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Business and Economics > Insurance

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

  • Type: Journal Issue x
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Cover IMF Working Papers
Government Insurance Against Natural Disasters: An Application to the ECCU
Mr. Alejandro D Guerson
This paper estimates insurance requirements against natural disasters (NDs) in the Eastern Caribbean Currency Union (ECCU) using an insurance layering framework. The layers include a government saving fund, as well as market instruments. Each layer is calibrated to cover estimated fiscal cost of NDs according to intensity and expected damage. The results indicate that ECCU countries could target saving fund stocks for relativelly smaller and more frequent events in the range of 6-12 percent of GDP, enough to cover 95 percent of NDs’ fiscal costs. To ensure financially-sustainable saving funds with a low probability of depletion, this requires annual budget savings in the range os 0.5 to 1.9 percent of GDP per year. Additional coverage could be obtained with market instruments for large and less frequent events, albeit at a significant cost.The results are based on a Monte-Carlo experiment that simulates natural disaster shocks and their impact on output and government finances.
Keywords:
ECCU; fiscal cycles; Monte Carlo experiment; debt sustainability.; WP; SF stock; ECCU country; CCRIF payout; financing flow; annual budget; cost composition; insurance cost; Natural disasters; debt sustainability; payout amount; rate of return; Insurance; Standing facilities; Stocks; Caribbean
Cover IMF Staff Country Reports
Eastern Caribbean Currency Union: 2018 Discussion on Common Policies of Member Countries-Press Release; Staff Report; and Statement by the Executive Director for the Eastern Caribbean Currency Union
International Monetary Fund. Western Hemisphere Dept.
This 2018 discussion on common policies of the Eastern Caribbean Currency Union (ECCU) highlights that the member countries are gradually recovering following the catastrophic impact of Hurricanes Irma and Maria in 2017. Conditions remain favorable to growth, however, risks are increasing. The fiscal balance for the region as a whole worsened in 2017, reflecting lower inflows from citizenship-by-investment programs and higher reconstruction and current spending. The IMF team made several policy recommendations including shifting focus from the current emphasis on recovery from natural disasters to building ex-ante resilience. The report also recommends intensifying decisive and timely actions to resolve weaknesses in the financial sector, including longstanding problems in the banking sector and emerging risks in the non-banking sector. The authorities expressed commitment to the acceleration of key reforms to upgrade and strengthen the financial sector regional oversight framework. In addition to fiscal consolidation, injecting new vigor into the structural policy agenda will help enhance competitiveness and make growth more inclusive.
Keywords:
ISCR; CR; ECCU country; ECCU price aggregate; Cartac; ECCU debt target; ECCU authority; ECCU region; ECCU work program; ECCU aggregate; Natural disasters; Insurance; Nonperforming loans; Credit bureaus; Caribbean; Global; staff advice; IMF's transparency policy; IMF's article
Cover IMF Staff Country Reports
Eastern Caribbean Currency Union: Selected Issues Paper
International Monetary Fund. Western Hemisphere Dept.
This Selected Issues paper presents a quantification of the long-term benefits of ex-ante resilient investment and insurance needs against natural disasters (ND) in Eastern Caribbean Currency Union (ECCU). Cost-benefit analysis of resilient investment based on a dynamic stochastic general equilibrium model tailored to small states and calibrated to all ECCU economies is also discussed in the paper. The model’s aggregate production function illustrates the interaction among the participating sectors and their contribution to output, ultimately informing the role of resilient investment. The study also quantifies government insurance coverage needs and costs using an empirical stochastic model that simulates NDs fiscal costs. The insurance needs are framed within the World Bank insurance layering framework. The results in this paper underscore the importance of a shift from ex-post recovery to a focus on ex-ante resilience building. Ex-ante resilient investment and insurance are key to the welfare and financial sustainability of the ECCU, given high intensity and recurrence of NDs.
Keywords:
ISCR; CR; ECCU country; country authorities; private sector; depreciation rate; resilient investment; ECCU economy; deficit bias; labor migration; debt target; insurance cost; Natural disasters; Public investment spending; Insurance; Caribbean
Cover IMF Staff Country Reports
Jamaica: Financial System Stability Assessment
International Monetary Fund. Monetary and Capital Markets Department
The macroeconomic environment has improved, reflecting the authorities’ efforts, supported by an IMF arrangement. Previously, years of high fiscal deficits, public enterprise borrowing, and financial sector bailouts led to rapid government debt accumulation, crowded out private credit, increased financial dollarization, and stifled economic growth. Fiscal discipline has been essential to reduce public debt (to about 100 percent of GDP). With government debt accounting for a sizable share of financial institutions’ assets, falling interest rates on government debt are leading to a search for yield. Also, entrenched structural obstacles, including high crime, bureaucratic processes, insufficient labor force skills, and poor access to finance still constrain economic growth. The authorities have made good progress in implementing the 2006 FSAP recommendations. Work on the regulatory framework has significantly advanced in several areas such as securities dealers’ activities, powers to the Bank of Jamaica (BoJ), payment systems, and the introduction of the centralized securities depository. However, the crisis management framework and risk-based supervision work has been lagging.
