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Business and Economics > Banks and Banking

You are looking at 1 - 10 of 56 items for :

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Cover Policy Papers
Review Of The Adequacy Of The Fund’s Precautionary Balances
International Monetary Fund. Finance Dept.
On December 12, 2022, the IMF’s Executive Board reviewed the adequacy of the Fund’s precautionary balances. The review took place on the standard two-year cycle, after an interim review in December 2021. Precautionary balances comprise the Fund’s general and special reserves. They are a key element of the IMF’s multi-layered framework for managing financial risks. Precautionary balances provide a buffer to protect the Fund against potential losses, resulting from credit, income, and other financial risks. In conducting the review, the Executive Board applied the rules-based framework agreed in 2010. Precautionary balances have risen further since the 2021 interim review and coverage metrics have strengthened. At the same, credit and other financial risks have also increased. The pace of reserve accumulation is expected to remain adequate. Against this background, Executive Directors endorsed staff’s proposal to retain the current medium-term target of SDR 25 billion and the minimum floor of SDR 15 billion. The Board also discussed the role of surcharges, which are primarily a component of the Fund’s risk management framework but also contribute to reserves accumulation.
Keywords:
concentration risk; D. financial risks; risk management framework; Fund credit; transparency policy; fund financial risks; Income; Credit; Credit risk; Credit ratings; Emergency assistance; Global; Caribbean; Western Hemisphere
Cover IMF Working Papers
IMF Programs and Financial Flows to Offshore Centers
Mr. Shekhar Aiyar
and
Manasa Patnam
This paper examines whether IMF lending is associated with increases in outflows to offshore financial centers (OFCs), known for bank secrecy and asset protection, relative to other international destinations. Using quarterly data from the BIS on bilateral bank deposits, we are unable to detect any positive and statistically significant effect of IMF loan disbursements on bank deposits in OFCs. The result holds even after restricting the sample to the duration of the IMF program, where disbursement quarters and non-disbursement quarters should be subject to similar degrees of macroeconomic stress. It is also robust to using the scheduled tranche of disbursements as an instrument for actual disbursements. While the effects vary by the type and conditionality of the IMF program, as well as the amount of lending, none of the effects are found to be positive and statistically significant. We also estimate whether the recent surge in emergency lending, during the Covid-19 crisis, is associated with an increase in outflows to OFCs but find no evidence to support this.
Keywords:
IMF loan disbursement; IMF disbursement; disbursement quarter; IMF emergency lending; IMF loan tranche; IMF aid disbursement; Offshore financial centers; Corruption; Loans; Bank credit; Global
Cover IMF Staff Country Reports
Seychelles: Request for Purchase Under the Rapid Financing Instrument-Press Release; Staff Report; and Statement by the Executive Director for Seychelles
International Monetary Fund. African Dept.
This paper refers to Seychelles’ Request for Purchase Under the Rapid Financing Instrument (RFI). The near-term economic fallout of the coronavirus disease 2019 pandemic is expected to be severe. Restriction in travel will hinder tourism and weaken fiscal and external positions, creating large additional financing needs. The authorities reacted swiftly by taking immediate measures of containment, including border closures, strengthening health policy responses and supporting households and firms. The emergency IMF support under the RFI provides timely resources to the authorities to address the urgent balance of payments and budgetary needs. The assistance of other international financial institutions and development partners is crucial to close the remaining financing gaps, ease the adjustment burden, and preserve economic growth. The authorities are committed to transparency and good governance in the use of emergency financing by providing monthly reports of pandemic-related expenditure to the National Assembly and undertaking an independent audit of such spending and procurement and publishing the results.
Keywords:
ISCR; CR; monetary policy; financing; balance of payments financing need; Seychelles economy; Seychellois authorities; Executive Board discussion; prudent monetary policy stance; Emergency assistance; Fiscal stance; Budget planning and preparation; Global; Sub-Saharan Africa; COVID-19
Cover IMF Staff Country Reports
Dominican Republic: Request for Purchase under the Rapid Financing Instrument-Press Release; Staff Report; and Statement by the Executive Director for the Dominican Republic
International Monetary Fund. Western Hemisphere Dept.
