Despite significant progress in recent decades, labor markets across the world remain divided along gender lines. Female labor force participation has remained lower than male participation, gender wage gaps are high, and women are overrepresented in the informal sector and among the poor. In many countries, legal restrictions persist which constrain women from developing their full economic potential. While equality between men and women is in itself an important development goal, women's economic participation is also a part of the growth and stability equation. In rapidly aging economies, higher female labor force participation can boost growth by mitigating the impact of a shrinking workforce. Better opportunities for women can also contribute to broader economic development in developing economies, for instance through higher levels of school enrollment for girls.
Resilience, supervision, and international coordination are essential to safeguarding global financial markets as new AI tools enable attackers
Fiscal pressures in developing countries make stronger domestic revenue systems more important than ever
Shipping and flight disruptions highlight new fault lines in the global economy and their costs for growth and livelihoods
To weather the shock, policymakers should ensure that any near-term measures are time-bound and targeted at the most vulnerable, and maintain the focus on medium-term development objectives
Countries face vastly different exposure to higher oil prices and supply uncertainty, shaped by whether they import or export, and how much policy space they have to respond
Impact on economic activity will vary across countries, but inflation will rise for all
[Please note this report is only available in French] The joint FAD/LEG/FIN/MCM governance Diagnostic (GD) report presents the macro-critical governance and corruption vulnerabilities in Madagascar around the following core pillars: (i) nature and severity of corruption; (ii) anti-corruption legal and institutional framework; (iii) rule of law; (iv) anti-money laundering and combating the financing of terrorism (AML/CFT) ; (v) tax policy; (vi) tax and customs administrations; (vii) public financial management (PFM); (viii) central bank governance and operations; and (ix) financial sector oversight. For each pillar, it provides an overview of the current situation, a detailed analysis of key issues requiring the authorities’ attention, and targeted recommendations with concrete actions for implementation. The report also identifies key reform measures, as contribution to the authorities’ roadmap on governance reforms, the State General Policy (Politique Générale de l’Etat) 2024, and the recently adopted National Strategy on Fight against Corruption (Stratégie Nationale de lute contre la corruption) 2025 -2030.
Using a newly constructed database of highly granular regional-level budgets, this paper documents the growing relevance of regional governments in Latin America over the past three decades and evaluates the implications for fiscal cyclicality. We find that regional governments exhibit lower revenue elasticity to national GDP than central governments, primarily due to the limited cyclicality of transfers. On the expenditure side, while overall elasticity is comparable to central governments, fiscal adjustment occurs through capital expenditures. We also show that transfers appear to operate primarily as redistribution mechanisms across regions rather than as instruments to offset differences in tax capacity.
A significant decline in oil production weakened fiscal and external positions. Overall growth held up in 2025, partly supported by public spending. Inflation eased from its peak, partly due to tight monetary policy, but remained at double digits. Despite a pickup in non-oil economic growth in recent years, non-oil revenues remained constrained while oil revenues declined sharply. Angola’s access to international markets has improved but elevated fiscal financing needs continued to crowd out social spending and private credit while further weakening the external position. The 2026 budget envisages fiscal consolidation and reaffirms a commitment to prudent debt management to preserve macroeconomic stability while addressing critical spending needs.
The use of IMF credit for budgetary financing (budget support) has surged in Extended Credit Facility (ECF) arrangements with low-income countries (LICs) post pandemic, yet its role in growth and adjustment remains understudied. This paper provides the first systematic analysis of budget support across all 100 ECFs approved since the PRGT’s inception in 2010. We develop a reduced-form model that captures how budget support affects the growth-reserves trade-off, where budget support substitutes for domestic financing and thus reduces crowding-out in domestic credit markets. The simulations are performed under wide parameter uncertainty reflecting limited evidence for LICs. Staggered difference-in-differences estimates on completed programs validate the model’s predictions, revealing average treatment effects on growth of 3.4 percentage points but 1.3 months of imports slower reserve accumulation by program end. These results fall at the upper bound of simulations, consistent with severe financing constraints in treated LICs. Budget support shows weak positive effects on fiscal and external adjustments, though not statistically robust, suggesting that it does not weaken consolidation incentives and that sustainable adjustment depends primarily on policy strength and fundamentals rather than financing modalities. Critically, budget support acts as a catalyst contingent on program completion: off-track programs experience particularly adverse growth outcomes. Findings underscore the need for careful consideration of growth-adjustment trade-offs in program design. Short-term growth support must be balanced against building external buffers with country-specific circumstances determining appropriate financing modalities.
