The global financial crisis and its effects on the international monetary funds

ABSTRACT This paper aims to analyze the innovations introduced in the functions of the International Monetary Fund in the context of the 2008 economic and financial crisis. This promoted an action that aimed to strengthen the surveillance function through the adoption of the Integrated Surveillance. Thus, alongside the traditional conditionality based on an a posteriori implementation of adequate economic policies, a criterion of ex ante conditionality in the precautionary branches was also introduced or based on the economic characteristics of the country to be financed. Concerning traditional conditionality, it will be asked whether the IMF has adopted a less extensive approach than its role.

The IMF or the AMF: Defining the Future of Financing for Investment and Development Projects in Africa

Since independence the government of many African countries have depended on the International Monetary Fund (IMF) and the World Bank as their main sources of finance for major developmental and investment projects in their respective countries. Accordingly, besides the granting of loans to Low Income Countries (LICs) at zero interest rate, the IMF also assists member countries to resolve their balance of payment challenges as well as granting interest-bearing loans to both member and non-member countries. Similarly, the African Monetary Fund (AMF) which is a prototype of the IMF was created by the African Union (AU) and is not yet operational. Just like the IMF, the AMF is intended to fund major developmental projects in Africa. This article examines the IMF loans conditionality and the award of Special Drawing Rights (SDR) to African Countries as seen during the COVID-19 crisis. It argues that the AMF would not be the African countries’ panacea as far as funding for developmental projects in Africa is concerned. In this regard, the article further examines Agenda 2063 as a future development model for Africa, as well as the various sources of project finance as envisioned in the Frameworks Document of Agenda 2063. It concludes that IMF still has the financial muscle to fund developmental projects and resolved balance of payment problems in Africa despite alternative sources of finance recommended by Agenda 2063.

Sri Lanka will step up appeals to China and India

Significance Sri Lanka’s foreign exchange (forex) reserves fell to USD1.6bn at end-November, enough to finance only about one month’s imports. Colombo has in recent years relied on macroeconomic support from key partners Beijing and Delhi, but its relations with these players have come under some strain recently. Impacts Colombo will only turn to the IMF if its outreach to friendly countries fails to yield sufficiently favourable results. The central bank will strongly consider raising interest rates, having kept them steady at two policy meetings since hikes in August. Worsening economic hardship could prompt an increase in anti-government protests.

Financial Development and Macroeconomic Performance: A Cointegration Approach

The paper tests the existence of long-term relations between all the IMF financial development indices and some macroeconomic performance indicators applying panel cointegration tests in a panel with 46 countries, and in a panel including only the sub-sample of the 27 EU countries over the interval 1990-2019. Overall, there are no significant differences between the results obtained for the whole sample and the panel including only the EU countries. The results obtained clearly point to the existence of cointegration between the financial development indices and the real Gross Domestic Product, as well as with the inflation, the unemployment rate, the current account, and the net international investment position. The results also show that there are no significant differences between the results obtained for the financial institutions and for the financial markets indices. Moreover, the results related to the specific aspects addressed by the IMF indices very well demonstrate that much more important than the simple access to or the depth of the financial institutions and markets is the efficiency of these institutions and markets.

Poverty, Inequality, and the International Monetary Fund: How Austerity Hurts the Poor and Widens Inequality

Among the drivers of socio-economic development, this article focuses on an important yet insufficiently understood international-level determinant: the spread of austerity policies to the developing world by the International Monetary Fund (IMF). In offering loans to developing countries in exchange for policy reforms, the IMF typically sets the fiscal parameters within which development occurs. Using an original dataset of IMF-mandated austerity targets, we examine how policy reforms prescribed in IMF programs affect inequality and poverty. Our empirical analyses span a panel of up to 79 countries for the period 2002–2018. Using instrumentation techniques, we control for the possibility that these relationships are driven by the IMF imposing harsher austerity measures precisely in countries with more problematic economies. Our findings show that stricter austerity is associated with greater income inequality for up to two years, and that this effect is driven by concentrating income to the top 10% of earners while all other deciles lose out. We also find that stricter austerity is associated with higher poverty headcounts and poverty gaps. Taken together, our findings suggest that the IMF neglects the multiple ways its own policy advice contributed to social inequity in the developing world.

