Posted on June 4, 2014 by iMFdirect
By Jesus Gonzalez-Garcia and Francesco Grigoli
(Version in Español)
Government ownership of banks is still common around the world, despite the large number of privatizations that took place over the past four decades as governments reduced their role in the economy. On average, state-owned banks hold 21 percent of the assets of the banking system worldwide. In Latin American and Caribbean countries, the public banks’ share is about 15 percent, with some of them showing very large shares, for instance, Argentina, Brazil, Uruguay, and Costa Rica are all over 40 percent (see Figure 1).
State-owned banks play an important role in the financial system. They fulfill functions that are not performed by private banks, provide financing for projects that benefit the rest of the economy, and provide countercyclical lending (lending more when the economy is weak). But public banks usually respond to the needs of governments owing to the state’s obvious involvement in their administration. As a result, government’s participation in the banking system may weaken fiscal discipline by allowing the public sector to access financing that they would not obtain from other sources.
In our recent study, we use a panel dataset for 123 countries to test whether a larger presence of state-owned banks in the banking system is associated with more credit to the public sector, larger fiscal deficits, higher public debt ratios, and the crowding out of credit to the private sector.
Filed under: Economic outlook, Economic research, Emerging Markets, Español, Finance, Fiscal policy, Government, International Monetary Fund, Latin America, Public debt | Tagged: Argentina, bank credit, banking, big banks, Caribbean, Latin America, public sector, Uruguay | Leave a comment »
Posted on April 25, 2014 by iMFdirect
By Alejandro Werner
(Version in Español and Português)
The prospects for global growth have brightened in recent months, led by a stronger recovery in the advanced economies. Yet in Latin America and the Caribbean, growth will probably continue to slow, although some countries will do better than others. We analyze the challenges facing the region in our latest Regional Economic Outlook and discuss how policymakers can best deal with them.
Filed under: Advanced Economies, Economic Crisis, Economic outlook, Economic research, Emerging Markets, Financial Crisis, growth, IMF, International Monetary Fund, Latin America, Public debt | Tagged: Caribbean, Central America, Chile, China, Colombia, commodiity prices, economic recovery, Federal Reserve, IMF forecast, interest rates, Latin America, Mexico, monetary policy, Peru, Regional Economic Outlook: Western Hemisphere, Western Hemisphere | Leave a comment »
Posted on April 16, 2014 by iMFdirect
By: Sanjeev Gupta and Martine Guerguil
(Version in Español, Français, Русский, 中文, and 日本語)
The global financial crisis brought to the fore the question of sustainability of public finances. But it merely exacerbated a situation that was bound to attract attention sooner or later—governments all over the world have been spending more and more in recent decades. Here at the IMF, we’ve been looking into the factors behind this increase in public spending, particularly social spending, and our latest Fiscal Monitor report discusses some of the options for spending reform.
Filed under: Advanced Economies, Economic Crisis, Economic outlook, Economic research, Emerging Markets, Employment, Financial Crisis, Fiscal policy, growth, International Monetary Fund, Low-income countries, Public debt | Tagged: education, expenditure reform, Fiscal Monitor, health care reform, private sector involvement, public finances, reforms | Leave a comment »
Posted on April 14, 2014 by iMFdirect
By IMFdirect editors
Socrates’ famous method to develop his students’ intellect was to question them relentlessly in an unending search for contradictions and the truth—or at the very least, a great quote.
The method was alive and well among the moderators, panelists and audiences of the IMF’s Spring Meetings seminars that took place alongside official discussions, where boosting high-quality growth, with a focus on the medium term, was at the top of the agenda. Our editors fanned out and found a couple of big themes kept coming up. Here are some of the highlights.
Lots of people are talking about what happens when the flood of easy money into emerging markets thanks to low interest rates in advanced economies like the United States slows even more than it has in the past year.
At a seminar on fiscal policy the discussion focused on the challenges facing policymakers as central banks slowly exit from unconventional monetary policy and interest rates begin rising.
A live poll of the audience found 63 percent said the global economy remains weak and unconventional monetary policies should remain in place.
Filed under: Advanced Economies, Africa, Annual Meetings, Asia, Economic outlook, Emerging Markets, Financial Crisis, Fiscal policy, Globalization, IMF, Inequality, International Monetary Fund, Politics, Public debt | Tagged: Chile, Christine Lagarde, emerging market, Federal Reserve, global economy, growth, income inequality, macroprudential policies, Olivier Blanchard, Oxfam, Program of Seminars, Reserve Bank of India, Spring Meetings, United Kingdom | 1 Comment »
Posted on March 5, 2014 by iMFdirect
By Serkan Arslanalp and Takahiro Tsuda
(Version in Español, Français, Português, Русский, 中文 and 日本語)
There are a trillion reasons to care about who owns emerging market debt. That’s how much money global investors have poured into in these government bonds in recent years —$1 trillion. Who owns it, for how long and why it changes over time can shed light on the risks; a sudden reversal of money flowing out of a country can hurt. Shifts in the investor base also can have implications for a government’s borrowing costs.
What investors do next is a big question for emerging markets, and our new analysis takes some of the guesswork out of who owns your debt. The more you know your investors, the better you understand the potential risks and how to deal with them.
Filed under: Advanced Economies, Debt Relief, Economic research, Emerging Markets, Financial Crisis, growth, International Monetary Fund, Investment, Public debt | Tagged: balance sheets, Brazil, China, Colombia, debt, emerging market economies, Global Financial Stability Report, government debt, Indonesia, interest rates, Latvia, Malaysia, Mexico, Poland, Romania, South Africa, Uruguay | Leave a comment »
Posted on January 13, 2014 by iMFdirect
by Isabel Rial, Suchanan Tambunlertchai, and Alexander Tieman
(Version in Türk)
Turkey has received well-deserved praise for its growth performance over the last decade. Yet along with this success story has come a steady widening of the current account deficit, projected to come out at 7.4 percent of GDP in 2013. The counterpart of this deficit is a reliance on external financing, much of which is of a short-term nature, highlighting the Turkish economy’s main problem at the moment.
Filed under: Economic Crisis, Emerging Markets, Europe, Financial Crisis, growth, IMF, International Monetary Fund, Public debt | Tagged: Article IV, competitiveness, monetary policy, public financial management, Turkey | 2 Comments »