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Business and Economics > Public Finance

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Cover IMF Working Papers
Raising Rates with a Large Balance Sheet: The Eurosystem’s Net Income and its Fiscal Implications
Nazim Belhocine
,
Mr. Ashok Vir Bhatia
, and
Jan Frie
The Eurosystem, having purposefully expanded its footprint in recent years, confronts a period of loss-making as rising policy rates lift the remuneration of bank reserves while assets churn more slowly. This paper projects the net income of the Eurosystem and its “top-five” national central banks over a ten-year horizon, finding that losses, while large, will be temporary and recoupable. The policy conclusions are fourfold. First, the temporary and recoupable nature of the loss-making obviates any need for capital contributions or indemnities from the state, instead allowing losses to be offset against future net income. Second, it must nonetheless be communicated that fiscal impacts will be material, with annual taxes and transfers of 0.1−0.2 percent of GDP giving way to potentially long interruptions in some cases. Third, more-conservative profit distribution policies in the future steady state could help mitigate the on-off pattern of dividends. Finally and most vitally, loss-making must remain orthogonal to monetary policy decision-making, as indeed it is at the ECB. Ultimately, credibility will rest on performance in delivering on the price stability mandate.
Keywords:
Eurosystem; balance sheet; monetary policy; profit distribution; seigniorage; central bank independence; ECB Policy; net purchase; QE portfolio; selected NCBs; Eurosystem's net income; rate path; pooling reference rate; distribution policy; Income; Financial statements; Unconventional monetary policies; Central bank policy rate; Global; Europe
Cover IMF Working Papers
Stock-Flow Adjustments, Government’s Integrated Balance Sheet and Fiscal Transparency
Mr. Mike Seiferling
This paper re-examines the stock-flow discrepancies of government debt and deficits and correlation with fiscal transparency. Applying the fully integrated relationship between financial stocks and flows allows for a more refined analysis of the deterministic components that make up the ‘stock-flow’ residual. Using partial measures of these stock-flow residuals, several empirical studies have found them to be significantly correlated with fiscaltransparency, inflation, fiscal rules, and banking crisis. Using fully integrated public finance data from the IMF Government Finance Statistics Yearbook for a sample of 22 countries, the findings in this paper suggest that stock-flow residuals have a significantly smaller magnitude than previously assumed and are, in fact, not correlated with fiscal transparency. A stronger determinant of fiscal transparency scores appears to be the actual reporting of fiscal data covering general government, especially a full financial balance sheet.
Keywords:
WP; balance sheet; stock flow adjustments; government finance statistics; fiscal transparency; public finance; stock-flow residual; stock-flow adjustment; gross debt; balance sheet approach; nonstructural debt reduction; adjustment identity; Financial statements; Stocks
Cover Staff Discussion Notes
Accounting Devices and Fiscal Illusions
Mr. Timothy C Irwin
This proposed SDN surveys the various accounting stratagems which governments have used to meet fiscal targets—thereby sidestepping the need for true adjustment—and suggests remedial actions to limit this type of fiscal non-transparency. Types of creative accounting covered includes, for instance, currency swaps to hide a debt build-up (as in Greece in 2001–07), sale and leaseback of government property (for example, in the United States), assumption of long-term pension obligations in exchange for short-term revenue (Argentina, Hungary, and other Eastern European countries), use of public-private partnerships to defer the recognition of investment spending (for instance, Portugal), and reliance on non-cash compensation (such as pension rights) to reduce measured wage bills (in the United States, United Kingdom, etc.) As is evident from the examples given, these fiscal tricks have recently come under increased international scrutiny, highlighting the importance of good fiscal reporting, accounting, and transparency in general, for avoiding unpleasant surprises, ensuring government accountability, and containing fiscal vulnerabilities.
Keywords:
SDN; deficit; debt; accounting device; accounting; public finance; Fiscal reporting; fiscal rules; fiscal consolidation; deficit device; debt rule; deficit indicator; reported deficit; deficit target; economic value; debt target; Pensions; Financial statements; Government finance statistics; Public investment and public-private partnerships (PPP); Currencies; Europe
Cover IMF Staff Country Reports
Papua new Guinea: Selected Issues and Statistical Appendix
International Monetary Fund
This Selected Issues paper on Papua New Guinea reports that although economic cycles have generally paralleled the many mineral sector booms and busts, the downward trend in growth rates may reflect other factors. Papua New Guinea’s economy is dominated by a large labor-intensive agricultural sector and a capital-intensive oil and minerals sector. The formal sector consists of enclave extractive industries, cash crop production, and a small, import-substituting manufacturing sector. The importance of the agriculture sector is about the same as at independence, reflecting structural impediments that have deterred more rapid growth.
