Posted on March 5, 2014 by iMFdirect
By Serkan Arslanalp and Takahiro Tsuda
(Version in Español, Français, Português, Русский, 中文)
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 »
Posted on January 13, 2014 by iMFdirect
By Alexander Culiuc and Kalpana Kochhar
(Versions in Español, Русский, Português, and 中文)
A number of emerging market economies have been on a rollercoaster since the U.S. Federal Reserve announced last May the eventual tapering of its asset purchase program. This is another reminder of how susceptible these economies remain to economic conditions outside their borders.
Much of the market movements to date have been short term in nature. But emerging markets know the end-game – interest rates in advanced economies will eventually go up, reducing the cheap external financing they have benefited from until now. And this is not the only external factor weighing on the growth prospects of emerging markets.
Filed under: Advanced Economies, Economic Crisis, Economic research, Emerging Markets, Financial Crisis, Fiscal policy, growth, IMF, International Monetary Fund, Public debt | Tagged: advanced economies, capital flows, commodiity prices, emerging market economies, exchange rate, inflation, interest rates, World Economic Outlook | 3 Comments »
Posted on December 11, 2013 by iMFdirect
By Alejandro Werner
(Versions Español and Português)
Public finances in most Latin American countries strengthened significantly before the global financial crisis. Since 2009, countries have generally increased public deficits, drawing down on their fiscal coffers.
These expansionary policies continue and are yet to be reversed. With further pressures likely to build over the period ahead—as economic growth has slowed, commodity prices have softened, and external funding costs are bound to rise—now is the right time to rethink fiscal policies across the region.
Filed under: Economic research, Emerging Markets, Financial Crisis, Fiscal policy, growth, IMF, International Monetary Fund, Latin America, Public debt | Tagged: Brazil, Chile, Colombia, fiscal policy, Fiscal Stimulus, infrastructure, labor market, Mexico, Peru, public deficits, public finances, public spending | Leave a comment »
Posted on November 27, 2013 by iMFdirect
By Martin Kaufman and Mercedes García-Escribano
(Version in Español and Português)
Since the early 2000s, Brazil’s economy has grown at a robust clip, with growth in 2010 reaching 7.5 percent—its strongest in a quarter of a century. A key pillar of its hard-won economic success has been sound economic policies and the adoption of far-reaching social programs, which resulted in a substantial decline in poverty.
In the last couple of years Brazil’s growth slowed down. Although other emerging market economies experienced a similar slowdown, the growth outturns in Brazil were particularly disappointing. And the measures taken to stimulate the economy did not produce a sustained recovery. This is because unleashing sustained growth in Brazil requires measures geared not at stimulating domestic demand but at changing the composition of demand towards investment and at increasing productivity.
Filed under: Advanced Economies, Economic outlook, Economic research, Emerging Markets, Español, Finance, Fiscal policy, growth, IMF, International Monetary Fund, Latin America, Português, Public debt | Tagged: Article IV, Brazil, BRICs, fiscal consolidation, infrastructure, macroeconomic policy, recovery, unemployment | Leave a comment »
Posted on November 6, 2013 by iMFdirect
By Michael Keen
(Version in Español, Français and 中文)
Last night, when you went to bed, you left $40 on the kitchen table. When you woke up this morning, you found only $30—and a note from the government saying, “Thank you very much, we took $10 as a tax payment.” This is, of course, extremely irritating. To an economist, however, it’s close to an ideal form of taxation, since there is nothing you can now do to reduce, avoid, or evade it—the holy grail of what economists call a non-distorting tax.
(This doesn’t mean that you won’t react in some way. Being worse off, you may now work a bit more, or save a bit less. But any other tax raising $1 would make you even worse off, because it would change relative prices (a tax on your earnings would make working less attractive, for instance), and so take your choices even further from those you would make in the absence of taxation.)
