Posted on June 5, 2015 by iMFdirect
By Alejandro Werner
(Versions in Español and Português)
Latin America has reached a critical moment. So much better off than two decades ago, and still facing deep-seated problems that get in the way of sustained strong growth and economic development. To better understand these problems from countries’ perspectives, and explore ways the IMF and others can help address them, we brought together experts from the region and beyond—central bankers, finance ministers, and academics—for a high-level conference in Washington, D.C. earlier this week.
Under the theme of “Rising Challenges to Growth and Stability,” participants engaged in lively debates about the current difficulties facing Latin America and the policy priorities for now and the future.
Here are my main takeaways from the event:
Filed under: Advanced Economies, Economic Crisis, Economic outlook, Emerging Markets, Employment, Español, Finance, Fiscal policy, Globalization, growth, IMF, International Monetary Fund, Latin America, Reform | Tagged: Annual Meetings, commodiity prices, economic development, economic diversification, education, governance, inequality, infrastructure, investment, Latin America, Peru, Regional Economic Outlook: Western Hemisphere, trade, U.S. interest rates | Leave a comment »
Posted on June 4, 2015 by iMFdirect
By Christine Lagarde
IMF staff have just concluded their annual health check of the U.S. economy, and released their concluding statement.
This year we have also undertaken a Financial Sector Assessment Program with the United States. We conduct these once every 5 years for systemically important countries and it is a comprehensive exercise looking at the whole U.S. financial system.
Given this important work, we have focused our review of the U.S. economy on financial stability risks and the appropriate policies to mitigate them, as well as looking at recent movements in the U.S. dollar and the timing, form, and impact of interest rate normalization by the Fed.
A more detailed report on the U.S. economy and on the financial sector will be available on July 8.
Filed under: Advanced Economies, Economic Crisis, Economic outlook, Economic research, Employment, Finance, Financial Crisis, Fiscal policy, Government, growth, Inequality, Politics, Reform | Tagged: Christine Lagarde, financial stability, financial system, fiscal policies, inflation, monetary policy, U.S., United States | Leave a comment »
Posted on June 2, 2015 by iMFdirect
By Jonathan D. Ostry and Atish R. Ghosh
Financial bailouts, stimulus spending, and lower revenues during the Great Recession have resulted in some of the highest public debt ratios seen in advanced economies in the past forty years. Recent debates have centered on the pace at which to pay down this debt, with few questions being asked about whether the debt needs to be paid down in the first place.
A radical solution for high debt is to do nothing at all—just live with it. Indeed, from a welfare economics perspective—abstracting from real world problems such as rollover risk—this would be optimal. We explore this issue in our recent work. While there are some countries where clearly debt needs to be brought down, there are others that are in a more comfortable position to fund themselves at exceptionally low interest rates, and that could indeed simply live with their debt (allowing their debt ratio to decline through growth or windfall revenues).
Filed under: Advanced Economies, Debt Relief, Economic Crisis, Economic outlook, Economic research, Finance, Fiscal policy, IMF, International Monetary Fund, Public debt, recession | Tagged: bailout, budgets, debt, fiscal policies, Great Recession, interest rates | Leave a comment »
Posted on May 29, 2015 by iMFdirect
By Jeff Hayden
World leaders will come together three times—in July, September, and December—to press for progress in the fight against poverty and to forge partnerships in support of better-quality life around the world.
In July, government officials and representatives from civil society organizations, donor groups, and the private sector will meet in Addis Ababa, Ethiopia, to secure the financing needed to lift millions out of extreme poverty.
The global community assembles again in New York in September to review progress under the Millennium Development Goals (MDGs), which expire this year, and to adopt new ones—the Sustainable Development Goals (SDGs)—that map out development through 2030.
Filed under: Advanced Economies, Africa, Civil Society, Economic research, Emerging Markets, Employment, Europe, Finance, Fiscal policy, Global Governance, Globalization, Government, IMF, International Monetary Fund, Multilateral Cooperation, Politics, unemployment | Tagged: Africa, Arab Spring, Christine Lagarde, Civil Society, development, development financing, F&D, Finance & Development magazine, infrastructure, Millennium Development Goals, poverty, terrorist financing, unemployment, United Nations, United Nations Conference on Sustainable Development, youth unemployment | Leave a comment »
Posted on May 29, 2015 by iMFdirect
By Petya Koeva Brooks and Gerd Schwartz
The 2008 global financial crisis and its aftermath have tested the European Union’s (EU) fiscal governance framework—the rules, regulations, and procedures that influence how budgetary policy is planned, approved, carried out, and monitored. Given the distinctive nature of EU integration, the framework aims to discipline national fiscal policies to prevent adverse spillovers to other countries and distortions to the conduct of the euro area’s common monetary policy.
The build-up of fiscal imbalances, however, revealed gaps in the framework. Public debt in the European Union soared following the crisis in 2008 to an average of around 95 percent in 2014—almost 30 percentage points above its average pre-crisis level (Chart 1).
Filed under: Advanced Economies, Europe, Finance, Fiscal policy, Global Governance, IMF, International Monetary Fund | Tagged: crisis, debt, EU, euro area, Fiscal Compact, fiscal framework, fiscal policies, imbalances, public debt, Stability and Growth Pact | Leave a comment »
Posted on May 20, 2015 by iMFdirect
By José Viñals
Financial market liquidity can be fleeting. The ability to trade in assets of any size, at any time and to find a ready buyer is not a given. As discussed in some detail last fall in this blog, a number of factors, including the evolving structure of financial markets and some regulations appear to have pushed liquidity into a new realm: markets look susceptible to episodes of high price volatility where liquidity suddenly vanishes.
In our April 2015 Global Financial Stability Report we identify a new aspect to the problem: asset price correlations have risen sharply in the last five years across all major asset classes (see figure). Continue reading
Filed under: Advanced Economies, Emerging Markets, Europe, Finance, IMF, International Monetary Fund | Tagged: bond markets, central banks, euro area, exchange rate, Financial regulation, GFSR, Global Financial Stability Report, Japan, market liquidity, market volatility, monetary policy, oil prices, swap lines, Switzerland, U.S. Fed, United States | Leave a comment »
Posted on May 7, 2015 by iMFdirect
By Shekhar Aiyar, Bergljot Barkbu, and Andreas (Andy) Jobst
If financing is the lifeblood of European small businesses, then the effect of the financial crisis was similar to a cardiac arrest. The flow of affordable credit from banks was choked off and small and medium-sized enterprises (SMEs) were hit hardest. Today, with bank lending still recovering from that shock, smart policy actions could open up securitization as a source of financing to help small businesses start up, flourish and grow.
SMEs are vital to the European economy. They account for 99 out of every 100 businesses, two in every three employees, and 58 cents of each euro of value added of the business sector in Europe. Improving access to finance would therefore not only revive small businesses, but also support a strong and lasting recovery for Europe as a whole.
Filed under: Advanced Economies, Economic Crisis, Economic research, Europe, Finance, Globalization, growth, IMF, International Monetary Fund, Investment, Reform | Tagged: bank lending, bond markets, capital markets, credit, EU, Europe, France, Germany, infrastructure, Italy, private investment, Securitization, small and medium-sized enterprises, Spain | Leave a comment »