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The paper assesses the economic impact of the IMF’s support through its facilities for LICs.

The new Staff Guidance Note incorporates changes to the framework approved by the IMF and IDA Boards in February 2012. These include revised thresholds for public and publicly guaranteed external debt; new benchmarks for total public debt; revised guidance on incorporating remittances; a “probability approach” that uses country-specific information; and a new assessment of the overall risk of debt distress.

Most LICs have demonstrated significant resilience but vulnerabilities remain in some small states, oil exporters and fragile states. The main challenge for LICs is to take advantage of solid growth to strengthen buffers against shocks and advance policies to sustain more inclusive growth over the longer term.

An IMF/ Ministry of Finance of the Bahamas Conference discussed measures to restore growth and competitiveness and address macroeconomic imbalances and financial weaknesses in the Caribbean.

Fund teams are applying new macro-fiscal frameworks and policy analysis tools to enhance policy advice in several resource-rich developing countries. Recent applications include Angola, Azerbaijan, Gabon, Ghana, Iraq, Kazakhstan, Mozambique, Turkmenistan.

 

The distribution of remaining gold sales profits to the Poverty Reduction and Growth Trust has come into effect, making its low-income lending sustainable over the longer term.

The Fund and Bank have reformed and unified the discount rates used in external debt analysis for LICs. Set at 5 percent, the new unified discount rate will remain in effect until the next review of the debt sustainability framework for LICs.

Annual Meetings Seminars (Video Links)
  • Forsaw that while Frontier Economies have weathered recent financial market turmoil well, the road ahead will be bumpy with the unwinding of unconventional monetary policies, spillovers from slowing EMs, and lower commodity prices.

  • Discussed challenges of exiting fragility, how donors can flexibly tailor aid and policy advice to harsh on-the-ground realities, and showcased two gripping fragile countries–Somalia and South Sudan.

  • Recognized that good-quality data is essential for sound policymaking, data remains weak and progress in strengthening SSA data has been uneven.
Upcoming: “Africa Rising” Conference
The Government of Mozambique and the IMF will convene a high-level conference in Maputo on May 29-30, 2014 to take stock of Africa’s sustained strong economic performance, its increased resilience to shocks, and the critical economic challenges facing the continent. This will be preceded by an April 2014 academic conference in Washington.

 






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