Filed under: Economic Crisis, Economic outlook, Economic research, Finance, Financial sector supervision, Fiscal policy, IMF, International Monetary Fund, Politics, Public debt | Tagged: capital levy, debt, Fiscal Monitor, tax cuts, tax policy, taxation | Leave a comment »
Posted on October 29, 2013 by iMFdirect
By Steven Barnett
(Version in 中文)
Less growth in China today will mean higher income in the future. So rather than worry, we should welcome the slowdown in China’s economy. Why? Because by favoring structural reforms over short-term stimulus, China’s leadership is illustrating their commitment to move to a more balanced and sustainable growth model.
Filed under: Asia, Economic outlook, Economic research, Emerging Markets, Finance, growth, IMF, International Monetary Fund, Public debt | Tagged: China, consumption, government finances, IMF, iMFdirect, investment, reform, sustainable growth, United States | 3 Comments »
Posted on October 16, 2013 by iMFdirect
By Alejandro Werner
(Version in Español & Português)
For many Latin American and Caribbean economies, clouds have appeared on the economic horizon. As the global growth momentum shifts from the emerging to the advanced economies, the strength of domestic economic policies will be crucial for how countries can cope with the combination of lower commodity prices and tighter external financing conditions.
Lower commodity prices have already started to affect the region’s commodity exporters. Even though prices remain high by historical standards, countries can no longer count on the tailwind from ever-improving terms of trade, which had propelled economic activity over the past decade.
Meanwhile, longer-term U.S. interest rates have started to rise, with knock-on effects for emerging markets. Across all of the financially integrated economies of Latin America, bond yields have increased, equity prices have fallen, and currencies have depreciated since May, when the U.S. Fed first mentioned the possibility of tapering its bond purchases later this year. Financial conditions remain fairly benign for now, but the strong tailwind from ultra-low external financing costs may also be gone for good.
Filed under: Economic outlook, Economic research, Emerging Markets, Español, Finance, IMF, International Monetary Fund, Languages, Latin America, Public debt | Tagged: fiscal balances, infrastructure, lending, Regional Economic Outlook: Western Hemisphere | Leave a comment »
Posted on October 15, 2013 by iMFdirect
By Michael Keen
(Version in Español)
Benjamin Franklin famously said these are the only things that we can be sure will happen to us. Certainly taxation has been much to the fore of public debate in the last few years. The latest Fiscal Monitor takes a close look at where tax systems now stand, and where they might, and should be headed. Can we tax better, could we—if we wanted to—raise more revenue, and how does fairness come into it?
A better way to tax
The IMF’s broad advice on the revenue side of consolidation is straightforward.
- Before raising rates, broaden bases by scaling back exemptions and special treatments, and thereby getting more people and entities to pay taxes;
- Rely more on taxing consumption rather than labor;
- Strengthen property taxes; and
- Seize opportunities to raise revenue while correcting environmental and other distortions by, not least, carbon pricing (to address climate and other pollution challenges).
Filed under: Advanced Economies, Economic research, Emerging Markets, Fiscal policy, IMF, International Monetary Fund, Low-income countries, Public debt | Tagged: fiscal adjustment, Fiscal Monitor, pension, property taxes, tax, tax reform | 1 Comment »
Posted on October 9, 2013 by iMFdirect
By Martine Guerguil
(Versions in 中文, Français, 日本語, Русский, and Español)
Five years into the crisis, the fiscal landscape remains challenging. On the positive side, deficit-cutting efforts and the first signs of recovery reduced the fiscal stress felt in many advanced economies; but debt ratios often remain at historical peaks. At the same time, slowing growth and rising borrowing costs, combined with unabated demands for improved public services, puts pressure on government budgets in emerging market economies.
So we created an index of ‘fiscal difficulty’ that shows the biggest challenge ahead for advanced economies is to maintain budget surpluses until debt ratios return to lower levels. We expect this will take several years.
Filed under: Advanced Economies, Economic outlook, Economic research, Emerging Markets, Employment, Finance, growth, International Monetary Fund, Low-income countries, Public debt | Tagged: Asia, budget, debt, deficit, emerging market, Fiscal Monitor, Middle East and North Africa, tax | 1 Comment »