Resolving Nonperforming Loans In Sub Saharan Africa In The Aftermath Of The Covid 19 Crisis
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Resolving Nonperforming Loans in Sub-Saharan Africa in the Aftermath of the COVID-19 Crisis by Luc Eyraud,Irina Bunda,Jehann Jack,Mr. Tarak Jardak,Rasmane Ouedraogo (Economist),Zhangrui Wang,Torsten Wezel Pdf
Sub-Saharan African countries are facing an unprecedented health and economic crisis that is likely to severely hurt credit quality and raise non-performing loans from already high levels. Banks have a critical role to play not only during the crisis by providing temporarily relief to businesses and households, but also during the recovery by supporting economic activity and facilitating the structural transformations engaged by the pandemic.
COVID-19 and the Response of Central Banks by Salewa Olawoye Pdf
COVID-19 and the Response of Central Banks analyses the reactions of central banks to the COVID-19 crisis in Sub-Saharan Africa. It focuses on how the pandemic has affected the economic performance of Sub-Saharan African countries, many of which were already struggling with growth and sustainability. The first part of the book covers countries within monetary unions such as Cameroon, Congo, Senegal, and Cote d'Ivoire. In the second half, countries with their own independent central banks, The Democratic Republic of Congo, Nigeria, Ghana, and Sierra Leone, are discussed. Chapters highlights the differences between Monetary Union membership and independent Central Banks in policymaking during health crises and explore the role of central banking in minimizing the deleterious effects.
Africa's Pulse, No. 21, Spring 2020 by Cesar Calderon,Gerard Kambou,Calvin Zebaze Djiofack,Vijdan Korman,Megumi Kubota,Catalina Cantu Canales Pdf
The COVID-19 pandemic has taken a toll on human life and brought major disruption to economic activity across the world. Despite a late arrival, the COVID-19 virus has spread rapidly across Sub-Saharan Africa in recent weeks. Economic growth in Sub-Saharan Africa is projected to decline from 2.4 percent in 2019 to -2.1 to -5.1 percent in 2020, the first recession in the region in 25 years. The coronavirus is hitting the region’s three largest economies —Nigeria, South Africa, and Angola— in a context of persistently weak growth and investment. In particular, countries that depend on oil and mining exports would be hit the hardest. The negative impact of the COVID-19 crisis on household welfare would be equally dramatic. African policymakers need to develop a two-pronged strategy of “saving lives and protecting livelihoods.†? This strategy includes relief measures and recovery measures aimed at strengthening health systems, providing income support to workers and liquidity support to viable businesses. However, financing of these policies will be challenging amid deteriorating fiscal positions and heightened public debt vulnerabilities. Therefore, African countries will require financial assistance from their development partners -including COVID-19 related multilateral assistance and a debt service stand still with creditors.
How to Assess the Benefits of Nonperforming Loan Disposal in Sub-Saharan Africa Using a Simple Analytical Framework by Irina Bunda,Luc Eyraud,Zhangrui Wang Pdf
The coronavirus (COVID-19) crisis, which has hit financial systems across Africa, is likely to deteriorate banks’ balance sheets. The largest threat to banks pertains to their loan portfolios, since many borrowers have faced a sharp collapse in their income, and therefore have difficulty repaying their obligations as they come due. This could lead to a sharp increase in nonperforming loans (NPLs) in the short to medium term.
Author : World Bank Publisher : World Bank Publications Page : 405 pages File Size : 42,5 Mb Release : 2022-05-14 Category : Business & Economics ISBN : 9781464817311
The COVID-19 pandemic triggered the largest global economic crisis in more than a century. In 2020, economic activity contracted in 90 percent of countries, the world economy shrank by about 3 percent, and global poverty increased for the first time in a generation. Governments responded rapidly with fiscal, monetary, and financial policies that alleviated the worst immediate economic impacts of the crisis. Yet the world must still contend with the significant longer-term financial and economic risks caused by, or exacerbated by, the pandemic and the government responses needed to mitigate its effects. World Development Report 2022: Finance for an Equitable Recovery examines the central role of finance in the economic recovery from COVID-19. Based on an in-depth look at the consequences of the crisis most likely to affect low- and middle-income economies, it advocates a set of policies and measures to mitigate the interconnected economic risks stemming from the pandemic—risks that may become more acute as stimulus measures are withdrawn at both the domestic and global levels. Those policies include the efficient and transparent management of nonperforming loans to mitigate threats to financial stability, insolvency reforms to allow for the orderly reduction of unsustainable debts, innovations in risk management and lending models to ensure continued access to credit for households and businesses, and improvements in sovereign debt management to preserve the ability of governments to support an equitable recovery.
