Low-Income Countries

Rising to the Challenge | World Bank Group-IMF Joint Event

Wednesday, April 3, 2024
09:00 am-12:00 pm ET / 13:00-16:00 GMT



 

As the global economic conditions begin to normalize after years marked by COVID-19, a global food crisis, surging inflation, and high interest rates, low-income countries—which suffered the most from these shocks—are at an important juncture.

How can low-income countries overcome their current challenges? What are the potential opportunities on the horizon?

Join Kristalina Georgieva and Ajay Banga for a live discussion on what low-income countries can do to foster macroeconomic stability, promote sustainable and inclusive growth, and unlock progress toward the sustainable development goals.

Also hear from senior policy makers and experts on what role the international community can play to support these countries—from mobilizing financing and calibrating their support through strengthening debt resolution frameworks.

For more details, see AGENDA.

Read our latest report on Macroeconomic Developments and Prospects for Low-Income Countries.

SPEAKERS
Kristalina Georgieva, Managing Director, International Monetary Fund
Kristalina Georgieva
Managing Director, International Monetary Fund
Antoinette Monsio Sayeh, Deputy Managing Director, IMF
Antoinette Monsio Sayeh
Deputy Managing Director, IMF
Vera Esperança Dos Santos Daves De Sousa,Finance Minister, Angola
Vera Esperança Dos Santos Daves De Sousa
Finance Minister, Angola
Andrew Mitchell, Minister of State (Development and Africa), United Kingdom
Andrew Mitchell
Minister of State (Development and Africa), United Kingdom
Hanan Morsy, Deputy Executive Secretary (Programme) and Chief Economist, United Nations Economic Commission for Africa
Hanan Morsy
Deputy Executive Secretary and Chief Economist, United Nations Economic Commission for Africa
Ajay Banga, President, World Bank Group
Ajay Banga
President, World Bank Group
Njuguna S. Ndungu, Cabinet Secretary, National Treasury & Economic Planning, Kenya
Njuguna S. Ndungu
Cabinet Secretary, National Treasury & Economic Planning, Kenya
Tatiana Rosito, Secretary of International Affairs, Ministry of Finance of Brazil
Tatiana Rosito
Secretary of International Affairs, Ministry of Finance of Brazil
Liao Min, Vice Minister of Finance of China
Liao Min
Vice Minister of Finance of China
Anna Bjerde, Managing Director of Operations, The World Bank
Anna Bjerde
Managing Director of Operations, The World Bank
Romuald Wadagni, Minister of Economy and Finance, Senior Minister of State, Benin, World Bank Governor
Romuald Wadagni
Minister of Economy and Finance, Senior Minister of State, Benin, World Bank Governor
Riccardo Barbieri Hermitte, Director General of the Treasury, Ministry of Economy and Finance of Italy
Riccardo Barbieri Hermitte
Director General, Treasury, Ministry of Economy & Finance, Italy
Abdulmuhsen AlKhalaf, Assistant Minister of Finance of Saudi Arabia
Abdulmuhsen AlKhalaf
Assistant Minister of Finance of Saudi Arabia

MODERATORS
Masood Ahmed, President, Center for Global Development
Masood Ahmed
President, Center for Global Development
Shanta Devarajan, Professor of the Practice of International Development, Georgetown University
Shanta Devarajan
Professor of the Practice of International Development, Georgetown University
Rachelle Akuffo, Anchor, Yahoo Finance
Rachelle Akuffo
Anchor, Yahoo Finance


Support for LICs

Blogs

Scars of Conflict Are Deeper and Longer Lasting in Middle East and Central Asia
June 5, 2024

The negative economic effects of conflicts are larger and more persistent, partly reflecting a sharper impact of higher-intensity conflicts in these regions.

AI Will Transform the Global Economy. Let’s Make Sure It Benefits Humanity.
January 14, 2024

AI will affect almost 40 percent of jobs around the world, replacing some and complementing others. We need a careful balance of policies to tap its potential

Harm From ‘De-Risking’ Strategies Would Reverberate Beyond China
October 17, 2023

The negative impact of ‘de-risking’ strategies by major economies would be felt beyond China, while comprehensive reforms in China could generate significant positive spillovers

How Financing Can Boost Low-Income Countries’ Resilience to Shocks
June 14, 2023

The economic gains from $272 billion in pandemic support for 94 countries were strongest in the poorest and more vulnerable recipients of IMF concessional financing

Fiscal Policy Can Help Tame Inflation and Protect the Most Vulnerable
April 3, 2023

Smart fiscal policy can help restore price stability and lessen the impact of the cost-of-living crisis.

The Time Is Now: We Must Step Up Support For the Poorest Countries
March 31, 2023

Low-income countries face huge economic challenges and financing needs. They rely on international institutions, including the IMF’s Poverty Reduction and Growth Trust, for vital policy and financial support. Economically stronger countries have a responsibility to contribute to the funding of this support.

