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This paper examines the influence of sovereign credit ratings and relative risk ratings on private capital flows to 26 emerging and frontier market economies, using quarterly data for 1998-2017. A dynamic panel regression model is used to estimate the relationship between ratings and capital flows after controlling for other factors that can influence capital flows, such as growth and interest rate differentials and global risk conditions. The analysis finds that while absolute ratings were an important determinant of net capital inflows prior to the global financial crisis in 2008, the influence of relative risk ratings increased in the post-crisis period, which was characterized by easy monetary policies and global liquidity, on the one hand, and greater caution and discretion on the part of investors on the other. The post-crisis effect of relative ratings appears to be driven mostly by portfolio flows. These findings imply that emerging and frontier markets need to pay greater attention to their relative economic performance and not just their sovereign ratings. Tracking changes in relative ratings could help predict macroeconomic disturbances resulting from volatile portfolio capital movements.

Capital Flows --- Capital Markets and Capital Flows --- Debt Markets --- Emerging Market Economies --- Emerging Markets --- External Debt --- Frontier Markets --- Private Capital Flows --- Sovereign Bond Market --- Sovereign Credit Rating

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Low- and middle-income country governments are increasingly tapping the global debt capital markets. This is increasing the amount of finance available for development, but at a considerably higher cost than traditional external borrowing on concessional terms. Using a novel methodology based on estimating sovereign credit ratings using the Moody's scorecard, and examining the associations between these ratings and the World Bank's Country Policy and Institutional Assessment scores, this paper examines how making improvements in the quality of economic policies and institutions can help lower governments' financing costs. This method aims to overcome the small-sample problem due to the number of rated developing country sovereigns still being relatively limited (although growing). Better economic governance Country Policy and Institutional Assessment scores are associated with better estimated ratings and materially lower financing costs; on average, improvements that are sufficient to increase the Country Policy and Institutional Assessment economic governance indicator score by one point are associated with interest costs that are lower by about 40 basis points, even setting aside the direct impact on ratings of better governance indicators. There are many reasons why improving governance is a good thing. Among them is the potential payoff to the public purse savings of USD 40 million or more on a standard USD 1 billion, 10-year bond.

Capital Markets --- Capital Markets and Capital Flows --- Country Policy --- Debt Management --- Debt Markets --- Finance and Financial Sector Development --- Financing Costs --- Governance --- Institutional Assessment --- Public Debt --- Public Financial Management --- Public Sector Development --- Sovereign Bond Market --- Sovereign Credit Rating --- Sovereign Debt

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The South African government offers various support mechanisms to support Eskom, the state-owned electric utility, and the independent power producers in providing low-cost electricity, including credit and payment guarantees. Guarantees constitute contingent liabilities to the government and pose risks to government finances. This note illustrates the methodologies explored by South Africa to assess the credit risk from guarantees extended to Eskom. To manage and closely monitor this risk, a dedicated Credit Risk directorate in the Asset and Liability Management division at the National Treasury of South Africa has implemented a risk assessment and management framework, supported by the World Bank Treasury. The team developed a sector-specific internal credit rating methodology to assess Eskom's creditworthiness. Additionally, the team developed a scenario analysis methodology to assess Eskom's ability to service debt from cash flows and cash reserves. The scenario analysis tool is currently used on an ad hoc basis to feed into the various scenarios that are considered for the budget process. Risk assessments are reported to the Fiscal Liabilities Committee on a quarterly basis for risk monitoring and to support recommendations for taking on new contingent liabilities, such as government guarantees. The Fiscal Liabilities Committee advises the minister of finance and is responsible for the determination of the processes and policies for approving guarantees and guarantee-like transactions. The Fiscal Liabilities Committee is generally mandated to promote the optimum management of the government's contingent liabilities, including guarantees. The implementation of further risk mitigation and monitoring tools, such as risk-based guarantee fees, budget allocations, and a contingency reserve account, is under discussion.

