IMF interesting latest news

 

Dear maria, We just published a new blog—please find the full text below.  How to Close Gender Gaps and Grow the Global Economy (IMAGE: BEASTFROMEAST/ISTOCK BY GETTY IMAGES) By Kristalina Georgieva, Antoinette Sayeh and Ratna Sahay Too many women are locked out of economic opportunities, which is not only unfair but also harms growth and resilience for all. We know that in countries with greater gender inequality just closing the gap in women’s labor force participation could increase economic output by an average of 35 percent. Progress, however, is slow to come and shocks, such as health and climate disasters, social unrest, and war continue to worsen gender inequality by directly affecting women’s lives and livelihoods or keeping them out of school and work. Appropriate economic and financial policies can help change these negative outcomes, improving economies by supporting the recovery and building resilience against future shocks. A dividend for women, in other words, is a dividend for all. For instance, while the pandemic set women further back everywhere, it also drove policy innovations. Several extraordinary pandemic assistance programs targeted women and brought more people into social safety nets. The latter makes it easier to provide targeted assistance to cope with the current food and fuel price spikes. For policymakers, there are well-proven solutions to adopt gender-sensitive macroeconomic actions. First, step up investment in women’s human capital. The gains from providing women equal access to food, healthcare, and education are especially large in emerging and developing economies. Think of cash transfers that help families afford the basics in countries with less developed social safety nets. Brazil introduced the Emergency Aid cash transfer program early in the pandemic, which provided double the benefits to women-led households. IMF staff estimates show that the poverty rate among such households would have increased from 11 percent to more than 30 percent without Emergency Aid; instead, it fell to about 8 percent. And Egypt recently expanded cash assistance to low-income single mothers helping them keep their children healthy and in school. In Togo, mobile technology helped expedite emergency financial support during the pandemic, especially benefitting women. The second confirmed solution is enabling women to work outside the home or start their businesses . Reforms to taxation, public spending, financial infrastructure and regulations, as well as labor markets can help. Providing access to quality and affordable childcare frees up more women to work and also creates jobs directly. In Norway, the expansion of universal childcare increased the likelihood of mothers’ employment by 32 percentage points. In emerging and developing economies, access to mobile phones and the internet opens the door to economic opportunity. For instance, IMF research shows that traditional and digital finance is helping close the gender gap in access to financial services, including microlending—resulting in lower income inequality and higher growth. A third area to tackle is biases . Out of 190 countries surveyed, the World Bank found that women were on equal legal standing with men in just 12 countries. Gender-based discrimination in social institutions costs the world economy $6 trillion according to the Organisation for Economic Co-operation and Development. But in recent years, countries have reduced these costs through social and legal actions such as curbing underage marriage, criminalizing domestic violence, and increasing the number of female elected officials. Fourth, increasing the representation of women in leadership positions is also critical. IMF analysis shows that a greater presence of women in financial institutions and financial policymaking goes hand in hand with greater financial resilience. And in fintech firms and the corporate sector, more women in leadership is associated with better performance and profitability, respectively. The IMF’s Gender Strategy The IMF has supported members in deploying and improving gender policies for a number of years. And recently, our Executive Board approved the first comprehensive IMF Strategy for Mainstreaming Gender to help our members adapt pro-gender equality policies to their unique circumstances. The strategy recognizes that macroeconomic and financial policies affect women and men differently, often unintentionally. We are helping policymakers identify and remedy these biases by applying a gender lens to our main activities—from our regular country policy surveillance to how we design and implement programs to our capacity development support. We have supported increased spending on women in our program countries. For example, Egypt expanded pre-school availability and improved the safety of public transport under an IMF-supported program, helping women get to jobs. And São Tomé and Príncipe, with the support of an IMF program, launched an initiative on gender budgeting—the use of fiscal policies and institutions to promote women’s equality across government programs. We also quantified the productivity benefits of getting more girls into high school in Senegal and other countries. Under the new strategy, the Fund will work in the years ahead with our 190 members and external partners to expand both the breadth of our policy recommendations and bring greater rigor in our analysis to help more countries tailor and deploy policies that support gender equality. Over time, gender-sensitive macroeconomic and financial policies will result in higher growth, greater economic stability and resilience, and lower income inequality—a dividend not just for women, but for everyone.   We Want To Hear From You! Click here for a 3-question survey on IMFBlog. Jeff Kearns Managing Editor IMF Blog jkearns@IMF.org

