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International Monetary Fund. African Dept.
Selected Issues
International Monetary Fund. African Dept.
This Selected Issues paper investigates state-owned financial institutions’ (SOFIs) performance in developing economies. It focuses on Sub-Saharan Africa, zooming in on the Togolese experience with SOFIs and privatization, at a time when the Togolese government has decided to further disengage from the financial sector. Typically set up with a public interest and financial inclusion mandate, SOFIs tend to weaken financial stability and fiscal discipline in developing economies, especially if they are not typically regulated and supervised on the same basis as other banks. Togo’s and cross-country experiences suggest that performance improves more after privatization when the government fully relinquishes control, when banks are privatized to strategic investors rather than through share issues, and when bidding is open to all, including foreign banks. The success of privatization also hinges on the business environment for competition, governance, and entry, on banks’ valuation and how policy concerns are dealt with, as well as on owner’s prudential review quality.
The Spring-Summer 2019 issue of the IMF Research Perspectives explores how technology deals with old questions. Articles discuss the ways technological progress and the increased availability of data have helped in some areas, while presenting new challenges for analyzing various matters. The issue also includes an interview with Gita Gopinath, the new director of the IMF Research Department.
Ms. Grace B Li
,
Mr. Stephen A. O'Connell
,
Mr. Christopher S Adam
,
Mr. Andrew Berg
, and
Mr. Peter J Montiel
VAR methods suggest that the monetary transmission mechanism may be weak and unreliable in low-income countries (LICs). But are structural VARs identified via short-run restrictions capable of detecting a transmission mechanism when one exists, under research conditions typical of these countries? Using small DSGEs as data-generating processes, we assess the impact on VAR-based inference of short data samples, measurement error, high-frequency supply shocks, and other features of the LIC environment. The impact of these features on finite-sample bias appears to be relatively modest when identification is valid—a strong caveat, especially in LICs. However, many of these features undermine the precision of estimated impulse responses to monetary policy shocks, and cumulatively they suggest that “insignificant” results can be expected even when the underlying transmission mechanism is strong.
Ms. Olessia Korbut
,
Mr. Gonzalo Salinas
, and
Cheikh A. Gueye
Economic stagnation in Sub-Saharan Africa (SSA) has led several economists to question the region’s ability to attain sustained economic growth, some of them arguing for the need to shift away from natural resource - based exports. Yet, we find that low growth has not been common to all SSA countries and that those that achieved political stability and significantly liberalized their economies experienced high growth in income per capita, as high as ASEAN-5 countries. This group of SSA countries attained high growth while maintaining their specialization in natural resource exports. Our analysis also rejects the hypothesis of reverse causality: that good growth performance allowed countries to attain political stability or liberalize their economies.
International Monetary Fund

Abstract

This third edition of the Global Monitoring Report examines the commitments and actions of donors, international financial institutions, and developing countries to implement the Millennium Declaration, signed by 189 countries in 2000. Many countries are off track to meet the Millennium Development Goals, particularly in Africa and South Asia, but new evidence is emerging that higher-quality aid and a better policy environment are accelerating progress in some countries, and that the benefits of this progress are reaching poor families. This report takes a closer look at the donors' 2005 commitments to aid and debt relief, and argues that rigorous, sustained monitoring is needed to ensure that they are met and deliver results, and to prevent the cycle of accumulating unsustainable debt from repeating itself. International financial institutions need to focus on development outcomes rather than inputs, and strengthen their capacity to manage for results in developing countries.

Mr. Kevin J Carey
,
Mr. Sanjeev Gupta
, and
Ms. Catherine A Pattillo

Abstract

Growth in sub-Saharan Africa has recently shown signs of improvement, but is still short of levels needed to attain the Millennium Development Goals. Economists have placed increasing emphasis on understanding the policies that promote sustained jumps in medium-term growth, and the paper applies this approach to African countries. The evidence presented finds an important growth-supporting role for particular kinds of institutions and policies, but also highlights aspects of growth that are still not well understood. The paper includes policy guidance for ensuring that the poor benefit from growth.

Mr. Markus Haacker

Abstract

This paper analyzes the macroeconomics of HIV/AIDS. The paper highlights that the mortality and morbidity associated with AIDS make it unlike most other types of sickness and disease. The paper describes the most common approaches used in accounting for growth in the context of an HIV/AIDS epidemic. The impact of HIV/AIDS on education and the accumulation of human capital is discussed. The paper also discusses the impact of HIV/AIDS on the public sector, and elaborates certain demographic events specific to the HIV/AIDS pandemic.