The FSAP takes place as the economy shows signs of recovery, but lingering concerns remain over liquidity pressures, given the fragile fiscal position and looming sizable external debt service. Angola’s oil-dependent economy recovered in 2024; yet sovereign and private financing conditions remained tight. The bank-dominated financial sector is small and appears adequately capitalized on average, but certain vulnerabilities persist, including high non-performing loans, a substantial sovereign-bank nexus, and exposure to foreign exchange and climate-related financial risks. Liquidity indicators are high, with the bulk of banks’ funding coming from residents’ deposits.
There has been renewed interest in revitalizing manufacturing, yet policy often confronts a circular challenge: firms hesitate to expand because they cannot reliably find suitably skilled workers (e.g., STEM-trained), while workers are reluctant to acquire those skills when jobs remain limited. This raises a policy question: intervene at the firm margin or the worker margin, or both? We study this question by extending Acemoglu and Shimer (1999) to a two-sector open-economy. The key friction is capital holdup: firms invest upfront to create jobs, but sunk investment weakens their wage bargaining positions, discouraging investment ex-ante. Because manufacturing is more capital intensive, holdup is more severe, leaving manufacturing employment inefficiently low. In the calibrated model, this inefficiency-induced industrial employment shortfall is about 1 percent of total employment – roughly one-fifth of LAC-East Asia gap. When Hosios condition holds, the optimal policy can be solely on the firm side: an investment subsidy financed by an employment tax on firms. When Hosios condition fails, an additional wedge distorting workers’ sectoral choices emerges, and targeted training subsidies become welfare-improving.
Climate-related risks are macro-critical considerations for Liberia. This Climate Policy Diagnostic identifies policy reforms that reduce balance of payment risks, boost fiscal resilience, and generate positive climate outcomes. A comprehensive reform agenda is needed to promote water and food security, and a robust package of fiscal policies is key to accelerating energy access and transition. While efficient disaster risk management and financing will save lives and build economic resilience, sustainable forestry and land-use are vital to livelihoods and can be supported by good fiscal policies. Stronger climate governance would help streamline climate policy implementation and reduce costs toward building resilience. In addition, strategic mobilization of climate finance and leveraging the private sector are crucial to closing the financing gap.
This paper updates the projections of the Fund’s income position for FY 2026 and FY 2027–2028 and proposes related decisions for the current and the following financial years. The paper includes proposed decisions to transfer SDR 1.38 billion of GRA resources to the Interim Placement Administered Account and to transfer estimated Fixed Income income and a payout from the Endowment Subaccount to help meet administrative expenses. It also includes a proposed decision to keep the margin for the rate of charge unchanged at 60 basis points for FY 2027–2028. The Fund’s total comprehensive income for FY 2026 is projected at about SDR 3.8 billion; reflecting an estimated pension-related remeasurement gain and retained income in the Investment Account. The Executive Board approved these decisions on April 28; 2026.
Resilience, supervision, and international coordination are essential to safeguarding global financial markets as new AI tools enable attackers
Fiscal pressures in developing countries make stronger domestic revenue systems more important than ever
Shipping and flight disruptions highlight new fault lines in the global economy and their costs for growth and livelihoods
To weather the shock, policymakers should ensure that any near-term measures are time-bound and targeted at the most vulnerable, and maintain the focus on medium-term development objectives
Countries face vastly different exposure to higher oil prices and supply uncertainty, shaped by whether they import or export, and how much policy space they have to respond
Impact on economic activity will vary across countries, but inflation will rise for all
[Please note this report is only available in French] The joint FAD/LEG/FIN/MCM governance Diagnostic (GD) report presents the macro-critical governance and corruption vulnerabilities in Madagascar around the following core pillars: (i) nature and severity of corruption; (ii) anti-corruption legal and institutional framework; (iii) rule of law; (iv) anti-money laundering and combating the financing of terrorism (AML/CFT) ; (v) tax policy; (vi) tax and customs administrations; (vii) public financial management (PFM); (viii) central bank governance and operations; and (ix) financial sector oversight. For each pillar, it provides an overview of the current situation, a detailed analysis of key issues requiring the authorities’ attention, and targeted recommendations with concrete actions for implementation. The report also identifies key reform measures, as contribution to the authorities’ roadmap on governance reforms, the State General Policy (Politique Générale de l’Etat) 2024, and the recently adopted National Strategy on Fight against Corruption (Stratégie Nationale de lute contre la corruption) 2025 -2030.
Using a newly constructed database of highly granular regional-level budgets, this paper documents the growing relevance of regional governments in Latin America over the past three decades and evaluates the implications for fiscal cyclicality. We find that regional governments exhibit lower revenue elasticity to national GDP than central governments, primarily due to the limited cyclicality of transfers. On the expenditure side, while overall elasticity is comparable to central governments, fiscal adjustment occurs through capital expenditures. We also show that transfers appear to operate primarily as redistribution mechanisms across regions rather than as instruments to offset differences in tax capacity.
