Latin America Faces Unusually High Risks - Santiago Acosta-Ormaechea, Ilan Goldfajn and Jorge Roldos (IMF)

 IMF 

Latin America Faces Unusually High Risks

April 26, 2022

By Santiago Acosta-Ormaechea, Ilan Goldfajn and Jorge Roldos

The War in Ukraine, higher inflation, tighter financial conditions, economic decelerations of key trading partners, and social discontent may dim growth prospects.

The war in Ukraine is shaking the global economy and raising uncertainty about the outlook for Latin America and the Caribbean.

The impact is being felt in Latin America through higher inflation that is affecting real incomes, especially of the most vulnerable. Policymakers are reacting to this challenge by tightening monetary policy and implementing measures to soften the blow on the most vulnerable and contain the risks of social unrest.

But there are other risks looming. A possible escalation of the war could eventually lead to global financial distress and tighter financial conditions for the region.

In addition, the ongoing tightening of monetary policy in the United States, as the Federal Reserve takes a more hawkish stance, could eventually affect global financial conditions.

Higher global and domestic financing costs can accelerate capital outflows and represent a challenge for the region, given large public and external financing needs in some countries and the limited resources to finance investment in the region.

Any greater growth deceleration in China, because of the pandemic or other reasons, could also have an impact on key export prices and trade in the region. All these risks cloud growth prospects for Latin America and require policy action.

Latin America’s rebound poised to slow

Even before the war, the region’s recovery from the growth-sapping pandemic was losing momentum. After a sharp rebound last year, growth is returning to its pre-pandemic trend rate as policies shift, slowing to 2.5 percent for 2022. Exports and investment are resuming their role as main growth drivers, but central banks have had to tighten monetary policy to combat an increase in inflation.

We forecast Brazil’s expansion will slow to 0.8 percent this year following last year’s growth of 4.6 percent. Mexico will decelerate to 2 percent. Colombia will likely post a lower deceleration with growth at 5.8 percent. Growth in Chile and Peru will be 1.5 percent and 3 percent, respectively, pointing to very significant reductions relative to their prior year’s double-digit rates.

Responding to higher food and energy prices 

Poverty and inequality remain key concerns as well given that the increase in inflation has an uneven impact on the population. The most vulnerable groups in the region are being hit hard by the increase in basic food and energy prices, while still struggling to recover from the economic impact of the pandemic.

Indeed, since the war began, several countries in the region have acted to contain the effects of rising prices on vulnerable groups—ranging from tax and import tariff reductions to price caps or social transfers.

Close to 40 percent of countries have introduced new measures, mostly on the tax side, with an estimated average fiscal cost equal to 0.3 percent of gross domestic product for this year.

To ensure social cohesion and reduce the risk of social unrest, governments should provide targeted and temporary support to low-income and vulnerable households, while allowing domestic prices to adjust to international prices. This would help vulnerable groups and contain fiscal costs, while also incentivizing production and restraining consumption. In countries with well-developed social safety nets, access could be expanded to temporarily cover larger groups of the population.

Where safety nets are not well developed, governments can implement temporary mechanisms to smooth the pass-through of international price surges to domestic prices. Although this strategy would protect households from the volatility of commodity prices, it may also have a significant fiscal cost while distorting price incentives for consumers and producers.

Countries benefiting from improvements in their terms of trade—a measure of prices for a country’s exports relative to its imports—may find it easier to finance these new measures. However, any additional fiscal space should be used wisely given the unusually high risks surrounding the global recovery and the evolution of commodity prices, as well as the increasing costs for government financing.

Inclusive consolidation is needed

With public debt-to-GDP ratios above pre-pandemic levels and borrowing costs rising amid higher local and global interest rates, countries will need to ensure the sustainability of public finances to help preserve credibility and rebuild fiscal space. However, it will be equally important to implement measures that protect the most vulnerable.

This will require a strategy that focuses on inclusive consolidation. Spending on social programs, health, education, and public investment should be protected, while implementing tax reforms (such as strengthening personal income taxes) that will bolster growth in an inclusive manner and help countries maintain fiscal sustainability.

FMI: War-Fueled Surge in Food Prices to Hit Poorer Nations Hardest (IMF bulletin, March 16, 2022)

War-Fueled Surge in Food Prices to Hit Poorer Nations Hardest (PHOTO: IMF PHOTO/YAM G JUN)

By Christian Bogmans, Jeff Kearns, Andrea Pescatori and Ervin Prifti Global food prices are poised to keep climbing even after jumping to a record in February, placing the heaviest burden on vulnerable populations while adding to headwinds for the global economic recovery. Food commodity prices rose 23.1 percent last year, the fastest pace in more than a decade, according to inflation-adjusted figures from the United Nations Food and Agriculture Organization. February’s reading was the highest since 1961 for the gauge tracking prices for meat, dairy, cereals, oils, and sugar. Now, the war in Ukraine and sanctions on Russia are upending shipments and possibly production for two of the world’s largest agricultural producers. The two countries account for nearly 30 percent of world wheat exports and 18 percent of corn, most of which is shipped through Black Sea ports that are now closed. Wheat futures traded in Chicago, the global benchmark, recently rose to a record. The Chart of the Week shows how price shocks will have worldwide impact, especially on poor households for whom food is a higher share of expenses. Food costs account for 17 percent of consumer spending in advanced economies, but 40 percent in sub-Saharan Africa. Though this region is highly import-dependent for wheat, the grain constitutes only a minor share of the total caloric needs. Differences in diet are also significant. In Europe, where bread is deeply embedded in many aspects of its culture, wheat makes up about a quarter of diets. In Southeast Asia, wheat accounts for only 7 percent versus 42 percent for rice, for which price increases so far have been relatively contained. Country-level averages, however, mask substantial differences within nations as poor households tend to eat more cereals but less meat, vegetables, and fruits compared with middle-income households. Finally, disruption may be even greater for countries with close trade links to Russia and Ukraine, including in Eastern Europe, the Caucasus, and Central Asia. High wheat prices will weigh even more on economies in the Middle East and North Africa, such as Egypt, which are especially reliant on Russian exports. Looking forward, reduced fertilizer supplies and higher oil prices will increase costs for harvesting, transporting and processing food. Policymakers must prevent those pressures from fueling food insecurity by avoiding protectionism and increasing social assistance for the poorest. The world may also call upon the two largest economies if the situation worsens. In the United States, where about 40 percent of corn production goes to ethanol, policymakers could reassess that use. And China, which holds more than half of global wheat and corn reserves, could consider releasing supplies to lower prices. ******