Keywords:
ISCR; CR; securities dealer; return on equity; Sagicor investments Jamaica Sagicor life Jamaica; BoJ power; intermediation activity; liquid asset ratio; liquid asset ratio requirement; liquidity facilities; unit trust; insurance fund; credit risk; resolution regime; Securities; Insurance companies; Insurance; Pension spending; Global; Caribbean
Cover IMF Staff Country Reports
Slovak Republic: 2015 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Slovak Republic
International Monetary Fund. European Dept.
This 2015 Article IV Consultation highlights that Slovakia remains among Europe’s stronger economies, with growth continuing to pick up in 2015, driven by strong domestic demand. A push to spend expiring European Union funds has underpinned rising investment while job creation and real wage growth have supported private consumption. Unemployment has fallen significantly since 2013, but is still about 11 percent overall, and is much higher for the long-term unemployed, youth, and women. The outlook is favorable with growth of 3–3.5 percent expected through the medium-term, reflecting sustained domestic demand as well as further contributions from the important export sector as substantial additional foreign auto sector investment is planned.
Keywords:
ISCR; CR; energy company Enel; energy company; ente nazionale per l'energia elettrica; student housing cost; carmaker Jaguar Land Rover; energy company EPH; staff appraisal; Labor markets; Unemployment; Loans; Europe; Global
Cover Departmental Papers
Strengthening the West African Economic and Monetary Union: The Role of Fiscal and Market Institutions in Economic Stabilization
Olivier Basdevant
,
Patrick A. Imam
,
Mr. Tidiane Kinda
, and
Ms. Aleksandra Zdzienicka
West African Economic and Monetary Union (WAEMU) countries face a well-known dilemma between the need to provide shock-smoothing mechanisms and the lack of adequate mechanisms to do so. WAEMU countries are subject to frequent and, to a large extent, asymmetric shocks. They have remained poorly diversified and vulnerable to external shocks, such as changing weather conditions. In addition to limited shock-smoothing mechanisms at the regional level, WAEMU members’ ability to respond to shocks through national policies is also constrained by limited fiscal space and the need to preserve external stability—not only at the national level but also at the union level. In this context, developing a well-defined fiscal rule framework at the national level would help to build the necessary fiscal space for shock-smoothing. In addition, the development of specific shock-smoothing mechanisms—including a more developed and integrated financial sector—would also be critical. In addition, promoting financial development is also a challenge, which needs to be addressed in tandem with an adequate surveillance system. Some of these challenges have been faced by other monetary unions, such as the euro area.
Keywords:
DPPP; DP; insurance fund; government; bridge funding; WAEMU country; WAEMU authorities; WAEMU convergence criteria; WAEMU member country; WAEMU economy; Fiscal rules; Fiscal councils; Insurance; West Africa
Cover IMF Staff Country Reports
Canada: 2012 Article IV Consultation
International Monetary Fund. Western Hemisphere Dept.
After recovering rapidly from the Great Recession, the Canadian economy has slowed down in 2012. Growth weakened in the first three quarters of 2012, and recent indicators have suggested that the pace of economic expansion remained subpar in the fourth quarter. The fiscal policy has continued to be a drag on growth, as the stimulus is being withdrawn. These have been only partly offset by an improvement in financial conditions in 2012. Growth is expected to gain new momentum over 2013.
Keywords:
ISCR; CR; government; economy; Canada; government Finance Statistics Manual; housing sector; stability assessment; market expectation; IMF staff estimate; household leverage; X. exchange rate arrangement; Housing prices; Insurance; Fiscal stance; Global
Cover IMF Staff Country Reports
Eastern Caribbean Currency Union: Selected Issues
International Monetary Fund
The Eastern Caribbean Currency Union (ECCU) countries’ economies are heavily dependent on the United States for foreign direct investment, mainly in the tourism sector. The Selected Issues paper discusses economic development and policies of the ECCU. About one-third of the stayover tourists to the ECCU countries are from the United States., the top tourist-source country. The flow of remittances is also an important channel of influence, reflecting the significant proportion of Caribbean migrants living in the United States.
Keywords:
ISCR; CR; ECCU economy; ECCU country; ECCB reserves; founder business personality; Ponzi scheme; Real exchange rates; Natural disasters; Insurance; Caribbean
Cover IMF Working Papers
A Model of Sovereign Debt in Democracies
Ali Alichi
This paper develops and empirically tests a political economy model of sovereign debt. The main incentive for repaying sovereign debt is to maintain access to international capital markets. However, in a democracy, one generation may choose default regardless of its consequences for future generations. An old generation with little concern for its country's access to capital markets can force a default on debt if it has the majority of voters. On the other hand, if the younger generation is more numerous, it can force repayment of previously defaulted debt. Other voter heterogeneities, such as in income, can generate similar results.
Keywords:
WP; political economy; insurance contract; transfer payment; simple majority
Cover IMF Working Papers
A (New) Country Insurance Facility
Mr. Tito Cordella
and
Mr. Eduardo Levy Yeyati
To cope with the self-fulfilling liquidity runs that triggered many recent financial crises, we propose the creation of a country insurance facility. The facility, which we envisage as complementary to the existing multilateral lending facilities, would provide eligible countries with automatic access to a credit line at a predetermined interest rate. Eligibility criteria should be easily verifiable, focus on debt sustainability, and take into account the currency and maturity composition of the debt. Other critical design issues considered here include the size of the facility, its duration and charges, and the exit costs for a country that loses eligibility.
Keywords:
WP; CIF loan; credit line; liquidity run; IMF facilities; risk premium