## Macroeconomic Research in Low-Income Countries (MRLIC) — DFID‑IMF Annual Review (April 2018 – March 2019) ## Source details **Canonical URL:** [Macroeconomic Research in Low-Income Countries (MRLIC) — DFID‑IMF Annual Review (April 2018 – March 2019)](https://www.imf.org/-/media/files/topics/lics/macro-research-for-development/annual-reports/dfid-ar-june2019.pdf) ## Other formats - [Markdown version](/-/media/files/topics/lics/macro-research-for-development/annual-reports/dfid-ar-june2019.pdf.md) - [Structured JSON version](/-/media/files/topics/lics/macro-research-for-development/annual-reports/dfid-ar-june2019.pdf.json) --- ### Research production and dissemination - Indicator 1.1 — Working papers (WPs) produced: - By March 2019 targets: H (105 papers), M (97 papers), L (89 papers) - Achieved: 113 cumulative (109% of high target) - 19 produced in 2018/19 - MRLIC produced 19 WPs in the past year, bringing the total to 113 over the programme to date; exceeds high target (105) and expected number for 2018/19 (15). - IMF Working Papers series ranking: ranked number 20 in IDEAS/RePEc Aggregate Rankings for Working Paper Series. - WPs this year cover all five MRLIC themes: Modelling and understanding policy choices; Understanding macro-financial linkages; Building resilience; Promoting structural change and institutional development; Enhancing inclusion. - Representative WPs (authors, year, WP number) include: - Gurara, Melina, Zanna, (2019), Some Policy Lessons from Country Applications of the DIG and DIGNAR Models, WP number 19/62. - Narita, Yin, (2018), In Search of Information: Use of Google Trends’ Data to Narrow Information Gaps for Low-income Developing Countries, WP number 18/286. - Broccolini et al., (2019), Mobilization Effects of Multilateral Development Banks, WP number 19/28. - Kpodar, Le Goff, Singh, (2019), Financial Deepening, Terms of Trade Shocks, and Growth Volatility in Low-Income Countries, WP number 19/68. - Atolia et al., (2018), Optimal Control of a Global Model of Climate Change with Adaptation and Mitigation, WP number 18/270. - Furceri et al., (2019), Macroeconomic Consequences of Tariffs, WP number 19/9. - Furceri, Loungani, Ostry, (2018), The Aggregate and Distributional Effects of Financial Globalization: Evidence from Macro and Sectoral Data, WP number 18/83. - Imam, Kpodar, (2019), Does an Inclusive Citizenship Law Promote Economic Development?, WP number 19/3. - Woldemichael, Gurara, Shimeles, (2019), The Impact of Community Based Health Insurance Schemes on Out-of-Pocket Healthcare Spending: Evidence from Rwanda, WP number 19/38. - Peralta-Alva et al., (2018), The Macroeconomic and Distributional Implications of Fiscal Consolidations in Low-income Countries, WP number 18/146. - Indicator 1.2 — Peer-reviewed published papers: - By March 2019 targets: H (51 papers), M (47 papers), L (43 papers) - Achieved: 58 published in total (114% of high target) - 10 published in 2018/19 - Papers accepted/published in outlets including Journal of Development Economics, Economica, International Journal of Forecasting, World Development, Oxford Review of Economic Policy, Journal of Economic Literature (forthcoming). - Note: acceptance rate context for top economics journals: 3% – 8%; JDE acceptance rate noted as 8%. - Indicator 1.3 — Freely available books: - By March 2019 targets: H (2 books), M (2 books), L (2 books) - Achieved: 2 books in total - One book published in 2018/19: Confronting Inequality: How Societies Can Choose Inclusive Growth — based on MRLIC research but not freely available and therefore does not count toward indicator 1.3. - Dissemination outputs and reach: - Four quarterly newsletters in the year; cumulative newsletters: 26 (meets high target). - Distribution network: over 1500 academics, policymakers, central bank staff, and government representatives. - Conference presentations by MRLIC team in past year: 22 (expectation: 10 conferences per year); cumulative conference presentations: 108 (substantially exceeds high target). - E-newsletter and web-page updates: 26 cumulative (meets high target); 4 in 2018/19. - Additional channels: blogs, IMF news articles, Finance and Development, IMF Research Bulletin, IMF twitter feed (examples: #imfcapdev, #women4growth, #imfgender), IMF intranet, VoXEU. ### Policy influence, events, and engagement - High-level policy conferences (Indicator 3.1): - By March 2019 targets: H (30), M (28), L (26) - Achieved: 36 cumulative (120% of high target) - 6 conferences in 2018/19 - Key finding: high-level conference engagement substantially exceeded targets; strong external researcher attendance. - Attendance of external researchers at high-level policy conferences (Indicator 4.2): - By March 2019 targets: H (71), M (66), L (60) - Achieved: 108 cumulative (152% of high target) - 22 in 2018/19 - IMF Board discussions (Indicator 3.2): - By March 2019 targets: H (15), M (14), L (13) - Achieved: 18 cumulative (120% of high target) - 2 in 2018/19 - MRLIC research was reflected in two IMF Board papers in the year; examples: - Board paper on resilience in countries vulnerable to natural disasters: MRLIC provided analytical framework and stylized facts on macroeconomic impacts. - Board discussions on the IMF’s social spending strategy drew heavily on MRLIC research (inequality model; fuel subsidy analysis). - IMF policy papers (Indicator 3.3): - By March 2019 targets: H (27), M (25), L (23) - Achieved: 36 cumulative (133% of high target) - 7 in 2018/19 - MRLIC reflected in five other IMF publications and policy papers in the year, including staff discussion notes on gender inclusion and youth labour markets, and contributions to the April 2018 AFR REO. ### Output scoring and capacity building (Output 4) - Overall output score: A+ (Output number per LF: 4; Impact weighting: 15%) - One indicator substantially exceeds the high target, two indicators meet the high target, and one indicator meets the medium target. - Indicator 4.1 — Commissioned papers from new researchers: - By March 2019 targets: H (28), M (26), L (24) - Achieved: 26 cumulative (meets medium target) - 1 in 2018/19 - Three papers commissioned from external researchers and delivered in past year; all accepted for publication in forthcoming Open Economy Review volume. Trend in commissioned papers: seven, five, three in past three years. - Only one of the three papers fits the indicator’s definition of “new” researchers. - Indicator 4.1.1 — Data and toolkits: - By March 2019 targets: H (8), M (7), L (6) - Achieved: 8 cumulative (meets high target) - 2 in 2018/19 - Major revision to the inequality toolkit; being applied in IMF surveillance (Article IV reports on Benin, Cambodia, Senegal). ### Dataset: Commodity Terms of Trade - Main features: - Comprehensive database of country-specific commodity price indices for 182 countries covering 1962-2018. - For each country, changes in international prices of up to 45 individual commodities are weighted using commodity-level trade data. - Produces commodity terms-of-trade index, commodity export price indices, and commodity import price indices. - Alternative weighting schemes: fixed weights and time-varying weights. - Uses: - Research impacts of international price changes on growth, development, cost of credit, asset prices, and macroeconomic policy responses to external price shocks. - Source authors cited: Bertrand Gruss and Suhaib Kebhaj (IMF). ### Selected empirical findings from MRLIC outputs (high-level summaries) - Productivity and infrastructure: - "Losing to Blackouts" (Ethiopia): power disruptions cause productivity losses of about 4–10 percent on average; higher losses for higher-quantile firms; systematic shutdown patterns documented (Daniel Gurara and Dawit Tessema). - Financial globalization and distribution: - Financial globalization yields limited average output gains and significant increases in inequality; effects heterogeneous by financial depth and crisis incidence (Davide Furceri, Prakash Loungani, Jonathan David Ostry). - Financial inclusion and microcredit: - Large-scale microcredit expansion increased access to credit, particularly in less developed areas; many first-time borrowers switch to commercial banks for larger, cheaper loans; microfinance plus credit-reference systems mitigate information frictions (Sumit Agarwal et al.). - Citizenship law and development: - Jus soli (inclusive citizenship) associated with higher income levels in developing countries, less so where institutions are stronger (Patrick A. Imam and Kangni R Kpodar). - Community-based health insurance (Rwanda): - Scheme reduces annual per capita out-of-pocket spending by about 3,600 Rwandan Franc (about US$12), about 83 percent of average per capita healthcare expenditure in 2000; distributional impact favors the rich; reduces incidence of catastrophic spending (Andinet Woldemichael et al.). - Fiscal consolidation distributional effects: - VAT has least efficiency cost but is highly regressive; PIT is less regressive but has higher efficiency costs; cash transfers to rural households mitigate VAT regressivity most effectively (Adrian Peralta-Alva et al.). - Natural disasters and resilience: - DIG/DIGNAR and dynamic general equilibrium applications show both structural protection and financial protection reduce output loss from natural disasters; trade-offs depend on public investment efficiency and liquidity constraints (Alessandro Cantelmo et al.; Manoj Atolia et al.). ### Country applications and capacity building - DIG model applications and country uptake: - Cameroon DIG application presented at Third Review under the Extended Credit Facility (ECF) in Yaoundé (Nov 6-9, 2018); findings: removing public investment inefficiencies and prioritizing high-return projects raises growth and lowers debt risks; risks from reliance on non-concessional financing highlighted; results to appear in annex to forthcoming Fourth Review under ECF. - DIG featured in Article IV consultations for St. Lucia, Bolivia, and Cameroon; IPSI pilot outcomes disseminated. - Monetary policy frameworks (FPAS): - FPAS and DIG models used in Article IV consultations and capacity-building in Uganda, Tanzania, Mozambique, St. Lucia, Cameroon, Malawi, Rwanda, and Bank of Uganda/Bank of Tanzania institutional reforms. - Training and courses: multiple regional and country-level trainings including a three-day course for National Bank of Rwanda on micro-applied economics topics. - Gender and inclusion: - MRLIC gender work informed G7 background note "Pursuing Women’s Economic Empowerment", IMF Staff Discussion Notes, Article IV applications (Nigeria and Senegal), and peer-learning events; applied in workshops and policy advice. ### Value for Money, costs, and productivity (seven-year summary) - Cost and output statistics (seven years): - Total Staff/Contractual/VS Costs: $12,836,063 - Research Paper Costs: $9,627,047 - Country Applications Costs: $3,209,016 - Working Papers: 139 (Produced: 114; Commissioned: 25) - Cost Per Working Paper: $69,259 - Published Papers: 61 (Produced: 58; Commissioned: 3) - Cost per Published Paper: $157,820 (reporting elsewhere shows $163,170 in Table 5; source tables report both $157,820 and $163,170 in different sections) - As of April 2019, $18.9m drawn down from the subaccount. - Indicative spending Years 1–7 (totals): - HQ led missions including entire mission team: $6,704,226 - Short-term Advisors - CD delivery: $510,562 - Research HQ based/Visiting Scholars: $5,621,275 - Seminars & Study Tours: $1,653,185 - Project Backstopping: $2,703,574 - Project Management: $198,055 - Exceptional Expenses: $261,052 - Language Services: $1,348 - Trust Fund Fee: $1,235,730 - TOTAL: $18,889,017 - Value-for-money conclusions: - Unit cost of just over $69,000 per working paper substantially lower than Business Case planned unit cost ($193,600 per IMF programme paper; $288,000 next best option). - MRLIC products received 804 citations to date; more than 60% from researchers outside the Fund. - MRLIC work in “applied economics” and “econometrics” cited three times more than average in these fields. - Total downloads of MRLIC IMF Working Papers exceeded 75,000 (approximately 650 downloads per paper). - MRLIC judged to represent excellent value for money; recommendation to continue funding. ### Risks, monitoring, and governance - Overall risk rating: Minor (each