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Business and Economics > Public Finance

You are looking at 1 - 10 of 112 items for :

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Cover IMF Working Papers
Echoes Across Borders: Macroeconomic Spillover Effects of Conflict in Sub-Saharan Africa
Hany Abdel-Latif
,
Antonio David
,
Rasmané Ouedraogo
, and
Markus Specht
This paper quantifies the macroeconomic spillover effects of conflict within sub-Saharan African (SSA) countries using a new Conflict Spillover Index (CSI), which accounts for conflict intensity and distance from conflict-affected countries. Our findings reveal an escalation in conflict spillovers across SSA since 2011, marked by considerable cross-country heterogeneity. Impulse responses show that conflict spillovers shocks significantly and persistently hinder economic growth, while concurrently elevating inflation in the “home” country. Conflict spillover shocks are also associated with increases in (current) government spending and government debt. Furthermore, the international trade transmission channel of spillovers operates mostly through increased imports, while negative effects on FDI winddown over time. Moreover, state-dependent impulse responses underscore the importance of good governance, fiscal space, and foreign aid in attenuating the adverse macroeconomic spillover effects of conflict. The detrimental impact of conflict on output is more severe in environments with weaker governance and limited fiscal space. Government expenditures tend to rise following a spillover shock in contexts of high governmental effectiveness, possibly reflecting the use of policy buffers to respond to shocks. In that context, the papers shed light on important factors to promote resilience in SSA economies.
Keywords:
Macroeconomic Spillovers; Conflict; Sub-Saharan Africa; conflict spillover shock; impulse response; macroeconomic spillover effect; effects of conflict; spillover effect; Spillovers; Fiscal space; Total expenditures; Global
Cover IMF Working Papers
The Legal Foundations of Public Debt Transparency: Aligning the Law with Good Practices
Karla Vasquez
,
Kika Alex-Okoh
,
Alissa Ashcroft
,
Alessandro Gullo
,
Olya Kroytor
,
Yan Liu
,
Mia Pineda
, and
Ron Snipeliski
Debt opacity burdens the public and can exacerbate debt vulnerabilities in many countries. Both low-income and developing countries and emerging market economies have critical gaps in debt transparency, and the implementation of international standards and guidelines has lagged. The paper surveys the legal frameworks of sixty jurisdictions and reveals the critical weaknesses that hinder debt transparency, which include weak reporting obligations, limited coverage of public debt, inadequate monitoring, unclear borrowing and delegation processes, unfettered confidentiality arrangements and weak accountability mechanisms. Because laws entrench practices and bind the discretion of policy makers and debt managers alike, subjecting them to public scrutiny, legal reform is a necessary part of any solution to the problem of hidden debt, though it may entail a difficult and time intensive process in many jurisdictions.
Keywords:
sovereign debt; transparency; disclosure; legal institutions; debt transparency; debt opacity; statistics guide; debt bulletin; debt manager; address debt vulnerability; debt Registry; Government debt management; Debt management; Securities; Middle East and Central Asia; Global; Asia and Pacific
Cover IMF Working Papers
The Macroeconomic Returns of Investment in Resilience to Natural Disasters under Climate Change: A DSGE Approach
Emilio Fernández Corugedo
,
Andres Gonzalez
, and
Mr. Alejandro D Guerson
This paper presents a Markov switching dynamic stochastic general equilibrium model designed to evaluate the macroeconomic return of adaptation investment to natural disasters (NDs) and the impact of climate change. While the model follows the existing literature in assuming that NDs destroy a share of the public and private capital stocks and a government that can invest in adaptation at an additional cost, it adds several features that are key to the analysis, both in the near (transition) and long (steady state) terms. Those include incomplete markets, financial frictions with collateral constraints, foreign remittances, full menu of tax and government spending instruments, and endogenous climate risk premium. The model is calibrated to the case of Dominica. It finds that NDs have large and persistent negative effects on output and public finances. It also shows that adaptation investment has large returns in terms of private investment, employment, output and tax revenue in the long term, especially under climate change.
