## fcdo-ar-june2022 ## Source details **Canonical URL:** [fcdo-ar-june2022](https://www.imf.org/-/media/files/topics/lics/macro-research-for-development/annual-reports/fcdo-ar-june2022.pdf) ## Other formats - [Markdown version](/-/media/files/topics/lics/macro-research-for-development/annual-reports/fcdo-ar-june2022.pdf.md) - [Structured JSON version](/-/media/files/topics/lics/macro-research-for-development/annual-reports/fcdo-ar-june2022.pdf.json) --- ### Output performance and research targets - Indicator 1.1 — Number of priority research papers or book chapters (themes include Monetary and exchange rate policies; Public investment, growth, and debt sustainability; Macroeconomic management of natural resources; Macroeconomic policies and income distribution; Financial deepening for macroeconomic stability and sustained growth; Growth through diversification; Gender and macroeconomics; Capital flows): - By March 2022 targets: H (167 papers) M (160 papers) L (155 papers) - Achieved: 162 cumulative (14 in past year) — Met medium target - Indicator 1.2 — Peer‑reviewed publications: - By March 2022 targets: H (99 papers) M (95 papers) L (91 paper) - Achieved: 98 cumulative (8 in past year) — Met medium target - Ten‑year output totals and revised targets (selected): - Working Papers (1.1): Total 175; Revised Targets H 167, M 160, L 155 - Published Papers (1.2): Total 99; Revised Targets H 99, M 95, L 91 - Commissioned Papers (4.1): Total 34; Revised Targets H 35, M 33, L 32 - Toolkits (4.2): Total 13; Revised Targets H 14, M 13, L 11 - External Researchers at High-level Policy Conferences (4.3): Total 155; Revised Targets H 152, M 148, L 144 ### Selected peer‑reviewed outputs (titles and journals) - Eight papers accepted for publication during the year: - "Building back better: How big are green spending multipliers?" — Ecological Economics - "The distributional implications of the impact of fuel price increases on inflation." — Energy Economics - "The welfare implications of exchange rate choices in developing agricultural economies" — Journal of Macroeconomics - "Will the AI revolution cause a great divergence?" — Journal of Monetary Economics - "Growth-equity trade-offs in structural reforms" — Journal of Political Economy - "The role of productivity, transportation costs, and barriers to intersectoral mobility in structural transformation" — Economic Modelling - "The Distributional Effects of Government Spending Shocks in Developing Economies." — Review of Development Economics - "Serving the Underserved: Microcredit As a Pathway to Commercial Banks." — Review of Economics and Statistics ### Selected substantive research findings - Fuel price pass-through and distribution: - Response of inflation to gasoline price shocks is smaller, but more persistent and broad-based in developing economies than in advanced economies. - Using retail fuel prices instead of crude oil prices shows past studies underestimated pass-through to inflation. - Purchasing power of all households declines with fuel price increases; distributional impact is progressive, phases out within 6 months in advanced economies and persists beyond a year in developing countries. - Global Monthly Retail Fuel Price Database expanded to premium and regular fuels, time dimension to December 2020, sample to 190 countries. - Remittances during COVID‑19: - Monthly remittance dataset for 52 countries (16 with bilateral data), Jan 2020–Dec 2020, shows strong resilience in remittance flows during the pandemic. - Findings: (i) remittances responded positively to COVID-19 infection rates in migrant home countries; (ii) stricter containment measures dampened remittances; (iii) shift from informal to formal channels contributed to surge in formal remittances. - Size of fiscal stimulus in host countries positively associated with remittances. - World Uncertainty Index (WUI): - Constructed for an unbalanced panel of 143 countries quarterly from 1952 using frequency of the word “uncertainty” in EIU country reports. - Index spikes around major events and predicts significant declines in output, larger and more persistent in countries with lower institutional quality and sectors with greater financial constraints. - Climate and external finance interactions: - Theoretical and empirical evidence (1995–2018) shows climate shocks reduce the positive effect of FDI, ODA, and remittances on growth in low‑ and middle‑income countries. - Policy implication: build resilience to climate change and pursue global mitigation and technology transfer. - Green spending multipliers: - Published evidence that green spending multipliers are about twice as large as their non-green counterparts (sample countries for green land‑use investment from Africa or other lower‑income countries). - AI and structural change: - Productivity gains from "robots" may drive divergence between developing economies and AEs through higher robot intensity in AEs, with implications for inequality and policy sequencing. - Distributional effects of fiscal shocks: - Unanticipated fiscal consolidations lead to a long‑lasting increase in income inequality; fiscal expansions lower inequality. ### Model toolkits and country applications - DIGNAD: Debt‑Investment‑Growth‑Natural‑Disasters model - Purpose: quantitatively assess macroeconomic effects of natural disasters and policy trade‑offs in small natural disaster‑prone states. - Integrated into the IMF’s Climate Macroeconomic Assessment Program (CMAP). - Applications: pilot Samoa (informed policy advice to advocate additional climate‑adaptation investment); used in Article IVs and Selected Issues for Solomon Islands, Maldives, St. Lucia, Uganda, Samoa. - Key simulation result (Uganda DIGNAD): building adaptation infrastructure can reduce by two thirds the GDP losses at the trough triggered by a disruptive disaster and almost halve the resulting fiscal gap. - DIGNAR‑19 and DIG models: - Used for dynamic structural policy simulations (applications to Uganda, Guinea, The Gambia, Madagascar, Solomon Islands). - Uganda (DIGNAR-19): reform package yields a medium‑term increase in non‑oil real GDP growth of 1.8 percentage points; combined measures lift non‑oil growth potential to almost 6.5 percent in the medium term; under reform scenario Uganda would reach middle‑income status by FY2026/27. - Guinea: mining accounts for less than 6 percent of employment and less than ¼ of GDP; diversification critical given large bauxite, gold, and unexploited iron ore reserves. - The Gambia: infrastructure gap projected to reach about 15 percent of GDP in 2030 under current and planned policies; strong domestic policies could cover about two‑thirds of the gap. - Madagascar: planned public investment needs over 2020–2021 nearly double projected financing under the baseline: 41 percent vs. 33.5 percent of GDP; under‑execution of externally financed investment observed (planned 5.5 and 4.6 percent of GDP in 2019 and 2020; executed 4 and 2.7 percent). - Solomon Islands (DIGNAD): estimated annual additional spending needs to achieve SDG targets by 2030 about 6.9 percent of 2030 GDP. - Samoa (CMAP): hazards damage growth and affect debt sustainability; slow‑moving climate stresses likely to impact potential growth in agriculture, fisheries, tourism. - IAPOC Toolkit — Assessment Toolkit for Monetary Policy Frameworks: - Three pillars: Independence and Accountability; Policy and Operational Strategy; Communications. - Index constructed for 50 economies over 2007–2018; used in consultations for Georgia, Kyrgyz Republic, Kenya, Rwanda, Tanzania, Uganda. ### Policy recommendations and cross‑cutting implications - Focus MRLIC research on macroeconomic issues affecting LICs given limited funds; consult FCDO and advisory committee on prioritization. - For climate resilience: - Prioritize comprehensive analysis of investment plans for climate resilience and mainstream adaptation into fiscal and public investment planning. - Mobilize international donor support for ex‑ante financing of resilient infrastructure; ex‑ante donor financing is more cost‑effective than ex‑post reconstruction. - Integrate SDG and climate commitments into PFM reform agendas. - For resource‑rich and fragile states: - Diversify growth away from narrow commodity concentration to broaden employment and reduce vulnerability to exogenous shocks. - Improve public investment efficiency and execution; mobilize domestic revenue and concessional financing; sequence borrowing to avoid unsustainable public debt accumulation. - Use non‑distortionary financing (donors, reallocation, cutting unproductive spending) where possible for resilience building. - For governance: - Republic of Congo anticorruption reforms recommended: improve transparency in oil trading; strengthen oversight and accountability of national oil company; enhance anti‑money laundering framework. - Quantified macro‑fiscal impacts (Republic of Congo projections over next 10 years): potential additional growth between 0.8 and 1.8 percentage points per year; potential decline in debt between 2.25 and 3 percentage points of GDP per year. - For labor, gender, and inclusion: - Policies reducing educational gender gaps and discrimination in the informal sector deliver largest positive macroeconomic effects (Kenya analysis). - Prioritize interventions that limit human capital scarring from school closures; evidence of higher scarring in LICs supports stronger IMF support for LICs. ### Dissemination, conferences, and uptake - MRLIC research presented at 16 high‑level policy and academic conferences this year; cumulative total: 155 (exceeding the high target). - Examples of events: Climate-Related Natural Disasters conference (June 16, 2021); Supporting Food Security in Sub‑Saharan Africa; COVID‑19 and Fragile States; EAC meeting on monetary policy space; IMF‑FSB Early Warning Exercise on human capital scarring. - Dissemination channels include blogs, articles, podcasts, and a quarterly newsletter distributed to a network of over 1,500 academics, policymakers, central bank staff, government representatives, and FCDO staff. - Research outputs featured in IMF policy fora and flagship reports: - October 2021 WEO Box 2.1: Food Insecurity and Prices during COVID-19 (nominal global food prices risen more than 40 percent since the start of the pandemic; in LICs food ~40 percent of consumption basket; staple food price growth raised CPI inflation 5 percentage points). - Staff Climate Note on Macro‑Fiscal Implications of Adaptation to Climate Change (four building blocks for mainstreaming adaptation into fiscal policy). - MRLIC outputs reflected in Article IVs, REOs, WEO, and IMF Board papers. ### Capacity building and courses - DIGx online course: "Public Debt, Investment, and Growth: The DIG and DIGNAR Models" - Recent run: 146 participants active on platform; more than 20 percent were government officials. - Participant composition: about half from low‑ or lower‑middle‑income countries; among government officials, more than half from sub‑Saharan Africa. - Pass rates among active participants: 60 percent general public; 81 percent government officials. - Other courses and clinics: - Model‑Based Monetary Policy Analysis and Forecasting (MPAFx) — new forecasting module included Feb 2022 (supported by FCDO and Government of Japan). - Gender equality and macroeconomics course (Jan 24–Feb 3) in collaboration with ATI and UN Women. - DIGNAR‑19 toolkit webinar delivered via IMF CCAMTAC to 13 countries (including 5 LICs); participant feedback: high satisfaction. ### Costs, value for money, and financial status - Approved budget: US$29.5 million. - As of April 2022, $23.7 million has been drawn from the subaccount. - Project expenditures (Years 1–10, cumulative total $23,665,189): - HQ led missions: $6,823,847 - Research HQ based / Visiting Scholars / Short‑term Advisors / CD tools / training materials: $9,585,719 - Seminars & Study Tours: $1,697,718 - Project Backstopping: $3,173,599 - Project Management: $283,308 - Exceptional Expenses: $550,638 - Language Services: $2,170 - Trust Fund Fee: $1,548,190 - Cost metrics: - Working Papers: 175 - Cost Per Working Paper: $70,327 - Published Papers: 99 - Cost per Published Paper: $124,315 - Total Staff/Contractual/Visiting Scholar Costs: $16,409,566 - Research Paper Costs: $12,307,175 - Country Applications Costs: $4,102,392 - Average cost per published paper ($124,315) is lower than the FCDO benchmark of $215,000 (£156,000) per paper (note alternative FCDO benchmark in text: $183,000 (£150,000) per paper based on May 13, 2022 exchange rate). - Direct project management costs ~1% of total budget; including Trust Fund management fee, program management costs ~8%. - Funding re‑profiling and co‑funding: - Annual FCDO funding re‑profiled; annual funding reduced from £1.7m to £0.8m due to U.K. Government ODA spending target reduction. - Phase IV period: April 2020 to March 2025; total Phase 4 amount maintained at £5.1 million but rephased across years (first year £1.7m; second year £0.8m; third and fourth years £0.9m; fifth year £0.8m). - CCCDI temporary co‑funding for FY2022: USD 1.2 million. - Complementary funding uncertainty noted; without co‑funding only about 60 percent of current output would have been delivered. ### Risks, challenges, and management responses - Overall risk rating: Minor. - Key risks: - Funding reduction risk: reduction in FCDO funding and difficulty finding other long‑term funding could reduce programme effectiveness. - External context: reliance on secondary datasets at IMF HQ limits exposure to LIC contexts; spillovers from the war in Ukraine increased requests and slowed output production. - Delivery and operational risks mitigated by established delivery systems and experienced management teams. - Fiduciary and procurement: funds spent under IMF financial management controls; competitive selection for contractual hires. - Assurance and due diligence: - Central Assurance Assessment (CAA) of IMF by FCDO (March 2019) confirmed IMF as a low‑risk partner; light touch due diligence in November 2019 ahead of Phase 4. - Reporting and monitoring: - Date of last narrative financial report: May 2021 - Date of last audited annual statement: October 2019 - Quarterly updates and annual reporting to FCDO; e‑newsletters to >1,500 external stakeholders. ### Performance and impact indicators (selected) - Citations and downloads: - Citations to MRLIC research papers increased to 3,326 from 1,742 last year. - Average of 15 citations per article over 218 distinct intellectual entities produced cumulatively until Year 10. - 40 articles cited more than 20 times. - IMF Working Papers downloads increased to 140,000 from 128,000 last year, average 800 per paper. - 88 percent of 3,326 citations made by external papers with no IMF or FCDO affiliation (up from 83 percent). - Project outputs vs. targets (Year 10 highlights): - The MRLIC team reached or exceeded high targets on 10 out of 13 output indicators for the year; of the remaining three, two met medium targets and one was below medium. - The research project produced 24 working papers in Year 10 (including 14 book chapters, two commissioned) and published 9 papers in peer‑reviewed journals. *Source: MRLIC Annual Review (FCDO‑IMF), June 2022.