 

Exame da situação e da política econômica sob o Artigo IV do FMI com o Brasil: otimista, mas atrasado - Resumo executivo do FMI

Esse exame peca pelo atraso e pela falta de dados mais precisos; ainda fala em 550 mil mortes, quando o Brasil se aproxima das 600 mil vítimas. Fala em crescimento de 5,3% do PIB em 2021, quando a maior parte dos observadores já revisou esse número para baixo. Fala de resposta eficiente do governo aos desafios, quando o que se tem é um governo sem direção e um ministro da Economia que é patético nas suas declarações e nas suas reviravoltas de barata tonta.

Ou seja, o FMI está poupando o governo e informando mal sobre a situação econômica do Brasil.

Paulo Roberto de Almeida 

IMF Executive Board Concludes 2021 Article IV Consultation with Brazil

September 22, 2021

Washington, DC: On September 10, 2021, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation [1] with Brazil.

Economic performance has been better than expected, in part due to the authorities’ forceful policy response. GDP regained its pre-pandemic level in 2021Q1 and momentum continues to be favorable, supported by booming terms of trade and robust private sector credit growth.

Tragically, the COVID-19 pandemic has claimed the lives of more than 550,000 Brazilians. Renewed lockdowns following a severe second COVID-19 wave early this year and the rollout of vaccination have helped bring down infections since April, with new daily COVID-19 cases and deaths falling significantly from their peaks. The government has procured sufficient doses to inoculate the adult population in 2021, with the most vulnerable population expected to be fully inoculated by the end of the year.

Real GDP is projected to grow by 5.3 percent in 2021. An improving labor market and high levels of household savings will support consumption and, as vaccinations continue, pent-up demand will return for in-person services. Depleted inventories will be rebuilt and the upswing in commodity prices will support new investment. Inflation is expected to fall steadily from recent peaks toward the mid-point of the target range by end-2022. After jumping to 99 percent of GDP in 2020, public debt is expected to drop sharply to 92 percent of GDP in 2021 and remain around that level over the medium-term. Uncertainty around the outlook is exceptionally high but risks to growth are viewed as being broadly balanced.

Key challenges remain. Currency depreciation and a surge in commodity prices have fed into headline inflation and inflation expectations even as the output gap remains negative. The labor market is lagging the recovery in output, and the unemployment rate is high, especially among youths, women, and afro-Brazilians. Emergency cash transfers will eventually expire and, in the absence of a permanent strengthening of the social safety net, poverty and inequality could become more acute. Near term fiscal risks are low, but the high level of public debt continues to pose medium-term risks . Restoring high and sustained growth, increasing employment, raising productivity, improving living standards, and reducing vulnerabilities will require policy efforts to eliminate bottlenecks and foster private sector-led investment.

Executive Board Assessment [2]

Executive Directors commended the Brazilian authorities for their decisive policy response to the COVID-19 shock, which significantly reduced the severity of the 2020 recession and cushioned its impact on the poor and vulnerable while setting the stage for a strong recovery in 2021. Directors welcomed the momentum of institutional reforms, despite the pandemic, to create the foundations for a more competitive economy. However, the pandemic has exacerbated long-standing challenges to higher growth and socio-economic inclusion. Further policy efforts are needed to bolster market confidence, foster private-sector-led investment, and strengthen the medium-term outlook.

Directors agreed that fiscal policy should focus on rebuilding buffers and reducing budget rigidities to create space for public investment and a stronger social safety net. The expenditure ceiling has played an important role in maintaining market confidence and continued adherence to the rule is necessary to reduce public debt. Comprehensive tax reform should aim to increase progressivity, simplify the system, and improve resource allocation. The tax reform should include a bold plan to scale back tax expenditures to frontload the benefits to equity and efficiency. Directors encouraged the authorities to adopt a more robust medium-term fiscal framework and strengthen subnational finances. These measures would help enhance fiscal credibility, reduce fiscal risks, and improve the capacity of the government to manage adverse shocks.

Directors supported the ongoing steady tightening of monetary policy to address rising inflation and keep inflation expectations well-anchored. Given the uncertainty around the outlook, policy would need to continue being data dependent, complemented with proactive communication and clear forward guidance. Directors welcomed the authorities’ commitment to a flexible exchange rate and to limit intervention to countering disorderly market conditions.

Directors noted that the banking system has been resilient and has supported the recovery. They agreed that a gradual phasing out of crisis-related financial support is appropriate and endorsed the authorities’ efforts to enhance financial inclusion and promote competition in the banking system.

Directors welcomed the ambitious supply-side reform agenda aimed at boosting productivity, potential growth, and living standards. Concerted action is needed to liberalize foreign trade and product markets, increase formal labor market flexibility, and improve governance. Strengthening the effectiveness and predictability of the anti-corruption and AML/CFT frameworks remains critical. Steps are also needed to further improve the environment for private sector investment.

Directors welcomed initiatives to foster environmentally sustainable activities in response to climate-related risks. Many Directors encouraged closer collaboration between the authorities and staff to analyze climate-related risks in macroeconomic assessments and evaluations of financial stability.

(tabelas de dados)

[1] Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.

[2] At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summings up can be found here: http://www.IMF.org/external/np/sec/misc/qualifiers.htm .

