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Mid- to senior- level officials from central banks and government agencies involved in the design and execution of policies that have an impact on the soundness of their country's external position.
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Participants are expected to have an advanced degree in economics or equivalent experience.
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This course will focus on the international experience with capital account liberalization and external vulnerability issues relevant to China.
This two-week course, presented by the IMF Institute, aims to broaden participants' understanding of external sector vulnerabilities. Drawing in part upon the latest work of the Fund, the course aims to provide participants with a comprehensive set of analytical tools for assessing these vulnerabilities and various policy responses. The skills developed during the course allow participants to inform a wide range of policies, notably those that pertain to external debt and foreign reserve management, capital account liberalization, and the management of foreign aid flows. Participants are expected to make presentations on a specific aspect of external vulnerabilities based on their country experiences.
The course is articulated in three sequential steps:
- First, the course discusses the `traditional' approach to analyzing the viability of external imbalances. The focus is on current account sustainability, the current account position and structure of the underlying financing, the linkages between the current account and external debt dynamics, and vulnerabilities related to current account shocks. In this regard, the course examines the Fund's external debt sustainability framework and provides an overview of the operational indicators used to assess external vulnerabilities. In addition, the unsustainability of current account positions as an underlying cause of external crises is analyzed.
- Second, the course stresses that assessing external vulnerabilities cannot be limited to current account analysis alone since external crises may also occur because of stock imbalances and capital market factors. Thus, the balance sheet approach with its emphasis on the role of shocks to stocks of assets and liabilities in triggering large adjustments in capital flows is presented as a complement to the traditional flow-analysis. In this context, lessons from recent capital account crises are discussed.
- Finally, the course addresses the vulnerabilities associated with certain macroeconomic policies of relevance to African countries. In particular, it examines the vulnerabilities linked to capital account liberalization as well as arguments in favor of a gradualist approach. In addition, it analyzes the vulnerabilities that a scaling-up of foreign aid could produce. Thus, the potential hazard of aid-induced Dutch disease, the volatility and unpredictability of aid, and the macroeconomic impact of different categories of aid-financed spending are discussed.
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