The Fund will accord high priority to activities that strengthen the technical and institutional capacity essential for agricultural and rural development. In this context, the Fund will, mainly as a part of its lending operations, and after taking into account the technical assistance operations of other agencies, finance technical assistance for the following main purposes:

(a) to assist the country to undertake feasibility studies in agricultural projects related to IFAD’s activities and priorities, although the Fund will encourage the development of local capabili-ties and skills in respect of project and programme design and planning for agricultural development, so as to progressively reduce dependence on foreign assistance and expertise;

(b) to assist countries in expanding the supply of trained personnel and their integration into sound institutional structures that permit effective response to local conditions and problems;

(c) to assist local institutions in the design and implementation of monitoring systems appro-priate to the special objectives of Fund-financed projects;

(d) to undertake special studies or pre-investment projects in problem areas, e.g. in rainfed agriculture areas or drought-prone areas that hold prospects for future investment;

(e) to assist countries more intensively at the project implementation stage, through special training for project management staff;

(f) to provide support to countries for research and extension activities. In particular, the development of technology appropriate to small farms would be supported. Small-scale but innovative projects with a strong exploratory element, leading to future larger scale invest-ment decisions, would receive special attention.

The Fund’s grant assistance, apart from technical assistance, shall be exclusively used for the financing of projects in the absolute poorest food-deficit countries with the most severe development problems. Taking account of the very limited amounts of resources for this type of assistance, the Executive Board will approve grant financing only for high-priority projects in countries with very severe budgetary constraints; these considerations will apply in particular to those cases where the revenue-generating effects of projects are considered unimportant but where the project still constitutes an essential element of the Fund’s programmes in the country.

Technical assistance, particularly for activities listed above, will normally be provided on a grant basis. However, when technical assistance for feasibility studies leads to a loan provided by the Fund, the Executive Board might include the costs of such technical assistance into the loan. In addition, the Fund may provide, in cooperation with other agencies, grants for suitable activities of international, regional and national research institutions.