For many years, countries in sub-Saharan Africa have spent large amounts on subsidizing fuel and electricity. For both sources of energy combined, this averages around 3-4 percent of GDP. That’s about the same magnitude as public spending on health in many countries. Now we need to ask some important questions. Is this a good use of scarce resources? Where does this money go? Is it helping to support the livelihood of the poorest in African economies? Is it helping to boost the country’s competitiveness? The answers are largely, no. I believe this money can and must be used better to invest in the critical physical and social infrastructure required to sustain growth in sub-Saharan Africa. A recent IMF paper backs this up.
Let’s face it. Everybody loves cheap energy. Almost all human activities require energy consumption and, if something is so basic, it seems pretty obvious that it should not be denied to anyone and government should make it as cheap as possible to both households and companies, including through subsidies. This can help households avoid paying exorbitant energy bills at the end of the month, something that the poor may not be able to afford even for basic needs like heating and cooking.
Companies may also need energy subsidies to help them stay competitive. Energy subsidies appear even more appropriate, and even the obvious thing to do, in countries that have a large supply of energy, like oil producers. After all, this natural wealth in the form of energy belongs to the people; why shouldn’t it be cheap?
Filed under: Africa, Economic research, Español, Finance, Financial Crisis, Fiscal policy, Français, growth, Inequality, International Monetary Fund, Low-income countries, Middle East, Politics, عربي | Tagged: education, energy subsidies, energy taxes, environment, fiscal policy, GDP, infrastructure, reform | Leave a Comment »
(Version in عربي)
I was in Algiers last week, my first time as the Managing Director of the IMF. It was a good visit: we reaffirmed the special partnership between Algeria and the IMF, and I was able to gain a deeper insight into Algeria’s aspirations—and also its challenges in reaching a hopeful future.
Filed under: Africa, International Monetary Fund | Tagged: Algeria, budget, business leaders, Christine Lagarde, civil society organizations, debt levels, economy, employment, energy, external deficits, gas, grwoth, IMF, iMFdirect, inclusive growth, inflation, International Monetary Fund, jobs, labor market policies, oil, private sector, productivity, subsidies, women, youth unemployment | Leave a Comment »
Today, I invite all of you to celebrate International Women’s Day. Let’s celebrate the incredible progress women have made over the past decades in different parts of society, playing a key role in economic life that our grandmothers worked for and dreamed about. Today, although men still dominate the executive suites in most professions, women all over the world hold high positions in the private sector and in public office. Women are no longer the Second Sex Simone de Beauvoir wrote about.
But far too many women face the most fundamental challenges: the right to safety and to choose the life they want.
Across the globe, fewer women than men are in paid employment, with only about 50 percent of working-age women participating in the labor force. In many countries, laws, regulations and social norms still constrain women’s possibilities to seek paid employment. And all over the world women conduct most of the work that remains unseen and unpaid, in the fields and in households.
Filed under: Africa, Asia, Europe, growth, International Monetary Fund, Latin America, Middle East, Politics | Tagged: advanced economies, child care, economic growth, eduation, emerging economies, employment, equal opportunity, fiscal policy, flexible work arrangements, gender wage gap, health services, IMF, iMFdirect, International Monetary Fund, International Women's Day, Japan, legislation, Netherlands, paid employment, Sweden, tax policy, unemployment, vocational training, women | Leave a Comment »
The planet’s most successful species are the great cooperators: ants, bees, termites, and humans.
In an article in the new issue of Finance & Development magazine, President Bill Clinton shares his experience working with governments, business, and civil society as part of his Clinton Global Initiative.
He says they are making the most progress in places where people have formed networks of creative cooperation where stakeholders come together to do things better, faster and cheaper than any could alone.
