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World Economic Outlook

Public Debt in Emerging Markets

September 2003

The World Economic Outlook presents the IMF staff's analysis and projections of economic developments at the global level, in major country groups (classified by region, stage of development, etc.), and in many individual countries. It focuses on major economic policy issues as well as on the analysis of economic developments and prospects. It is usually prepared twice a year, as documentation for meetings of the International Monetary and Financial Committee, and forms the main instrument of the IMF's global surveillance activities.

Reports and Related Links:

English

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World Economic Outlook

Public Debt in Emerging Markets

September 2003

Reports and Related Links:

English

A Survey by the Staff of the International Monetary Fund

©2003 International Monetary Fund

Disclaimer
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Video Webcasts—Technical Information

Contents

661k pdf file

Assumptions and Conventions

Preface

Foreword

Chapter I.
607k pdf file

Economic Prospects and Policy Issues

North America: Can the United States Remain the Engine of Global Growth?

Western Europe: Prolonged Weakness with Tentative Signs of a Turnaround

Japan: Bold Measures Needed to Accelerate Restructuring and End Deflation

Latin America: Emerging Stability Provides Opportunity to Accelerate Crisis-Proofing

Asia-Pacific Region: Greater Exchange Rate Flexibility Needed for More Balanced Growth

European Union Candidates: Coping with Weakness in the Euro Area

Commonwealth of Independent States: Structural Reforms Key to Sustaining the Growth Upswing

Middle East: Fiscal Reforms Key to Stability and Higher Growth

Africa: Growth Has Been Resilient But Still Far Too Low

Appendix 1.1. Longer-Term Prospects for Oil Prices

Appendix 1.2. Nonenergy Commodity Prices and Semiconductor Markets

References

Boxes

1.1

Recent Changes in Monetary and Financial Conditions in the Major Currency Areas

1.2

How Should We Measure Global Growth?

1.3

Managing Increasing Aid Flows to Developing Countries

1.4

Rebuilding Post-Conflict Iraq

1.5

Gulf Cooperation Council: Challenges on the Road to a Monetary Union

Tables

1.1

Overview of the World Economic Outlook Projections

1.2

Emerging Market Economies: Net Capital Flows

1.3

Advanced Economies: Real GDP, Consumer Prices, and Unemployment

1.4

Selected Economies: Current Account Positions

1.5

Major Advanced Economies: General Government Fiscal Balances and Debt

1.6

Selected Western Hemisphere Countries: Real GDP, Consumer Prices, and Current Account Balance

1.7

Selected Asian Economies: Real GDP, Consumer Prices, and Current Account Balance

1.8

European Union Candidates: Real GDP, Consumer Prices, and Current Account Balance

1.9

Commonwealth of Independent States: Real GDP, Consumer Prices, and Current Account Balance

1.10

Selected Middle Eastern Countries: Real GDP, Consumer Prices, and Current Account Balance

1.11

Selected African Countries: Real GDP, Consumer Prices, and Current Account Balance

1.12

Oil Reserves and Production

Figures

1.1

Global Indicators

1.2

Current and Forward-Looking Indicators

1.3

Fiscal and Monetary Easing in the Major Advanced Countries

1.4

Developments in Mature Financial Markets

1.5

Emerging Market Financial Conditions

1.6

Selected Countries: Exchange Rate and Interest Rate Developments

1.7

Global Outlook

1.8

How Much Do Developed Country Policies Help Developing Countries?

1.9

United States: Household Balance Sheets

1.10

United States: Return of the Twin Deficits

1.11

Euro Area: A Relatively Weak Cyclical Upturn

1.12

Japan: Monetary, Financial, and Fiscal Indicators

1.13

Selected Western Hemisphere Countries: Economic Activity, Financial Indicators, and Public Debt

1.14

Asia: Composition of Growth, Exchange Rate Volatility, and Reserves

1.15

Selected European Union Accession Countries: Impact of Euro Area and Euro Appreciation

1.16

Real GDP, Investment, and Structural Reforms in the CIS Countries

1.17

Oil Price Cycles and Fiscal Policy in the Middle East

1.18

Downturns in Advanced Countries, and Reforms and Growth in Sub-Saharan Africa

1.19

Oil Prices and Consumption

1.20

Oil Inventories

1.21

Global Economic Growth and Oil Prices

1.22

Historical Oil Price Forecasts

1.23

Nonenergy Commodities and Semiconductors

Chapter II.
417k pdf file

Three Current Policy Issues in Developing Countries

How Can Economic Growth in the Middle East and North Africa Region Be Accelerated?

Are Foreign Exchange Reserves in Asia Too High?

How Concerned Should Developing Countries Be About G-3 Exchange Rate Volatility?

Appendix 2.1. Economic Growth in the Middle East and North Africa Region: Definitions, Data Sources, and Country Coverage

Appendix 2.2. How Concerned Should Developing Countries Be About G-3 Exchange Rate Volatility? Data and Modeling Strategy

References

Boxes

2.1

Accounting for Growth in the Middle East and North Africa

2.2

Measuring Foreign Reserves

2.3

Reserves and Short-Term Debt

Tables

2.1

Growth Regression Results

2.2

Simple Regressions of Reserves on Explanatory Variables

2.3

Multiple-Variable Regression Results for Reserves

2.4

Benefits of Eliminating Consumption Volatility (Upper Bounds)

2.5

Illustrative Sterilization Costs

2.6

Selected Emerging Market Countries: Sources of Reserve Accumulation, 2001–02

2.7

Impact of Exchange Rate Volatility on Trade and on Emerging Market Capital Inflows