risk category rated Minor). - Emerging delivery risk: change in IMF accounting processes requiring recovery of information technology service costs increases per-unit staffing cost slightly (about $3 per hour implication); recommendation: DFID and IMF teams discuss implications before end July 2019. - Monitoring mechanisms: - Staff reports tracking use of MRLIC products in country analysis; training records; internal communications; three-month “forward look” shared with DFID quarterly; DFID monitors via approximately quarterly calls. - Impact and reach metrics (up to March 2019): - 150 MRLIC products received over 800 citations; more than 60% from outside the IMF. - Total downloads exceeded 75,000 (roughly 650+ downloads per paper). - Example social media reach: one paper was tweeted/retweeted by users with total of 226,000 followers (preliminary analysis). - Training HQ satisfaction: average rating 4.6 out of 5. ### Lessons identified and recommendations - Cross-cutting lessons: - Strong research production and uptake, but drop in MRLIC analysis use at IMF Board level despite large body of research. - Commissioning process and external researcher engagement need revisiting to ensure targets capture value from new collaborators. - Continued need to track dissemination metrics (views, downloads) — monitoring system reported complete. - Budget shifts (Phase 3 lower by 37% vs Phase 2) prompted delivery adjustments: more use of research assistants, selective visiting scholars, and cost-sharing. - Specific recommendations (selected): - IMF and DFID should agree format and dissemination plan for synthesis products and organise a stocktaking conference to disseminate MRLIC outcomes to policy and academic audiences (stocktaking conference planned for March 2020). - Establish a programme advisory committee (IMF, DFID, senior external advisors) to advise on policy relevance and future work. - Review logframe targets (indicators 1.1, 1.2, 1.3, 4.1, 4.1.1, 4.2) in IMF-DFID logframe discussion by end July 2019 to assess appropriateness given overachievements and small-number indicators. - MRLIC team and DFID should discuss reasons for lower Board-level use, whether senior buy-in would be beneficial, and plan to ensure research influences highest Fund levels. - Continue allocating some resources for hosting external researchers to maintain research quality and programme profile; retain selective external engagement via conferences and workshops. - MRLIC and DFID to consider long-term plan for toolkit/model uptake given quality-control constraints when MRLIC staff deliver most analyses. ### Theory of Change, workplan, and planned synthesis - Implicit Theory of Change (logical framework): - OUTPUT 1: High quality, policy relevant research on macroeconomic issues affecting LICs produced. - OUTPUT 2: IMF research products used by IMF country teams and partner authorities. - OUTPUT 3: Engagement by senior IMF policymakers on LIC issues strengthened. - OUTPUT 4: IMF strengthens research capacity by expanding researcher/policymaker networks. - OUTCOME: Better engagement by IMF policymakers on LIC-specific macroeconomic issues. - IMPACT: Better macroeconomic policymaking in LICs leading to faster economic growth, job creation and poverty reduction. - Workplan highlights and synthesis products: - Five planned synthesis briefs: debt-investment-growth; monetary policy; inequality; gender; economic diversification. - Stocktaking conference objectives: review eight-year experience and present five synthesis products; conference timing/location noted in workplan. - Major thematic priorities and planned activities across: Modelling and policy choices; Understanding macro-financial linkages; Promoting structural change; Enhancing inclusion; Building resilience. - Project duration: began March 2012 and concludes March 2020 (Phase I: March 2012–March 2015; Phase II: April 2015–March 2017; Phase III: April 2017–March 2020). - Approved project budget noted as US$23.3 million in project summary. *Source: Macroeconomic Research in Low-Income Countries: A DFID/IMF Research Partnership — Seventh Year Annual Report to DFID (for period April 2018 – March 2019), Prepared by the Staff of the Research and Strategy, Policy and Review Departments, July 3, 2019.* ### 1.1 Number of priority research ### 1.1 Number of priority research ### Scope and topics - Research covered the following priority topics: 1) Monetary and exchange rate policies; 2) Public investment, growth, and debt sustainability; 3) Macroeconomic management of natural resources; 4) Macroeconomic policies and income distribution; 5) Financial deepening for macroeconomic stability and sustained growth; 6) Growth through diversification; 7) Gender and macroeconomics; 8) Capital flows. ### Indicator 1.1 — Working papers (WPs) produced - By March 2019: H (105 papers) M (97 papers) L (89 papers) A+ - 113 cumulative (109% of high target) - 19 produced in 2018/19 - MRLIC produced 19 WPs in the past year, bringing the total to 113 over the programme to date; this exceeds the high target (105) and the expected number for 2018/19 (15). - IMF Working Papers series ranking: IMF WPs are ranked number 20 in IDEAS/RePEc Aggregate Rankings for Working Paper Series. - WPs produced in the past year cover all five MRLIC themes (Modelling and understanding policy choices; Understanding macro-financial linkages; Building resilience; Promoting structural change and institutional development; Enhancing inclusion). - Representative WPs (authors, year, title fragment, WP numbers): - Gurara, Melina, Zanna, (2019), Some Policy Lessons from Country Applications of the DIG and DIGNAR Models, WP number 19/62. - Narita, Yin, (2018), In Search of Information: Use of Google Trends’ Data to Narrow Information Gaps for Low-income Developing Countries, WP number 18/286. - Broccolini et al., (2019), Mobilization Effects of Multilateral Development Banks, WP number 19/28. - Kpodar, Le Goff, Singh, (2019), Financial Deepening, Terms of Trade Shocks, and Growth Volatility in Low-Income Countries, WP number 19/68. - Atolia et al., (2018), Optimal Control of a Global Model of Climate Change with Adaptation and Mitigation, WP number 18/270. - Furceri et al., (2019), Macroeconomic Consequences of Tariffs, WP number 19/9. - Furceri, Loungani, Ostry, (2018), The Aggregate and Distributional Effects of Financial Globalization: Evidence from Macro and Sectoral Data, WP number 18/83. - Imam, Kpodar, (2019), Does an Inclusive Citizenship Law Promote Economic Development?, WP number 19/3. - Woldemichael, Gurara, Shimeles, (2019), The Impact of Community Based Health Insurance Schemes on Out-of-Pocket Healthcare Spending: Evidence from Rwanda, WP number 19/38. - Peralta-Alva et al., (2018), The Macroeconomic and Distributional Implications of Fiscal Consolidations in Low-income Countries, WP number 18/146. ### Indicator 1.2 — Peer-reviewed published papers - By March 2019: H (51 papers) M (47 papers) L (43 papers) A+ - 58 published in total (114% of high target) - 10 published in 2018/19 - MRLIC had 10 papers accepted for publication in peer-reviewed journals in the year, bringing the programme total to 58, exceeding the cumulative high target of 51 and the expected annual figure of seven. - Papers in high-quality journals include Journal of Development Economics (JDE), Economica, International Journal of Forecasting, World Development, Oxford Review of Economic Policy, Journal of Economic Literature (forthcoming). - Representative published/accepted papers (authors, year, outlet or status): - Gurara et al., (2018), Trends and Challenges in Infrastructure Investment in Developing Countries, International Development Policy, 10.1, 2018. - Berg et al., (2018), Some Misconceptions About Public Investment Efficiency and Growth, Economica, vol. 86, pp. 409-430. - An et al., (2019), Do IMF forecasts respect Okun’s law? Evidence for advanced and developing economies, International Journal of Forecasting, vol. 35, pp. 1131-1142. - Abuka et al., (2019), Monetary Policy and Bank Lending in Developing Countries: Loan Applications, Rates, and Real Effects, Journal of Development Economics, vol. 139, pp. 185-202. - Marto, Papageorgiou, Kluyev, (2018), Building resilience to natural disasters: An application to small developing states, Journal of Development Economics, vol. 135, pp. 574-586. - Amendolagine et al., (2019), Local sourcing in developing countries: The role of foreign direct investments and global value chains, World Development, vol. 113, pp. 73-88. - Furceri, Ostry, Robust Drivers of Income Inequality, Oxford Review of Economic Policy, forthcoming. - Johnson, Papageorgiou, What Remains of Cross-Country Convergence?, Journal of Economic Literature, forthcoming. - Context on top-journal acceptance rates noted: acceptance rate for top economics journals is 3% – 8%, and for JDE it is 8%. ### Indicator 1.3 — Freely available books - By March 2019: H (2 books) M (2 books) L (2 books) A - 2 books in total - (The one book published in 2018/19 is not freely available) - One book published in 2018/19: Confronting Inequality: How Societies Can Choose Inclusive Growth. It is based on MRLIC research but is not freely available and therefore does not count towards indicator 1.3. ### Lessons identified and recommendations linked to research outputs - Recommendation 1: - IMF and DFID should agree the format and dissemination plan for synthesis products summarising key MRLIC research themes, including organising a stocktaking conference (currently planned for March 2020) to disseminate MRLIC research outcomes to policy and academic audiences and shape future LIC macroeconomic research priorities. - Recommendation 2: - Establish a programme advisory committee (IMF, DFID, and senior external advisors from academia and thinktanks) to advise on policy relevance of research and suggest future work and collaboration opportunities. - Recommendation 3 (to be included in IMF-DFID logframe discussion by end July 2019): - Review targets for 1.1 and 1.2 to assess appropriateness of increasing targets for 2019/20 to account for overachievements. - Review 1.3 to assess likelihood of producing freely available books. - Review targets under 1.3 to assess whether low/medium/high is appropriate for an indicator with a small number of outputs. *Source: DFID-IMF MRLIC annual report figures and analysis, by March 2019.* ### 3.1 High level policy conferences ### 3.1 High level policy conferences ### High-level policy conferences drawing on project outputs - By March 2019, number of policy conferences drawing on outputs from the project: - H (30) - M (28) - L (26) - A++ - 36 cumulative (120% of high target) - 6 in 2018/19 ### Attendance of external researchers and policy makers at high-level policy conferences (Indicator 4.2) - By March 2019, number of high-level policy conferences attended by external researchers: - H (71) - M (66) - L (60) - A++ - 108 (cumulative) (152% of high target) - 22 in 2018/19 ### Dissemination (Indicator 4.3) - Project outputs disseminated in e-newsletter and up-dated public web-page and R4D (DFID web portal). Number of updates of e-newsletter and/or web-page: - By March 2019, number of up-dates: - H (26) - M (24) - L (22) - A+ - 26 (cumulative) (Meets high target) - 4 in 2018/19 ### Key finding - High-level conference engagement substantially exceeded targets, with 36 conferences citing project outputs (120% of high target) and strong external researcher attendance (108 cumulative; 152% of high target). --- ### 3.2 IMF Board discussions ### Indicator 3.2: IMF Board discussions - By March 2019: - H (15) - M (14) - L (13) - A++ - 18 cumulative (120% of high target) - 2 in 2018/19 ### Board-level influence and examples - MRLIC research was reflected in two IMF Board papers in the year (exceeding the target but lower than five in the previous year). - A Board paper on resilience in countries vulnerable to natural disasters: - Covered components of disaster risk management strategies (structural, financial, and post-disaster). - Examined challenges LICs and small states face, international community support, and maximizing benefits from international assistance. - MRLIC work provided the analytical framework to evaluate different policies and set out stylized facts of the macroeconomic impacts of natural disasters. - Board discussions