International aid will bolster Iraqi federal state

2016 ◽  
Keyword(s):  
Current Account ◽  
Oil Prices ◽  
International Aid ◽  
Federal State ◽  
Current Account Balance ◽  
Structural Reforms ◽  
Kurdistan Region ◽  
Content Type ◽  
Budget Support ◽  
International Donors

Significance The 5.3-billion-dollar loan is part of a broader international aid programme. The SBA loan will be disbursed over three years in 13 quarterly installments, including a first payment of 634 million dollars of budget support in the fourth quarter of 2016. Impacts A rally in oil prices and improved current account balance could erode Iraqi commitment to the structural reforms required by donors. International scrutiny may slow a re-expansion of Iraqi spending for 3-5 years. The aid will bolster Haider Abadi, whose continuation as premier is viewed as vital by international donors and investors. Longer-term structural reforms for private-sector growth will be difficult to implement, but may be successful in the Kurdistan region.

Is the GCC an optimum currency area (OCA)? Empirical answers from co-movements

2020 ◽  
Vol 13 (5) ◽  
pp. 873-890
Author(s):  
Tamsir Cham
Keyword(s):  
Financial Crisis ◽  
Monetary Union ◽  
Current Account ◽  
Oil Prices ◽  
Current Account Balance ◽  
Annual Data ◽  
Optimum Currency Area ◽  
Content Type ◽  
Currency Area ◽  
Optimum Currency

Purpose This paper aims to investigate whether the Gulf Cooperation Council (GCC) is an optimum currency area in the wake of the global financial crisis and low oil prices using annual data from 2000 to 2016. Design/methodology/approach It applies the European Monetary Union as a reference point and co-movement methodology on key variables such as gross domestic product, inflation, terms of trade and current account balance. The findings revealed that all countries meet the macroeconomic convergence criteria and there is greater co-movement of these variables in the GCC. Findings Furthermore, the degree of co-movements increases during the financial crisis and recent low oil prices, which signifies the synchronization of shocks. However, labor is less mobile in the region and current account balance co-movement is relatively weak, but with the endogeneity of a monetary union, these constraints will evaporate as the zone enters monetary unification. The paper recommends that for the GCC monetary union to happen and be sustainable, there needs to be political will. The paper also recommended for the zone to have a common identification card so that nationals can move and work freely within the GCC region. Originality/value The study defers from the others in the following: this paper considered shock synchronization and co-movement methodology, which has not been applied in the region to assess its feasibility as an OCA.

scholarly journals Explaining India’s current account deficit: a time series perspective

2019 ◽  
Vol 26 (1) ◽  
pp. 117-138
Author(s):  
Harendra Kumar Behera ◽  
Inder Sekhar Yadav
Keyword(s):  
Current Account ◽  
Unit Root ◽  
Current Account Deficit ◽  
Structural Break ◽  
Current Account Balance ◽  
Fiscal Deficit ◽  
Causality Test ◽  
Content Type ◽  
Financial Account ◽  
Cointegration Tests

Purpose The purpose of this paper is to examine the issue of high current account deficit (CAD) from various perspectives focussing its behaviour, financing pattern and sustainability for India. Design/methodology/approach To begin with the trends, composition and dynamics of CAD for India are analysed. Next, the influence of capital flows on current account is investigated using Granger non-causality test proposed by Toda and Yamamoto (1995) between current account balance (CAB) to GDP ratio and financial account balance to GDP ratio. Also, the sustainability of India’s current account is examined using different econometrics techniques. In particular, Husted’s (1992), Johansen’s cointegration and vector error correction model (VECM) is applied along with conducting unit root and structural break tests wherever applicable. Further, long-run and short-run determinants of the CAB are estimated using Johansen’s VECM. Findings The study found that the widening of CAD is due to fall in household financial savings and corporate investments. Also, it was found that a large part of India’s CAD has been financed by FDI and portfolio investments which are partly replaced by short-term volatile flows. The unit root and cointegration tests indicate a sustainable current account for India. Further, econometric analysis reveals that India’s current account is driven by fiscal deficit, terms of trade growth, inflation, real deposit rate, trade openness, relative income growth and the age dependency factor. Practical implications Since India’s CAD has widened and is expected to widen primarily due to rise in gold and oil imports, policy makers should focus on achieving phenomenal export growth so that a sustainable current account is maintained. Also, with rising working-age and skilled population, India should focus more on high-value product exports rather than low-value manufactured items. Further, on the structural side it is important to correct fiscal deficit as it is one of the important factors contributing to large CAD. Originality/value The paper is an important empirical contribution towards explaining India’s CAD over time using latest and comprehensive data and econometric models.