Filed under: Advanced Economies, Africa, Asia, Civil Society, Debt Relief, Economic Crisis, Emerging Markets, Employment, Europe, Finance, Fiscal policy, Globalization, growth, IMF, Inequality, International Monetary Fund, Latin America, Middle East, Multilateral Cooperation | Tagged: Africa, agriculture, Bolsa Familia, Brazil, business, business leaders, Canada, capital markets, Clinton Global Initiative, Coca-Cola, Colombia, cooperation, developing countries, domestic food security, Economics, economy, exports, farmers, Fundacíon Carlos Slim, Fundacíon Pies Descalzos, Gap Inc., governments, growth, Haiti, HIV/AIDS, IMF, iMFdirect, imports, infrastructure, International Monetary Fund, investment, Ira Magaziner, Ireland, Latin America, Malawi, mining industry, networks, NGOs, Norway, philanthropists, poverty, President Bill Clinton, private sector, small and medium-sized enterprises, the United Kingdom, tourism, United Nations General Assembly, vocational training | 4 Comments »
By David Lipton
(Version in عربي)
Almost two years since the Arab Awakening started, the future of the Middle East and North Africa is in a flux, with fledgling democracies struggling to find their way and renewed outbreaks of violence adding to the challenges the region is facing. Some are starting to worry aloud that the revolutionary path may hit a dead end.
To me, a useful way to think about the present situation is that the region could end up taking any one of three alternative paths, as far as its economic future is concerned. We could witness either:
- Economic deterioration, if squabbling over political power prevents stabilization, let alone reform;
- Stabilization through a reassertion of vested business interests that would offer a respite from eroding economic conditions, but condemn the region to a return to economic stagnation or at best tepid growth;
- Or we could see a new economy emerge, as newly elected governments gradually find a way to end economic disruptions and undertake reforms that open the way to greater economic opportunity for their people.
While the first two paths would be undesirable, they could come to pass. Needless to say, the third path of transformation would be best.
No doubt the Arab countries in transition will chart their own paths. But I strongly believe that the international community also has a role in helping them avoid the unfavorable outcomes. Let me share some thoughts on how we can provide support.
Filed under: Africa, Economic Crisis, Economic research, Employment, Europe, Finance, Financial Crisis, Globalization, growth, IMF, Inequality, Investment, Middle East, Politics, Public debt, عربي | Tagged: Arab, Arab Awakening, Arab Spring, Belgium, David Lipton, EBRD, European Union, exports, Gulf Cooperation Council, Hamadi Jebali, iMFdirect, Jordan, Libya, MENA, Morocco, transformation, Tunisia, Turkey, United States, Yemen | 3 Comments »
(Version in Español)
World food prices are on the rise again owing mainly to global weather-related shocks. This has led to concern that the rise could result in higher inflation and hurt the most vulnerable.
Two points to note are that the recent increase in food prices has been less acute than the two previous episodes (in mid-2008 and early 2011), and features important differences across commodities. For example, while the price of soybeans, corn and wheat are up sharply, coffee and sugar prices are down. Market projections suggest that corn, soy, and wheat prices will stay high through end-2012, but then decline gradually as supply conditions normalize.
Filed under: Africa, Economic Crisis, Economic outlook, Economic research, Emerging Markets, Employment, Fiscal policy, Globalization, growth, IMF, Inequality, Investment, Latin America, Politics | Tagged: Brazil, Caribbean, Central America, coffee, commodities, corn, fertilizer, food prices, iMFdirect, inflation, seeds, South America, Southern Cone, soybeans, sugar, wages, wheat | 2 Comments »
The slow global recovery is making fiscal adjustment more difficult around the world, but this doesn’t mean that little has been accomplished.
In fact, significant progress in many countries has been made during the past two years in strengthening their fiscal accounts after the 2008–09 deterioration. The IMF’s latest Fiscal Monitor takes stock of this progress.
Deficits are lower, and in many cases debt is too
Let me first say something about advanced economies, which is where the most urgent fiscal problems exist.
Most advanced economies have made good progress lowering their fiscal deficits (the imbalance between spending and revenues). Deficits, adjusted for the economic cycle, fell by about ¾ of a percentage point of GDP in 2011 and 2012, and are projected to do so by about 1 percentage point of GDP in 2013.
Filed under: Advanced Economies, Africa, Annual Meetings, Asia, Economic Crisis, Economic outlook, Economic research, Emerging Markets, Employment, Europe, Finance, Fiscal policy, Global Governance, Globalization, growth, IMF, Inequality, International Monetary Fund, Investment, Latin America, Low-income countries, Middle East, Multilateral Cooperation, Politics, Public debt | Tagged: budgets, Carlo Cotarelli, debt ratio, Debt-to-GDP, deficit, emerging markets, fiscal cliff, fiscal consolidation, Fiscal Monitor, spending, taxes, United States | 3 Comments »