## September 2019 ## Source details **Canonical URL:** [September 2019](https://www.imf.org/-/media/files/topics/lics/macro-research-for-development/newsletters/sep2019.pdf) ## Other formats - [Markdown version](/-/media/files/topics/lics/macro-research-for-development/newsletters/sep2019.pdf.md) - [Structured JSON version](/-/media/files/topics/lics/macro-research-for-development/newsletters/sep2019.pdf.json) --- ### Review of Implementation of IMF Commitments in Support of the 2030 Agenda for Sustainable Development - Reviews IMF implementation of 2015 commitments to support developing countries in pursuing the 2030 agenda, covering: - strengthening national tax systems; - tackling large infrastructure gaps; - promoting economic inclusion; - development of domestic financial markets; - intensifying engagement in fragile and conflict-affected states; - improving economic statistics; - expanding the financial safety net for developing countries; - addressing macroeconomic aspects of climate change. - Findings show a large scaling up of IMF support for the 2030 development agenda. - IMF also adopted a framework to assess corruption vulnerabilities and developed a broad framework for assessing the spending levels needed to reach key SDGs. - Paper draws lessons from implementation to inform future IMF engagements. ### Building Resilience in Developing Countries Vulnerable to Large Natural Disasters - Frames disaster risk management as a three-pillar strategy: structural, financial, and post-disaster (including social) resilience. - Recommends a coherent disaster resilience strategy based on diagnostics of risks and cost-effective responses to mobilize international support. - Working paper using a dynamic stochastic general equilibrium model calibrated to six disaster-vulnerable countries: - Policy makers can save 10 percent of GDP in net present value terms by investing ex-ante in resilient infrastructure. - Investing ex-ante can avoid 4 percent of GDP from recovery costs on average. - Working paper was presented on June 20 at the World Forum on Climate Justice and is conditionally accepted by Political Geography. ### Country Studies and Public Investment - Lao P.D.R. — Economic Gains from Promoting Gender Equality - Labor force participation rates are relatively equitable, but gender gaps persist in formal employment and hourly wages. - There is a 20-percent gender wage gap, partly associated with females’ lower educational attainment. - Study quantifies effects of policies promoting girls’ education, increasing the formal sector, and reducing barriers to women’s labor-market potential on growth and government revenues. - Cameroon — The Macroeconomic Impact of Public Investment Reforms - Government aims for Cameroon to become an emerging-market economy by 2035; prioritized public investment in infrastructure and non-oil sectors. - Public debt increased from 12.1 in 2010 (post HIPC debt relief) to 35.6 percent of GDP at end-2018, earning Cameroon a high risk of debt distress rating. - Continued need to stabilize the economy, prioritize public investment, and cap non-concessional external financing. - Annex III scenarios highlight: - benefits from reforms that remove inefficiencies and prioritize high-return projects; and - payoffs from rebalancing public investment financing away from non-concessional sources (4th Review Under the ECF). - Bolivia — Public Investment: Prospects and Implications - “Patriotic Agenda 2025” (2016–2020) promotes state-led industrialization and large-scale public investment to fill infrastructure gaps. - Sustaining public investment at current levels as a share of GDP while hydrocarbon revenues continue to decline could call public debt sustainability into question. - Republic of Congo — Macro-Fiscal Gains from Anti-Corruption Reforms - Oil revenue management and public investment vulnerable to corruption due to limited transparency and accountability. - Model results indicate potential additional growth between 0.8 to 1.8 percent per year over the next 10 years depending on reforms adopted. - Debt can decline by 2.25 to 3 percent of GDP per year over the same period under those reforms. - Suggests substantial macro-fiscal gains even under conservative reform scenarios. ### Monetary Policy, Bank Lending, and Financial Sector Dynamics - Monetary Policy and Bank Lending in Developing Countries: Loan Applications, Rates, and Real Effects - Uses Uganda supervisory credit register microdata on loan applications, volumes, and rates with unanticipated monetary policy variation. - Monetary contraction reduces bank credit supply by increasing loan application rejections and tightening loan volumes and rates. - Effects are stronger for banks with more leverage and sovereign debt exposure. - Associated spillovers on inflation, economic activity (including construction permits and trade), and social unrest. - Related column published on Vox. - Financial Access under the Microscope - Evaluates a large-scale microcredit expansion program using administrative credit register data. - Program improved access to credit, especially in underdeveloped areas, and generated positive spillovers to commercial banks. - Newly-created MFIs faced lending constraints; a sizable share of first-time borrowers obtained subsequent loans from commercial banks that were larger, cheaper, and longer-term. - Commercial banks expanded branch networks in under-served low-risk areas. - Conclusion: microfinance plus a credit reference bureau can mitigate information frictions and serve as a pathway for first-time borrowers to commercial banks. - Remittances and Financial Inclusion in LMICs and Fragile States - Uses a sample of 187 countries over 2004-2015. - Impact of remittances on financial inclusion depends on remittance size. - When remittance-to-gdp is lower than 13%, remittances act as a substitute to formal financial intermediation, alleviating credit-constraint recipients and obviating their need to use banking services. - When the remittance-to-gdp ratio is high enough, remittances complement formal financial services by providing banks liquidity to expand services, including lending. - In LMICs with more developed and stable financial systems, the complementarity effect holds. - In fragile states, financial access is high but usage is low. ### Forecasting Tools and Institutional Capacity - Forecasting and Policy Analysis System (FPAS) Manual (Bank of Uganda) - ICD collaborated with Bank of Uganda in July 2019 to ensure the FPAS Manual covers organizational details and is accessible to new experienced users. - Manual presents: - overview of the monetary policy framework in Uganda; - broad description of FPAS procedures, organization of the forecasting process; - modeling apparatus including the Quarterly Projection Model; - comprehensive presentation of codes infrastructure. - Intended as a user guide for BoU management and current and prospective economists involved in forecasting rounds. - Monetary Policy Frameworks: An Index and New Evidence - Ongoing project (Filiz Ünsal, Chris Papageorgiou, Hendre Garbers) constructing the first cross-country index of monetary policy frameworks and providing a comprehensive assessment toolkit. - Presented to IMF Board (May 9), FDMD David Lipton (July 12 and 31), and at Bank Negara Malaysia (July 17). - Presented at conferences including National Bank of Ukraine (May 23-24) and Federal Reserve Bank of Chicago (June 4-5). ### Methods and Nowcasting Innovations - In Search of Information: Use of Google Trends’ Data to Narrow Information Gaps for Low-income Developing Countries - Working Paper presented by Futoshi Narita at the 2019 IAAE Annual Conference (June 25-28). - Uses online search frequencies from Google Trends to address timely data availability for LIDCs. - Google Trends data found to be more useful in nowcasting real GDP than nighttime lights for LIDCs, demonstrating potential to facilitate timely economic assessments. --- _Source: https://www.imf.org/-/media/files/topics/lics/macro-research-for-development/newsletters/sep2019.pdf_