Policy shocks, current account and the macroeconomy in a developing country

2019 ◽  
Vol 46 (3) ◽  
pp. 710-726
Author(s):  
Moumita Basu ◽  
Ranjanendra Narayan Nag
Keyword(s):  
Exchange Rate ◽  
Developing Country ◽  
Foreign Exchange ◽  
Current Account ◽  
Current Account Balance ◽  
Foreign Exchange Reserves ◽  
Effective Demand ◽  
Content Type ◽  
Traded Goods ◽  
The Current Account

Purpose This is a theoretical paper in the field of international macroeconomics. The purpose of this paper is to focus on a dynamic interaction between current account imbalance and unemployment in response to some policy-induced shocks for a small open economy under a flexible exchange rate. Design/methodology/approach The paper uses a two-sector framework: one sector is traded and another is the non-traded sector that is subject to an effective demand constraint. The current account imbalance arises due to the discrepancy between production of traded goods, household consumption of traded goods and government purchases of importables. The authors keep the asset structure simple by considering only domestic currency and foreign bonds that are imperfect substitutes. The paper considers a standard methodology of dynamic adjustment process involving change in foreign exchange reserves and exchange rate under perfect foresight. The saddle path properties of the equilibrium are also examined. Findings The results of comparative static exercises depend on a set of structural features of a developing country, which include asset substitutability, wage price rigidity and sectoral asymmetries. The paper shows that expansionary monetary policy, balanced budget fiscal expansion and financial liberalization have an ambiguous effect on the current account balance, foreign exchange reserves, non-traded sector and the level of employment. Originality/value The existence of Keynesian unemployment with fixed prices is the key ingredient of this paper. The paper introduces the problem of effective demand to analyze the dynamics of current account balance and exchange rate, which, in turn, determine the sectoral composition of output and level of employment.

Asia-Pacific Regional Outlook

Policy Papers ◽  
2005 ◽  
Vol 2005 (75) ◽  
Author(s):  
Keyword(s):  
Current Account ◽  
Regional Growth ◽  
Oil Prices ◽  
Food Prices ◽  
Domestic Demand ◽  
Asia Pacific ◽  
Current Account Balance ◽  
China And India ◽  
The Impact

Looking ahead, prospects are relatively bright. Regional growth is expected to amount to 6 percent both this year and next, propelled by vigorous exports and strong domestic demand in China and India. Meanwhile, headline inflation is expected to remain around 3—3½ percent, as lower food prices offset the impact of higher oil prices. At the same time, the region’s current account balance is forecast to remain around 3 percent of GDP, albeit with large changes in its distribution.

Juba's intractability prevents South Sudan's recovery

2017 ◽  
Keyword(s):  
At Risk ◽  
Oil Prices ◽  
Civil Conflict ◽  
War Crimes ◽  
Economic Resilience ◽  
Livestock Farming ◽  
Content Type ◽  
International Donors

Significance South Sudan's war-blighted economy is expected to contract by 3.5% in 2017, compared with 13.8% last year, thanks to modest increases in oil prices. Persistent reports of corruption and suspected war crimes perpetrated by government forces have exhausted much of the goodwill from international donors. Economic and humanitarian conditions are perilous for many of the population. Impacts Any macroeconomic improvements are at risk if the protracted civil conflict continues. Livestock farming, agriculture and urban subsistence will remain sources of basic economic resilience. The threat of sanctions against Kiir is unlikely to alter his stance given that most of his assets are based in the region.