* ### 1.1 Number of priority research papers or book chapters ### 1.1 Number of priority research papers or book chapters ### Output performance and targets - Indicator 1.1 — Number of priority research papers or book chapters produced on the specified research topics (Monetary and exchange rate policies; Public investment, growth, and debt sustainability; Macroeconomic management of natural resources; Macroeconomic policies and income distribution; Financial deepening for macroeconomic stability and sustained growth; Growth through diversification; Gender and macroeconomics; Capital flows): - By March 2022: H (167 papers) M (160 papers) L (155 papers) - 162 cumulative (14 in past year) Met medium target ### Peer‑reviewed publications (Indicator 1.2) - Indicator 1.2 — Number of research papers accepted for publication in appropriate high‑quality peer‑reviewed journals: - By March 2022: H (99 papers) M (95 papers) L (91 paper) - 98 cumulative (8 in past year) Met medium target - Narrative summary: MRLIC had eight papers accepted for publication in peer‑reviewed journals during the year, bringing the cumulative total to meeting the medium target. One MRLIC paper was not counted under this output because it was less directly related to LIC issues. ### Eight papers accepted for publication (titles and journals) - 1. Building back better: How big are green spending multipliers? — Ecological Economics. - 2. The distributional implications of the impact of fuel price increases on inflation. — Energy Economics. - 3. The welfare implications of exchange rate choices in developing agricultural economies — Journal of Macroeconomics. - 4. Will the AI revolution cause a great divergence? — Journal of Monetary Economics. - 5. Growth-equity trade-offs in structural reforms — Journal of Political Economy. - 6. The role of productivity, transportation costs, and barriers to intersectoral mobility in structural transformation — Economic Modelling. - 7. The Distributional Effects of Government Spending Shocks in Developing Economies. — Review of Development Economics. - 8. Serving the Underserved: Microcredit As a Pathway to Commercial Banks. — Review of Economics and Statistics. ### Selected substantive research findings and contributions - An MRLIC‑funded chapter in the book “The Global Informal Workforce: Priorities for Inclusive Growth” investigated the relationship between informality and gender gaps in Sub‑Saharan Africa, finding education is usually more relevant for women as a driver of informal employment. - MRLIC analysis examined drivers of remittance flows during the Covid‑19 pandemic. - One working paper found climate shocks reduce the positive effect of FDI, ODA, and migrants’ remittances on economic expansion; another argued for transferring clean energy technologies from advanced economies to emerging market and developing economies. - MRLIC research quantified the macro‑criticality of education: one paper estimated economic costs due to the loss‑of‑learning caused by the Covid‑19 pandemic; another examined epidemics and human capital in developing countries. - MRLIC commissioned and contributed two chapters to a new IMF book on How to Achieve Inclusive Growth (chapters on Labor Markets and Financial Globalization), hosted the editors as IMF visiting scholars, and ensured free and open access to the volume. ### Progress, lessons learned, and recommendations - Progress: MRLIC continues to produce high‑quality, relevant research addressing immediate LIC challenges, including rising energy prices and inflation, rising debt, loss of human capital, and structural transformation challenges. - Recommendation: Given limited funds, ensure MRLIC research remains tightly focused on macroeconomic issues affecting LICs rather than spreading across less relevant areas or topics already well covered by other funding. The FCDO and the advisory committee should be consulted to provide advice on this prioritisation. *Source: MRLIC Annual Review (FCDO‑IMF), June 2022.* ### 1. Labor Markets [Chapter 3 of How to Achieve Inclusive Growth] ### 1. Labor Markets [Chapter 3 of How to Achieve Inclusive Growth] ### Toolkits and Data Products - MRLIC produced two new toolkits: - Debt-Investment-Growth-Natural-Disasters (DIGNAD) model: quantitatively assesses the macroeconomic effects of natural disasters and associated policy trade-offs in small natural disaster-prone states. DIGNAD was integrated into the IMF’s Climate Macroeconomic Assessment Program (CMAP). In the first pilot case of Samoa, DIGNAD simulations informed policy advice to advocate additional climate-adaptation investment. Applications to Bangladesh, Timor-Leste, and Madagascar are forthcoming. - Independence and Accountability, Policy and Operational Strategy, and Communications (IAPOC) index: an assessment toolkit for monetary policy frameworks (MPFs) synthesizing pillars capturing the soundness of MPFs for 50 economies over time, including LICs. The IAPOC toolkit has been presented at conferences and used to strengthen MPF consultations for Georgia, Kyrgyz Republic, Kenya, Rwanda, Tanzania, and Uganda. - Indicator 4.2 definition: “A data toolkit is a new dataset that is put in a format that is accessible and applicable to the work of IMF country teams and country authorities.” - Progress against toolkit production targets by March 2022: - Target bands: H (14), M (13), L (11) - Achieved: 13 cumulative, 2 in the past year (met medium) ### Dissemination, Conferences, and External Engagement - MRLIC research was presented at 16 high-level policy and academic conferences this year; cumulative total: 155 (exceeding the high target). - Target bands for cumulative high-level conferences by March 2022: H (152), M (148), L (144) - Achieved: 155 cumulative, 16 this year (exceeds high) - Dissemination channels and outputs include blogs, articles, and a quarterly newsletter distributed to a network of over 1,500 academics, policymakers, central bank staff, government representatives, and FCDO staff. - Examples of outreach items listed: - IMF Blog: Fragile and Conflict-Affected Economies Are Falling Further Behind - VOXEU Blog: Defying the odds: Remittances held up during the COVID-19 pandemic - VOXEU: Blog Investigating the Drivers of Remittance Fees - GlobalDev Blog: Public investment for growth: a country’s absorptive capacity is key - IMF Podcast: Island States Paying Price for Climate Change - F&D: Intergenerational Social Mobility in Africa - DIGNAR-19 Toolkit Manual - Note: “Spillovers from the War in Ukraine to Low-income Countries” (bilaterally shared with FCDO) ### Research Output Volume and Commissioning - Indicator 4.1: Number of commissioned research papers produced on thematic areas. - By March 2022 targets: H (35), M (33), L (32) - Achieved: 34 (this year, 2 chapters in inclusive growth) — Met medium ### Progress, Lessons Learned, and Recommendations - Toolkits are a core mechanism through which MRLIC research becomes embedded in IMF operations and used by IMF economists and country teams. - MRLIC has expanded the researcher base by commissioning/co-authoring with external researchers and by involving junior researchers at early career stages; many junior researchers pursue further research or PhD studies after involvement. - Previous recommendation to strengthen the network of researchers: after discussion with FCDO and given budget cuts and emerging crises (Covid-19, Russia-Ukraine), the current commissioning approach plus events/conferences is judged satisfactory. ### Risk Overview - Overall risk rating: Minor. - Key risks and mitigations: - External context: Most research uses secondary datasets at IMF headquarters — limited exposure to LIC contexts. - Delivery: Established delivery systems and high sustained demand for MRLIC outputs. - Operational: Experienced management teams at FCDO and IMF. - Fiduciary: Funds spent directly by the IMF subject to IMF financial management controls. - Reputational: Little or no reputational risk from research activities. - Innovation: Research topics not subject to substantial innovation risks. - Safeguarding: Programme activities rarely involve contact with vulnerable persons; external researchers managed per IMF procedures. - Funding reduction risk: Reduction in FCDO funding and difficulty finding other long-term funding could reduce programme effectiveness; mitigations include focusing on core elements and securing additional funding. - Assurance and due diligence: - A Central Assurance Assessment (CAA) of the IMF conducted by FCDO in March 2019 confirmed the IMF as a low-risk partner; a light touch due diligence was done in November 2019 ahead of Phase 4. - The risk register has been updated in response to Covid-19 but needs further updating to reflect pandemic-era operations and funding reductions. ### Programme Management, Delivery, and Financial Performance - FCDO funding re-profiled; annual funding reduced from £1.7m to £0.8m due to UK Government ODA spending target reduction. - Reduction increases difficulty covering fixed research programme costs (mainly staff) and costs for conferences and research uptake; uncertainty hampers attraction and retention of contractual research staff. - In 2021/22, shortfall was partly mitigated by temporary funding from CCCDI; future complementary funding uncertain. - Governance and coordination: - FCDO and IMF hold quarterly check-in meetings; IMF provides quarterly summaries of outputs and upcoming presentations. - Strong continuity in IMF management: MRLIC programme director involved since inception and remains main IMF–FCDO contact. - VfM and unit cost metrics: - Cost per working paper: $70,327 (based on Working Papers: 175) - Cost per published paper: $124,315 (based on Published Papers: 99) - Total Staff/Contractual/Visiting Scholar Costs: $16,409,566 - Research Paper Costs: $12,307,175 - Country Applications Costs: $4,102,392 - The average cost per published paper ($124,315) is lower than the FCDO benchmark of $215,000 (£156,000) per paper. - Cost per working paper is approximately $70,000. - Procurement and quality controls: - MRLIC follows IMF guidelines for hiring, travel, conferences; contractual employees selected by competitive process; outputs must meet Fund requirements for publication; papers further evaluated via peer-reviewed publication submissions. - Reporting dates: - Date of last narrative financial report: May 2021 - Date of last audited annual statement: October 2019 ### Selected Working Papers and Key Findings (Annex 1 — Output 1.1) - Topic 1. Modelling and understanding policy choices - “Taking Stock of IMF Capacity Development on Monetary Policy Forecasting and Policy Analysis Systems.” Key focus: qualitative assessment of FPAS CD delivery and FPAS use in central bank decision-making. - “The Distributional Implications of the Impact of Fuel Price Increases on Inflation.” Key findings: - Response of inflation to gasoline price shocks is smaller, but more persistent and broad-based in developing economies than in advanced economies. - Using retail fuel prices rather than crude oil prices shows past studies underestimated pass-through to inflation. - Purchasing power of all households declines with fuel price increases; distributional impact is progressive, but progressivity phases out within 6 months in advanced economies and persists beyond a year in developing countries. - Data update: Global Monthly Retail Fuel Price Database expanded to premium and regular fuels, time dimension to December 2020, sample to 190 countries. - Topic 2. Understanding macro-financial linkages - “Defying the Odds: Remittances During the COVID-19 Pandemic.” Key findings: - Using a monthly remittance dataset for 52 countries (16 with bilateral data) covering Jan 2020–Dec 2020, remittances showed strong resilience during the pandemic. - Evidence: (i) remittances responded positively to COVID-19 infection rates in migrant home countries; (ii) stricter containment measures dampened remittances; (iii) shift from informal to formal channels due to travel restrictions contributed to surge in formal remittances. - Size of fiscal stimulus in host countries positively associated with remittances. - “The S-curve: Understanding the Dynamics of Worldwide Financial Liberalization.” Key findings: - Using a database of domestic financial reforms in 90 countries (1973–2014), global financial liberalization followed an S-curve: slow early, accelerated during the 1990s, slowed after 2000. - A learning model explains dynamics: policymakers update beliefs on growth effects of reforms; positive growth surprises in advanced economies accelerated global reform uptake; the 2008 financial crisis caused belief reversals. - “The World Uncertainty Index.” Key points: - Constructed for an unbalanced panel of 143 countries quarterly from 1952 using frequency of the word “uncertainty” in EIU country reports. - Index spikes around major events (Gulf War, Euro debt crisis, Brexit vote, COVID pandemic). - Uncertainty higher in developing countries; more synchronized across advanced economies. - Innovations in the WUI foreshadow significant declines in output, larger and more persistent in countries with lower institutional quality and in sectors with greater financial constraints. - Topic 3. Building resilience - “Global Climate Change Mitigation, Fossil-Fuel Driven Development, and the Role of Financial and Technology Transfers.” Key conclusions: - Advanced economies (AEs) typically have stronger interest in mitigation than EMDEs. - From equity perspective, compensation is called for only if EMDEs are relatively small. - There can be an efficiency case for compensation (AEs buy EMDEs out of some GHG emissions). - Superior option: development of clean energy technologies by AEs and transfer to EMDEs, requiring strong mitigation efforts by AEs even if EMDEs do not initially comply. - “How do Climate Shocks Affect the Impact of FDI, ODA and Remittances on Economic Growth?” Key findings: - Theoretical model: FDI, ODA, and remittances improve growth; effects increase with good absorptive capacity; climate shocks reduce these positive effects. - Empirical evidence for low- and middle-income countries (1995–2018) confirms theory. - Policy implication: developing countries should build strong resilience to climate change; global actions needed to reduce greenhouse gas emissions and build structural resilience, especially in developing countries. *How to Achieve Inclusive Growth (Chapter 3: 1. Labor Markets), MRLIC Annual Review (fcdo-ar-june2022).