## Macroeconomic Developments and Prospects in Low-Income Developing Countries - 2016

## Source details

**Canonical URL:** [Macroeconomic Developments and Prospects in Low-Income Developing Countries - 2016](https://www.imf.org/en/publications/policy-papers/issues/2017/01/13/pp5086-macroeconomic-developments-and-prospects-in-low-income-developing-countries-2016)

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- [Markdown version](/en/publications/policy-papers/issues/2017/01/13/pp5086-macroeconomic-developments-and-prospects-in-low-income-developing-countries-2016/index.md)
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## Bibliographic details
- Published: November 23, 2016

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### Overview
- This paper is the third in a series assessing macroeconomic developments and prospects in low-income developing countries (LIDCs).
- The first paper examined trends during 2000–2014, a period of sustained strong growth across most LIDCs.
- The second paper focused on the impact of the drop in global commodity prices since mid-2014 on LIDCs—a story with losers (countries dependent on commodity exports, notably fuel) and winners (countries with a more diverse export base, where growth remained robust).
- The overarching theme is incomplete adjustment to the new world of “lower for long” commodity prices, with many commodity exporters still far from a sustainable macroeconomic trajectory (Chapter 1).

### Key findings and messages
- Many commodity exporters, notably fuel producers, remain under significant economic stress, with sluggish growth, large fiscal imbalances, and weakened foreign reserve positions.
- Countries with a more diversified export base are generally doing well, although several have been hit by declines in remittances, conflict/natural disasters, and the contractionary impact of macroeconomic stabilization programs.
- Widening fiscal imbalances, in both commodity and diversified exporters, have resulted in rising debt levels, with severe financing stress emerging in some cases.
- Financial sector stresses have emerged in many LIDCs, with expectations that these strains will increase in many commodity exporters over the next 12–18 months.

### Analytical focus areas (by chapter)
- Chapter 1: Assessment of macroeconomic conjuncture and incomplete adjustment to “lower for long” commodity prices.
- Chapter 2: Analysis of risks and vulnerabilities with a focus on financial sector stresses and medium-term fiscal risks; actions and capacity building needed to manage and contain these challenges over time.
- Chapter 3: How infrastructure investment can be accelerated in LIDCs to address weaknesses in public infrastructure (such as energy, transportation systems) seen as key constraints on medium-term growth potential, especially in the context of 2016 as the first year of the march towards the 2030 development goals.

### Policy emphases and recommendations
- Strengthen financial sector oversight to address current and prospective financial stresses in many LIDCs.
- Address medium-term fiscal risks to contain rising debt levels and severe financing stress in vulnerable countries.
- Accelerate infrastructure investment, with attention to energy and transportation systems, to remove key constraints on medium-term growth potential.
- Invest in capacity building to better manage financial sector stresses and fiscal vulnerabilities over time.

### Publication details
- Publication date: November 23, 2016
- Read Executive Summary in Arabic, Chinese, French, and Spanish (links provided on the original page).

*International Monetary Fund — Macroeconomic Developments and Prospects in Low-Income Developing Countries - 2016*

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## Content in this bundle

- **Policy Paper**
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_Source: https://www.imf.org/en/publications/policy-papers/issues/2017/01/13/pp5086-macroeconomic-developments-and-prospects-in-low-income-developing-countries-2016_