This paper presents the primary institutions and economic policies that have led to Chile’s remarkable record of stability and growth over the past twenty years. The core of this policy stance is the combination of fiscal discipline and an open trade policy regime, together with carefully...

On a credit rating-adjusted basis, spreads on U.S. high-yield debt have typically been regarded as a lower bound for emerging market debt. However in the C-rated and defaulted segment, emerging market debt has traded at lower spreads than similarly rated U.S. high yield debt. We show that the...

Recent events have shown that sovereigns, just like banks, can be subject to runs, highlighting the importance of the investor base for their liabilities. This paper proposes a methodology for compiling internationally comparable estimates of investor holdings of sovereign debt. Based on this...

We review the impact of the global financial crisis, and its spillovers into the sovereign sector of the euro area, on the international “rules of the game†for dealing with sovereign debt crises. These rules rest on two main pillars. The most important is the IMF’s lending...

This paper investigates the drivers of reserves in emerging markets (EMs) and small island (SIs) and develops an operational metric for estimating reserves in SIs taking into account their unique characteristics. It uses quantile regression techniques to allow the estimated factors driving...

Despite relatively fast economic growth over the past few years, Cape Verde’s public debt to GDP ratio has risenrapidly. Achieving an appropriate balance among public investment, growth, and debt sustainability has become a priority for the Cape Verdean authorities. The IMF-World Bank...

The staff report for the 2011 Article IV Consultation concluded that a vibrant recovery marked Estonia’s first year in the euro area, albeit amid nascent tensions. The economy’s strong rebound has been grounded in a proven track record of prudent macroeconomic policies. Executive...

Romania’s external position continues to improve. Inflation peaked in December 2010, and is now likely to decline. Financial market stress has remained relatively low in recent months. The current account deficit improved from 13½ percent of GDP in 2007 to about 4¼ percent of GDP in...

Owing to the deteriorating economy of Guatemala, authorities requested a Stand-By Arrangement (SBA) with access of SDR 630.6 million in April 2009, which aimed at safeguarding macroeconomic and financial stability and anchoring investor confidence. Executive Directors have agreed that the SBA is...

St. Lucia faces significant policy challenges in the aftermath of Hurricane Tomas. It is experiencing an urgent balance of payments need that would result in a severe economic disruption. The government is focused on achieving medium-term debt sustainability. The policies outlined tackle urgent...