Nonperforming Loans in Sub-Saharan Africa by Hippolyte Fofack Pdf
"This paper investigates the leading causes of nonperforming loans during the economic and banking crises that affected a large number of countries in Sub-Saharan Africa in the 1990s. Empirical analysis shows a dramatic increase in these loans and extremely high credit risk, with significant differences between the CFA and non-CFA countries, and substantially higher financial costs for the latter sub-panel of countries. The results also highlight a strong causality between these loans and economic growth, real exchange rate appreciation, the real interest rate, net interest margins, and interbank loans consistent with the causality and econometric analysis, which reveal the significance of macroeconomic and microeconomic factors. The dramatic increase in these loans is largely driven by macroeconomic volatility and reflects the vulnerability of undiversified African economies, which remain heavily exposed to external shocks. Simulated results show that macroeconomic stability and economic growth are associated with a declining level of nonperforming loans; whereas adverse macroeconomic shocks coupled with higher cost of capital and lower interest margins are associated with a rising scope of nonperforming loans. These results are supported by long-term estimates of nonperforming loans derived from pseudo panel-based prediction models. "--World Bank web site.
The Financial Performance and Macrofinancial Implications of Large State-Owned Enterprises in Sub-Saharan Africa by Torsten Wezel,Naly Carvalho Pdf
Using a newly-compiled dataset of state-owned enterprises in Sub-Saharan Africa, we present aggregate information about profitability, liquidity and leverage. We find that 40 percent of the close to 300 surveyed SOEs are unprofitable, while larger firms also tend to be illiquid and overleveraged. In cross-sectional regressions we find that SOE debt stock sustainability is impacted by firms’ profitability and liquidity, while macroeconomic factors cannot be shown to matter, expect for some governance variables. Based on these findings and citing country examples, we also illustrate that weak SOE performance may have a macrofinancial impact affecting bank soundness through delinquent loan exposures.
West African Economic and Monetary Union by International Monetary Fund. African Dept. Pdf
After almost a decade of strong growth, the WAEMU region is facing severe challenges from a triple crisis impacting the health, economic and security situations. Both fiscal and monetary policies were relaxed significantly in 2020 to contain the pandemic and support the economy. A gradual fiscal consolidation is expected to start in 2021 and bring back the aggregate fiscal deficit towards the 3 percent of GDP regional ceiling within three years. Growth is expected to recover swiftly in 2021–22 to pre-crisis levels, but the economic outlook is still uncertain.
The Promise of Fintech by Ms.Ratna Sahay,Mr.Ulric Eriksson von Allmen,Ms.Amina Lahreche,Purva Khera,Ms.Sumiko Ogawa,Majid Bazarbash,Ms.Kimberly Beaton Pdf
Technology is changing the landscape of the financial sector, increasing access to financial services in profound ways. These changes have been in motion for several years, affecting nearly all countries in the world. During the COVID-19 pandemic, technology has created new opportunities for digital financial services to accelerate and enhance financial inclusion, amid social distancing and containment measures. At the same time, the risks emerging prior to COVID-19, as digital financial services developed, are becoming even more relevant.
Banking Efficiency and Financial Development in Sub-Saharan Africa by Sandrine Kablan Pdf
This study assesses the determinants of banking system efficiency in sub-Saharan Africa (SSA) and asks what, besides the degree of efficiency, explains the low level of financial development in the region. It uses stochastic frontier analysis to measure efficiency and a generalized method of moments system to explain financial development. SSA banks are found to be generally cost-efficient, but nonperforming loans undermine efficiency, which suggests that improvement in the regulatory and credit environments should improve efficiency. The political and the economic environment have held back financial development in SSA.
Author : Marito Garcia,Charity M. T. Moore Publisher : World Bank Publications Page : 441 pages File Size : 46,6 Mb Release : 2012-02-21 Category : Business & Economics ISBN : 9780821388983
The Cash Dividend by Marito Garcia,Charity M. T. Moore Pdf
This book provides in-depth descriptions and analysis of how cash transfer programs have evolved and been used in Sub-Saharan Africa since 2000. The analysis focuses on program features and implementation, but it also highlights political economy issues and current knowledge gaps.