2.8

Determinants of Exchange Rate Crises

2.9

Global Economy Model Simulations: How Various Emerging Market Characteristics Increase or Reduce the Impact of G-3 Real Exchange Rate (RER) Volatility

2.10

Selected Summary Statistics

Figures

2.1

MENA Growth Performance in Comparison

2.2

Regional Comparison of Growth Determinants: Macroeconomic and Trade Policy Indicators, 1980–2000

2.3

Trade Restrictiveness Measure, 1997–2002

2.4

Regional Comparison of Growth Determinants: Terms of Trade Volatility, Institutional Quality, Demographics, and Secondary Education, 1980–2000

2.5

Institutional Quality, 1984–2000

2.6

Decomposition of Growth Differentials Among Subgroups of MENA and East Asian Countries

2.7

Indicators of Internal and External Conflict, 1984–2000

2.8

Foreign Exchange Reserves

2.9

Share of Global Reserves

2.10

Selected Emerging Economies: Exchange Rate Regimes

2.11

Selected Emerging Economies: Reserve Accumulation

2.12

Selected Emerging Economies in Asia: Reserve Accumulation

2.13

Selected Emerging Economies in Asia: Actual and Predicted Reserves

2.14

Selected Emerging Economies in Latin America: Actual and Predicted Reserves

2.15

Selected Other Emerging Economies: Actual and Predicted Reserves

2.16

Industrial Country Real Exchange Rate (RER) Volatility

2.17

Share of Countries on a Hard or Crawling Peg

2.18

Volatility in Industrial Countries' Real Exchange Rates (RERs) and Developing Countries' Real Effective Exchange Rates (REERs)

2.19

Volatility and Misalignment of Developing Countries' Real Effective Exchange Rates (REERs)

2.20

Correlation Between the Structure of Trade Links and of Financial Links

2.21

Developing Country Real Effective Exchange Rate (REER) Volatility

2.22

Yen/Dollar Real Exchange Rate, and Real Effective Exchange Rates (REERs) in East Asia

See Also:
Video Webcast: How Economic Growth in the Middle East and North Africa Region Can Be Accelerated? By Dalia Hakura Economist, Research Department (first essay in Chapter II)
Transcript

Video Webcast: Are Foreign Reserves in Asia too High? By Hali Edison, Senior Economist, Research Department (second essay in Chapter II)
Transcript

Video Webcast: How Concerned Should Developing Countries Be About G-3 Exchange Rate Volatility? By Nikola Spatafora, Economist, Research Department (third essay in Chapter II)
Transcript

Chapter III.
356k pdf file

Public Debt in Emerging Markets: Is It Too High?

Public Debt and Fiscal Policy in Emerging Market Economies

Assessing the Sustainability of Public Debt in Emerging Market Economies

How Can Public Debt Levels Be Reduced?

Conclusions

Appendix 3.1. Assessing Fiscal Sustainability: Data and Econometric Methods

References

Boxes

3.1

Data on Public Debt in Emerging Market Economies

3.2

Fiscal Risk: Contingent Liabilities and Demographics

3.3

Assessing Fiscal Sustainability Under Uncertainty

3.4

The Case for Growth-Indexed Bonds

Tables

3.1

Emerging Market Economies: Fiscal Policy Reaction Functions, 1990–2002

3.2

Industrial Economies: Fiscal Policy Reaction Functions, 1990–2002

3.3

Expenditure Equations, 1990–2002

3.4

Overborrowing and Institutions: Bivariate Regression Results

3.5

Determinants of Overborrowing

Figures

3.1

Public Debt in Emerging Market Economies

3.2

Comparison of Public Debt Levels in Emerging Market and Industrial Economies

3.3

Emerging Market Economies: Contributions to the Change in the Public Debt Stock Since 1997

3.4

Fiscal Balance in Emerging Market Economies

3.5

Debt Default and Public Debt Ratios

3.6

Revenue Ratios and Effective Tax Rates in Emerging Market and Industrial Economies

3.7

Volatility of Revenues and Effective Tax Rates in Emerging Market and Industrial Economies

3.8

Emerging Market and Industrial Economies: Actual and Debt Stabilizing Primary Balances

3.9

Relationship Between Public Debt and the Primary Balance

3.10

Emerging Market and Industrial Economies: Sensitivity of Fiscal Policy to the Business Cycle

3.11

Do Governments in Emerging Market Economies Overborrow?

3.12

Maximum Ratios of Sustainable Public Debt to GDP

3.13

Ratios of Revenue and Public Debt to GDP

3.14

How Do Emerging Market Countries Reduce Their Debt?

See Also:
Video Webcast: Public Debt in Emerging Markets: Is It Too High? By Tim Callen, Deputy Division Chief, Research Department ( Chapter III)
Transcript

159k pdf file

Annex: Summing Up by the Acting Chair

550k pdf file

Statistical Appendix

Assumptions

What's New

Data and Conventions

Classification of Countries

General Features and Compositions of Groups in the World Economic Outlook Classification

List of Tables

   Output (Tables 1–7)
   Inflation (Tables 8–13)
   Financial Policies (Tables 14–21)
   Foreign Trade (Tables 22–26)
   Current Account Transactions (Tables 27–32)
   Balance of Payments and External Financing
      (Tables 33–37)
   External Debt and Debt Service (Tables 38–43)
   Flow of Funds (Table 44)
   Medium-Term Baseline Scenario (Tables 45–46)

Box

Economic Policy Assumptions Underlying the Projections for Selected Advanced Economies

World Economic Outlook and Staff Studies for the World Economic Outlook, Selected Topics