Mr. Fabien Gonguet, Mr. Claude P Wendling, Ozlem Aydin Sakrak, and Bryn Battersby
Public financial management (PFM) consists of all the government’s institutional arrangements in place to facilitate the implementation of fiscal policies. In response to the growing urgency to fight climate change, “green PFM” aims at adapting existing PFM practices to support climate-sensitive policies. With the cross-cutting nature of climate change and wider environmental concerns, green PFM can be a key enabler of an integrated government strategy to combat climate change. This note outlines a framework for green PFM, emphasizing the need for an approach combining various entry points within, across, and beyond the budget cycle. This includes components such as fiscal transparency and external oversight, and coordination with state-owned enterprises and subnational governments. The note also identifies principles for effective implementation of a green PFM strategy, among which the need for a strong stewardship located within the ministry of finance is paramount.
Stefan Mittnik, Willi Semmler, and Alexander Haider
Recent research in financial economics has shown that rare large disasters have the potential to disrupt financial sectors via the destruction of capital stocks and jumps in risk premia. These disruptions often entail negative feedback e?ects on the macroecon-omy. Research on disaster risks has also actively been pursued in the macroeconomic models of climate change. Our paper uses insights from the former work to study disaster risks in the macroeconomics of climate change and to spell out policy needs. Empirically the link between carbon dioxide emission and the frequency of climate re-lated disaster is investigated using cross-sectional and panel data. The modeling part then uses a multi-phase dynamic macro model to explore this causal nexus and the e?ects of rare large disasters resulting in capital losses and rising risk premia. Our proposed multi-phase dynamic model, incorporating climate-related disaster shocks and their aftermath as one phase, is suitable for studying mitigation and adaptation policies.
International Monetary Fund. Strategy, Policy, & and Review Department
This note provides operational guidance to staff on how to engage on social safeguard issues with low-income countries in both program and surveillance contexts. The note is not intended as a comprehensive guide, and should be used in conjunction with other operational guidance notes, such as those relating to conditionality and surveillance.
International Monetary Fund. Asia and Pacific Dept
Executive Directors commend Bangladesh in addressing the major challenges to growth and poverty reduction. The strategy is comprehensive and confronts the key issues impeding sustainable development and inclusive growth in Bangladesh. Implementing sound macro-financial policies, intensifying revenue mobilization, improving the business environment, ensuring trade liberalization, and improving governance and accountability are top priorities. Actions should be sequenced according to these priorities. Severe external shocks could reignite macroeconomic pressures and undermine socioeconomic targets.
Bangladesh’s second Poverty Reduction Strategy Paper -- “Steps Towards Change: National Strategy for Accelerated Poverty Reduction II (NSAPR II)” – provides a framework for implementing the government’s agenda during FY09-FY11. First prepared by a Caretaker government,1 the NSAPR II was later revised by the current elected government to reflect its priorities. The NSAPR II outlines five strategic priorities and describes the supporting strategies to achieve them. This Joint Staff Advisory Note (JSAN) provides feedback on priority areas for strengthening the NSAPR II and its implementation.
The staff report for the 2007 Article IV Consultation on Bangladesh highlights recent developments and policy discussions. Bangladesh’s growth outlook and external position remain robust, but inflation has picked up. Overall macroeconomic stability has been maintained, but fiscal performance continues to suffer from structural weaknesses. Executive Directors welcomed the planned reforms in the area of public financial management and the adoption by major ministries of the medium-term budget framework. They supported the recent reforms to promote transparency, fair elections, and the prevention of money laundering.
Bangladesh is reducing poverty and making headway toward meeting its MDGs. However, political considerations are exerting an increasing influence on economic policy decisions. The overall fiscal balance has been kept below budget and program targets, notwithstanding sizable revenue slippages. Monetary policy has been gradually tightened, and the exchange rate has stabilized in recent months, but further monetary tightening is needed. Quantitative performance criteria for the fifth review were met with the exception of that for revenue collection.
Mr. Jan Kees Martijn, Gabriel Di Bella, Mr. Shamsuddin Tareq, Mr. Benedict J. Clements, and Mr. Abebe Aemro Selassie
Macroeconomic outcomes in low-income countries (LICs) have improved markedly in recent years, but important questions remain regarding possible adjustments in the design of IMF-supported programs in such countries. This paper draws on a review of the literature as well as the experience of 15 LICs that have attained some degree of macroeconomic stability to discuss, for example, the appropriate target range for inflation in shock-prone LICs; whether countries should use fiscal space to cut excessive tax burdens, reduce high debt levels, or raise public spending; and how the effectiveness of public expenditures can be improved.