Tolstoy & Billionaires: Overheard at the IMF’s Spring Meetings

By iMFdirect editors

All happy countries are alike; each unhappy country is unhappy in its own way.

This twist on Tolstoy’s Anna Karenina echoed through the seminars during the IMF’s Spring Meetings as most countries, while recovering, are struggling with the prospect of lower potential growth and the “new mediocre” becoming a “new reality.”

Our editors fanned out to cover what officials and civil society had to say about how to help countries pave their own path to happiness.

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Fiscal Impact of Lower Oil Prices on Latin America and the Caribbean

By Robert Rennhack and Fabián Valencia

(Versions in Español and Português)

The plunge in world oil prices—from $105 to about $50 per barrel since mid-2014—has been a boon for oil-importing countries, while presenting challenges for oil exporters.

In general, oil importers will enjoy faster growth, lower inflation, and stronger external positions, and most will not encounter any significant fiscal pressures. Oil exporters will tend to face slower growth and weaker external current account balances and some will run into fiscal pressures, since many rely on direct oil-related revenues. One country that stands out is Venezuela, which had been experiencing severe economic imbalances before oil prices began to fall and now finds itself in an even more precarious position.

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Subsidies—Love Them or Hate Them, It’s Better to Target Them

For decades, countries in the Middle East and North Africa have relied heavily on food and fuel price subsidies as a form of social protection. And, understandably, governments have recently raised subsidies in response to hikes in global commodity prices and regional political developments. Like many things, there may be a time and a place for using subsidies. But, they need to be better targeted. And, often, there will be better alternatives. Alternatives that do a better job of protecting the poor. Subsidies enjoyed by all are typically poorly targeted, so they are not the most cost-effective way to provide social protection. They really should be regarded as stop-gap measures. But, better targeting subsidies or replacing them with more effective social safety nets is a complex process, so buy-in from the public is crucial to success.

By | May 10th, 2011|Economic outlook, International Monetary Fund, Middle East|

Confessions of a Dismal Scientist—Africa’s Resilience

Like many economists, I tend to fear the worst. I have witnessed phenomenal changes for the better in sub-Saharan Africa over the past 20 odd years. Part of me still worries that this trajectory will not endure. But, the more I see of the region’s economic performance and outlook, the more I’m changing my tune. Good macroeconomic policies in many more countries the years before the crisis put them in good stead to weather the crisis relatively well. As we report in our latest Regional Economic Outlook, output in sub-Saharan Africa looks set to expand by around 5½ this year and 6 percent in 2012. My latest worry is the recent sharp increase in food and fuel prices on world markets. To help minimize the dislocation that this shock may entail, countries should consider a two-pronged policy response.

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