IMF Communications Department

MEDIA RELATIONS

PRESS OFFICER: Maria Candia

Phone: +1 202 623-7100Email: MEDIA@IMF.org

@IMFSpokesperson

China, para o bem e para o mal, a obsessão de todo mundo - Notícias diversas

 A China é logo ali

Edson Rossi | 17/09/21 - 09h00

Enquanto a diplomacia nacional sob Bolsonaro decidiu transformar em saco de pancadas a China e o governo argentino de Alberto Fernández e Cristina Kirchner, os dois países estreitam seus laços comerciais. No ano passado, os chineses alcançaram o Brasil como principais exportadores para os países vizinhos. Do total de importações da Argentina, Brasil e China respondem por 20,4% cada. Mas nos primeiros sete meses deste ano, Pequim já passou à dianteira: os argentinos compraram US$ 6,9 bilhões de produtos chineses contra US$ 6,8 bilhões dos brasileiros.

https://www.istoedinheiro.com.br/presentinho-para-flavio/

'Não vai ter invasão de produtos chineses no Brasil', afirma embaixador uruguaio sobre acordo comercial com China
Diplomata usa como exemplo a parceria entre Chile e o país asiático. Segundo ele, nada aconteceu de negativo nas economias da região
Eliane Oliveira | 17/09/2021 - 12:00 / Atualizado em 17/09/2021 - 13:03

Há um ano em Brasília, mas com a experiência de quem participou ativamente das negociações que deram origem ao Mercosul, o embaixador do Uruguai no Brasil, Guillermo Valles Galmés, garante que não há razão alguma para temer um acordo de livre comércio entre seu país e a China. Ele costuma comparar o que aconteceu com o Chile, que já tem um tratado comercial há cerca de 15 anos com os chineses.

Chile e China levaram de três a quatro anos para concluir as negociações. O acordo foi assinado em 2006. Em 2017, a ex-presidente chilena Michelle Bachelet e o presidente chinês Xi Jinping assinaram um novo documento aprofundando os termos do tratado.

— O Chile não é vizinho como o Uruguai, mas é uma economia muito mais potente, tem interesses com o Brasil muito mais profundos e tem um acordo de livre comércio maduro, há muitos anos, com a China. O que aconteceu com o Brasil? Nada. E o que vai acontecer de negativo, se houver um acordo entre a China e o Uruguai? Nada. Não haverá invasão de produtos chineses no Brasil —  disse o embaixador ao GLOBO.

A decisão do Uruguai de buscar acordos em separado dos demais sócios do Mercosul, anunciada em julho deste ano, causou um impasse. Os argentinos protestaram e argumentaram que, pelas regras atuais, tratados de redução de tarifas precisam ser negociados em conjunto.

Mas o governo brasileiro apoia a iniciativa, por considerar que o bloco precisa de flexibilidade e que esse tipo de proibição não encontra respaldo legal. Porém, alguns setores da indústria nacional se mostraram preocupados em perder competitividade para produtos chineses.

Galmés ponderou que as conversas ainda estão no início. As negociações, enfatizou, dependem de um estudo sobre o impacto de um tratado do gênero nas duas economias.

— Ainda não estamos negociando e é uma negociação que é prolongada. Não podemos imaginar cenários catastróficos, nem cenários idílicos. Só agora começamos a conversar — disse o embaixador.

Além de aumentar as exportações de produtos uruguaios — de forma geral, alimentos — o Uruguai poderá receber investimentos chineses, inclusive a instalação de fábricas. Para o diplomata, esse aspecto deve ser visto de forma positiva por todos os sócios do Mercosul, inclusive pelas indústrias locais.

— Hoje, há fábricas chinesas no Brasil. Estão exportando para o Uruguai? Sim. Se estão exportando com tarifa zero, o produto é brasileiro, e não chinês — argumentou.

O embaixador também negou que, com o acordo com a China, o Uruguai passe a receber as chamadas 'maquiladoras' — empresas que importam peças e insumos, sem pagar taxas, para montá-los no país de destino e exportar para outros mercados. Ele enfatizou que há regras de origem no Mercosul, que permitem saber qual a composição do bem formada por partes produzidas exclusivamente pelos países do bloco.

— Com o Uruguai, isso não vai acontecer . Essa ideia de maquiladora não tem fundamento —afirmou.

Os uruguaios foram informados por Pequim, na semana passada,  que a China tem interesse em conversar sobre um acordo comercial. Outro alvo dos vizinhos é o Acordo de Associação Transpacífico (TPP), formado por países da Ásia, da Oceania e das Américas do Norte e do Sul.  Na última quinta-feira, os chineses demonstraram interesse em aderir ao TPP.

https://oglobo.globo.com/economia/nao-vai-ter-invasao-de-produtos-chineses-no-brasil-afirma-embaixador-uruguaio-sobre-acordo-comercial-com-china-25201413

Georgieva, do FMI, é acusada de favorecer China em relatório anual sobre negócios do Banco Mundial
Ela é suspeita de alterar posições do país do ranking do Doing Business. Episódio pode minar autoridade da atual diretora-gerente do Fundo, avaliam especialistas
Bloomberg | 17/09/2021 - 12:25

Kristalina Georgieva corre o risco de ver sua autoridade como diretora-gerente do Fundo Monetário Internacional (FMI) minada poucas semanas antes de uma reunião anual de autoridades de finanças globais. Ela foi acusada de favorecer a China no ranking anual de negócios do Banco Mundial (Bird), o Doing Business, quando ainda trabahava na instituição.

As denúncias se referem ao período em que Georgieva era executiva-chefe do banco e supervisionava campanhas para conseguir um aumento de capital para o órgão.

Georgieva disse discordar "fundamentalmente" da acusação, contida em um relatório encomendado pelo Banco Mundial ao escritório de advocacia WilmerHale, de que ela pressionou os funcionários do banco para ajustar a classificação da China no relatório econômico anual.

"Discordo fundamentalmente das conclusões e interpretações da Investigação de Irregularidades de Dados no que se refere à minha função no relatório Doing Business do Banco Mundial de 2018. Já tive um briefing inicial com o Conselho Executivo do FMI sobre este assunto",  disse Georgieva em comunicado.

Na reunião que teve com o conselho do Fundo na quinta-feira, antes de a notícia ser divulgada,  ela afirmou que  iria continuar seu trabalho como de costume, de acordo com fontes a par do assunto.