on the IMF’s social spending strategy were heavily influenced by MRLIC research, in particular: - The inequality model. - Analysis of fuel subsidies. --- ### 3.3 IMF policy papers ### Indicator 3.3: IMF policy papers - By March 2019: - H (27) - M (25) - L (23) - A++ - 36 cumulative (133% of high target) - 7 in 2018/19 ### Policy papers and publications reflecting MRLIC research - MRLIC research reflected in five other IMF publications and policy papers in the past year, bringing the programme total to 36. - Examples include: - Two staff discussion notes on the economic gains from gender inclusion, and youth labour markets. - Two contributions in the April 2018 edition of the African Regional Economic Outlook covering revenue mobilisation in resource-rich countries and the future of work in sub-Saharan Africa. - A policy paper on women’s economic empowerment was prepared and discussed ahead of the meeting of G7 ministers and central bank governors in June 2018: - Set out the IMF’s position on gender equality. - Drew heavily on MRLIC research. - Described how the IMF will continue efforts through deeper understanding, better integration of analysis, improved learning opportunities, and improving collaboration with other organisations. --- ### Output: IMF strengthens research capacity (Output 4) ### Overall output score and rationale - Output number per LF: 4 - Output Score: A+ - Impact weighting (%): 15% - One indicator substantially exceeds the high target, two indicators meet the high target, and one indicator meets the medium target. Therefore, this output is scored as A+. ### Indicator 4.1: Commissioned papers from new researchers - By March 2019, number of commissioned research papers produced: - H (28) - M (26) - L (24) - A - 26 cumulative (Meets medium target) - 1 in 2018/19 - Three papers were commissioned from external researchers and delivered in the past year; all accepted for publication in a forthcoming volume of the Open Economy Review: - Marjit, Kar, International Capital Flows and Wage Inequality with Land Conversion in Poor Countries - Martinez-Zarzoso, Are Labour Provisions in Free Trade Agreements Improving Labour Conditions? - Hellier, Phases of Globalization, Wages and Inequality - The number of externally commissioned papers has been on a downward trend: seven, five, three in the past three years. - Only one of the three papers fits the indicator’s definition of “new” researchers; the other authors had previously extensively worked on development, or macroeconomics, or both. ### Indicator 4.1.1: Data and toolkits - By March 2019, number of data/toolkits produced: - H (8) - M (7) - L (6) - A+ - 8 cumulative (Meets high target) - 2 in 2018/19 - MRLIC programme released two toolkits this year, bringing the total to eight (meets the high target). - Example toolkit: - Major revision to the inequality toolkit: - Can be used to investigate implications of fiscal policy reforms on income distributions. - An updated paper on the analytical framework behind the toolkit was published. - The toolkit is being applied in IMF surveillance work, for example in the Article IV reports on Benin, Cambodia and Senegal. --- ### Lessons identified and recommendations ### Lessons - There has been a drop in the use of MRLIC analysis in discussions at the IMF Board level despite a large body of research that should influence senior discussions within the Fund. ### Recommendations - Recommendation 1: - The MRLIC team and DFID should discuss: - (a) why use of MRLIC analysis at IMF Board level has dropped, - (b) whether more senior buy-in would be beneficial and how to achieve this, - (c) set out a plan for ensuring research is taking place in the right areas to influence at the highest levels of the Fund. - Recommendation 2: - The IMF-DFID logframe discussion (by end July 2019) should include: - Review all indicator targets to see whether it is appropriate to increase targets for 2019/20 to account for overachievements. *Source: DFID Annual Review June 2019 (MRLIC programme).* ### 2. A new comprehensive dataset of country-specific commodity price and terms-of-trade indices. It ### 2. A new comprehensive dataset of country-specific commodity price and terms-of-trade indices ### Dataset purpose and coverage - The dataset can be used to research the impact of changes in international prices on growth, development, the cost of credit, and asset prices. - The dataset can be used to assess the role of macroeconomic policies in managing external price shocks. - Coverage: 182 countries over 1962-2018. - The comprehensiveness enables analysis in low-income countries (LICs). ### MRLIC dissemination and engagement (Indicator 4.2: Attendance at conferences) - MRLIC team presented at 22 conferences in the past year (expectation: 10 conferences per year). - Cumulative conference presentations for the programme: 108 (substantially exceeds the high target). - Notable presentations included: NBER Summer Institute (trade-in-services toolkit), ASSA Annual Meeting (American Economic Association), and CSAE Conference at Oxford University. - MRLIC hosted a session at UNU-WIDER annual conference on inclusive growth, income inequality, structural transformation and gender diversity. - MRLIC presented a one-day course for DFID economists covering IMF research on macro and gender, gender budgeting, two toolkits, and theoretical research on gender/income inequality. ### Project outputs disseminated (Indicator 4.3) - Four quarterly newsletters in the year; cumulative newsletters: 26 (meets the high target). - Distribution: broad network of over 1500 academics, policymakers, central bank staff, and government representatives. - Further dissemination channels: - Blogs, IMF news articles, Finance and Development, IMF Research Bulletin. - IMF twitter feed (examples: #imfcapdev, #women4growth, #imfgender). - IMF intranet news stories and specialised websites such as VoXEU. ### Lessons and recommendations linked to engagement with external researchers - Recommendation 1: IMF and MRLIC teams should discuss and agree the best way to engage external researchers and for them to add value to the programme. - Recommendation 2: IMF-DFID logframe discussion (by end July 2019) should include: - Review indicator 4.1 to ensure it is capturing the most important aspects of working with external researchers. - Review indicator 4.1.1 wording to consider whether all toolkits need to be “new”. - Review targets for 4.2 to see whether it is appropriate to increase targets for 2019/20 to account for overachievement. ### Theory of Change and progress towards outcomes - Implicit Theory of Change summarized in the logical framework: - OUTPUT 1: High quality, policy relevant research on macroeconomic issues affecting LICs produced. - OUTPUT 2: IMF research products produced under this project used by IMF country teams and partner authorities. - OUTPUT 3: Engagement by senior IMF policymakers on issues affecting LICs strengthened through this project. - OUTPUT 4: IMF strengthens research capacity by expanding the network of researchers and policymakers working on LIC macroeconomics. - OUTCOME: Better engagement by IMF policy-makers on LIC-specific macroeconomic issues, leading to improved policy-making in specific project thematic areas. - IMPACT: Better macroeconomic policymaking in LICs leading to faster economic growth, job creation and poverty reduction. - No major changes to the ToC in the past year; ToC remains valid. - Partnership decision: partner directly with the IMF to maximise early engagement of potential users and ensure research agenda shaped by demand for policy advice. - Evidence of integration into IMF operations: - MRLIC models and analyses are being used directly in IMF Article IV country reports and reviews of IMF lending programmes. - MRLIC staff receive requests for input into country missions funded by country teams. - Strong uptake in two areas: monetary policy and gender equality. - Board-level engagement: drop in number of papers presented to the IMF Board this year noted; programme should attempt to address this to maintain top-level influence. - Quotes of Director-level and Managing Director recognition (verbatim wording preserved in source). ### Logframe changes and targets - Minor logframe changes this year: targets for indicators 2.2 and 2.2.1 were revised upwards to adjust for previous overachievement. - Phase 3 (2017) budget lower than Phase 2 by 37%; targets were set as “medium” (equivalent to DFID score “A”) with “high” and “low” targets around that baseline. - Planned logframe review by end of July 2019 to: - Review and adjust targets on all indicators as necessary. - Review and tweak wording of indicators. - Consider adding indicators (or sub-indicators) to account for 2019/20 activities (e.g. stocktaking conference). ### Value for Money (VfM) findings - Unit cost of just over $69,000 for working papers (substantially lower than Business Case planned unit cost). - Business Case (BC) envisioned unit cost per research paper: $193,600 for IMF programme and $288,000 for next best option. - Staff, contractual employees, and visiting scholars estimated to spend 75% of their time on research papers and 25% on country applications. - Quality metrics: - Total publications over seven years: 58 publications in peer-reviewed journals. - MRLIC products received 804 citations in total so far; more than 60% from researchers outside the Fund. - MRLIC work in “applied economics” and “econometrics” cited three times more than average in these fields. - Inclusion in top academic conferences (NBER Summer Institute, ASSA, SED, CSAE). - Strong uptake by country authorities and IMF country teams. - Anticipated trend: lag in peer-reviewed publication implies cost per published paper expected to decrease over time. ### Cost and productivity statistics (seven years) - Total Staff/Contractual/VS Costs: $12,836,063 - Research Paper Costs: $9,627,047 - Country Applications Costs: $3,209,016 - Working Papers: 139 - Produced: 114 - Commissioned: 25 - Cost Per Working Paper: $69,259 - Published Papers: 61 - Produced: 58 - Commissioned: 3 - Cost per Published Paper: $157,820 - Note: estimates likely overestimate true cost of research time because “HQ led missions” includes both IMF staff salary and travel expenses. ### Project management and overheads - Direct project management costs: approximately 1% of total budget. - Including Trust Fund management fee, programme management costs: around 8% of total budget (1% direct + 7% standard IMF fee). - Conclusion: high proportion of funds spent on producing high-quality research. - VfM assessment: programme represents excellent value for money and should continue. ### Rationale for continued funding and operational strengths - Economy: low programme management costs and adherence to IMF procurement/hiring guidelines; use of cost sharing. - Efficiency: outputs produced under firm timeframes and IMF publication requirements; 58 peer-reviewed publications. - Effectiveness: MRLIC staff primarily IMF staff, allowing rapid communication of findings to IMF country staff to achieve policy impact. - Increasing sustainability: initial investment in visiting academics built credibility; programme now leverages a network with fewer visiting researchers needed. ### Risk overview and mitigation - Overall risk rating: Minor; each risk category rated Minor. - External context: limited exposure to LIC context due to headquarters-based research using secondary datasets. - Delivery: established delivery systems with high delivery record; demand remains high. - Operational: experienced management at DFID and IMF. - Fiduciary: all funds spent directly by IMF subject to IMF financial management controls. - Reputational: little or no reputational risk. - Innovation: not subject to substantial innovation risks. - Safeguarding: activities rarely involve contact with vulnerable persons; external researchers managed per IMF procedures. - Central Assurance Assessment (CAA) by DFID in March 2019 confirmed IMF as a low risk partner; included enhanced due diligence and safeguarding procedures. - Emerging delivery risk: change in accounting processes within IMF budget office requiring recovery of information technology service costs, raising per-unit staffing cost slightly. - Recommendation: DFID and IMF teams should discuss implications