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This paper reviews the Interim Staff Report Under Intensified Surveillance for Jamaica. The authorities have reaffirmed their objective of balancing the budget in FY 2005/06, while recognizing that this now poses a greater challenge. The IMF staff now estimates that measures in the range of 2.5–3.0 percent of GDP would be required to meet this goal, compared with the IMF staff’s estimate of 1.7 percent of GDP at the time of the 2004 Article IV consultation. The room to maneuver in monetary and exchange rate policy remains constrained by the debt overhang.

Banks and Banking --- Budgeting --- Public Finance --- Debt --- Debt Management --- Sovereign Debt --- Monetary Policy --- National Government Expenditures and Related Policies: General --- National Budget --- Budget Systems --- Central Banks and Their Policies --- Public finance & taxation --- Banking --- Budgeting & financial management --- Public debt --- International reserves --- Expenditure --- Budget planning and preparation --- Open market operations --- Central banks --- Public financial management (PFM) --- Debts, Public --- Foreign exchange reserves --- Expenditures, Public --- Budget --- Jamaica

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This paper provides a simple, quantitative, net worth-based, approach to assessing the need for central bank capital. It derives a concept of "core capital" (a function of the central bank's operating expenditures and the carrying cost of its international reserves) as the minimum capital needed by a central bank to ensure the credibility of its inflation target. The approach is illustrated with the published accounts of three loss-making central banks and selected accounting entries for a broader sample of central banks. Policy implications are explored. In particular, the paper argues that central bank capitalizations cannot be automatic and require instead a broad policy debate.

Bank capital. --- Banks and banking, Central. --- Electronic books. -- local. --- Banks and Banking --- Macroeconomics --- Money and Monetary Policy --- Public Finance --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Monetary Policy --- Monetary Systems --- Standards --- Regimes --- Government and the Monetary System --- Payment Systems --- National Government Expenditures and Related Policies: General --- Personal Income, Wealth, and Their Distributions --- Banking --- Monetary economics --- Public finance & taxation --- International reserves --- Currencies --- Expenditure --- Personal income --- Banks and banking --- Foreign exchange reserves --- Money --- Expenditures, Public --- Income --- Chile

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This paper compares the importance of precautionary and mercantilist motives in the hoarding of international reserves by developing countries. Overall, empirical results support precautionary motives; in particular, a more liberal capital account regime increases international reserves. Theoretically, large precautionary demand for international reserves arises as a self-insurance to avoid costly liquidation of long-term projects when the economy is susceptible to sudden stops. The welfare gain from the optimal management of international reserves is of a first-order magnitude, reducing the welfare cost of liquidity shocks from a first-order to a second-order magnitude.

Developing countries -- Economic policy. --- Electronic books. -- local. --- Fiscal policy -- Developing countries -- Econometric models. --- Banks and Banking --- Exports and Imports --- Finance: General --- Monetary Policy --- Portfolio Choice --- Investment Decisions --- Trade: General --- Current Account Adjustment --- Short-term Capital Movements --- Banking --- Finance --- International economics --- International reserves --- Liquidity --- Reserves accumulation --- Export performance --- Capital account liberalization --- Foreign exchange reserves --- Economics --- Exports --- Balance of payments --- China, People's Republic of --- Fiscal policy --- Econometric models. --- Developing countries --- Economic policy.

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The staff report for the First Review Under the Stand-By Arrangement on the Republic of Croatia focuses on fiscal policy and monetary and financial sector policies. Financial soundness indicators show a continuation of the overall strengthening of the banking system, although foreign exchange-related credit risk remains high. Efforts to strengthen financial discipline in the broader public sector remain an important component of the program. Progress is continuing on the agenda of the original program in the areas of fiscal management and privatization.

Banks and Banking --- Budgeting --- Exports and Imports --- Macroeconomics --- Public Finance --- Foreign Exchange --- International Lending and Debt Problems --- Debt --- Debt Management --- Sovereign Debt --- Monetary Policy --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- National Budget --- Budget Systems --- Banking --- International economics --- Public finance & taxation --- Budgeting & financial management --- Currency --- Foreign exchange --- External debt --- Public debt --- International reserves --- Budget planning and preparation --- Central banks --- Public financial management (PFM) --- Debts, External --- Debts, Public --- Banks and banking --- Foreign exchange reserves --- Budget --- Croatia, Republic of

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The authors combine the literature on financial crises in emerging markets and developing economies with that on international migrations by investigating whether the increasingly large flows of workers' remittances can help reduce the probability of current account reversals. The rationale for this stands in the great stability and low cyclicality of remittances as compared with other private capital flows: these properties, combined with the fact that remittances are cheap inflows of foreign currencies, might reduce the probability that foreign investors suddenly flee out of emerging markets and developing economies and trigger a dramatic current account adjustment. The authors find that remittances can have such a beneficial effect. In particular, they show that a high level of remittances, as a ratio of GDP, makes the relationship between a decreasing stock of international reserves (over GDP) and a higher probability of current account crises less stringent. The same occurs, though less neatly, for the positive relationship between an increasing stock of external debt (over GDP) and the probability of current account reversals. The results point also to a threshold effect of remittances: the mechanisms just described are, in fact, much stronger when remittances are above 3 percent of GDP.

Banking System --- Capital Flows --- Capital Inflows --- Consumption --- Country of Origin --- Currencies and Exchange Rates --- Currency Crises --- Currency Depreciation --- Current Account --- Debt Markets --- Economic Theory and Research --- Economies --- External Debt --- Finance and Financial Sector Development --- Financial Crises --- Financial Literacy --- Foreign Currencies --- Foreign Currency --- Foreign Debt --- Foreign Direct Investment --- Health, Nutrition and Population --- International Economics & Trade --- International Reserves --- Macroeconomic Instability --- Macroeconomic Management --- Macroeconomics and Economic Growth --- Population Policies --- Private Capital --- Remittances --- Welfare