IMF

IMF. October 04, 2017. Brazil : Technical Assistance Report-Supporting Implementation of the Expenditure Rule Through Public Financial Management Reforms

• Author/Editor:International Monetary Fund. Fiscal Affairs Dept.
• Date: October 4, 2017
• Series: Country Report No. 17/292
• Summary: Faced with significant economic and fiscal challenges, the Brazilian government is reforming its fiscal framework to promote fiscal sustainability and reduce debt. Since 2015, Brazil has struggled with its deepest economic recession in decades and ongoing political tensions. The fiscal situation has deteriorated sharply with a significant drop in revenues and debt increasing above the emerging market average. Within the past year, the government has made significant progress in reforming its fiscal framework. In late 2016, a new expenditure rule was established and a new IFI was created. Reforms are also ongoing in several areas, including a new public financial management (PFM) law currently with the legislature.

Full text: http://www.imf.org/en/Publications/CR/Issues/2017/10/04/Brazil-Technical-Assistance-Report-Supporting-Implementation-of-the-Expenditure-Rule-Through-45275

IMF. October 3, 2017. How Policy Makers Can Better Predict a Downturn – and Prepare
By Claudio Raddatz and Jay Surti

A trading floor in Singapore. Financial conditions provide valuable clues to the economic outlook and can improve the accuracy of forecasts (photo: Caro/Oberhaeuser/Newscom).

The global financial crisis showed that periods of robust growth and seeming calm in financial markets can be followed by a sudden surge in market volatility and an unexpected economic downdraft. That’s why it is so important for policy makers to keep a close watch on so-called financial conditions. These can include everything from bond yields and oil prices to foreign exchange rates and levels of domestic debt.

New analysis in the Global Financial Stability Report develops a novel tool that enables policy makers to use the information contained in financial conditions to quantify risks to future growth – which can help them take steps to forestall those risks.

Good times

In the run-up to the crisis, good times encouraged firms and households to engage in risky behavior. Low interest rates prompted firms and households to gorge on debt. Rising asset prices boosted the value of collateral as well as bank capital and profits, making it possible for banks to loosen underwriting standards and facilitating even more borrowing and lending. Eventually, recognition by markets of the risks inherent in the build-up of these vulnerabilities set off a rapid increase in funding costs and tightening of credit, which in turn triggered a cascade of defaults and bank failures that ended in the most severe recession since the 1930s.



How can our new tools help predict a downturn? Our analysis identifies some conditions that often appear to point to trouble within 12 months: rising market volatility, more risk-aversion among investors, and a widening of credit spreads—the difference in yield between ultra-safe securities such as US Treasury notes and other forms of debt. Over a period of two to three years, a higher level of debt and credit growth are better signals of tough economic times ahead.

Commodity prices

Of course, the importance of any given gauge depends on the type of economy. Higher borrowing costs for companies and worsening global risk sentiment are signs of trouble across the board. But while rising commodities prices are beneficial for exporters such as Australia, Canada, and Brazil, they increase the risk of a downturn in commodity-importing countries.

So, what are financial conditions signaling today? Credit spreads are low and so is volatility in markets, suggesting a relatively benign outlook. That’s the good news. But growing debt levels signal risks down the road. A rapid increase in credit spreads and greater market volatility could significantly worsen the outlook for global growth.



Fortunately, policy makers can use the tools we’ve developed to help them forecast risks and take appropriate actions. They can use so-called macroprudential measures to curb credit growth and reduce the risk of a slump. Such measures include requiring banks to hold more capital as a buffer against losses, and requiring families to make bigger down-payments on the homes they buy. Once a crisis appears imminent, options include cutting central bank policy rates as well as some of the measures that were deployed during the last crisis, such as asset-purchase programs and emergency liquidity facilities.

OECD

OECD. 04/10/2017. Progress on gender equality far too slow

Countries need to do much more to close gender gaps worldwide, according to a new OECD report.

The Pursuit of Gender Equality: An Uphill Battle presents a stark call to action, highlighting that very little progress has been made since the 2012 OECD report Closing the Gender Gap Now.

“The pursuit of gender equality must be a priority to achieve sustainable, inclusive growth for the benefit of every citizen,” said OECD Chief of Staff and G20 Sherpa Gabriela Ramos at the launch of the report in advance of the Women’s Forum taking place in Paris. “There is no reason for women to trail behind men in social, economic, and political outcomes. Countries need to do much more to reach the gender equality goals.”

In the latest survey carried out in 2012 on the pursuit of gender equality, OECD countries identified the three most important gender inequality issues: violence against women, the persisting large gender wage gap, and the unequal sharing of unpaid work. Many countries are now prioritising these issues in policy, and many are also pushing to get more women into public and private sector leadership.

Some progress has been made, the report notes. Most OECD countries are tackling workplace harassment through stronger laws and regulations. Several countries, including Australia, Germany, Italy, Japan, Mexico and the United Kingdom, have introduced measures to encourage more young girls to choose science, technology, engineering and manufacturing (STEM) and young men to study and work in health and education.

Nonetheless, gender gaps persist in all areas of social and economic life across countries, and the size of these gaps has often changed little in recent years. While today young women in OECD countries leave school with better qualifications than young men, they are less likely to study in the higher earning STEM-related fields.

Women’s labour force participation rates have moved closer to men’s rates over the past few decades, but in every OECD country women are still less likely than men to engage in paid work. When women do work, they are more likely to do it on a part-time basis, are less likely to advance to management positions, are more likely to face discrimination, and earn less than men. The median female worker earns almost 15% less than her male counterpart, on average, across the OECD – a rate that has barely changed since 2010.

Women are less likely to be entrepreneurs, and female-owned businesses tend to earn less than male-owned ones. Gender gaps tend to increase with age, reflecting the crucial role that parenthood plays in gender equality. Much more than fatherhood, motherhood typically has sizable negative effects on workforce participation, pay and career advancement. Gender inequalities pervade public life, as well: women are underrepresented in political office, holding less than one-third of seats in lower houses of national legislatures, on average, in the OECD. Affirmative action is needed but alone is insufficient to bring about gender equality. Countries also need to invest in female leadership opportunities through for example mentoring opportunities and network supports. At the same time male role models in senior management need to drive the change in gender stereotypes and norms that continue to hamper women’s access to leadership.

Clearly much remains to be done to narrow, and ultimately close, gender gaps across all countries. The report outlines not only the social but also the strong economic case for action: reducing the gender gap in labour force participation by 25% by 2025, as agreed by G20 leaders, could add 1 percentage point of growth to projected baseline GDP growth across the OECD over the period 2013-25, and almost 2.5 percentage points if gender participation gaps were halved by 2025.

Since 2013, about two-thirds of OECD countries have put in place new equal pay policies, involving greater transparency on pay with companies increasingly required to analyse and disclose their gender wage gaps. Many countries have also introduced measures to improve access to quality early childhood education and care, as well as encouraged fathers to take parental leave: several, including Canada, Japan, Korea and Poland, have increased subsidies or benefits for childcare; and others, including Norway and the UK, have introduced or expanded free childcare.

FULL DOCUMENT: http://www.oecd-ilibrary.org/deliver/8117331e.pdf?itemId=/content/book/9789264281318-en&mimeType=application/pdf

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LGCJ.: