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Business and Economics > Public Finance

You are looking at 1 - 10 of 77 items for :

  • Type: Journal Issue x
  • Economic Growth and Aggregate Productivity: General x
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Cover IMF Working Papers
Government Debt and Growth: The Role of R&D
Can Sever
Economic growth in the advanced economies (AEs) has been slowing down since the early 2000s, while government debt ratios have been rising. The recent surge in debt at the onset of the Covid-19 pandemic has further intensified concerns about these phenomena. This paper aims to offer insight into the high-debt low-growth environment in AEs by exploring a causal link from government debt to future growth, specifically through the impact of debt on R&D activities. Using data from manufacturing industries since the 1980s, it shows that (i) government debt leads to a decline in growth, particularly in R&D-intensive industries; (ii) the differential effect of government debt on these industries is persistent; and (iii) more developed or open financial systems tend to mitigate this negative impact. These findings contribute to our understanding of the relationship between government debt and growth in AEs, given the role of technological progress and innovation in economic growth.
Keywords:
Government debt; fiscal policy; economic growth; R&D; innovation; financial development; economic growth in the advanced economies; R&D activity; impact of debt; debt level; affect tax dynamics; Financial sector development; Manufacturing; Productivity; Aging; Global
Cover IMF Staff Country Reports
Republic of Congo: Request for an Extension of the Extended Credit Facility Arrangement-Staff Report
International Monetary Fund. African Dept.
This paper focuses on Congo’s Request for an Extension of the Extended Credit Facility Arrangement. The extension seeks to allow sufficient time to complete the sixth (and final) review. Preliminary data suggest that program performance at end-June 2024 was mixed. All end-June 2024 quantitative performance criteria were met, but the continuous zero ceiling on new external arrears was breached while several indicative targets were missed. The authorities reaffirmed their commitment to fiscal prudence to alleviate ongoing liquidity pressures and preserve the gains achieved under the Extended Credit Facility (ECF). Fiscal consolidation will continue in 2025 supported by improved nonhydrocarbon revenue mobilization and expenditure rationalization, while protecting targeted poverty-reducing spending. The authorities concurred that laying the foundations for a sustainable and inclusive growth requires stepping up the implementation of structural reforms to strengthen debt management practices, enhance governance, accelerate economic diversification, and build a climate-proof economy. IMF supports the authorities’ request for an extension of the ECF arrangement.
Keywords:
IMF's transparency policy; ECF arrangement; liquidity pressure; ECF review; reform progress; filets Sociaux; Inclusive growth; Government debt management; Revenue mobilization; Liquidity
Cover IMF Working Papers
Chasing the Dream: Industry-Level Productivity Developments in Europe
Serhan Cevik
,
Sadhna Naik
, and
Keyra Primus
European countries are lagging behind in productivity growth, with significant productivity gaps across industries. In this study, we use comparable industry-level data to explore the patterns and sources of total factor productivity (TFP) growth across 28 countries in Europe over the period 1995–2020. Our empirical results highlight four main points: (i) TFP growth is driven largely by the extent to which countries are involved in scientific and technological innovation as the leader country or benefiting from stronger knowledge spillovers; (ii) the technological gap is associated with TFP growth as countries move towards the technological frontier by adopting new innovations and technologies; (iii) increased investment in information and communications technology (ICT) capital and research and development (R&D) contributes significantly to higher TFP growth; and (iv)the impact of human capital tends to be stronger when a country is closer to the technological frontier. The core findings of this study call for policy measures and structural reforms to promote innovation and facilitate the diffusion of new and existing technologies across Europe.
Keywords:
Total factor productivity; technology; R&D; innovation; human capital; Europe; productivity development; developments in Europe; core finding; TFP slowdown; TFP difference; Productivity; Capital spending; Global
Cover IMF Working Papers
Productive Capacities, Economic Vulnerability and Growth Volatility in Sub-Saharan Africa
Aminou Yaya
Sub-Saharan Africa (SSA) countries, like most developing countries, face major challenges to achieve strong, sustainable, and inclusive growth with the view to reduce significantly persistent poverty and inequality. Many of these challenges results from a high level of economic vulnerability due to simultaneous shocks, notably the Covid-19 pandemic, climate change and the multiplicity of armed conflicts. Hence the need to study policies and means of strengthening economic resilience to shocks. This paper analyzes the effects of productive capacities on the volatility of economic growth in SSA countries when faced with significant vulnerability. The study covers the period 2000-2018 for 43 SSA countries. Using Generalized Method of Moments (GMM), the results show that economic vulnerability contributes to growth volatility in SSA. However, this effect varies according to the performance of productive capacities. Countries with high productive capacities have greater opportunities to mitigate the effect of economic vulnerability on growth volatility. Some specific dimensions of productive capacities (Institutions, ICT) seem to matter more than others. The results of this study provide important recommendations to policy makers.
Keywords:
Productive capacities; economic vulnerability; growth volatility; estimation methodology; Real GDP growth in SSA; i. sensitivity; Human capital; Export diversification; Exports; Sub-Saharan Africa; Caribbean; Africa