* ### 8. Macro-Fiscal Gains from Anticorruption Reforms in the Republic of Congo [Chapter 6 of Good Governance ### 8. Macro-Fiscal Gains from Anticorruption Reforms in the Republic of Congo ### Key findings - Notwithstanding the anticorruption efforts the authorities have made since 2017, oil revenue management and public investment in Congo remain vulnerable to corruption as a result of insufficient transparency and accountability. - Corruption in the oil revenue management and public investment sectors is potentially a significant factor of weak macro-fiscal outcomes. - Macro-fiscal gains from anticorruption reforms are significant and depend on the ambition of reforms implemented. ### Quantified macro-fiscal impacts (projections over the next 10 years) - Potential additional growth: between 0.8 and 1.8 percentage points per year in the long term. - Potential decline in debt: between 2.25 and 3 percentage points of GDP per year. ### Recommended reforms for the oil sector - Improve transparency in oil trading. - Strengthen oversight and accountability of Congo’s national oil company. - Support oil sector governance reforms with measures to enhance the framework for anti–money laundering. ### Recommended reforms for public investment management and efficiency - Increase transparency of public investment execution. - Strengthen external controls. - Restructure the internal audit system. *Chapter 6 of Good Governance in Sub-Saharan Africa — Giovanni Melina, Hoda Selim, and Concepcion Verdugo-Yepes.* ### 5. Harnessing Resource Wealth for Inclusive Growth in Fragile Western African States [published in March ### 5. Harnessing Resource Wealth for Inclusive Growth in Fragile Western African States ### Overview and purpose - Presents applications of dynamic structural models (DIGNAR-19, DIGNAD, DIG) and analytical work aimed at informing policy on public investment, natural-resource-led growth, climate resilience, infrastructure financing, and distributional outcomes in low-income and fragile states. - Emphasizes strategies to diversify growth away from narrowly concentrated commodity sectors, raise public investment efficiency and execution, mobilize fiscal space, and integrate climate and SDG targets into fiscal planning. ### Key country-model applications and findings - Uganda (DIGNAR-19; Article IV) - Simulations with the IMF’s DIGNAR-19 dynamic general equilibrium model, calibrated to Ugandan data, quantify growth dividends from a reform package. - The combined effect of the reform package would yield a medium-term increase in non-oil real GDP growth of 1.8 percentage points. - The combined effects of fiscal measures, structural and governance reforms would lift non-oil growth potential to almost 6.5 percent in the medium term. - Under the reform scenario, Uganda would reach a middle-income status by FY2026/27. - Guinea (DIGNAR-19; Article IV) - Growth is increasingly concentrated in the mining sector despite the sector accounting for less than 6 percent of total employment and contributing less than ¼ of total GDP. - Guinea holds almost one third of the world’s bauxite reserves and large reserves of gold and the world’s largest unexploited iron ore deposits, with potential to move up the value chain to alumina and steel. - FDI in mining has been a key driver and is expected to accelerate; diversifying growth toward the non-mining sector is critical to create jobs, reduce poverty, and reduce vulnerability to exogenous shocks and competition (e.g., Australia, Indonesia). - A COVID-19 extension of the DIGNAR model highlights risks of the current growth model and benefits of a more diversified growth model. - The Gambia (DIGNAR-19; Selected Issues) - Infrastructure gap projected to reach about 15 percent of GDP in 2030 under current and planned policies. - Strong government policies to improve domestic revenue mobilization, enhance spending efficiency, and attract private investment could cover about two-thirds of the infrastructure gap. - Support from development partners needed for the remaining gap; reliance on borrowing would significantly raise public debt given limited fiscal space. - Madagascar (DIGNAR-19; Extended Credit Facility) - Public investment needs to realize the Plan Emergence Madagascar (PEM) are nearly double projected financing under the baseline over 2020-2021: 41 percent vs. 33.5 percent of GDP. - Recent under-execution of externally financed investment: planned at 5.5 and 4.6 percent of GDP in 2019 and 2020 budget laws, executed at 4 and 2.7 percent of GDP, respectively. - Domestically financed investment was 1.6 and 2.9 percent of GDP in 2019 and 2020, respectively. - A pre-COVID DIG model iteration showed that raising public investment efficiency to the SSA average could increase real GDP per capita growth by up to 0.7 percent in 2023 and 0.5 percent each year thereafter compared to the baseline as at end-2019, while boosting private consumption and investment. - Solomon Islands (DIGNAD; Selected Issues) - Estimated annual additional spending needs to achieve key SDG targets by 2030 are about 6.9 percent of 2030 GDP. - Higher investment in energy infrastructure, including renewable energy, is key to climate adaptation and low-carbon transition. - Creating fiscal space via budget reallocation and improving spending efficiency would raise economic returns by building climate resilience. - An integrated financing strategy mixing additional concessional financing and front-loaded fiscal measures, including domestic revenue mobilization, is needed and should be properly sequenced to achieve SDGs by 2030. - Samoa (CMAP technical assistance) - Samoa is highly exposed to tropical cyclones, earthquakes, tsunamis, droughts, and floods; these hazards damage growth and affect debt sustainability. - Slow-moving climate stresses (sea level rise, heat) likely to impact potential growth in agriculture, fisheries, and tourism. - Assessment draws on DIGNAD analysis (Annex I). - Uganda (DIGNAD; Selected Issues on climate resilience) - DIGNAD simulations indicate that building adaptation infrastructure can reduce by two thirds the GDP losses at the trough triggered by a disruptive disaster and almost halve the resulting fiscal gap. - Given financing challenges, international support and scaling up capacity to access donor funds are required to meet ambitious adaptation plans. - Dominica (Selected Issues on resilience financing) - Investing in resilience capital is efficient despite high economic cost; the financing instrument matters. - Financing resilience via donor support or cutting unproductive government spending yields higher returns than financing via distortionary taxes. ### Distributional and gender-related findings - Kenya (Selected Issues: Towards More Gender Equality) - Analysis of gender inequality across education, health access, employment, earnings, and financial inclusion using a general equilibrium model. - Policies that reduce the educational gender gap and discrimination in the informal sector deliver the largest positive macroeconomic effects. - Novel policy simulation: reducing time women spend fetching safe water is analyzed as a policy option. - Policy advice includes measures to increase policy efficiency and prevent the COVID-19 crisis from eroding recent gender-equality gains. ### Policy implications and cross-cutting recommendations - Diversify growth away from narrow commodity concentration to broaden employment and reduce vulnerability to external shocks. - Improve public investment efficiency and execution to translate budgeted allocations into realized projects and growth outcomes. - Mobilize domestic revenue and attract private and concessional financing while sequencing borrowing to avoid unsustainable public debt accumulation. - Integrate SDG and climate commitments into PFM reform agendas and fiscal planning to achieve climate-sensitive development goals. - Prioritize adaptation infrastructure to reduce disaster-driven GDP losses and fiscal gaps, supported by international financing and capacity building to access donor funds. - Use non-distortionary financing (donors, reallocation, cutting unproductive spending) where possible for resilience-building to maximize returns and limit adverse distributional impacts. ### Capacity building, courses, and uptake by authorities - Forecasting and Policy Analysis Systems Assistance (FPAS) to Ghana (Virtual TA, November 2021) - Supported Bank of Ghana in enhancing short-term forecasting architecture, counterfactual simulations with the Quarterly Projection Model (QPM), and model-based analysis for the November 2021 forecast round. - Outputs include User Guides and contributions to a prospective IMF Working Paper on Ghana QPM. - Courses offered to IMF staff and country authorities - Online Course: Public Debt, Investment, and Growth: The DIG and DIGNAR Models (DIGx) - Explains interactions among the investment-growth nexus, fiscal adjustment, and private sector response. - Highlights factors shaping effects: type of fiscal financing, rate of return of public capital, efficiency of public investment, and revenue mobilization capacity. - Over the past decade, DIG and DIGNAR used in over 65 country applications in Fund-supported programs and surveillance. - Course applications inform policy on public investment surges, fiscal consolidations, cash transfers, mix of current and capital spending, spending efficiency, tax administration, and commodity price collapses. - Recent course run: 146 participants active on the online platform; more than 20 percent were government officials. - Participant composition: about half of active participants (general public and government officials) were from low- or lower-middle-income countries; among government officials, more than half were from the sub-Saharan African region. - Pass rates among active participants: 60 percent for the general public and 81 percent for government officials. - Course: Macro-Structural Training: Distributional Impact of Policies and Reforms - Reviews IMF analytical and policy work on inequality and operational tools for country work, including templates to assess distributional incidence of fuel subsidy reform and a multi-sector heterogeneous agents toolkit for policy analysis. - Course: Clinic on Diversification, Structural Transformation, and Reforms in Developing Economies - Focuses on diversification in trade and the domestic economy, links to volatility and growth, and empirical relationships between structural reforms and productivity across income groups. - Course: Clinic on Labor and Product Market Reforms - Covers regulations, institutions, short-term effects, interactions between reforms, and analytic frameworks for quantifying reform impacts in an IMF surveillance context. - Online Course: Model-Based Monetary Policy Analysis and Forecasting (MPAFx) - New module on model-based forecasting added and included in the February 2022 MPAFx offering, supported by FCDO and the Government of Japan. *IMF—FCDO Annual Report, June 2022 (Annex B: Details of Country Applications under Output 2).* ### 2. Presentation to Authorities: Enhancing Resilience to Climate Change in the Maldives ### Presentation to Authorities: Enhancing Resilience to Climate Change in the Maldives ### Climate adaptation analysis and main findings - The team presented an analysis on climate adaptation to the Maldivian authorities in the context of the Article IV consultation. - Building resilient infrastructure is necessary given the increased likelihood of adverse climate-change-related shocks. - The analysis calibrates a general equilibrium model (DIGNAD) to assess investment plans with respect to: - their degree of climate resilience, - their impact on future economic prospects, - their funding costs and sources. - Main finding: there is a significant dividend associated with building resilient infrastructure. - Under worsened climate conditions, the cumulative output gain from investing in more resilient technologies increases up to a factor of two. - Fiscal constraint implication: given the Maldives’ limited fiscal space, particularly after COVID-19, international cooperation should be stepped up. - Financial timing result: it is financially convenient for donors to help build resilience prior to the occurrence of natural disasters rather than helping finance reconstruction ex-post. ### Policy implications and recommendations - Prioritize comprehensive analysis of investment plans to evaluate climate resilience and macroeconomic impacts. - Mobilize international donor support to finance resilient infrastructure given limited domestic fiscal space. - Emphasize ex-ante donor financing of resilient technologies as more cost-effective than ex-post reconstruction financing. --- ### Capacity Development and Training Activities ### DIGNAR-19: Toolkit for Macro Policy Assessments of COVID-19 - A webinar on the DIGNAR-19 model was delivered through the IMF CCAMTAC. - Attendance: participants including country officials from 13 countries in the Caucasus, Central Asia, and Mongolia region, including 5 low-income countries—Georgia, Kyrgyz Republic, Mongolia, Tajikistan, and Uzbekistan. - Participant feedback: high level of satisfaction regarding presentation effectiveness and usefulness of material. ### Gender equality and macroeconomics course - Conducted from January 24th to February 3rd in collaboration with the Africa Training Institute (ATI) and UN Women. - Audience: country authorities from selected African countries. ### Model-Based Monetary Policy Analysis and Forecasting (MPAFx) online course - With support from the FCDO and the Government of Japan, an additional module on model-based forecasting was developed. - The new module was completed and included in the February 2022 MPAFx offering. --- ### High-level Policy Conferences and Events ### Climate-Related Natural Disasters—Macroeconomic Effects and Policy Responses - Conference organized virtually on June 16, 2021, with policymakers, experts, and academics. - Opened with remarks by RES director Gita Gopinath and a high-level panel including Managing Director Kristalina Georgieva, Mia Mottley (Prime Minister, Barbados), and Richard Randriamandrato (Minister of Economy and Finance, Madagascar); moderated by Haslinda Amin (Bloomberg Television). - Panel themes: how climate change exacerbates vulnerabilities to macro-critical natural disasters (droughts, floods, hurricanes). - Policy topics covered: debt service suspension initiative, disaster clause provisions in public debt, saturation of the economy with safe assets, effects on sectoral specialization, financial adaptation and monetary policy, inclusion of disasters in macro-fiscal frameworks. ### Supporting Food Security in Sub-Saharan Africa Amid COVID-19 and Climate Change - Key observations: - Sub-Saharan Africa is highly vulnerable to climate change with increased frequency and intensity of natural disasters threatening food security due to heavy reliance on rain-fed agriculture and