R. Portes, A. Swoboda, W.M. Scammel, Robert Hormats, Bahram Nowzad, Philip Cagan, Frederick Ribe, Martin Feldstei, Lan Bovenberg, Sebastian Edward, Mr. Liaquat Ahamed, Anthony Lanyi, Susan Joeke, Masooma Habib, H.W. Arndt, and Robert Picciotto
This paper discusses the structural adjustment in low-income countries. In the first 20 months of its operations, the IMF’s structural adjustment facility (SAF) has provided concessional financial assistance to support the balance-of-payments adjustment efforts of 21 low-income member countries. Most SAF arrangements have supported policy reform programs that have also received support under other IMF facilities. The fundamental concept underlying the SAF is the notion that growth and adjustment are mutually reinforcing.
This paper discusses the main operational issues involved in the implementation of interbank foreign exchange systems in selected African countries. The countries considered are The Gambia, Ghana, Kenya, Mozambique, Nigeria, and Sierra Leone. The paper finds that exchange rates in these markets tend to be determined through transactions between dealers and clients at the retail level, for the most part, rather than through wholesale interdealer transactions. Additionally, many factors continue to limit the full development of these markets. In particular, informational problems limiting “real time” quotes, inadequate competition in the market, and insufficient regulations to reduce exchange rate risk and encourage “true” interdealer transactions. Despite these limitations, the markets studied have improved the efficiency of foreign exchange allocation and substantially narrowed exchange rate differentials between the official and parallel markets.
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