As the global economic conditions begin to normalize after years marked by COVID-19, a global food crisis, surging inflation, and high interest rates, low-income countries—which suffered the most from these shocks—are at an important juncture.
How can low-income countries overcome their current challenges? What are the potential opportunities on the horizon?
Join Kristalina Georgieva and Ajay Banga for a live discussion on what low-income countries can do to foster macroeconomic stability, promote sustainable and inclusive growth, and unlock progress toward the sustainable development goals.
Also hear from senior policy makers and experts on what role the international community can play to support these countries—from mobilizing financing and calibrating their support through strengthening debt resolution frameworks.
For more details, see AGENDA.
Read our latest report on Macroeconomic Developments and Prospects for Low-Income Countries.
The IMF has acted with unprecedented speed and scale to support low-income countries during the pandemic. The Fund provided financial support to 53 of 69 eligible low-income countries in 2020 and in the first half of 2021, with about US$14 billion disbursed as zero percent interest rate loans from the Poverty Reduction and Growth Trust.
Most of this support was through the Fund’s emergency financing instruments—the Rapid Credit Facility (RCF) and Rapid Financing Instrument (RFI)—which provide immediate, one-time disbursements to countries facing urgent balance of payments needs. The Fund was able to respond to a record number of requests for financial assistance through a series of temporary access limit increases to the RCF and RFI, and temporary increases in the Poverty Reduction and Growth Trust (PRGT) overall access limits.
New AI Preparedness Index Dashboard tracks 174 economies based on their digital infrastructure, human capital, labor policies, innovation, integration and regulation
The negative economic effects of conflicts are larger and more persistent, partly reflecting a sharper impact of higher-intensity conflicts in these regions.
AI will affect almost 40 percent of jobs around the world, replacing some and complementing others. We need a careful balance of policies to tap its potential
The negative impact of ‘de-risking’ strategies by major economies would be felt beyond China, while comprehensive reforms in China could generate significant positive spillovers
The economic gains from $272 billion in pandemic support for 94 countries were strongest in the poorest and more vulnerable recipients of IMF concessional financing
Smart fiscal policy can help restore price stability and lessen the impact of the cost-of-living crisis.
This paper updates the projections of the Fund’s income position for FY 2024 and FY 2025-2026 and proposes related decisions for the current and the following financial years. The paper also includes a proposed decision to keep the margin for the rate of charge unchanged until completion of the review of surcharges, but until no later than end FY 2025, at which time the Board would set the margin for the rest of FY 2025 and FY 2026. The Fund’s overall net income for FY 2024 is projected at about SDR 4.4 billion after taking into account pension-related remeasurement gain and estimated retained investment income of the Endowment Account.
On March 20, 2024, the IMF’s Executive Board reviewed the adequacy of the Fund’s precautionary balances. The review took place somewhat ahead of the standard two-year cycle, in view of the imminent attainment of the current indicative medium-term indicative target of SDR 25 billion for the first time. Precautionary balances comprise the Fund’s general and special reserves. They are a key element of the IMF’s multi-layered framework for managing financial risks. Precautionary balances provide a buffer to protect the Fund against potential losses, resulting from credit, income, and other financial risks. The review was based on the assessment framework established in 2010, which uses an indicative range for precautionary balances, linked to a forward-looking measure of total IMF non-concessional credit, to guide decisions on adjusting the medium-term target over time. While financial risks remain high, they are broadly unchanged from the last review, taking into account the further accumulation of reserves and strengthening of some risk mitigants. Against this background, Executive Directors broadly supported staff’s proposal to retain the current medium-term target of SDR 25 billion and increase the minimum floor from SDR 15 billion to SDR 20 billion. The Board also supported maintaining the biennial review cycle, with earlier reviews if warranted by developments that could materially affect the adequacy of precautionary balances.
This paper reports on the Fund’s income position for FY 2023 following the closing of the Fund’s accounts for the financial year and completion of the external audit. Overall net income of the General Department was SDR 1.7 billion, SDR 0.1 billion lower than estimated in April, mainly reflecting a decrease in the remeasurement gain reported under IAS 19 (the accounting standard for employee benefits) offset partly by higher-than-anticipated returns from the investment subaccounts compared with earlier projections.
This paper updates the projections of the Fund’s income position for FY 2023 and FY 2024 and proposes related decisions for the current and next financial year. The paper also includes a proposed decision to keep the margin for the rate of charge unchanged for financial year 2024. The Fund’s overall net income for FY 2023 is projected at about SDR 1.8 billion, slightly lower than the April 2022 estimate.
On December 12, 2022, the IMF’s Executive Board reviewed the adequacy of the Fund’s precautionary balances. The review took place on the standard two-year cycle, after an interim review in December 2021. Precautionary balances comprise the Fund’s general and special reserves. They are a key element of the IMF’s multi-layered framework for managing financial risks. Precautionary balances provide a buffer to protect the Fund against potential losses, resulting from credit, income, and other financial risks. In conducting the review, the Executive Board applied the rules-based framework agreed in 2010. Precautionary balances have risen further since the 2021 interim review and coverage metrics have strengthened. At the same, credit and other financial risks have also increased. The pace of reserve accumulation is expected to remain adequate. Against this background, Executive Directors endorsed staff’s proposal to retain the current medium-term target of SDR 25 billion and the minimum floor of SDR 15 billion. The Board also discussed the role of surcharges, which are primarily a component of the Fund’s risk management framework but also contribute to reserves accumulation.