weak infrastructure and institutions. - COVID-19 compounded challenges by aggravating food chain disruptions, raising food prices, eroding real incomes, and increasing the number of undernourished to reach 264 million in 2020. - Policy consideration: identify viable options to support pandemic recovery and resilient, sustainable growth, including voluntary channeling of some SDRs from countries with strong external positions to those most in need. ### COVID-19 and Fragile States: Promoting Resilient Recovery for the Most Vulnerable Communities - Objective: take stock of economic and social impact of COVID-19 in fragile and conflict-affected states (FCS) and identify pathways for resilient recovery. - Focus: scale up joint multilateral support where climate risks, food insecurity, and active conflict overlap; highlight IMF commitment through an FCS Strategy. ### Macroeconomic Fragile States post COVID-19: What Stabilization Policies? - Webinar at the Euro-Mediterranean Economists Association discussed increased fragility in the Middle East and Africa. - Reference: the book “Macroeconomic Policy in Fragile States” coedited by Ralph Chami, Raphael Espinoza, and Peter Montiel. - Policy anchors: fiscal policy, trust, governance, private sector involvement; role of international partners, coordination, and solidarity. ### How to Achieve Inclusive Growth - Framing: rising inequality, poverty, social unrest, gender and ethnic disparities, declining social mobility, unbalanced growth, and climate risk require a holistic framework. - Event: launch of a new IMF book presenting a unified plan to combat economic and social disparities. ### EAC: Challenges to Monetary Policy Space and Transmission - Virtual meeting with East African Community (EAC) Ministers of Finance and Central Bank Governors on October 19 during the 2021 Annual Meetings. - MRLIC team provided input to the presentation; discussants included Mr. Atingi-Ego (Deputy Governor, Bank of Uganda) and Mr. Rwangombwa (Governor, Central Bank of Rwanda). - Welcoming and closing remarks by Mr. Abebe Aemro Selassie (Director, IMF’s African Department). ### IMF-FSB joint Early Warning Exercise: Human Capital Scarring - The Early Warning Exercise, jointly conducted by the IMF and the Financial Stability Board (FSB), presented to the IMFC during the World Bank-IMF 2021 Annual Meetings, considered downside risks including human capital scarring from the pandemic. - Contribution: team estimating long-term GDP losses from school closures and pandemic disruptions (April 2021 World Economic Outlook, Chapter 2, Box 2.2). - Finding: potentially higher scarring in low-income countries due to more school closures, supporting strong support for low-income countries in IMFC deliberations. ### Supporting Fragile and Conflict-Affected States: The IMF FCS Strategy - Analysis shows per capita incomes in FCS will not recover to near their 2019 levels until 2024 based on IMF projections; the gap with pre-pandemic per capita income trends is set to remain larger for FCS than for other countries. - Low-income FCS are particularly at risk of being left behind. - Outputs from the FCDO-IMF research collaboration feed into the IMF’s comprehensive FCS strategy discussed at the IMF Board Meeting on March 9 with a launching event on March 18. --- ### Research Outputs Reflected in IMF Policy Papers ### October 2021 WEO Box 2.1: Food Insecurity and Prices during COVID-19 - Nominal global food prices have risen more than 40 percent since the start of the pandemic. - In low-income countries, where food makes up about 40 percent of the consumption basket, staple food price growth raised consumer price index inflation 5 percentage points. - Within countries, the poorest households spend proportionately more on food: people in sub-Saharan Africa with consumption below $2.97 a day spend about 58 percent of their income on food. ### Staff Climate Note on Macro-Fiscal Implications of Adaptation to Climate Change (joint with FAD) - Adaptation is integral to sustainable development and must be mainstreamed into fiscal policy. - Four building blocks identified: 1. Taking stock of present and future climate risks, identifying knowledge and capacity gaps, and establishing guidance for next steps. 2. Developing adaptation solutions guided by an extension of the IMF three-pillar disaster resilience strategy to address changes in both extreme and average weather: prevention of risks, alleviation of residual risks, and macro-fiscal resilience. 3. Mainstreaming these solutions into government operations by strengthening public financial management institutions and factoring climate risks and adaptation plans into budgets, macro-frameworks, and management of public investment, assets and liabilities. 4. Providing for transparent evaluations to inform future plans through continual monitoring and regular updating of adaptation plans. ### Board Paper inputs on diversification and recovery - Inter-departmental working group examined targeted (vertical) and horizontal interventions to promote diversification in low-income countries; concluded horizontal and vertical policies are complements rather than substitutes in many cases. - Dynamic general equilibrium macroeconomic model assessment: simulation for the average LIC suggests public investment planned for 2021-25 will accelerate growth relative to the WEO baseline and be almost sufficient for the average LIC to get back to the pre-COVID convergence path by 2025. --- ### Toolkits Developed and Disseminated ### DIGNAD - Description: a structural dynamic general equilibrium framework to quantitatively assess macroeconomic effects of natural disasters and associated policy trade-offs in small natural disaster-prone states with focus on growth and debt; based on Marto, Papageorgiou and Klyuev (2018). - Uses: evaluate outcomes of climate-related natural disasters on macroeconomic variables such as GDP and debt conditional on ex-ante and ex-post adaptation policies. - Calibration: can be calibrated to match country-specific data moments (e.g., annual return on standard infrastructure investment and adaptation infrastructure investment). - Applications: used in Article IV surveillances (e.g., the Solomon Islands, the Maldives, St. Lucia) and integrated into the Climate Macroeconomic Assessment Program (CMAP). ### IAPOC Toolkit – Assessment Toolkit for Monetary Policy Frameworks - Framework: three pillars—Independence and Accountability, Policy and Operational Strategy, and Communications (IAPOC). - Coverage: index constructed for 50 advanced economies, emerging markets, and low-income developing countries over 2007-2018 based on central banks’ laws and websites. - Dissemination: launched within IMF staff on May 19, 2022; ad hoc consultations conducted with IMF country teams in Georgia, Kyrgyz Republic, Kenya, Rwanda, Tanzania, and Uganda. *Source: FCDO-IMF research collaboration Annual Report, June 2022.* ### 1. Presentation of “How to Boost the Post-COVID-19 Recovery? Policy Lessons from Country Applications of ### Presentation of “How to Boost the Post-COVID-19 Recovery? Policy Lessons from Country Applications of the DIGNAR Model” at Villa Mondragone International Economic Seminar in July 2021 ### Seminar and Presentation Activity (selected) - Presentation of “How to Boost the Post-COVID-19 Recovery? Policy Lessons from Country Applications of the DIGNAR Model” at Villa Mondragone International Economic Seminar in July 2021. - Presentation on Food insecurity in Low-Income Countries at a seminar organized by the IMF and the World Food Programme in February 2022. - Presentation of “Network Bottlenecks and Market Power” at Society for Economic Dynamics in July 2021. - Presentation on “The Socio-Economic Impact of Special Economic Zones: Evidence from Cambodia” at the 23rd INFER Annual Conference in September 2021; Southern Economic Association Conference in November 2021; and as a poster at Allied Social Science Associations (ASSA) Annual Conference in January 2022. - Multiple presentations on “Search Externalities in Firm-to-Firm Trade” at University of Bonn in September 2021; STEG conference in January 2022; and CSAE conference, University of Oxford in March 2022. - Keynote Speech: “Will the AI Revolution Cause a Great Divergence?” at The 2nd Applied Macroeconomics Forum in December 2021. - Presentation on "Structural Reforms and Elections: Evidence from a World-Wide New Dataset" at NBER Summer Institute in July 2021. - Presentation on LDC economic development and challenges at UN LDC Conference in November 2021. - Webinar presentation “Macroeconomics of Climate Change” at Africa Training Institute in April 2021. - Presentation on Epidemics, Gender, and Human Capital in Developing Countries at an AFRITAC event in December 2021. - Presentation on “Monetary Policy Frameworks: An Index and New Evidence” at BIS in March 2022. - Presentation of macro-fiscal results of Samoa’s CMAP mission to acting Minister of Finance and management of the Ministry of Finance in March 2022. ### Internal and Fund-wide Dissemination - Internal presentations delivered to IMF audiences included: - “Trade and the COVID-19 pandemic: lessons from French firms” at a Surveillance meeting in November 2021. - “The Role of Targeted Interventions to Support Growth and Diversification in Developing Countries: Recent Staff Work” at Diversification Working Group Seminar in February 2022. - “Food insecurity in SSA” at RES-AFR joint IMF seminar on February 16, 2022. - “Food Prices in Sub-Saharan Africa: An Empirical Assessment” at AFR-RES joint IMF seminar on March 31, 2022. - Internal daily newsletter “Headlines on LICs” circulated to about 100 Fund staff, expanded during the COVID-19 crisis to cover Ukraine-Russia war, food crisis, inflation, climate change, inequality, gender, and other LIC-relevant topics. ### Other Outputs (selected) - E-newsletters: June 2021; September 2021; December 2021; March 2022. - Blogs/Articles/Podcasts/Toolkits: - IMF Blog: Fragile and Conflict-Affected Economies Are Falling Further Behind. - VOXEU Blog: Defying the odds: Remittances held up during the COVID-19 pandemic. - VOXEU: Blog Investigating the Drivers of Remittance Fees. - GlobalDev Blog: Public investment for growth: a country’s absorptive capacity is key. - IMF Podcast: Island States Paying Price for Climate Change. - F&D: Intergenerational Social Mobility in Africa. - DIGNAR-19 Toolkit Manual. ### Key Findings and Analytical Outputs - Project performance and targets: - The MRLIC team reached or exceeded high targets on 10 out of the 13 output indicators considered under the program. - Of the remaining three output indicators, two met or exceeded the middle targets while one is below the middle target. - Funding and rephasing (Phase 4): - Annual project funding for the year was reduced from £1.7 million to £0.8 million while the total project amount remains unchanged. - Phase IV period: April 2020 to March 2025. - Phase disbursement rephasing: from equal annual installments of £1.7 million for three years to £1.7 million for the first year; £0.8 million for the second year; £0.9 million for the third and fourth years; and £0.8 million for the fifth year. - Total Phase 4 amount maintained at £5.1 million. - Complementary funding: - CCCDI funding for the fiscal year 2022 amounts to USD 1.2 million. - Research reach and impact metrics: - Citations to MRLIC research papers increased to 3,326 from 1,742 reported last year. - Average of 15 citations per article over 218 distinct intellectual entities produced cumulatively until Year 10. - 40 articles cited more than 20 times. - IMF Working Papers downloads increased to 140,000 from 128,000 last year, with an average of 800 per paper. - 88 percent of the 3,326 citations were made by external papers with no IMF or FCDO affiliation (up from 83 percent last year). - Research dissemination into policy fora and tools: - DIGNAD (Debt-Investment-Growth-Natural-Disasters) model integrated into the IMF’s Climate Macroeconomic Assessment Program (CMAP) technical assistance program. - In the Samoa pilot, DIGNAD simulations inform policy advice to advocate additional climate-adaptation investment that would promote long-term debt sustainability even with upfront concessional borrowing. - MRLIC outputs featured in IMF flagships and policy documents including the World Economic Outlook (WEO), Regional Economic Outlooks (REOs), IMF Board papers and presentations, Article IV Staff Reports, and technical assistance reports. - Courses and toolkits delivered on DIG, DIGNAR, DIGNAR-19, DIGNAD, monetary policy frameworks, inequality, diversification, and labor market reforms. ### Note: Spillovers from the War in Ukraine to Low-Income Countries (summary) - Primary channels of impact identified: - Impacts on global food and oil prices and financial linkages. - Food security specifics: - Cereals make up two-thirds of the daily caloric intake in LICs and are primarily imported. - Increases in global wheat prices could bring almost one-to-one increases in local wheat prices. - A global wheat price increase by itself could result in a 3-5 percent increase in the cost of the consumption basket in many LICs, with substantially larger impacts in countries with high wheat consumption shares and import dependence. - Additional risks: - LICs could be affected by oil price spikes, tightened external financing conditions from uncertainty and financial sanctions, and limited policy space following the pandemic. - Policy implication summarized: - Immediate attention to food and fuel price shocks, combined with constrained fiscal and external buffers, necessitates tailored policy responses for LICs to protect vulnerable households and preserve macroeconomic stability. *Source: Macroeconomic Research in Low-Income Countries — An FCDO/IMF Research Partnership: Tenth Year Annual Report to FCDO (prepared by IMF staff; June 13, 2022).