Archived Series > World Economic and Financial Surveys
Abstract
What is the human cost of the global economic crisis? This year’s Global Monitoring Report, The MDGs after the Crisis, examines the impact of the worst recession since the Great Depression on poverty and human development outcomes in developing countries. Although the recovery is under way, the impact of the crisis will be lasting and immeasurable. The impressive precrisis progress in poverty reduction will slow, particularly in low-income countries in Africa. No household in developing countries is immune. Gaps will persist to 2020. In 2015, 20 million more people in Sub-Saharan Africa will be in extreme poverty and 53 million more people globally. Even households above the $1.25-a-day poverty line in higher-income developing countries are coping by buying cheaper food, delaying other purchases, reducing visits to doctors, working longer hours, or taking multiple jobs. The crisis will also have serious costs on human development indicators: • 1.2 million more children under age five and 265,000 more infants will die between 2009 and 2015. • 350,000 more students will not complete primary education in 2015. • 100 million fewer people will have access to safe drinking water in 2015 because of the crisis. History tells us that if we let the recovery slide and allow the crisis to lead to widespread domestic policy failures and institutional breakdowns in poor countries, the negative impact on human development outcomes, especially on children and women, will be disastrous. The international financial institutions and international community responded strongly and quickly to the crisis, but more is needed to sustain the recovery and regain the momentum in achieving the Millennium Development Goals (MDGs). Developing countries will also need to implement significant policy reforms and strengthen institutions to improve the efficiency of service delivery in the face of fiscal constraints. Unlike previous crises, however, this one was not caused by domestic policy failure in developing countries. So better development outcomes will also hinge on a rapid global economic recovery that improves export conditions, terms-oftrade, and affordable capital flows—as well as meeting aid commitments to low-income countries. Global Monitoring Report 2010, seventh in this annual series, is prepared jointly by the World Bank and the International Monetary Fund. It provides a development perspective on the global economic crisis and assesses the impact on developing countries—their growth, poverty reduction, and other MDGs. Finally, it sets out priorities for policy responses, both by developing countries and by the international community.
Abstract
In response to the volatility of capital flows since the mid-1990s, many emerging market economies have taken a variety of steps designed to “selfinsure” against volatile capital flows. One such measure has been the development of local securities and derivatives markets as an alternative source of funding the public and corporate sectors. This paper examines this self-insurance policy, focusing on the extent to which emerging markets have developed local securities and derivatives, and what key policy issues have arisen as a result.
Abstract
This paper provides information on private market financing for developing countries, covering developments since August 1992. Progress in dealing with bank debt problems has been based in large part on persistence in the pursuit of stabilization and reform programs. Such programs have resulted in strengthened external positions that have allowed debtor countries to accumulate reserves for use in debt-reduction operations. All of the countries where negotiations are now continuing had at some point suspended payments on medium- and long-term debt. Banks have recognized that resumption of regular (albeit partial) payments can be politically difficult in the absence of a quid pro quo. The group of middle-and lower-middle income countries with debt problems still to come to terms with bank creditors on debt-reduction packages is now limited. Many of these remaining countries (including Bulgaria, Ecuador, Panama, Peru, and Poland) have already begun negotiations with creditor banks.
Abstract
This paper reviews recent developments in private market financing for developing countries. Bank creditors themselves have been more amenable to restructuring in an environment where secondary market discounts on bank claims were falling significantly below the level of bank provisioning. This has allowed banks to realize substantial book profits by participating in debt operations. Debt conversions have also played a substantial role in reducing commercial bank debt. The pace of such conversions, however, has slowed over the past year in response to lower secondary market discounts on external debt and to a drop in privatization-related conversions. The re-entry to international capital markets by certain middle-income countries that had experienced debt-servicing difficulties gathered momentum over the past year. Total bond issues in international markets by the main re-entrants accounted for over half of issues by developing countries in this period. In contrast to the experience in securities markets, new bank lending to market re-entrants has remained limited and is confined mainly to short-term trade lines or project financing.
Abstract
This paper presents a survey by IMF staff of recent trends in private market financing for developing countries. In addition to summarizing recent developments in capital flows to developing countries through banking and securities markets, it analyzes three issues of particular interest in the debt and financing outlook for developing countries. The underlying structure of market financing for several developing countries has undergone significant change in the recent past. The change has been prompted by recognition of the adverse impact of continued uncertainty about debt refinancing terms and of a growing debt stock on countries’ development prospects, and by a concurrent reduction in banks’ financial vulnerability arising from their developing country portfolios. The analysis focuses on the extent to which capital repatriation may be influenced by such specific actions as amnesties, capital account liberalization, the availability of foreign-currency denominated instruments, and debt conversion schemes.
Abstract
This paper assesses recent trends in international capital markets. It reviews, in particular, the forces currently reshaping the markets of industrial countries and confronting financial institutions with major challenges. For the international capital markets, 1988 was generally a year of recovery. The international securities markets, depressed during the second and third quarters of 1987 and badly shaken by the October market break, rebounded in 1988. Intensifying competition and changing regulatory requirements characterize contemporary financial markets. Competition has been fostered by the internationalization of institutions, the liberalization of domestic markets, technological advances in data processing and telecommunications, and financial product innovations that more extensively link traditional banking and securities markets. A fundamental task of financial intermediaries is to appraise and assume risk and to charge for it appropriately. As a result of regulatory change, the growth of derivative product markets, and technological innovation, competitive pressure appears to be increasing the general level of risk assumed by intermediaries, while only partially providing the tools needed to manage that risk.
Abstract
This paper discusses developments and issues concerning export credits from the perspective of the economic adjustment process of indebted developing countries. This emphasis is consistent with the principle that officially supported export credit—whether it takes the form of direct official credits or insurance and guarantees on privately funded credits—is an instrument of commercial financing for exports and not a means of aid finance. All creditor governments have a broad range of objectives in using the economic instruments at their disposal to help overcome the adjustment problems of heavily indebted countries, with which important bilateral trade relations are being maintained. In support of an expansion in world trade and notwithstanding the competitive element, export credit insurance and guarantees may have a special role in helping to catalyze private credit flows, especially since such a role coincides with the interest of private lenders to shift away from general purpose balance of payments finance to trade and project finance.
Abstract
This paper provides a description and analysis of recent developments in international capital markets and an assessment of the prospects for private financing flows. It focuses particularly on recent trends in liberalization and innovation in international financial markets, including relevant changes in supervision, and on developments in the debt situation, especially the factors that influence flows to developing countries. The pattern of current account imbalances among industrial countries, which have well-developed securities markets, has been a major factor in the shift of international financial flows toward international bond markets and away from the bank credit market. This shift would be even more apparent if foreign purchases in domestic bond markets were also incorporated. The increase in the swap market has been complemented by an expansion of the futures and options markets. These short-term hedging and arbitrage instruments have increased the scope for banks and nonbanks to cover financial risks associated with fluctuations in exchange and interest rates.