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A quarterly magazine of the IMF
  December 2004
Volume 41, Number 4
A Single Currency for Africa?
Paul Masson and Catherine Pattillo
The goal of a common currency has long been a pillar of African unity but is it in Africa's best interests? Drawing on their recently published book, The Monetary Geography of Africa, Masson and Pattillo conclude that a full African monetary union spanning the continent is neither feasible nor desirable, but selective expansions of Africa's two existing monetary unions-the CFA franc zone in West and Central Africa and the CMA in Southern Africa-could be feasible.Combined with stringent entrance criteria, and linked to the New Partnership for Africa's Development, this strategy could provide a strong incentive for improved policies.
(404 kb, pdf file)

Learning from Success
Martin Ravallion and Shaohua Chen
China has made huge strides in its battle against poverty over the past
25 years, providing a number of lessons for other developing countries trying to improve living standards. What has worked well in China and why has the problem of inequality become a looming problem?
(140 kb, pdf file)

From Fixed to Float:
Fear No More

Cem Karacadag, Rupa Duttagupta, Gilda Fernandez, and Shogo Ishii
The nuts and bolts of how countries can move to a floating exchange rate. Article summarizes key operational and policy issues for countries that have decided to adopt market-determined exchange rates.
(136 kb, pdf file)

What If . . . ?
Paul Hilbers and Matthew T. Jones
Stress tests-the use of different scenarios to determine how vulnerable countries' financial systems are to shocks-are increasingly becoming part of the IMF's regular surveillance of member countries' economies.
(129 kb, pdf file)
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Making Room
for Public Investment

Richard Hemming and
Teresa Ter-Minassian

The IMF has been criticized for holding back public investment in Latin America and elsewhere. Should it change its rather stringent rules for fiscal accounting? Changes that go too far run the risk of opening a pandora's box of creative accounting, the authors say, but there is scope to help countries make more room for public investment.
(153 kb, pdf file)

Demystifying Outsourcing
Mary Amiti and Shang-Jin Wei
Although service outsourcing is growing rapidly, it remains a small fraction of industrial countries' GDP. And, despite fears to the contrary, studies show that jobs are not being exported, on net, from industrial countries to developing countries as a result of outsourcing.
(137 kb, pdf file)

Combating Corruption:
Look Before You Leap

Anwar Shah and Mark Schacter
A lack of progress in eradicating corruption could be due to misguided strategies. Experience strongly suggests that the best way to tackle corruption is through an indirect approach that starts with the root causes.
(107 kb, pdf file)

Taking the Plunge Without Getting Hurt
M. Ayhan Kose, Eswar S. Prasad, and Marco E. Terrones
An IMF study suggests that opening up to the global economy could help developing countries cope with the adverse effects of volatility on growth.
(126 kb, pdf file)

Calculating the Benefits of Debt Relief
Rina Bhattacharya and
Benedict Clements

High levels of debt can depress economic growth in low-income countries, but only after it reaches a certain threshold. Cutting debt service obligations can provide breathing space for raising public investment.
(97 kb, pdf file)


Letter from the Editor
(59 kb, pdf file)

In Brief

News from international agencies
Battling the AIDS pandemic; On the ball; UN spotlights child hunger deaths; Babies and bosses.
(91 kb, pdf file)

People in Economics

In On The Ground Floor
Jacqueline Irving
Profile of Linah Mohohlo, the award-winning central bank governor of Botswana, who talks about one of Africa's best-performing economies. While Mohohlo's achievements in managing Botswana's monetary policy would seem impressive enough by any gauge, Mohohlo also has an active role in the private sector, sitting on the boards of several major companies. She is also a member of the Commission for Africa-set up earlier this year to push for action in the international community on issues such as development aid, fair trade, and debt relief.
(109 kb, pdf file)

Back to Basics

Pedantry or Prudence: How Does the IMF Account for Grants and Loans?
Peter Heller
Examines how the IMF accounts for grants and concessional loans in a country's budget, not only in terms of how they affect the fiscal balance but, more importantly, in assessing fiscal policy.
(76 kb, pdf file)

Picture This

Agricultural Trade: Reaping a Rich Harvest from Doha
Focuses on how the Doha trade negotiations can benefit trade in agricultural products. Highlights the fact that trade barriers to agricultural products coupled with subsidies, particularly in the richest countries, prevent the poorer ones from maximizing the gains they could reap from agricultural trade. Charts illustrate the extent of agricultural protection, tariff rates on raw materials, the level of export subsidies, and estimates of the impact (largely beneficial) of global trade liberalization.
(293 kb, pdf file)

Book Reviews

The Shackled Continent: Power, Corruption, and African Lives, Robert Guest

The Battle for Zimbabwe, Geoff Hill

India's Emerging Economy: Performance and Prospects in the 1990s and Beyond, Kaushik Basu (editor)

Engaging India: Diplomacy, Democracy, and the Bomb, Strobe Talbott

IMF Essays From a Time of Crisis: The International Financial System, Stabilization, and Development, Stanley Fischer
(96 kb, pdf file)

Straight Talk

Odious or Just Malodorous
Raghuram Rajan
While the proposal to declare debt accumulated under dictatorships as odious is well motivated, one does not need conspiracy theories to explain why the idea has not got anywhere, nor why newly legitimate governments have accepted responsibility for servicing the potentially odious debts they inherited.
(64 kb, pdf file)

Country Focus

Disciplined macroeconomic policies, greater international competitiveness, and progress with structural reforms have reduced Brazil's vulnerabilites in recent years, but major challenges remain.
(65 kb, pdf file)

Articles published in 2004
(61 kb, pdf file)