* ### references prepared by the IMF team and shared with the FCDO. ### fcdo-ar-june2022 - references prepared by the IMF team and shared with the FCDO ### Challenges - Annual funding was reduced by more than a half, compressing funds needed to operationalize the work program. - Co-funding from the CCCDI portfolio and proactive management helped maintain high performance; without these efforts, only about 60 percent of the current output would have been delivered. - The budget change posed a risk to continue funding fees for exclusive commercial databases essential for original, high-quality research; in a tight budgetary environment those fees would be among the first items to be cut. - Stable funding is key to supporting contractual positions; uncertainty over the budget posed a challenge in renewing employment contracts and hiring new contractual staff. - Spillovers from the war in Ukraine increased requests from IMF membership and slowed MRLIC output production. - Lingering uncertainties from COVID-19, heavy debt burdens, soaring energy prices, and escalating food insecurity accentuated dire conditions in many LICs, triggering frequent priority changes to respond to urgent IMF member requests. - The MRLIC team appreciated the early disbursement of part of the rephased third installment (£ 632,000 out of £900,000) in March 2022, allowing fulfillment of constructive obligations for FY2023 (Year 11). - The team requested FCDO views on calibrating the project’s expected outputs amid substantial budget cuts. ### Researcher base and capacity-building - The team continued to expand the researcher base by involving junior researchers at early career stages; many pursued further research or PhD studies in macro development. - Examples of junior researchers and subsequent affiliations: - Matt Lowe — Assistant professor, University of British Columbia; coauthored “The public and private marginal product of capital”, 2019, Economica 86:342, 336-361. - Ricardo Marto — University of Pennsylvania (PhD studies). - Kristina Manysheva — Northwestern University (PhD studies). - Sakina Shibuya — University of Wisconsin-Madison (PhD studies). - Jun Ge — University of Maryland (PhD studies). - The model of working with many junior researchers expanded the medium-term researcher base while producing high-quality near-term outputs. ### Highlights by Five Broad Topics - (i) Modelling and understanding policy choices - Published evidence that green spending multipliers are about twice as large as their non-green counterparts; sample countries for green land-use investment are from Africa or other lower-income countries. - Research in Energy Economics: response of inflation to gasoline price shocks is smaller, but more persistent and broad-based in developing economies; purchasing power of all households declines as fuel prices increase, with distributional impact more progressive in developing countries. - Oxford Economic Papers: with food subsistence, optimal policy calls for complete stabilization of sticky-price non-food inflation despite a food-subsistence threshold; subsistence amplifies welfare losses of policy mistakes and raises stakes for monetary policy at earlier development stages. - Advances in monetary policy work for LICs: - Departmental paper assessed FPAS CD delivery and use by central banks. - IMF-FCDO experts delivered online courses on model-based monetary policy analysis and forecasting (MPAFs). - Continued operational support to Bank of Ghana (BOG), including a virtual FPAS Technical Assistance mission to enhance short-term forecasting architecture and conduct counterfactual simulations using the Quarterly Projection Model (QPM). - (ii) Understanding macro-financial linkages - Journal of Macroeconomics: welfare implications of exchange rate choices in developing agricultural economies; international relative price adjustments exacerbate currency and factor misalignments in shallow labor and product markets—insight into exchange rate targeting in many developing agricultural economies. - Construction of a novel World Uncertainty Index (WUI) for a panel of 143 individual countries from 1952; WUI spikes around major global events (Gulf War, Euro debt crisis, Brexit vote, COVID-19 pandemic) and predicts significant output losses. - Working paper: remittances cushioned the COVID-19 shock by providing lifelines to the poorest. - Development of the Independence and Accountability, Policy and Operational Strategy, and Communications (IAPOC) index for 50 economies over time, including LICs: - Synthesizes pillars capturing soundness of monetary policy frameworks (MPFs). - Allows granular analysis of subcomponents and gives policymakers levers to improve MPFs. - IAPOC toolkit used to strengthen MPF consultations for Georgia, Kyrgyz Republic, Kenya, Rwanda, Tanzania, and Uganda. - (iii) Building resilience - Continued applications of DIG-type models to support policy discussions, Article IV consultations, and IMF program engagements. - Uganda Article IV Staff Report: box estimating economic gains from structural and fiscal reforms to examine prospect of achieving middle-income status over the medium term. - Guinea Article IV Staff Report: energizing non-mining sector will help diversify economy, reduce external vulnerabilities, and achieve more sustainable inclusive growth. - Gambia Selected Issues Paper (SIP): under current and planned policies, Gambia’s infrastructure gap will reach about 15 percent of GDP in 2030; improvement in public policy management could fill up to two thirds of the gap. - Madagascar Staff Report (supported by IMF’s Extended Credit Facility): highlights infrastructure gap and importance of raising public investment efficiency using DIG model simulations. - DIGNAD applications: - Solomon Islands: IMF country team assessment that Solomon Islands will need about 6.9 percent of 2030 GDP in investment (notably in resilient infrastructure and renewable energy) to meet the 2030 SDGs. - Samoa: estimated damage to infrastructure and livelihoods from increasingly frequent and severe coastal storms. - Rwanda Article IV Staff Report: building adaptation infrastructure can reduce up to two thirds of GDP losses and nearly half of the resulting fiscal gap caused by a natural disaster. - Publications: - Journal of Macroeconomics: analysis on strong cyclical relationship between emissions and real GDP growth in advanced and developing economies, suggesting pro-cyclical mitigation strategies. - Working paper: argued for transferring clean energy technologies from AEs to EMDEs given stronger uptake in AEs. - Working paper: climate shocks reduce the positive effect of FDI, ODA, and migrants’ remittances on economic expansion—underscoring need to reduce greenhouse gas emissions and green economies to bolster resilience. - (iv) Promoting structural change and institutional development - Publications in Journal of Monetary Economics, Economic Modeling, and Scottish Journal of Political Economy. - Findings: - AI/robot revolution and divergence: productivity gains of “robots” drive divergence between developing economies and AEs; AEs benefit from higher robot intensity driven by higher wages and stock of complementary traditional capital. - Evidence of a growth-equity trade-off for some reforms: financial and capital account liberalization can increase both growth and inequality. - Policy sequencing: reducing mobility barriers (lower costs for skills acquisition and institutional changes) and improving productivity of traditional farmers must precede policies intended to increase modern sector productivity or reduce transportation costs. - Book chapter on macro-fiscal gains of good governance in SSA: oil sector governance reforms could target improving transparency in oil trading and strengthening oversight and accountability of Republic of Congo’s national oil company. - Training delivered to IMF staff on diversification, structural transformation, and labor and product markets reforms. - (v) Enhancing inclusion - Review of Development Economics: distributional effects of government spending shocks—unanticipated fiscal consolidations lead to a long-lasting increase in income inequality, while fiscal expansions lower inequality. - The Review of Economics and Statistics: using rich micro data from Rwanda, a microcredit expansion program improves access to microcredit and reduces poverty when it expands commercial bank account ownership. - Working paper and F&D blog: education and observable human characteristics shaped intergenerational mobility in Africa through the century. - Research documented that primary and secondary school completion rates have been more negatively affected by epidemics for girls than boys; results featured during the October 2021 Annual Meetings with an IMF social media video. - MRLIC published chapter 7 of “The Global Informal Workforce: Priorities for Inclusive Growth”: low education has a larger impact on informal employment for women. - MRLIC provided financial support for the book “How to Achieve Inclusive Growth,” with 12 chapters focused on LICs covering topics including growth-inequality-poverty links; financial inclusion, technological progress, and AI; competition and innovation; trade and complementary policies; tax design for efficiency and equity; public expenditure for inclusive growth; human capital accumulation shortfalls; challenges in resource-rich nations; and a chapter reviewing climate change science and socio-economic damages. - MRLIC funding supported two external visiting scholars (one an editor and contributor), with two chapters counted toward commissioned papers (Output indicator 4.1). - Internal training (“clinic”) on distributional impact of policies and reforms provided an overview of IMF analytical and policy work on inequality and its operationalization in country work. ### Log-frame outputs and performance (summary) - The research project’s 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 this 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. - The team met, and in most cases exceeded, the high target for all outputs for year 10 (FY2022) except for three outputs (one above the low target, one meets the medium target, and one exceeds the medium target). - Targets were revised in February 2022 to reflect rephasing of project funding; historical revisions increased the stock of outputs at the end of Phase 3 (from 129 to 130 for output 1.1 and from 70 to 77 for output 1.2); the log-frame was streamlined. - Table 2 key figures (Year 1 to Year 10 totals and revised targets): - Working Papers (1.1): Year outputs by year — 13, 17, 10, 16, 20*, 18*, 20*, 16, 21, 24; Total 175; Revised Targets H 167, M 160, L 155. - Published Papers (1.2): Year outputs — 2*, 6, 8*, 9*, 15*, 10*, 12*, 15*, 13, 9; Total 99; Revised Targets H 99, M 95, L 91. - Uptake by IMF Teams (2.1): Year outputs — 9, 12, 13, 14, 16, 21, 13, 17, 14, 14; Total 143; Revised Targets H 142, M 138, L 134. - Courses Offered to IMF Staff (2.1.a): Year outputs (partial) — 3, 5, 8; Revised Targets H 7, M 6, L 5. - Uptake by Authorities (2.2): Year outputs — 1, 2, 4, 2, 7, 13, 9, 8, 8, 6; Total 60; Revised Targets H 57, M 56, L 55. - Courses Offered to Authorities (2.2.a): Year outputs (partial) — 9, 7, 4, 5, 5; Total 30; Revised Targets H 28, M 26, L 25. - High-level Policy Conferences (3.1): Year outputs — 6, 4, 2, 1, 9, 8, 6, 4, 2, 8; Total 50; Revised Targets H 48, M 46, L 44. - Results Reflected in IMF Board Discussions and Papers (3.2): Year outputs — 4, 4, 3, 2, 6, 10, 7, 5, 8, 6; Total 55; Revised Targets H 53, M 52, L 50. - Results Reflected in IMF Policy Papers (3.2.a): Year outputs — 3, 3, 2, 1, 2, 5, 2, 2, 2, 2; Total 24; Revised Targets H 27, M 25, L 23. - Commissioned Papers (4.1): Year outputs — 0, 13, 0, 0, 7, 5, 1, 4, 2, 2; Total 34; Revised Targets H 35, M 33, L 32. - Toolkits (4.2): Year outputs — 0, 0, 1, 1, 3, 2, 2, 0, 2, 2; Total 13; Revised Targets H 14, M 13, L 11. - External Researchers at High-level Policy Conferences (4.3): Year outputs — 6, 5, 5, 15, 20, 35, 22, 16, 15, 16; Total 155; Revised Targets H 152, M 148, L 144. - Thematic Areas of IMF Policy Influenced and Made LIC-specific (1): Year outputs — 3, 2, 0, 0, 3, 2, 1, 1, 4, 2; Total 18; Revised Targets H 18, M 17, L 16. ### Output 1: Produce high quality, policy relevant research on macroeconomic issues affecting LICs - In Year 10 the team produced 24 working papers (including 14 book chapters, two of which are commissioned papers) and published 9 papers in peer-reviewed journals. - Output 1.1 — Working Papers: Topic 1. Modelling and understanding policy choices (continued research and outputs as described under “Highlights by Five Broad Topics”). *Source: IMF staff reporting.* ### 1. Departmental Paper: Taking Stock of IMF Capacity Development on Monetary Policy Forecasting ### Departmental Paper: Taking Stock of IMF Capacity Development on Monetary Policy Forecasting and Policy Analysis Systems ### Overview - The MRLIC project produced a broad portfolio of research, toolkits, courses, country applications, and high-level engagements focused on monetary policy, macro-financial linkages, resilience, structural change, and inclusion. - Research outputs include departmental papers, working papers, commissioned book chapters, and published journal articles across topics such as monetary policy forecasting, fuel price inflation impacts, remittances, financial liberalization, and climate change mitigation. ### Research outputs and published papers - Output categories include: - Departmental Paper: Taking Stock of IMF Capacity Development on Monetary Policy Forecasting and Policy Analysis Systems. - Working papers and published papers spanning Topic 1 (Modelling and understanding policy choices) through Topic 5 (Enhancing inclusion). - Notable published papers and outlets listed: - "Building back better: How big are green spending multipliers?" — Ecological Economics. - "The distributional implications of the impact of fuel price increases on inflation" — Energy Economics. - "The welfare implications of exchange rate choices in developing agricultural economies" — Journal of Macroeconomics. - "Will the AI revolution cause a great divergence?" — Journal of Monetary Economics. - Other published work appeared in Journal of Macroeconomics, Scottish Journal of Political Economy, Economic Modelling, Review of Development Economics, The Review of Economics and Statistics, Economic Systems, Applied Economics, Journal of Banking and Financial Economics, Oxford Economic Papers, Journal of African Economies, Journal of Development Economics. ### Toolkits, courses, and capacity building materials - Toolkits produced: - DIGNAD - IAPOC Toolkit – An Assessment Toolkit for Monetary Policy Frameworks - DIGNAR-19 Toolkit Manual - Online and in-person courses developed/offered: - Online Course Delivery: Public Debt, Investment, and Growth: The DIG and DIGNAR Models (DIGx). - Course: Macro-Structural Training: Distributional Impact of Policies and Reforms. - Course: Clinic on Diversification, Structural Transformation, and Reforms in Developing Economies. - Course: Clinic on Labor and Product Market Reforms. - Online Course: Model-Based Monetary Policy Analysis and Forecasting (MPAFx). - Course: DIGNAR-19: A Toolkit for Macro Policy Assessments of the COVID-19 Pandemic in Emerging and Developing Countries at IMF CCAMTAC. - Course: Gender equality and macroeconomics (in collaboration with the African Training Institute (ATI) and UN Women). ### Country applications and IMF team uptake - Number of uptakes by IMF country teams: 14 (including 5 courses offered to IMF staff). - Number of uptakes by country authorities: 6 (including 5 courses offered to country authorities, of which two are online courses open to both IMF staff and country authorities). - Specific applications of DIG/DIGNAR/DIGNAD models: - Estimating Reform Gains (application of DIGNAR-19 model to Uganda, Article