This paper analyzes how the leverage of financial institutions affects their demand for
assets and the resulting value of transactions between financial institutions. The results
show a positive relationship between buyer capital and the likelihood of buying assets,
and between buyer capital and the value of the deal. That is, those institutions that are
the least constrained in their ability to raise funding are those that demand assets and
pay more for them. This result does not hold, however, for deposit-taking institutions
that had access to several government programs designed to improve their liquidity
position during the crisis of 2008.
This Selected Issues paper covers three topics of particular relevance to Mauritania: export competitiveness and exchange rate policy, the monetary policy framework, and the transfer of government deposits from commercial banks to the central bank. The paper reports on the recent economic developments over 1999–2001. It describes a stable macroeconomic environment with robust growth, low inflation, manageable current account deficits, and a comfortable level of gross foreign reserves. The paper also looks at the issue of export competitiveness and exchange rate policy.
The Second Review Under the Three-Year Arrangement Under the Poverty Reduction and Growth Facility of Rwanda explains macroeconomic challenges. Indicative limits on domestic debt have been established. If these limits are exceeded or inflation is rekindled, the domestic component of fiscal spending must be released more gradually. On the structural side, the focus remains on public financial management (PFM) and the financial sector. The authorities’ financial sector development plan is a sound basis for building long-term financial markets.