This paper discusses World Bank and IMF support for addressing fiscal and debt distress in IDA countries, with emphasis on strong continued concessional flows for green, resilient, and inclusive development.
International Monetary Fund. Strategy, Policy, & and Review Department
This paper is the sixth in a series that examines macroeconomic developments and prospects in low-income countries (LICs). LICs are defined in this report as the countries eligible to PRGT facilities (69 countries). The first section of the paper discusses recent macroeconomic developments and trends across LICs. The second section estimates LICs’ financing needs up to 2025 to resume and accelerate their income convergence with advanced economies (AEs). It does this by estimating the additional financing that would enable LICs to step up spending response to COVID, including vaccination needs, while rebuilding or keeping external buffers to enhance resilience, and then the paper considers the financing needed to allow LICs to accelerate convergence with AEs. The paper then discusses a mix of financing options, including concessional financing from the international financial institutions, grants and loans from bilateral donors, private financing and debt operations, but also domestic reforms within LICs themselves as a key component to foster growth, enhance private investment, raise public revenues, and increase efficiency of spending.
This paper studies whether fiscal policy plays a stabilizing role in the context of import food price shocks. More precisely, the paper assesses whether fiscal policy dampens the adverse effect of import food price shocks on household consumption. Based on a panel of 70 low and middle-income countries over the period 1980-2012, the paper finds that import price shocks negatively and significantly affect household consumption, but this effect appears to be mitigated by discretionary government consumption, notably through government subsidies and transfers. The results are particularly robust for African countries and countries with less flexible exchange rate regimes.
The International Monetary Fund’s (IMF’s) Statistics Department (STA) provided technical assistance (TA) on financial soundness indicators (FSI) to the National Bank of Ethiopia (NBE) during June 15-July 10, 2020. The TA mission took place in response to a request from the authorities, with the support of the IMF’s African Department (AFR). Due to the COVID-19 pandemic and travel restrictions, the mission was conducted remotely via video conferences. The mission worked with the staff of the NBE on the development of FSIs that are in line with the IMF’s 2019 FSI Guide.1 The main objectives of the mission were to: (i) review the source data, institutional coverage, and accounting and regulatory frameworks supporting the compilation of FSIs; (ii) provide guidance for mapping source data for the banking sector to the FSI reporting templates FS2 and FSD as well as preparing the metadata; and (iii) agree with the authorities on the timeline to begin regular reporting of the FSIs for deposit-takers to STA. The mission also provided technical assistance to the NBE on the compilation of net open positions in foreign currencies.