Front Matter

Front Matter

International Monetary Fund
Published Date:
December 2009
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    African Department


    ©2009 International Monetary Fund

    Production: IMF Multimedia Services Division

    Typesetting: Alicia Etchebarne-Bourdin

    Cataloging-in-Publication Data

    Foreign exchange reserve adequacy in the EAC countries/Paulo Drummond . . . [et al.].—

    • Washington, D.C.: International Monetary Fund, 2009.

      • p.; cm.—(African departmental paper; 09-1)

    • Includes bibliographical references.

    • ISBN-13: 9781462366682

    1. Foreign exchange—Africa, Eastern. 2. Bank reserves—Africa, Eastern. 3. East African Community. I. Drummond, Paulo Flavio Nacif, 1966—. II. International Monetary Fund. III. African departmental paper ; 09-1.

    HG3983.4.F67 2009

    Disclaimer: This publication should not be reported as representing the views or policies of the International Monetary Fund. The views expressed in this work are those of the authors and do not necessarily represent those of the IMF, its Executive Board, or its management.

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    Executive Summary

    The concomitant external shocks experienced in 2008-09 by the East African Community (EAC) countries and stepped-up support by the IMF— including the SDR allocation—and other donors, are likely to arouse renewed interest in the question of the adequate level of international reserves. This note discusses the evolution of reserve holdings in EAC countries and uses several tools for assessing reserve adequacy in the region. The analysis suggests that reserve levels in most cases seem to include safety buffers, and thus, do not require immediate action. However, the situation could become tighter if export recovery is delayed or export prices do not pick up. Over the medium term, the desirable reserve path should also be adapted to regional and international integration.1

    The authors would like to thank Shiv Dixit for his excellent research assistance, as well as the IMF country teams covering the EAC economies for their helpful suggestions.

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