## September 2023 — Climate Action in South Asian Economies ## Source details **Canonical URL:** [September 2023 — Climate Action in South Asian Economies](https://www.imf.org/-/media/files/topics/lics/macro-research-for-development/newsletters/sep2023.pdf) ## Other formats - [Markdown version](/-/media/files/topics/lics/macro-research-for-development/newsletters/sep2023.pdf.md) - [Structured JSON version](/-/media/files/topics/lics/macro-research-for-development/newsletters/sep2023.pdf.json) --- ### High-level seminars and peer learning on climate action in South Asia - Event hosted by IMF SARTTAC and the Center for Social and Economic Progress in New Delhi on July 20. - Organized and funded by the Research Department and the Strategy and Policy Review Department, in collaboration with Asia and Pacific, Research, and Institute for Capacity Development. - Keynote speakers included Bo Li (Deputy Managing Director, IMF); Krishna Srinivasan (Director, Asia and Pacific Department, IMF); Vitor Gaspar (Director, Fiscal Affairs Department, IMF); Antonio Spilimbergo (Deputy Director, Research Department, IMF); Anantha Nageswaran (Chief Economic Advisor, Government of India); Rajeshwa Rao (Deputy Governor, Reserve Bank of India); Abdur Rouf Talukder (Governor, Bangladesh Bank); and Professor Lord Nicholas Stern (Chair of the Centre for Climate Change Economics and Policy and IG Patel Professor of Economics and Government at the London School of Economics). - Purpose: strengthen policy dialogue on mainstreaming climate action in macroeconomic management, including challenges for low-income countries Maldives and Nepal. - Technical sessions and tools demonstrated: - DIGNAD: assess how ex ante adaptation infrastructure helps manage natural disaster risk and better ensure debt sustainability. - Natural Disasters for the Debt Dynamic Tool: develop baseline and alternative scenarios on debt sustainability in the face of natural disasters. ### Presentations and applied research on extractive industries and mining revenues - July 18, 2023: Alejandro Badel organized a meeting with Inter-American Development Bank, World Bank, US Department of Commerce, lithium mining industry representatives, and Argentine mining authorities to present FCDO-sponsored research developed as part of the 2022 Article IV Mission to Guinea. - Focus: IMF assistance to low-income countries in optimizing collection and allocation of revenues derived from extractive industries; responsible and strategic management of extractive industry revenues. - August 2, 2023: Alejandro Badel presented an FCDO-sponsored research project co-authored with Rachel Fredman Lyngas to a mini-conference attended by World Bank, IMF's Inclusion and Gender Unit, and the mining industry. - Research titled “Mining Revenues and Inclusive Development in Guinea”: examines influence of government investments in education and infrastructure on directing mining revenues toward sustainable growth and poverty alleviation. - Discussed preliminary results from ongoing work by Alejandro Badel and Aristide Medeon on the macro-inequality impact of the Simandou project, to guide allocation of increased government revenues from the project. - Emphasis on gender-balanced and inclusive growth in resource-rich economies. ### Panel nowcasting for countries without quarterly GDP - Working paper by Omer Faruk Akbal, Seung Mo Choi, Futoshi Narita, and Jiaxiong Yao. - Problem: quarterly GDP statistics are scarce for over 60 developing economies, including approximately 20 countries in sub-Saharan Africa, and more than two-thirds of fragile and conflict-affected states. - Contribution: panel approach leveraging statistical relationships from countries with available data to estimate quarterly GDP for countries that do not routinely publish such data, using readily available indicators common to many countries. - Finding: framework shows substantial potential, especially when applied to similar country groups, to supply real-time empirical insights into economic conditions. ### Policy distortions and aggregate productivity - Paper by José-María Da-Rocha, Diego Restuccia, and Marina M. Tavares analyzing policy distortions and endogenous establishment-level productivity in a general equilibrium framework. - Key quantitative findings: - Policy distortions can reduce aggregate TFP by over 24 percent (using United States data benchmarks). - If distortions affect the exit rate of incumbent establishments, aggregate TFP loss can double to 48 percent. - Broader impacts: distortions affect average establishment size and impede productivity growth, with implications for income disparities and policy design in low-income countries. ### Strengthening monetary policy frameworks in the Caucasus and Central Asia (CCA) - Departmental paper released on August 28th with contributions from Filiz D. Unsal, Mariarosaria Comunale, Marina Conesa Martinez, and Omer Faruk Akbal; prepared by Tigran Poghosyan, Klakow Akepanidtaworn, Maria Atamanchuk, Ezequiel Cabezon, and Selim Cakir; research assistance from Vahid Khatami. - Findings: - CCA economies experience volatile inflation rates due to large shares of food and imported goods in consumption baskets and high exchange rate pass-through. - The 2022 surge in global food and energy prices and persistent supply-chain bottlenecks highlighted regional vulnerability. - Most CCA central banks prioritize price stability and often set numerical inflation targets. - Despite improvements, anchoring inflation expectations remains a persistent challenge. ### Digitalization and gender equality in political leadership in Sub-Saharan Africa - Working paper by Diego Gomes and Carine Meyimdjui covering 34 Sub-Saharan African countries. - Key finding: positive correlation between perceptions of women as political leaders and digitalization, measured by internet access and social media use. - Policy recommendation: improve ICT infrastructure and technological education to increase women’s participation in political processes and representation in leadership positions. - Research presented at the 2nd Gender and Economics Workshop organized by the University of Luxembourg. ### Natural disasters and domestic public debt costs - Research (to be published) by Alassane Drabo, Roland Kangni, and Carine Meyimdjui analyzing sovereign borrowing costs in developing countries (including 45 LICs) from 2000 to 2019. - Key empirical findings: - Climate shocks affect domestic debt costs depending on indicators and maturity. - Negative precipitation shocks raise short-term debt costs. - Droughts increase short- and medium-term borrowing expenses. - Importance: domestic debt is harder to restructure than external debt and has become a substantial portion of total public debt in many developing countries. - Presentation venues: 1st Women in Macroeconomics, Law, and Economics Workshop in Bonn, Germany; 29th Ulvön Conference on Environmental Economics in Ulvön, Sweden; Macro Development Workshop 2023 in Melbourne, Australia. ### Macroeconomic framework of climate adaptation - Ongoing work presented by Gabriela Cugat on June 30, 2023, at the 2023 Annual Meeting of the Society for Economic Dynamics; joint project with Vu Chau and Filiz Unsal. - Model: small open economy model for climate adaptation in developing nations that incorporates slow-moving climate risks and allows for endogenous entry and adaptation choices within the climate-vulnerable sector. - Calibration: based on an average developing country (including low-income nations). - Findings and implications: - Optimal incentives for adaptation depend on the interplay between returns on adaptation and financing constraints. - Combining private climate action with public sector initiatives is necessary to avert widespread output decline. - Paper is part of a larger team project by Africa, Institute for Capacity Development, and Research departments that won the IMF Climate Innovation Challenge. - Intended application: develop a toolkit for country teams. --- _Source: https://www.imf.org/-/media/files/topics/lics/macro-research-for-development/newsletters/sep2023.pdf_