International Monetary Fund. Western Hemisphere Dept.
This paper discusses Grenada’s Request for Disbursement Under the Rapid Credit Facility. IMF financing support provides resources to the countries’ authorities for essential health-related expenditures and income support to ease the impact of coronavirus disease 2019 on the population. The countries’ governments have responded to the pandemic by swiftly implementing containment measures, allocating scarce budgetary resources to critical health care spending, and introducing income support to the most affected sectors and households. Protection of the financial system will help cushion the economic impact of the pandemic. Measures have also been taken by the Eastern Caribbean Central Bank to facilitate the provision of credit and safeguard financial stability. Going forward, and once the current crisis dissipates, the authorities intend to push ahead with a comprehensive Disaster Resilience Strategy aimed at building resilience to natural disasters. They are also committed to further strengthening financial sector oversight to safeguard macro-financial stability.
The Arab Countries in Transition (ACTs) have had diverging trajectories over the past year and face an uncertain outlook.1 Improvements in the European economy, lower oil prices, and some progress on the policy front have provided tailwinds to growth, which is expected to pick up significantly in Egypt and Morocco. At the same time, unemployment remains high. Moreover, several of the ACTs have also suffered from intensifying and spreading conflicts that cause widespread human suffering and sizeable economic challenges. Libya and Yemen are directly affected, while spillovers from these conflicts and the civil wars in Iraq and Syria weigh on Jordan and Tunisia, as well as other countries in the region (e.g., Lebanon, Djibouti), Turkey and Europe. These spillovers come most prominently in the form of large refugee flows, deteriorating security, and pressures on economic infrastructures and labor markets. All these factors add urgency to the need in the Arab countries to strengthen economic resilience and address long-standing sources of inequity and exclusion. Coordinated and scaled-up support from the international community will be also critical in stabilizing conditions in the region, addressing the refugee crisis, and securing a more promising economic future for the ACTs in this challenging environment.
In spite of deepening and spreading conflicts in the region, as well as, in many cases, a challenging internal socio-political environment, the Arab Countries in Transition (Egypt, Jordan, Libya, Morocco, Tunisia and Yemen) have broadly maintained macroeconomic stability. At the same time, however, their economies are not delivering the growth rates needed for a meaningful reduction in unemployment, in particular for the youth and women. Notwithstanding diversity of conditions, countries should quickly advance structural reforms to foster higher and more inclusive growth, and continue to strengthen fiscal and external buffers to maintain stability amid heightened uncertainty. Coordinated support from the international community will be crucial in the form of financing, improved trade access, and capacity building assistance.
Despite uneven progress, there are early signs of improvement and macroeconomic stabilization in some Arab Countries in Transition (ACTs). 1 However, persistently weak growth and subdued private investment amid heightened regional insecurity continue to weigh on the task of reducing unemployment. This calls for accelerated reform efforts by the authorities to achieve higher, more inclusive, and more private sector-led growth, supported by external partners. In addition, mobilizing affordable external financing could help boost well-implemented public investment and provide a short-term impetus to growth and employment, thereby stabilizing difficult socio-political conditions on the ground and providing space for deeper structural reforms.
International Monetary Fund. Middle East and Central Asia Dept.
The political and security environment remains uncertain in Libya. Libya faces the challenges of stabilizing the economy and responding to the aspirations of the revolution. The near-term outlook is favorable, but there are significant risks. The overarching policy objective should be to foster inclusive growth. Banks are not intermediating, and resources should be devoted to its effective implementation. Expenditure is skewed toward wages and subsidies. Libya needs to adopt a comprehensive reform strategy. The government agrees with the assessment of the economic outlook and associated risks and policy options as outlined by Executive Directors.
Political uncertainty in the Arab Countries in Transition (ACT) has continued in recent months, especially as the escalation of the conflict in Syria is creating negative regional spillovers.1 While transition governments have maintained macroeconomic stability thus far, serious short-term risks continue, and the authorities have made limited progress in building consensus for needed economic reforms. With the exception of Libya, the ACTs’ growth in 2012 has remained weak in light of continued policy uncertainty, regional tensions, the deteriorating global economy, and high food and fuel commodity prices. A moderate recovery is expected in 2013. The shrinking of fiscal and reserve buffers over the past year has left very little policy space and heightened vulnerabilities. Prompt policy action and timely and adequate international support are essential to maintain macroeconomic stability and address long-running structural deficiencies, to lay the foundation for inclusive growth and job creation for a young and growing population.
Historic transitions in the Arab Spring countries are coming under increasing strain frommacroeconomic pressures and unmet social demands. Domestic uncertainty over the countries' future course, compounded by the global slowdown and rising oil prices, took a toll on growth during 2011. The outlook for 2012 and 2013 is equally challenging. The protracted political transition, lower global growth, and euro zone weakness are likely to result in a slow and drawn-out economic recovery, with unemployment at best stabilizing at high levels. Maintaining macroeconomic stability in this environment will be challenging, not least since policy buffers were reduced during 2011. Indeed, gross external and fiscal financing needs of MENA oilimporters are projected at about $93 and $103 billion, respectively, in 2012-13. With capital markets expected to provide only a small part of these funds, official financial support will be essential to allow countries to continue on their path toward economic transformation. But at the same time, countries need to make tangible progress on that path. This requires bold reform and modernization agendas that command broad consensus and are embedded in a sustainable medium-term macroeconomic policy framework to build confidence, anchor expectations, and pave the way for sustained and inclusive growth.
Mr. Ralph Chami, Mr. Adolfo Barajas, Anjali Garg, and Connel Fullenkamp
Using data on the distribution of migrants from Africa, GDP growth forecasts for host countries, and after estimating remittance multipliers in recipient countries, this paper estimates the impact of the global economic crisis on African GDP via the remittance channel during 2009-2010. It forecasts remittance declines into African countries of between 3 and 14 percentage points, with migrants to Europe hardest hit while migrants within Africa relatively unaffected by the crisis. The estimated impact on GDP for relatively remittance-dependent countries is 2 percent for 2009, but will likely be short-lived, as host country income is projected to rise in 2010.
Libya’s macroeconomic performance in 2008 has been strong, with real GDP growth of about 4 percent, and record fiscal and external surpluses. The staff report for Libya’s 2009 Article IV Consultation underlies economic developments and policies. The outlook has been adversely affected by the global crisis mostly through a decline in oil prices and output. This outlook is subject to downside risks relating to a further worsening in global economic conditions or a wavering of the efforts to improve the quality of public expenditure and advance structural reforms.
This 2006 Article IV Consultation highlights that Libya has made efforts to liberalize its economy and foreign trade, achieving increasing economic growth while maintaining macroeconomic stability. In 2006, economic conditions continued to be satisfactory. Real GDP grew about 5½ percent, reflecting an increase of 4½ percent in the value added of the hydrocarbon sector. In 2006, structural reform continued with the implementation of a wide range of measures covering fiscal management and taxation, banking and payments systems, trade, and the business environment.