This paper reports on the Fund’s income position for FY 2022 following the closing of the Fund’s accounts for the financial year and completion of the external audit.
Private consumption in the U.S. has recovered swiftly from the pandemic trough and has been running above the pre-pandemic trend even as interest rates rose sharply. This paper examines the underlying drivers for this strong growth in consumption. Using both state- and household-level data, we find that excess savings from the pandemic, large increases in household wealth (especially housing), along with solid real income gains contributed to strengthening post-pandemic consumption. Compared with pre-COVID estimates, the marginal propensity to consume out of housing wealth is substantially higher, which, together with large gains in housing prices, made the wealth effect a key driver for post-pandemic consumption growth.
St. Lucia has enviably high female labor force participation rate and strikingly low participation gap vis-à-vis male. The latter is lower than OECD average and way below world average. Women are also more educated than men. Yet, using a micro dataset of St. Lucia Labor Force Survey over the period 2016-2021, our analysis points towards disproportionate effects of childcare on female participation and unemployment and a substantial gender gap in labor income for workers without higher education. Moreover, the income gap is not explained by observable worker characteristics. While the paper does not explore causal links, this unique feature of high female participation and, yet, considerable gender gaps in other dimensions could be due to the social, historical, and political structure that resulted in a matrifocal but not a matriarchal system. At the same time, the small gender gaps for workers with higher education across participation, unemployment, and labor income seem to suggest that women can overcome some barriers through education. Our results bring to the fore two crucial aspects related to gender studies: (i) While macroeconomic indicators like female labor participation rate are important tools, they are not always sufficient to capture progress in gender equality; and (ii) econometric analysis needs to be complemented with a more holistic understanding of the history and social context shaping deeply rooted gender traits.
This paper evaluates the progression of the sovereign ESG landscape since the initial comprehensive assessment of the sector in 2021 in “Demystifying Sovereign ESG” by conducting a comparative analysis of the current sovereign ESG methodologies of commercial ESG providers. The 2021 study articulated the distinct nature of the sovereign ESG segment from corporate ESG and documented fundamental shortcomings in sovereign ESG methodologies, such as the “ingrained income bias”, lack of consensus on environmental performance, and conflation of risk and sustainability objectives. While sovereign ESG methodologies have evolved since 2021, the significant correlation across providers of aggregate, S, and G scores persist. In response to market demand there has been a notable shift towards greater focus on the E pillar against growing heterogeneity on climate and environmental considerations across ESG providers. The findings underscore the disparity between perceptions and realities in implementing a sustainability strategy within the sovereign debt asset class. This necessitates a reevaluation of sovereign ESG scoring methodologies towards outcome-based metrics and urges a globally coordinated effort to establish robust sustainability measurement frameworks.
We investigate the existence of a middle-income trap using finite state Markov chains, constant growth thresholds, and mean passage times. As well as studying output per head, we examine the dynamics of its proximate determinants: TFP, the capital-output ratio, and human capital. We find upwards mobility for the capital-output ratio and human capital, but not for relative TFP. The lack of upwards mobility in relative TFP, at least from an intermediate level, suggests that escaping the middle-income category can take many years, and such traps may become increasingly apparent in the years to come.
Prioritizing populations most in need of social assistance is an important policy decision. In the Eastern Caribbean, social assistance targeting is constrained by limited data and the need for rapid support in times of large economic and natural disaster shocks. We leverage recent advances in machine learning and satellite imagery processing to propose an implementable strategy in the face of these constraints. We show that local well-being can be predicted with high accuracy in the Eastern Caribbean region using satellite data and that such predictions can be used to improve targeting by reducing aggregation bias, better allocating resources across areas, and proxying for information difficult to verify.
This paper presents a novel approach to addressing VAT regressivity, by proposing the adoption of a progressive VAT: a single-rate, broad-base, VAT, whereby tax paid on consumption is re-paid to lower income households in real-time, at the moment of purchase. Such a system can effectively eliminate regressivity, while minimizing the political economy, cash-flow, and welfare stigma obstacles that are often associated with standard welfare transfers used in modern VAT systems. It would also have other significant advantages, particularly in terms of compliance incentives.
A conversation on how sub-Saharan Africa can promote climate-resilient and green development. African Department director Abebe Aemro Selassie hosts the premiere episode of Africa Perspectives.
A discussion with University of Zambia students on how Zambia is making progress in its reform efforts to restore sustainability, invest in youth, combat corruption, and attract investment and the role of the IMF.
The conference provides an opportunity to discuss how South Asia can build on its development success in the aftermath of the COVID-19 pandemic and geopolitical tensions to achieve its potential.
A discussion on how the Resilience and Sustainability Trust fits wider climate objectives at the country and global level.
Jihad Azour, Director of the Middle East and Central Asia Department, presents the IMF’s latest economic outlook and growth projections for the MENA region
A presentation and discussion of the October 2022 Regional Economic Outlook for Sub-Saharan Africa.