Cover IMF Working Papers
Stepping Up Venture Capital to Finance Innovation in Europe
Nathaniel G Arnold
,
Guillaume Claveres
, and
Jan Frie
Relative to the US, productivity growth and investment in R&D in lagging in the EU, where it is more difficult to finance and scale up promising, innovative startups. Many of the most successful EU startups move elsewhere for financing, causing the EU to lose out on both the direct growth benefits and positive spillovers from these innovative firms. The EU could nurture innovative startups by accelerating the development of its venture capital (VC) ecosystem. Reducing regulatory frictions, especially ones that deter pensions funds and insurers from investing in VC, combined with well-designed tax incentives for R&D investments could help accelerate the development of the VC sector. These and other key CMU initiatives, such as the consolidation of stock markets and reforming and harmonizing insolvency regimes, will take time. Given the urgency to boost innovation, giving public financial institutions like the European Investment Fund a more active and expanded role in kickstarting VC markets where needed and in familiarizing investors with the VC asset class can be a helpful interim step.
Keywords:
Startups; Venture capital; Productivity; Capital Markets Union; EU startup; kickstarting VC market; startup financing stage; EU legislation; VC sector; Pension spending; Stock markets; Mutual funds; Insurance companies; Pensions; Europe
Cover IMF Staff Country Reports
Republic of Tajikistan: Request for a Twenty-Two-Month Policy Coordination Instrument-Press Release; Staff Report; Debt Sustainability Analysis; and Statement by the Executive Director for the Republic of Tajikistan
International Monetary Fund. Middle East and Central Asia Dept.
This paper presents Republic of Tajikistan’s Request for a Twenty-Two-Month Policy Coordination Instrument. Tajikistan’s favorable post-pandemic economic performance continued in 2023, with strong, broad-based growth and low inflation. The program focuses on improving fiscal resilience to increase space for priority social and development spending while keeping public debt on a downward trajectory. Fiscal reforms under the program increase revenue mobilization and spending efficiency and strengthen social protection of the most vulnerable. Monetary, exchange rate and financial sector policies aim to strengthen the economy’s resilience to shocks. Improvements in exchange rate flexibility and monetary policy transmission will enhance shock absorption and facilitate a gradual transition toward inflation targeting. Tajikistan is reliant on remittances, primarily from Russia, to support domestic demand and provide a source of foreign exchange. Risks to the outlook are tilted to the downside in the context of heightened geopolitical tensions and sanctions on Russia.
Keywords:
NBT legislation; NBT credit; twenty-two-month Policy Coordination Instrument; Policy discussion; policy transmission; Debt sustainability analysis; Debt sustainability; Monetary base; Global; Middle East
Cover IMF Staff Country Reports
Togo: Request for a 42-Month Arrangement Under the Extended Credit Facility-Press Release; Staff Report; and Statement by the Executive Director for Togo
International Monetary Fund. African Dept.
This paper discusses Togo’s Request for a 42-Month Arrangement under the Extended Credit Facility (ECF). Togo continues to face headwinds, following a series of shocks in recent years. The ECF-arrangement will help accelerate poverty reduction, maintain macroeconomic stability, and catalyze further external financing, benefitting Togo and thereby contributing to the macroeconomic and external stability in the West African Economic and Monetary Union (WAEMU). The authorities will strengthen debt sustainability through a large fiscal consolidation in line with a dual fiscal anchor. By providing and catalyzing concessional financing for budget purposes, the program will help ease trade-offs between enhancing inclusion through higher social spending and strengthening debt sustainability. It will also help maintain macroeconomic and external stability in the WAEMU. In order to support growth and limit fiscal and financial sector risks, the authorities will strengthen public financial management, improve the business environment, and ensure the reform of the remaining state-owned bank that was not completed under preceding programs.
Keywords:
ECF program objective; The Fund; ECF arrangement; ECF program; financial support; government function; Debt sustainability; Commercial banks; Global; West Africa
Cover IMF Staff Country Reports
Togo: Demande d’un accord de 42 mois au titre de la facilité élargie de crédit-communiqué de presse; rapport des services du FMI; analyse de viabilité de la dette; annexe d’information; déclaration de l’administrateur pour le Togo
International Monetary Fund. African Dept.
Bien que sa croissance ait bien résisté aux chocs ces dernières années, le Togo fait face à un niveau élevé d’insécurité alimentaire et d’attaques terroristes, et ses besoins en matière de développement demeurent considérables. Les déficits budgétaires et la dette ont augmenté, ce qui a eu pour effet d’annuler la baisse de l’endettement obtenue au cours de la période de l’accord FEC de 2017–20, de réduire la marge de manoeuvre budgétaire et les réserves permettant d’absorber les chocs, et de contribuer aux vulnérabilités au sein de l’Union économique et monétaire ouestafricaine (UEMOA). Deux banques sous-capitalisées, l’une publique et l’autre récemment privatisée, font peser des risques sur la stabilité du secteur financier et sur les finances publiques. Les autorités sollicitent un soutien financier de 200 % de la quote-part du Togo (293,60 millions de DTS) dans le cadre d’un accord au titre de la FEC d’une durée de 42 mois.
Keywords:
Objectif du programme ECF; Le Fonds; Accord ECF; Programme ECF; un soutien financier; fonction gouvernementale; la viabilité de la dette; Banques commerciales; Global; Afrique occidentale.
Cover Promoting Inclusive Growth in the Middle East and North Africa
Promoting Inclusive Growth in the Middle East and North Africa
Challenges and Opportunities in a Post-Pandemic World

