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Shahid Yusuf
Since the onset of the Arab Spring, economic uncertainty in Egypt, Jordan, Libya, Morocco, Tunisia, and Yemen (Arab Countries in Transition, ACTs) has slowed already sluggish growth; worsened unemployment, particularly of youth; undermined business confidence, affected tourist arrivals, and depressed domestic and foreign direct investment. Furthermore, political and social tensions have constrained reform efforts. Assessing policy options as presented in the voluminous literature on the Arab Spring and based on cross-country experience, this paper concludes that sustainable and inclusive growth calls for a two pronged approach: short term measures that revive growth momentum and partially allay popular concerns; complemented with efforts to adjust the public’s expectations and prepare the ground for structural reforms that will deliver the desired longer tem performance.
International Monetary Fund

global downturn, higher energy prices, and tightening of credit conditions for emerging markets remain. Key policy recommendations : Policy framework and stance . Monetary policy has been appropriately tightened, and the central bank should stand ready to raise interest rate further, if necessary, to keep inflation expectations anchored firmly to the 3-percent target. The structural fiscal surplus rule is as important as ever in shielding the economy from shocks, and room existing under the rule is being used to alleviate the impact of higher inflation on

International Monetary Fund

a prudent fiscal stance, effective management of bank liquidity, flexibility in exchange rate management, and careful debt management. Fiscal policy will need to concentrate on accelerating pro-poor spending and broadening the tax base. Particular attention should be placed on better targeting of social spending, and a broad-based improvement in public expenditure management. “The authorities’ strategy for growth and poverty reduction is anchored firmly in the PRSP, which places emphasis on improving access to social services, employment and income

International Monetary Fund

framework for monetary policy anchored firmly on disinflation. Various aspects of the monetary policy transmission mechanism pose challenges for the NBH, calling for prudent assumptions in the conduct of monetary policy in light of the benefits of strengthening policy credibility. Successfully implementing the IT framework can play a significant role in helping to reduce the costs of disinflation in Hungary, especially when supported by a high level of transparency and adequate support from fiscal policy. References Abel , István and P. Siklos

International Monetary Fund

growth, which is annual because quarterly GDP data are not reported in Ghana. 2 Increase represents depreciation of the cedi. 28. With full credibility, the central bank raises the interest rate, relative to baseline, by less than 100 basis points . 8 The real price of foreign exchange shows a small, brief increase. The modest tightening, resulting in a small negative output gap, is sufficient to keep inflation close to 5 percent, because public expectations of inflation are anchored firmly to the target. This result is in line with the experience of the past

International Monetary Fund
This 2008 Article IV Consultation highlights that the Chilean economy has proved resilient in the face of strong economic and financial headwinds during the past year. Rising world prices for energy and food have been exacerbated by drought and a tight domestic energy situation. The government continues to move forward with a bold structural agenda. In the financial sector, the authorities plan to introduce initiatives aimed at enhancing market access for small and medium-sized enterprises, increase market depth, and boost the internationalization of the peso.
International Monetary Fund

strong inflation increase in May and recent jump in oil prices, the authorities and staff agreed that the decline in inflation over the coming months could be more gradual than anticipated in the last Monetary Policy Report , possibly raising the risks of second-round effects. 9 In this light, the central bank should stand ready with additional policy measures, if necessary, to keep inflation expectations anchored firmly to the 3-percent target. 19. The central bank earns high marks for transparency, although communication of the inflation outlook could be

International Monetary Fund

to anchor firmly inflation expectations, and moreover economic activity is moderating. Recent rainfall should have a favorable effect on supply of some domestic food items. After the recent increase, we also expect core inflation (which excludes food and energy) to come down gradually in 2009 in line with core inflation in the euro area. 4. The June 2008 program quantitative targets were observed ( Table 1 ). Domestic borrowing was significantly below its ceiling, and domestic debt was further reduced . The mid-year review of the budget conducted in August

International Monetary Fund
This Selected Issues paper on Ghana shows that as a small, open low-income economy, the country faces several major challenges in its conduct of disinflation policy. Ghana has historically experienced volatile and often high inflation rates. The paper also presents a model that recognizes difficulties being faced by Ghana, among them less-than-perfect credibility of announcements of inflation reduction and policymaker aversion both to movements of output from its potential level and to variability in the interest rate.
Shahid Yusuf and Ms. Daniela Gressani

the help of learning, debugging, scaling up, and incremental innovation. 122 The new IP is tolerant of networked cluster development: “Third Italy” is one form it takes, Cambridge, UK, another. 123 A review of successful clusters suggests that, aside from luck and serendipitous occurrences, anchor firms (Lockheed and Fairchild in Silicon Valley), research universities (MIT/Harvard in Boston) and special economic zones (SEZs) (Shenzhen, Penang, Hsinchu Park) can serve as nuclei around which many small firms aggregate. 124 A possible route to cluster formation in