Policy Actions for COVID-19 Economic Recovery by Ramesh Subramaniam,Alfredo Perdiguero,Jason Rush,Pamela Asis-Layugan Pdf
The Policy Actions for COVID-19 Economic Recovery (PACER) Dialogues were held from June to September 2020 as the coronavirus disease (COVID-19) pandemic accelerated around the world. They shared cutting-edge knowledge and best practices to help countries in Southeast Asia and the People's Republic of China strengthen cooperation to mitigate the devastating effects of COVID-19 and accelerate their economic recovery. This compendium of 13 policy briefs summarizes the discussions, recommendations, and actionable insights from the PACER Dialogues.
The Economic Impact of Conflicts and the Refugee Crisis in the Middle East and North Africa by Mr.Bjoern Rother,Ms.Gaelle Pierre,Davide Lombardo,Risto Herrala,Ms.Priscilla Toffano,Mr.Erik Roos,Mr.Allan G Auclair,Ms.Karina Manasseh Pdf
In recent decades, the Middle East and North Africa region (MENA) has experienced more frequent and severe conflicts than in any other region of the world, exacting a devastating human toll. The region now faces unprecedented challenges, including the emergence of violent non-state actors, significant destruction, and a refugee crisis bigger than any since World War II. This paper raises awareness of the economic costs of conflicts on the countries directly involved and on their neighbors. It argues that appropriate macroeconomic policies can help mitigate the impact of conflicts in the short term, and that fostering higher and more inclusive growth can help address some of the root causes of conflicts over the long term. The paper also highlights the crucial role of external partners, including the IMF, in helping MENA countries tackle these challenges.
International Monetary Fund. Monetary and Capital Markets Department
Author : International Monetary Fund. Monetary and Capital Markets Department Publisher : International Monetary Fund Page : 109 pages File Size : 49,7 Mb Release : 2019-10-16 Category : Business & Economics ISBN : 9781498324021
Global Financial Stability Report, October 2019 by International Monetary Fund. Monetary and Capital Markets Department Pdf
The October 2019 Global Financial Stability Report (GFSR) identifies the current key vulnerabilities in the global financial system as the rise in corporate debt burdens, increasing holdings of riskier and more illiquid assets by institutional investors, and growing reliance on external borrowing by emerging and frontier market economies. The report proposes that policymakers mitigate these risks through stricter supervisory and macroprudential oversight of firms, strengthened oversight and disclosure for institutional investors, and the implementation of prudent sovereign debt management practices and frameworks for emerging and frontier market economies.
Author : International Monetary Fund Publisher : International Monetary Fund Page : 92 pages File Size : 50,8 Mb Release : 2021-04-06 Category : Business & Economics ISBN : 9781513569673
Global Financial Stability Report, April 2021 by International Monetary Fund Pdf
Extraordinary policy measures have eased financial conditions and supported the economy, helping to contain financial stability risks. Chapter 1 warns that there is a pressing need to act to avoid a legacy of vulnerabilities while avoiding a broad tightening of financial conditions. Actions taken during the pandemic may have unintended consequences such as stretched valuations and rising financial vulnerabilities. The recovery is also expected to be asynchronous and divergent between advanced and emerging market economies. Given large external financing needs, several emerging markets face challenges, especially if a persistent rise in US rates brings about a repricing of risk and tighter financial conditions. The corporate sector in many countries is emerging from the pandemic overindebted, with notable differences depending on firm size and sector. Concerns about the credit quality of hard-hit borrowers and profitability are likely to weigh on the risk appetite of banks. Chapter 2 studies leverage in the nonfinancial private sector before and during the COVID-19 crisis, pointing out that policymakers face a trade-off between boosting growth in the short term by facilitating an easing of financial conditions and containing future downside risks. This trade-off may be amplified by the existing high and rapidly building leverage, increasing downside risks to future growth. The appropriate timing for deployment of macroprudential tools should be country-specific, depending on the pace of recovery, vulnerabilities, and policy tools available. Chapter 3 turns to the impact of the COVID-19 crisis on the commercial real estate sector. While there is little evidence of large price misalignments at the onset of the pandemic, signs of overvaluation have now emerged in some economies. Misalignments in commercial real estate prices, especially if they interact with other vulnerabilities, increase downside risks to future growth due to the possibility of sharp price corrections.