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  • genre: journal x
  • volume: 2021 x
Cover Staff Discussion Notes
A Proposal to End the COVID-19 Pandemic: Executive Summary
Ruchir Agarwal
and
Ms. Gita Gopinath
Urgent steps are needed to arrest the rising human toll and economic strain from the COVID-19 pandemic that are exacerbating already-diverging recoveries. Pandemic policy is also economic policy as there is no durable end to the economic crisis without an end to the health crisis. Building on existing initiatives, this paper proposes pragmatic actions at the national and multilateral level to expeditiously defeat the pandemic. The proposal targets: (1) vaccinating at least 40 percent of the population in all countries by the end of 2021 and at least 60 percent by the first half of 2022, (2) tracking and insuring against downside risks, and (3) ensuring widespread testing and tracing, maintaining adequate stocks of therapeutics, and enforcing public health measures in places where vaccine coverage is low. The benefits of such measures at about $9 trillion far outweigh the costs which are estimated to be around $50 billion—of which $35 billion should be paid by grants from donors and the residual by national governments potentially with the support of concessional financing from bilateral and multilateral agencies. The grant funding gap identified by the Access to COVID-19 Tools (ACT) Accelerator amounts to about $22 billion, which the G20 recognizes as important to address. This leaves an estimated $13 billion in additional grant contributions needed to finance our proposal. Importantly, the strategy requires global cooperation to secure upfront financing, upfront vaccine donations, and at-risk investment to insure against downside risks for the world.
Keywords:
COVID-19; Pandemic; Economic crisis; pandemic policy; financing facilities; donor country; LMIC vaccination; vaccination target; Income; Manufacturing; Global; Africa
Cover Global Financial Stability Notes
Drivers of Emerging Market Bond Flows and Prices
Mr. Evan Papageorgiou
and
Rohit Goel
An interesting disconnect has taken shape between local currency- and hard currency-denominated bonds in emerging markets with respect to their portfolio flows and prices since the start of the recovery from the COVID-19 pandemic. Emerging market assets have recovered sharply from the COVID-19 sell-off in 2020, but the post-pandemic recovery in 2021 has been highly uneven. This note seeks to answer why. Yields of local currency-denominated bonds have risen faster and are approaching their pandemic highs, while hard currency bond yields are still near their post-pandemic lows. Portfolio flows to local currency debt have similarly lagged flows to hard currency bonds. This disconnect is closely linked to the external environment and fiscal and inflationary pressures. Its evolution remains a key consideration for policymakers and investors, since local markets are the main source of funding for emerging markets. This note draws from the methodology developed in earlier Global Financial Stability Reports on fundamentals-based asset valuation models for funding costs and forecasting models for capital flows (using the at-risk framework). The results are consistent across models, indicating that local currency assets are significantly more sensitive to domestic fundamentals while hard currency assets are dependent on the external risk sentiment to a greater extent. This suggests that the post-pandemic, stressed domestic fundamentals have weighed on local currency bonds, partially offsetting the boost from supportive global risk sentiment. The analysis also highlights the risks emerging markets face from an asynchronous recovery and weak domestic fundamentals.
Keywords:
emerging markets, bonds, COVID-19, at-risk framework; bond flow; hard currency assets; portfolio flow; emerging market assets; hard currency-denominated bond; hard currency bond; Emerging and frontier financial markets; Currencies; Bonds; Securities markets; Capital flows; Global
Cover Departmental Papers
Policy Advice to Asia in the COVID-19 Era
Changyong Rhee
and
Katsiaryna Svirydzenka
The Asia-Pacific region was the first to be hit by the COVID-19 pandemic; it put a strain on its people and economies, and policymaking became exceptionally difficult. This departmental paper contains the assessment of the key challenges facing Asia at this critical juncture and policy advice to the region both to address the current challenges and to build the foundations for a more sustainable and inclusive future. The paper focuses on (1) adjusting to the COVID-19 shock, (2) using unconventional policies when policy space is limited, (3) dealing with debt, and (4) helping the vulnerable and greening the recovery. The paper first presents the different ways countries are adjusting to the COVID-19 shock.
