Optimal Precautionary Reserves For Low Income Countries

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Optimal Precautionary Reserves for Low-Income Countries

Ms.Era Dabla-Norris,Mr.Jun Il Kim,Ms.Kazuko Shirono
Optimal Precautionary Reserves for Low Income Countries Book PDF

Author : Ms.Era Dabla-Norris,Mr.Jun Il Kim,Ms.Kazuko Shirono
Publisher : International Monetary Fund
Page : 37 pages
File Size : 46,9 Mb
Release : 2011-10-01
Category : Business & Economics
ISBN : 9781463923280

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Optimal Precautionary Reserves for Low-Income Countries by Ms.Era Dabla-Norris,Mr.Jun Il Kim,Ms.Kazuko Shirono Pdf

This paper develops a cost-benefit approach that helps to quantify the optimal level of international reserves in low-income countries, focusing on the role of reserves in preventing and mitigating absorption drops triggered by large external shocks. The approach is applied to a sample of 49 LICs over the period 1980-2008 to yield estimates of the likelihood and severity of a crisis. The calibration results suggest that the standard metric of three months of imports is inadequate for countries with fixed exchange rate regimes. The results also highlight the role of overall policy frameworks and availability of Fund-support in determining optimal reserve levels, raising questions about the uniform applicability of standard rules of thumb across countries.

Optimal Reserves in Financially Closed Economies

Mr.Olivier Jeanne,Mr.Damiano Sandri
Optimal Reserves in Financially Closed Economies Book PDF

Author : Mr.Olivier Jeanne,Mr.Damiano Sandri
Publisher : International Monetary Fund
Page : 29 pages
File Size : 47,8 Mb
Release : 2016-04-12
Category : Business & Economics
ISBN : 9781484325445

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Optimal Reserves in Financially Closed Economies by Mr.Olivier Jeanne,Mr.Damiano Sandri Pdf

Financially closed economies insure themselves against current-account shocks using international reserves. We characterize the optimal management of reserves using an open-economy model of precautionary savings and emphasize several results. First, the welfare-based opportunity cost of reserves differs from the measures often used by practitioners. Second, under plausible calibrations the model is consistent with the rule of thumb that reserves should be close to three months of imports. Third, simple linear rules can capture most of the welfare gains from optimal reserve management. Fourth, policymakers should place more emphasis on how to use reserves in response to shocks than on the reserve target itself.

Assessing Reserve Adequacy in Low-Income Countries

Mr.Valerio Crispolti,Ms.Era Dabla-Norris,Mr.Jun Il Kim,Ms.Kazuko Shirono,Mr.George C. Tsibouris
Assessing Reserve Adequacy in Low Income Countries Book PDF

Author : Mr.Valerio Crispolti,Ms.Era Dabla-Norris,Mr.Jun Il Kim,Ms.Kazuko Shirono,Mr.George C. Tsibouris
Publisher : International Monetary Fund
Page : 78 pages
File Size : 40,6 Mb
Release : 2013-03-08
Category : Business & Economics
ISBN : 9781475554526

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Assessing Reserve Adequacy in Low-Income Countries by Mr.Valerio Crispolti,Ms.Era Dabla-Norris,Mr.Jun Il Kim,Ms.Kazuko Shirono,Mr.George C. Tsibouris Pdf

Low-income countries routinely experience exogenous disturbances—sharp swings in the terms of trade, export demand, natural disasters, and volatile financial flows—that contribute to higher volatility in aggregate output and consumption compared with other countries. Assessing Reserve Adequacy in Low-Income Countries presents the findings of an analysis of a range of external shocks faced by these countries, beginning with a discussion of the impact of external shocks on macroeconomic growth, volatility, and welfare. Although sound macroeconomic and prudential policy frameworks are the first line of defense for limiting vulnerability, international reserves constitute the main form of self-insurance against such shocks. The evidence suggests that low-income countries with reserve coverage above three months of imports were better able to smooth consumption and absorption in the face of external shocks compared with those with lower reserve holdings. The analysis also points to the importance of country characteristics and vulnerabilities in assessing reserve adequacy.

International Reserves

Mr.Jaewoo Lee,Mr.Joshua Aizenman
International Reserves Book PDF

Author : Mr.Jaewoo Lee,Mr.Joshua Aizenman
Publisher : International Monetary Fund
Page : 32 pages
File Size : 52,8 Mb
Release : 2005-10-01
Category : Business & Economics
ISBN : 9781451862171

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International Reserves by Mr.Jaewoo Lee,Mr.Joshua Aizenman Pdf

This paper compares the importance of precautionary and mercantilist motives in the hoarding of international reserves by developing countries. Overall, empirical results support precautionary motives; in particular, a more liberal capital account regime increases international reserves. Theoretically, large precautionary demand for international reserves arises as a self-insurance to avoid costly liquidation of long-term projects when the economy is susceptible to sudden stops. The welfare gain from the optimal management of international reserves is of a first-order magnitude, reducing the welfare cost of liquidity shocks from a first-order to a second-order magnitude.