O relatório da empresa de advocacia concluiu que, na edição de 2018 do Doing Business, a classificação da China foi elevada artificialmente do 85º para o 78º lugar, a mesma do ano anterior, depois que autoridades do governo chinês procuraram o então presidente do Bird, Jim Young Kim, e outros diretores para expressar preocupações de que a classificação do país não refletia as reformas econômicas realizadas.

O documento foi apresentado internamente na quarta-feira e divulgado pelo Conselho do Banco Mundial na quinta.

“Para ser claro, nossa revisão não deve ser interpretada como uma sugestão de que houve qualquer conduta inadequada por parte de qualquer funcionário chinês ou de outro governo”, escreveram no relatório.

O porta-voz do Ministério das Relações Exteriores da China, Zhao Lijian, disse em uma coletiva de imprensa na sexta-feira, em Pequim, que o Banco Mundial deveria “seguir os procedimentos internos de revisão para investigar a questão para melhor proteger o profissionalismo e a autoridade do relatório Doing Business e a reputação do Banco Mundial e seus membros. ”

O governo chinês “atribui grande importância à melhoria do ambiente de negócios e a conquista é testemunhada por todos”, acrescentou Zhao Lijian.

Doing Business: alvo de escândalos
A acusação contra Georgieva foi a última de uma série de escândalos que afetaram o conturbado relatório nos últimos anos. Tão acossada, subjetiva e polêmica é a metodologia do relatório, que mede a facilidade e a transparência de se operar em uma economia, que o Banco Mundial anunciou que vai deixar de publicá-lo. 

Mas, para Georgieva, o escrutínio pode estar apenas começando. O Tesouro dos Estados Unidos vê as acusações como graves e está "analisando o relatório", disse o departamento. Os EUA detêm poder de veto sobre as principais decisões do FMI e do Banco Mundial.

Os legisladores republicanos poderiam usar o caso para renovar as críticas à expansão dos recursos do FMI sob a liderança de Georgieva.

Paul Romer, o ganhador do Nobel que foi o economista-chefe do Banco Mundial até início de 2018, disse em uma entrevista que a China costumava pressionar os funcionários do banco para alterar os relatórios preliminares.

Foi sua crítica de despedida ao processo Doing Business, em entrevista ao Wall Street Journal, que levou à investigação do relatório e da política em torno dele.

Questões sérias
O deputado French Hill, um republicano do Arkansas e um dos maiores críticos da emissão de reservas do FMI no mês passado, disse que o relatório levanta sérias questões sobre as motivações de Georgieva durante seu tempo no Banco Mundial.

— Se essas alegações forem verdadeiras, o conselho do FMI deve avaliar prontamente seu serviço no cargo mais alto do fundo — disse ele.

Hill, membro do comitê de serviços financeiros da Câmara, disse que pediria à secretária do Tesouro dos EUA, Janet Yellen, que avaliasse o relatório e apresentasse essa opinião ao Congresso.

— Os mercados financeiros e os formuladores de políticas contam com a experiência dos credores multilaterais e essa reputação agora está manchada — acrescentou.

Justin Sandefur, pesquisador sênior e observador do Banco Mundial no Center for Global Development, disse que o relatório pode acabar afetando seu relacionamento com os membros do FMI.

— O FMI é responsável por garantir a integridade das estatísticas macroeconômicas internacionais e exigir que os países prestem contas da integridade de seus dados — disse Sandefur em uma entrevista. — Este relatório mostra Georgieva ativamente envolvida na manipulação de dados para fins geopolíticos. Isso parece bastante grave.

O episódio oferece uma rara visão de como a China exerceu influência sobre os líderes das instituições financeiras internacionais nos últimos anos e como esses altos funcionários foram reativos às sensibilidades em Pequim.

https://oglobo.globo.com/economia/georgieva-do-fmi-acusada-de-favorecer-china-em-relatorio-anual-sobre-negocios-do-banco-mundial-25201225

O globalismo dos tecnocratas que não é o globalismo dos imbecis: reflexões sobre matéria do FMI - Paulo Roberto de Almeida

Tecnocratas internacionais são acusados pelos malucos paranóicos das teorias conspiratórias do antiglobalismo de serem os principais agentes – "burocratas internacionais não eleitos pelo povo", dizia o Robespirralho, o aspone diminuído do inepto presidente que temos –, junto com milionários de esquerda como o George Soros, mais a "esquerdalha mundial", de um suposto projeto mundial para retirar soberania aos Estados nacionais. Esse é o globalismo dos imbecis, aqueles que pretendem matar as instituições multilaterais e deixar o poder com os Estados nacionais, ou seja, com as super potências. 

Reproduzo abaixo um artigo no blog do FMI sobre moedas digitais, que vai justamente no sentido contrário ao pretendido pelos antiglobalistas, mas também ajuda a entender a distinção que eu sempre faço entre globalização micro (a verdadeira) e a globalização macro (que é, na verdade, uma antiglobalização).

A globalização micro é essa feita por indivíduos e empresas que trabalham de forma livre e quase desimpedida, criando produtos e serviços, e depois os lançam nos mercados mundiais, para uso e usufruto de quem queira se servir de inovações, entre elas as moedas digitais, por exemplo, que ESCAPAM do controle dos governos. Temendo a perda de senhoriagem, os Estados nacionais – EUA, China, etc. – querem criar os seus próprios bitcoins e continuar com o monopólio das moedas oficiais, as únicas com poder liberatório e de circulação.

A globalização macro é essa feita pelos Estados e organismos internacionais, que sempre tentam CONTROLAR a livre expressão de indivíduos e empresas que fazem concorrência ao monopólio estatal com produtos e serviços que não DEVEM NADA aos governos, e isso é insuportável aos olhos de burocratas nacionais e internacionais. A globalização macro tenta REGULAR as transações, de qualquer tipos, e cobrar impostos em cima desses fluxos livres que se estabelecem entre indivíduos e empresas, POR CIMA das fronteiras. 

Os imbecis do antiglobalismo não percebem que os burocratas internacionais atuam justamente com o mesmo objetivo dos Estados nacionais: controlar atividades, fluxos, pagamentos, inovação, o que me parece impossível, mas eles atrapalham um pouco o que é feito na globalização micro, que é o mesmo que LIBERDADE!