Keywords:
Policy Advice; Pandemic; Asia; DPPP; DP; containment measure; potential GDP; sample firm; illiquid firm; investment regression; nonfinancial firm; nonviable firm; rising debt; COVID-19; Yield curve; Central bank policy rate; Sovereign bonds; Global; Asia and Pacific; South Asia; Pacific Islands; Australia and New Zealand
Cover IMF How To Notes
How to Manage Value-Added Tax Refunds
Mario Pessoa
,
Andrew Okello
,
Artur Swistak
,
Muyangwa Muyangwa
,
Virginia Alonso-Albarran
, and
Vincent de Paul Koukpaizan
The value-added tax (VAT) has the potential to generate significant government revenue. Despite its intrinsic self-enforcement capacity, many tax administrations find it challenging to refund excess input credits, which is critical to a well-functioning VAT system. Improperly functioning VAT refund practices can have profound implications for fiscal policy and management, including inaccurate deficit measurement, spending overruns, poor budget credibility, impaired treasury operations, and arrears accumulation.This note addresses the following issues: (1) What are VAT refunds and why should they be managed properly? (2) What practices should be put in place (in tax policy, tax administration, budget and treasury management, debt, and fiscal statistics) to help manage key aspects of VAT refunds? For a refund mechanism to be credible, the tax administration must ensure that it is equipped with the strategies, processes, and abilities needed to identify VAT refund fraud. It must also be prepared to act quickly to combat such fraud/schemes.
Keywords:
value-added tax; refunds; VAT; management framework; VAT refund; Georgia revenue service; VAT system; Tax refunds; Tax administration core functions; Credit; Income; Global; Africa
Cover Policy Papers
Supplement to the Guidance Note for Surveillance Under Article IV Consultations
International Monetary Fund
This note provides updated guidance to country teams on bilateral surveillance in the context of Article IV consultations in light of the COVID crisis. This guidance impacts the focus, format and presentation of staff reports while keeping intact the substance of all existing Board-endorsed requirements. Similarly, all aspects of the comprehensive 2015 Guidance Note for Surveillance Under Article IV Consultations also remain in effect, except as modified below. This supplement aims to strengthen the focus of Fund surveillance on the fallout from the crisis and related challenges flexibly to adapt to a rapidly evolving context and will remain in effect, in the absence of further communication, until comprehensive new guidance is issued following the completion of the upcoming Comprehensive Surveillance Review.
Keywords:
PP; sustainability assessment; ESR country; ESR template
Cover IMF Staff Country Reports
Djibouti: Technical Assistance Report-External Sector Statistics
International Monetary Fund. Statistics Dept.
An external sector statistics (ESS) mission visited Djibouti from January 26–30, 2020. This was the fourth mission under the JSA/AFR project to improve ESS in 17 Francophone African countries. The mission found that significant data on direct investment (DI) have not been incorporated in either the balance of payments or international investment position (IIP) statistics since 2017.
Keywords:
ISCR; CR; balance of payments survey; ANPI data; balance of payments compiler; balance of payments unit; balance of payments statistician; port data; Foreign direct investment; External sector statistics; Balance of payments statistics; Customs unions; Europe; Asia and Pacific
Cover IMF Staff Country Reports
Djibouti: Technical Assistance Report-External Sector Statistics
International Monetary Fund. Statistics Dept.
An external sector statistics (ESS) mission visited Djibouti from January 26–30, 2020. This was the fourth mission under the JSA/AFR project to improve ESS in 17 Francophone African countries. The mission found that significant data on direct investment (DI) have not been incorporated in either the balance of payments or international investment position (IIP) statistics since 2017.
Keywords:
ISCR; CR; balance of payments survey; ANPI data; balance of payments compiler; balance of payments unit; balance of payments statistician
Cover Technical Notes and Manuals
Administering the Value-Added Tax on Imported Digital Services and Low-Value Imported Goods
Mr. John D Brondolo
This technical note and manual (TNM) addresses the following questions: (1) What are the main challenges in administering the value-added tax on imported digital services and the measures that countries have introduced to address the challenges?; (2) What are the main challenges in administering the value-added tax on low-value imported goods and the measures that countries have introduced to address the challenges? ;and (3) What are the key tasks in implementing the measures for improving the administration of the value-added tax on imported digital services and low-value imported goods?
Keywords:
VAT return; vendor collection approach; non-resident supplier; VAT treatment; European Union practice; Value-added tax; Imports; Global; Australia and New Zealand; Caribbean; Africa
Cover IMF Working Papers
Financial Globalization and Inequality: Capital Flows as a Two-Edged Sword
Mr. Barry J. Eichengreen
,
Mr. Balazs Csonto
,
Ms. Asmaa A ElGanainy
, and
Zsoka Koczan
We review the debate on the association of financial globalization with inequality. We show that the within-country distributional impact of capital account liberalization is context specific and that different types of flows have different distributional effects. Their overall impact depends on the composition of capital flows, their interaction, and on broader economic and institutional conditions. A comprehensive set of policies – macroeconomic, financial and labor- and product-market specific – is important for facilitating wider sharing of the benefits of financial globalization.
Keywords:
capital flows; capital account; remittances; and inequality.