The Paris Agreement is galvanizing countries to pledge net zero greenhouse gas emissions targets for the middle of the 21st century, but countries also need to commit to reducing emissions ambitiously over the next decade. This requires rapidly scaling up international cooperation. A new IMF Staff Climate Note argues that an international carbon price floor (ICPF) agreement can enable greater near-term reductions by building confidence that all participating countries are undertaking comparable mitigation efforts. An ICPF could involve a small number of major emitting countries that all agree on a minimum carbon price that each would implement. The report describes how such an agreement can be pragmatic, equitable, and accommodate a range of carbon pricing approaches.

On Friday, June 18, the Center on Regulation and Markets at Brookings and the International Monetary Fund will convene an event to discuss an ICPF’s rationale, policy design, potential emissions...

CALL FOR PAPERS

The 9th Statistical Forum of the International Monetary Fund will take place virtually and in Washington, D.C. during November 17–18, 2021. The Forum is a platform for policymakers, researchers, private sector, regulators and compilers of economic and financial data to come together to discuss cutting-edge issues in macroeconomic and financial statistics and to build support for statistical improvements.

The theme of this year’s Statistical Forum is “Measuring Climate Change: The Economic and Financial Dimensions.” The risks posed by climate change are wide-ranging and profound. Both the risks and the mitigations have strong economic and financial dimensions. Climate change is macro critical for public policy with concerns ranging from fiscal imbalances to financial stability, as well as food and water security and impacts on vulnerable populations and regions. However, the existing frameworks for statistics related to climate...

Listen to the brightest minds in the field of economics and development discuss their latest research and deconstruct global economic trends. IMF Podcasts are also available on digital platforms such as iTunes, SoundCloud and Libsyn, and free to use for broadcasters, educators and institutions. 

As the IMF has warned, economic recoveries are diverging dangerously. The disparities will widen further between wealthy countries that have widespread access to vaccines, diagnostics, and therapeutics, and poorer countries still struggling to inoculate frontline healthcare workers. As of the end of April 2021, less than two percent of Africa’s population had been vaccinated. By contrast, over 40 percent of the population in the United States and over 20 percent in Europe had received at least one dose of the vaccine.

It is well understood that there can be no lasting end to the economic crisis without an end to the health crisis. Pandemic policy is thus economic policy. It is critical for global macroeconomic and financial stability, which makes it of fundamental importance to the IMF and other economic institutions. Ending the pandemic is a solvable problem but requires further coordinated global action.

The latest research by IMF staff analyzes...

Listen to the brightest minds in the field of economics and development discuss their latest research and deconstruct global economic trends. IMF Podcasts are also available on digital platforms such as iTunes, SoundCloud and Libsyn, and free to use for broadcasters, educators and institutions. 

June 16, 2021

Washington, DC: Following the statement issued on June 11 by the Creditor Committee for Chad under the Common Framework for Debt Treatments beyond the DSSI, Ms. Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), issued the following statement:

“I very much welcome the statement issued on June 16 by the Creditor Committee for Chad. This is a key milestone on the path to the debt relief that Chad urgently needs, together with envisaged financial support from IMF, the World Bank, and other development partners. [1] The statement also demonstrates concrete progress in implementing the G20’s Common Framework, which sends a positive signal to other countries that may need debt treatments to support a strong and lasting recovery from this unprecedented crisis.

"Let me thank each of the members of the Creditor Committee for their intensive work on Chad’s requested debt treatment, including their recognition of...

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Emerging markets must balance overcoming the pandemic, returning to more normal policies, and rebuilding their economies

As the COVID-19 pandemic enters a second year, concerns are rising about how well emerging markets will fare. So far, they have been agile in responding to the economic fallout from the pandemic with unprecedented rescue packages for their hard-hit sectors and households. After a short-lived period of financial stress in March 2020, most emerging markets were able to return to global financial markets and issue new debt to meet their financing needs. However, in a global recovery in which some countries are rebounding faster than others and uncertainty is high regarding the pandemic, there is likely to be more market volatility. This will test the ability of policymakers in emerging markets to navigate a shifting landscape, manage their policy trade-offs, and achieve a durable recovery.

The emerging market...

Digital forms of money could be a boon for emerging market and lower-income economies if the transition is well managed and regulated

Digital money has the potential to transform the financial sector. Emerging markets and lower-income countries stand to gain the most from this dramatic shift. Broad and inexpensive access to digital money and phone-based transactions could open the door to financial services for 1.7 billion people without traditional bank accounts. And countries may grow increasingly connected, facilitating trade and market integration. The real-world impact is significant.

But with any opportunity comes risk. The passage to this new world could exclude those on the other side of the digital divide. It also opens the door to fragmentation, currency substitution, and loss of policy effectiveness. The transition must be well managed, coordinated, and soundly regulated.

