This paper introduces the Asset and Liability Management (ALM) compound option model. The model builds on the observation that the public sector net worth in a multi-period setting corresponds to the value of an option on an option on total government assets. Hence, the ALM compound option model...

This paper explores the relationship between the level and management of public debt and financial stability, and explains the channels through which the two are interlinked. It suggests that the broader implications of a debt management strategy and its implementation should be carefully...

The paper discusses the challenges facing Albania's fiscal policy following the graduation from the IMF programs. It argues that Albania's public debt remains too high and needs to be reduced. Strengthening the fiscal framework, including by introducing a numerical fiscal rule, could help...

In this study, Lebanon’s economy performed well during the global financial crisis. The banking sector has been resilient in the face of the global crisis, thanks to relatively conservative funding and asset structures, and prudent banking regulations and supervision. The need to address...

This paper discusses key findings of the Second Review and Financing Assurances Review Under the Stand-By Arrangement for Latvia. The sharp economic downturn is starting to bottom out, although recovery has not yet begun. The authorities have implemented the June 2009 supplementary budget, and...

Morocco’s strong starting position, reflecting macroeconomic and structural reforms introduced over the last decade, has given the country greater room to maneuver in its policy response. The direct impact of the global crisis on Morocco has been limited, primarily affecting Morocco...