Building A Monetary Union in Africa


By iMFdirect

It’s like the European Union but for East Africa.

In this podcast by the IMF, find out how Uganda, Kenya, Tanzania, Rwanda and Burundi stand to benefit from the creation of the East African Community.  There will be a common currency as well as more trade and investment too.  Will a union also expose them to more risk?

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Fair Play—Equal Laws for Equal Working Opportunity for Women


2014MDNEW_04By Christine Lagarde 

(Versions in 中文, Français, 日本語Русскийعربي and Español)

Leveling the legal playing field for women holds real promise for the world—in both human and economic terms. Unfortunately, that promise remains largely ignored and its potential untapped. In too many countries, too many legal restrictions conspire against women to be economically active—to work.

What can be done to remove these barriers?  A new study done by IMF economists seeks to answer that question.

The bottom line? It’s about a fair, level playing field.

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A Big Step Forward for Bolstering Financial Inclusion


By David Marston, Era Dabla-Norris, and D. Filiz Unsal

(version in Español)

Economists are paying increasing attention to the link between financial inclusion—greater availability of and access to financial services—and economic development. In a new paper, we take a closer look at exactly how financial inclusion impacts a country’s economy and what policies are most effective in promoting it.

The new framework developed in this paper allows us to identify barriers to financial inclusion and see how lifting these barriers might affect a country’s output and level of inequality.  Because the more you know about what stands in the way of financial inclusion, the better you can be at designing policies that help foster it.

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Seven Questions About The Recent Oil Price Slump


By Rabah Arezki and Olivier Blanchard[1]

(Versions in عربي中文, Français, 日本語Русский, and Español)

Oil prices have plunged recently, affecting everyone: producers, exporters, governments, and consumers.  Overall, we see this as a shot in the arm for the global economy. Bearing in mind that our simulations do not represent a forecast of the state of the global economy, we find a gain for world GDP between 0.3 and 0.7 percent in 2015, compared to a scenario without the drop in oil prices. There is however much more to this complex and evolving story. In this blog we examine the mechanics of the oil market now and in the future, the implications for various groups of countries as well as for financial stability, and how policymakers should address the impact on their economies.  

In summary: 

  • We find both supply and demand factors have played a role in the sharp price decline since June. Futures markets suggest that oil prices will rebound but remain below the level of recent years. There is however substantial uncertainty about the evolution of supply and demand factors as the story unfolds.
  • While no two countries will experience the drop in the same way, they share some common traits: oil importers among advanced economies, and even more so emerging markets, stand to benefit from higher household income, lower input costs, and improved external positions. Oil exporters will take in less revenue, and their budgets and external balances will be under pressure.
  • Risks to financial stability have increased, but remain limited. Currency pressures have so far been limited to a handful of oil exporting countries such as Russia, Nigeria, and Venezuela. Given global financial linkages, these developments demand increased vigilance all around.
  • Oil exporters will want to smooth out the adjustment by not curtailing fiscal spending abruptly. For those without savings funds and strong fiscal rules, budgetary and exchange rate pressures may, however, be significant. Without the right monetary policies, this could lead to higher inflation and further depreciation. 
  • The fall in oil prices provides an opportunity for many countries to decrease energy subsidies and use the savings toward more targeted transfers, and for some to increase energy taxes and lower other taxes.  
  • In the euro area and Japan, where demand is weak and conventional monetary policy has done most of what it can, central banks forward guidance is crucial to anchor medium term inflation expectations in the face of falling oil prices.

Again, our simulations of the impact of the oil price drop do not represent a forecast for the state of the world economy in 2015 and beyond. This we will do in the IMF’s next World Economic Outlook in January, where we will also look at many other cross-currents driving growth, inflation, global imbalances and financial stability. 

What follows is our attempt to answer seven key questions about the oil price decline:

  1. What are the respective roles of demand and supply factors?
  2. How persistent is this supply shift likely to be?
  3. What are the effects likely to be on the global economy?
  4. What are likely to be the effects on oil importers?
  5. What are likely to be the effects on oil exporters?
  6. What are the financial implications?
  7. What should be the policy response of oil importers and exporters?

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What Happens to Public Health Spending in IMF-Supported Programs? Another Look


By Benedict Clements, Sanjeev Gupta, and Masahiro Nozaki

(Versions in 中文Français日本語, Русский, and Español)

Improvements in health can have a tremendously positive effect on society’s well-being and the level of economic activity. Indeed, 2013’s path-breaking report by the Lancet Commission indicates that about 11 percent of the economic growth in recent decades can be attributed to these improvements. As such, it makes good sense for macroeconomists to pay attention to health indicators and to the factors that influence them, such as public health spending.

In this context, it is not surprising that the impact of IMF-supported programs on public health spending has generated considerable attention. Previous research, focusing on periods before the global financial crisis, indicates that Fund-supported programs have a positive effect on public health spending (Martin and Segura, 2004; Center for Global Development, 2007; Clements, Gupta and Nozaki, 2013). But does this pattern still hold if we extend the analysis to more recent years? In this blog, we take a fresh look at this evidence for developing economies.

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Moving On Up: The Growth Story of Frontier Economies


Min ZhuBy Min Zhu

(version in Español)

The growth story for frontier economies isn’t the same as China’s in the last two decades, or the United States a hundred years ago.  These fast growing, low-income countries have their own story, and it’s not what you might think.

In May of this year, I wrote about who they are and how they are different, and now I want to go into a bit more detail about how their economies have been on the rise and how they have moved themselves to the frontier.

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The First Wealth


Jeff Hayden altBy Jeff Hayden

“The first wealth is health,” American philosopher Ralph Waldo Emerson wrote in 1860.­

Emerson’s quote, cited by Harvard economist and health expert David E. Bloom in Finance and Development’s lead article, reminds us that good health is the foundation on which to build—a life, a community, an economy.­

Humanity has made great strides, developing vaccines and medical techniques that allow us to live longer, healthier lives. Other developments—such as increased access to clean water and sanitation—have helped beat back long-standing ills and pave the way for better health.

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