IV). - Application of DIGNAR-19 model to Guinea (Article IV). - Application of DIGNAR-19 model to The Gambia (Selected Issues). - Application of DIGNAR-19 model to Madagascar (Extended Credit Facility). - Application of DIGNAD model to Solomon Islands (Selected Issues). - Samoa: Technical Assistance Report—Climate Macroeconomic Assessment Program (CMAP). - Selected Issues Paper: Enhancing Resilience to Climate Change (DIGNAD model application for Uganda). - Selected Issues Paper: Building Resilience to Natural Disasters: Growth and Income Distribution Implications of Alternative Government Financing Instruments (Dominica). - Selected Issues Paper: Towards More Gender Equality in Kenya. - FPAS Assistance to Ghana (Virtual Technical Assistance). ### High-level engagement and influence on IMF policy - The team held and contributed to 8 high-level policy conferences involving IMF senior staff. - The team contributed to 6 outputs discussed at the IMF Executive Board, including 2 IMF Policy Papers. - High-level policy conferences attended included: - Climate-Related Natural Disasters—Macroeconomic Effects and Policy Responses. - Supporting Food Security in Sub Saharan Africa Amid the COVID Pandemic and Climate Change. - COVID-19 and Fragile States: Promoting Resilient Recovery for the Most Vulnerable Communities. - Macroeconomic Fragile States post COVID-19: What Stabilization Policies? - How to Achieve Inclusive Growth. - Presentation of “EAC: Challenges to Monetary Policy Space and Transmission” at a seminar during the 2021 Annual Meetings. - IMF-FSB joint Early Warning Exercise: Potential Loss from Human Capital Scarring Due to the Pandemic. - Supporting Fragile and Conflict-Affected States: The IMF FCS Strategy. - Results of MRLIC research reflected in IMF Board discussions and flagship reports, including: - October 2021 WEO Box 2.1: Food Insecurity and Prices during COVID-19. - Staff Climate Note on Macro-Fiscal Implications of Adaptation to Climate Change (joint with FAD). - Board Presentation: The Role of Targeted Interventions to Support Growth and Diversification in Developing Countries: Recent Staff Work. - October 2021 MCD REO: A fragile recovery continues in the Middle East and Central Asia region. - Box in Board Paper: Reaching the Pre-COVID Convergence Path Through the Lens of a Dynamic General Equilibrium Macroeconomic Model [in Macroeconomic Developments and Prospects In Low-Income Countries—2021]. - Section in Board Paper: The International Monetary Fund's Strategy in Fragile and Conflict-Affected States (FCS). ### Outreach, dissemination, and external engagement - The team produced 4 newsletters: June 2021, September 2021, December 2021, March 2022. - Blogs, podcasts, and other communications included: - IMF Blog: Fragile and Conflict-Affected Economies Are Falling Further Behind. - VOXEU Blog: Defying the odds: Remittances held up during the COVID-19 pandemic. - VOXEU: Blog Investigating the Drivers of Remittance Fees. - GlobalDev Blog: Public investment for growth: a country’s absorptive capacity is key. - IMF Podcast: Island States Paying Price for Climate Change. - F&D: Intergenerational Social Mobility in Africa. - Note: “Spillovers from the War in Ukraine to Low-income Countries” (bilaterally shared with FCDO). - Internal daily newsletters: “Headlines on LICs”. ### Outcomes, impacts, and stakeholder feedback - The MRLIC project outcomes were widely taken up in Article IV reports, flagship IMF reports (WEO, REO), policy papers, and IMF Executive Board discussions. - Toolkits and courses contributed to operational policy dialogue and capacity building for country authorities. - Course participation and performance metrics: - DIGx course last run: 146 participants joined online; more than 20 percent were government officials. - About half of active participants were from low or lower middle-income countries. - More than half of government officials were from sub-Saharan Africa. - Pass rate among active participants: 60 percent for the general public and 81 percent for government officials. - The macro-structural course on the Distributional Impact of Policies and Reforms received 38 participants. - The course to country authorities on Gender Equality and Macroeconomics had 45 participants, with more than 40 coming from LICs. - DIGNAR-19 webinar at IMF CCAMTAC had participants from 13 countries (including 5 LICs). - Evaluation ratings by participants of courses averaged 4.6 (out of 5). - Engagement at conferences and seminars included participation at WFP, NBER, ASSA, BIS, CSAE, SED, Southern Economic Association, AFRITAC, and ATI. - The MRLIC team’s analysis contributed to an Early Warning Exercise presented to the International Monetary and Financial Committee (IMFC) on potential human capital scarring from the pandemic. ### Key messages and policy-relevant findings - The FCDO-IMF partnership has been instrumental in developing policy-relevant analysis on gender gaps, food insecurity, climate-related macro-fiscal issues, and monetary policy frameworks for LICs, supporting policy formulation and capacity building. - Toolkits (DIGNAD, DIGNAR-19, IAPOC Toolkit) and model applications (DIG family, FPAS inputs) enhanced country-level analytical capacity and informed Article IV, Selected Issues, and program work. - Online courses and webinars provided scalable capacity building: DIGx and MPAFx enabled skill development for IMF staff and country authorities, with high engagement and completion rates among government officials. - Research findings were integrated into IMF policy deliberations and high-level events, amplifying their influence on international support for LICs amid COVID-19 and the war in Ukraine. *Source: IMF MRLIC project report (FCDO-IMF partnership).* ### 7. COSTS, VALUE FOR MONEY, AND ### 7. COSTS, VALUE FOR MONEY, AND MANAGEMENT ### Approved budget and financial status - The project’s approved budget is US$29.5 million. - As of April 2022, $23.7 million has been drawn from the subaccount. - These figures reflect a lag of actual expenses of approximately two to three months to enable verification of expenses before they are charged to donor subaccounts. ### Project expenditures (Years 1–10, cumulative) - HQ led missions including entire mission team: $6,823,847 - Research HQ based / Visiting Scholars; Short-term Advisors; Development of CD tools; Development of general CD technical materials; Development of training courses or other learning materials: $9,585,719 - Seminars & Study Tours; Interactive learning and workshops: $1,697,718 - Project Backstopping: $3,173,599 - Project Management: $283,308 - Exceptional Expenses: $550,638 - Language Services: $2,170 - Trust Fund Fee: $1,548,190 - Total: $23,665,189 - Note: Activity items are consolidated. Appendix 2 provides the project’s formal financial reporting generated by the IMF’s accounting system. ### Value for Money and governance - The project is described as highly cost effective due to solid governance of the procurement process and high-quality work by the team. - The team strictly follows all Fund guidelines for hiring, travel, and conferences. - All contractual employees undergo a competitive process before being hired. - Outputs are produced within strict timeframes and must meet Fund requirements for publication. - The quality of papers is further assessed when submitted to peer-reviewed publications. - The average cost per paper is reported as lower than the FCDO benchmark of $183,000 (£150,000) per paper. - Currency conversion is based on the exchange rate as of May 13, 2022 (U.K. £1 = U.S. $1.21995). ### Cost per working and published paper (Years 1–10) - Total Staff/Contractual/VS Costs: $16,409,566 - Research Paper Costs: $12,307,175 - Country Applications Costs: $4,102,392 - Working Papers: 175 - Cost Per Working Paper: $70,327 - Published Papers: 99 - Cost per Published Paper: $124,315 - Interpretation notes from the publication: - The cost estimates are based only on funds provided by the FCDO, indicating a cost-benefit balance from the perspective of the FCDO. - Staff, contractual employees, and visiting scholars are estimated to spend 75 percent of their time on research papers and 25 percent on country applications work; the total staff, contractual, and visiting scholar cost is thus split between papers and applications. - The first line of Table 3 includes both IMF staff salary and travel expenses; therefore, the estimates calculated for working and published paper costs likely overestimate the true cost of research time. - These counts include commissioned papers. - Direct project management costs represent approximately one percent of the total budget. Including the Trust Fund management fee, program management costs amount to about eight percent. - Historical and exchange-rate context: - The cost per working paper for the 10 years is approximately $70,000 (£58,000), compared to about $77,000 (£55,000) last year. - The cost per published paper is about $124,000 (£102,000), compared to about $129,000 (£92,000) last year (after a technical correction on last year’s estimates). - These costs decreased in U.S. dollars while they slightly increased in U.K. pounds due to exchange rate fluctuations. - Past reporting errors included double-counting commissioned papers and historical revisions to the number of papers produced during Phases 1, 2, and 3; corrected historical counts reduced working papers to 151 (from 176) while published papers remained at 90. - The exchange rate used in last year’s report was as of May 13, 2021 (U.K. £1 = U.S. $1.402300), which led to higher costs in U.K. pound by 15 percent even with no change in costs in U.S. dollars. - Accounting for the new co-financing structure with the CCCDI is conceptually complicated and could raise estimated costs if additional partner funding were included, without implying additional cost to FCDO. ### Outputs and research productivity - Total number of publications reached 94 over the 10 years. - Papers are published in high-ranked journals and are well cited by external researchers. - Products are featured in programs of prestigious conferences and show strong uptake by country authorities and IMF country teams. - The project provides “gold access” to journal publications to ensure public access to outputs produced through the grant. ### Work allocation and time use - The team estimates that staff, contractual employees, and visiting scholars allocate 75 percent of their time to research papers and 25 percent to country applications. - The total staff, contractual, and visiting scholar costs are split accordingly between research and applications. ### Project management, monitoring, and evaluation - Monitoring: - The IMF reports to FCDO annually regarding the outputs included in the log-frame. - Quarterly updates are provided to the project website. - The team sends out quarterly e-newsletters reaching an audience of more than 1500 academics, policymakers, central bank staff, and government representatives; these e-newsletters are posted on the project website. - All publicly available working and published papers are uploaded to the R4D portal on the FCDO website. - Video conference calls are conducted when deemed necessary by IMF and FCDO project members. - Evaluation: - FCDO conducts a yearly evaluation of the program. - No budget for an external evaluation was included in the project budget. ### Risks - The reduction in the project’s annual funding amount has posed significant challenges, notably in responding to new policy issues LICs face amid the pandemic and the war in Ukraine. - A key risk is further budget cuts or delays in disbursements relative to the current Letter of Understanding. - Additional funding cuts would undermine the quality and quantity of delivery by making it more difficult to hire competitive contractuals and visiting scholars and to respond to growing demand for support. - Scope to find alternative sources of funding is highly uncertain, particularly because the CCCDI envelope used to support the program this year is only temporary. _Provided by the FCDO-IMF project report._ ### 11. FURTHER INFORMATION ### 11. FURTHER INFORMATION; APPENDIX 1. LOG-FRAME; APPENDIX 2. FINANCIAL REPORTS; APPENDIX 3. RESEARCH OUTPUTS ### Log-frame: overarching impact and outcome targets - Project name: Macroeconomic Research in Low-Income Countries (LICs). - Impact: "Better macroeconomic policymaking in LICs leading to faster economic growth, job creation and poverty reduction." - Impact Indicator 1: Proportion of people living in extreme poverty in LICs. - Planned(2018) MRLIC countries: 28.5% - Achieved: (no additional numeric change provided beyond baseline) - Source: World Bank, Poverty and Equality dataset, Poverty headcount ratio at $1.90 a day (2011 PPP) (% of population), Simple average of MRLIC countries. - Impact Indicator 2: Economic growth rates in LICs. - Planned(2019) MRLIC countries: 4.0% - Achieved: (no additional numeric change provided beyond baseline) - Source: IMF WEO data, Real GDP growth, Annual percent change, Simple average of MRLIC countries. ### Log-frame time horizon, funding assumptions, and inputs - Log-frame revised: February 2022; extended to March 2025; assumes similar level of funding would be available each year and reduced annual amounts from FCDO are complemented by other funding sources (e.g., CCCDI in the case of FY2022). - Inputs (memorandum): - FCDO: £5.1 million - Govt: £1.0 million - Other: £6.1 million - FCDO SHARE (%): 84 - Note: "Other" is USD 1.2 million for FY2022 from the IMF's COVID-19 Crisis Capacity Development Initiative (CCCDI), with U.K. £1 = USD 1.219950 (as of May 13, 2022). "Other" does not include cost-sharing from the IMF's internal budget. CCCDI-funded outputs counted towards MRLIC targets only when assessed as within aims and scope of MRLIC. - Log-frame subject to change depending on funding. ### Outcome and output targets, assumptions, and achieved results (selected indicators) - Outcome Indicator 1 (planned March 2020 baseline 12): - By March 2021: H (16) M (14) L (12) - By March 2022: H (18) M (16) L (14) - By March 2023: H (20) M (18) L (16) - By March 2024: H (22) M (20) L (18) - By March 2025: H (24) M (22) L (20) - Specific context note: the average per year (Yr 1 - 8) is 2. Medium case is 2 per year. High case 2 additional, low case 2 fewer. - Achieved: 16 18 - OUTPUT 1 — High quality, policy relevant research on macroeconomic issues affecting LICs produced. - Output Indicator 1.1 (Planned March 2020 baseline (130)): - By March 2021: H (151 papers) M (146 papers) L (141 papers) - By March 2022: H (167 papers) M (160 papers) L (155 papers) - By March 2023: H (196 papers) M (191 papers) L (186 papers) - By March 2024: H (212 papers) M (207 papers) L (202 papers) - By March 2025: H (228 papers) M (223 papers) L (218 papers) - Specific context: average output per year (Yr 1 - 8) is 16; medium