Variation in the Stellar Initial Mass Function from the Chromospheric Activity of M Dwarfs in Early-type Galaxies

Mass measurements and absorption-line studies indicate that the stellar initial mass function (IMF) is bottom-heavy in the central regions of many early-type galaxies, with an excess of low-mass stars compared to the IMF of the Milky Way. Here we test this hypothesis using a method that is independent of previous techniques. Low-mass stars have strong chromospheric activity characterized by nonthermal emission at short wavelengths. Approximately half of the UV flux of M dwarfs is contained in the λ1215.7 Lyα line, and we show that the total Lyα emission of an early-type galaxy is a sensitive probe of the IMF with a factor of ∼2 flux variation in response to plausible variations in the number of low-mass stars. We use the Cosmic Origins Spectrograph on the Hubble Space Telescope to measure the Lyα line in the centers of the massive early-type galaxies NGC 1407 and NGC 2695. We detect Lyα emission in both galaxies and demonstrate that it originates in stars. We find that the Lyα to i-band flux ratio is a factor of 2.0 ± 0.4 higher in NGC 1407 than in NGC 2695, in agreement with the difference in their IMFs as previously determined from gravity-sensitive optical absorption lines. Although a larger sample of galaxies is required for definitive answers, these initial results support the hypothesis that the IMF is not universal but varies with environment.

Wolf-Rayet Galaxies in SDSS-IV MaNGA. II. Metallicity Dependence of the High-mass Slope of the Stellar Initial Mass Function

As hosts of living high-mass stars, Wolf-Rayet (WR) regions or WR galaxies are ideal objects for constraining the high-mass end of the stellar initial mass function (IMF). We construct a large sample of 910 WR galaxies/regions that cover a wide range of stellar metallicity (from Z ∼ 0.001 to 0.03) by combining three catalogs of WR galaxies/regions previously selected from the SDSS and SDSS-IV/MaNGA surveys. We measure the equivalent widths of the WR blue bump at ∼4650 Å for each spectrum. They are compared with predictions from stellar evolutionary models Starburst99 and BPASS, with different IMF assumptions (high-mass slope α of the IMF ranging from 1.0 to 3.3). Both singular evolution and binary evolution are considered. We also use a Bayesian inference code to perform full spectral fitting to WR spectra with stellar population spectra from BPASS as fitting templates. We then make a model selection among different α assumptions based on Bayesian evidence. These analyses have consistently led to a positive correlation of the IMF high-mass slope α with stellar metallicity Z, i.e., with a steeper IMF (more bottom-heavy) at higher metallicities. Specifically, an IMF with α = 1.00 is preferred at the lowest metallicity (Z ∼ 0.001), and an Salpeter or even steeper IMF is preferred at the highest metallicity (Z ∼ 0.03). These conclusions hold even when binary population models are adopted.

Stellar Population and Elemental Abundance Gradients of Early-type Galaxies*

The evolution of galaxies is imprinted on their stellar populations. Several stellar population properties in massive early-type galaxies have been shown to correlate with intrinsic galaxy properties such as the galaxy’s central velocity dispersion, suggesting that stars formed in an initial collapse of gas (z ∼ 2). However, stellar populations change as a function of galaxy radius, and it is not clear how local gradients of individual galaxies are influenced by global galaxy properties and galaxy environment. In this paper, we study the stellar populations of eight early-type galaxies as a function of radius. We use optical spectroscopy (∼4000–8600 Å) and full spectral fitting to measure stellar population age, metallicity, slope of the initial mass function (IMF), and nine elemental abundances (O, Mg, Si, Ca, Ti, C, N, Na, and Fe) out to 1 R e for each galaxy individually. We find a wide range of properties, with ages ranging from 3–13 Gyr. Some galaxies have a radially constant, Salpeter-like IMF, and other galaxies have a super-Salpeter IMF in the center, decreasing to a sub-Salpeter IMF at ∼0.5 R e . We find a global correlation of the central [Z/H] with the central IMF and the radial gradient of the IMF for the eight galaxies, but local correlations of the IMF slope with other stellar population parameters hold only for subsets of the galaxies in our sample. Some elemental abundances also correlate locally with each other within a galaxy, suggesting a common production channel. These local correlations appear only in subsets of our galaxies, indicating variations of the stellar content among different galaxies.