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Business and Economics > Budgeting

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Cover IMF Working Papers
Policy Multipliers in Japan Under QQE
Sam Ouliaris
and
Celine Rochon
This paper tests whether Japan's key macro policy multipliers have declined since 2013, the year that Japan introduced Qualitative and Quantitative Easing. We use the augmented Blanchard-Perotti structural VAR model introduced in Ouliaris and Rochon (2021) to study the dynamic effects of shocks in the central bank’s asset holdings, interest rates, and debt levels relative to GDP on economic activity in Japan. We find that both the expenditure and tax multipliers of Japan have fallen, implying that the effectiveness of fiscal policy in Japan declined following the change in monetary policy. Moreover, we find that the efficacy of quantitative easing is small, implying the need for huge interventions to have a significant effect on real GDP, and that the effectiveness of quantitative easing has declined since 2013. We argue that the reduction in policy multipliers can be attributed to the upward trend in the government debt level relative to GDP which, despite historically low interest rates, has increased Japan’s structural deficit, and the likelihood of reduced expenditures and higher taxes going forward.
Keywords:
fiscal multipliers; structural VAR; policy multiplier; debt multiplier; tax multiplier; effectiveness of quantitative easing; QQE multiplier; Tax expenditures; Real interest rates; Central bank balance sheet
Cover Policy Papers
Review of the Fund’s Income Position for FY 2024 and FY 2025-2026
International Monetary Fund. Finance Dept.
This paper updates the projections of the Fund’s income position for FY 2024 and FY 2025-2026 and proposes related decisions for the current and the following financial years. The paper also includes a proposed decision to keep the margin for the rate of charge unchanged until completion of the review of surcharges, but until no later than end FY 2025, at which time the Board would set the margin for the rest of FY 2025 and FY 2026. The Fund’s overall net income for FY 2024 is projected at about SDR 4.4 billion after taking into account pension-related remeasurement gain and estimated retained investment income of the Endowment Account.
Keywords:
Income Position; Lending Income; Investment Income; Expenditures; Margin for the Rate of Charge; Reserve Accumulation; Precautionary Balances; Pension; Provisioning; Payout; Reimbursement; Remeasurement; Surcharges; outlook factor; GRA FY; FY 2024; review of surcharge; market condition; transparency policy; Income; SDR interest rate; Budget planning and preparation; Credit; Discount rates; Global
Cover Policy Papers
The Consolidated Medium-Term Income and Expenditure Framework
International Monetary Fund
The medium-term income projections have been updated from the April 2015 outlook and the February review of the adequacy of precautionary balances. The main changes to the outlook stem from a more gradual rise in the SDR interest rates and lower surcharge income following the lowering of the surcharges threshold. The revised projections still show a positive forecast for net operational income (and surcharges) over the medium term, albeit lower than projected a year ago. Lending income (excluding surcharges) is marginally higher compared with earlier estimates. Surcharge income is estimated to be lower, reflecting the adjustment of the surcharges thresholds following the implementation of quota increases under the 14th General Review. Projected income from the Fixed-Income Subaccount of the Investment Account and interest-free resources are expected to increase more gradually over the medium-term as market indicators now point to a slower rise in interest rates from their current low levels. The expenditure path includes an increase in real terms of about ½ percent in the net administrative budget for FY 2017 to accommodate rising costs for physical and IT security. Moreover, reflecting further upward pressure over the medium term and uncertainty about the scope for offsetting savings, the traditional baseline assumption of a constant real spending envelope in the outer years is complemented by an alternative scenario with a further moderate spending increase of 1½ percent, phased in over FY 2018–19. In addition, a lower projected U.S. dollar/SDR exchange rate increases the expenses in SDR terms.
