The IIF covers 30-40 emerging and frontier markets, with a particular focus on economic and financing issues. Our reports feature topical analysis of macroeconomic fundamentals, policy developments, political economy dynamics and downside risks.
China’s rising CPI, elevated debt, and deteriorating external positions prevented strong credit stimulus in 2019. Policy impulses came mainly in the form of fiscal spending in 2018 and tax cuts in 2019. Stimulus in 2020 requires better coordination among fiscal, monetary and credit policies.
Pressure on SSA assets has intensified due to COVID-19 related shocks. In this note, we analyze the composition of external flows to the region. SSA has become more globally integrated and reliant on portfolio flows. This makes the region more exposed to swings in investor sentiment.
Lebanese authorities have developed a five-year comprehensive reform program, which could be supported by the IMF’s Extended Fund Facility. If implemented effectively we expect the macroeconomic situation to stabilize and an orderly debt restructuring, though significant challenges remain.
COVID-19 has increased external funding challenges despite moderate borrowing needs. Notwithstanding oil price relief, collapsing remittances and tourism will weigh on current account receipts. While some countries have tapped global debt markets, uncertainty over financing sources remains.
COVID-19 presents a challenge to BoPs in the Sub-Saharan Africa region. Lower commodity prices will sharply reduce exports in many countries. Dependence on tourism and remittances will also have a negative effect. C/A deficit financing is going to be challenging due to risk-off sentiment. Multilateral funding can cover some gaps, but solvency is an issue as well.
COVID-19 has exacerbated existing external pressures on Nigeria. Despite external support, we expect reserve losses of $8 bn in 2020. The c/a deficit remains significant in the context of low oil prices. At the same time, global risk-off behavior weighs on capital flows. Debt amortization and large fiscal deficits increase financing needs.
We expect the IMF to approve, in the coming weeks, the Egyptian authorities’ request for financial assistance through a Rapid Financing Instrument (RFI) and a Stand-By Arrangement (SBA). This financial support package would help strengthen confidence in the economy and meet large financing needs.
COVID-19 is exacerbating existing vulnerabilities in Sub-Saharan Africa. The global recession and drop in commodity prices hit the region hard. We present a framework to summarize SSA’s exposure to different risks. Multilaterals need to play an important role in the region going forward.
We project a deep recession in 2020 due to COVID-19 and the plunge in oil prices. Saudi Arabia can accommodate widening deficits given its large financial buffers and low debt.
This note analyzes the fiscal tools that China has used in recent years and examines whether there is room for further fiscal expansion, especially against the backdrop of the COVID-19 pandemic.