IMF Policy Discussion Papers
1999
May 1, 1999
Mapping Financial Sector Vulnerability in a Non-Crisis Country
Description: The forward-looking framework expounded in this paper links a qualitative evaluation of system-wide vulnerability (covering macro, sectoral, institutional, and systemic liquidity issues) with a quantitative assessment of the financial condition of significant financial institutions. Based on vulnerability criteria and judgmental stress tests, twelve indicators of soundness (measuring risk exposure, solvency, liquidity, profitability, and supervisory assessment) are developed. This holistic methodology can be used not only as an early warning/crisis-avoidance system to identify potential systemic problems—and problem institutions—requiring immediate attention, but also to pinpoint needed reforms in the legal, regulatory, and institutional infrastructure that can lessen the likelihood of a future crisis.
April 1, 1999
The Role of the Currency Board in Bulgaria's Stabilization
Description: This paper focuses on the process leading to the choice of a currency board as a stabilization instrument, and its specific design. The use of a currency board was complicated and controversial because of serious structural problems, including a systemic banking crisis. It argues that the arrangement was well designed for the task at hand, combining a traditional rule-based exchange arrangement with a number of legal and structural measures to address the pressing bank sector and fiscal issues. In light of the interdependence of the measures, the success of Bulgaria’s currency board stabilization must be attributed to a combination of elements, of which the currency board was a crucial, but not the only determining factor. Structural problems, most notably in the banking sector, were equally severe. The banking crisis had been smoldering since at least 1995. A 1996 review found that out often state banks, which still accounted for more than 80 percent of banking sector assets, nine had negative capital and more than half of all state banks' portfolios were nonperforming.
February 1, 1999
Tax Policy and the Asian Crisis
Description: This paper focuses on tax policy and the crisis in Asia in the context of globalization and technological change. Two sets of conclusions, specific tax reform measures and general lessons from the crisis, form the tax policy agenda on these issues. The complexity and volume of financial transactions, associated with the opening of emerging markets, have made tax administration a more challenging task. Just as strengthening financial systems must be a precursor to capital account liberalization, tax administrations clearly also require strengthening in such an environment. In many emerging markets the capacity to tax capital returns is limited. Tax administrators need to understand and monitor complex financial transactions that grew rapidly due both to financial sector liberalization and technological innovation. Traditional difficulties for tax administrators, such as transfer pricing, that had often been limited to natural resource sectors in developing economies, took on wider importance as local companies gained sophistication and developed offshore operations.
January 1, 1999
Honduras's Growth Performance During 1970-1997
Description: For more than three decades, Honduras’s average annual growth in real per capita GDP has been almost zero and highly uneven, even though its total investment-to-GDP ratio has been relatively large. This paper argues that policy and efficiency variables seem to have had less of an influence on growth in Honduras than they had on other countries. Instead, lack of growth can be attributed to the offsetting negative influence of low labor and capital productivity, which result from deficient levels of human capital and inadequate composition of investment. Other constraints to growth in Honduras include inadequate physical and institutional infrastructures.
1998
December 1, 1998
Economic Transition and Social Protection: Issues and Agenda for Reform
Description: This paper briefly describes the factors constraining the social protection policies in the Baltics, Russia, and other countries of the former Soviet Union (BRO). The analysis considers public spending in social programs, including generalized subsidies for goods and consumer services, pensions, unemployment-related and social benefits, and education and health care. The paper then lists policies that can help mitigate the worsening living standards of the poor and the vulnerable in a fiscally sustainable manner.
October 1, 1998
Corporate Debt Restructuring in East Asia: Some Lessons from International Experience
Description: This paper summarizes some lessons from international experience for corporate debt restructuring in east Asia. Basic principles of debt restructuring are described, the experiences of Mexico, Chile, the United Kingdom, Hungary, and Poland are examined, and general lessons are drawn. The approaches currently being adopted in Indonesia, Korea, Malaysia and Thailand are then reviewed in the context of these lessons.
September 1, 1998
Inflation, Credibility, and the Role of the International Monetary Fund
Description: This paper argues that many developing countries may find it difficult to buttress disinflation programs purely through the adoption of traditional credibility-enhancing devices (such as monetary anchors and central bank independence), owing to “technical problems” (for example, high instability of money demand, increased capital mobility) and an insufficient endowment of credibility in the political institutions. In these cases, borrowing credibility from an outside agency like the International Monetary Fund may be the most effective solution. The paper discusses the different options that would allow the Fund to support programs aimed not at external adjustment—the Fund’s traditional role—but at disinflation.
September 1, 1998
Capital Account Liberalization in the Southern Mediterranean Region
Description: Capital Account Liberalization in the Southern Mediterranean Region
August 1, 1998
What Should be Done with a Fiscal Surplus?
Description: What Should be Done with a Fiscal Surplus?
August 1, 1998
Systemic Banking Distress - The Need for an Enhanced Monetary Survey
Description: Systemic Banking Distress - The Need for an Enhanced Monetary Survey