Sou pela liberdade, e portanto sou pelo globalização, pelo globalismo, pela TOTAL ausência de controles estatais, que não sejam aqueles que se destinam a garantir, a segurança, a saúde, a vida, a propriedade e a LIBERDADE dos indivíduos, que para mim sempre passam ANTES dos Estados. Por isso, não sou patriota, não sou nacionalista, não sou estatizante; apenas reconheço que Estados existem e vão continuar existindo enquanto o mundo for desigual, assimétrico e violento. Vai demorar para que a realidade mude no mundo, afinal de contas só temos pouco mais de 10 mil anos de civilização, ou seja, vida organizada em comunidades pacíficas. Mas existem ainda violência dispersa no mundo, não apenas derivada das assimetrias econômicas, mas também de instintos primitivos e até nobres: poder, ódio, amor, desejos, interesses e paixões. 

Sendo o mundo como é, os Estados estão aí para garantir um pouco de segurança entre os indivíduos e no interior das jurisdições estatais, que é a forma que temos, nos últimos 4 ou 5 mil anos, para a constituição e manutenção de comunidades estáveis, com todas as diferenças que ainda existem entre "tribos" humanas. Em alguns milhares de anos, quando toda a humanidade estiver totalmente mesclada, misturada e supostamente unida, tudo isso pode mudar, mas por enquanto é isso.

Por isso, sou globalófilo e universal: desejo a mistura mais ampla possível entre povos e nações, e isso só pode ser alcançado pela globalização micro, aquela que se desenvolve naturalmente, e mais rapidamente, saída do espírito empreendedor de indivíduos e empresas, não a macro, regulada por burocratas estatais e internacionais, que só atrasa a primeira.

Paulo Roberto de Almeida 

Brasília, 29/07/2021

Making The Digital Money Revolution Work for All

By Tobias Adrian and Tommaso Mancini-Griffoli

IMF blog: July 29, 2021

History moves in uneven steps. Just as the telegraph erased time and distance in the 19^th century, today’s innovations in digital money may bring significant changes in the way we lead our lives. The shift to electronic payments and social interactions brought on by the pandemic may cause similarly rapid and widespread transformations.

But we must look beyond the dazzle of technology and the alluring image of futuristic payment services. At the IMF, we must identify and help countries solve the deeper policy tradeoffs and challenges that are arising.

The rapid pace of change is a call to action—for countries to guide, and not be guided by, today’s transformations. It is also important for the IMF to engage early with countries, and usher in reforms that will contribute to the stability of the international monetary system, and foster solutions that work for all countries. There is a window of opportunity to maintain control over monetary and financial conditions, and to enhance market integration, financial inclusion, economic efficiency, productivity, and financial integrity. But there are also risks of stepping back on each of these fronts. We must enact the right policies today to reap the gains tomorrow.

We emphasize this in two papers published today, one on the new policy challenges, and one on an operational strategy for the Fund to engage with countries on the digital money revolution.

Digital money developing rapidly

Digital forms of money are diverse and evolving swiftly. They include publicly issued central bank digital currencies (CBDC)—think of these as digital cash, though not necessarily offering the same anonymity to avoid illicit transfers. Private initiatives are also proliferating, such as eMoney (like Kenya’s mobile money transfer service MPesa) and stablecoins (digital tokens backed by external assets, like USD-coin and the proposed Diem). These are digital representations of value that can be transferred at the click of a button, in some cases across national borders, as simply as sending an email. The stability of these means of payment, when measured in national currencies, varies significantly. The least stable of the lot, which hardly qualify as money, are cryptoassets (such as Bitcoin) that are unbacked and subject to the whims of market forces.

These innovations are already a reality, and growing rapidly. According to IMF data, CBDCs are being closely analyzed, piloted, or likely to be issued in at least 110 countries. Examples range from the Bahamas’ Sand Dollar already in use, to the People’s Bank of China’s eCNY pilot project, to countries like the United States where the benefits and drawbacks of a digital dollar are still being studied. Stablecoins, still esoteric two years ago, tripled in value in the last six months (from $25 billion to $75 billion), while cryptoassets doubled (from $740 billion to $1.4 trillion). And adoption is global. eMoney accounts are not only growing much more rapidly in low- and middle-income countries than in the rich ones, but are now also more numerous. Africa, in particular, is leading the way.

Opportunities are immense. A local artisan can receive payments more cheaply, potentially from foreign customers, in an instant. A large financial conglomerate can settle asset purchases much more efficiently. Friends can split bills without carrying cash. People without bank accounts can save securely and build transaction histories to obtain micro-loans. Money can be programmed to serve only certain purposes, and be accessed seamlessly from financial and social media applications. Governments can tax and redistribute revenues more efficiently and transparently.

Policy implications—opportunities and challenges ahead

We may well reap these benefits, but we must be aware of risks, and—importantly—of the bigger policy implications and tradeoffs. The challenges to policymakers are stark, complex, and widespread.

The most far-reaching implications are to the stability of the international monetary system. Digital money must be designed, regulated, and provided so that governments maintain control over monetary policy to stabilize prices, and over capital flows to stabilize exchange rates. These policies require expert judgment and discretion and must be taken in the interest of the public. Payment systems must grow increasingly integrated among countries, not fragmented in regional blocs. And it is essential to avoid a digital divide between those who gain from digital money services and those left behind. Moreover, the stability and availability of cross-border payments can support international trade and investment.

There are also implications for domestic economic and financial stability. The public and private sectors should continue to work together to provide money to end-users, while ensuring stability and security without stifling innovation. Banks could come under pressure as specialized payment companies vie for customers and their deposits, but credit provision must be sustained even during the transition. And fair competition must be upheld—not an easy task given the large technology companies entering the world of payments. Moreover, governments should leverage digital money to facilitate the transfer of welfare benefits or the payment of taxes. Scope even exists to bolster financial inclusion by decreasing costs to access payment and savings services.

Finally, new forms of money must remain trustworthy. They must protect consumers’ wealth, be safe and anchored in sound legal frameworks, and avoid illicit transactions.