Confrontation with Iraq’s militias may come to a head

2020 ◽  
Keyword(s):  
Prime Minister ◽  
Oil Prices ◽  
International Aid ◽  
Financial Assistance ◽  
Content Type ◽  
The Us ◽  
Double Hit ◽  
Will Force

Significance This followed five rocket attacks on the US-led coalition in the last two weeks, which killed two US and one UK citizen. It also came two days after Kurdish President Barham Salih named Adnan al-Zurfi, a US-linked Shia nationalist politician, as the new prime minister-designate. Impacts Washington may hold back its response to attacks in order to further Zurfi’s ratification. A massive double hit from low oil prices and COVID-19 will force Iraq to seek more international aid. A Zurfi government could improve Iraq’s chances of gaining Western and Gulf financial assistance.

scholarly journals Structural Reforms and External Rebalancing

2017 ◽  
Vol 17 (182) ◽  
Author(s):  
Alexander Culiuc ◽  
Annette Kyobe
Keyword(s):  
Current Account ◽  
Positive Impact ◽  
Real Effective Exchange Rate ◽  
Current Account Balance ◽  
Structural Reforms ◽  
Tradable Sector ◽  
Effective Exchange ◽  
Short Run ◽  
Effective Exchange Rate ◽  
The Current Account

Empirical research on structural reforms has focused primarily on their impact on growth and productivity. Yet an often-invoked rationale for structural reforms is their impact on external adjustment. This paper finds little evidence that structural reforms improve the current account in the short run, but they can increase the responsiveness and resilience of the economy to external shocks. In particular, elasticities of exports with respect to the real effective exchange rate increase with some structural indicators, suggesting that structural reforms facilitate the reallocation of resources to the tradable sector in response to a negative external shock. The paper concludes that structural reforms, while not having an immediate positive impact on the current account balance, can be an important complement to traditional macroeconomic adjustment.

Belarus faces oil price and COVID-19 shocks

2020 ◽  
Keyword(s):  
Petroleum Product ◽  
Oil Prices ◽  
Oil Price ◽  
Structural Reforms ◽  
Content Type ◽  
Global Demand ◽  
The Government

Significance Reduced global demand due to COVID-19 and the collapse of OPEC+ output caps have driven prices under 40 dollars per barrel. That does not benefit Belarus, as its petroleum product exports have also fallen in value. After months of arguments about oil prices, President Alexander Lukashenka says he has secured a pledge of financial relief from Russia, but Moscow has yet to confirm. Impacts Lukashenka's re-election would normally be routine, but this year it takes place in unfavourable external circumstances. If protests start to grow, the government can always impose restrictions attributed to COVID-19. US-EU attempts at closer engagement will be thwarted by Belarus's ultimate reliance on Russia. Belarus will replace Russian with Chinese loans but neither is a substitute for structural reforms.

Economic downturn may be on the horizon in Ecuador

2019 ◽  
Keyword(s):  
Current Account ◽  
Current Account Deficit ◽  
Oil Prices ◽  
Import Demand ◽  
Export Growth ◽  
Economic Downturn ◽  
Short Term ◽  
Content Type ◽  
The Government ◽  
Spending Cuts

Subject Economic challenges. Significance In the first quarter, Ecuador’s economy grew at its weakest pace since the 2016 recession. The government is facing significant challenges in implementing a recently agreed IMF programme, while President Lenin Moreno’s popularity has plummeted following unpopular, but arguably necessary, spending cuts. Impacts Dollar appreciation and a tightening of global financing conditions would weaken Ecuador’s competitiveness. Short-term, the current account deficit will narrow, as rising oil prices support export growth and the slowdown weighs on import demand. Moreno’s diminishing popularity will exacerbate uncertainty around implementation of the IMF programme.

Iraqi Kurdistan will face dilemmas over federal ties

2021 ◽  
Keyword(s):  
Federal Government ◽  
Democratic Party ◽  
Oil Prices ◽  
Kurdistan Region ◽  
Government Formation ◽  
Content Type ◽  
Iraqi Kurdistan ◽  
Long Time

Significance Long-time Kurdistan Democratic Party (KDP) leader Masoud Barzani and new Patriotic Union of Kurdistan (PUK) chief Bafel Talabani discussed how to form a common front over government formation in Baghdad. The Kurdistan Region of Iraq (KRI) is benefitting from temporary stability linked to higher oil prices. Impacts Kurdish hesitation on whether to commit to a Sadrist-led majority federal government will also simultaneously hold back Sunni groups. Both Turkey and Iran could become more militaristic in their approach to the KRI -- and each other. The intra-PUK deadlock could lead to fighting in Suleimaniya, but mediation is more likely, if senior party figures step up.

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