- Ales Bulir, Marianne Schulze-Gattas, Atish Ghosh, Alex Mourmouras, A. Hamann, and Timothy Lane
- Published Date:
- February 2002
2002 International Monetary Fund
Production: IMF Graphics Section
Figures: Sanaa Elaroussi
Typesetting: Alicia Etchebarne-Bourdin
IMF-supported programs in capital account crises/Timothy Lane . . .
[et al.].—Washington, D.C.: International Monetary Fund, 2002.
p. cm.—(Occasional paper, ISSN 0251-6365; no. 210)
Includes bibliographical references.
1. International Monetary Fund—Developing countries. 2. Capital movements—Developing countries. 4. Balance of payments—Developing countries. 5. Crisis management—Developing countries. I. Lane, Timothy D. (Timothy David), 1955–. II. International Monetary Fund. III. Occasional papers (International Monetary Fund); no. 210.
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- I Introduction
- II Pre-Crisis Conditions and Emergence of the Crisis: Implications for Program Design
- III Program Financing
- IV Macroeconomic Frameworks and Outcomes
- V Policy Programs
- VI Conclusions
- I Country Sample
- II Financial Fragilities and Official Financing
- III Calculation of Fiscal Sustainability and Fiscal Impulse Ratios
- IV Vector Auto regression Estimates of Real Money and Real GDP Relationship
- V Chronologies of Events in Countries’ Capital Account Crises
- 3.1. Official Financing in Capital Account Crisis Programs
- 3.2. Private Sector Involvement
- 3.3. Capital Controls
- 4.1. Decomposition of Output Movements into Aggregate Supply and Aggregate Demand Shocks
- 5.1. Social Safety Nets
- 5.2. The Interest Rate-Exchange Rate Nexus in Currency Crises: A Review of the Literature
- 5.3. Credit Markets and Quantity Rationing in the Asian Crisis Countries
- 5.4. Costs of Financial Sector Restructuring
- 5.5. Structural Measures in IMF-Supported Programs in the Asian Crisis Countries
- Text Tables
- 2.1. Selected Macroeconomic Indicators for Capital Account Crisis Countries
- 3.1. Medium-Term External Debt Stability
- 3.2. Program and Actual Balance of Payment Developments
- 3.3. Selected Stock Vulnerability Indicators
- 4.1. Current Account Adjustment
- 4.2. Behavior of Inventories
- 5.1. Evolution of Fiscal Performance Criteria and Indicative Targets
- 5.2. Medium-Term Fiscal Sustainability
- 5.3. Fiscal Balances and Fiscal Impulse Ratios: Programs versus Outcomes
- 5.4. Firm-Level Risk Measures: Country Medians, 1995–96
- 5.5. Monetary Conditionality
- 5.6. Inflation: Program Projections and Outcomes
- Appendix Tables
- A3.1. Primary Fiscal Balances and Fiscal Impulse Ratios: Programs versus Outcomes
- A4.1. Impulse Response Functions
- A5.1. Macroeconomic Indicators in Capital Account Crisis Programs
- A5.2. Balance of Payment Developments in Selected Asian Countries
- A5.3. Balance of Payment Developments in Selected Latin American Countries
- Text Figures
- 2.1. Exchange Rate Movements in Capital Account Crisis Countries
- 2.2. Balance of Payment Developments
- 4.1. Macroeconomic Projections and Outcomes in Capital Account Crisis Programs
- 4.2. Contributions to GDP Growth in Capital Account Crisis Programs
- 4.3. Blanchard-Quah Decompositions of Growth
- 5.1. Quarterly Fiscal Impulses and Real GDP Growth
- 5.2. Changes in Real Interest Rates and Real Exchange Rates
- 5.3. Private Capital Flows and Ex Post Dollar Rates of Return
- 5.4. Private Capital Flows and Ex Ante Dollar Rates of Return
- 5.5. Nominal and Real Overnight and Lending Rates
- 5.6. Broad Money and Banking System Credit in Real Terms
- 5.7. Real GDP, Real Credit, and Real Money
- 5.8. Structural Conditionality
- Appendix Figures
The following symbols have been used throughout this paper:
… to indicate that data are not available; n.a. to indicate not applicable;
— to indicate that the figure is zero or less than half the final digit shown, or that the item does not exist;
– between years or months (e.g., 2000–01 or January-June) to indicate the years or months covered, including the beginning and ending years or months;
/ between years (e.g., 2000–01) to indicate a crop or fiscal (financial) year.
“Billion” means a thousand million.
Minor discrepancies between constituent figures and totals are due to rounding. The term “country,” as used in this paper, does not in all cases refer to a territorial entity that is a state as understood by international law and practice; the term also covers some territorial entities that are not States, but for which statistical data are maintained and provided internationally on a separate and independent basis.
During the 1990s, a number of emerging market countries faced capital account crises, in which sudden reversals of capital inflows forced large and abrupt current account adjustments, often with pervasive macroeconomic consequences. The nature and scope of these crises presented challenges that differed considerably from those of more traditional adjustment programs. Given the dominant role of private capital flows, estimates of sustainable current account positions—and the appropriate balance between financing and adjustment—were subject to much greater uncertainty, the impact of macroeconomic policies on market confidence became critical, and structural policies had to address a variety of vulnerabilities that lay at the root of the crises.
This paper reviews the design of and experience with IMF-supported programs formulated in response to capital account crises in the 1990s, focusing on the experiences of eight countries: Turkey (1994), Mexico (1995), Argentina (1995), Thailand (1997), Indonesia (1997), Korea (1997), the Philippines (1997), and Brazil (1998). The review was prepared by a staff team under the general guidance of Jack Boorman, Director of the Policy Review Department. The staff team comprised Timothy Lane (Chief, Policy Review Division), Aleš Bulíř, Atish Ghosh, Javier Hamann, Alex Mourmouras, and Marianne Schulze-Ghattas.
The authors are grateful to numerous colleagues at the IMF for detailed comments on the paper: to Sibabrata Das, Tricia Gillett, and Ivetta Hakobyan for research assistance; and to Olivia Carolin, Brian Gallo, Fernanda Gusmao, and Sylvia Palazzo for secretarial assistance. Jacqueline Irving of the External Relations Department edited the manuscript and coordinated production of the publication.
The opinions expressed in the paper are those of the authors and do not necessarily reflect the views of the IMF or of its Executive Directors.