The Impact of Global Financial Crisis on LICs: Preliminary Assessment Hugh Bredenkamp Strategy, Policy, and Review Department International Monetary Fund December 2008. Overview.
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The Impact of Global Financial Crisis on LICs:Preliminary Assessment Hugh BredenkampStrategy, Policy, and Review DepartmentInternational Monetary FundDecember 2008
Fiscal deficits (5¼%)
(5¾ months of imports)
Debt (30% of GDP)Background: A Decade of Progress
For LICs, better policies, global growth, and debt relief had resulted in:
In September, 33 LICs were identified as vulnerable (with reserves falling below 3 months in 2008)
Oil price to $68
Nonfuel commodity prices
Recovery begins late 2009Fall 2008: Severe Financial Crisis
October 2008 WEO scenario for 2009….
Reduced inflows into domestic markets
Uganda, South Africa
Parent banks restricting financing, capital withdrawal
Kyrgyz RepublicEffects on LICs: Direct Financial Channels
Global growth LIC growth :
1 % global growth 0.3 % to 0.5 % in SSA growth
Slowdown in advanced and middle-income countries, plus contraction of trade credit
lower export volumes for LICs
Reduced export prices for oil and commodity exporters
Workers remittances have grown rapidly ….
Especially important in some countries: more than 25% of GDP for Lesotho; 12% for Cape Verde
But at least no stagflation…