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This paper investigates inflation risks for 12 Middle East and Central Asia countries, with an equal share of commodities exporters and importers. The empirical strategy leverages the recent developments in the estimation of macroeconomic risks and uses a semi-parametric approach that balances well flexibility and robustness for density projections. The paper uncovers interesting features of inflation dynamics in the region, including the role of backward versus forward-looking drivers, non-linearities, and heterogeneous and delayed exchange rate pass-through. The results have important implications for the conduct of monetary policy and central bank communication in the Middle East and Central Asia and emerging markets in general.

Macroeconomics --- Economics: General --- Inflation --- Production and Operations Management --- Foreign Exchange --- Forecasting and Other Model Applications --- Criteria for Decision-Making under Risk and Uncertainty --- Price Level --- Deflation --- Monetary Policy --- Commodity Markets --- Macroeconomics: Production --- Economic & financial crises & disasters --- Economics of specific sectors --- Currency --- Foreign exchange --- Prices --- Commodity prices --- Output gap --- Production --- Exchange rates --- Consumer price indexes --- Currency crises --- Informal sector --- Economics --- Economic theory --- Price indexes --- Iran, Islamic Republic of

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There is relatively little literature that analyses the role, functions, and organization of finance ministries. The purpose of this working paper is to review international experiences in this area, in an effort to formulate guiding principles of organizational design and the allocation of functions, while recognizing the crucial importance of each country’s history and institutional context. Over the past 30 years many finance ministries have moved from a “traditional” to an “emerging” model of organizational design in which there is greater openness and transparency, more flexible management practices, and a broader focus on strategic policy issues. In addition, many operational functions have been devolved to arm’s–length agencies or line ministries. The paper describes the challenges facing developing countries in strengthening their finance ministries, and the principles, approaches, and strategies that can be applied.

Finance, Public --- Administrative agencies --- Administrative procedure --- Cameralistics --- Public finance --- Public finances --- Currency question --- Management. --- Accounting --- Budgeting --- Macroeconomics --- Public Finance --- Public Administration --- Public Sector Accounting and Audits --- National Government Expenditures and Related Policies: General --- National Budget --- Budget Systems --- Fiscal Policy --- Forecasts of Budgets, Deficits, and Debt --- Public finance & taxation --- Budgeting & financial management --- Public finance accounting --- Public financial management (PFM) --- Budget planning and preparation --- Fiscal policy --- Macroeconomic and fiscal forecasts --- Fiscal accounting and reporting --- Budget --- Economic forecasting --- United Kingdom

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This paper finds that the neutral interest rate has been on a downward trajectory in Morocco since the global financial crisis and may have fallen in the wake of the pandemic. In that context, monetary policy transmission to output and prices appears relatively muted given limited exchange rate flexibility until recently. Also, monetary policy transmission to some market rates has somewhat weakened in the wake of the pandemic. A lower natural rate and low policy rates raise the question of whether further rate reductions would impair the banking system. We find that the sensitivity of cash demand to deposit rates is low, implying limited risks that banks would lose funding with further reductions. A reliance on checking and savings accounts for funding may impair monetary pass-through, however. If monetary policy reaches its effective lower bound, limited and credible recourse to an asset purchase program could usefully complement conventional measures and strengthen monetary policy transmission under an inflation-targeting regime with a flexible exchange rate.

Macroeconomics --- Economics: General --- Banks and Banking --- Foreign Exchange --- Money and Monetary Policy --- Money and Interest Rates: General --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Interest Rates: Determination, Term Structure, and Effects --- Monetary Policy --- Economic & financial crises & disasters --- Economics of specific sectors --- Finance --- Banking --- Currency --- Foreign exchange --- Monetary economics --- Real interest rates --- Financial services --- Central bank policy rate --- Deposit rates --- Yield curve --- Exchange rates --- Currency crises --- Informal sector --- Economics --- Interest rates --- Monetary policy --- Morocco

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La situation d'endettement de la république du Congo s'est considérablement améliorée depuis 2010, grâce à l'allégement de la dette obtenu dans le cadre de l’initiative en faveur des pays pauvres très endettés et de l’initiative d’allégement de la dette multilatérale engagées par le FMI et la Banque mondiale. D'importantes recettes pétrolières ont permis au pays d'accroître ses dépenses et ses réserves de change. Cependant, la pauvreté et l’inégalité restent comparativement élevées. Ce document examine les défis que doit relever le Congo pour gérer les recettes qu’il tire des ressources naturelles et assurer une croissance soutenue et inclusive.

Public Finance --- Taxation --- Industries: Financial Services --- National Government Expenditures and Related Policies: Infrastructures --- Other Public Investment and Capital Stock --- National Government Expenditures and Related Policies: General --- Business Taxes and Subsidies --- Financial Institutions and Services: Government Policy and Regulation --- Debt --- Debt Management --- Sovereign Debt --- Public finance & taxation --- Finance --- Public investment spending --- Expenditure --- Oil, gas and mining taxes --- Financial services --- Public debt --- Public investments --- Expenditures, Public --- Financial services industry --- Debts, Public --- Congo, Democratic Republic of the

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Countries in the Middle East and North Africa are exposed to significant fiscal risks. This paper analyzes the sources of these fiscal risks in 17 low- and middle-income countries in the Middle East, North Africa and Pakistan region, excluding high-income Gulf countries (MENAPEG), and discusses avenues for reform to strengthen fiscal risk management. The materialization of fiscal risks in MENAPEG has been driven by macroeconomic shocks, contingent liabilities, and tail-risk events. The region has a track record of volatile economic growth and sharp exchange rate movements. High dependence on hydrocarbon revenue among MENAPEG oil and gas exporters and pervasive universal subsidies generate considerable budgetary exposure to swings in commodity prices. Substantial government involvement in the economy and large state ownership of firms and banks exposes several MENAPEG countries to contingent liabilities from state-owned enterprises and the financial sector. Lastly, the region’s history of social unrest and conflicts together with tail-risk events such as the recent COVID-19 pandemic, and natural disasters and climate change, have been important sources of fiscal risks. Many of the factors historically associated with the materialization of fiscal risks in MENAPEG countries are likely to remain sources of vulnerability in the future, raising the need for robust fiscal risk management frameworks. Policy reform can strengthen fiscal risk management in MENAPEG. This paper describes precedents where progress is made and provides a broad analytical framework for policymakers to build upon to fully embrace fiscal risk management in all its dimensions. Going forward, it is crucial for national authorities to enhance their capacity to identify, quantify, and assess risk factors and their budget’s exposure to them. This should be followed by thorough fiscal risk analysis to inform policy decisions to mitigate risks. Where risks cannot be mitigated or are judged to be acceptable, countries should consider adopting appropriate medium-term fiscal frameworks to build buffers to deal with them.

Public Policy --- International Economics --- Political Economy --- International Agreements and Observance --- International Organizations --- Fiscal Policy --- International Relations and International Political Economy: Other --- Taxation, Subsidies, and Revenue: General --- Taxation and Subsidies: Externalities --- Redistributive Effects --- Environmental Taxes and Subsidies --- National Budget --- Budget Systems --- Public Administration --- Public Sector Accounting and Audits --- Political economy --- International institutions --- International organization --- Economics --- International agencies