Mr. Emre Alper, Ms. Wenjie Chen, Mr. Jemma Dridi, Mr. Herve Joly, and Mr. Fan Yang
This paper assesses the extent of economic and financial integration among the East African Community (EAC) along a number of dimensions and, where possible, whether integration has increased in the wake of the major regional integration policy milestones.
Mr. Paolo Mauro, Mr. Herve Joly, Mr. Ari Aisen, Mr. Emre Alper, Mr. Francois Boutin-Dufresne, Mr. Jemma Dridi, Mr. Nikoloz Gigineishvili, Mr. Tom Josephs, Ms. Clara Mira, Mr. Vimal V Thakoor, Mr. Alun H. Thomas, and Mr. Fan Yang
This paper takes stock of the main fiscal risks facing the EAC partner countries. These include macroeconomic shocks, and specific risks, such as the financial performance of the public enterprises, large infrastructure projects, PPPs, and pension funds. In addition, weaknesses in the institutional framework are reviewed. This analysis highlights some of the largest risks and begins to give a sense of the potential magnitudes involved.
Both sides of the institutions and growth debate have resorted largely to microeconometric techniques in testing hypotheses. In this paper, I build a panel structural vector autoregression (SVAR) model for a short panel of 119 countries over 10 years and find support for the institutions hypothesis. Controlling for individual fixed effects, I find that exogenous shocks to a proxy for institutional quality have a positive and statistically significant effect on GDP per capita. On average, a 1 percent shock in institutional quality leads to a peak 1.7 percent increase in GDP per capita after six years. Results are robust to using a different proxy for institutional quality. There are different dynamics for advanced economies and developing countries. This suggests diminishing returns to institutional quality improvements.
Mr. Paulo Drummond, Mr. Ari Aisen, Mr. Emre Alper, Ms. Ejona Fuli, and Mr. Sébastien Walker
This paper examines how susceptible East African Community (EAC) economies are to asymmetric shocks, assesses the value of the exchange rate as a shock absorber for these countries, and reviews adjustment mechanisms that would help ensure a successful experience under a common currency. The report draws on analysis of recent experiences and examines likely future changes in the EAC economies.
Mr. Paulo Drummond, Mr. S. K Wajid, and Mr. Oral Williams
The countries in the East African Community (EAC) are among the fastest growing economies in sub-Saharan Africa. The EAC countries are making significant progress toward financial integration, including harmonization of supervisory arrangements and practices and the modernization of monetary policy frameworks. This book focuses on regional integration in the EAC and argues that the establishment of a time table for the eliminating the sensitive-products list and establishing a supranational legal framework for resolving trade disputes are important reforms that should foster regional integration.
International Monetary Fund. Monetary and Capital Markets Department
This is the 65th issue of the AREAER. It provides a description of the foreign exchange arrangements, exchange and trade systems, and capital controls of all IMF member countries. It also provides information on the operation of foreign exchange markets and controls on international trade. It describes controls on capital transactions and measures implemented in the financial sector, including prudential measures. In addition, it reports on exchange measures imposed by member countries for security reasons. A single table provides a snapshot of the exchange and trade systems of all IMF member countries. The Overview describes in detail how the general trend toward foreign exchange liberalization continued during 2013, alongside a strengthening of the financial sector regulatory framework. A Special Topic essay examines the dynamics and evolution of capital flows. The AREAER is available in several formats. The Overview in print and online, and the detailed information for each of the 191 member countries and territories is included on a CD that accompanies the printed Overview and in an online database, AREAER Online. In addition to the information on the exchange and trade system of IMF member countries in 2013, AREAER Online contains historical data published in previous issues of the AREAER. It is searchable by year, country, and category of measure and allows cross country comparisons for time series.
KEY ISSUES Context: Since the last Article IV Consultation in 2012, notable progress has been achieved to enhance macroeconomic stability, underpinned by the Fund-supported program. However, continued progress could be tested as the country faces a more challenging environment, due to increasing social and political tensions and frequent strikes in the run-up to the 2015 elections. Moreover, recent political developments reinforce uncertainties surrounding external budget support. Program: The Executive Board approved the three-year arrangement under the Extended Credit Facility (ECF) on January 27, 2012, with a total access of SDR 30 million. The first, second, third, and fourth reviews were completed on July 27, 2012, February 14, 2013, September 6, 2013, and February 28, 2014, respectively. For the fifth review, all end-March performance criteria were observed, but fiscal revenues underperformed in the first quarter of 2014 requiring corrective fiscal measures (about 1 percent of GDP on an annual basis). Satisfactory progress has been made on structural reforms, albeit with some delays. Outlook and risks: The medium-term macroeconomic outlook is challenging. The principal near-term risk is an intensification of election-related uncertainty, economic disruptions and violence, which would affect investment and growth. Governance issues or delays in making measurable progress in public financial management (PFM) reforms, and heightening of political tensions could curtail donor support. Reintegrating repatriated refugees is likely to add to unemployment pressures, increase demand for public services, and exacerbate social conflict over access to land. Staff Views: The staff recommends the completion of the fifth review under the ECF arrangement, setting of revised performance criteria and indicative targets for September–December 2014, and disbursement of SDR 5 million. The authorities have consented to the publication of this report following the completion of the review.
Burundi’s Fourth Review Under the Extended Credit Facility (ECF) Arrangement is discussed. The measures undertaken to enhance fiscal outlook by the 2015 elections are reviewed. Satisfactory progress has been made on structural reforms. Policy discusses have focused on reinvigorating program implementation after the difficulties in completing the third review under the ECF arrangement. The IMF staff recommends the completion of the fourth review under the ECF arrangement, setting of new performance and indicative criteria for September 2014, and the disbursement of SDR 5 million.
This paper focuses on Economic Development and Poverty Reduction Strategy (EDPRS) 2013–2018 for Rwanda. Ownership of the EDPRS by a wide range of stakeholders at national level has been a key factor of success. The EDPRS 2 has integrated inclusiveness and sustainability as driving factors in elaborating the strategy. Community-based solutions, working closely with the population, have made possible fast-track and cost-effective implementation and increased demand for accountability, in education with the 9YBE construction of classrooms, the Crop Intensification Program in agriculture, and community-based health care programs.