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Foreign Exchange Reserve Adequacy in East African Community Countries
Author:
International Monetary Fund
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Series:
Departmental Papers
Volume/Issue:
Volume 2009: Issue 008
Language:
English
Publication Date:
15 Dec 2009
DOI:
https://doi.org/10.5089/9781462366682.087
ISBN:
9781462366682
ISSN:
2616-5333
Pages:
34
Keywords:
DPPP; DP; reserve; special drawing rights; EAC country; exchange rate; SDR allocation; EAC economy; coverage ratio; reserve coverage; IMF resource; Reserve positions; International reserves; Reserves accumulation; Capital flows; Assessing reserve adequacy (ARA); Sub-Saharan Africa; Global
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The Departmental Paper Series presents research by IMF staff on issues of broad regional or cross-country interest. The views expressed in this paper are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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The concomitant external shocks experienced in 2008-09 by the East African Community (EAC) countries of Kenya, Rwanda, Tanzania, and Uganda 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 paper 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.
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Cover Departmental Papers
Departmental Papers
ISSN:
2616-5333
Publisher:
International Monetary Fund