IMF WEEKEND READ

 

Dear MARIA, In today's edition, we highlight: IMF lending reforms Columbia University's Minouche Shafik Gita Gopinath on fiscal policy Caucasus and Central Asia outlook Natural disasters and corruption

IMF LENDING Reforms and Financing Must Pay Off Sooner (Credit: IMF) As the world confronts the weakest medium-term growth outlook in three decades amid high debt, fragmented trade and higher-for-longer interest rates, the IMF is redoubling its efforts to promote stability and growth. In a blog, Ceyla Pazarbasioglu, director of the IMF’s Strategy, Policy and Review Department, says the challenge is to support vulnerable countries that have limited fiscal space to implement politically costly reforms. “To help countries undertake and sustain adjustment, reforms and financing are needed that pay off sooner in terms of growth,” Pazarbasioglu says. “We need to ensure that the IMF has the resources to effectively exercise its lending function.” Read more: Factsheet on IMF lending instruments.

The IMF’s largest-ever allocation of special drawing rights injected $650 billion of much-needed reserves and liquidity into the world’s economies two years ago as they confronted the pandemic. Since then, the Group of Twenty and other economically stronger member countries have voluntarily pledged more than $100 billion of these reserves to support vulnerable low- and middle-income countries. The Chart of the Week shows how our mechanisms for large-scale voluntary channeling of these resources benefits countries through two key lending instruments: the Poverty Reduction and Growth Trust and the Resilience and Sustainability Trust.

PEOPLE IN ECONOMICS Minouche Shafik: The Everywhere Economist (Credit: Ken Benoit, Lauritta) It’s not luck that economist Minouche Shafik played a key role in pivotal international developments of the past three decades. And she is still at it. As a freshly minted Oxford economics PhD, she worked on Eastern Europe at the World Bank after the 1989 fall of the Berlin Wall. During the Make Poverty History campaign of the mid-2000s, she led the UK government’s influential Department for International Development. At the IMF during the 2009-10 euro area debt crisis, she oversaw the Fund’s work on several countries at the epicenter of the upheaval. During the Arab Spring pro-democracy protests of the early 2010s, Shafik ran the IMF’s programs in the Middle East. She was deputy governor of the Bank of England, overseeing a $500 billion balance sheet, during the turmoil of Britain’s Brexit vote. Now she’s the first female president of New York’s Columbia University, following six years at the helm of the London School of Economics and Political Science (LSE). For the September issue of F&D magazine, Shafik spoke to Nicholas Owen about international development, central banking, the social contract, and free speech on university campuses.

REGIONAL ECONOMIC OUTLOOK Caucusus and Central Asia

Jihad Azour, director of the IMF’s Middle East and Central Asia Department, outlined the economic challenges facing the region in a panel discussion moderated by CNBC’s Joumanna Bercetche. Read the department’s latest regional outlook: Building Resilience and Fostering Sustainable Growth.

ANNUAL REPORT Committed to Collaboration (Credit: IMF Photos) The IMF’s annual report highlights work on challenges facing the global economy, including Russia’s war on Ukraine, inflation, debt vulnerabilities, inequality, food insecurity, geoeconomic fragmentation, climate change, and digitalization. The report, available in nine languages, includes a letter from the managing director and descriptions of what we do and who we are. The In Focus section drills down on how the Fund and its membership have worked together in addressing the world’s key challenges—global economic uncertainty, the cost-of-living crisis, public debt, resilience to shocks, and international cooperation.

With the years of access to cheap money behind them and the effects of climate change and geopolitical tensions only getting worse, what does resilience look like for emerging market economies? This year’s Per Jacobbson lecture brings together three influential thinkers to discuss how countries can work towards economic resilience in an era of greater uncertainty. The talk features Lesetja Kganyago, Governor of the Reserve Bank of South Africa, Masood Ahmed, President of the Center for Global Development, and is moderated by Guillermo Ortiz, former Governor of the Bank of Mexico.

Weekly Roundup FISCAL POLICY Gopinath on Fiscal Reset Recent turbulence in the bond markets calls for a renewed focus on fiscal policy and a reset in fiscal thinking, Gita Gopinath, the IMF’s first deputy managing director, wrote in an op-ed for the Financial Times (paywall). Gopinath says that governments cannot be the insurer of first resort for all shocks, revenues need to keep up with spending, and fiscal frameworks need strengthening. CAPACITY DEVELOPMENT Netherlands Expands Cooperation The Netherlands’ Minister for Foreign Trade and Development Cooperation Liesje Schreinemacher and the IMF's Gita Gopinath agreed to expand a capacity-development partnership in areas such as climate and debt management. Schreinemacher also announced a 7-million-euro contribution to the new IMF-Ukraine CD Fund, the largest contribution so far. Watch highlights of the announcement. GLOBALIZATION Advance or Retreat? Globalization is not retreating due to geopolitical developments, according to an IMF staff paper. Looking at bilateral trade flows between 1948 and 2021, the paper finds that the much-debated geopolitical alignment between countries has contradictory and statistically insignificant effects on trade, depending on the level of economic development. Moreover, the economic magnitude of this effect is not as important as income or geographic distance. NATURAL DISASTERS Corruption Kills Natural disasters are inevitable, but humanitarian and economic losses are determined largely by policy preferences and the resilience of public infrastructure. In a paper, IMF staff investigate whether corruption increases the loss of human lives caused by natural disasters. The difference between the least and most corrupt places in their 135-country sample implies a sixfold increase in the number of deaths per population caused by natural disaster in any given year. HEALTH Digital Interventions An IMF Note looks at how digital health records and telemedicine can improve delivery quality, access to underserved populations, and resource utilization in healthcare. It also shows how digital disease surveillance tools can identify outbreaks and track the spread of diseases, while novel digital platforms can facilitate patent licensing and international pooled procurements for better drug access in developing countries. GOVTECH Equity and Efficiency Digital payments and e-procurement can significantly enhance budget transparency and expand social assistance to reach the most vulnerable, an IMF staff paper finds. Coordination between agencies, facilitated by a dedicated GovTech institution, is critical for reaping both efficiency and equity gains.

MARK YOUR CALENDAR

NOVEMBER 15 | 10:00 AM EST PortWatch: Tracking Trade Disruptions From Space Join us for the official launch of PortWatch, an open platform designed to monitor and simulate trade disruptions from climate extremes and other shocks.

Thank you again very much for your interest in the Weekend Read! Be sure to let us know what issues and trends we should have on our radar.

Nick Owen Editor IMF Weekend Read nowen@IMF.org