Contingent liabilities --- Credit rating --- Credit risk --- Economic adjustment and lending --- Electric utilities --- Energy and environment --- Energy demand --- Energy policies and economics --- Energy sector --- Finance and financial sector development --- Financial crisis management and restructuring --- Fiscal risks --- Guarantees --- Macroeconomics and economic growth --- On-lending --- Public debt management --- Public sector development --- Risk management --- Scenario analysis

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Los jóvenes, el grupo más afectado por la desaceleración económica mundial, se están movilizando y exigen un cambio. En esta edición de F&D “Los jóvenes reclaman cambio”, se analiza la necesidad de abordar con urgencia los desafíos a los que se enfrentan los jóvenes y crear oportunidades para ellos. El profesor de Harvard David Bloom evalúa el alcance del problema y subraya la importancia de escuchar a los jóvenes en “Futuro incierto”. En “Sacar buena nota " se analiza cómo impartir a los jóvenes de hoy en día los conocimientos que necesitan para conseguir empleo. La Subdirectora Gerente del FMI, Nemat Shafik, comparte su opinión sobre las consecuencias económicas y sociales del desempleo juvenil en “Hablando claro”. En “Generación marcada” se analiza el efecto de la crisis económica mundial en los jóvenes trabajadores de las economías avanzadas, y en “Hablan los jóvenes” conversamos directamente con varios jóvenes de todo el mundo. Se analizan la regulación del sistema financiero y el impulso al PIB mediante el empoderamiento de las mujeres. En esta revista también examinamos el ascenso del renmimbi, analizamos el papel de las agencias de calificación crediticia, debatimos cómo potenciar el papel de la mujer y presentamos los principios básicos de la regulación macroprudencial, que es cada vez más importante para la estabilidad financiera. En “Gente del mundo de la economía”, trazamos una semblanza de Fred Bergsten, “Un mundialista estadounidense”. En “Vuelta a lo esencial” estudiamos el papel multidimensional de los bancos en nuestros sistemas financieros.

International finance. --- Finance --- Economic assistance --- International monetary system --- International money --- International economic relations --- Finance: General --- Labor --- Macroeconomics --- Money and Monetary Policy --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Education: General --- Economics of Gender --- Non-labor Discrimination --- Unemployment: Models, Duration, Incidence, and Job Search --- Monetary Systems --- Standards --- Regimes --- Government and the Monetary System --- Payment Systems --- Labour --- income economics --- Education --- Monetary economics --- Gender studies --- women & girls --- Credit rating agencies --- Women --- Unemployment --- Credit ratings --- Money --- United States --- Income economics --- Women & girls

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Young people, hardest hit by the global economic downturn, are speaking out and demanding change. F&D looks at the need to urgently address the challenges facing youth and create opportunities for them. Harvard professor David Bloom lays out the scope of the problem and emphasizes the importance of listening to young people in "Youth in the Balance." "Making the Grade" looks at how to teach today's young people what they need to get jobs. IMF Deputy Managing Director, Nemat Shafik shares her take on the social and economic consequences of youth unemployment in our "Straight Talk" column. "Scarred Generation" looks at the effects the global economic crisis had on young workers in advanced economies, and we hear directly from young people across the globe in "Voices of Youth." Renminbi's rise, financial system regulation, and boosting GDP by empowering women. Also in the magazine, we examine the rise of the Chinese currency, look at the role of the credit rating agencies, discuss how to boost the empowerment of women, and present our primer on macroprudential regulation, seen as increasingly important to financial stability. People in economics - C. Fred Bergsten, American Globalist Back to basics - The multi-dimensional role of banks in our financial systems.

Finance: General --- Labor --- Macroeconomics --- Money and Monetary Policy --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Education: General --- Economics of Gender --- Non-labor Discrimination --- Unemployment: Models, Duration, Incidence, and Job Search --- Monetary Systems --- Standards --- Regimes --- Government and the Monetary System --- Payment Systems --- Finance --- Labour --- income economics --- Education --- Monetary economics --- Gender studies --- women & girls --- Credit rating agencies --- Women --- Unemployment --- Credit ratings --- Money --- United States --- Income economics --- Women & girls