Carlo Pizzinelli on How Consumers Chart Inflation   (Photo: Stevepb/Pixabay) While consumers' expectations of where prices are going are something that economists have been tracking for a long time, understanding how those expectations are formed provides valuable insight toward controlling inflation. New research by economists Carlo Pizzinelli (IMF), Peter Andre (Briq Institute), Christopher Roth (University of Cologne), and Johannes Wohlfart (University of Copenhagen) shows a surprising divide between what experts think and consumers believe drives inflation and other economic trends. Carlo Pizzinelli is the author of an article in the latest Finance and Development based on the study. In this podcast, Pizzinelli sits down with Journalist Rhoda Metcalfe to discuss how the collective consumer mind influences economic policy. Listen to the podcast Read the transcript   ***** Thanks for listening to the podcast. We're always looking to improve your experience so let us know if you have any suggestions! Send your comments to me at bedwards2@imf.org.   Bruce Edwards Producer, IMF Podcasts

(CREDIT: PETE REYNOLDS) Dear maria, Money is now on the cusp of a transformation that could reshape banking, finance, and even the structure of society, writes Cornell professor Eswar Prasad in F&D. With the era of physical currency drawing to an end, the age of digital currencies has begun. A new round of competition between official and private currencies is also looming in both the domestic and international arenas. “The proliferation of digital technologies that is powering this transformation could foster useful innovations and broaden access to basic financial services," Prasad writes. "But there is a risk that the technologies could intensify the concentration of economic power and allow big corporations and governments to intrude even more into our financial and private lives.” Read the full article F&D September Issue The Money Revolution: Crypto, CBDCs, and the future of finance Our September edition focuses on the ongoing money revolution and its implications for finance, monetary policy, international capital flows, and society at large. “The future of money is undoubtedly digital,” writes F&D editor-in-chief Gita Bhatt. “The question is: what is it going to look like?” F&D attempts to answer that question, drawing on cutting-edge research and analysis from economists and other leading experts including Agustín Carstens, Eswar Prasad, Ravi Menon, Tobias Adrian and many others. Want to get a print copy delivered to your home or office? Click here to subscribe.   Have Your Say What do you think of this article? Please write to us directly and let us know your thoughts. We would love to hear from you. Nick Owen Senior Editor F&D Magazine nowen@IMF.org   P.S. Want to get a print copy delivered to your home or office? Click here to subscribe.

Dear maria, We just published a new blog—please find the full text below. Energy Shocks Amid Rapid Inflation Could Fuel Faster Wage Gains (PHOTO: SURADECH14 AND KENTOH/GETTY IMAGES) By Chikako Baba and Jaewoo Lee Billions of consumers around the world are seeing higher oil prices seep into the cost of living and wages. Filling the gas tank soon starts to cost more when crude prices climb, as does airfare, but higher energy costs also boost prices for all the products on store shelves. Workers seek higher wages to compensate for a loss in their purchasing power. These are what economists call second-round effects, and they can in turn further raise prices. If this feedback is large and sustained, a wage-price spiral could emerge, with wage growth and inflation rising over an extended period. As the Chart of the Week shows, when overall inflation is already high, like it is now, wages tend to increase by more in response to an oil price shock. This finding, based on a study of 39 European countries, may reflect that people are more likely to react to price increases when high inflation is visibly eroding living standards. The larger the second-round effects, the greater the risk of a sustained wage-price spiral through a feedback loop between wages and prices. If large and sustained, oil price shocks could fuel persistent rises in inflation and inflation expectations, which should be countered by a monetary policy response. As our chart shows, the risk of such a dynamic tends to be greater when the overall inflation rate is already high. For example, wages increase by 0.4 percent when underlying inflation is higher than 4 percent, one year after a 10 percent increase in oil prices, but increase by less than 0.2 percent otherwise.  When overall inflation is higher, people tend to be more alert to price increases of all stripes and seek higher compensation for oil price rises. However, differences between high and low inflation periods narrow in the second year. These results impart two messages on the current situation, one concerning and the other reassuring. Of concern is how current high inflation could increase the risk of energy prices causing sizable second-round effects an d a sustained increase in inflation, which includes pushing up inflation expectations. To head off such a risk, central banks will need to respond firmly. What’s reassuring is the chart shows that even in a high-inflation environment, wages stabilized after a year rather than continuing to rise at a steady clip. In other words, there was a wage level but not a wage inflation increase. To the extent that central banks remain adequately vigilant, current high inflation could still cause higher compensation for the cost of living than usual but need not morph into a sustained increase in inflation.   We Want To Hear From You! Click here for a 3-question survey on IMFBlog. Jeff Kearns Managing Editor IMF Blog jkearns@IMF.org