case 16 per year; high case 5 additional, low case 5 fewer. - High-level context assumptions (selected): No major global challenge initially assumed; two global shocks (COVID-19 pandemic, war in Ukraine) required adjustments; ability to identify high-quality academics; academic researchers able to deliver contracted inputs; counterpart inputs materialise as anticipated. - Five research themes of MRLIC: (1) Modelling and understanding policy choices; (2) Understanding macro-financial linkages; (3) Building resilience; (4) Promoting structural change and institutional development; (5) Enhancing inclusion. - Achieved: 151 175 - Output Indicator 1.2 (Planned March 2020 baseline (77)): - By March 2021: H (90 papers) M (86 papers) L (82 papers) - By March 2022: H (99 papers) M (95 papers) L (91 papers) - By March 2023: H (108 papers) M (104 papers) L (100 papers) - By March 2024: H (117 papers) M (113 papers) L (109 papers) - By March 2025: H (126 papers) M (122 papers) L (118 papers) - Specific context: average output per year (Yr 1 - 8) is 9; medium case 9 per year; high case 4 additional, low case 4 fewer. - Achieved: 90 99 - Impact weighting for OUTPUT 1: 30% - OUTPUT 2 — IMF research products (policy analysis, practical and operational tools and frameworks) produced and used by IMF country teams and partner authorities. - Output Indicator 2.1 (Planned March 2020 baseline (115)); new indicator includes courses offered to IMF staff: - By March 2021: H (129) M (125) L (121); Courses: H (4) M (3) L (2) - By March 2022: H (142) M (138) L (134); Courses: H (7) M (6) L (5) - By March 2023: H (157) M (153) L (149); Courses: H (11) M (10) L (9) - By March 2024: H (172) M (168) L (164); Courses: H (15) M (14) L (13) - By March 2025: H (187) M (183) L (179); Courses: H (19) M (18) L (17) - Specific context: average output per year (Yr 1 - 8) is 15; medium case 15 per year; first year due to COVID-19 restrictions is 10; high case 4 additional, low case 4 fewer. Courses: medium case 3 courses first year, then 4 per year; high/low ±1. - Achieved: 129 (3 courses) 143 (8 courses) - Output Indicator 2.2 — Application and use of tools and frameworks by country authorities; Sub-indicator 2.2.a: Courses offered to country authorities (Planned March 2020 baseline (46); Courses offered to country authorities (20)): - By March 2021: H (52) M (49) L (46); Courses: H (24) M (22) L (20) - By March 2022: H (57) M (56) L (55); Courses: H (28) M (26) L (25) - By March 2023: H (68) M (65) L (62); Courses: H (36) M (34) L (32) - By March 2024: H (73) M (70) L (67); Courses: H (40) M (38) L (36) - By March 2025: H (78) M (75) L (72); Courses: H (44) M (42) L (40) - Specific context: average output per year (Yr 1 - 8) is 6; medium case 5 per year; first year due to COVID-19 restrictions is 3; high case 3 additional, low case 3 fewer. Courses: medium case 2 courses first year, then 4 per year; high case 2 additional, low case 2 fewer. - Achieved: 54 (25 courses) 60 (30 courses) - Impact weighting for OUTPUT 2: 30% - OUTPUT 3 — Engagement by senior IMF policymakers; strengthening research-to-policy uptake. - Output Indicator 3.1 (Planned March 2020 baseline (40)): - By March 2021: H (45) M (43) L (41) - By March 2022: H (48) M (46) L (44) - By March 2023: H (56) M (54) L (52) - By March 2024: H (60) M (58) L (56) - By March 2025: H (64) M (62) L (60) - Specific context: average output per year (Yr 1 - 8) is 5; medium case 4 per year; first year due to COVID-19 restrictions is 3; high case 2 additional, low case 2 fewer. - Achieved: 42 50 - Output Indicator 3.2 (Planned March 2020 baseline (41); IMF Policy Papers (20)): - By March 2021: H (48) M (45) L (42); IMF Policy Papers: H (25) M (23) L (21) - By March 2022: H (53) M (52) L (50); IMF Policy Papers: H (27) M (25) L (23) - By March 2023: H (63) M (60) L (57); IMF Policy Papers: H (29) M (27) L (25) - By March 2024: H (68) M (65) L (62); IMF Policy Papers: H (32) M (30) L (28) - By March 2025: H (73) M (70) L (67); IMF Policy Papers: H (35) M (33) L (31) - Specific context: average output per year (Yr 1 - 8) is 5; medium case 5 per year; first year due to COVID-19 restrictions is 4; high case 3 additional, low case 3 fewer. Sub-indicator average output per year is 3; medium case 3 per year; high case 2 additional, low case 2 fewer. - Achieved: 49 (22 IMF Policy Papers) 55 (24 IMF Policy Papers) - Impact weighting for OUTPUT 3: 30% - OUTPUT 4 — IMF strengthens research capacity and dissemination activities. - Output Indicator 4.1 (Planned March 2020 baseline (30)): - By March 2021: H (33) M (31) L (30) - By March 2022: H (35) M (33) L (32) - By March 2023: H (37) M (35) L (34) - By March 2024: H (39) M (37) L (35) - By March 2025: H (41) M (39) L (37) - Specific context: average output per year (Yr 1 - 8) is 4; medium case 2 per year; first year due to COVID-19 restrictions is 1; high case 2 additional, low case 2 fewer. - Achieved: 32 34 - Output Indicator 4.2 (Planned March 2020 baseline (9)): - By March 2021: H (12) M (11) L (10) - By March 2022: H (14) M (13) L (11) - By March 2023: H (15) M (14) L (13) - By March 2024: H (16) M (15) L (14) - By March 2025: H (17) M (16) L (15) - Specific context: average output per year (Yr 1 - 8) is 1; medium case 2 in first two years, and 1 in final year; high case 1 additional, low case 1 fewer. - Achieved: 11 13 - Output Indicator 4.3 (Planned March 2020 baseline (124)): - By March 2021: H (138) M (134) L (130) - By March 2022: H (152) M (148) L (144) - By March 2023: H (175) M (171) L (167) - By March 2024: H (191) M (187) L (183) - By March 2025: H (207) M (203) L (199) - Specific context: average output per year (Yr 1 - 8) is 16; medium case 16 per year; first year due to COVID-19 restrictions is 10; high case 4 additional, low case 4 fewer. - Achieved: 139 155 - Impact weighting for OUTPUT 4: 10% - Notes on revisions and streamlining: - Advisory committee meetings (previously output 1.4) removed from log-frame but occurrence will be reported. - Number of e-newsletters disseminated (previously output 4.4) removed from log-frame because dissemination is now standard practice. - Descriptions of output indicators 1.1 and 3.2.a revised for clarification. - Baseline outputs revised upward: output 1.1 from 129 to 130; output 1.2 from 70 to 77 reflecting historical revisions before Phase 4. ### Financial reports (selected figures, as of April 30, 2022) - Cumulative bilateral cash flow statement (In U.S. Dollars): - Contributions (Cumulative FY 2017 - FY 2022 total): 25,951,803 - Interest Earned: 164,592 - Total Cash Available: 26,116,395 - Expenses Paid: 23,665,189 - Cash Balance: 2,451,206 - Note: Contributions are net of transfers and return of funds. Expenses paid include the 7% TFM. - Detailed progress report (selected summary rows): - Total Inflows: 26,345,131 - Total Outflows (Expenses): 23,665,189 - Remaining Budget (including projects pending approval): 4,524,103 - Trust Fund Management Fee: 1,844,159 (of which 1,548,190 paid; 295,969 remaining) - Grand Total: 28,189,290 (Total Outflows 23,665,189; Remaining Budget 4,524,103) - Note: Remaining balance for closed projects zeroed out upon project completion. Items do not include costs related to Long-Term Experts. ### Research outputs — selected working paper summaries (Appendix 3) - Topic 1. Modelling and understanding policy choices 1. Departmental Paper: Taking Stock of IMF Capacity Development on Monetary Policy Forecasting and Policy Analysis Systems - Authors: Nils Mæhle, Tibor Hlédik, Mikhail Pranovich, and Carina Selander - Summary: - Takes stock of FPAS CD (Forecasting and Policy Analysis System capacity development), drawing on experience and lessons from central bank FPAS CD delivery. - Shares insights and typical tools developed to facilitate understanding of FPAS CD within the IMF and to inform future capacity development on building macroeconomic frameworks. - Offers a qualitative assessment of FPAS CD delivery and use of FPAS in central bank decision-making. 2. The Distributional Implications of the Impact of Fuel Price Increases on Inflation - Authors: Kangni Kpodar and Boya Liu - Summary — three key findings: - The response of inflation to gasoline price shocks is smaller, but more persistent and broad-based in developing economies than in advanced economies. - Past studies using crude oil prices instead of retail fuel prices to estimate pass-through to inflation significantly underestimate it. - While purchasing power of all households declines as fuel prices increase, the distributional impact is progressive; the progressivity phases out within 6 months after the shock in advanced economies, whereas it persists beyond a year in developing countries. - Method and data: Combines household survey data with CPI components to construct CPI indexes for poorest and richest quintiles; updates Global Monthly Retail Fuel Price Database (expanded to premium and regular fuels, time dimension to December 2020, sample to 190 countries). - Topic 2. Understanding macro-financial linkages 3. Defying the Odds: Remittances During the COVID-19 Pandemic - Authors: Kangni R Kpodar, Montfort Mlachila, Saad N Quayyum and Vigninou Gammadigbe - Summary — main empirical findings: - Uses a newly compiled monthly remittance dataset for a sample of 52 countries (16 countries with bilateral remittance data). - Documents a strong resilience in remittance flows during Jan 2020-Dec 2020 despite the global recession. - Evidence that: (i) remittances responded positively to COVID-19 infection rates in migrant home countries, underscoring remittances as an important automatic stabilizer; (ii) stricter containment measures dampen remittances; (iii) shift from informal to formal channels due to travel restrictions appears to have contributed to a surge in formal remittances. - The size of fiscal stimulus in host countries is positively associated with remittances as fiscal response cushions economic impact of the pandemic. *International Monetary Fund — United Kingdom - Project on Macroeconomic Research in LICs, Annual Report (June 2022).* ### 4. The S-curve: Understanding the Dynamics of Worldwide Financial Liberalization ### 4. The S-curve: Understanding the Dynamics of Worldwide Financial Liberalization ### Data and empirical regularity - Using a novel database of domestic financial reforms in 90 countries over 1973-2014, the authors document that global financial liberalization followed an S-curve path: - reforms were slow and gradual in early periods; - reforms accelerated during the 1990s; - reforms slowed down after 2000. ### Estimated mechanism: a learning model - Policymakers updated their beliefs about the growth effects of financial reforms by learning from: - their own country experiences; and - other countries' experiences. - The paper estimates a learning model that quantitatively explains the observed S-curve dynamics. ### Drivers of the 1990s wave and subsequent reversal - Positive growth surprises in advanced economies helped accelerate belief updating worldwide, leading to the global wave of financial liberalization in the 1990s. - The 2008 financial crisis caused significant belief reversals, slowing the pace of liberalization after 2000 and reversing earlier learning-driven momentum. ### Key takeaways - Cross-country learning and international spillovers of growth information are central to understanding the timing and speed of financial liberalization. - Macroeconomic outcomes in advanced economies can materially affect policy adoption dynamics in other countries via belief updating. *Nan Li, Chris Papageorgiou, Tong Xu and Tao Zha (summary in FCDO Annual Report, June 2022).* ### 1. Twin Deficits in Developing Economies ### Twin Deficits in Developing Economies ### Summary findings - A one percent of GDP unanticipated increase in the government budget balance improves, on average, the current account balance by 0.8 percentage point of GDP. - This effect is substantially larger than that obtained using standard measures of fiscal impulse, such as the cyclically-adjusted budget balance. - The analysis documents heterogeneity across countries and over time in the magnitude of the twin-deficit response. ### Conditional (heterogeneity) patterns - The effect of an unanticipated fiscal tightening on the current account balance tends to be larger: - during recessions; - in countries that are more open to trade; - in countries that have less flexible exchange rate regimes; - in countries with lower initial public debt-to-GDP ratios. ### Methodological and comparative notes - The study focuses on unanticipated changes in the government budget balance as the fiscal shock measure and contrasts results with standard measures such as the cyclically-adjusted budget balance, finding the unanticipated-balance measure yields a substantially larger estimated effect on the current account. *Published July 2018. Davide Furceri and Aleksandra Zdzienicka.