Keywords:
PP; income; fy; return; SDR; SDR Department; expenditure position; income projection; Non-lending income; fund's income position; income from the Fixed-Income Subaccount; income source; about SDR; SDR terms; projected income; consolidated income; fund's lending income; Personal income; SDR interest rate; Budget planning and preparation; Exchange rates; Global
Cover Policy Papers
Review of the Fund's Income Position for FY 2016 and FY 2017-2018
International Monetary Fund
The Fund’s total net income for FY 2016 including surcharges is projected at about SDR 1.0 billion or some SDR 0.15 billion higher than expected in April 2015. Lending income continues to be the main source of income and is in line with April 2015 estimates. Investment income has fallen reflecting the decline in equity markets that exceeded the modest returns on fixed income securities. As a result of the 5-yearly review of key actuarial assumptions, the IAS 19 adjustment (relating to reporting of employee benefits) is expected to contribute about SDR 0.3 billion to net income in FY 2016. The paper recommends that GRA net income of SDR 1.1 billion for FY 2016 (which excludes projected losses of the gold endowment), be placed equally to the special and general reserve. After the placement to reserves, precautionary balances are projected to reach SDR 15.2 billion at the end of FY 2016. Following the completion of the Board’s review of the investment strategy for the Fixed-Income Subaccount, the paper further proposes to transfer currencies equivalent to the increase of the Fund’s reserves for FY 2014 and FY 2015 (totaling SDR 2.6 billion) and FY 2016 (estimated at SDR 1.1 billion), from the GRA to the Investment Account. The paper proposes that the margin for the rate of charge be set at 100 basis points for the two years FY 2017 and FY 2018. This follows a comprehensive review of the underlying factors relevant for the establishment of the margin this year and also takes into account the impact of the inclusion of the renminbi in the SDR basket on Fund income and borrowing costs. The projections for FY 2017 and FY 2018 point to a net income position of SDR 1 billion and SDR 0.7 billion, respectively. These projections are subject to considerable uncertainty and are sensitive to a number of assumptions.
Keywords:
PP; income; SDR; fy; SDR interest rate; income projection; expenditure position; SDR exchange rate; Non-lending income; fund's income position; Personal income; Reserves accumulation; Credit; Currencies; Global
Cover IMF Staff Country Reports
Angola: Selected Issues
International Monetary Fund. African Dept.
This Selected Issues paper assesses macroeconomic fiscal risks and the benefits of improved fiscal risk management in Angola. Angola faces fiscal risks coming from multiple sources, such as volatility in oil prices and production, macroeconomic shocks, weak macroeconomic forecasting; weaknesses in public fiscal management, energy subsidies, potential delays of oil revenue transfers from the state-owned oil company Sonangol to the Treasury, and contingent liabilities from state-owned banks and enterprises. Addressing these risks requires action in various fronts, including more transparent fiscal reporting, improved forecasting of fiscal aggregates and other macroeconomic variables, developing a fiscal stabilization fund with more flexible deposit and withdrawal rules, strengthened public expenditure controls, and more timely oil revenue transfers from Sonangol to the Treasury.
Keywords:
ISCR; CR; bank; tax; Angola; Angolan bank; reference rate; interbank rate; lending rate; Banco de Desenvolvimento de Angola; Tax expenditures; Fiscal risks; Interbank rates; Oil prices; Deposit rates; Global; Africa
Cover Policy Papers
The Consolidated Medium-Term Income and Expenditure Framework
International Monetary Fund
The medium-term income projections have been updated since the last estimate provided to the Executive Board in April 2014. The main changes to the outlook stem from a lower path for credit outstanding and expectations for a more gradual rise in interest rates. The revised projections show lower levels of net operational income over the coming years. Lending income is lower compared with earlier estimates as a result of lower credit levels, including the advance repurchases by Ireland and Portugal. Non-lending income is also projected to be lower reflecting a further downward shift in SDR interest rates and, thus, returns on investments and interest-free resources. The updated expenditure path assumes the net administrative budget remains constant in real terms at the FY 2012 level. The long-run projections indicate a broad balance between income and expenditures, assuming that interest rates rise to 3.5 percent and with lending returning to pre-crisis levels. The pace of reserve accumulation is expected to slow, reflecting the decline in Fund credit, and precautionary balances are now projected to remain slightly below the projected target of SDR 20 billion over the medium term compared with the earlier estimates.
Keywords:
PP; income; fy; net; yield; income projection; expenditure position; gold profits; consolidated income; fund's income position; Personal income; SDR interest rate; Reserve positions; Credit; Budget planning and preparation; Global
Cover IMF Staff Country Reports
Canada: Selected Issues
International Monetary Fund. Western Hemisphere Dept.