Keywords:
ISCR; CR; GDP; mineral revenue; government; TFP growth; revenue windfall; TFP variation; mineral balance; investment policy reform; revenue performance; Total factor productivity; Non-renewable resources; Fiscal stance; Global; East Asia; Asia and Pacific
Cover IMF Working Papers
Growth and Productivity in Asean Countries
Mr. Michael Sarel
This study examines the nature of the growth process in the ASEAN countries, and particularly whether it has been generated primarily by more inputs or by productivity gains. It uses internationally comparable data and explores an alternative method for estimating the capital and labor factor shares. The results, contradicting some previous studies, indicate a very impressive growth rate of TFP in Singapore, Thailand, and Malaysia, a relatively strong rate for Indonesia, and a negative rate for the Philippines. This study argues that the results of previous studies were driven mainly by the fact that they relied on national accounts data for measures of various variables and, in particular, the factor income shares of capital and labor.
Keywords:
WP; growth rate; share; growth; TFP; productivity; ASEAN; factor share; capital share; TFP level; TFP estimate; income share; Total factor productivity; Production growth; Growth accounting; Public expenditure review; East Asia; Southeast Asia
Cover IMF Working Papers
Accountability and Transparency in the Public Sector: The New Zealand Experience
Mr. M. Cangiano
This paper describes the reforms introduced in the New Zealand public sector since the mid-1980s. The reforms included corporatization and privatization of most state-owned enterprises, the shift from a cash-basis to an accrual-basis accounting system and the compilation of a balance sheet for the central government and its entities, performance-based arrangements for the delivery of core government outputs; and institutional changes in expenditure control mechanisms. The paper also summarizes the impact of the reforms on government revenue and spending patterns, and discusses lessons learned from New Zealand’s experience.
Keywords:
WP; government; country; asset sale; enterprise; State Service condition; New Zealand government; capital base; cash flows; government accounts system; government's power; government members of parliament; government activity; conditions of Employment Act; operating expenses; government policy; governments of the State of New South Wales; Financial statements; Public sector; Budget planning and preparation; Fiscal accounting and reporting; Eastern Europe
Cover IMF Working Papers
Growth in East Asia: What We Can and What We Cannot Infer From it
Mr. Michael Sarel
This paper examines the different arguments raised by the studies that addressed the East Asian growth experience. The original arguments presented in this paper are all on the negative side, highlighting problems associated with some of the possible explanations for the East Asian miracle. The paper concentrates mainly on four dimensions of the debate about the East Asian growth experience: (i) The nature of economic growth intensive or extensive?; (ii) The role of public policy and of selective interventions; (iii) The role of high investment rates and a strong export orientation as possible engines of growth; and (iv) The importance of the initial conditions and their relevance for policy.
Keywords:
WP; land equality; a number of country; land redistribution; industrializing country; investment rate; industrializing economies of East Asia; depreciation rate; Productivity; Growth accounting; Public expenditure review; Technological innovation; East Asia
Cover IMF Working Papers
Working Paper Summaries (WP/94/1 - WP/94/76)
International Monetary Fund
The IMF Working Papers series is designed to make IMF staff research available to a wide audience. Almost 300 Working Papers are released each year, covering a wide range of theoretical and analytical topics, including balance of payments, monetary and fiscal issues, global liquidity, and national and international economic developments.
Keywords:
WP; policy; economy; market; stabilization; petroleum product; stabilization policy; competitiveness indicator; stabilization program; export instability; Real exchange rates; Monetary unions; Inflation; Currencies; Commodity prices; Central and Eastern Europe; Maghreb; Europe; Eastern Europe; Sub-Saharan Africa; Africa
Cover IMF Working Papers
Improving the Management of a Central Bank: A Case Study
Mr. John Mendzela
This paper examines how major efficiency gains and improved effectiveness were simultaneously achieved at the Reserve Bank of New Zealand over a five-year period. It identifies the business management concepts that were used to transform the organization, outlines how they were applied, and evaluates the benefits obtained. The paper concludes that substantial real efficiency gains were achieved, while effectiveness was maintained or enhanced. Looking more widely, the business management concepts used to achieve these benefits could be applied to other central banks.
Keywords:
WP; efficiency gain; RBNZ staff; senior management; The RBNZ culture; property manager; resource base; RBNZ culture; RBNZ organization chart; RBNZ goal; internal audit group; RBNZ change; price stability objective; staff number; career staff; Budget planning and preparation; Information and data management; Performance audit; Employment