Policy Papers

Review of the Fund’s Income Position for FY 2024 and FY 2025-2026
May 10, 2024

This paper updates the projections of the Fund’s income position for FY 2024 and FY 2025-2026 and proposes related decisions for the current and the following financial years. The paper also includes a proposed decision to keep the margin for the rate of charge unchanged until completion of the review of surcharges, but until no later than end FY 2025, at which time the Board would set the margin for the rest of FY 2025 and FY 2026. The Fund’s overall net income for FY 2024 is projected at about SDR 4.4 billion after taking into account pension-related remeasurement gain and estimated retained investment income of the Endowment Account.

Review of the Adequacy of the Fund’s Precautionary Balances
April 4, 2024

On March 20, 2024, the IMF’s Executive Board reviewed the adequacy of the Fund’s precautionary balances. The review took place somewhat ahead of the standard two-year cycle, in view of the imminent attainment of the current indicative medium-term indicative target of SDR 25 billion for the first time. Precautionary balances comprise the Fund’s general and special reserves. They are a key element of the IMF’s multi-layered framework for managing financial risks. Precautionary balances provide a buffer to protect the Fund against potential losses, resulting from credit, income, and other financial risks. The review was based on the assessment framework established in 2010, which uses an indicative range for precautionary balances, linked to a forward-looking measure of total IMF non-concessional credit, to guide decisions on adjusting the medium-term target over time. While financial risks remain high, they are broadly unchanged from the last review, taking into account the further accumulation of reserves and strengthening of some risk mitigants. Against this background, Executive Directors broadly supported staff’s proposal to retain the current medium-term target of SDR 25 billion and increase the minimum floor from SDR 15 billion to SDR 20 billion. The Board also supported maintaining the biennial review cycle, with earlier reviews if warranted by developments that could materially affect the adequacy of precautionary balances.

The Fund’s Income Position for FY 2023— Actual Outcome
November 17, 2023

This paper reports on the Fund’s income position for FY 2023 following the closing of the Fund’s accounts for the financial year and completion of the external audit. Overall net income of the General Department was SDR 1.7 billion, SDR 0.1 billion lower than estimated in April, mainly reflecting a decrease in the remeasurement gain reported under IAS 19 (the accounting standard for employee benefits) offset partly by higher-than-anticipated returns from the investment subaccounts compared with earlier projections.

Review of the Fund’s Income Position for FY2023 and FY2024
June 16, 2023

This paper updates the projections of the Fund’s income position for FY 2023 and FY 2024 and proposes related decisions for the current and next financial year. The paper also includes a proposed decision to keep the margin for the rate of charge unchanged for financial year 2024. The Fund’s overall net income for FY 2023 is projected at about SDR 1.8 billion, slightly lower than the April 2022 estimate.

Review Of The Adequacy Of The Fund’s Precautionary Balances
December 20, 2022

On December 12, 2022, the IMF’s Executive Board reviewed the adequacy of the Fund’s precautionary balances. The review took place on the standard two-year cycle, after an interim review in December 2021. Precautionary balances comprise the Fund’s general and special reserves. They are a key element of the IMF’s multi-layered framework for managing financial risks. Precautionary balances provide a buffer to protect the Fund against potential losses, resulting from credit, income, and other financial risks. In conducting the review, the Executive Board applied the rules-based framework agreed in 2010. Precautionary balances have risen further since the 2021 interim review and coverage metrics have strengthened. At the same, credit and other financial risks have also increased. The pace of reserve accumulation is expected to remain adequate. Against this background, Executive Directors endorsed staff’s proposal to retain the current medium-term target of SDR 25 billion and the minimum floor of SDR 15 billion. The Board also discussed the role of surcharges, which are primarily a component of the Fund’s risk management framework but also contribute to reserves accumulation.

The Fund’s Income Position for FY 2022—Actual Outcome
December 16, 2022

This paper reports on the Fund’s income position for FY 2022 following the closing of the Fund’s accounts for the financial year and completion of the external audit.

Research & Publications

Sovereign Environmental, Social, and Governance (ESG) Investing: Chasing Elusive Sustainability
May 17, 2024

This paper evaluates the progression of the sovereign ESG landscape since the initial comprehensive assessment of the sector in 2021 in “Demystifying Sovereign ESG” by conducting a comparative analysis of the current sovereign ESG methodologies of commercial ESG providers. The 2021 study articulated the distinct nature of the sovereign ESG segment from corporate ESG and documented fundamental shortcomings in sovereign ESG methodologies, such as the “ingrained income bias”, lack of consensus on environmental performance, and conflation of risk and sustainability objectives. While sovereign ESG methodologies have evolved since 2021, the significant correlation across providers of aggregate, S, and G scores persist. In response to market demand there has been a notable shift towards greater focus on the E pillar against growing heterogeneity on climate and environmental considerations across ESG providers. The findings underscore the disparity between perceptions and realities in implementing a sustainability strategy within the sovereign debt asset class. This necessitates a reevaluation of sovereign ESG scoring methodologies towards outcome-based metrics and urges a globally coordinated effort to establish robust sustainability measurement frameworks.

