Prospects for Policy Integration in Low Income Economies

2005 ◽  
Author(s):  
Michael T. Rock ◽  
David P. Angel
Keyword(s):  
Soviet Union ◽  
Low Income ◽  
Former Soviet Union ◽  
Poverty Reduction ◽  
Low Income Countries ◽  
Initial Assessment ◽  
Policy Integration ◽  
Industrial Competitiveness ◽  
Capability Building ◽  
Difficult Challenge

In the final chapter of the book, we turn to the question of the prospects for policy integration in the low income countries, or the poorest of the rest of the industrializing economies in Africa, Asia, and elsewhere. Is there any evidence that these low income countries can or have practiced policy integration? Does policy integration offer opportunities for low income countries to pursue industry-led growth strategies in ways that balance concerns with the environment and those of poverty reduction? Answering these questions is a difficult challenge in that far less is known about the institutions and strategies of industrial capabilities building in low income countries than is known about industrial capabilities building in the East Asian NIEs. To partially address this concern, we have conducted a questionnaire survey of the effectiveness of industrial capability building strategies and institutions in a sample of 27 low income countries in Asia, Africa, Latin America and the Caribbean, and in the former Soviet Union. We then combine these survey data with the published measures on country industrial competitiveness and on macro-institutional conditions, as used in Chapter 2, to provide an initial assessment of the effectiveness of industrial capability building strategies in these countries, as well as the macro- and meso-level institutional obstacles to effective policy integration. Building on the analyses of industrial upgrading presented in Chapter 2 and of policy integration in Chapter 3, we need to consider three broad domains of institutional effectiveness. First, we need to examine the extent to which the basic enabling conditions identified in Chapter 2 are, or are not, being met in low income countries. In Chapter 2 we argued that openness to trade and investment, macroeconomic stability, political stability, development of a substantial physical and human infrastructure base, and bureaucratic capability in government are critical to industrial competitiveness and industrial capability building. These variables, along with better resource pricing policies and the development of an effective environmental regulatory agency embedded in the institutions of industrial policy, are also critical for improving the environmental performance of industry (Chapters 3 and 9).

Use of Windfall Gold Sale Profits—Further Considerations

Policy Papers ◽  
2011 ◽  
Vol 2011 (33) ◽  
Author(s):  
Keyword(s):  
Low Income ◽  
Poverty Reduction ◽  
Low Income Countries ◽  
Executive Directors ◽  
Preliminary Discussion ◽  
Use Of Resources ◽  
Wide Range

In April 2011, Executive Directors held a preliminary discussion on the use of the profits of SDR 6.85 billion from the Fund’s limited gold sale. They noted their expectation that at least SDR 4.4 billion of the profits would be placed in an endowment within the Investment Account, and affirmed their support for the 2009 financing package for low-income countries (LICs), including the distribution to the Fund’s membership of up to SDR 0.7 billion from the profits linked to gold sales, with the expectation that most members will return equivalent funds to the Poverty Reduction and Growth Trust (PRGT). There was a wide range of views among Directors on the three main options presented for the windfall of SDR 1.75 billion, but no consensus favoring a single option. The main options presented included use of resources linked to the windfall to boost the capacity of the PRGT, counting the windfall towards precautionary balances, or investing the windfall profits as part of the Investment Account’s endowment. Many Directors indicated that they could support a combination of two or more of the main options.

2016 Poverty Reduction and Growth Trust - Review of Interest Rate Structure

Policy Papers ◽  
2016 ◽  
Vol 2016 (50) ◽  
Author(s):  
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Low Income ◽  
Poverty Reduction ◽  
Low Income Countries ◽  
Credit Facility ◽  
Rate Structure ◽  
Low Interest Rates ◽  
The Interest Rate ◽  
Rate Mechanism