A significant decline in oil production weakened fiscal and external positions. Overall growth held up in 2025, partly supported by public spending. Inflation eased from its peak, partly due to tight monetary policy, but remained at double digits. Despite a pickup in non-oil economic growth in recent years, non-oil revenues remained constrained while oil revenues declined sharply. Angola’s access to international markets has improved but elevated fiscal financing needs continued to crowd out social spending and private credit while further weakening the external position. The 2026 budget envisages fiscal consolidation and reaffirms a commitment to prudent debt management to preserve macroeconomic stability while addressing critical spending needs.
The use of IMF credit for budgetary financing (budget support) has surged in Extended Credit Facility (ECF) arrangements with low-income countries (LICs) post pandemic, yet its role in growth and adjustment remains understudied. This paper provides the first systematic analysis of budget support across all 100 ECFs approved since the PRGT’s inception in 2010. We develop a reduced-form model that captures how budget support affects the growth-reserves trade-off, where budget support substitutes for domestic financing and thus reduces crowding-out in domestic credit markets. The simulations are performed under wide parameter uncertainty reflecting limited evidence for LICs. Staggered difference-in-differences estimates on completed programs validate the model’s predictions, revealing average treatment effects on growth of 3.4 percentage points but 1.3 months of imports slower reserve accumulation by program end. These results fall at the upper bound of simulations, consistent with severe financing constraints in treated LICs. Budget support shows weak positive effects on fiscal and external adjustments, though not statistically robust, suggesting that it does not weaken consolidation incentives and that sustainable adjustment depends primarily on policy strength and fundamentals rather than financing modalities. Critically, budget support acts as a catalyst contingent on program completion: off-track programs experience particularly adverse growth outcomes. Findings underscore the need for careful consideration of growth-adjustment trade-offs in program design. Short-term growth support must be balanced against building external buffers with country-specific circumstances determining appropriate financing modalities.
The FSAP takes place as the economy shows signs of recovery, but lingering concerns remain over liquidity pressures, given the fragile fiscal position and looming sizable external debt service. Angola’s oil-dependent economy recovered in 2024; yet sovereign and private financing conditions remained tight. The bank-dominated financial sector is small and appears adequately capitalized on average, but certain vulnerabilities persist, including high non-performing loans, a substantial sovereign-bank nexus, and exposure to foreign exchange and climate-related financial risks. Liquidity indicators are high, with the bulk of banks’ funding coming from residents’ deposits.
There has been renewed interest in revitalizing manufacturing, yet policy often confronts a circular challenge: firms hesitate to expand because they cannot reliably find suitably skilled workers (e.g., STEM-trained), while workers are reluctant to acquire those skills when jobs remain limited. This raises a policy question: intervene at the firm margin or the worker margin, or both? We study this question by extending Acemoglu and Shimer (1999) to a two-sector open-economy. The key friction is capital holdup: firms invest upfront to create jobs, but sunk investment weakens their wage bargaining positions, discouraging investment ex-ante. Because manufacturing is more capital intensive, holdup is more severe, leaving manufacturing employment inefficiently low. In the calibrated model, this inefficiency-induced industrial employment shortfall is about 1 percent of total employment – roughly one-fifth of LAC-East Asia gap. When Hosios condition holds, the optimal policy can be solely on the firm side: an investment subsidy financed by an employment tax on firms. When Hosios condition fails, an additional wedge distorting workers’ sectoral choices emerges, and targeted training subsidies become welfare-improving.
Climate-related risks are macro-critical considerations for Liberia. This Climate Policy Diagnostic identifies policy reforms that reduce balance of payment risks, boost fiscal resilience, and generate positive climate outcomes. A comprehensive reform agenda is needed to promote water and food security, and a robust package of fiscal policies is key to accelerating energy access and transition. While efficient disaster risk management and financing will save lives and build economic resilience, sustainable forestry and land-use are vital to livelihoods and can be supported by good fiscal policies. Stronger climate governance would help streamline climate policy implementation and reduce costs toward building resilience. In addition, strategic mobilization of climate finance and leveraging the private sector are crucial to closing the financing gap.
This paper updates the projections of the Fund’s income position for FY 2026 and FY 2027–2028 and proposes related decisions for the current and the following financial years. The paper includes proposed decisions to transfer SDR 1.38 billion of GRA resources to the Interim Placement Administered Account and to transfer estimated Fixed Income income and a payout from the Endowment Subaccount to help meet administrative expenses. It also includes a proposed decision to keep the margin for the rate of charge unchanged at 60 basis points for FY 2027–2028. The Fund’s total comprehensive income for FY 2026 is projected at about SDR 3.8 billion; reflecting an estimated pension-related remeasurement gain and retained income in the Investment Account. The Executive Board approved these decisions on April 28; 2026.