before end July 2019. ### Delivery, commercial and financial performance - MRLIC again exceeded the vast majority of its “high” output targets. - Phase 3 operated under a lower budget relative to previous phases; team met or exceeded “high” targets on most outputs by: - Shifting to research assistants (RAs) instead of costly visiting academics. - Leveraging the network built from earlier visiting academics. - Increasing cost sharing with other IMF departments and external organisations. - Efficient use of internal economists. - As of April 2019, $18.9m has been drawn down from the subaccount (reflecting a 2-3 month lag for expense verification). - Indicative breakdown of spending Years 1-7 (totals): - HQ led missions including entire mission team: $6,704,226 - Short-term Advisors - CD delivery: $510,562 - Research HQ based/Visiting Scholars: $5,621,275 - Seminars & Study Tours: $1,653,185 - Project Backstopping: $2,703,574 - Project Management: $198,055 - Exceptional Expenses: $261,052 - Language Services: $1,348 - Trust Fund Fee: $1,235,730 - TOTAL: $18,889,017 - Programme management continuity: MRLIC programme director involved since inception and remains main point of contact between IMF and DFID. - Date of last narrative financial report(s): May 2019 - Date of last audited annual statement(s): October 2018 ### Monitoring, evidence and learning - Monitoring mechanisms: - Staff reports tracking use of MRLIC products in country analysis. - Recording of training courses. - Internal management and communications. - Three-month “forward look” shared with DFID quarterly. - DFID monitors progress via approximately quarterly calls. - Impact and reach metrics (up to March 2019): - 150 MRLIC products received over 800 citations; more than 60% from outside the IMF. - MRLIC work in “applied economics” and “econometrics” cited three times more than average in these fields. - Total downloads of MRLIC IMF Working Papers exceeded 75,000 (approximately 650 downloads per paper). - Example social media reach: one paper (“Remittances and Vulnerability in Developing Countries”) was tweeted and retweeted by users with a total of 226,000 followers. - Training feedback: - IMF ICD system found very high satisfaction for HQ training: average rating 4.6 out of 5. - ICD system does not systematically collect standardized feedback for more customised in-country training. - DFID professional development conference sessions received extremely positive feedback. - Evidence of need and rationale for continuation: - Persistent shortage of researchers working on macroeconomics in LICs and accessible policy-relevant macroeconomics research on LICs. - Evolving macro-level challenges for LICs: global growth uncertainty, debt vulnerabilities, limited policy space, climate change, demographic changes, changing economic structures. - Strong argument for continuation of MRLIC beyond 2020. - Learning agenda questions guiding future phase 4 discussions: - Topic selection: what will gain traction within and outside the Fund; what is macro-critical; alignment with DFID and IMF priorities. - Operational design: oversight that adds value without bureaucracy; effective channels of influence; most effective model of working with external researchers. ### Progress on previous recommendations - Progress summarized in section; specific prior recommendations and progress tracked (details in source). *Source: Annual Review content from the MRLIC programme (IMF–DFID joint report).* ### 1. The review team recommends still allocating some ### MRLIC/DFID review recommendations and implementation (June 2019) ### External researchers and collaborations - The review team recommends still allocating some resources for hosting external researchers and maintaining close collaborations with key experts to support research quality and maintain a high profile for the programme. - External researchers were used in the past year (see output 4). - MRLIC engaged external researchers through conferences and events (not only by commissioning papers); example: a workshop on macroeconomics in fragile states in December 2018 (see output 3). - DFID and the MRLIC team agreed that an advisory committee should be established for a future phase of work consisting of a small group (from the IMF, DFID, academia, thinktanks) to: - meet (remotely) twice a year; - (a) assess how the project operates; - (b) give advice on future work; - (c) suggest external collaboration opportunities; - (d) provide checks and balances. ### Publications, synthesis products, and dissemination - The review team recommends MRLIC continue to publish policy briefs and how-to notes to disseminate results, particularly among policy-makers using various channels of communication. - DFID and the MRLIC team agreed that synthesis products would be delivered in the final year of this phase (i.e. 2019/20). - Topics for five synthesis products have been agreed: - debt-investment-growth - monetary policy - inequality - gender - economic diversification ### Decision processes, governance, and research outlines - Going forward, the MRLIC team should keep a record of the decision process on the topics for research and publications. - The role of a steering committee in such decisions should be discussed at the next bi-annual DFID-IMF management meeting. - The original proposal for phase 3 is the guiding document for research topics. - For new opportunities, a research outline is drafted and the Chiefs in the Research and Strategy, Policy & Review Departments have the final say. ### Monitoring, evidence, and learning (MEL) - Where possible MRLIC should monitor views, downloads and citations for publicly available papers. - Monitoring should be in place by end December 2018. - Status: Complete. See monitoring, evidence and learning section. - The MRLIC team should seek to strengthen training and workshop work by tracking feedback from participants and using this to improve future delivery. - Status for compiling ICD feedback: Partially completed. The IMF Institute for Capacity Development gathers this information and it should be compiled by end December 2018. ### Budget changes, country missions, and funding model - In reaction to the lower budget for Phase 3 of the programme, MRLIC has cut funding for country missions by its staff by 50% and made a strategic decision to replace these funds with direct funding from IMF country teams. - The change supported a sharp increase in uptake, lowered DFID burden share, and made the programme more demand-responsive. DFID welcomes this change. - The review team notes risks associated with the change (principally quality assurance) and recommends DFID and MRLIC continue to monitor the effects of this change closely and address any issues which arise. ### Quality assurance and use of MRLIC models - The IMF has strict quality checks in place for all written products. - All outputs and analyses from the toolkits and models built by MRLIC are checked by MRLIC staff prior to publication. - In almost all cases where the IMF has used MRLIC models for policy advice, the underlying analysis has been delivered directly by an MRLIC staff member—an excellent mechanism for quality control but one that places constraints on the eventual breadth of uptake. - Recommendation: MRLIC and DFID should consider the intended long-term plan for this area. ### Knowledge sharing and DFID engagement - The MRLIC team has offered to share with DFID its knowledge and experiences on knowledge sharing, internal learning, and uptake of research by country teams; the review team recommends DFID initiate a dialogue with the IMF on this. - DFID’s attendance at the IMF-WB meetings was constrained in 2018/19 and there were few high-profile events. - MRLIC research has been presented to senior DFID staff on several occasions (examples include the fragility workshop; DFID economist cadre professional development conference; and meetings with DFID’s Trade and Public Finance Dept). ### Commissioning process - The review team suggests reassessing the commissioning process to better assess how and when papers are commissioned and the correct target for the logframe indicator. This should be completed by December 2018. - DFID and the MRLIC team have discussed challenges with commissioning external researchers. - The logframe target has remained unchanged because the essence of the indicator is to capture success in bringing new researchers into the field. *Source: Review team recommendations and MRLIC/DFID responses (dfid-ar-june2019).* ### 2. MRLIC should, where possible, track indicators for ### 2. MRLIC should, where possible, track indicators for ### Tracking status and immediate action - MRLIC should, where possible, track indicators for its dissemination products (i.e. views and downloads of newsletters, blogs and videos) by end December 2018. - Status: Complete. See monitoring, evidence and learning section. ### Annual Review process and quality assurance - The Annual Review was conducted by the SRO and programme manager from DFID’s Growth Research Team (GRT), responsible for overseeing the MRLIC programme. - The review process included: - A review of DFID and IMF documents. - In-depth discussions with the IMF team. - Comments received from an Economic Adviser independent of the programme’s management, but with a working knowledge of MRLIC. - Quality Assurance provided by the GRT A1 Team Leader. ### Programme description — purpose and timeline - Purpose: - Enhance generation of high-quality research on key macroeconomic issues in low-income countries (LICs). - Ensure uptake through collaborative design and execution with policymakers within and outside the IMF. - Use the IMF’s pulling power to expand the network of macroeconomic researchers working on LICs. - Achieve objectives cost-effectively. - Project duration: - The project began in March 2012 and will conclude in March 2020. - Phase I: March 2012 to March 2015 - Phase II: April 2015 to March 2017 - Phase III: April 2017 to March 2020 - Core areas of research (five): 1. Modelling and understanding policy choices (e.g., monetary, exchange rate, fiscal and structural policies) 2. Understanding macro-financial linkages (e.g., capital flows, financial deepening and inclusion, macro-prudential policies) 3. Building resilience (e.g., natural disaster, climate change, migration, and conflict) 4. Promoting structural change and institutional development (e.g., public investment, growth, debt sustainability, natural resource wealth management, diversification, structural reforms) 5. Enhancing inclusion (e.g., income inequality, macroeconomic policy and income distribution, gender and macroeconomics) - Dissemination and engagement mechanisms: - Papers freely shared with DFID and external policymakers through DFID’s research portal and a dedicated IMF project website. - Frameworks to support IMF policy for LICs, presentations at high-level policy conferences, commissioned papers, quarterly e-newsletters, and project-financed conferences. ### Overview of Year — progress, achievements, and influence - Overall performance: - The project kept up very strong performance in the seventh year, with the output met or exceeded the “high” thresholds for all the targets, except one. - Research findings channeled into IMF Board papers and Staff Discussion Notes and converted to tools used by IMF country teams and LIC authorities. - External recognition: - IMF Managing Director Christine Lagarde acknowledged the partnership’s contribution to helping countries pursue policies that are inclusive and sustainable across four dimensions: economic, social, environmental, and governance. - IMF Research Department Director Ms. Gita Gopinath and IMF SPR Director Mr. Martin Mühleisen provided statements highlighting DFID’s support and the project’s contribution to IMF engagement with LICs. - Selected technical achievements and uptake: - FPAS and DIG models continued to provide practical guidance to LIC policymakers; DIG featured in Article IV Consultations of St. Lucia and Cameroon. - Two technical meetings of the East African Community FPAS Working Group held in Kampala and Nairobi. - Training clinics conducted for Fund economists and LIC authorities (Uganda, Tanzania, Malawi, Rwanda). - A three-day course on “Methods and Tools for Micro-applied Economics” offered to the National