* ### 7. The Monetary Transmission Mechanism in the Tropics: A Case Study Approach ### 7. The Monetary Transmission Mechanism in the Tropics: A Case Study Approach ### Case study: 2011 monetary tightening in East African Community (Kenya, Uganda, Tanzania, Rwanda) - Study focuses on a significant tightening of monetary policy that took place in 2011 in four members of the East African Community: Kenya, Uganda, Tanzania and Rwanda. - Finding: Evidence of the transmission mechanism is found in most of the countries. - Finding: Variations across countries can be explained mainly by differences in the policy regime. ### DIGNAR-19 model applications and reform simulations - Uganda (Box 2: Estimating Reform Gains, application of DIGNAR-19 model to Uganda, Article IV) - Simulations with the IMF’s DIGNAR-19 dynamic general equilibrium model, calibrated to Ugandan data, quantify growth dividends from a reform package. - Combined effect of the reform package would yield a medium-term increase in non-oil real GDP growth of 1.8 percentage points. - Combined effects of fiscal measures, structural and governance reforms would lift non-oil growth potential to almost 6.5 percent in the medium term, allowing the Ugandan economy to offset the effects of COVID-19 scarring. - Under the reform scenario, Uganda would reach a middle-income status by FY2026/27. - Guinea (Application of DIGNAR-19 model to Guinea, Article IV) - Growth becoming increasingly concentrated in the mining sector; sector currently accounts for less than 6 percent of total employment and contributes less than ¼ of total GDP. - Policy implication: Energizing the non-mining sector and diversifying sources of growth are critical to create jobs, reduce poverty, and reduce vulnerability to exogenous shocks. - The Gambia (Application of DIGNAR-19 model to The Gambia, Selected Issues) - Building infrastructure is a key strategic priority; infrastructure gap estimated to reach about 15 percent of GDP in 2030 under current and planned policies. - Strong government actions could cover about two-thirds of this infrastructure gap; support from development partners is important for the remainder. - Reliance on borrowing would lead to a significantly higher public debt given limited fiscal space. - Madagascar (Application of DIGNAR-19 model to Madagascar, Extended Credit Facility) - Government’s planned public investment needs over 2020-2021 are nearly double projected investment financing under the baseline: 41 percent vs. 33.5 percent of GDP. - Recent under-execution of externally financed investment: planned at 5.5 and 4.6 percent of GDP in budget laws for 2019 and 2020, but executed at 4 and 2.7 percent of GDP, respectively. - Domestically financed investment stood at 1.6 and 2.9 percent of GDP in 2019 and 2020, respectively. - Pre-COVID DIG model: a rise in public investment efficiency to the SSA average could increase real GDP per capita growth by up to 0.7 percent in 2023 and 0.5 percent each year thereafter compared to the baseline as at end-2019, while also boosting private consumption and investment. - Policy implication: Identifying and addressing bottlenecks in the efficiency and execution of public investment is critical to the success of the Plan Emergence Madagascar (PEM). ### DIGNAD and natural-disaster/climate resilience applications - Solomon Islands (Application of DIGNAD model to Solomon Islands, Selected Issues) - Additional annual spending needs to achieve key SDG targets by 2030 estimated at about 6.9 percent of 2030 GDP. - Priority: Higher investment in energy infrastructure, including renewable energy, to strengthen climate change adaptation and support a low-carbon transition. - Recommendation: An integrated financing strategy with concessional financing and front-loaded fiscal measures, including domestic revenue mobilization, properly sequenced to achieve SDGs by 2030. - Samoa (Technical Assistance Report—Climate Macroeconomic Assessment Program (CMAP)) - Samoa is highly exposed to tropical cyclones, earthquakes, tsunamis, droughts, and floods; these damage economic growth and adversely impact debt sustainability. - Climate risks (coastal storms, sea level rise, increasing heat) likely to amplify damage to infrastructure and livelihoods and impact potential growth in agriculture, fisheries, and tourism. - Uganda (Selected Issues Paper: Enhancing Resilience to Climate Change, DIGNAD model application) - Uganda is prone to natural disasters that climate change is making more frequent and impactful. - DIGNAD model simulations: building adaptation infrastructure can reduce by two thirds the GDP losses at the trough triggered by a disruptive disaster and almost halve the resulting fiscal gap. - Given financing challenges, international support and scaling up capacity to access donor funds are required to meet ambitious adaptation plans. - Dominica (Selected Issues Paper: Building Resilience to Natural Disasters) - Multi-sector general equilibrium model shows investing in resilience capital is efficient despite high economic cost; financing instrument matters. - When resilience is financed using donors' support or by cutting unproductive government spending, returns are higher than when financed via distortionary taxes. ### Income, gender inequality, and structural policies - Kenya (Selected Issues Paper: Towards More Gender Equality in Kenya) - Analysis documents gender gaps in education, health access, employment, earnings, and financial inclusion, and assesses legal, customary and religious contributors to those gaps. - Using a general equilibrium model, policies that reduce educational gender gaps and discrimination in the informal sector have the largest positive macroeconomic and socioeconomic effects. - Novel policy explored: reducing time women spend fetching safe water. - Recommendation: Policy options and sequencing to preserve and extend gender-equality gains amid COVID-19 impacts. ### Capacity development, courses, and uptake by authorities - DIG/DIGNAR models and teaching - Online course: Public Debt, Investment, and Growth: The DIG and DIGNAR Models (DIGx) - Course explains interactions among the investment-growth nexus, fiscal adjustment, and private sector response to assess macroeconomic effects of public investment scaling-up plans. - Over the past decade, DIG and DIGNAR models have been applied in over 65 country applications in Fund-supported programs and surveillance. - Online course delivery outcomes (last run): - 146 participants were active on the online platform, of which more than 20 percent were government officials. - About half of active participants (general public and government officials) were from low- or lower-middle-income countries. - Among government officials, more than half were from the sub-Saharan African region. - Pass rate among active participants: 60 percent for the general public and 81 percent for government officials. - Other courses and clinics (summaries) - Macro-Structural Training: Distributional Impact of Policies and Reforms - Focuses on IMF analytical and policy work on inequality, the role of fiscal policy, and new templates to assess distributional incidence (fuel subsidy reform template and multi-sector heterogeneous agents model toolkit). - Clinic on Diversification, Structural Transformation, and Reforms in Developing Economies - Emphasizes diversification beyond trade, links to lower volatility and higher growth, and policy priorities to support macrostructural transformation. - Clinic on Labor and Product Market Reforms - Reviews regulations, institutions, databases, and analytical frameworks to quantify reform impacts in a surveillance context. - Online Course: Model-Based Monetary Policy Analysis and Forecasting (MPAFx) - New module on model-based forecasting included in February 2022 MPAFx offering (developed with support from FCDO and the Government of Japan). ### FPAS assistance and technical engagement - FPAS Assistance to Ghana (Virtual Technical Assistance) - Virtual FPAS TA mission in November 2021 supported Bank of Ghana to enhance short-term forecasting architecture, revisited counterfactual simulations with the Quarterly Projection Model (QPM), and studied BoG staff historical forecasts. - Support included model-based analysis for the November 2021 forecast round and documentation outputs such as User Guides and a prospective IMF Working Paper on Ghana QPM. *Published in June 2019 in the Journal of African Economies by Andrew Berg, Luisa Charry, Rafael Portillo, and Jan Vlcek.* ### 3. Presentation to Authorities: Enhancing Resilience to Climate Change in the Maldives ### Presentation to Authorities: Enhancing Resilience to Climate Change in the Maldives ### Context and objective - The IMF team presented an analysis on climate adaptation to the Maldivian authorities in the context of the Article IV consultation. - The analysis responds to an increased likelihood of adverse climate-change-related shocks and the consequent need to build resilient infrastructure in the Maldives. - The study stresses that fulfilling infrastructure needs requires comprehensive analysis of investment plans with respect to: - their degree of climate resilience, - their impact on future economic prospects, and - their funding costs and sources. ### Model and analytical approach - Analysis conducted by calibrating a general equilibrium model: DIGNAD. - DIGNAD is used to touch upon challenges of climate adaptation, including assessments of resilient technologies and their macroeconomic implications. ### Main findings - There is a significant dividend associated with building resilient infrastructure. - Under worsened climate conditions, the cumulative output gain from investing in more resilient technologies increases up to a factor of two. - Given the Maldives’ limited fiscal space, particularly after COVID-19, domestic financing constraints are an important binding limitation on resilience-building investment. ### Policy implications and recommendations - Building resilient infrastructure yields substantial macroeconomic benefits, especially under worsening climate scenarios. - Investment planning should explicitly calibrate the resilience characteristics of infrastructure projects and evaluate impacts on growth and public finances. - Because fiscal constraints limit the Maldives’ capacity to fund resilience at scale, stronger international cooperation is recommended to help meet investment needs. ### Financial timing and donor implications - It is financially convenient for donors to help build resilience prior to the occurrence of natural disasters rather than helping finance reconstruction ex-post. - Donor support focused on ex-ante resilience-building can be more cost-effective than post-disaster reconstruction financing. *Source: Presentation to Maldivian authorities during the Article IV consultation by the IMF team.* ### 1. Presentation of “How to Boost the Post-COVID-19 Recovery? Policy Lessons from Country ### 1. Presentation of “How to Boost the Post-COVID-19 Recovery? Policy Lessons from Country Applications of the DIGNAR Model” at Villa Mondragone International Economic Seminar in July 2021 ### Presentations and conference participation - Presentation of “How to Boost the Post-COVID-19 Recovery? Policy Lessons from Country Applications of the DIGNAR Model” at Villa Mondragone International Economic Seminar in July 2021. - Presentation on “Network Bottlenecks and Market Power” at Society for Economic Dynamics in July 2021. - Presentation on "Structural Reforms and Elections: Evidence from a World-Wide New Dataset" at NBER Summer Institute in July 2021. - Presentation on “Search Externalities in Firm-to-Firm Trade” at University of Bonn in September 2021. - Presentation on “The Socio-Economic Impact of Special Economic Zones: Evidence from Cambodia” at the 23rd INFER Annual Conference in September 2021. - Presentation on LDC economic development and challenges at UN LDC Conference in November 2021. - Presentation on “The Socio-Economic Impact of Special Economic Zones: Evidence from Cambodia” at Southern Economic Association Conference in November 2021. - Keynote Speech: Will the AI Revolution Cause a Great Divergence? At The 2nd Applied Macroeconomics Forum in December 2021. - Presentation on Epidemics, Gender, and Human Capital in Developing Countries at an AFRITAC event - “Gender Equality and Macroeconomics: Lessons from East Africa and Beyond” in December 2021. - Poster session on “The Socio-Economic Impact of Special Economic Zones: Evidence from Cambodia” at Allied Social Science Associations (ASSA) Annual Conference in January 2022. - Presentation on “Search Externalities in Firm-to-Firm Trade” at STEG conference in January 2022. - Presentation on “Search Externalities in Firm-to-Firm Trade” at CSAE conference, University of Oxford in March 2022. - Presentation on “Monetary Policy Frameworks: An Index and New Evidence” at BIS in March 2022. - Presentation on the results of the macro-fiscal section of Samoa’s CMAP mission to the acting Minister of Finance as well as the management of the Ministry of Finance in March 2022. - Presentation at the webinar “Macroeconomics of Climate Change” at Africa Training Institute in April 2021. - Presentation on “The Role of Targeted Interventions to Support Growth and Diversification in Developing Countries: Recent Staff Work” at Diversification Working Group Seminar in February 2022. - Presentation on “Trade and the COVID-19 pandemic: lessons from French firms” at Surveillance meeting in November 2021. ### Thematic areas of IMF policy influence (Outcome Indicator 1) - Food insecurity and food inflation — highlighted as a thematic area influencing IMF policy; see related discussion in Section 2 of the original report. - Climate change and debt sustainability — highlighted as a thematic area influencing IMF policy; see related discussion in Section 2 of the original report. ### Other outputs — Newsletters - June 2021 Newsletter - September 2021 Newsletter - December 2021 Newsletter - March 2022 Newsletter - Internal daily newsletters: “Headlines on LICs” - As the COVID - 19 crisis unfolded across the globe in March 2020, the team began circulating a daily email with the latest articles on COVID-19 and LICs covering infections, vaccine deployments, and related government policies. - The newsletter was expanded to cover emerging topics important to LICs such as Ukraine-Russia war, food crisis, inflation, climate change, inequality, gender, etc. - The daily email provides a list of headlines with weblinks under each topic gathered by automated alerts and manual search, filtered by judgment by the team member in charge. - The newsletter has been circulated to about 100 Fund staff. - The IMF’s African Department requested adding their senior staff and the Regional Studies Division to the distribution list. ### Blogs, articles, podcasts, toolkits, and notes - IMF Blog: Fragile and Conflict-Affected Economies Are Falling Further Behind - VOXEU Blog: Defying the odds: Remittances held up during the COVID-19 pandemic - VOXEU: Blog Investigating the Drivers of Remittance Fees - GlobalDev Blog: Public investment for growth: a country’s absorptive capacity is key - IMF Podcast: Island States Paying Price for Climate Change - F&D: Intergenerational Social Mobility in Africa - DIGNAR-19 Toolkit Manual - Note: “Spillovers from the War in Ukraine to Low-income Countries” (bilaterally shared with FCDO) - Authors: Cedric Okou, John Spray, Filiz Unsal, and Roland Kpodar. - Summary of key findings: - The most important channels through which the war in Ukraine may affect low-income countries (LICs) are impacts on global food and oil prices and financial linkages. - Considering cereals make up two-thirds of the daily caloric intake in LICs and is primarily imported, an increase in global cereal prices may intensify food insecurity concerns. - Increases in global wheat prices could bring almost one-to-one increase in local wheat prices. - Global wheat price increases by themselves could result in a 3-5 percent increase in the cost of the consumption basket in many LICs, with a substantially larger impact in countries with high wheat consumption shares and import dependence. - LICs could also be affected by oil price spikes as fear of sanctions on Russian exports escalates, and by tightened external financing conditions brought by uncertainty and financial sanctions. - These forces are likely to be compounded by the limited policy space in most LICs following the pandemic. ### Internal presentations (Fund-wide or across Departments) - Presentation on “Food insecurity in SSA” at RES-AFR joint IMF seminar on February 16, 2022. - Presentation on “Food Prices in Sub-Saharan Africa: An Empirical Assessment” at AFR-RES joint IMF seminar on March 31, 2022. --- _Source: https://www.imf.org/-/media/files/topics/lics/macro-research-for-development/annual-reports/fcdo-ar-june2022.pdf_