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PETER MONTIEL

The design of appropriate stabilization policies to meet short-run and long-run balance of payments objectives under fixed exchange rates requires analysis of how fiscal and credit policies affect the balance of payments. A starting point for such an analysis is often thought to be the monetary approach to the balance of payments, which, over the past two decades, has made important contributions to the analysis of the behavior of open economies under fixed exchange rates. As is known, however, the fundamental equation of the monetary approach is one that should be satisfied by any well-specified macroeconomic structural model of an open economy. The monetary approach is not itself a structural model, but rather a framework of analysis that is compatible with diverse macroeconomic models, which in turn may each possess quite different implications for the effects of stabilization policies on the balance of payments and on other macroeconomic variables.

International Monetary Fund
This paper examines the challenges and policy options after hyperinflation in Zimbabwe. The paper reviews the pros and cons of alternative monetary regimes for Zimbabwe to succeed the current multicurrency system, which the authorities consider a temporary arrangement. The analysis suggests that some form of official dollarization has significant advantages. The paper also assesses competitiveness and external sustainability in debt-distressed Zimbabwe. It also makes a case for creating fiscal space for growth and development in post-hyperinflation Zimbabwe.
International Monetary Fund. Middle East and Central Asia Dept.

This Selected Issues paper estimates both Guatemala’s potential output and output gap using a wide range of econometric techniques. The analysis suggests that Guatemala’s potential output growth is about 3.5 percent for the whole sample period and that the output gap is almost closed. Results are highly robust among different methodologies. Among the methods used, several well-known time series filters and two different estimations of a state-space model are included. Additionally, a test for structural breaks in the series of potential GDP is presented. All methodologies conclude that the output gap at the end of 2012 is almost closed at -0.2 percent of potential GDP.

Mrs. Joslin Landell-Mills

Abstract

This paper discusses the IMF’s New Facilities for Structural Adjustment (SAF) for helping the poor. The first arrangement supported by the SAF was approved by the IMF’s Executive Board in August 1986. By the end of February 1992, 35 countries had already used resources under SAF arrangements and 19 under enhanced structural adjustment facility arrangements. For several of these, donors have used the policy framework paper as a basis for deciding their own loan commitments. It is hoped that the IMF’s part in the international effort to deal with the crisis in the poorest countries will make an effective contribution to improving their well-being in a sustainable way.

Mrs. Joslin Landell-Mills

Abstract

The international community has responded to the crisis in the poorer developing countries by equipping the International Monetary Fund with two special new facilities—the structural adjustment facility (SAF) in March 1986 and the enhanced structural adjustment facility (ESAF) in December 1987. Under these facilities, up to SDR 8.7 (about US$12) billion of concessional resources is expected to be made available to help low-income countries with protracted payments problems take measures to improve their balance of payments and foster growth over the medium term.

Thomas Reichmann and Mr. Richard T. Stillson

Countries facing temporary balance of payments problems may use Fund resources, usually in the form of stand-by arrangements, to support programs designed to correct maladjustments in their balance of payments. The authors of this article recently conducted a study of such programs. They report here on their analysis and their evaluation of the policies followed by a selected number of countries which used Fund resources under stand-by arrangements.