The challenges are significant, and so is the potential reward. But policy action must begin immediately. This is the time to establish a common vision for the future of the international monetary system, to strengthen international collaboration, and to enact policies and establish legal and regulatory frameworks that will drive innovation for the benefit of all countries while mitigating risks.

Choosing the right path now is critical. Regulation, market structure, product features, and the role of the public sector can quickly ossify around less desirable outcomes. Backtracking later can be very costly.

The IMF has a mandate to help ensure that widespread adoption of digital money fosters domestic economic and financial stability, and the stability of the international monetary system. We plan to engage regularly with country authorities to evaluate country-specific policies, provide capacity development to avoid a digital divide, and develop analytical foundations to identify policy options and tradeoffs.

To do so, the IMF must deepen its expertise, widen its skillset, ramp up resources, and leverage its near universal membership. Still, we cannot do this alone. The challenges are so complex and multifaceted, that collaborating closely with other stakeholders is necessary. The World Bank, the Bank for International Settlements along with its Innovation Hub, international working groups and standard-setting bodies, as well as national authorities, are all complementary partners, each with its specific mandate and skillset. By joining hands, we will help households and firms leverage the benefits and avoid the pitfalls of the digital money revolution.

Tobias Adrian is the Financial Counsellor and Director of the IMF’s Monetary and Capital Markets Department.

Tommaso Mancini-Griffoli is a Division Chief in the IMF's Monetary and Capital Markets Department.

O FMI e os direitos humanos: a visão engajada da social democracia - Friedrich Ebert Stiftung

 

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Con entusiasmo y satisfacción presentamos hoy la primera Edición Especial de la Revista Derechos en Acción (ReDeA) dedicada a una temática central de la realidad económica, social y jurídica de nuestro país, la región y el mundo: Fondo Monetario Internacional y derechos humanos.

El abordaje de la temática es desde una mirada crítica e interdisciplinaria, y comprometida con la efectivización de los derechos humanos de todas las poblaciones de nuestros pueblos tercermundistas, en el contexto especial de una pandemia y recesión sin precedentes.

La propuesta de este formato de número dedicado a la temática surgió de una conversación con Juan Pablo Bohoslavsky, quien sumó en la tarea al economista Francisco Cantamutto. Ambos, reconocidos investigadores, se hicieron cargo de la tarea de llevar el barco a buen puerto, desarrollando con eficiencia la ardua labor de selección y revisión de los trabajos, realización de entrevistas, recopilación de documentos, hilvanando con paciencia, buen criterio y minuciosidad cada parte del ejemplar que hoy sale a la luz como una unidad coherente y articulada. Durante más de seis meses compartimos nuestra casa con ellos, de quienes aprendimos mucho, trabajando colectiva y solidariamente con un objetivo en común. Este número, cuyo impacto en los ámbitos político, social, económico y jurídico damos por hecho, será una marca imborrable en la historia de nuestra revista. Tenemos sólo palabras de gratitud para nuestros editores invitados, así como para la Asociación Civil por la Igualdad y la Justicia (ACIJ) y la Friedrich Ebert Stiftung (FES) por sus apoyos institucionales a nuestro proyecto.

A las lectoras y lectores que se acercan por primera vez a ReDeA les queremos contar la razón por la que encontrarán en nuestra publicación arte y poesía, junto con derecho y ciencias sociales. Cuando pensamos en generar un apartado de arte en la revista, lo hicimos a partir de la idea del poder de la imagen en la construcción de subjetividades, en las reflexiones críticas que repotencian criterios y posturas ante las situaciones más sensibles y diversas de la vida. La poesía también tiene mucho para decir sobre el mundo donde el derecho actúa, lo interpela constantemente. Entendemos que en la praxis artística y poética, que se crea desde la tensión entre el pensar y el hacer, se va definiendo el concepto de realidad. Este concepto, de realidad, se diseña por los elementos desde donde oscilan las percepciones del sujeto. El arte, además, plantea una mirada o una forma de entender el mundo, los artefactos artísticos responden, a su vez, como producciones de una cultura. Entendemos que la articulación interdisciplinaria entre el arte y el derecho traza una construcción de conocimiento colectivo, permitiendo enriquecer y repensar los imaginarios y las significaciones. Por esas mismas razones, también, para el diseño de la tapa convocamos a la talentosa “tapista” Ana Yael, una artista argentina radicada en Barcelona.

Invitamos a adentrarse en este número especial de ReDeA y esperamos contar con ustedes en las próximas ediciones.

Publicado: 2021-05-21

US Dollar Share of Global Foreign Exchange Reserves Drops to 25-Year Low - Serkan Arslanalp and Chima Simpson-Bell (FMI)

 US Dollar Share of Global Foreign Exchange Reserves Drops to 25-Year Low

By Serkan Arslanalp and Chima Simpson-Bell

The share of US dollar reserves held by central banks fell to 59 percent—its lowest level in 25 years—during the fourth quarter of 2020, according to the IMF’s Currency Composition of Official Foreign Exchange Reserves (COFER) survey. Some analysts say this partly reflects the declining role of the US dollar in the global economy, in the face of competition from other currencies used by central banks for international transactions. If the shifts in central bank reserves are large enough, they can affect currency and bond markets.

Our Chart of the Week looks at the recent data release from a longer-term perspective. It shows that the share of US dollar assets in central bank reserves dropped by 12 percentage points—from 71 to 59 percent—since the euro was launched in 1999 (top panel), although with notable fluctuations in between (blue line). Meanwhile, the share of the euro has fluctuated around 20 percent, while the share of other currencies including the Australian dollar, Canadian dollar, and Chinese renminbi climbed to 9 percent in the fourth quarter (green line).

 

Exchange rate fluctuations can have a major impact on the currency composition of central bank reserve portfolios. Changes in the relative values of different government securities can also have an impact, although this effect would tend to be smaller since major currency bond yields usually move together. During periods of US dollar weakness against major currencies, the US dollar’s share of global reserves generally declines since the US dollar value of reserves denominated in other currencies increases (and vice versa in times of US dollar strength). In turn, US dollar exchange rates can be influenced by several factors, including diverging economic paths between the United States and other economies, differences in monetary and fiscal policies, as well as foreign exchange sales and purchases by central banks.