Dear maria, We just published a new blog—please find the full text below.  How Africa Can Escape Chronic Food Insecurity Amid Climate Change By Laurent Kemoe, Cedric Okou, Pritha Mitra and Filiz Unsal Climate change is intensifying food insecurity across sub-Saharan Africa, where Russia’s war in Ukraine and the pandemic are also adding to food shortages and high prices. Climate events, which destroy crops and disrupt food transport, are disproportionately common in the region. One-third of the world’s droughts occur in sub-Saharan Africa, and Ethiopia and Kenya are enduring one of the worst in at least four decades. Countries such as Chad are also being severely impacted by torrential rains and floods. The resulting rise in poverty and other human costs are compounded by cascading macroeconomic effects, including slower economic growth. A new IMF policy paper examines how fiscal and financial policies and reforms such as technology transfer can reduce this damage and help countries adapt. Food supplies and prices are especially vulnerable to climate change in sub-Saharan Africa because of a lack of resilience to climatic events, food import dependence, and excessive government intervention. Most people live in rural agricultural and fishing communities that can’t afford infrastructure to protect them from adverse weather. For example, they depend on rain to water their crops, and less than 1 percent of arable land is equipped with irrigation. Weather-sensitive domestic food production results in heavy reliance on imports, with some 85 percent coming from outside the region. While food imports can provide a buffer to domestic shocks, inflation spurred by weather shocks in regions where imports are produced can be passed on to consumers. Similarly, weather events that raise the cost of transportation are also passed on. The resulting high food-import costs can erode foreign reserves and weigh on exchange rates, contributing to more rapid price gains. Against this backdrop, governments often try to help by intervening in agricultural production and food distribution. Untargeted interventions can be inefficient and weigh on national budgets, inflate food prices, impede competition, and reduce crop yields. For example, price controls and numerous and lengthy regulatory processes contribute to shortages by disincentivizing food production, storage, and trade. Similarly, subsidies for fertilizer and seeds drive overuse and suppress crop diversification. On the other hand, targeted government involvement can have merit, such as supporting research and development in building resilience and agricultural productivity. Prioritizing policies around those that best protect the poor will be key amid financing and capacity constraints. Fiscal and financial policies Protecting food production and distribution from weather events begins with climate-resilient infrastructure. This type of public investment also creates jobs and can catalyze private investment. Consider, for example, solar power that facilitates irrigation, water access, and temperature control for food storage. Equally impactful is a flood barrier that protects ports and roads critical to food distribution. Digitalization is also crucial. It gives farmers access to early warning systems and mobile banking as well as platforms to purchase fertilizers, seeds, or sell produce, helping to connect small producers to large vendors. Social cash transfers that are targeted and far-reaching help people buy food and rebuild after weather shocks. They further allow families and small businesses to invest in resilience-building equipment and technology. By offering people control of the support they receive these cash transfers are more effective at containing inequality than agricultural subsidies. Access to finance from private markets can play a similar role to social assistance. Raising it requires developing financial markets, which can take time. In the interim, micro-finance or public-private partnerships can help provide credit to people who currently don’t have access through banks. To this end, establishing collateral through advances in property rights is crucial. With World Bank support, Mozambique and Tanzania are expanding title and survey registers and developing digital land administrative services. A pilot project in Ghana uses blockchain technology to improve incomplete or missing land records. Cost-effective structural reforms Trade liberalization and import diversification could help stabilize regional food supply and prices. Zambia’s big maize harvests, for example, could have helped offset shortfalls elsewhere in Southern Africa if not for a ban on exporting the crop. Access to larger markets can incentivize investment in agricultural production networks and value chains. It can also help spread knowledge—such as how to plant drought-resistant crops—and spur competition. One positive step in this direction is the Africa Continental Free Trade Agreement among 54 countries, which covers most goods and services. Empowered producer organizations can reach remote climate-vulnerable agricultural communities. This would help spread new technologies such as digital pest-control devices and high-yield seeds that tolerate heat and drought and improve climate adaptation training and market information. Aggregating production and selling directly to consumers can help to increase negotiating power, which in turn reduces storage costs, lengthens contracts, expands profit margins and opens access to new markets. By streamlining and better targeting regulations, governments can help farmers build resilience. For example, appropriate water-use regulations reduce the cost for farmers to establish and expand irrigation systems. Along the same lines, efficient seed registration, like in Kenya, multiplies seed supply and access to resilient seeds. Finally, fertilizer testing, labeling, and registration requirements help farmers access contaminant-free fertilizers appropriate for specific weather shocks, soil, and crops. Financing, capacity development, and transfer of technology and know-how will be key to supporting the policies outlined above. With mounting debt and limits to raising taxes, countries in sub-Saharan Africa will need grants and concessional finance. Development partners can also support resilience-building research and can propagate climate and financial literacy. The IMF is supporting countries in these efforts including through climate-oriented public financial management advice and lending facilities such as our Resilience and Sustainability Trust. Soon to be operational, this new lending facility will provide longer-term affordable financing to address climate change and other challenges.   We Want To Hear From You! Click here for a 3-question survey on IMFBlog. Jeff Kearns Managing Editor IMF Blog jkearns@IMF.org