Keywords:
natural disasters; climate change; DSGE; resilient capital; financial frictions; Dominica; climate adaptation policies; adaptation investment; investment producer; government spending instrument; endogenous climate risk premium; ND event; moment calibration summary; Consumption; Return on investment; Caribbean; Global
Cover Policy Papers
Review of Experience with The Food Shock Window Under The Rapid Financing Instrument and The Rapid Credit Facility
International Monetary Fund. Finance Dept.
,
International Monetary Fund. Legal Dept.
, and
International Monetary Fund. Strategy, Policy, & Review Department
The Food Shock Window (FSW) under the Rapid Credit Facility (RCF) and the Rapid Financing Instrument (RFI) was approved in September 2022 for 12 months, as a complement to the tools used by the Fund to support the broader international effort to address the global food shock. The Fund has been working closely with partners to provide a coordinated international response to the global food shock, and has contributed through policy advice, technical assistance and lending. Where needed and possible, financial support to countries affected by the global food shock has been delivered by the IMF through multi-year Fund-supported programs The FSW complemented this support in situations where these programs were not feasible or not necessary. As the global food shock and associated balance of payment pressures are expected to continue throughout 2023, the IMF extended the FSW until end-March 2024 to allow the FSW to continue serving as a contingency tool. This extension will also provide sufficient time to observe if the FSW can lapse without limiting the capacity of the Fund to support its members. To ensure adequate borrowing space under the emergency financing limits for those countries that have received support through the FSW, the IMF also extended the additional 25 percent of quota added to the Cumulative Access Limit until end-2026 for countries that have accessed the Food Shock Window through the RFI and until the completion of the 2024/25 PRGT review for those that accessed the Food Shock Window through the RCF.
Keywords:
Cumulative Access Limits; Rapid Financing Instrument; Rapid Credit Facility; Food Insecurity; FSW request; FSW financing; UCT-quality program; FSW relative; FSW experience; FSW resource; Food security; Food prices; Emergency assistance; Balance of payments need; Global
Cover Policy Papers
Review of Implementation of The 2018 Framework for Enhanced Fund Engagement on Governance
International Monetary Fund. Fiscal Affairs Dept.
,
International Monetary Fund. Legal Dept.
, and
International Monetary Fund. Strategy, Policy, & Review Department
This paper reviews the implementation of the “2018 Framework for Enhanced Fund Engagement on Governance” (the “2018 Governance Framework”). The Board adopted the 2018 Governance Framework to promote a more systematic, effective, candid, and evenhanded engagement with member countries regarding corruption of macro critical dimensions and governance vulnerabilities that allow corruption. Building upon various sources of information, including surveys with key stakeholders, the paper provides a comprehensive stocktaking of the Fund’s work in governance and corruption since 2018, and makes specific proposals to further improve implementation of the Framework.
Keywords:
governance; corruption; systematic; effective; candid; evenhanded; enhanced engagement; IMF Text Analytics database; IMF engagement; governance vulnerability; audit report; IMF's work; Auditing; Civil society organizations; Emergency assistance; Anti-money laundering and combating the financing of terrorism (AML/CFT); Global
Cover IMF Working Papers
The Impact of the IMF’s COVID-19 Support to Developing and Emerging Economies
Sumin Chun
,
Karmen Naidoo
, and
Nelson Sobrinho
We construct a high-frequency dataset that combines information on all IMF lending and proxies of monthly economic activity during the first two years of the COVID-19 pandemic (2020–21). Using this novel dataset and standard econometric techniques we find a positive and significant marginal effect of IMF financing on economic activity in low-income countries (LICs) and emerging market economies. We also present tentative evidence that IMF financing may have helped economic outcomes by easing fiscal budget constraints, allowing for larger government spending in response to the pandemic. Overall, this evidence suggests that IMF financing helped lessen the negative impacts of the pandemic on economic activity, especially in LICs.
