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International Monetary Fund. Monetary and Capital Markets Department
This Technical Assistance report on the Lao People’s Democratic Republic provides advice toward implementing risk-based supervision (RBS). Special attention needs to be given to expediting the formal approval of the RBS manual and fully implementing RBS methods in practice. Although this could be delayed due to other supervisory priorities, it is considered essential as the quality of supervision is improved by the practical application of RBS tools and learning-by-doing. The root causes of risks should be better identified, and greater attention should be paid to well-reasoned analysis of risks and the accompanied supervisory action. In addition, the mission advised additional modification of these documents to enhance its usefulness and quality. With respect to foreign-branch supervision, special consideration should be given to the extent of adequate oversight by the branch head office, supervision by the home supervisor, and overall financial condition of the foreign banking group. The mission provided examples of qualitative criteria for foreign-branch rating.
Klaus-Peter Hellwig
I regress real GDP growth rates on the IMF’s growth forecasts and find that IMF forecasts behave similarly to those generated by overfitted models, placing too much weight on observable predictors and underestimating the forces of mean reversion. I identify several such variables that explain forecasts well but are not predictors of actual growth. I show that, at long horizons, IMF forecasts are little better than a forecasting rule that uses no information other than the historical global sample average growth rate (i.e., a constant). Given the large noise component in forecasts, particularly at longer horizons, the paper calls into question the usefulness of judgment-based medium and long-run forecasts for policy analysis, including for debt sustainability assessments, and points to statistical methods to improve forecast accuracy by taking into account the risk of overfitting.
International Monetary Fund. Monetary and Capital Markets Department
The BoL has been implementing risk-based supervision (RBS) methods on a pilot basis. The RBS manual is now substantially complete, and the BSD staff are applying the RBS methods on a pilot basis. The BSD staff have drafted Institutional Profiles (IP) and Risk Assessment Summaries (RAS) for more than half of the banks; benchmarks and peer groups are being implemented; on-site reports of examination (ROX) have been utilized for several banks. The mission worked with off-site and on-site teams analyzing data for two pilot banks. Utilizing actual results for two pilot banks, the mission assisted BSD staff in identifying the risks, measuring and evaluating the impact on banks’ condition, and formulating appropriate conclusions and ratings.
International Monetary Fund. Monetary and Capital Markets Department
This Technical Assistance Report discusses the main findings and recommendations made by the IMF Mission regarding the development of risk-based supervision (RBS) in the Lao People’s Democratic Republic. Over the past few months, the Bank of Lao has made great strides in preparing for implementation of risk-based supervision of banks. A new supervisory manual reflecting key principles of risk-based approach to supervision has been drafted. The new draft template of the Report of Onsite Examination is broadly in line with the past technical assistance recommendations. Some improvements could support the analysis of trends over longer periods of time, and emphasize exceptions to prudential and/or regulatory norms. Planning an onsite examination using new RBS methods is a logical next step.
International Monetary Fund. Strategy, Policy, &, Review Department, International Monetary Fund. Legal Dept., and International Monetary Fund. Secretary's Department
"The changing contours of the global economy and the rapid transformation of the global financial safety net (GFSN) have strengthened the case for more structured collaboration between its different layers, particularly with Regional Financing Arrangements (RFAs). RFAs have become an important part of the GFSN, and their roles have also evolved. Over recent years, their coverage has expanded to encompass many major advanced and emerging market economies; the resources under their control has risen. Moreover, since the global financial crisis, some RFAs have become key financing counterparts of Fund-supported programs. These developments have heightened the importance of close and timely collaboration with RFAs. However, there is currently no formal framework for an exchange of Board documents with RFAs, leaving a gap in Fund collaboration with RFAs. The Fund has a long-standing practice for collaborating and sharing documents with other international organizations, primarily under the Transmittal Policy that was amended most recently in November 2017. However, some RFAs do not meet the criteria under the Transmittal Policy and, in view of the unique and heterogeneous institutional and governance structures of RFAs, there is a need for a dedicated and coherent framework that facilitates the exchange of documents on both routine and non-routine bases. This paper proposes a policy framework for the exchange of documents between the Fund and RFAs. The proposed framework establishes a set of criteria to be met by RFAs for document exchange—based on the consideration of whether a certain entity shares common operational interest with the Fund, and provides satisfactory confidentiality and reciprocity assurances. Under routine document sharing arrangements with RFAs, Board documents would be provided after Board consideration. In cases of UFR arrangements involving current or potential co-financing by the Fund and RFAs, or Policy Coordination Instruments (PCIs) and Policy Support Instruments (PSIs) that may help unlock RFA financing to the country, staff proposes that relevant Board documents be exchanged prior to their consideration by the Board, following notification to the Board. The proposed framework builds on the principles of the Transmittal Policy and does not impact the transmittal of documents to international organizations currently governed by the Transmittal Policy."
International Monetary Fund. Legal Dept.

Abstract

This volume documents decisions, interpretations, and resolutions of the Executive Board and Board of Governors of the International Monetary Fund, as well as documents relating to the United Nations and other international organizations.

Miss Rita Mesias

Abstract

This Coordinated Direct Investment Survey Guide (Guide) has been prepared to assist economies in participating in the Coordinated Direct Investment Survey (CDIS). The CDIS is being conducted under the auspices of the Statistics Department of the IMF across a wide range of economies. The survey is conducted simultaneously by all participating economies; uses consistent definitions; and encourages best practices in collecting, compiling, and disseminating data on direct investment positions. The CDIS is thus an important tool in capturing world totals and the geographic distribution of direct investment positions, thereby contributing to important new understandings of the extent of globalization, and improving the overall quality of direct investment data worldwide. As of the writing of this updated Guide, more than 100 economies participate in the CDIS.

Mr. Alfred Schipke

Abstract

With a combined population of more than 350 million people, frontier and developing Asia, which includes countries such as Vietnam, Cambodia, and Bangladesh, is located in the world’s fastest-growing region and has favorable demographics. The countries share a number of common macroeconomic, financial, and structural challenges. This book addresses issues related to economic growth and structural transformation, as well as the risk of a poverty trap and rising income inequality.