International Monetary Fund :Weekend Read..

 

Dear MARIA, In today's edition, we highlight: Debt service in low-income countries Technology for development Measuring money in the digital age Africa capacity development

DEBT SUSTAINABILITY How to Ease Rising External Debt-Service Pressures in Low-Income Countries (Credit: Kim Haughton/IMF Photos) High debt servicing costs are a growing challenge for low-income countries, even as the risk of a systemic debt crisis has diminished, Ceyla Pazarbasioglu, Director of the IMF's Strategy, Policy and Review Department, writes in a blog with Allison Holland. Financing pressures due to relatively high interest payments and the pace at which low-income countries need to repay debt are straining budgets. In particular, over the next two years low-income countries need to refinance about $60 billion of external debt each year, about three times the average in the decade through 2020, they write. “A scenario where sufficient low-cost funding materializes is possible, but there are also scenarios where more ambitious reforms, stronger international cooperation, and faster improvements in the global debt restructuring architecture may be necessary to help them emerge stronger and more resilient.” Watch a conversation between Ceyla Pazarbasioglu and the FT’s Martin Wolf on the current challenges and road ahead for sovereign debt.

Behind any good policy stands good data. And as the global economy becomes increasingly digitalized, effective policy and regulation are critical to ensure a stable and equitable financial system. In this podcast, Jim Tebrake, Deputy Director in the IMF Statistics Department, says the world of digital money is changing quickly and statisticians should be prepared to provide the data that policymakers need to respond effectively.

FINANCE & DEVELOPMENT Technology for Development (Credit: Getty Images) Artificial intelligence-based technologies can target aid and credit better and improve access to tailored teaching and medical advice, but balancing these risks and opportunities calls for local innovation and adaptation, write Columbia’s Daniel Björkegren and Berkeley’s Joshua Blumenstock for Finance & Development magazine. Most recent advances in AI originated in wealthy nations—developed in those countries for local users, using local data. Over the past several years, the authors have conducted research with partners in low-income nations, working on AI applications for those countries, users, and data. “AI systems will require investment in knowledge infrastructure, especially in developing economies, where data gaps persist and the poor are digitally underrepresented.” Read the full article   This article appears in the December issue of F&D, which focuses on what artificial Intelligence means for economics. Read other articles by Daron Acemoglu, Simon Johnson, Ian Bremmer, Mustafa Suleyman, Anton Korinek, Hélène Landemore, Nandan Nilekani, Tanuj Bhojwani, Gita Gopinath, Robert Horn, Jeremy Wagstaff, Kerry Dooley Young, Eswar Prasad, Anil Ari, Lev Ratnovski, Christopher Evans, Marika Santoro, Martin Stuermer, Gita Bhatt, Erik Brynjolfsson, Gabriel Unger, Andrew Berg, Chris Papageorgiou, Maryam Vaziri, and many more.

MANAGING DIRECTOR REMARKS Africa Training Institute

Managing Director Kristalina Georgieva gave opening remarks at the 10th Anniversary Conference of the IMF's Africa Training Institute.

CAPACITY DEVELOPMENT Training for Africa's Policymakers “Africa and the world are on a journey—from a period marked by the pandemic and high inflation, to a new digital, climate-friendly economy,” said IMF Managing Director, Kristalina Georgieva, in remarks at the 10th Anniversary Conference of the IMF’s Africa Training Institute. “To get there, we must navigate high debt levels and limited policy space, and we must work together to overcome fragmentation.” In its first decade, the Africa Training Institute has delivered 230 courses to 7,000 government officials to build the skills needed to formulate and implement sound macroeconomic policies. This work is made possible through the support of the host country, Mauritius, contributions from member countries, and funding from development partners. IMF Financial Counselor Tobias Adrian also delivered remarks on climate change at the conference.

Sub-Saharan Africa suffers from persistent security challenges, and Sahel countries such as Burkina Faso, Chad, Niger, Mauritania, and Mali are particularly afflicted by protracted conflicts and humanitarian crises. Our research shows that discontent with state institutions among marginalized groups is a key driver of unrest in the region. As the Chart of the Week shows, conflict is often concentrated near national borders where there tend to be more limited or insufficient public services, fostering feelings of exclusion. These conflict-prone hotspots pose substantial security and stability risks in both directly affected and neighboring countries. Read the blog

Weekly Roundup STAFF PAPER Monetary Policy Spillovers U.S. monetary policy spillovers are affecting the Middle East and Central Asia region, write the authors of an IMF staff paper. Tightening driven by contractionary monetary policy shocks hinders growth, while tightening driven by positive information news shocks boosts growth despite higher interest rates. Countries with weaker fundamentals face more negative spillovers from contractionary monetary policy shocks but may sometimes benefit more from positive information news shocks. Moreover, high oil prices mitigate both spillovers for oil exporters while global risk appetite amplifies both spillovers. STAFF PAPER Automation and Welfare An IMF staff paper examines the welfare effects of automation in neoclassical growth models with and without intergenerational transfers. In a standard overlapping generations model without such transfers, improvements in automation technologies that would lower welfare can be mitigated by shifts in labor supply related to demographics or pandemics. With perfect intergenerational transfers based on altruism, automation could raise the well-being of all generations. With imperfect altruism, fiscal transfers (universal basic income) and public policies to expand access to education opportunities can alleviate much of the negative effect of automation. MARK YOUR CALENDAR

JAN 30 | 8:00 AM ET World Economic Outlook Update IMF Chief Economist Pierre-Olivier Gourinchas, Petya Koeva Brooks, and Daniel Leigh present the latest forecast for the global economy. Watch on IMF Live.

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