Bank of Rwanda. - Workshop on trade in services and inclusive growth in Geneva; a special issue of Review of International Economics dedicated to workshop papers. - Staff Discussion Note: “Work in Progress: Improving Youth Labor Market Outcomes in Emerging Market and Developing Economies.” - Inequality toolkit updated with more detailed documentation and better open source software compatibility; plan to publish toolkit and source code on GitHub. - Gender work: G-7 Background note “Pursuing Women’s Economic Empowerment” and Staff Discussion Note “Economic Gains from Gender Inclusion: New Mechanism, New Evidence” presented to the IMF Executive Board; peer learning events and workshops held; approach applied in Article IV Consultations (Nigeria and Senegal). - Resilience work: two workshops on fragile states and climate change; analytical tools for natural disaster resilience piloted in Dominica; paper “Resilience in Countries Vulnerable to Large Natural Disasters” presented to the IMF Executive Board. ### Metrics, dissemination, and participant feedback - Citation and download metrics (tracked up to March 2019): - Out of 150 intellectual entities, there is a total of more than 800 citations. - More than 60 percent of citations were from outside the IMF staff’s work. - Work in “applied economics” and “econometrics” cited three times more than the averages of papers in those fields. - The total number of downloads of IMF Working Papers produced by this project has exceeded 75,000—roughly speaking, 650+ downloads per paper. - A preliminary Twitter analysis indicates one paper (“Remittances and Vulnerability in Developing Countries”) was tweeted and retweeted by users with a total of 225,916 followers (while a portion may include nonhuman “bots”). - Training feedback: - For training held at the IMF’s headquarters, participant satisfaction rated at 4.6 out of 5 (i.e., more than 90 percent of satisfaction) on average via the ICD system. - For customized in-country training, ICD’s system does not systematically collect standardized feedback; interactions with beneficiary authorities indicated very positive feedback and continued need for support. ### Challenges, resource constraints, and program adjustments - Budgetary constraints: - Phase III has a lower budget than the two previous phases, yet most “high” output targets were met or exceeded. - Cost reductions achieved by sourcing funds for participation in IMF country missions directly from IMF country teams. - New cost-recovery requirement: - From May 2019 onward, IMF budget office will implement cost recovery of information technology services from external donors. - Expected impact: higher per-unit staffing cost (about $3 per hour) and thus lower hours worked given the fixed envelope of the project’s budget. - Engagement with external researchers: - Commissioned papers require careful targeting; project shifted toward interacting with external researchers at conferences and workshops and hiring senior visiting scholars more selectively. - These shifts were effective in maintaining reputation and network with leading senior researchers. ### Log-frame outputs and productivity (high-level) - The research project has four main output categories: 1. Produce high quality, policy-relevant research on macroeconomic issues affecting LICs. 2. Promote and increase usage of IMF research products generated under the project by IMF country teams and partner authorities. 3. Strengthen engagement by senior IMF policymakers on issues affecting LICs. 4. Strengthen capacity-building by expanding the network of LIC researchers. - Table 2 summary (seven years): - This year, completed 19 working papers, bringing the total to 113 over seven years. - The project met or exceeded the “high” target for all outputs except one (for which the “medium” target was met). *Macroeconomic Research in Low-Income Countries: A DFID/IMF Research Partnership — Seventh Year Annual Report to DFID (for period April 2018 – March 2019), Prepared by the Staff of the Research and Strategy, Policy and Review Departments, July 3, 2019* ### 1. Some Policy Lessons from Country Applications of the DIG and DIGNAR Models ### 1. Some Policy Lessons from Country Applications of the DIG and DIGNAR Models ### Research themes and published outputs - The project produced 10 peer-reviewed journal papers in the year. - One book was published: Confronting Inequality: How Societies Can Choose Inclusive Growth. - Topic coverage included: - Modelling and understanding policy choices (e.g., infrastructure investment, public investment efficiency, Okun’s law, monetary policy and bank lending). - Understanding macro-financial linkages (no publications under this topic in the year). - Building resilience (research on growth and jobs; climate and natural disaster policy applications). - Promoting structural change and institutional development (local sourcing, cross-country convergence, resilience to natural disasters). - Enhancing inclusion (research on income inequality drivers and financial inclusion). ### Country applications, uptake, and capacity building - The team completed 13 applications with IMF country teams, spanning FPAS framework, diversification, DIG/Investment scaling up/Debt sustainability, natural disasters, income and gender inequality, and remittances. - Specific country engagements included applications or workshops using the DIG model in Bolivia and Cameroon, DIG extended with natural disasters to St Lucia, and DIG in a background note for a Belt and Road Initiative conference. - Two coordinated projects with country authorities: - An ICD expert supported a technical meeting of the East African Community (EAC) FPAS working group. - An ICD team assisted Bank of Uganda (BoU) to review and upgrade its modelling toolkit during a joint BoU/IMF workshop. - Seven courses/workshops were held for country authorities and IMF staff, including: - Modernizing Monetary Policy Framework in Tanzania through development of FPAS - Monetary Policy Modelling and Forecasting Training in Malawi and Rwanda - DIG Model: Theory, Application, and Hands-on Sessions (Bolivia and Cameroon) - Peer learning event on gender equality in Dar es Salaam, Tanzania - A three-day course on “Understanding Gender Responsive Budgeting” at IMF East Africa Regional Technical Assistance Center - Rwanda: 3-day course on “Methods and Tools for Micro-Applied Economics: Topics in Financial Intermediation” ### Policy influence, adoption, and institutional effects - FPAS framework impacts: - Hands-on training clinics and bilateral technical support strengthened medium-term projection models for IMF AFR country desks, including Uganda, Tanzania and Mozambique. - Bank of Tanzania: assistance fostered internal organizational changes, strengthened the Forecasting Unit, and improved external communication on monetary policy. - National Bank of Rwanda: steps towards establishing FPAS, including aligning MPC meeting timing with data releases, identifying interdepartmental forecasting team members, and developing a forecasting calendar. - Bank of Uganda: long-term DFID-IMF support has modernized the BoU monetary policy framework since 2011, aiding inflation stabilization during the 2011 election period and facilitating peer-to-peer exchange across the region. - DIG model dissemination: - Two workshops in Bolivia and Cameroon introduced the DIG model and the Infrastructure Policy Support Initiative (IPSI) pilot outcomes to technical staff across multiple ministries. - Inequality toolkit: - Major update improved features (transitional dynamics and welfare decomposition), interfaces, and documentation. - Toolkit used by IMF country desk economists in Article IV consultations with Cambodia and Senegal; a Cambodia-based IMF working paper resulted. - The team is collaborating with other IMF departments to finalise publishing the toolkit and its source code on GitHub. - Gender and inclusion: - Team research supported high-level seminars (e.g., “Empowering Women in the Workplace” at IMF-World Bank Annual Meetings) and prepared a background note for the G7 Meeting of Ministers and Central Bank Governors in support of the Gender Equality Advisory Council. - Two peer learning events on gender equality and gender budgeting facilitated knowledge exchange with IMF African Department and UN Women. - Fragile states and climate change: - Organized a workshop with Oxford University on macroeconomic policy in fragile states; a collected book of conference papers is scheduled for early 2020. - Co-organised a “Coping with Climate Change” workshop in Paris with multiple partners to connect climate experts with economists studying central bank and financial sector responses relevant to low-income countries. ### Evidence of academic and public outreach impact - Research citation impact: papers noted to have a very high rate of citations—three times more than the average in the two key fields referenced in the report. - Papers published in leading journals, including Journal of Economic Literature and Journal of Development Economics; presented at major conferences including NBER Summer Institute, ASSA Annual Meeting, Society for Economic Dynamics, and CSAE Annual Conference. - Outreach channels used: VoxEU, IMF Blog, IMF-UN Women blog, IMF news articles, Finance & Development, IMF Research Bulletin, quarterly e-newsletters, internal IMF intranet stories, and social media mentions (example hashtags cited: #imfcapdev, #women4growth, #imfgender). - Examples of external recognition: - Governor of Bank of Uganda, Professor Emmanuel Tumusiime-Mutebile, commended the DFID-IMF team’s continued support since 2011 and cited model-based improvements in policy making. - Governor of the Reserve Bank of Vanuatu, Mr. Simeon Malachi Athy, welcomed IMF-DFID analytical work on diversification and growth, noting the need to segment and diversify tourism and improve ease of doing business. ### Outputs reflected in IMF policy processes - Research influenced two IMF Board papers/meetings: - Building Resilience in Developing Countries Vulnerable to Large Natural Disasters - A Strategy for IMF Engagement on Social Spending - Research informed other IMF policy products, including: - Economic Gains from Gender Inclusion: New Mechanisms, New Evidence - Work in Progress: Improving Youth Labour Market Outcomes in Emerging Market and Developing Economies - African Department’s (AFR) Regional Economic Outlook (REO) April 2018 entries on revenue mobilization and the future of work in Sub-Saharan Africa - Pursuing Women’s Economic Empowerment ### Capacity expansion, commissioned work, and toolkits - One commissioned paper: Phases of Globalization, Wages and Inequality by Joël Hellier (Open Economy Review, forthcoming). - Toolkits produced or updated: - Inequality toolkit (major update; internal and external publication; recent applications in Benin, Cambodia, Senegal). - Commodity Terms of Trade Database. - External researcher engagement: the team offered 22 presentations at high-level policy conferences during the year. ### Outcomes, impacts, and planned dissemination - The project’s outputs strengthened monetary policy frameworks in LICs, promoted peer learning, and improved forecasting and model-based decision making. - The team is preparing policy briefs across core research areas to synthesize lessons from the collaboration’s multi-year engagement with macroeconomic policymaking in low-income countries. ### Project resources and management - The approved budget for the project is US$23.3 million. *IMF DFID-funded research project annual report (June 2019).