27/03/2010
The IMF benefited from the global crisis with 5 lessons
Countries which financed the development projects has been more vulnerable to crisis than others
From «Wall Street» a financial crisis broke out that turned into an economic crisis hit the global economy, but most reports indicate that the world has started to recover as well as valuable lessons that emerged from that crisis. A Photo taken of the transactions on the New York Stock Exchange yesterday. Reuters
A Survey Concluded by the International Monetary Fund for 126 developing country, members of the Fund and included the GCC countries, on the relationship between economic development model followed by these countries affected by the extent of the global economic crisis with five key lessons depends on the volume of financing development through borrowing, and exchange rate flexibility , and the composition of exports, Foreign Affairs, the control on Banks and, finally, the financial situation before the crisis.
The IMF said that the survey aimed at identifying the existing economic differences in developing countries, and achieved growth rates varied during the year 2009.
Following are more details:
A Survey Concluded by the International Monetary Fund for 126 developing country, members of the Fund and included the GCC countries, on the relationship between economic development model followed by these countries affected by the extent of the global economic crisis with five key lessons depends on the volume of financing development through borrowing, and exchange rate flexibility , and the composition of exports, Foreign Affairs, the control on Banks and, finally, the financial situation before the crisis.
The first observations recorded by the survey that countries that funded the development projects through borrowing has been more vulnerable to the global crisis than others. It measured the proportion of the size of the Fund's bank loans to the volume of deposits in the banking sectors in these countries, where it became clear that the private sector that relied more on borrowing suffered more than others. The impact of transmission of the repercussions of the global crisis to developing countries by this factor more clearly, as the developing nations that were dependent on funding international banks, and after the outbreak of the crisis, sources of funding dried up and exposed the economy to the crisis. It has been seen by the size of foreign reserves and balance of the general budget and the size of credit growth during the years before the global crisis.
The survey found that about 40 countries in the sample was for a working external borrowing a key role in the size of its exposure to the global crisis, where growth rates were significant, such as credit crisis, which led to the transition effects of the crisis directly after the international banks in the industrial countries was a victim to the global crisis.
With regard to exchange rates, the survey found that countries engaged in flexible exchange rate policy was less affected by the global crisis, as the link to a particular currency means difficulty in dealing with the financial upheavals in the markets, while flexible exchange rate which provides great potential to do so.
Also in the case for the financial institutions control.
As for the material policies, especially in terms of fiscal balance of the budget, it was clear from the survey link between the size of the percentage of deficit to GDP on the one hand, and the proportion of economic growth recorded in 2009. This index illustrates that countries that were experiencing significant financial deficit was less confident in dealing with the global crisis, and less able to exercise incentive policies for the economy.
The flexibility of the rate exchange plays a key role in reducing vulnerability to the global crisis, as no survey shows that the least affected by the global crisis is pursuing a policy rate associated with a particular currency.
Being a well financialzed with world's reserves will protect the economy in crisis, as it allows for the developing countries to exercise incentive policies counter to the economic cycle through the global crisis.
With regard to foreign trade, the survey found the need to diversify exports and markets, and accelerating the liberalization of the global trading system, and moving the restrictions on the agricultural and food freedom for the developing countries and accelerating the rounds of WTO negotiations on Doha agenda.