Dear maria, In today's edition, we spotlight the global food crisis, climate change and food security in sub-Saharan Africa, India's economic recovery, central bank mandates, wage-price spirals, Europe's inflation and energy security, ethnic inequalities in Peru, the "fear economy", and much more.

Food Crisis Fending Off The Food Crisis Why Countries Must Cooperate on Carbon Prices (IMAGE: IMF PHOTO) As food prices spike across the world, the IMF is considering a new financing instrument to help countries cope with the cost-of-living crisis. Around 50 countries could receive funds under the new food shock instrument, which is currently being discussed by the Fund’s board of directors, Managing Director Kristalina Georgieva said on Tuesday. “Cost of living is a problem everywhere. But the part that concerns food and the very availability of food is the most dramatic shock people in countries are experiencing,” she told Masood Ahmed of the Center for Global Development in an interview. The proposal would see access to emergency financing increase for one year for the most vulnerable countries, either because the cost of their food imports has rocketed or because they are affected by other factors, as is the case with war-ravaged Ukraine. Georgieva said she hoped to have the board’s approval by the annual meetings in October. 📺 Watch a video of the interview in which Georgieva also discusses debt, emerging markets, Argentina, Sri Lanka, Ukraine and more.   Sub-Saharan Africa Climate Change and Food Insecurity (IMAGE: ARTUSH/ISTOCK BY GETTY IMAGES) Sub-Saharan Africa experiences more climate disaster than other parts of the world, destroying crops, disrupting food deliveries and driving more people into poverty and hunger. One-third of the world’s droughts occur in sub-Saharan Africa (Ethiopia and Kenya are enduring one of the worst for at least four decades) and countries such as Chad are being severely impacted by torrential rains and floods. In a blog based on a new paper, the IMF’s Laurent Kemoe, Cedric Okou, Pritha Mitra and Filiz Unsal write that fiscal and financial policies and technology transfer can reduce the damage and help countries adapt to climate change. “The IMF is supporting countries in these efforts including through climate-oriented public financial management advice and lending facilities such as our Resilience and Sustainability Trust.” 📺 Watch a video of IMF African Department Director Abebe Selassie discuss development challenges in the region with Stefan Dercon of Oxford University.   F&D A New Era For Money Money is now on the cusp of a transformation that could reshape banking, finance, and even the structure of society, writes Cornell professor Eswar Prasad in F&D. With the era of physical currency drawing to an end, the age of digital currencies has begun. A new round of competition between official and private currencies is also looming in both the domestic and international arenas. “The proliferation of digital technologies that is powering this transformation could foster useful innovations and broaden access to basic financial services," Prasad writes. "But there is a risk that the technologies could intensify the concentration of economic power and allow big corporations and governments to intrude even more into our financial and private lives.” Read the full article   This article appears in the September 2022 edition of F&D Magazine—THE MONEY REVOLUTION: CRYPTO, CBDCs, AND THE FUTURE OF FINANCE. Other featured articles include: A Foundation of Trust | Agustín Carstens, Jon Frost, and Hyun Song Shin Making Sense of Crypto | Ravi Menon Regulating Crypto | Aditya Narain and Marina Moretti Bullet Train | Tobias Adrian and Tommaso Mancini Griffoli ‘Defi’ and ‘TradFi’ Must Work Together | Michael Casey The Superficial Allure of Crypto | Hilary Allen Defi’s Promise and Pitfalls | Fabian Schär The Ascent of CBDCs | Andrew Stanley Digital Money 101 | F&D Staff Central Bankers’ New Cybersecurity Challenge | Giulia Fanti, Josh Lipsky, Ole Moehr Digital Journeys: Bali, India, and Africa | Harry Jacques, Jeff Kearns, Ashlin Mathew, and Chris Wellisz

