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  • genre: journal x
  • volume: 2021 x
Cover Staff Climate Notes
Climate-Sensitive Management of Public Finances—"Green PFM”
Mr. Fabien Gonguet
,
Mr. Claude P Wendling
,
Ozlem Aydin Sakrak
, and
Bryn Battersby
Public financial management (PFM) consists of all the government’s institutional arrangements in place to facilitate the implementation of fiscal policies. In response to the growing urgency to fight climate change, “green PFM” aims at adapting existing PFM practices to support climate-sensitive policies. With the cross-cutting nature of climate change and wider environmental concerns, green PFM can be a key enabler of an integrated government strategy to combat climate change. This note outlines a framework for green PFM, emphasizing the need for an approach combining various entry points within, across, and beyond the budget cycle. This includes components such as fiscal transparency and external oversight, and coordination with state-owned enterprises and subnational governments. The note also identifies principles for effective implementation of a green PFM strategy, among which the need for a strong stewardship located within the ministry of finance is paramount.
Keywords:
public financial management, green budgeting, green public financial management, mainstreaming, climate change adaptation, climate change mitigation; IMF staff Climate note; IMF staff Climate Note 2021/002; climate change mitigation; management of public finances; climate change adaptation; Budget planning and preparation; Climate change; Climate policy; Global
Cover Global Financial Stability Notes
Digital Banking Support to Small Businesses amid COVID-19: Evidence from China
Tao Sun
This note analyzes the economic impact of digital lending to micro and small sized enterprises (MSEs) in China during the coronavirus disease (COVID-19) pandemic. A preliminary analysis of a large pool of MSEs served by a digital bank indicates that digital banks were able to remotely evaluate borrowers and sustain lending during the pandemic, thereby facilitating the business continuity, sales growth, and financial inclusiveness of MSEs. In the global context, a policy framework—leveraging the advantages of digital banks and empowering digital banks, while guarding against possible financial stability risks—would further support small businesses during and after the COVID-19 pandemic.
Keywords:
micro and small enterprises, digital banking, fintech, COVID-19; digital bank; lending to micro; credit demand; borrowing decision; technology firm; Small and medium enterprises; COVID-19; Loans; Corporate finance; Global
Cover Staff Discussion Notes
Insolvency Prospects Among Small-and-Medium-Sized Enterprises in Advanced Economies: Assessment and Policy Options
Mr. Federico J Diez
,
Mr. Romain A Duval
,
Jiayue Fan
,
Jose M Garrido
,
Sebnem Kalemli-Ozcan
,
Chiara Maggi
,
Mr. Maria Soledad Martinez Peria
, and
Mr. Nicola Pierri
The COVID-19 pandemic has increased insolvency risks, especially among small and medium enterprises (SMEs), which are vastly overrepresented in hard-hit sectors. Without government intervention, even firms that are viable a priori could end up being liquidated—particularly in sectors characterized by labor-intensive technologies, threatening both macroeconomic and social stability. This staff discussion note assesses the impact of the pandemic on SME insolvency risks and policy options to address them. It quantifies the impact of weaker aggregate demand, changes in sectoral consumption patterns, and lockdowns on firm balance sheets and estimates the impact of a range of policy options, for a large sample of SMEs in (mostly) advanced economies.
Keywords:
Insolvency; Bankruptcy; “Quasi” Equity Injections; Small- and medium-size enterprises; COVID-19; insolvent firm; cash position; equity injection; illiquid firm; firm exit; cash flow; Solvency; Small and medium enterprises; Stocks; Financial statements; Southern Europe; Asia and Pacific
Cover Departmental Papers
Tourism in the Post-Pandemic World: Economic Challenges and Opportunities for Asia-Pacific and the Western Hemisphere
Ms. Manuela Goretti
,
Mr. Lamin Y Leigh
,
Aleksandra Babii
,
Mr. Serhan Cevik
,
Stella Kaendera
,
Mr. Dirk V Muir
,
Sanaa Nadeem
, and
Mr. Gonzalo Salinas
This departmental paper analyzes the impact of the COVID-19 pandemic on tourism in the Asia Pacific region, Latin America, and Caribbean countries. Many tourism dependent economies in these regions, including small states in the Pacific and the Caribbean, entered the pandemic with limited fiscal space, inadequate external buffers, and foreign exchange revenues extremely concentrated in tourism. The empirical analysis leverages on an augmented gravity model to draw lessons from past epidemics and finds that the impact of infectious diseases on tourism flows is much greater in developing countries than in advanced economies.
Keywords:
Tourism; Jobs; Diversification; COVID-19; Growth; Spillovers; tourism industry; tourism sector; tourism flow; tourism export; tourism model; tourism dominance; economies will; Communicable diseases; Exports; Global; Pacific Islands; Caribbean; Asia and Pacific; Western Hemisphere
Cover IMF How To Notes
How to Design a Fiscal Strategy in a Resource-Rich Country: Guidance Note on the Excel Template (v1.0)
Olivier Basdevant
and
Eslem Imamoglu
This guidance note describes how to use the Excel-based template developed by the Fiscal Affairs Department (FAD) of the IMF accompanying the note “How to Design a Fiscal Strategy in a Resource-Rich Country.” This template uses data inputs to generate simulations of fiscal policy dynamics. It helps IMF teams and country authorities in RRCs analyze trade-offs associated with alternative fiscal strategies for the use of public resource wealth. Visualizing these trade-offs and assessing their sensitivity to underlying macroeconomic assumptions can help inform policymakers on the most appropriate fiscal strategy, given country-specific circumstances.