This paper reviews the interest rate structure that would apply to the PRGT in 2017–18. Based on the interest rate setting mechanism agreed in 2009, the interest rate for the Extended Credit Facility (ECF) would be zero and the rate for the Standby Credit Facility (SCF) would be 0.25 percent. The interest rate for the Rapid Credit Facility (RCF) was set permanently at zero in July 2015. Since the current mechanism was agreed, the Executive Board has granted successive exceptional interest waivers on all outstanding Fund concessional credit, setting all interest rates charged at zero percent. These waivers have been extended three times, providing interest rate relief to many low-income countries at a time when they faced considerable headwinds from the global economic environment. A strong case remains for maintaining zero rates on Fund concessional credit at the current global economic juncture. The global outlook for LICs has not significantly improved since the last review and downside risks remain significant. At the same time, many Directors noted at the last review in 2014 that the possibility of a prolonged period of very low interest rates warrants an early re-examination of the mechanism, including an exit strategy from repeated application of the waiver, with the objective of safeguarding the self-sustaining capacity of the PRGT. The paper seeks to respond to this call. It proposes that the PRGT interest rate mechanism be amended to accommodate anomalies created by a prolonged period of very low interest rates. Specifically, a new threshold is proposed whereby both the ECF and the SCF rate would be set at zero when the 12-month average SDR rate is less than or equal to 0.75 percent. This proposal will likely keep all PRGT interest rates under the mechanism at zero through at least 2020 given current market expectations while incurring only minimal subsidy costs and eliminating the need for continual waivers. In addition, staff proposes to waive interest rate charges on outstanding legacy balances under the Exogenous Shocks Facility (ESF), which are not determined via the interest rate mechanism, until the next review.

2017 Handbook of IMF Facilities for Low-Income Countries

Policy Papers ◽  
2017 ◽  
Vol 2017 (2) ◽  
Author(s):  
Keyword(s):  
Developing Countries ◽  
Low Income ◽  
Poverty Reduction ◽  
Safety Net ◽  
Policy Coordination ◽  
Low Income Countries ◽  
Executive Board ◽  
Reference Tool ◽  
Financial Safety Net ◽  
Comprehensive Reference

This Handbook provides guidance to staff on the financial facilities and non-financial instruments for low-income countries (LICs), defined here as all countries eligible to obtain concessional financing from the Fund. It updates the previous version of the Handbook that was published in February 2016 (IMF, 2016d) by incorporating modifications resulting from Board papers and related decisions since that time, including Financing for Development—Enhancing the Financial Safety Net for Developing Countries—Further Considerations (IMF, 2016c), Review of Poverty Reduction and Growth Trust – Review of Interest Rate Structure (IMF, 2016b), Eligibility to Use the Fund’s Facilities for Concessional Financing (IMF, 2017a), Large Natural Disasters—Enhancing the Financial Safety Net for Developing Countries (IMF, 2017b) and Adequacy of the Global Financial Safety Net – Proposal for a New Policy Coordination Instrument (IMF, 2017c). Designed as a comprehensive reference tool for program work on LICs, the Handbook also refers, in summary form, to a range of relevant policies that apply more generally to IMF members. As with all guidance notes, the relevant IMF Executive Board decisions, including the terms of the various LIC Trust Instruments that have been adopted by the Board, remain the sole legal authority on the matters covered in the Handbook

Modification of Access Policies for the Poverty Reduction and Growth Facility and the Exogenous Shocks Facility

Policy Papers ◽  
2009 ◽  
Vol 09 ◽  
Author(s):  
Keyword(s):  
Low Income ◽  
Poverty Reduction ◽  
Low Income Countries ◽  
Economic Downturn ◽  
Medium Term ◽  
Exogenous Shocks ◽  
World Economic ◽  
Access Policies ◽  
Over Time

The paper proposes a doubling of access limits on concessional lending to ensure that the Fund can respond effectively to the needs of low-income countries (LICs) severely affected by the current world economic downturn. Pending adoption of broader reforms to the LIC facilities architecture, higher access limits under the Poverty Reduction and Growth Facility (PRGF) and Exogenous Shocks Facility-High-Access Component (ESF-HAC) would give the Fund greater flexibility in assisting LICs, which have become more exposed to global volatility over time. A doubling of access limits would restore them to their 1998 levels in percent of GDP and would be consistent with the approach taken in determining new access limits for General Resources Account (GRA) resources. It would also be in line with the projected doubling of medium-term demand for concessional resources.

