The coronavirus pandemic is a global crisis like no other in modern times, and there is a growing apprehension about handling potentially contaminated cash. This paper is the first empirical attempt in the literature to investigate whether the risk of infectious diseases affects demand for physical cash. Since the intensity of cash use may influence the spread of infectious diseases, this paper utilizes two-stage least squares (2SLS) methodology with instrumental variable (IV) to address omitted variable bias and account for potential endogeneity. The analysis indicates that the spread of infectious diseases lowers demand for physical cash, after controlling for macroeconomic, financial, and technological factors. While the transactional constraints imposed by the COVID-19 pandemic could become a catalyst for the use of digital technologies around the world, electronic payment methods may not be universally available in every country owing to financial and technological bottlenecks.
This paper develops a gravity model framework to estimate the impact of infectious diseases on bilateral tourism flows among 38,184 pairs of countries over the period 1995–2017. The results confirm that international tourism is adversely affected by disease risk, and the magnitude of this negative effect is statistically and economically significant. In the case of SARS, for example, a 10 percent rise in confirmed cases leads to a reduction of as much as 9 percent in tourist arrivals. Furthermore, while infectious diseases appear to have a smaller and statistically insignificant negative effect on tourism flows to advanced economies, the magnitude and statistical significance of the impact of infectious diseases are much greater in developing countries, where such diseases tend to be more prevalent and health infrastructure lags behind.
This Selected Issues paper aims to measure the impact of the Ebola virus disease (EVD) epidemic on economic growth in Sierra Leone. A novel empirical approach is used, which is based on a Difference in Differences setup, called the Synthetic Control Method. The model suggests that EVD had a severe impact on growth. In 2014, the first year EVD hit the country, the impact on real growth excluding iron ore is estimated to be more than 5 percentage points. It is suggested that in outer years, the severity of the impact will lessen, and growth will converge to its normal path by 2018.
This paper discusses Liberia’s Fourth Review Under the Extended Credit Facility (ECF) Arrangement and Requests for Waivers of Nonobservance of Performance Criteria (PC), Modification of PC, and Rephasing and Extension of the Arrangement. The end-June 2014 quantitative PC on government revenues and central bank net foreign exchange position, and one indicative target on net domestic assets were not met. Only three out of seven structural benchmarks for the fourth review were met. Based on the authorities’ corrective actions, the IMF staff supports completion of the delayed fourth ECF review, and the authorities’ request for an extension and re-phasing of the program to end-December 2016.
This paper discusses Liberia’s Request for an Extension of the Arrangement Under the Extended Credit Facility (ECF). From mid-2014 to mid-2015, Liberia faced a serious Ebola virus disease crisis, which triggered the declaration of a state of emergency. End-June 2014 performance criteria (PCs) and indicative targets were met, except the revenue floor and the floor net foreign exchange position of the Central Bank of Liberia (CBL), and the ceiling on net domestic assets. The authorities are expected to request waivers for the missed PCs in light of corrective actions undertaken to improve revenue collection and strengthen the net foreign exchange position of the CBL. The IMF staff supports the authorities’ request to extend the ECF arrangement.
This paper discusses Guinea’s Request for Debt Relief Under the Catastrophe Containment (CC) Window of the Catastrophe Containment and Relief (CCR) Trust. Since early 2014, Guinea has been experiencing an ongoing Ebola epidemic that has spread to several countries in the region. The immediate economic effect of the Ebola epidemic has been a pronounced slowdown in 2014. Performance under the Extended Credit Facility arrangement has been satisfactory, the difficult macroeconomic environment notwithstanding. The IMF staff supports the authorities’ request for assistance under the CC window of the CCR Trust given the nature of the public health disaster, and the ensuing financing needs to contain the disease and rehabilitate Guinea’s public health system.
This paper discusses Sierra Leone’s Second Review Under the Extended Credit Facility Arrangement and Financing Assurances Review. Economic output is set to contract by some 13 percent in 2015, comprising a decline in non-iron-ore activity of some 2 percent, and a 47 percent slump in iron-ore output as the dominant mining operator is not expected to resume activity until mid-year at the earliest. Policy discussions focused on generating fiscal space to tackle the Ebola emergency and contend with the effects of the slump in iron-ore production and prices. The IMF staff supports the authorities’ request for significant additional financing from the IMF.
This paper discusses Liberia’s Request for Disbursement Under the Rapid Credit Facility (RCF) and Debt Relief Under the Catastrophe Containment and Relief (CCR) Trust. Economic activity has declined significantly, and fiscal and external financing needs are more pronounced than envisaged at the time of the Extended Credit Facility (ECF) augmentation. The authorities remain committed to the broad objectives of the ECF program. The IMF staff recommends approval of the authorities’ requests for a disbursement under the RCF and debt relief under the CCR Trust given the extensive economic damage caused by the Ebola outbreak and based on the authorities’ updated policy intentions and commitments.
This paper discusses Guinea’s Fifth Review Under the Three-Year Arrangement Under the Extended Credit Facility (ECF), Financing Assurances Review, and Requests for an Augmentation of Access and Extension of Current Arrangement. Performance under the ECF program has been satisfactory. All quantitative performance criteria have been met. Macroeconomic policies in 2015 will remain supportive to help deal with the Ebola outbreak. The IMF staff supports the completion of the fifth review under the ECF arrangement and financing assurances review and requests for an extension of the current arrangement to end-2015, an augmentation in access, and disbursement of 25 percent of quota as budget support under the 5th review.
KEY ISSUES Background. With the highest number of new and cumulative Ebola cases recorded to date, Liberia is the country most affected by the epidemic in West Africa. In addition to exacting a heavy human toll, the Ebola outbreak is having a severe economic and social impact, and could jeopardize the gains from a decade of peace. The largest sectors of the economy (agriculture, services and mining) have been weakened by the epidemic, resulting in significant financing gaps for the fiscal and external accounts. The closure of international borders and, in particular, the internal quarantines are disrupting labor and food supply, leading to shortages of basic commodities, depreciation pressures and higher inflation. Request. The authorities are requesting an ad-hoc augmentation of access under the ECF and an immediate additional disbursement of SDR 32.3 million, equivalent to 25 percent of quota, to help bridge the significant financing need that has emerged in the wake of the outbreak. The authorities are also requesting modification of end-December performance criteria to allow on-lending of the equivalent of the Fund support to the government. Appraisal. Staff supports the authorities’ request for an augmentation of access and immediate disbursement in light of the urgency and size of the balance of payments need. Staff also supports the requested modification of end-December 2014 performance criteria via a program adjustor to allow the on-lending of the additional Fund support to the government. Program status. The third ECF review was concluded on July 3, 2014. Available information indicates that the program remains on track and that continuous PCs are being met. Program financing. The proposed augmentation would complement assistance committed by other stakeholders including US$19 million in additional budget support from the African Development Bank and the World Bank, and would help catalyze support from other donors. The authorities have committed to take the necessary measures to address any residual financing gap.