The International Monetary Fund is looking at sovereign debt restructuring, worried that it is bailing out private creditors. Gabriel Sterne, an economist at Exotix, explains to Fast FT deputy editor Robin Wigglesworth why the proposal for automatic bail-ins would not be wise.
Anyone reading the IMF’s latest update to its World Economic Outlook might come away worried about a repeat of the emerging market ructions in 2013 over the US scaling back its asset buying programme (aka tapering).
The Fund says that the world economy is “Not yet out of the woods”, and suggests that, for EMs, once the US Federal Reserve starts tapering in 2014, “portfolio shifts and some capital outflows are likely.” Continue reading »
Lagarde with Henry Rotich, Kenyan finance minister
IMF boss Christine Lagarde concludes a trip to Africa trip on Friday, continuing her tradition of starting the new year visiting one of the world’s fastest growing continents. For 2014, she chose Kenya and Mali, two very different economies on either side of Africa. Continue reading »
Another week, another barrage of criticism for Thailand’s massive rice subsidy scheme.
This time the attack on a programme that is costing the government billions of dollars a year and adding to worries about the country’s economy is delivered diplomatically, but none the less forcefully, by the International Monetary Fund. Continue reading »
Indonesia, the Philippines, Malaysia and Thailand are on the face of it a relatively homogeneous, integrated group of nations with similar trading partners. So why did the first two emerge from the 2008 financial crisis in a much better shape than the latter?
A working paper from the IMF concludes that it was because Indonesia and the Philippines were less open to trade and had greater fiscal stimuli. Continue reading »
The IMF may have outlined the risks to sub-Saharan Africa from tighter monetary policy in the US and other shocks (read the FT’s Javier Blas for the full story) – but as the report makes clear, it’s not just the US that has an impact on Africa’s fortunes.
There’s China too, of course. In a section titled Africa’s Rising Exposure to China: How Large Are Spillovers through Trade?, the Fund looks to quantify and group the countries most exposed to a China slowdown. Continue reading »
A landmark deal with Kosovo, a $3bn loan package from a new Emirati ally, a high-profile anti-corruption drive: Serbia has been filled with a new boldness in recent times.
It continued on Friday as the National Bank of Serbia cut its policy interest rate by half a point to 10.5 per cent, more than the expected quarter-point cut. The bank had held steady for the previous three months following reductions totalling 75 bp in May and June, as inflation fell from double figures. Continue reading »
By Dalibor Rohac of the Cato Institute
In the weeks leading to the Annual Meetings of the International Monetary Fund (IMF) and the World Bank last weekend, Christine Lagarde, the managing director of the Fund, has been making a lot of headlines. She announced that the IMF would push for more gender equality in labour markets around the world, suggested that the IMF could help protect the planet from environmental damage by promoting reforms of energy subsidies, and urged European countries to move towards a fiscal union in order to help eurozone limit the severity of future financial crises.
That is a lot of ground to cover. While each of these proposals should be discussed on its own merit, jointly they are symptomatic of the spectacular mission creep that characterises the past 40 years of the organisation’s existence. Continue reading »
Sri Lanka watched nervously as India’s rupee plunged, not least because it too suffers from the high current account and fiscal deficit mixture that turned investors sour on its larger neighbour.
Now India’s currency is recovering, and Sri Lanka seems emboldened too, as its central bank today shunned IMF advice and surprised forecasters by cutting rates by half a percentage point. But is it a cut too far? Continue reading »
The IMF’s World Economic Outlook caused a bit of a stir this week, given the gloomy outlook for emerging economies.
But within the Fund’s number crunching a few things were a little overlooked. Such as the rather drastic revisions to some GDP forecasts from the previous April outlook. Look away Libya, hello Turkmenistan. Even some major EMs got a significant downward shift. Chart of the week takes a look at the difference 6 months can make. Continue reading »
The IMF’s latest World Economic Outlook makes pretty grim reading for emerging markets. The Fund has cut half a percentage point from its projection for overall EM growth for 2013, and 0.4 percentage points off its 2014 forecast – they are now 4.5 and 5.1 per cent, respectively.
And it’s not all China. The big downward revisions for 2013 are India (-1.8 percentage points), Mexico (-1.7), and Russia (-1.0). But the real meat of the IMF’s report is a big section entitled “What Explains the Slowdown in the BRICS?”. The answer isn’t very pretty. Continue reading »
Should South Africa have a debt ceiling? The question was raised in a report earlier in October by the IMF, which suggested that the country might want to put one in place as its fiscal position deteriorates.
But in London on Tuesday, South African finance minister Pravin Gordhan dismissed the idea, suggesting that the Fund was barking up the wrong tree. Continue reading »
Too much public spending, excessive reliance on domestic demand and loose monetary policy – the International Monetary Fund has made clear its concerns about Turkey in some of its harshest criticism of the country in recent years. Continue reading »
Here to help
Serbs are justly proud of their hospitality. Traditionally, guests – whether old friends or new – are welcomed into the home and treated to limitless coffee, or meze and lashings of potent homemade slivovitz. Serbia’s latest guests this week, from the IMF, are as much old sparring partners as friends, but no doubt will receive a particularly warm welcome. For the country needs a new deal with the Fund to underpin its fledgling economic revival. Continue reading »
By Gerardo Rodriguez of BlackRock
Investing in emerging markets has never been boring. Recent market volatility has spawned various comments on the future of the asset class as a whole. Stronger fundamentals have made emerging markets more resilient and safer places to invest. But the challenging external environment and imminent tapering by the Fed is exposing some of the weak spots of EMs. The adjustment of relative prices is a necessary condition for the rebalancing that is required. However, there are risks that the correction goes too far and the asset class falls into a vicious cycle. Continue reading »