Keywords:
FADHTN; HTN; resource revenue; calibration method; commodity shock; dropdown menu; shock path
Cover Policy Papers
Measuring the Informal Economy
Mr. Gabriel Quiros-Romero
,
Mr. Thomas F Alexander
, and
Ms. Jennifer Ribarsky
This paper proposes a framework for measuring the informal economy that is consistent with internationally agreed concepts and methodology for measuring GDP. Based on the proposed framework, the informal economy “comprises production of informal sector units, production of goods for own final use, production of domestic workers, and production generated by informal employment in formal enterprises.” This proposed framework will facilitate preparation of estimates of the informal economy as a component of GDP.
Keywords:
PP; enterprise survey; household enterprise; registration record; enterprise unit; food establishment; construction company; Informal economy; Informal employment; Income; Employment; Global
Cover IMF Staff Country Reports
Morocco: 2020 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Morocco
International Monetary Fund. Middle East and Central Asia Dept.
As in many other countries in the world, the pandemic has exerted a heavy toll on Morocco’s population. Its economy has also been hit by a severe drought that affected agriculture output. The authorities’ prompt response has helped contain the social and economic damage from the shocks but could not avoid a severe contraction of GDP. The loss of tax revenues deteriorated the fiscal position, while the fall in tourism receipts widened the current account deficit. However, greater access to external borrowing, including the full drawing of the IMF Precautionary and Liquidity Line (PLL) arrangement, has helped maintain international reserves at adequate levels so far in 2020. A gradual economic recovery is expected to begin in 2021, assuming the impact of the drought and the health crisis wane next year. The recent rise in COVID-19 cases, both in Morocco and its main trading partners, suggests that this outlook remains subject to significant downside risks.
Keywords:
ISCR; CR; vaccination campaign; vaccine dose; draft budget law; coupon rate; government policy; COVID-19; Credit; Loans; Maghreb; Global
Cover IMF Staff Country Reports
Morocco: 2020 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Morocco
International Monetary Fund. Middle East and Central Asia Dept.
As in many other countries in the world, the pandemic has exerted a heavy toll on Morocco’s population. Its economy has also been hit by a severe drought that affected agriculture output. The authorities’ prompt response has helped contain the social and economic damage from the shocks but could not avoid a severe contraction of GDP. The loss of tax revenues deteriorated the fiscal position, while the fall in tourism receipts widened the current account deficit. However, greater access to external borrowing, including the full drawing of the IMF Precautionary and Liquidity Line (PLL) arrangement, has helped maintain international reserves at adequate levels so far in 2020. A gradual economic recovery is expected to begin in 2021, assuming the impact of the drought and the health crisis wane next year. The recent rise in COVID-19 cases, both in Morocco and its main trading partners, suggests that this outlook remains subject to significant downside risks.
Keywords:
ISCR; CR; vaccination campaign; vaccine dose; draft budget law; coupon rate; government policy
Cover IMF Working Papers
Dissecting Economic Growth in Uruguay
Ms. Natasha X Che
Uruguay experienced one of its biggest economic booms in history during 2004-2014. Since then, growth has come down significantly. The paper investigates the various causes of the boom and discusses the sustainability of these causes. It then compares Uruguay against high-growth countries that were once at a similar income level, across a broad set of structural indicators, to identify priority reform areas that could improve long-term growth prospect.
Keywords:
economic growth; Uruguay; commodity price boom; sustainable growth; economy of Uruguay; WP; convergence record; income convergence; soybean export; terms of trade; Uruguay economy
Cover FinTech Notes
Virtual Assets and Anti-Money Laundering and Combating the Financing of Terrorism (1): Some Legal and Practical Considerations
Nadine Schwarz
,
Ms. Ke Chen
,
Ms. Kristel Poh
,
Ms. Grace Jackson
,
Kathleen Kao
, and
Maksym Markevych
The purpose of this note is to assist countries in their understanding and mitigation of the money laundering (ML), terror financing (TF), and financing of the proliferation of weapons of mass destruction (PF) risks related to virtual assets (VAs). This is the first of two Fintech Notes dedicated to VAs and anti-money laundering and combating the financing of terrorism (AML/CFT). This first note is broad in scope. It explains why VAs are vulnerable for misuse for ML/TF/PF purposes and clarifies which assets and service providers should be subject to AML/CFT measures. It discusses the measures that all countries should take, and the type of action necessary in instances of criminal misuse of VA. A second Fintech note focuses on the AML/CFT regulatory and supervisory framework for virtual asset service providers (VASPs). Both notes are based on Financial Action Task Force (FATF) standards and draw heavily on the FATF’s 2019 “Guidance for a Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers.” They aim at providing policy makers and authorities with AML/CFT responsibilities with an overview of the legal and operational considerations that the implementation of a sound AML/CFT framework for VAs and VASPs raises. In some instances, the notes make reference to specific types of VAs, VASPs, and related products. These references are made for illustrative purposes only, and do not constitute an endorsement of the specific VAs, VASPs, and related products. Finally, at the time of drafting, no country had been assessed against the new standards and many country authorities were in the process of establishing how best to incorporate the new standards in their AML/CFT framework. For these reasons, this note does not refer to specific country examples.
Keywords:
CFT obligation; CFT regulation; CFT supervisor; FATF standard; CFT control; FATF definition; Anti-money laundering and combating the financing of terrorism (AML/CFT); Virtual currencies; Blockchain and DLT; Digital currencies; Global