* ### Appendix 2 provides the formal financial reporting of the project, with a financial statement and project ### Appendix 2 — Formal financial reporting, expenditures, work plan, and monitoring (IMF‑DFID project) ### Financial reporting and expenditures - As of April 2019, $18.9 million has been drawn down from the subaccount. - Reported lag: actual expenses reflect a lag of approximately two to three months to enable verification before charging donor subaccounts. - Indicative breakdown of spending over Years 1–7 (Table 4, Activity Total, Years 1-7): - HQ led missions including entire mission team: $6,704,226 - Short-term Advisors - CD delivery: $510,562 - Research HQ based/Visiting Scholars: $5,621,275 - Seminars & Study Tours: $1,653,185 - Project Backstopping: $2,703,574 - Project Management: $198,055 - Exceptional Expenses: $261,052 - Language Services: $1,348 - Trust Fund Fee: $1,235,730 - Total: $18,889,017 - Exchange rate exposure: The project does not foresee any changes in cost structures due to exchange rates. ### Value for money, outputs, and impact - Value-for-money assertions: - Project described as highly cost effective due to governance in procurement and team quality. - All contractual employees undergo a competitive hiring process; outputs meet Fund publication requirements and are submitted to peer-reviewed journals for further evaluation. - Cost benchmarks and estimates: - DFID benchmark: $190,000 (£150,000) per paper. - Reported average cost per working paper for seven years: approximately $69,000 (£55,000). - Reported cost per published paper: $163,000 (£129,000). - Staff, contractual employees, and visiting scholars estimated to spend 75 percent of their time on research papers and 25 percent on country applications; total staff/contractual/VS costs are allocated accordingly. - Publications and citations: - Total number of publications over seven years: 58. - Total citations to date: 804, with more than 60 percent from researchers outside the Fund. - Citation performance: project products cited three times more than the average in the fields “applied economics” and “econometrics”. - Inclusion in top academic programs: NBER Summer Institute, ASSA, SED, CSAE. - Strong uptake by country authorities and IMF country teams noted. ### Cost per working and published paper (Table 5 — exact figures) - Total Staff/Contractual/VS Costs1: $12,836,063 - Research Paper Costs: $9,627,047 - Country Applications Costs: $3,209,016 - Working Papers: 139 - Produced: 113 - Commissioned: 25 - Cost Per Working Paper: $69,259 - Published Papers: 59 - Produced: 58 - Commissioned: 1 - Cost per Published Paper: $163,170 - Note 1 (methodology): Estimated as the sum of “HQ led missions”, “Short-term Advisors”, and “Research HQ based/Visiting Scholars”. “HQ led missions” includes both IMF staff salary and travel expenses; hence the calculated costs likely overestimate true research-time costs. - Management costs: - Direct project management costs represent approximately one percent of the total budget. - Including the Trust Fund management fee, program management costs are around eight percent. ### Work plan and timetable — major research themes and planned activities - Overall plan: continue main research areas, expand research capacity, produce synthesis products (summary briefs), and organize a stocktaking conference. - Individual thematic plans: 1) Modelling and understanding policy choices - Monetary and exchange rate policies in LICs: - Intensive training for central bank staff in Malawi, Tanzania, Rwanda, Uganda, and Ghana in macroeconomic modelling, forecasting, and policy analysis. - Support to regional FPAS working group for EAC Partner States (Kenya, Uganda, Rwanda, Tanzania, Burundi). - Develop practical how-to guide on FPAS capacity building in a LIC central bank. - Develop online version of the Model-based Monetary Policy Analysis and Forecasting (MPAF) course. - Compile a handbook "A Practical Guide on FPAS Capacity Building in a LIC Central Bank." - Public investment in LICs: - Investigate how absorption constraints affect infrastructure construction costs using road-work project data. - Quantify macroeconomic dividends from removing public investment inefficiency and prioritising higher-return projects (Cameroon) and fiscal consolidation (Bolivia); explore macro-risks from non-concessional financing and maintaining elevated public investment (Cameroon, Bolivia). - Contribute a chapter on public investment during fiscal cycles to the book on Infrastructure Governance. - Mainstream applications of the DIG framework and extend to DIG-Labor (physical and human capital). - Publish a companion toolkit and provide technical assistance on public investment; examine cost of scaling up public investment. 2) Understanding macro-financial linkages - Monetary policy frameworks: - Develop first index of countries’ monetary policy frameworks assessed along 5 dimensions—independence, accountability, policy strategy, operational framework, and communication strategy—based on manually collected public information. - Pilot applied to a heterogeneous group of 18 countries (including Kenya, Nigeria, Rwanda, Uganda); preliminary evidence shows large variation and close tracking of medium-term inflation expectations. - Aim to expand sample to over 100 developing countries including most LICs and extend over multiple years. - Financial reforms and capital flows: - Analytical work on impact of banking reforms and capital account liberalization on capital inflows and public/private capital formation. - Distinguish between FDI and non-FDI inflows and their differential impact on growth and inequality. - Investigate drivers of high remittance cost and its slow decline; inform policy options. - Study capital flows to low-income countries and implications for domestic banking sectors. - Examine competition and transition from microfinance to commercial banks. 3) Promoting structural change and institutional development - Growth through diversification: - Finalise structural reform database in developing economies; culminate in a Staff Discussion Note and a Board Paper. - Integrate the database into a toolkit for mission teams and authorities; contribute a chapter to the IMF World Economic Outlook. - Host a workshop and high-level conference to promote DFID-IMF joint work and engage policymakers and academics. - Extend the toolkit to include more LICs. - Interdepartmental group: stocktaking exercise and a policy paper to guide Fund advice to LICs. - New workstream on automation and diversification; identify determinants of export diversification and provide practical advice. - Provide technical assistance and work on a paper on Rethinking Development Policy. - Investigate implications of the robot revolution and potential “great divergence”. 4) Enhancing inclusion - Macroeconomic policies and income distribution: - Incorporate updated inequality toolkit into the Structural Reform Curriculum and IMF Institute for Capacity Development course. - Revise working paper on the inequality toolkit (currently under review at The Economic Journal); commission a Vox article. - Provide technical assistance on the inequality toolkit to country teams and authorities. - Prepare a Staff Discussion Note summarising findings on how fiscal policies can reduce gender inequality. - Analyse link between informality and female labour force participation in Sub-Saharan African urban centres. - Improve and augment gender and income inequality frameworks; apply unified framework to Laos and Nigeria. - Study impact of ICT on structural change. - Develop a framework to build resilience in small states sustainably. - Build a bank-level dataset to study banking and access to credit in Africa. 5) Building resilience - Climate change: - Constructed a natural-disasters modelling framework applied to small states; Vanuatu was the first pilot and received positive reception. - Extend the model to assess monetary policy implications and long-term macroeconomic impacts of temperature and CO2 emission increases. - Contribute a chapter on building resilience to natural disaster in the Infrastructure Governance book; evaluate benefits of ex-ante intervention and mobilizing resources for resilience. - Examine macroeconomic outcomes in disaster-prone countries. - Conflict: - Edited book on macroeconomic policy in fragile states in progress; aims to identify causes and consequences of fragility and policy adaptations; contributors include academics and international-organization experts. - Expert-only workshop planned in December 2018 to catalyse cross-fertilisation among contributors. - Corruption: - Evidence provided that corruption can impede sustainable, inclusive economic growth. - Developed a framework for enhanced Fund engagement to address governance vulnerabilities, including corruption. - Provide technical assistance on governance and anti-corruption reform to country teams. ### Synthesis products and stocktaking conference - Planned synthesis brief notes (five areas): 1. Debt-investment-growth nexus: take stock of DIG and DIGNAR model applications; review literature and extract policy lessons from over 65 country applications in seven years. 2. Monetary policy: summarise insights on adapting monetary policy methods for LICs, review practices and effectiveness, and provide guidance. 3. Inequality: survey IMF‑DFID findings on how macro policies affect income inequality; highlight policy design implications, including tax reforms. 4. Gender: summarise IMF‑DFID research on gender equality and economic outcomes, including gender budgeting survey results from more than 80 countries. 5. Economic diversification: summarise analyses and literature, distil proposals, and discuss interactions with sector-specific or industrial policies. - Stocktaking conference: - Objectives: overview project outcomes, review eight-year experience to identify good practices and challenges, and distil strategic directions for macroeconomic research and policy in LICs. - Intended participants: leading researchers and experienced policymakers on low-income country issues. - Conference timing and location: will be held at the Oxford University, London, in March 21–22, 2020, jointly with the Centre for the Study of African Economies (CSAE) annual conference in March 22–24, 2020. - Structure: - March 21 (Saturday): high-level event for policymakers with opening/closing keynote addresses; two panel discussions (tentative topics: “collaboration between research and policy-making—theory vs. practice” and “priority research area for policy-making in low-income countries”). - March 22 (Sunday): present project’s key outcomes and the five synthesis products as part of CSAE conference sessions. ### Risk, monitoring, and evaluation - Risk: The overall risk for the project remains low. - Monitoring: - IMF reports annually to DFID on log-frame outputs. - Quarterly updates provided to the project website; quarterly e-newsletters reach an audience of more than 1500 academics, policymakers, central bank staff, and government representatives. - Public working and published papers uploaded to the R4D portal on the DFID website. - “Gold access” provided to journal publications to ensure public access. - Video conference calls conducted when deemed necessary by IMF and DFID project members. - Evaluation: - No budget for an external evaluation was included in the project budget. *Appendix 2 of the IMF‑DFID project annual report (financial statement, expenditures, work plan, and monitoring as reported).* ### APPENDIX 1: LOG-FRAME ### APPENDIX 1: LOG-FRAME ### OUTPUT 1 — High quality, policy relevant research on macroeconomic issues affecting LICs produced - Output Indicator 1.1: Planned and achieved number of research papers - Baseline: March 2017 (75) - By March 2018: H (90 papers), M (86 papers), L (82 papers) - By March 2019: H (105 papers), M (97 papers), L (89 papers) - By March 2020: H (120 papers), M (108 papers), L (96 papers) - Specific context: the average output per year (Yr 1 - 5) is 15, 10.95 for M, 6.9 for L - Achieved: 94 113 - Output Indicator 1.2: Number of research papers accepted for publication in appropriate high-quality peer-reviewed journals - Baseline: March 2017 (37) - By March 2018: H (44 paper), M (42 papers), L (40 papers) - By March 2019: H (51 papers), M (47 paper), L (43 papers) - By March 2020: H (58 papers), M (52 papers), L (47 paper) - Specific context: the average output per year (Yr 1 - 5) is 7, 5.11 for M, 3.22 for L. - Achieved: 48 58 - Output Indicator 1.3: Number of freely available books - Baseline: March 2017 (2) - By March 2018: H (2 books), M (2 books), L (2 books) - By March 2019: H (2 books), M (2 books), L (2 books) - By March 2019 (duplicate row): H (2 books), M (2 books), L (2 books) - Specific context: the average output per year (Yr 1 - 5) is 0). Books are a new output, so historical data is not available / reliable. - Achieved: 2 3 - Impact weighting: 30 - Inputs and resourcing notes (excerpted) - Number of priority research papers produced, on research topics including: 1) Monetary and exchange rate policies; 2) Public investment, growth, and debt sustainability; 3) Macroeconomic management of natural resources; 4) Macroeconomic policies and income distribution; 5) Financial deepening for macroeconomic stability and sustained growth; 6) Gth thh diifiti (text as provided) - High-level context / assumptions: 1) No major financial or economic crisis, such that IMF staff can devote time to the project as committed. 