Precautionary Reserves

Mr.Fabian Valencia
Precautionary Reserves Book PDF

Author : Mr.Fabian Valencia
Publisher : International Monetary Fund
Page : 27 pages
File Size : 49,8 Mb
Release : 2010-03-01
Category : Business & Economics
ISBN : 9781451963502

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Precautionary Reserves by Mr.Fabian Valencia Pdf

Using precautionary savings models we compute levels of optimal reserves for Bolivia. Because of Bolivia's reliance on commodity exports and little integration with capital markets, we focus on current account shocks as the key balance of payments risk. These models generate an optimal level of net foreign assets ranging from 29 to 37 percent of GDP. For comparison purposes, we contrasted these results with standard rule of thumb measures of reserve adequacy, which in the case of Bolivia resulted in substantially lower levels of adequate reserves. These differing results emphasize the need to appropriately account for country-specific risks in order to derive adequate measures of reserve buffers.

The Optimal Level of International Reserves for Emerging Market Countries

Romain Ranciere,Olivier Jeanne
The Optimal Level of International Reserves for Emerging Market Countries Book PDF

Author : Romain Ranciere,Olivier Jeanne
Publisher : International Monetary Fund
Page : 40 pages
File Size : 53,5 Mb
Release : 2006-10
Category : Business & Economics
ISBN : UCSD:31822036089225

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The Optimal Level of International Reserves for Emerging Market Countries by Romain Ranciere,Olivier Jeanne Pdf

We present a model of the optimal level of international reserves for a small open economy that is vulnerable to sudden stops in capital flows. Reserves allow the country to smooth domestic absorption in response to sudden stops, but yield a lower return than the interest rate on the country's long-term debt. We derive a formula for the optimal level of reserves, and show that plausible calibrations can explain reserves of the order of magnitude observed in many emerging market countries. However, the recent buildup of reserves in Asia seems in excess of what would be implied by an insurance motive against sudden stops.

International Reserves in Low Income Countries

International Monetary Fund
International Reserves in Low Income Countries Book PDF

Author : International Monetary Fund
Publisher : International Monetary Fund
Page : 36 pages
File Size : 50,7 Mb
Release : 2012-01-01
Category : Business & Economics
ISBN : 9781463968540

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International Reserves in Low Income Countries by International Monetary Fund Pdf

This paper provides a historical perspective on the role of international reserves in low-income countries as a cushion against large external shocks over the last three decades - including the current global crisis. The results suggest that international reserves have played a role in buffering external shocks, with the resulting macroeconomic costs varying with the nature of the shock, the economy's structural characteristics, and the level of reserves.

Foreign Exchange Constraint and Developing Economies

Aleksandr V. Gevorkyan
Foreign Exchange Constraint and Developing Economies Book PDF

Author : Aleksandr V. Gevorkyan
Publisher : Edward Elgar Publishing
Page : 279 pages
File Size : 49,9 Mb
Release : 2023-01-17
Category : Business & Economics
ISBN : 9781800880504

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Foreign Exchange Constraint and Developing Economies by Aleksandr V. Gevorkyan Pdf

Foreign Exchange Constraint and Developing Economies addresses the complex nature of foreign exchange constraint for macroeconomic and social development. The book collects expertise and perspectives from a diverse set of contributions. Using a combination of innovative theoretical and empirical approaches, the book suggests several analytical frameworks to help advance academic research and policy work on foreign exchange and sustainable development.

Rwanda

International Monetary Fund
Rwanda Book PDF

Author : International Monetary Fund
Publisher : International Monetary Fund
Page : 87 pages
File Size : 52,5 Mb
Release : 2012-06-20
Category : Business & Economics
ISBN : 9781475512328

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Rwanda by International Monetary Fund Pdf

The Rwandan economy continued to grow strongly in 2011, and significant progress in poverty reduction has been achieved. The Fourth Review Under the Policy Support Instrument (PSI) highlights that the fiscal framework for 2012/13 is in line with the main objectives of the PSI, and the authorities are committed to delay non-priority spending rather than resort to additional domestic financing if revenue collections fall short of target. Efforts are ongoing to further strengthen public financial management and enhance revenue administration.

Interim Review of The Adequacy of The Fund’s Precautionary Balances

International Monetary,International Monetary Fund. Finance Dept.
Interim Review of The Adequacy of The Fund s Precautionary Balances Book PDF

Author : International Monetary,International Monetary Fund. Finance Dept.
Publisher : International Monetary Fund
Page : 51 pages
File Size : 50,6 Mb
Release : 2021-12-16
Category : Business & Economics
ISBN : 9781616357528

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Interim Review of The Adequacy of The Fund’s Precautionary Balances by International Monetary,International Monetary Fund. Finance Dept. Pdf

Precautionary balances are a key element of the Fund’s multilayered framework to mitigate financial risks. Overall financial risks remain elevated but have not increased significantly since the last review. Staff proposes to leave the medium-term target of SDR 25 billion, and the minimum floor of SDR 15 billion, unchanged at this time. With the projected increase in lending income, the pace of reserve accumulation is expected to remain adequate relative to the medium-term indicative target. The paper also reviews policy factors discussed in recent Board meetings that affect the level and accumulation of reserves.