We at the IMF have put forward a detailed proposal that, with strong coordinated global action, could bring the pandemic under control everywhere, adding 9 trillion to global GDP by 2025 for an upfront investment of just 50 billion US dollars—possibly the highest-return public investment ever.

By Abebe Aemro Selassie, Luc Eyraud, and Catherine Pattillo

??, Français, Português

African economies are at a pivotal juncture. The COVID-19 pandemic has brought economic activity to a standstill. Africa’s hard-won economic gains of the last two decades, critical in improving living standards, could be reversed.

High public debt levels and the uncertain outlook for international aid limit the scope for growth through large public investment programs. The private sector will have to play more of a role in economic development if countries are to enjoy a strong recovery and avoid economic stagnation. Heads of state from Africa made this one of their resounding messages during the recent summit on “Financing African Economies” held in Paris in May.

Infrastructure—both physical (roads, electricity) and social (health, education)—is one area where the private sector could be more involved. Africa’s infrastructure development needs are huge—in the order...

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Emerging markets must balance overcoming the pandemic, returning to more normal policies, and rebuilding their economies

As the COVID-19 pandemic enters a second year, concerns are rising about how well emerging markets will fare. So far, they have been agile in responding to the economic fallout from the pandemic with unprecedented rescue packages for their hard-hit sectors and households. After a short-lived period of financial stress in March 2020, most emerging markets were able to return to global financial markets and issue new debt to meet their financing needs. However, in a global recovery in which some countries are rebounding faster than others and uncertainty is high regarding the pandemic, there is likely to be more market volatility. This will test the ability of policymakers in emerging markets to navigate a shifting landscape, manage their policy trade-offs, and achieve a durable recovery.

The emerging market...

Author/Editor:

Ruchir Agarwal ; Gita Gopinath

Publication Date:

May 19, 2021

Electronic Access:

Free Download. Use the free Adobe Acrobat Reader to view this PDF file

Summary:

Urgent steps are needed to arrest the rising human toll and economic strain from the COVID-19 pandemic that are exacerbating already-diverging recoveries. Pandemic policy is also economic policy as there is no durable end to the economic crisis without an end to the health crisis. Building on existing initiatives, this paper proposes pragmatic actions at the national and multilateral level to expeditiously defeat the pandemic. The proposal targets: (1) vaccinating at least 40 percent of the population in all countries by the end of 2021 and at least 60 percent by the first half of 2022, (2) tracking and insuring against downside risks, and (3) ensuring widespread testing and tracing, maintaining adequate stocks of therapeutics, and enforcing public...

While it’s difficult to forecast long-run productivity, particularly in the current environment, there are two key channels through which the pandemic might influence productivity: accelerated digitalization and a reallocation of workers and capital (e.g. machines and digital technologies) between different firms and industries. Our recent note examines how all this works.

Productivity boost

The pandemic accelerated the shift toward digitalization and automation, including through e-commerce and remote-work—and these trends seem unlikely to reverse.

These changes are likely to impact productivity. Recent investments in digital tools—ranging from video conferencing and file sharing applications to drones and data-mining technologies—can make us more efficient at our work. As shown in the chart below, for a sample of 15 countries over 1995–2016, a ten percent rise in intangible capital investment (which is where assets like digital technologies are captured...

The Paris Agreement is galvanizing countries to pledge net zero greenhouse gas emissions targets for the middle of the 21st century, but countries also need to commit to reducing emissions ambitiously over the next decade. This requires rapidly scaling up international cooperation. A new report from the International Monetary Fund argues that an international carbon price floor (ICPF) agreement can enable greater near-term reductions by building confidence that all participating countries are undertaking comparable mitigation efforts. An ICPF could involve a small number of major emitting countries that all agree on a minimum carbon price that each would implement. The report describes how such an agreement can be pragmatic, equitable, and accommodate a range of carbon pricing approaches.

On Friday, June 18, the Center on Regulation and Markets at Brookings and the International Monetary Fund will convene an event to discuss an ICPF’s rationale, policy design, potential...

By Aqib Aslam and Maria Coelho

On June 5, 2021, Finance Ministers from the Group of Seven major industrialized nations committed to a global minimum corporate tax rate on multinationals of at least 15 percent. While there are a number of details yet to be hammered out in broader global discussions, this historic agreement heralds an important step forward on the road to international corporate tax reform.

It also highlights the role minimum taxes can play at the global level to help reverse nearly four decades of falling global corporate tax rates and reduce the incentives for large multinational firms to shift profits to low-tax jurisdictions to reduce their worldwide tax liability.

Our new study examines how different types of domestic minimum tax regimes can help countries preserve their corporate tax base and mobilize revenue.

Minimum taxation over the decades

There is an unusual tension in the world of corporate taxation. On the one...