2) IMF are able to identify high-quality academics working on specific research topics, and agreeable to IMF terms and conditions. 3) Academic researchers are able to deliver contracted inputs consistent with timeframes envisaged for the project. 4) Counterpart inputs materialise as anticipated. ### OUTPUT 2 — IMF research products (policy analysis, practical and operational tools and frameworks) used by IMF country teams and partner authorities - Output Indicator 2.1: Application and use of tools and frameworks by country teams - Baseline: March 2017 (64) - By March 2018: H (77), M (73), L (70) - By March 2019: H (90), M (83), L (76) - By March 2020: H (103), M (92), L (82) - Specific context: the average output per year (Yr 1 - 5) is 13, 9.49 for M, 5.98 for L - Achieved: 85 98 - Output Indicator 2.2: Application and use of tools and frameworks by country authorities - Baseline: March 2017 (16) - By March 2018: H (19), M (18), L (17) - By March 2019: H (32), M (30), L (29) - By March 2020: H (25), M (23), L (20) - Specific context: the average output per year (Yr 1 - 5) is 3, 2.19 for M, 1.38 for L - Achieved: 29 38 - Output Indicator 2.2.1: Courses offered to country authorities - Baseline: March 2017 (1) - By March 2018: H (3), M (2), L (1) - By March 2019: H (10), M (9), L (8) - By March 2020: H (5), M (4), L (3) - Specific context: the average output per year (Yr 1 - 5), N/A. This is a new indicator. - Achieved: 9 16 - Impact weighting: 30 - Inputs and resourcing notes (excerpted) - Source attribution for inputs: IMF ### APPENDIX 2 — Financial reports (selected figures) - Bilateral - Cash Flow Statement (As of Apr 30, 2019) (In U.S. Dollars) - Contributions: 5,868,570 4,594,260 2,254,739 4,537,586 2,368,482 1,968,935 21,592,572 - Interest Earned: 2,212 752 7,369 19,702 35,135 56,743 121,913 - Total Cash Available: 5,870,782 4,595,012 2,262,108 4,557,288 2,403,617 2,025,678 21,714,485 - Expenses Paid: 4,152,952 2,003,585 3,536,000 3,768,706 2,937,652 2,490,122 18,889,017 - Cash Balance: 1,717,830 4,309,257 3,035,365 3,823,947 3,289,912 2,825,468 2,825,468 - Notes: - Contributions are net of transfers and return of funds. - Expenses paid include the 7% TFM. - Project financial summary (selected lines) - Latest Approved/Proposed Budget: 19,941,175 - Expenses: 17,653,287 - Remaining Balance: 2,287,888 - Project listings and execution rates (selected): - IMF_IMF_2012_01 DFID Macro Research 1&2 — Closed; Latest Approved/Proposed Budget 12,451,409; Expenses 12,451,410; Execution (%) -100% - SPR_IMF_2017_04 DFID Macro Research 3 — Approved 2017-04-01 to 2020-04-30; Latest Approved/Proposed Budget 7,489,765; Expenses 5,201,877; Remaining Balance 2,287,888; Execution (%) 69% - Grand Total: 21,337,057 18,889,017 2,448,041 - Contributions to date: 21,592,571 - Interest Earned: 121,913 - Total Inflows (A): 21,714,484 - Expenses: 18,889,017 - Remaining Budget (including projects pending approval): 2,448,041 - Total Outflows (B): 21,337,058 - Total (A - B): 377,426 - Note: The remaining balance for closed projects is zeroed out upon project completion. ### APPENDIX 3 — Research outputs (selected working papers and summaries) - Topic 1. Modelling and understanding policy choices - "Some Policy Lessons from Country Applications of the DIG and DIGNAR Models" — Daniel Gurara, Giovanni Melina and Luis-Felipe Zanna - Findings (five policy lessons): improving public investment efficiency or raising project rates of return raises growth and lowers debt sustainability risks; prudent and gradual investment scaling-ups preferred over aggressive front-loaded ones; domestic revenue mobilization creates fiscal space and contains debt surges; aid smoothens fiscal adjustments and may lower unsustainable debt risks; external savings mitigate Dutch disease and serve as fiscal buffers. - "In Search of Information: Use of Google Trends’ Data to Narrow Information Gaps for Low-income Developing Countries" — Futoshi Narita and Rujun Yin - Findings: Online search frequencies about a country significantly correlate with macroeconomic variables (e.g., real GDP, inflation, capital flows), conditional on other covariates; correlation with real GDP stronger than that of nighttime lights for LICs; search frequencies improve out-of-sample forecasting performance albeit slightly. - Topic 2. Understanding macro-financial linkages - "Mobilization Effects of Multilateral Development Banks" — Chiara Broccolini et al. - Findings: Positive and significant direct and indirect mobilization effects of MDB lending on number of deals and total size of bank inflows; increases in number of lending banks and average maturity; effects last up to three years and are not offset by decline in bond financing; no evidence of anticipation effects. - "Borrowing Costs and The Role of Multilateral Development Banks: Evidence from Cross-Border Syndicated Bank Lending" — Daniel Gurara, Andrea F Presbitero and Miguel Sarmiento - Findings: MDB participation associated with higher borrowing costs and longer maturities but lower spreads for riskier borrowers; suggests MDBs can crowd in private investment through risk mitigation. - "Commodity Price Movements and Banking Crises" — Markus Eberhardt and Andrea F Presbitero - Findings: Accounting for changes in commodity prices increases predictive power for banking crises in 60 LICs (1981-2015); commodity price effect economically substantial and robust; net capital inflows increase crisis likelihood; credit growth and capital flow surges play no significant role in predicting banking crises in LICs. - "Financial Deepening, Terms of Trade Shocks, and Growth Volatility in Low-Income Countries" — Kangni R Kpodar, Maelan Le Goff and Raju J Singh - Findings: Banking sector development acts as a shock-absorber for terms of trade shocks in LICs (sample of 38 LICs, 1978-2012); result confirmed in expanded sample of 121 developing countries though role fades as economies grow richer; stock market development appears neither shock-absorber nor shock-amplifier. - "Are Remittances Good for Labor Markets in LICs, MICs and Fragile States?" — Ralph Chami et al. - Findings: Remittances strongly impact labor supply and demand; reduce labor force participation and increase informality; reduce overall unemployment but benefit lower-wage nontradables at expense of tradables; inequality declines but average wage and productivity growth declines leading to increased labor income share; in fragile states remittances impose a positive externality. - Topic 3. Building resilience - "Optimal Control of a Global Model of Climate Change with Adaptation and Mitigation" — Manoj Atolia et al. - Findings: Extends IAM to include mitigation, adaptation and infrastructure investment; model produces optimal control problem with five-dimensional state and control vectors; optimal policy characterized by significant initial investment in public capital for mitigation; when initial CO2 levels are high, adaptation starts immediately but accounts for smaller proportion of public investment initially. - "Policy Trade-Offs in Building Resilience to Natural Disasters: The Case of St. Lucia" — Alessandro Cantelmo et al. - Findings: Using a dynamic general equilibrium model calibrated to St. Lucia, both financial protection and structural protection reduce output loss from natural disasters; structural protection normally delivers larger payoff, financial protection superior when liquidity constraints limit prompt rebuilding; trade-off sensitive to public investment efficiency. - Topic 4. Promoting structural change and institutional development - "Rethinking Development Policy: Deindustrialization, Servicification and Structural Transformation" — Manoj Atolia et al. - Findings: Reviews theories of structural transformation, roles of manufacturing, policy and international environment; discusses premature deindustrialization and relation to middle-income trap; draws conclusions on prospective future paths and development policies. - "Export Competitiveness - Fuel Price Nexus in Developing Countries: Real or False Concern?" — Kangni R Kpodar et al. - Findings: Increase in domestic gasoline or diesel price adversely affects real non-fuel export growth in short run, impact phases out within two years; negative effect concentrated in countries with high-energy dependency ratio or constrained access to alternative energy. - "Macroeconomic Consequences of Tariffs" — Davide Furceri et al. - Findings: Tariff increases lead, in the medium term, to declines in domestic output and productivity, more unemployment, higher inequality, and real exchange rate appreciation; small effects on trade balance; effects magnified when tariffs rise during expansions, for advanced economies, and when tariffs go up, not down; results robust across perturbations and complemented by industry-level data. *International Monetary Fund — United Kingdom - Project on Macroeconomic Research in LICs (Progress Report as of Apr 30, 2019).* ### 13. Commodity Terms of Trade: A New Database ### 13. Commodity Terms of Trade: A New Database ### Main contribution - Presents a comprehensive database of country-specific commodity price indices for 182 economies covering the period 1962-2018. - For each country, changes in the international price of up to 45 individual commodities are weighted using commodity-level trade data. - Provides a commodity terms-of-trade index that proxies windfall gains and losses of income associated with changes in world prices. - Includes additional country-specific series: commodity export price indices and commodity import price indices. - Offers indices constructed with alternative weighting schemes: - fixed weights (based on average trade flows over several decades), - time-varying weights (accounting for variation in the mix of commodities traded and the overall importance of commodities). ### Analysis and uses - Database supports analysis of the dynamics of commodity terms of trade across country groups. - Enables assessment of the influence of commodity price movements on key macroeconomic aggregates. *Source: Bertrand Gruss and Suhaib Kebhaj (IMF).* ### 14. Losing to Blackouts: Evidence from Firm Level Data ### Findings - Uses manufacturing firm census data from Ethiopia to identify productivity losses attributable to power disruptions. - Estimates show power disruptions result in productivity losses of about 4–10 percent on average. - Finds nonlinear productivity losses across productivity distribution quantiles: firms at higher quantiles faced higher losses compared to firms around the median. - Documents patterns of systematic shutdowns as firms attempt to minimize losses. *Source: Daniel Gurara and Dawit Tessema (IMF).* ### 15. The Aggregate and Distributional Effects of Financial Globalization: Evidence from Macro and Sectoral Data ### Key findings - Policies to liberalize international capital flows (financial globalization) lead on average to limited output gains while contributing to significant increases in inequality—an equity–efficiency trade-off. - Heterogeneity in effects by country characteristics: - Liberalization increases output in countries with high financial depth and those that avoid financial crises. - Distributional effects are more pronounced in countries with low financial depth and inclusion and where liberalization is followed by a crisis. - Difference-in-difference sectoral estimates: - Liberalization episodes reduce the share of labor income, particularly for industries with higher external financial dependence, greater propensity to use layoffs, and higher elasticity of substitution between capital and labor. - Sectoral results support a causal interpretation of macro-level findings. *Source: Davide Furceri, Prakash Loungani and Jonathan David Ostry (IMF).