Mr. Luis Brandao-Marques and Mrs. Esther Perez Ruiz
This paper develops comparable financial conditions indices (FCIs) for the six large and most
financially-integrated Latin American economies (LA6) by following Korobilis (2013) and Koop
and Korobilis (2014). The main findings are as follows. First, the estimated FCIs are influenced
by a commodity cycle, a global financial cycle, as well as country-specific episodes of financial
distress. Second, by early 2017, financial conditions remained favorable in most LA6 economies
relative to historical standards. Third, the impact of financial shocks on economic activity widely
varies across LA6 and is otherwise found to be stronger in periods of financial stress. Fourth,
exposure to regional financial spillovers also differs across LA6.
The Seventh PMR includes: (i) a discussion of progress made over the last year on the actions corresponding to four Management Implementation Plans (MIPs) that were classified as still “in progress” in the previous PMR; and (ii) an assessment of the progress made in achieving the high-level objectives in three areas directly related to those MIPs. In addition, an update on substantive issues related to five older MIPs agreed since 2007 is provided at the end of the report. Three new evaluations have been completed by the IEO since March 2014. In July and August 2015, Management issued the MIPs in response to these evaluations. Given that only a short time has passed since their completion, progress in addressing the actions contemplated in those MIPs will be discussed in the next PMR.