This paper analyzes Dominican Republic’s Request for Purchase Under the Rapid Financing Instrument (RFI). The RFI provides timely resources to the authorities which they intend to mobilize for essential coronavirus disease 2019 (COVID-19)-related health expenditure and support to the vulnerable population. The pandemic has significantly weakened the Dominican Republic’s macroeconomic outlook for 2020 and created financing needs that require additional support. The authorities are also seeking support from other multilateral institutions. Macroeconomic and financial policies have been accommodative in response to the pandemic. The temporary fiscal measures to accommodate higher public healthcare spending and targeted transfers to the most vulnerable are appropriate. The IMF emergency assistance under the RFI is expected to help provide the much-needed resources to address the urgent balance of payments needs and support essential COVID-19-related health expenditure. The support of other international financial institutions and development partners would be crucial to close the remaining financing gaps, ease the adjustment burden, and preserve the Dominican Republic’s dynamic economic growth.
Keywords:
ISCR; CR; financing; request; resource; financing gap; Executive Board discussion; monetary policy rate; inflation targeting framework; request for emergency; headline inflation; COVID-19; Public sector; Fiscal stance; Emergency assistance; Global
Cover IMF Working Papers
Managing Reductions in Aid Inflows: Assessing Policy Choices in Haiti
Ioana Moldovan
,
Mrs. Marina V Rousset
, and
Chris Walker
A low-income country such as Haiti that confronts an environment of diminishing aid inflows must assess tradeoffs among the available policy options: spending cuts, monetization, sales of debt, or use of foreign reserves. To provide the analytical tools for this task, the paper draws from a set of DSGE models recently developed to evaluate policy choices in low-income countries for which external aid flows represent an important revenue source. Two simplified stylized variations of the main model are used to gain intuition and initially assess the trdeaoffs. Subsequenctly a full-scale small open economy DSGE model, calibrated to match conditions in Haiti and in similar low-income countries, is employed. Several key results are common to all model versions. While sales of foreign exchange reserves can compensate for the loss of aid inflows, this strategy is not sustainable. The remaining policy choices entail larger welfare costs, involving lower consumption levels and real depreciation. The results suggest that a mixture of spending cuts and depreciation is the best strategy, when use of foreign reserves is constrained.
Keywords:
WP; real interest rate; Dynamic Stochastic General Equilibrium Model (DSGE); Aid; Fiscal Policy; Monetary Policy; Public Investment; Foreign Reserves; Haiti; depreciation rate; open economy; labor disutility parameter; nominal exchange rate; exchange rate depreciation; government spending cut; aggregate consumption; labor income; monopolistic competition; exchange rate fluctuation; steady-state labor; labor supply decision; Consumption; Real exchange rates; Real interest rates; Western Hemisphere; Caribbean; Global
Cover IMF Working Papers
Aid and Growth at the Regional Level
Axel Dreher
and
Steffen Lohmann
This paper brings the aid effectiveness debate to the sub-national level. We hypothesize the nonrobust results regarding the effects of aid on development in the previous literature to arise due to the effects of aid being insufficiently large to measurably affect aggregate outcomes. Using geocoded data for World Bank aid to a maximum of 2,221 first-level administrative regions (ADM1) and 54,167 second-level administrative regions (ADM2) in 130 countries over the 2000-2011 period, we test whether aid affects development, measured as nighttime light growth. Our preferred identification strategy exploits variation arising from interacting a variable that indicates whether or not a country has passed the threshold for receiving IDA's concessional aid with a recipient region's probability to receive aid, in a sample of 478 ADM1 regions and almost 8,400 ADM2 regions from 21 countries. Controlling for the levels of the interacted variables, the interaction provides a powerful and excludable instrument. Overall, we find significant correlations between aid and growth in ADM2 regions, but no causal effects.