* ### 16. Financial Inclusion Under the Microscope ### Findings - Evaluates a large-scale microcredit expansion using administrative microdata covering the universe of loans to individuals from a developing country. - The program significantly increased access to credit, particularly in less developed areas. - Effect driven by newly set-up credit cooperatives (U-SACCOs) granting loans to previously unbanked individuals. - A sizable share of first-time borrowers who need a second loan switch to commercial banks; commercial banks: - cream-skim low-risk borrowers, - grant them larger, cheaper, and longer-term loans. - These switchers are not riskier than similar individuals already at commercial banks and initially receive smaller loans. - Implication: the microfinance sector, combined with a well-functioning credit reference bureau, helps mitigate information frictions in credit markets. *Source: Sumit Agarwal, Thomas Kigabo, Camelia Minoiu, Andrea F Presbitero and Andre Silva (IMF).* ### 17. Does an Inclusive Citizenship Law Promote Economic Development? ### Contributions and findings - Documents evolution of citizenship laws worldwide, distinguishing jus soli, jus sanguinis, and mixed regimes, and outlines plausible channels for differential economic impacts. - Compiles a global data set of citizenship laws. - Empirical strategy: cross-country regressions, panel-data techniques, synthetic control method, and robustness tests. - Main result: jus soli laws—being more inclusive—lead to higher income levels than alternative citizenship rules in developing countries, though to a lesser extent in countries with stronger institutional environments. *Source: Patrick A. Imam and Kangni R Kpodar (IMF).* ### 18. The Impact of Community Based Health Insurance Schemes on Out-of-Pocket Healthcare Spending: Evidence from Rwanda ### Findings - Uses a nationally representative household survey collected over a ten-year period to assess impacts of Rwanda's Community-Based Health Insurance Scheme. - The scheme significantly reduces annual per capita out-of-pocket spending by about 3,600 Rwandan Franc (about US$12) or about 83 percent of average per capita healthcare expenditure compared to the baseline level in 2000. - Distributional effect: impacts favor the rich relative to the poor. - The program also reduces the incidence of catastrophic healthcare spending significantly. *Source: Andinet Woldemichael, Daniel Gurara and Abebe Shimeles (IMF).* ### 19. The Macroeconomic and Distributional Implications of Fiscal Consolidations in Low-income Countries ### Approach - Quantitatively investigates macroeconomic and distributional impacts of fiscal consolidations in low-income countries through three instruments: value added tax (VAT), personal income tax (PIT), and corporate income tax (CIT). - Extends a heterogeneous agents incomplete markets model by including multiple sectors and rural-urban distinctions to capture salient features of LICs. ### Key results - VAT has the least efficiency costs but is highly regressive. - PIT impacts the economy in the opposite way (less regressive, higher efficiency costs), with CIT lying in between VAT and PIT on these margins. - Cash transfers targeting rural households mitigate the negative distributional impacts of VAT most effectively. - Public investment leads to little redistribution. *Source: Adrian Peralta-Alva, Marina Mendes Tavares, Xuan S. Tam and Xin Tang (IMF).* _Source: IMF DFID Annual Report June 2019 (chapters and papers summarized above)._ ### 6. An application of the DIG model to Cameroon ### 6. An application of the DIG model to Cameroon ### DIG model application and main findings - The DIG model application to Cameroon was presented to the authorities during the Third Review under the Extended Credit Facility (ECF) in Yaoundé (Nov 6- 9, 2018). - The application examined the macroeconomic gains from removing public investment inefficiencies. - Simulation results highlighted sustainable growth dividends from public investment reforms geared towards: - removing inefficiencies, and - prioritizing high return projects with the potential to crowd in the most private investment. - The application also demonstrated macro-risks associated with continued reliance on non-concessional financing. - These findings are presented in an annex to the forthcoming Fourth Review under the Extended Credit Facility (ECF) Arrangement. *Source: IMF DFID annual report chapter "An application of the DIG model to Cameroon".* ### 1. Building Resilience in Developing Countries Vulnerable to Large Natural Disasters ### 1. Building Resilience in Developing Countries Vulnerable to Large Natural Disasters ### Macroeconomic challenge and capacity constraints - Natural disasters can have large macroeconomic effects; disaster-risk management is a macro-critical challenge. - For small states and low-income countries, the capacity to develop, finance, and implement a disaster risk-management strategy is often limited, even as the economic case for doing so is compelling. - The paper discusses components of a national disaster risk-management strategy and coordination of support from international financial institutions (IFIs) and other development partners. ### Components and coordination - Emphasizes the need for: - Developing, financing, and implementing disaster risk-management strategies. - Coordinated support from IFIs and development partners to build national resilience. --- ### 2. A Strategy for IMF Engagement on Social Spending ### Rationale and scope - Interest in social spending issues has intensified over the last decade; the IMF has increased its engagement on social spending issues. - The paper outlines a strategy to guide IMF engagement on social spending issues going forward. ### Tools and resources - Strategy draws on specific tools and resources, including several DFID outputs (e.g., the inequality how-to note, the 2017 Staff Discussion Note on inequality issues in LIDCs, the fuel subsidy template). - Expected channels for reflecting results: Fiscal Monitor/WEO/REO/SDN. --- ### 3. Economic Gains From Gender Inclusion: New Mechanisms, New Evidence ### Key findings - While progress has been made in increasing female labor force participation (FLFP) in the last 20 years, large gaps remain. - Gender diversity yields economic gains beyond simply adding more workers: - Women bring new skills to the workplace—this may reflect social norms, upbringing, social interactions, differences in risk preference, and responses to incentives. - Male and female labor are imperfect substitutes in production; gender differences in the labor force matter. - Standard models that ignore gender differences understate the favorable impact of gender inclusion on growth and misattribute to technology part of growth actually caused by women’s participation. - Narrowing gender gaps benefits both men and women, because of a boost to male wages from higher FLFP. - Sectoral reallocation from traditional agriculture to services—where FLFP is relatively high—helps boost gender parity and productivity. --- ### 4. Youth Labor Market Outcomes in Emerging Market and Developing Economies ### Scope and key statistics - Young people make up about a third of the working-age population in the typical emerging market and developing economy. - About 20 percent of youth in these economies are neither employed, in school, nor in training (the youth inactivity rate). This is double the share in the average advanced economy. ### Potential impact of policy change - Were nothing else to change, bringing youth inactivity in these economies down to what it is in advanced economies and getting those inactive young people into new jobs would have the following effects: - The working-age employment rate in the average emerging market and developing economy would rise more than 3 percentage points. - Real output would get a 5 percent boost. --- ### 5. African Department (AFR) Regional Economic Outlook (REO) April 2018: Selected Analyses ### Revenue mobilization in resource-rich sub-Saharan African countries (Box 2.2) - Analysis focused on the CEMAC region with broader lessons for sub-Saharan Africa. - Revenue mobilization is a particularly powerful means to reduce government indebtedness, but it may also generate undesirable effects on inequality. - Highlights need for mitigating policies, in particular cash transfer programs targeted to the most vulnerable, especially if specific revenue mobilization instruments are likely to affect poor households’ incomes. ### The Future of Work in Sub-Saharan Africa (Chapter 3) - Created two indices of countries’ export vulnerability to automation based on measures of automatability of occupations from Frey and Osborne (2017) and Brynjolfsson, Mitchell, and Rock (2018). - Indices are mapped to industries and then to export goods to ascertain how vulnerable an export sector is to automation. --- ### 6. Pursuing Women’s Economic Empowerment ### Rationale and strategic priorities - Greater gender equality boosts economic growth, reduces income inequality, and supports economic diversification and resilience. - Gender equality is one of the 17 UN Sustainable Development Goals. ### International commitments and IMF priorities - The G7 (Taormina Leaders’ Summit, 2017) emphasized closing the gender gap and mainstreaming gender equality into policy; Canada’s G7 Presidency continues this emphasis. - The IMF will focus on: - (i) Deepening understanding of the economic benefits of women’s empowerment in the labor market and through more equal opportunities for boys and girls, including in the context of rapid technological change. - (ii) Integrating the analysis into Fund policy dialogue with member countries. - (iii) Providing customized assistance, workshops, and peer-learning courses in areas such as gender budgeting. - (iv) Expanding collaboration with other international institutions to leverage complementary expertise. --- ### 7. Commissioned Research and Tools ### Selected commissioned paper - Phases of Globalization, Wages and Inequality (Joël Hellier; Open Economy Review, forthcoming) - Extends the North-South HOS model by assuming: - (i) size of the South (emerging countries) increases over time; - (ii) North and South have very different factor endowments; - (iii) several northern and southern countries with different skill endowments; - (iv) North-South technological differences, productivity catching up and technological transfers. - Model generates three phases of globalization with distinct production patterns and specific changes in inequality in the North and the South. - In the North: inequality continuously increases and unskilled workers’ purchasing power continuously decreases during the first phase of globalization; inequality diverges across countries. - In the South: diverse inequality dynamics are possible depending on skill endowment and technological gap; model predictions align with observed facts. ### Toolkits - Commodity Terms of Trade Database. - A Toolkit to Evaluate the Welfare Effects of Fiscal Consolidations in Low-income Countries: - Inequality toolkit major update allows computation of transitional dynamics and welfare decompositions into aggregate and distributional components for policy reforms, with full open source support upon demand from outside the Fund. - Major update of the working paper documenting the analytical framework was also issued. - Distributed as an update to the previous toolkit to allow returned users to utilize prior results and to avoid confusion from multiple toolkits. --- ### 8. Research Dissemination and Engagements ### External conferences and seminars (selection of attendance) - Events attended by external researchers include: - Center for Studies and Research on International Development, University of Auvergne, France – May 2018. - “Voyage to Indonesia” seminar series – July 2018. - 2018 Annual Meeting of the Society for Economic Dynamics – June 2018. - Financial Inclusion: Analytical Corner of the IMF-World Bank’s Annual Meeting – October 2018. - IMF: Gender Inequality and the Macroeconomy at LSE Inequalities Institute – November 2018. - Numerous other conferences and seminars through March 2019. ### E-newsletters - Results were disseminated in newsletters dated: - June 2018 Newsletter - September 2018 Newsletter - December 2018 Newsletter - March 2019 Newsletter --- --- _Source: https://www.imf.org/-/media/files/topics/lics/macro-research-for-development/annual-reports/dfid-ar-june2019.pdf_