The bottom panel shows that the value of the US dollar against major currencies (black line) has remained broadly unchanged over the past two decades. However, there have been significant fluctuations in the interim, which can explain about 80 percent of the short-term (quarterly) variance in the US dollar’s share of global reserves since 1999. The remaining 20 percent of the short-term variance can be explained mainly by active buying and selling decisions of central banks to support their own currencies.

Turning to this past year, once we account for the impact of exchange rate movements (orange line), we see that the US dollar’s share in reserves held broadly steady. However, taking a longer view, the fact that the value of the US dollar has been broadly unchanged, while the US dollar’s share of global reserves has declined, indicates that central banks have indeed been shifting gradually away from the US dollar.

Some expect that the US dollar’s share of global reserves will continue to fall as emerging market and developing economy central banks seek further diversification of the currency composition of their reserves. A few countries, such as Russia, have already announced their intention to do so.

Despite major structural shifts in the international monetary system over the past six decades, the US dollar remains the dominant international reserve currency. As our Chart of the Week shows, any changes to the US dollar’s status are likely to emerge in the long run.

Serkan Arslanalp is Deputy Division Chief in the Balance of Payments Division of the IMF’s Statistics Department. 

Chima Simpson-Bell is an Economist in the IMF’s Statistics Department.

O pífio crescimento econômico da América Latina - FMI

Apenas um trecho: 

The region’s contraction of 7 percent in 2020 was the sharpest in the world, by far exceeding the global slowdown of 3.3 percent. Growth for 2021 is projected at 4.6 percent, well below the 5.8 percent estimated for emerging markets excluding China. Income per capita will not catch up with its pre-pandemic level until 2024, resulting in a 30 percent cumulative loss relative to the pre-pandemic trend.

Short-term shot and long-term healing for Latin America and the Caribbean

By Alejandro Werner, Takuji Komatsuzaki, and Carlo Pizzinelli

Growth in Latin America and the Caribbean recovered briskly in the second half of 2020, yet still more slowly than the global economy and other emerging markets. That’s despite unprecedented policy support, strong performance of trading partners, soaring commodity prices and accommodative global financial conditions. The persistence of the health crisis in many countries casts a shadow on the near-term outlook. People and economies continue to require a short-term shot to exit from the COVID-19 crisis, while the aggravation of several underlying structural fragilities poses significant long-term challenges.

The region’s contraction of 7 percent in 2020 was the sharpest in the world, by far exceeding the global slowdown of 3.3 percent. Growth for 2021 is projected at 4.6 percent, well below the 5.8 percent estimated for emerging markets excluding China. Income per capita will not catch up with its pre-pandemic level until 2024, resulting in a 30 percent cumulative loss relative to the pre-pandemic trend.

Slow and divergent recovery

The outlook, however, is subject to an extraordinary degree of uncertainty as the race between vaccines and the virus continues. On the upside, faster control of the pandemic globally as well as stronger than anticipated domestic policy support would boost growth. Fast vaccination and significant policy support are giving Chile a short-term boost. The country is expected to bounce back already this year to its pre-pandemic GDP level.

On the downside, the recent resurgence of the virus in Brazil, Chile, Paraguay, Peru and Uruguay, combined with slow vaccine rollouts (except in Chile) cast a shadow on the near-term outlook—though new lockdowns are likely to be less damaging than at the start of the pandemic as economies have learned to adjust. Brazil is projected to recover by 2022 due to the withdrawal of fiscal and monetary policy support and slow vaccine rollout. Mexico will only return to its pre-pandemic GDP level by 2023, despite impulse from the US’ large fiscal policy plan, due to the absence of significant domestic fiscal support and the reversal of structural reforms. The American Rescue Plan will boost growth in some Central American countries through trade and remittances, helping these countries to rebound by 2022. Caribbean tourism-dependent economies will be the last to recover (only in 2024) due to the slow resumption in tourism.

The increase in US long-term yields so far has had a somewhat muted impact on asset prices and capital flows in the region. But a continued increase in long-term interest rates remains a risk.

Unequal effects

The recovery has also been heterogeneous within countries. Manufacturing has rebounded faster than contact-intensive services, aided by exports in some cases, particularly in Mexico. However, labor markets remain fragile—only two-thirds of those who lost jobs at the beginning of the pandemic in Brazil, Chile, Colombia, Mexico and Peru were employed again by the end of last year. The informal sector, which suffered the largest losses initially, has driven the job recovery.

Average labor income fell since the beginning of the pandemic, with pronounced divergences in labor market outcomes across countries, sectors, and demographic groups. Countries that implemented employment retention schemes (for example, Brazil) had a less dramatic fall in employment but the recovery has also been slower. However, even in the case of a relatively quick recovery in Mexico, those who have been reemployed have had larger earning losses than those whose employment remained uninterrupted during the crisis. Women and low-educated workers have struggled the most. Low-skilled female workers in particular lost more jobs or had to cut back on working hours even when able to retain employment, suffering the largest income losses.

 

Long-lasting consequences

Poverty is estimated to have increased by 19 million people, and inequality, as measured by the Gini coefficient, increased by 5 percent compared to pre-crisis levels. The pandemic will also leave long-lasting damage to human capital from school closures, which were longer than in other regions.

 

While the precise learning losses are difficult to estimate, staff analysis suggests that students aged 10 to 19 might expect a 4 percent lower income on average over their lifetimes if the lost days of schooling in 2020 are not compensated.

The income losses differ among countries, depending on how much the pandemic reduces the chance of completing secondary education and on the size of the skill premium for higher education. The losses will be greatest for students whose families are less able to support out-of-school learning, exacerbating already high income inequality and low levels of educational attainment.

 

The most urgent task continues to be controlling the pandemic, by ensuring that health care systems are adequately resourced, and everybody can be vaccinated. Fiscal and monetary policies should remain supportive in countries where there is sufficient policy space—a short-term shot for their economies—while countries with tight budgets should reprioritize spending towards healthcare and support for households, and work to create additional fiscal space. Given the continued heavy toll on low-income workers, targeted support to facilitate job creation and retraining may be warranted.

