## Coping with the Crisis: Policy Options for Emerging Market Countries

_IMF Staff Position Notes, April 23, 2009_

## Source details

**Canonical URL:** [Coping with the Crisis: Policy Options for Emerging Market Countries](https://www.imf.org/en/publications/imf-staff-position-notes/issues/2016/12/31/coping-with-the-crisis-policy-options-for-emerging-market-countries-22894)

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## Bibliographic details
- Authors: Christopher W. Crowe, Jonathan David Ostry, Jun I Kim, Marcos Chamon, Atish R. Ghosh
- Published: April 23, 2009
- Series: IMF Staff Position Notes
- DOI: https://doi.org/10.5089/9781462323296.004

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### Overview and context
- Authors: Christopher W. Crowe, Jonathan David Ostry, Jun I Kim, Marcos Chamon, Atish R. Ghosh
- Publication date: April 23, 2009
- Core problem: Emerging market economies (EME) face two concurrent shocks:
  - a ‘sudden stop’ of capital inflows resulting from the global deleveraging process
  - a collapse in export demand associated with the global slump
- Objective: Outline policies to solve the debt overhang and bring about recovery across groups of emerging market countries.

### Key findings and mechanisms
- Greater official financing is a key ingredient to expand the “policy space” available to EMEs to pursue supportive macroeconomic policies.
- In countries with large debt overhangs, official financing can help meet the fiscal outlays associated with resolving that overhang.
- Ensuring an adequate framework to facilitate rapid debt workouts is an important first step.
- Debt restructuring mechanisms can:
  - provide greater scope for monetary easing
  - reduce negative repercussions of exchange rate depreciation on unhedged balance sheets
- Depending on available fiscal space, expansionary fiscal policy should be deployed to support economic activity.

### Policy recommendations
- Expand official financing to EMEs to increase policy space for supportive macroeconomic action.
- Establish and ensure adequate frameworks for rapid debt workouts and debt restructuring mechanisms.
- Use debt restructuring to enable more monetary easing without transferring undue balance-sheet risks to the non-financial sector.
- Deploy expansionary fiscal policy where fiscal space permits to support domestic demand and recovery.

### Subjects and keywords (as listed)
- Subjects: Banking, Currencies, Exchange rates, Financial statements, Fiscal policy, Foreign exchange, Money, Public financial management (PFM)
- Keywords: adverse selection, capital account, Currencies, East Asia, emerging market country, Exchange rates, Financial statements, foreign currency, Global, hard-won gain, output gap, SPN

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## Content in this bundle

- **_spn0908 - Executive Summary**
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  - [_spn0908 - Executive Summary (PDF)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/spn/2009/_spn0908.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/imf-staff-position-notes/issues/2016/12/31/coping-with-the-crisis-policy-options-for-emerging-market-countries-22894_