International Monetary Fund (IMF) Deputy Managing Director Min Zhu and Minister of Finance of Luxembourg Pierre Gramegna today signed a Letter of Understanding (LOU) on Luxembourg’s support for the IMF’s Central America-Panama-and the Dominican Republic Regional Technical Assistance Center (CAPTAC-DR), located in Guatemala. Luxembourg will be a new donor to CAPTAC-DR and the first one to sign an LOU for the center’s second program phase, contributing $2.1 million over five years.
“Regional Technical Assistance Centers allow us to deliver technical assistance and training in a highly effective way because these activities can be closely tailored to the specific needs of each region, and be highly responsive to those needs. CAPTAC-DR is in a unique position to implement such a closer cooperation because of its proximity to its recipient countries”, Mr. Zhu said. Minister Gramegna expressed his country’s support for the Fund’s technical assistance, saying “In the short time of its existence, CAPTAC-DR has achieved remarkable success, and we are proud of being part of this important endeavor. We believe this will be another step in a long-term partnership and close collaboration between Luxembourg and the IMF in Fund’s technical assistant programs.”
Luxembourg has contributed to other IMF technical assistance initiatives: AFRITAC West and two topical trust funds; Anti-Money Laundering and Combating the Financing of Terrorism; Tax Policy and Administration, contributing €1.25 million to each of these initiatives.
Established in 2009, CAPTAC-DR provides technical assistance to Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and Panama. Its first five-year budget amounted to $35.6 million. Phase II will start with a program document budget of $39.2 million. To date, formal pledges amount to $20.7 million and most of the current donors have expressed their willingness to continue their support in Phase II, while recipient countries have agreed to double their contributions.
The center has helped to strengthen capacity in the fiscal, financial, and statistical areas. Importantly, it has fostered regional harmonization and integration, which has been one of the main objectives of the recipient countries.
CAPTAC-DR’s operations in Phase II will build on the progress to date. The Center’s medium-term TA strategy will remain focused on the following key areas: modernizing tax and customs administrations (to mobilize additional budget revenues and facilitate trade); strengthening public financial management systems (to support the formulation of an efficient and sustainable public expenditure policy); improving regulation and supervision of the financial sector (to support financial stability); strengthening the monetary framework (to keep inflation low and stable); and improving economic statistics (to make informed economic policy decisions).