Tonga

International Monetary Fund. Asia and Pacific Dept
Tonga Book PDF

Author : International Monetary Fund. Asia and Pacific Dept
Publisher : International Monetary Fund
Page : 69 pages
File Size : 42,5 Mb
Release : 2015-04-30
Category : Business & Economics
ISBN : 9781475518375

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Tonga by International Monetary Fund. Asia and Pacific Dept Pdf

This 2015 Article IV Consultation highlights that Tonga’s economy is estimated to have grown by about 2 percent in FY2013/14 (year ending June) driven by agriculture and construction, following a contraction in 2012/13 mainly caused by the completion of a large capital project. The external position has strengthened, following large grants and remittance inflows, which have bolstered international reserves. Real GDP growth is expected to average 2–3 percent in FY2014/15–FY2019/20. Although the progress of reconstruction in the aftermath of 2014 Cyclone Ian is slower than expected, the coronation scheduled for July 2015 and preparations for the 2019 South Pacific Games will support economic activity over the next few years.

Central African Economic and Monetary Community (CEMAC)

International Monetary Fund. African Dept.
Central African Economic and Monetary Community CEMAC Book PDF

Author : International Monetary Fund. African Dept.
Publisher : International Monetary Fund
Page : 68 pages
File Size : 42,7 Mb
Release : 2014-08-26
Category : Business & Economics
ISBN : 9781498315685

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Central African Economic and Monetary Community (CEMAC) by International Monetary Fund. African Dept. Pdf

Regional growth weakened in 2013 due to a fall in oil production in most countries. GDP growth is expected to pick-up in 2014 due to the recovery of oil production and the continuation of the implementation of public investment plans in most of CEMAC countries. Despite large spending of oil wealth during the last years, poverty, income inequality and unemployment remain high. The business climate is one of the most challenging in Africa. The region’s most pressing challenge is to implement structural reforms to promote sustainable and inclusive growth while adopting macro policies to preserve financial stability, ensure an efficient use of oil revenues and increase resilience to shocks.

Zambia

International Monetary Fund
Zambia Book PDF

Author : International Monetary Fund
Publisher : International Monetary Fund
Page : 75 pages
File Size : 55,5 Mb
Release : 2012-07-26
Category : Business & Economics
ISBN : 9781475521535

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Zambia by International Monetary Fund Pdf

Despite Zambia's continued battle with poverty, the authorities have maintained sustained growth and macroeconomic stability during the past decade. 2011 showed robust GDP growth supported by agricultural activities and strong bank credit. But the Executive Board expressed concern over the risks arising from the volatility of copper prices and the delay in implementing measures required to meet the 2012 budget deficit target. Directors recommended strengthening the tax administration and reducing subsidies and incentives for achieving the fiscal targets.

Nigeria

International Monetary Fund
Nigeria Book PDF

Author : International Monetary Fund
Publisher : International Monetary Fund
Page : 80 pages
File Size : 53,5 Mb
Release : 2012-07-24
Category : Business & Economics
ISBN : 9781475536638

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Nigeria by International Monetary Fund Pdf

The Nigerian economy remained strong, with a non-oil real GDP of 8.3 percent and an overall real GDP of 6.7 percent. A modest fiscal consolidation took place in 2011 as a response to the substantial monetary tightening by the Central Bank of Nigeria and moderation of food prices. Banks showed continued improvement in financial stability. Executive Directors commended the authorities for countercyclical policies. However, they emphasized the need for policies that safeguard macroeconomic stability and ensure inclusive growth.

The Gambia

International Monetary Fund. African Dept.
The Gambia Book PDF

Author : International Monetary Fund. African Dept.
Publisher : International Monetary Fund
Page : 84 pages
File Size : 42,9 Mb
Release : 2013-09-18
Category : Business & Economics
ISBN : 9781484392072

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The Gambia by International Monetary Fund. African Dept. Pdf

This IMF Staff Report for the 2013 Article IV Consultation presents economic development and policies of Tthe Gambia. The IMF report shows that Tthe Gambia’s economy is picking up slowly from the past drought conditions. The Gambian Programme for Accelerated Growth and Employment (PAGE) emphasizes fiscal adjustment, together with infrastructure investment and structural reforms to support inclusive growth. Fiscal adjustment is needed to ease the heavy debt burden, arising mainly from domestic debt. Execution of the PAGE, supported by commitments from development partners, would help reduce poverty, especially in rural areas, given a strong focus on agriculture.