This paper describes that in developing countries, the moves toward more flexible exchange rate arrangements and liberalization of exchange controls often occurred in the context of comprehensive macroeconomic adjustment programs supported by the IMF. These programs featured a broad range of policy actions, including an increasing emphasis on structural reforms aimed at improving resource allocation and enhancing the supply response of the economy. With respect to restrictive systems, the trend toward liberalization of nontrade current and capital transactions continues, primarily because it is seen as ineffective, even counterproductive, to try to control such financial flows. This trend contrasts with trade where it appears that some major participants have been awaiting the outcome of the Uruguay Round before further reducing restrictions. A single currency peg has been the exchange arrangement most frequently used by developing countries, of which over one third currently have such an arrangement. This type of peg has the merit of being easy to administer and is generally chosen by countries that have a large share of foreign exchange transactions in the currency chosen as the peg.
International Monetary Fund. External Relations Dept.
The enhancement of the IMF’s structural adjustment facility is discussed. In its April 1987 meeting, the IMF’s Interim Committee highlighted the plight of low-income countries, and outlined a strategy for their recovery. It emphasized that it is crucial for these countries to implement reforms that to be fully effective, will need to be accompanied by the timely provision of additional financing on appropriate concessional terms to support these reforms. The Committee also called upon creditor governments to grant exceptional relief with respect to official credits in highly indebted low-income countries.
The economies of the Mediterranean region countries—which in the present study include Algeria, Egypt, Jordan, Lebanon, Morocco, Syria, Tunisia, as well as Israel and Turkey—experienced a period of strong and dynamic economic development in the late 1970s and early 1980s, with positive income growth, export expansion, and increasing manufacturing activity. Together with a stable financial environment of low inflation, this permitted considerable progress in output expansion and structural change, with consequent creation of employment opportunities and increases in the standard of living of the population. But since the late 1980s, with few exceptions, these economies have experienced a much less dynamic evolution. Export expansion has slowed considerably, contributing—together with the termination of the oil windfall—to a slow-down in output growth. As a result, per capita in-come growth in most countries has stagnated, or at best fallen behind the pace of other more dynamic regions. While Israel and Turkey have done somewhat better, with continued export expansion and output growth, they have both recently experienced a sharp deterioration of internal finances and worsening inflation pressures, particularly severe in Turkey.
The economy of the Mediterranean region countries - which in the present study include Algeria, Egypt, Jordan, Lebanon, Morocco, Syria, Tunisia, as well as Israel and Turkey - experienced a period of strong and dynamic economic development in the late 1970s and early 1980s. But since the 1980s these economies have experienced a much less dynamic evolution and tended toward stagnation. This paper by Oleh Havrylyshyn, presents an assessment of the experience of these economies in a framework of a broad trade strategy perspective for Mediterranean countries, and examines prospects for the future.
This Recent Economic Developments and Selected Issues paper on Georgia highlights that during 1997, the Georgian economy grew by 11 percent according to official estimates, while the average annual inflation rate continued its downward path initiated in 1995 and reached single-digit levels of about 7 percent. The fiscal deficit (on a commitment basis) declined from 4.5 percent in 1996 to 4.1 percent in 1997. Investment outlays of the general government, however, fell in real terms in 1997 as the government adjusted to a tighter budget constraint.
This 2011 Article IV Consultation highlights that the Turkish economy continued to grow strongly through the first half of 2011, reaping the benefits of institutional reforms and revamped policy frameworks implemented in the previous decade. However, growth became increasingly fueled by domestic demand and imports. Policy responses were insufficient to prevent the development of a large current account deficit and high inflation. Executive Directors have commended the Turkish authorities for their agile economic management during the global crisis, which, together with structural reforms undertaken earlier, contributed to a rapid recovery.
This paper describes economic developments in Turkey during the 1990s. Economic activity continued to increase rapidly in 1996, with gross national product growing by 8 percent in real terms, for the second year in a row. Although the pace of activity seemed to ease a little during the first three quarters of the year, production gained momentum in the last quarter, especially in agriculture. The industrial sector continued to expand fastest (7.1 percent), but the service (6.6 percent) and the agricultural sectors (5.2 percent) also performed strongly.
This paper reviews economic developments in Turkey during 1992–96. The Turkish economy rebounded in 1995, with real gross national product rising by 8.1 percent, reversing the decline of 6.1 percent in 1994. A strong pickup in activity in the second and third quarters of 1995 more than compensated for the continued weakness in the first quarter and a slight decline in the fourth quarter caused by uncertainty in the run-up to the elections. Industry performed strongly, with a growth rate of 12.1 percent, followed by services (6.4 percent) and agriculture (2.6 percent).
This paper assesses the effect of constrained trade finance on trade flows in countries undergoing financial and balance of payments crises. Most of the countries that had a major crisis had a significant trade contraction, while trade-related finance declined sharply. However, trade may also be affected by other variables such as world demand, domestic demand, banking crises, changes in export and import prices, and real exchange rate depreciation. To estimate the effect of constrained trade finance on trade flows, we estimate import and export volume equations including explicitly trade financing as an explanatory variable in addition to the usual variables such as relative prices and income. We conclude that constrained trade finance is a factor in explaining both export and import volumes in the short-run. A fall in external trade finance explains a relatively small part of the trade loss during crises, while a fall in trade financing in connection with domestic banking crisis can lead to a substantial loss of trade.
This paper describes a simulation model that can serve as a basis for a developing country growth-oriented adjustment program. The model has been designed to provide explicit links between fiscal, monetary and exchange rate policies and major macroeconomic variables. While the model is applied to and solved for the case of Turkey, its simplicity and flexibility make it sufficiently general to be applicable to a wide range of countries. The model integrates demand-determined output with a supply side that responds to policies which affect investment and it allows the relative shares of domestic and foreign factors of production to be determined by their relative prices. The model is solved using Lotus 1-2-3, software that is familiar to Fund economists and which allows the user to quickly evaluate alternative assumptions and policies.