This Selected Issues paper assesses Canada’s post-crisis export performance of non-energy products using model-based benchmarks. Specifically, the analysis explores whether the pre-crisis relationship between Canada’s non-energy exports and their determinants still holds in the post-crisis period. At the aggregate level, Canada’s non-energy exports do not seem to have performed particularly poorly relative to the benchmark. Of the 23 non-energy products, five products outperformed their respective benchmarks both in growth and level terms, while seven products underperformed by the same measures. The statistical tests show that a total of 13 products had a structural break during the global financial crisis of 2007–2008. At the aggregate level, the time paths of non-energy exports’ elasticities confirm the increasing importance of US business investment. The findings at the product level reinforce those at the aggregate level, but also reveal some interesting differences between across products. A decomposition of Canada’s non-energy export growth based on the post-crisis elasticities confirms the significant contributions from US consumption and non-US demand.
Keywords:
ISCR; CR; expenditure rule; neutral rate; debt rule; rate path; fishing products; debt objective; Fiscal rules; Exports; Central bank policy rate; Global; Europe
Cover IMF Working Papers
Deposit Insurance Database
Asli Demirgüç-Kunt
,
Edward Kane
, and
Mr. Luc Laeven
This paper provides a comprehensive, global database of deposit insurance arrangements as of 2013. We extend our earlier dataset by including recent adopters of deposit insurance and information on the use of government guarantees on banks’ assets and liabilities, including during the recent global financial crisis. We also create a Safety Net Index capturing the generosity of the deposit insurance scheme and government guarantees on banks’ balance sheets. The data show that deposit insurance has become more widespread and more extensive in coverage since the global financial crisis, which also triggered a temporary increase in the government protection of non-deposit liabilities and bank assets. In most cases, these guarantees have since been formally removed but coverage of deposit insurance remains above pre-crisis levels, raising concerns about implicit coverage and moral hazard going forward.
Keywords:
WP; insurance coverage; government guarantee; deposit account; insurance scheme; Deposit insurance; Financial institutions; Financial crises; low income; insurance arrangement; explicit deposit insurance scheme; government funding; deposit insurance arrangement; deposit insurance agency; guarantee scheme; government indebtedness; government debt-to-GDP ratio; protection scheme; Government liabilities; Bank deposits; Blanket guarantee; Banking crises; Global
Cover IMF Working Papers
What is Shadow Banking?
Mr. Stijn Claessens
and
Mr. Lev Ratnovski
There is much confusion about what shadow banking is. Some equate it with securitization, others with non-traditional bank activities, and yet others with non-bank lending. Regardless, most think of shadow banking as activities that can create systemic risk. This paper proposes to describe shadow banking as “all financial activities, except traditional banking, which require a private or public backstop to operate”. Backstops can come in the form of franchise value of a bank or insurance company, or in the form of a government guarantee. The need for a backstop is in our view a crucial feature of shadow banking, which distinguishes it from the “usual” intermediated capital market activities, such as custodians, hedge funds, leasing companies, etc.
Keywords:
WP; risk; lending; bank; Shadow Banking; Regulation; Policy; liquidity service; list of Shadow banking activity; type of Shadow banking activity; external to the Shadow banking activity; strips assets; Government liabilities; Systemic risk; Capital markets; Liquidity; Europe
Cover Policy Papers
Framework Administered Account for Selected Fund Activities -Financial Access Survey Subaccount
International Monetary Fund
In March 2009 the Fund established a new Framework Administered Account to administer external financial resources for Selected Fund Activities (the “SFA Instrument”). The financing of activities under the terms of the SFA Instrument is implemented through the establishment and operation of subaccounts within the SFA. This paper requests Executive Board approval to establish the Financial Access Survey Subaccount (“the Subaccount”) under the terms of the SFA Instrument.
Keywords:
PP; href; list of Subaccounts; Socialist People's Libyan Arab Jamahiriya Subaccount; General government spending; Anti-money laundering and combating the financing of terrorism (AML/CFT); Sovereign wealth funds; Tax administration core functions; Investment banking; Africa; Middle East; Central America; West Africa; East Africa