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Middle East and Central Asia > Yemen, Republic of

You are looking at 1 - 4 of 4 items for :

  • Type: Journal Issue x
  • Central Banks and Their Policies x
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Cover IMF Working Papers
Are Banks Really Lazy? Evidence from Middle East and North Africa
Mr. Simon T Gray
,
Mr. Philippe D Karam
, and
Ms. Rima A Turk
We investigate whether low loan-to-deposit (LTD) ratios and high levels of reserve balances at the central bank (or holdings of government securities) are a reflection of policy-driven factors compared to commonly cited reasons of reluctance to lend or sometimes weak investment demand in uncertain environments. We examine changes to central bank (CB) balance sheet structures as well as commercial banks’ flow of funds over the period 2007–2012. First, Middle East and North Africa (MENA) CBs play an active role in view of their size that is very large with respect to their economies compared to CBs in advanced economies. Second, under exchange rate targeting, most MENA CB balance sheets are asset-driven, holding foreign exchange (FX) reserves to support the exchange rate policy and resulting in lower loan-to-deposit (LTD) ratios in the case of unsterilized increases in FX. Third, CB policy decisions seem to be accompanied by an increase in commercial bank reserve money balances, with ensuing reduction in the LTD. Finally, if governments meet their financing needs from the banking system—whether from commercial banks or by monetary financing—commercial bank balance sheets will tend to expand, resulting in lower LTD ratios. Our analysis suggests that government and CB actions may also drive the demand for and supply of credit, which are traditionally attributed to the behavior of banks and non-financial corporates and households only. The findings offer a different interpretation of changes in CB and banks’ balance sheets, with direct implications for LTD, calling to exercise caution in recommending policy action which aim at propping up LTD to ‘appropriate’ levels in an effort to reinvigorate credit following a downturn.
Keywords:
WP; Ltd ratio; balance sheet structure; CB action; asset purchase; CB financing; FX reserve; MENA; central banks; banks; credit; a number of AE CBs; CB bill; CB asset; credit growth; Commercial banks; Financial statements; Bank credit; Global
Cover Policy Papers
Safeguards Assessments - 2012 Update
International Monetary Fund
The safeguards policy was introduced in 2000 to reduce the risks of misuse of Fund resources and misreporting of program monetary data to the Fund. It supports the Fund’s approach to prudent lending and complements other safeguards such as program design, conditionality, and access limits, to name a few. Some 242 assessments of 92 central banks have been completed since 2000. Assessments are followed by a period of monitoring for as long as Fund credit is outstanding.
Keywords:
PP; audit; control framework; risk management practice; sheet risk; fy; governance framework; ownership of change; External audit; Auditing; Central bank balance sheet; Central bank governance; Monetary statistics; Middle East and Central Asia; West Africa; Caribbean
Cover IMF Working Papers
Inflation Dynamics in Yemen: An Empirical Analysis
Abdullah Almounsor
Yemen has had a high and volatile rate of inflation in recent years. This paper studies the underlying determinants of inflation dynamics in Yemen using three different approaches: (i) a single equation model, (ii) a Structural Vector Autoregression Model, and (iii) a Vector Error Correction Model. The outcomes suggest that inflation dynamics in Yemen are driven by international price shocks, exchange rate depreciation, domestic demand shocks, and monetary innovations. The impact of international prices and exchange rate depreciation indicate a significant pass-through of import prices. In the short run, external shocks of international prices and the exchange rate account for most variations in inflation, but domestic shocks to money supply and domestic demand explain larger variations in the medium term.
Keywords:
WP; demand-pull inflation; inflation dynamics; Inflation; pass-through; domestic demand; and money supply; inflation response; inflation elasticity; variance inflation; inflation variation; inflation shock; inflation in Yemen; Monetary base; Exchange rates; Vector error correction models; Structural vector autoregression
Cover IMF Working Papers
Yemen: Exchange Rate Policy in the Face of Dwindling Oil Exports
Todd Schneider
,
Nabil Ben Ltaifa
,
Mr. Faisal Ahmed
, and
Mr. Saade Chami
This paper investigates the likely implications of declining oil production on Yemen's equilibrium exchange rate, and discusses policy options to ensure a smooth transition to a nonoil economy. The empirical results suggest that, as oil production and foreign exchange earnings fall, the Yemeni rial will have to adjust downward in real effective terms to keep pace with the equilibrium exchange rate. In light of strong pass-through from exchange rate depreciation to domestic inflation, this could entail a substantial depreciation in nominal terms. Given the nature of the adjustment, a floating exchange rate regime appears to be the best option, if supported by appropriate macroeconomic policies. However, given public fixation on a exchange rate stability, a softly managed float would be a better option for Yemen whereby the central bank may have to lead the market toward the equilibrium exchange rate.
Keywords:
WP; exchange rate; crawling peg; Yemen; depreciation; Exchange rates; adjustment process; oil; equilibrium exchange rate; exchange rate depreciation; regime in the form; developments in Yemen; crawling peg exchange regime; exchange rate development; band in an effort; nominal exchange rate; real effective exchange rate; exchange rate pass-through effect; exchange rate band; crawling peg regime; Real exchange rates; Real effective exchange rates; Oil production; Exchange rate arrangements; Africa; Global