This paper provides three policy lessons to take full advantage of the opportunity afforded by EU funds. The main features of the global integrated monetary and fiscal (GIMF) model and how it was modified to account for income convergence are discussed. The impact of EU funds as exhibited in the...

The Selected Issues paper on Poland underlies that as the only European Union economy to avoid outright recession during the crisis, Poland is likely to attract renewed risk appetite. Poland could become one of the main recipients of capital inflows. This could lead to excessive exchange-rate...

The staff report for the 2006 Article IV Consultation on Botswana highlights economic developments and monetary and exchange rate policy. Botswana’s growth has been fueled by continued increases in diamond production; and real diamond output is projected to level off, and then decline...

This paper discusses key findings of the Fourth Review Under the Stand-By Arrangement for Georgia. The strategy remains appropriate, and program targets for 2010 are in line with those presented at the Third Review. Fiscal policy will transition from an expansionary stance in 2009 to a path of...

This paper discusses the request from Costa Rica for a Stand-By Arrangement (SBA). The program seeks to enable an orderly adjustment of the Costa Rican economy to an adverse external environment, while mitigating its adverse effects on growth and household incomes. To strengthen the external...

Recent economic performance in Yemen has been mixed. A sharp decline in oil production, coupled with inflexible government expenditure and only marginal improvement in the tax-to-GDP ratio led to an overall fiscal deficit of 5.8 percent in 2007. Executive Directors have noted that Yemen’s...

This paper explores the role of exchange rates in emerging economies with inflation-targeting regimes, an issue that has become especially germane during the current episode of financial turmoil and volatile capital flows. Under inflation targeting, the interest rate is the main monetary policy...

Standard theory shows that sterilized foreign exchange interventions do not affect equilibrium prices and quantities, and that domestic and foreign currency denominated bonds are perfect substitutes. This paper shows that when fiscal policy is not sufficiently flexible in response to spending...

This paper reviews the experiences of a number of European countries in coping with capital inflows. It describes the nature of the inflows, their implications for macroeconomic and financial stability, and the policy responses used to cope with them. The experiences suggest that as countries...