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International Monetary Fund. Western Hemisphere Dept.

The fallout from the COVID-19 crisis is hitting ECCU economies hard. Tourism receipts (accounting for nearly 40 percent of GDP) have dried up, as tourist arrivals have come to a grinding halt. The authorities successfully contained the spread of the virus at the onset of the pandemic by largely closing the borders, but a reopening of the economies since the summer has led to a surge in COVID cases. The ECCU economy is projected to contract by 16 percent in 2020 and by a further near ½ percent in 2021. Fiscal positions have deteriorated sharply, and public debt is projected to reach near 90 percent of GDP in 2021 and remain at an elevated level for years to come. Headline indicators suggest the financial system is relatively sound with ample liquidity buffers, but nonperforming loans are expected to rise significantly. The outlook is clouded by exceptionally high risks, including from the uncertainty concerning the evolution of the pandemic.

Mr. Alfred Schipke, Aliona Cebotari, and Ms. Nita Thacker


The Eastern Caribbean Economic and Currency Union (OECS/ECCU) is one of four currency unions in the world. As in other parts of the world in the aftermath of the global economic and financial crisis, the region is at a crossroads, facing the major challenges of creating jobs, making growth more inclusive, reforming the banking system, and managing volatility, while grappling with high public debt and persistent low economic growth. Policymakers have the critical task of implementing strong reforms to strengthen the monetary union while also laying the foundation for accelerating growth. This Handbook provides a comprehensive analysis of the key issues in the OECS/ECCU, including its organization and economic and financial sector linkages, and provides policy recommendations to foster economic growth.

International Monetary Fund

The European Union’s (EU) financial stability framework is being markedly strengthened. This is taking place on the heels of a severe financial crisis owing to weaknesses in the banking system interrelated with sovereign difficulties in the euro area periphery. Important progress has been made in designing an institutional framework to secure microeconomic and macroprudential supervision at the EU level, but this new set-up faces a number of challenges. Developments regarding the financial stability may assist in the continuing evolution of the European financial stability architecture.

International Monetary Fund

After the recession, Uruguay continued to face difficult economic conditions under the Stand-By Arrangement. Executive Directors emphasized the need to promote sustainable growth with low inflation and high employment. They welcomed Uruguay's continued commitment to trade liberalization, and stressed the need for fiscal discipline, improved competitiveness, strong fiscal and monetary policies, structural reforms, and measures to strengthen the performance of public enterprises. They observed that the country's economic statistics are adequate for the assessment and monitoring of macroeconomic policies.

International Monetary Fund
This paper presents empirical evidence on the effects of achieving investment grade on borrowing costs for the sovereign and the private sector. This study provides background information on sovereign credit ratings and compares Panama’s key macroeconomic and institutional characteristics with those of other emerging markets. Statistical evidence on the reduction in sovereign spreads associated with obtaining investment grade status and the impact of the sovereign’s upgrade on corporate financing costs were also discussed. The model is estimated using a variety of panel regression techniques.
International Monetary Fund
The Irish authorities are adopting consolidation measures to meet the original fiscal targets as well as implementing structural reforms in the labor market and sheltered sectors to enhance competitiveness. Strengthened euro area support for Ireland’s growth and debt sustainability would greatly reinforce prospects for Ireland to regain market access at an early stage given more adverse circumstances. Reports suggest that investors are differentiating Ireland based on its policy implementation track record and growth prospects. Vulnerabilities persist, however, as international demand for Irish bonds is sensitive to developments in the euro area.
International Monetary Fund. Western Hemisphere Dept.
Dominica has faced two major challenges during the past two decades: weak competitiveness and low potential growth. In addition to these economic challenges, the country has been facing frequent natural disasters. Growth is expected to pick up gradually. The financial system is highly liquid but monetary conditions have not eased. The external position is improving on strong service receipts. Fiscal policy is reaching its limit in terms of its ability to support economic activity. The balance of risks to the fiscal outlook is broadly balanced.