Keywords:
WP; effect of aid; IDA-threshold effect; level of significance; term growth-effect; Aid Effectiveness; Geo-coding; World Bank; rainfall growth; aid-growth regression; growth OLS; IDA threshold; Agroindustries; Personal income; Population growth; Africa; Central Asia; South Asia; Global
Cover Policy Papers
Update on the Financing of the Fund's Concessional Assistance and Debt Relief to Low-Income Member Countries
International Monetary Fund
Commitments under new PRGT-supported programs are expected to increase in 2012 in part reflecting the weaker global economic outlook. PRGT commitments in 2011 amounted to SDR 1.2 billion, unchanged from their 2010 level. Staff projections suggest demand could rise to about SDR 2 billion in 2012. If all elements of the 2009 financing package are secured, the PRGT will have an annual average lending capacity of SDR 2.2 billion over 2012–14, or SDR 1.6 billion through 2015. Additional pledges of SDR 1 billion in loan resources are still required to secure the targeted loan resources approved under the 2009 financing package. Fourteen members have so far pledged SDR 9.8 billion in new loan resources for the PRGT compared with the target of SDR 10.8 billion. New borrowing agreements totaling SDR 9.5 billion have been signed with thirteen lenders.
Keywords:
PP; loan resource; reserve account; SDR equivalent; about SDR; subsidy contribution; subsidy resource; trading arrangement; LIC financing package; resources mobilization; SDR rate; Debt relief; Loans; Credit; Emergency assistance; Concessional external borrowing; Africa; Global
Cover Policy Papers
Poverty Reduction and Growth Trust - Review of Interest Rate Structure
International Monetary Fund
This is the first review of the interest rate mechanism approved under the 2009 reforms of the Fund’s concessional lending facilities. The mechanism links the Poverty Reduction and Growth Trust (PRGT) interest rate structure to world interest rates and provides a setting to differentiate interest rates across the various PRGT facilities. The framework requires reviews every two years, with the first such review to be completed by December 31, 2011.
Keywords:
PP; interest rate; PRGT; loan; interest; PRGT interest rate mechanism; PRGT interest rates; PRGT loan; PRGT facilities; SDR rate; PRGT lending; interest rate waiver; Loans; Credit; Emergency assistance; Interest payments; SDR interest rate; Global
Cover IMF Working Papers
Post-Conflict Recovery: Institutions, Aid, or Luck?
Mr. Antonio David
,
Mr. Fabiano Rodrigues Rodrigues Bastos
, and
Marshall Mills
This paper identifies the factors linked to cross-country differentials in growth performance in the aftermath of social conflict for 30 sub-Saharan African countries using panel data techniques. Our results show that changes in the terms of trade are the most important correlate of economic performance in post-conflict environments. This variable is typically associated with an increase in the marginal probability of positive economic performance by about 30 percent. Institutional quality emerges as the second most important factor. Foreign aid is shown to have very limited ability to explain differentials in growth performance, and other policy variables such as trade openness are not found to have a statistically significant effect. The results suggest that exogenous factors ("luck") are an important factor in post-conflict recovery. They also highlight the importance in post-conflict settings of policies to mitigate the macroeconomic impact of terms of trade volatility (including countercyclical macroeconomic policies and innovative financing instruments) and of policies to promote export diversification.
Keywords:
WP; terms of trade variable; executive constraints variable; conflict country; country policy; terms of trade volatility; economic growth; conflict; sub-Saharan Africa; terms of trade shock; terms of trade movement; Terms of trade; Real interest rates; Human capital; Estimation techniques
Cover Policy Papers
Update on the Financing of the Fund’s Concessional Assistance and Debt Relief to Low-Income Member Countries
International Monetary Fund
Significant progress has been made towards meeting the fund-raising targets for the PRGT, but additional resources will be needed to complete the 2009 LIC financing package. So far, fourteen members have pledged about SDR 9.8 billion in new loan resources, compared to the target of SDR 10.8 billion (including provision for a liquidity buffer to facilitate encashment). New borrowing agreements totaling SDR 7.7 billion have been signed with ten lenders. Six of these agreements provide loan resources in SDRs, and five creditors also participated in the voluntary encashment regime.
Keywords:
PP; reserve account; interest rate; SDR equivalent; about SDR; coverage ratio; PRGT Reserve Account; resources of SDR; SDR amount; Debt relief; Loans; Credit; Emergency assistance; Personal income; Africa; Global