India’s Economic Recovery India used its financial resources effectively in the aftermath of the pandemic, IMF Managing Director Kristalina Georgieva said in an interview during her recent visit to the country. She also set out her thoughts on prospects for emerging market economies, recoveries strategies, debt, crypto, and food prices. In another interview she gave an overview of global economic challenges.

Central Banking Lecture The ethics of currency was the focus of this year’s annual Michel Camdessus Central Banking Lecture, held in honor of the former IMF Managing Director. In his lecture, François Villeroy de Galhau, Governor of the Banque de France, spoke about central bank independence, mandates and accountability, and discussed the international dimension of monetary trust in the context of today’s challenges. Watch the lecture.

Inflation Expectations Economists have long tried to track consumers' expectations of where prices are going. Understanding how those expectations are formed provides valuable insight toward controlling inflation. In a podcast, IMF economist Carlo Pizzinelli discusses how the collective consumer mind influences economic policy. Read the transcript.

Factsheets: Accountability The IMF is governed by and accountable to its member countries. It meets regularly with government and private-sector representatives to inform and improve its work. To ensure accountability, the IMF relies on internal and external audits, risk management tools, and independent evaluations. IMF staff are subject to strict ethical and workplace standards of conduct. Check out our latest factsheet to learn more.

Soaring oil prices are seeping into the cost of living for billions of consumers across the world. Filling the gas tank soon costs more, but higher energy costs also boost prices for all the products on store shelves. Workers seek higher wages to compensate for a loss in their purchasing power. These are what economists call second-round effects. As the Chart of the Week by the IMF’s Chikako Baba and Jaewoo Lee shows, wages tend to increase by more in response to an oil price shock when overall inflation is already high, as it is in many countries today.

WEEKLY ROUND-UP 01. Fighting Inflation in Europe Europe’s inflationary pressures should decline, but it could be a slower process than sometimes assumed given the persistence of core inflation, the Director of the IMF’s European Department said in a speech on Thursday. “Central banks should thus continue to raise policy rates under most scenarios—even more clearly in emerging European economies,” Alfred Kammer told the IMF-World Bank constituency meeting in Sarajevo. Earlier, IMF Deputy Managing Director Bo Li said governments in the Western Balkans could not afford to suppress the rise in energy prices as global financial conditions tighten and there are better ways to help households weather the energy crisis. 02. Europe's Energy Security Reforms aimed at lessening Europe’s dependence on fossil fuels would significantly reduce carbon emissions and improve energy security across the continent, the IMF’s Serhan Cevik writes in a working paper, based on analysis of 39 countries between 1980 and 2019. “The latest bout of geopolitical tensions in Europe has rekindled policy discourse on the macro-critical importance of ensuring an adequate supply of energy at a stable and reasonable price.” 03. The Fear Economy How does fear of disaster affect economic growth? When fear rises, the demand for safe assets rises and the neutral interest rate falls, the IMF’s Ruchir Agarwal writes in a working paper. If the central bank does not lower the interest rate on safe assets by the same amount, then savings rise leading to a decline in consumption and aggregate demand. Argawal reckons the findings could help fight recessions. 04. Ethnic Inequality Narrows in Peru Peru’s strong economic growth in the past two decades has narrowed wealth gaps between the country’s three largest ethnic groups and contributed to social stability, according to a working paper by the IMF’s Carlos Chavez, Gonzalo Salinas and Yuri Zamora. Today Peru’s mixed-raced mestizos have the highest income per head on account of migration to towns. The authors recommend several policies to narrow ethnic inequality even further. MARK YOU CALENDAR 01. Sub-Saharan Africa Policy Dialogue IMF Deputy Managing Director Antoinette Sayeh will on Sept. 20 open a two-day policy dialogue on post-pandemic development challenges in sub-Saharan Africa with government officials, academics and representatives from civil society organizations. Register here.

Nick Owen Editor IMF Weekend Read nowen@IMF.org