of prolonged UFR on the buildup of
economic management skills
3. Government officials in all three country case
studies and in most other prolonged user countries
generally agreed that the prolonged involvement of
the IMF had resulted in some positive transfer of
technical economic management skills. However,
views differed as to the extent of that transfer.2 In a
few cases, including Morocco and the Philippines,
the prolonged time spent under IMF-supported pro-
grams was deemed to have made a major contribu-
tion to the development of technical and analytical
skills. However, in several others, in particular Pak-
istan and Senegal, it was felt that the knowledge
being transferred by prolonged exposure to IMF
missions was too narrow and specialized to be of
much use outside the context of IMF programs and
that the ready availability of IMF models and
methodologies weakened the incentives for local
technicians to develop their own tools. The potential
buildup of technical skills was also limited by the
relatively low retention rate of technocrats having
benefited from the IMF’s training.
4. Notwithstanding the perception that there was
some transfer of technical skills, officials in all three