IMF国际货币组织全球-Macroeconomic-Developments-and-Prospects-in-Low_72页_1mb

Summary of IMF Policy Paper: Macroeconomic Developments and Prospects in Low-Income Developing Countries—2019

Core Content

This IMF Policy Paper provides an analysis of macroeconomic developments and prospects in Low-Income Developing Countries (LIDCs) for 2018–2019. It includes a discussion on the implementation of the Value-Added Tax (VAT) system and the role of financial safety nets in ensuring financial stability in these countries.

Main Points

Macroeconomic Developments

• Growth Performance: LIDCs recorded an average annual growth of 5% in 2018–19, which is robust given the global slowdown in growth. However, there is significant variation in growth experiences across countries.
  • Commodity Exporters: These countries have been slower to recover from the commodity price drop since mid-2014.
  • Diversified Exporters: These have experienced stronger growth over the past few years.
  • Fragile States: Often underperform, with little or no sustained GDP per capita growth.
• Debt Trends: Public debt accumulation has slowed since 2017, but about half of LIDCs still see debt levels rising. Two-fifths of LIDCs are at high risk of or already in debt distress.
• Tax Revenue: The median tax-GDP ratio in LIDCs remains around 13%, unchanged since 2013. However, a quarter of countries managed to increase this ratio by at least 2 percentage points, showing the potential for sustained progress with well-designed reforms.

VAT Implementation Challenges

• VAT as a Revenue Tool: VAT is a powerful instrument for increasing tax revenues, but its implementation in LIDCs has been hindered by institutional challenges.
  • Key Challenges: Management of VAT credits and VAT registration processes.
  • Implementation Needs: Countries need to develop a comprehensive risk-based strategy and build institutional capacity to ensure compliance and efficiency.
• Distributional Impact: While concerns about VAT regressivity exist, governments have other tools to address distributional objectives. Digitalization opens new possibilities for benefit programs that can be more effective than VAT exemptions or reduced rates.

Financial Safety Nets

• Importance: Strong financial safety nets are essential for LIDCs to withstand financial shocks and maintain public confidence.
• Weaknesses Identified:
  • Lack of effective bank resolution regimes.
  • Inadequate emergency liquidity assistance (ELA) frameworks.
  • Absence of deposit insurance systems in many LIDCs.
• Recommendations:
  • Strengthen financial sector safety nets.
  • Tailor international standards to local conditions.
  • Enhance the role of the Fund and other international bodies in supporting reforms.

Key Information

• LIDCs Overview: There are 59 LIDCs, accounting for 1.5 billion people (one-fifth of the world's population) but only 4% of global output.
• Fiscal and External Positions: Fiscal balances improved in most commodity exporters, but diversified exporters saw a marginal widening of deficits.
• Investment and Productivity: Investment remains a key driver of growth, but inefficiencies in resource use and weak business climates hinder productivity growth.
• Human Capital: Access to education has improved, but quality remains low, limiting human capital accumulation.
• Financial Sector Vulnerabilities: Nonperforming loans and loss of correspondent banking relationships (CBRs) continue to be significant issues. Proactive regulatory oversight and strengthened frameworks are needed.

Policy Priorities

• Strengthening Debt Management: Improving data quality and transparency, and using the joint Bank-Fund approach to address debt vulnerabilities.
• Enhancing Tax Administration: Broadening tax bases and improving tax administration to boost domestic revenue mobilization.
• Tailoring VAT Implementation: Addressing institutional challenges to ensure effective VAT management.
• Improving Financial Sector Safety Nets: Developing robust bank resolution regimes, ELA frameworks, and deposit insurance systems.
• Prioritizing Reforms: Ensuring that reforms are aligned with country-specific conditions and implementation capacities.

Conclusion

The IMF Executive Board generally endorsed the staff report, emphasizing the need for continued monitoring and tailored policy approaches. They encouraged further thematic exploration and better alignment of the report timeline with major IMF meetings. The paper also stressed the importance of understanding the inclusive nature of growth and the role of digitalization in improving fiscal policy effectiveness.

References

• IMF World Economic Outlook
• World Bank migration and remittances database
• OECD database
• Various IMF staff calculations and reports

Figures and Tables

• Figure 1: Global Growth Projections
• Figure 2: Global Commodity Prices
• Figure 3: Capital Inflows to LIDCs
• Figure 4: Remittances and Official Development Assistance Flows to LIDCs
• Figure 5: Real GDP Growth, 2016–19
• Figure 6: Fiscal Trends across LIDCs
• Table 1: LIDCs: Selected Macroeconomic Indicators

Boxes

• Box 1: The Challenge of Low Credit and Deposits in LIDCs
• Box 2: Benefits of Infrastructure Upgrades Can Be Seen from Space
• Box 3: Key Structural Reforms to Improve Productivity
• Box 4: A Primer on the VAT
• Box 5: Elements of a Comprehensive VAT Compliance Strategy
• Box 6: Bhutan—Distributional Impact of the VAT and Reliefs
• Box 7: Innovative Mechanisms for Mitigating the Impact of VAT Regressivity
• Box 8: Financial Safety Nets for Banks
• Box 9: Depositor Preference

Authors and Contributors

• Approved By: Sean Nolan, Michael Keen, and Ratna Sahay
• Prepared By: Interdepartmental team from AFR, APD, RES, and SPR
• Contributions: FAD and MCM
• Leadership: Boriana Yontcheva
• Key Contributors:
  • Chapter 2: Katherine Baer, Dora Benedek, Eric Hutton, Michael Keen, Zayda Manatta, Arbind Modi, Artur Swistak
  • Chapter 3: Jan Nolte, Deeksha Kale, and Mark Buessing-Loercks
• Production Assistance: Lesa Yee and Elisavet Zachou