Gender

We study how banking groups adjust corporate credit supply in response to tighter macroprudential policies. Using granular data on syndicated corporate loans, we show that banking groups reallocate lending from bank subsidiaries toward affiliated nonbank financial institutions (NBFIs) following regulatory tightening. Relative to bank subsidiaries within the same group, NBFI subsidiaries expand lending, and their credit supply also increases in absolute terms. We estimate that by ‘banking on’ their nonbanks, banking groups offset, on average, more than half of the contraction in bank lending induced by macroprudential tightening. Our findings highlight an important intra-group reallocation channel through which banking groups can partially offset regulatory constraints and result in greater bank–nonbank interconnectedness.

This paper analyzes the redistributive effects of inflation across 18 European economies from 2021:Q3 to 2022:Q2, using unique micro-datasets for this country sample. We estimate inflation’s impact on household welfare through the consumption basket, income, and wealth channels. Our main contribution is incorporating real assets into the wealth channel and accounting for behavioral responses to inflation in both the income and wealth channels. These factors significantly alter inflation’s distributional effects compared to previous literature. The inflation shock is estimated to have caused an average welfare loss equivalent to 18.5 percent of annual household income across our sample, with households in the poorest income quintiles suffering the largest losses. Cross-country differences also widen when real assets are incorporated, with a few economies even showing welfare gains for some or all quintiles because house prices rose faster than inflation.

The IMF conducted a Technical Assistance (TA) mission to assist the National Reserve Bank of Tonga (NRBT) in determining an appropriate policy rate and in implementing an effective liquidity management and forecasting framework. This TA mission serves as a follow-up to previous IMF TA, which provided recommendations to the NRBT for modernizing its monetary policy implementation framework. The mission found that the NRBT has made commendable progress in modernizing its monetary policy implementation framework, including the establishment of an appropriately designed interest rate corridor with standing facilities and open market operations. However, the NRBT’s policy rate of 2 percent lacked analytical justification. In addition, liquidity forecasting was insufficiently robust, limiting effective liquidity management and the potential for interest rate steering. There were also gaps in the institutional arrangements for liquidity management, particularly relating to the lack of systematic daily monitoring of government account flows, which impaired forecast accuracy. To address these deficiencies, the mission recommended creating a dedicated Liquidity Forecasting Unit (LFU) to centralize data collection, forecast daily liquidity, and support policy decisions. The NRBT should utilize advanced statistical techniques provided by the mission to assist with forecasting liquidity and publish the results. In relation to the policy rate, an analytical framework was provided by the mission. A phased approach was also advised for adjusting the policy rate, which entails gradually moving towards an appropriate rate, thereby allowing market adaptation. Implementing these recommendations will enhance monetary policy effectiveness, market development, and safeguard Tonga’s exchange rate peg and financial stability.

The return to a secular decline in hydrocarbon production after a brief respite during the 2022 energy boom is again straining fiscal and external accounts. Boosting non-hydrocarbon growth is key to delivering a diversified, inclusive and balanced economy. Fund Management approved a 12-month extension of the Staff Monitored Program (SMP) in June 2024 to establish the reform track record required for a potential IMF financing arrangement.

Malta's economy has grown rapidly over the past decade, with per capita income nearly doubling since 2013. Growth averaged close to 7 percent annually, led by labor-intensive tourism, online gaming, and professional services, and was supported by inflows of foreign workers. Labor-driven growth supported by immigration, is expected to continue in the medium term but slow in the longer term as Malta, an island economy with the highest population density in the EU, cannot sustain further substantial population and labor force growth through immigration. Without adequate policy and structural reform measures, the inevitable deceleration in labor force growth would weigh on potential output and limit actual growth.

The Bahamas has been in the midst of a solid economic recovery, supported by buoyant tourism. This has created space to strengthen public finances, improve the institutional framework for fiscal policymaking, and invest in disaster risk management. Inflation has declined, supported by the peg with the U.S. dollar. An ambitious electricity sector reform is underway but Hurricane Melissa is a vivid reminder that the country remains vulnerable to unpredictable natural disasters.

This paper presents a comprehensive analysis of inflation in Timor-Leste—a post-conflict, low-income economy and small developing state that is fully dollarized. We find that Timorese inflation was high until about mid-2010 and was strongly influenced by swings in global food prices given its high share of food in the CPI basket and heavy reliance on food imports. But inflation has been relatively low and stable in the past decade relative to peers—a period that also broadly coincided with moderate global food prices. We develop an empirical model for Timorese inflation that distills the role of these underlying drivers, and which can be deployed for forecasting inflation.

rmation from the IMF’s Annual Report on Exchange Arrangements and Exchange Restrictions (AREAER), the index is constructed by estimating the level of openness annually and updating it daily by incorporating changes in capital flow management measures (CFMs). Therefore, this index goes beyond the traditional indexes that rely on binary labels that only distinguish between full capital openness and any control. Within the range of [0, 1], the FinOpen index quantifies granular policy intensity and allows comparisons across countries (with higher values indicate greater capital openness). In addition, the dataset extends back to 1960 for 42 emerging and developing countries, and the methodology can be applied to construct long-term series for other countries.

Selected Issues