Healing longer-term scars will be more challenging and will require accelerating structural reforms, expanding access to high-quality education and health, broadening social safety nets, and improving the business climate. A deeper structural transformation that could be facilitated by a broad fiscal pact is needed to reverse years of slow growth.

 

Alejandro Werner is Director of the IMF's Western Hemisphere Department.

Takuji Komatsuzaki is a senior economist in the Regional Studies Division of the IMF’s Western Hemisphere Department.

Carlo Pizzinelli is an economist in the Regional Studies Division of the IMF's Western Hemisphere Department.

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Asia-Pacific, the Gigantic Domino of Climate Change - Vitor Gaspar and Chang Yong Rhee (IMF)

 Asia-Pacific, the Gigantic Domino of Climate Change

By Vitor Gaspar and Chang Yong Rhee (IMF)

Forget the poetic flap of a butterfly’s wings in Beijing causing rain in Central Park. Climate issues in Asia-Pacific are measured in superlatives. The world’s biggest population. Two of the three largest carbon dioxide-emitting countries and the largest share of emissions globally. The most exposed to extreme weather events. Some of the smallest and most vulnerable countries. Also, the fastest-growing part of the global economy and many of the leaders in green technology.

It’s not hard to see that what Asia does to fight global warming will be literally felt across the whole planet.

Pursuing a green recovery in the aftermath of COVID-19 might sound daunting, but it’s actually a great opportunity to direct recovery spending into stimulating sustainable jobs and growth.

Green investment is generally more labor-intensive than the regular kind. The near-term extra spending and jobs would strengthen economies. In the longer-term, Asian economies would become more sustainable and resilient, and could build on their lead in many of the emerging green technologies.

What policies are needed? A newly released IMF staff paper makes recommendations in three areas.

More carbon taxes, more compensation

With the world’s most populous and fastest-growing economies, Asia-Pacific emits the largest volume of greenhouse gas, producing about half the world’s carbon dioxide. China, India (the first and third-largest emitters respectively, with the US second) and other large emitters will need to make greater efforts to reduce emissions if global warming is to be kept to the Paris Agreement’s goal of 1.5–2 degrees Centigrade above pre-industrial levels.

Taxes on the carbon dioxide released when burning fossil fuels can be a highly effective way of reducing emissions, but they are little used in the region. Even a gradually introduced and relatively modest carbon tax of $25 per ton would achieve the region’s aggregate Paris Agreement target. But Asia’s Paris targets, like other region’s, are well below what is needed and models suggest that $50-100 per ton is required globally to keep warming below 2 degrees.

 

Rather than taxing all emissions, much can be done by targeting the most polluting fuels. That would be very effective in countries like China, India and Mongolia, heavily reliant on coal, by far the dirtiest fossil fuel. And it comes with the added benefit of reducing air pollution, which could save some 3 million lives in China alone by 2030.

Of course, some households, workers, and firms would be particularly affected by the higher energy prices resulting from carbon taxes. They need to be identified and compensated, ideally with targeted benefits, though universal transfers can also work. For example, China could use carbon tax revenues to increase its minimum guaranteed income scheme, finance green investment or reduce other taxes.

 

Other policies can help. For example, more sectors can be included in emissions trading systems, in which the government sets overall limits on emissions and lets the market determine their price. Financial incentives to use less-polluting alternatives, such as electric vehicles, reduce the need to raise energy prices. Stricter regulations on air quality can support decarbonization efforts.

Increase adaptability to climate change

Even in the best of scenarios, historic emissions mean a certain amount of warming and climate change will be inevitable. Extreme weather events are only expected to intensify, so adaptation is urgent. Rising sea levels alone could directly affect a billion people by mid-century, potentially submerging many cities and wiping out entire nations.

Low-income and Pacific island countries are particularly vulnerable and need to invest in protecting infrastructure, making water resources more resilient, adapting dryland agriculture, restoring mangroves, and improving early warning systems for natural disasters.

 

But some of the most vulnerable have the least resources to prepare. Adaptation requires stepping up public investment, on average by about 3 percent of GDP annually. For the smallest, also the least-polluting countries, the price tag is higher. A recent IMF/World Bank assessment concluded that Tonga would have to spend $67 million a year in climate adaptation for 10 years. Doesn’t sound much, until one realizes this is 14 percent of its GDP, which underscores the need for greater international support for such countries.

Greener recovery from COVID-19

The COVID-19 crisis does not change the climate crisis, but provides an opportunity to tackle it. How? By ensuring that as much as possible of the very large recovery spending is allocated towards greener activities. Some countries are already doing that, like Korea in its Green New Deal. But much more can be done as the pandemic response shifts from crisis containment to recovery.

Countries seeking to accelerate the transition to carbon neutrality can invest in renewable energy, retrofitting buildings, upgrading the electricity grid, facilitating electric cars, and incentivizing research. When the main challenge is adaptation, they could upgrade infrastructure projects, retrofit existing assets, and develop coastal protection. For many, it will be a combination of both.

Global efforts to promote and finance the transfer of green technologies to developing countries and expanding multilateral climate funds need to be stepped up. The IMF is helping by integrating climate in our annual country economic assessments and scaling up capacity development to ensure government officials have the needed skills to handle these complex issues.

Butterflies still matter… 

In a 1952 short story, American science fiction writer Ray Bradbury imagined a man from 2055 who travels to the past and, by accidentally stepping on a butterfly, changes the outcome of his day’s presidential election. It was “a small thing,” Bradbury writes, “that could upset balances and knock down a line of small dominoes and then big dominoes and then gigantic dominoes.” In our global fight against climate change, Asia-Pacific is a gigantic domino that cannot fall. As the world recovers from COVID-19, now is the time and opportunity to ensure ourselves a better 2055.

Vitor Gaspar is Director of the IMF’s Fiscal Affairs Department.

Chang Yong Rhee is the Director of the IMF’s Asia and Pacific Department.

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