2005 Review of the Poverty Reduction Strategy Approach - Balancing Accountabilities and Scaling Up Results

Policy Papers ◽  
2005 ◽  
Vol 2005 (67) ◽  
Author(s):  
Keyword(s):  
World Bank ◽  
Low Income ◽  
Poverty Reduction ◽  
Scaling Up ◽  
Low Income Countries ◽  
New Approach ◽  
The World Bank ◽  
Reduction Strategies ◽  
Poverty Reduction Strategy ◽  
The International Monetary Fund

In December 1999, the World Bank (the Bank) and the International Monetary Fund (the Fund) introduced a new approach to their relations with low-income countries, centered around the development and implementation of poverty reduction strategies (PRS) by the countries as a precondition for access to debt relief and concessional financing from both institutions. These strategies were also expected to serve as a framework for better coordination of development assistance among other development partners.

Handbook of IMF Facilities for Low-Income Countries

Policy Papers ◽  
2012 ◽  
Vol 2012 (18) ◽  
Author(s):  
Keyword(s):  
Low Income ◽  
Poverty Reduction ◽  
Low Income Countries

The Fund’s concessional facilities are aimed at providing flexible and tailored support to low-income countries (LICs) in their efforts to achieve, maintain, or restore a stable and sustainable macroeconomic position consistent with strong and durable poverty reduction and growth.

Turbulence and Order in Economic Development

2018 ◽  
Author(s):  
Hazel Gray
Keyword(s):  
Economic Development ◽  
Low Income ◽  
Poverty Reduction ◽  
Private Property ◽  
Economic Transformation ◽  
Low Income Countries ◽  
State Institutions ◽  
Role Of The State ◽  
Manufacturing Growth

The terms of debate on the role of institutions in economic development are changing. Stable market institutions, in particular secure private property rights and democratically accountable governments that uphold the rule of law, are widely seen to be a prerequisite for economic transformation in low-income countries. Yet over the last thirty years, economic growth and structural transformation has surged forward in a range of countries where market and state institutions have differed from these ideals, as well as from each other. This book studies the role of the state in economic transformation in two such countries, Tanzania and Vietnam. These were two of the poorest countries in the world in the early 1980s but, over the last thirty years, both have experienced significant changes in the pace and character of economic development. While both countries experienced faster rates of GDP growth, their paths of economic transformation were very different. Vietnam experienced rapid manufacturing growth and poverty reduction while Tanzania’s path of economic change was characterized by the rise of mining and a much slower pace of poverty reduction. Employing a political settlements approach, this book argues that their paths of economic transformation were mediated by the lasting influence of differences in the institutions and distributions of power that had been forged during the socialist period. The comparison generates new insights into the variable relationship between political order and economic outcomes.

Social Safeguards and Program Design in PRGT and PSI-Supported Programs

Policy Papers ◽  
2017 ◽  
Vol 2017 (29) ◽  
Author(s):  
Keyword(s):  
Low Income ◽  
Poverty Reduction ◽  
Low Income Countries ◽  
Vulnerable Groups ◽  
Social Spending ◽  
Social Programs ◽  
Fiscal Adjustment ◽  
Policy Measures ◽  
Social Safety Nets ◽  
Considerable Support

The Fund provides considerable support to low-income countries (LICs). This includes concessional financing from the Poverty Reduction and Growth Trust (PRGT), which currently carries an interest rate of zero percent. Since 2010, over half of Fund-supported arrangements have involved a PRGT facility. Support for poverty reduction is a core objective of arrangements supported by these facilities. This paper examines how PRGT-supported programs safeguard spending on poor and vulnerable groups within the broader framework of promoting inclusive growth. In some cases, national poverty reduction programs seek to shift expenditures toward social programs in the context of generally higher spending supported by domestic revenue mobilization, grants, or debt financing. In other cases, the goal is to safeguard poor and vulnerable groups from fiscal adjustment and reform measures that could adversely affect them by adopting countervailing policy measures to strengthen social safety nets. In discussing social safeguards, this paper focuses on how and if these objectives are reflected satisfactorily in the design of PRGT and PSI-supported programs. The effectiveness of social spending in improving social outcomes, including by durably reducing poverty, is beyond the scope of the paper.

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