Search Results

You are looking at 1 - 10 of 31 items for :

  • "EAC economy" x
Clear All
Mr. Paulo Drummond, Mr. Ari Aisen, Mr. Emre Alper, Ms. Ejona Fuli, and Mr. Sébastien Walker
This paper examines how susceptible East African Community (EAC) economies are to asymmetric shocks, assesses the value of the exchange rate as a shock absorber for these countries, and reviews adjustment mechanisms that would help ensure a successful experience under a common currency. The report draws on analysis of recent experiences and examines likely future changes in the EAC economies.
Mr. Paulo Drummond, Mr. Ari Aisen, Mr. Emre Alper, Ms. Ejona Fuli, and Mr. Sébastien Walker

shocks (“susceptibility”) as well as the ability of countries to adjust to shocks that are asymmetric with respect to the EAC area through other channels—fiscal policy, labor mobility, and wage and price flexibility (“adaptability”). The objectives of this paper are, first, to identify how susceptible are the EAC economies to asymmetric shocks; second, to assess the value of the exchange rate as a shock absorber for these countries; and third, to review adjustment mechanisms that would help ensure a successful experience under a common currency-EAC. While the

Ms. Catherine McAuliffe, Ms. Sweta Chaman Saxena, and Mr. Masafumi Yabara

upgrading rural road networks and simplification of customs and border post procedures. Expanding exports may also demand, at least in the initial years, targeted “catalytic” interventions in natural niche sectors where EAC economies could build up or strengthen their comparative advantage, overcome late-comer handicaps, and establish a market presence. Coordinated interventions should cover complementary areas (skills, transportation, technology, market access). These interventions should be carefully targeted, both sectorally and geographically. Resources are

Paulo Flavio Nacif Drummond and Mr. Gustavo Ramirez

demand for its exports and deteriorating the terms of trade prompted by declines in global commodity prices. At times, the region has also been affected by tighter financial conditions abroad, particularly during episodes of financial crisis. However, the magnitude of the impact of past slowdowns has varied greatly, depending on the causes of the decline in world growth and idiosyncratic domestic developments in EAC economies, including economic policy responses. Throughout the 1980s and 1990s, recessions in industrial countries led to more-than-proportional recessions

International Monetary Fund

-based indicators of reserve provide a measure of the potential for resident-based capital flight. For example, a sizable money stock in relation to reserves suggests a large potential for out-of-money capital flight, especially if money demand is unstable and there is evidence of a weak banking system. Of course, this metric might be less relevant for EAC countries than for countries that have fully liberalized their capital account. However, as EAC economies further advance their integration into the global economy, monitoring this indicator will become more important. In any

International Monetary Fund
The East African Community (EAC) countries (Kenya, Tanzania, Uganda, and Rwanda) have been affected by the global financial crisis and global recession. The fall in global demand and inflows and tighter liquidity conditions abroad affected the countries in this region as elsewhere in sub-Saharan Africa. But how hard have countries in the EAC been hit? Have the spillovers from the global crisis affected countries in the region as much as other countries in the sub-Saharan region? Have the transmission channels or magnitudes of the spillovers been different across EAC countries? How can these countries return quickly to a path of sustained high growth? What is the role for policy? Would acceleration of regional integration and policy coordination help achieve this goal? Would it make the region less susceptible to shocks? This paper focus on the EAC countries and attempts to address these questions.
International Monetary Fund

,” CEPR Discussion Paper No. 2025 ( London : Centre for Economic Policy Research ). Roger , Scott , 1993 , “The Management of Foreign Exchange Reserves,” BIS Economic Paper No. 38 ( Basel : Bank for International Settlements ). 1 The authors would like to thank Shiv Dixit for his excellent research assistance, as well as the IMF country teams covering the EAC economies for their helpful suggestions. 2 See for instance Duffie, Pedersen, and Singleton (2003 ), Hauner (2005 ), and Levy-Yeyati (2007). 3 See Caballero and Panageas

International Monetary Fund
The concomitant external shocks experienced in 2008-09 by the East African Community (EAC) countries of Kenya, Rwanda, Tanzania, and Uganda and stepped-up support by the IMF—including the SDR allocation—and other donors, are likely to arouse renewed interest in the question of the adequate level of international reserves. This paper discusses the evolution of reserve holdings in EAC countries and uses several tools for assessing reserve adequacy in the region. The analysis suggests that reserve levels in most cases seem to include safety buffers, and thus, do not require immediate action. However, the situation could become tighter if export recovery is delayed or export prices do not pick up. Over the medium term, the desirable reserve path should also be adapted to regional and international integration.
Mr. Nikoloz Gigineishvili, Mr. Paolo Mauro, and Ke Wang
Is rapid economic growth experienced by the East African Community during the past decade built on solid foundations? To gain some clues, we use a variety of newly-collected and existing data sources to analyze the structural transformation of output and exports, as well as indicators of their quality and sophistication. The move from agriculture to a wide range of other sectors—bodes well for continued growth, as do gradual improvements in quality. Yet, no clear winners on the production side seem to have emerged, to embed a durable comparative advantage in international markets. These observations may instill a note of caution against projecting rapid growth into the distant future.
Ms. Catherine McAuliffe, Ms. Sweta Chaman Saxena, and Mr. Masafumi Yabara
The East African Community (EAC) has been among the fastest growing regions in sub-Saharan Africa in the past decade or so. Nonetheless, the recent growth path will not be enough to achieve middle-income status and substantial poverty reduction by the end of the decade—the ambition of most countries in the region. This paper builds on methodologies established in the growth literature to identify a group of countries that achieved growth accelerations and sustained growth to use as benchmarks to evaluate the prospects, and potential constraints, for EAC countries to translate their recent growth upturn into sustained high growth. We find that EAC countries compare favorably to the group of sustained growth countries—macroeconomic and government stability, favorable business climate, and strong institutions—but important differences remain. EAC countries have a smaller share of exports, lower degree of financial deepening, lower levels of domestic savings, higher reliance on donor aid, and limited physical infrastructure and human capital. Policy choices to address some of these shortcomings could make a difference in whether the EAC follows the path of sustained growth or follows other countries where growth upturns later fizzled out.