At the Threshold: The Increasing Relevance of the Middle-Income Trap
April 26, 2024

We investigate the existence of a middle-income trap using finite state Markov chains, constant growth thresholds, and mean passage times. As well as studying output per head, we examine the dynamics of its proximate determinants: TFP, the capital-output ratio, and human capital. We find upwards mobility for the capital-output ratio and human capital, but not for relative TFP. The lack of upwards mobility in relative TFP, at least from an intermediate level, suggests that escaping the middle-income category can take many years, and such traps may become increasingly apparent in the years to come.

Harnessing Satellite Data to Improve Social Assistance Targeting in the Eastern Caribbean
April 5, 2024

Prioritizing populations most in need of social assistance is an important policy decision. In the Eastern Caribbean, social assistance targeting is constrained by limited data and the need for rapid support in times of large economic and natural disaster shocks. We leverage recent advances in machine learning and satellite imagery processing to propose an implementable strategy in the face of these constraints. We show that local well-being can be predicted with high accuracy in the Eastern Caribbean region using satellite data and that such predictions can be used to improve targeting by reducing aggregation bias, better allocating resources across areas, and proxying for information difficult to verify.

Designing a Progressive VAT
April 5, 2024

This paper presents a novel approach to addressing VAT regressivity, by proposing the adoption of a progressive VAT: a single-rate, broad-base, VAT, whereby tax paid on consumption is re-paid to lower income households in real-time, at the moment of purchase. Such a system can effectively eliminate regressivity, while minimizing the political economy, cash-flow, and welfare stigma obstacles that are often associated with standard welfare transfers used in modern VAT systems. It would also have other significant advantages, particularly in terms of compliance incentives.

Specialization, Market Access and Real Income
March 8, 2024

This paper estimates the impact of external demand shocks on real income. We utilize a first order approximation to a wide class of small open economy models that feature sector-level gravity in trade flows, which allows us to measure foreign shocks and characterize their welfare impact in terms of reducedform elasticities. We use machine learning techniques to group 4-digit manufacturing sectors into a smaller number of clusters, and show that the cluster-level elasticities of income with respect to foreign shocks can be estimated using high-dimensional statistical techniques. Foreign demand shocks in complex intermediate and capital goods have large positive impacts on real income, whereas impacts in other sectors are negligible. We showthat the estimates imply that countries that specialize in these sectors enjoy greater gains from increased openness, and that (small) export subsidies to these sectors are welfare-improving. Finally, a calibrated multisector production and trade model with input-output linkages and external economies of scale can match the empirical estimates.

Strengthening Income Stabilization through Social Protection in Emerging and Developing Economies: The Brazilian Experience
March 8, 2024

Social protection programs are crucial for stabilizing household income, especially during crises. Brazil's response to the pandemic, the Auxilio Emergencial (AE) program, demonstrated the value of a resilient social safety net and digital tools. This study assesses AE's effectiveness in income stabilization, poverty reduction, and inequality. Results show that the pre-pandemic social protection system would have only buffered about a quarter of income loss, with unemployment insurance more significant for higher-income households, and social safety net transfers crucial for lower-income households, especially those in informal employment. AE successfully supported lower-income households during the pandemic, but its generosity went beyond the stabilization of income, resulting in large fiscal costs.

Videos

Promoting Climate-Resilient and Green Development in Africa | Africa Perspectives
February 7, 2023

A conversation on how sub-Saharan Africa can promote climate-resilient and green development. African Department director Abebe Aemro Selassie hosts the premiere episode of Africa Perspectives.

Zambia: Towards a More Resilient and Inclusive Future
February 1, 2023

A discussion with University of Zambia students on how Zambia is making progress in its reform efforts to restore sustainability, invest in youth, combat corruption, and attract investment and the role of the IMF.

Strengthening Institutions for Sustainable Growth in the Post-COVID World
January 6, 2023

The conference provides an opportunity to discuss how South Asia can build on its development success in the aftermath of the COVID-19 pandemic and geopolitical tensions to achieve its potential.

The Resilience and Sustainability Trust - A Dialogue with Countries
December 13, 2022

A discussion on how the Resilience and Sustainability Trust fits wider climate objectives at the country and global level.

Regional Economic Outlook for the Middle East and North Africa, October 2022
November 2, 2022

Jihad Azour, Director of the Middle East and Central Asia Department, presents the IMF’s latest economic outlook and growth projections for the MENA region

Living on the Edge: IMF Outlook for sub-Saharan Africa Nairobi Launch
November 1, 2022

A presentation and discussion of the October 2022 Regional Economic Outlook for Sub-Saharan Africa.

Seminars

Seminars
The Infrastructure Seminar series provides a forum for leading experts to share latest insights on key policy issues related to public infrastructure.
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Developing Economies Seminars

Developing Economies Seminars
A flagship seminar at the Fund, the Developing Economies Seminar Series focuses on topical policy issues for developing countries.
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FCDO/IMF Project

FCDO/IMF Project
The IMF has partnered with the UK's Foreign, Commonwealth and Development Office (FCDO) to study critical macroeconomic policy issues in low-income countries to promote sustainable and inclusive growth in low-income countries.
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