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This paper applies intertemporal models of precautionary saving to compute an optimal level of international reserves for The Gambia. The analysis focuses on current account shocks specific to a low-income economy with a significant import component and complements a more standard, rule-of-thumb reserve adequacy assessment. The results suggest a central range from 4.5 months to 7 months of imports, which is broadly aligned with the recent actual coverage. Notwithstanding parameter sensitivity, the simulations allow for more informed policy decisions that balance flexibility with a prudent approach to reserve use.

Banks and Banking --- Exports and Imports --- Macroeconomics --- International Finance: General --- Foreign Exchange --- Monetary Policy --- Trade: General --- Macroeconomics: Consumption --- Saving --- Wealth --- Empirical Studies of Trade --- Banking --- International economics --- International reserves --- Imports --- Consumption --- Terms of trade --- Reserves accumulation --- Central banks --- International trade --- National accounts --- Reserve positions --- Foreign exchange reserves --- Economics --- Economic policy --- nternational cooperation --- Gambia, The --- Balance of payments. --- International finance. --- Nternational cooperation

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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.

Banks and Banking --- Exports and Imports --- Foreign Exchange --- Monetary Policy --- International Investment --- Long-term Capital Movements --- International Lending and Debt Problems --- Banking --- International economics --- Currency --- Foreign exchange --- International reserves --- Capital flows --- Exchange rates --- Assessing reserve adequacy (ARA) --- External debt --- Reserve positions --- Central banks --- Reserves accumulation --- Balance of payments --- External position --- Foreign exchange reserves --- Capital movements --- International finance --- Debts, External --- Kenya

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This paper reviews the Fund’s income position for FY 2020 and FY 2021–22. It updates the April 2019 projections and proposes decisions for the current year. The paper also includes a proposed decision to set the margin for the rate of charge for financial years 2021 and 2022. Projections of the Fund’s income are subject to larger than normal uncertainties related to the impact of the COVID-19 pandemic on key assumptions. For FY 2020, these uncertainties relate mainly to the discount rate used to measure the Fund’s retirement plan obligations at April 30, 2020 and to the full year asset returns on the retirement plan and the Endowment Subaccount (EA), given the recent volatility in financial markets. For FY 2021–22, a key additional uncertainty is the scale of new lending associated with the economic fallout from the COVID-19 pandemic.

Banks and Banking --- Budgeting --- Macroeconomics --- Personal Income, Wealth, and Their Distributions --- Interest Rates: Determination, Term Structure, and Effects --- Monetary Policy --- National Budget --- Budget Systems --- Finance --- Banking --- Budgeting & financial management --- Personal income --- SDR interest rate --- Discount rates --- Reserves accumulation --- Budget planning and preparation --- Income --- Interest rates --- Discount --- Foreign exchange reserves --- Budget --- United States --- Sdr interest rate

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Many emerging market economies have in the recent past experienced a surge in capital inflows that may threaten their economic and financial stability. The IMF in early 2011 proposed a framework intended to guide Fund advice to policymakers on how to best respond to such inflows, including both macroeconomic instruments and so-called capital flow management measures (CFMs). The paper applies this framework to three countries that have experienced elevated capital inflows after the onset of the 2008 global financial crisis - the Czech Republic, Poland, and Romania. It finds that the evaluation of the macroeconomic criteria as prescribed by the framework does not support the use of CFMs, but instead advocates macroeconomic policies as the first line of defense against large-scale capital inflows. This finding is by and large consistent with the IMF’s policy advice given to country authorities in the context of surveillance missions.

Finance --- Business & Economics --- International Finance --- Capital movements. --- Capital movements --- Capital flight --- Capital flows --- Capital inflow --- Capital outflow --- Flight of capital --- Flow of capital --- Movements of capital --- Balance of payments --- Foreign exchange --- International finance --- Banks and Banking --- Exports and Imports --- Foreign Exchange --- Inflation --- International Investment --- Long-term Capital Movements --- Current Account Adjustment --- Short-term Capital Movements --- Price Level --- Deflation --- Monetary Policy --- International economics --- Currency --- Macroeconomics --- Banking --- Capital inflows --- Exchange rates --- Capital controls --- Reserves accumulation --- Central banks --- Prices --- Foreign exchange reserves --- Czech Republic

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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.