Keywords:
COVID-19 pandemic; External financing; Emerging economies; Developing countries; IMF lending; Economic recovery; Nighttime lights; Mobility; IMF commitment; IMF disbursement; IMF's COVID-19 support; high-frequency dataset; COVID-19; Income; Emergency assistance; Agroindustries; Global
Cover IMF Working Papers
Debt-for-Climate Swaps: Analysis, Design, and Implementation
Mr. Marcos d Chamon
,
Erik Klok
,
Mr. Vimal V Thakoor
, and
Mr. Jeromin Zettelmeyer
This paper compares debt-for-climate swaps—partial debt relief operations conditional on debtor commitments to undertake climate-related investments—to alternative fiscal support instruments. Because some of the benefits of debt-climate swaps accrue to non-participating creditors, they are generally less efficient forms of support than conditional grants and/or broad debt restructuring (which could be linked to climate adaptation when the latter significantly reduces credit risk). This said, debt-climate swaps could be superior to conditional grants when they can be structured in a way that makes the climate commitment de facto senior to debt service; and they could be superior to comprehensive debt restructuring in narrow settings, when the latter is expected to produce large economic dislocations and the debt-climate swap is expected to materially reduce debt risks (and achieve debt sustainability). Furthermore, debt-climate swaps could be useful to expand fiscal space for climate investment when grants or more comprehensive debt relief are just not on the table. The paper explores policy actions that would benefit both debt-climate swaps and other forms of climate finance, including developing markets for debt instruments linked to climate performance.
Keywords:
Debt-for-climate swaps; climate mitigation; climate adaptation; climate finance; fiscal space; debt; NDCs; climate swap; debt risk; Debt-Climate swap; IMF working papers; climate investment; Debt conversion; Debt relief; Debt restructuring; Debt service; Global; debt swap operation; trilateral debt swaps; financial support; debt relief debt swap
Cover IMF Staff Country Reports
Somalia: Request for an Extension of the Arrangement Under the Extended Credit Facility-Press Release; and Staff Report
International Monetary Fund. Middle East and Central Asia Dept.
In the attached letter, the Somali authorities request an extension of the date on which the arrangement under the Extended Credit Facility (ECF) will automatically expire unless a review is completed to August 17, 2022. On March 25, 2020, the Executive Board approved Somalia’s HIPC Initiative Decision Point1 and a three-year arrangement under the ECF.2 The first review under the ECF arrangement was completed by the Executive Board on November 18, 2020.3 However, as no review has been completed since then, the ECF arrangement is set to automatically expire on May 17, 2022, in line with the rule on automatic expiration of ECF arrangements if no review has been completed for 18 months. Under Fund policy, the Board may decide to delay the automatic expiry of the arrangement by up to three months if staff and the authorities appear close to reaching understandings on targets and measures to put the ECF-supported program back on track.
Keywords:
ECF arrangement; IMF's transparency policy; IMF's executive board; election delay; ECF review; Development policy; Development assistance; Global
Cover Policy Papers
Making Debt Work For Development and Macroeconomic Stability
International Monetary Fund
and
World Bank
The coronavirus crisis has stiffened debt and development-related headwinds that had become strong even before 2020. Sustaining development while maintaining debt sustainability has been made harder by the protracted effects of the pandemic on public finances, earnings and employment, and human capital accumulation of vulnerable populations. The fiscal support programs financed by public debt provided relief and saved lives and livelihoods. But debt-induced uncertainty can now dampen investment and growth, especially given rising global interest rates. Bigger debt servicing burdens will reduce available fiscal space for development and stabilization and growing sovereign debt financing needs can crowd out domestic investment. Over-indebtedness can adversely affect economic development through many channels—"debt overhang,” “fiscal space,” “crowding out” and increased crisis risk —making countries vulnerable to abrupt changes in market sentiment, jeopardizing both stability and growth.
Keywords:
transparency policy; financing needs; IFC investment project; long-term debt; development policy financing; sustainable development finance policy; Government debt management; Debt relief; Debt sustainability; Debt service; Global
Cover Policy Papers
Guidance Note on Information Sharing Between IMF and World Bank Staff
International Monetary Fund. Strategy, Policy, & Review Department
and
World Bank
This Guidance Note outlines good practices on information-sharing across key areas in which the Bank and the IMF interact. The note outlines general principles consistent with these frameworks and discusses how the staffs of the two institutions are expected to exchange information related to country operations, technical assistance, and policy work.
Keywords:
World Bank staff; guidance note; information sharing; fund staff; share Between IMF; Debt sustainability analysis; Debt relief; Development assistance; Development policy; Global