Abstract

Despite some pre-pandemic gains in poverty reduction, literacy, and lifespans, many economies in the Middle East and North Africa (MENA) have struggled to ensure that the benefits of economic development and diversification accrue equitably to all segments of their populations. Among the main issues that remain unresolved are the high share of inactive youth (who are not engaged in employment, education, or training); large gaps in economic opportunities for women; fragmented social protection systems; and underdeveloped private sectors with tight regulation, absence of a level playing field, and limited access to credit that stifle the creation of new firms and growth, employment, and incomes. The COVID-19 pandemic not only risks wiping out some of the progress made in the region over the past decades, but could also exacerbate inequality in a durable way. There is evidence that the impact of the pandemic has been uneven across groups, with the recession having a disproportionate effect on the low-skilled, the young, women, and migrant workers in employment and incomes. With widespread inequality, high unemployment, and the expected entry of 27 million young people into the labor force over the next 10 years, countries across the MENA region need to evolve their economic models to boost job creation and make sure that the benefits of economic development are shared more widely among all their citizens. This book’s objective is to reassess the inclusive growth agenda in the MENA region in light of the rapidly changing pandemic-influenced world. It argues that countries need to embrace global trade and technological advances and evolving demographics at home as an opportunity to successfully implement policies that foster higher and more inclusive growth. It underscores that a return to the old social contract is neither desirable nor feasible. The book presents a comprehensive view of policies suited to the regional context that would boost job-rich and inclusive growth within a resilient macroeconomic policy framework. Its goal is to provide guidance to policymakers in the region to frame how best to promote inclusive growth, including in their engagement with all stakeholders.

Keywords:
inequality; inclusive growth; gender; job creation; private sector development; MENA; climate change; SOE; financial inclusion; future of work; MENA region; MENA country; IMF staff calculation; MENAP country; MENA policymaker; Labor markets; Middle East; North Africa; East Africa; Caribbean; Global
Cover IMF Staff Country Reports
United Republic of Tanzania: Request For a 40- Month Arrangement Under The Extended Credit Facility —Press Release; Staff Report; And Statement By The Executive Director For The United Republic Of Tanzania
International Monetary Fund. African Dept.
Tanzania’s economy is gradually recovering from the negative effects of the COVID-19 pandemic. While IMF emergency financing (0.8 percent of GDP) in 2021 helped address fiscal pressures, preserve stability, and finance the authorities’ COVID-19 economic and health response, Tanzania continues to face development and reform challenges to unleash its economic potential. The authorities are seeking renewed Fund assistance to support the country facing protracted balance of payments needs associated with the two external shocks—the COVID-19 pandemic and the war in Ukraine—and to support the authorities’ reform agenda summarized in their Five-Year Development Plan.
Keywords:
ECF arrangement; IMF emergency financing; interest rate; IMF financial support; financing gap; COVID-19; Debt sustainability; Debt sustainability analysis; Global; Eastern Europe