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The Strange Case of Low Financial Inclusion Using Digital Payment Services in Mexico

Mexico followed, in past years, what appeared to be a textbook formula for expanding access to and use of digital financial services for its citizens. And yet, less than half of its adult population reported having a bank account only two years ago, which is lower than the Latin American average of 55.1 percent, and significantly below the upper-middle-income country average of 73.1.

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How to Strengthen the Role of Pan-African Institutions Within the International Financial Architecture

In a recent joint piece, African and European leaders underscored the importance of strengthening the positions and roles of pan-African institutions within a new international financial architecture, reaffirming one of the four key goals of the summit on financing African economies held last May in Paris. What is the new international financial architecture? Which pan-African institutions are targeted and why should their role and positions be strengthened within it? How should Africa and its partners proceed to achieve this goal?
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The Case for Liquidity Support for Frontier Markets

The puzzle for development finance experts has been that the capital flows from developed financial markets to developing countries are nowhere large enough to meet financing needs for the Sustainable Development Goals (SDGs), even if official assistance were to be ramped up significantly. Cyclically low investment returns in the developed world should make investment in developing countries quite attractive, yet investments in frontier markets, particularly in Africa, do not begin to meet the development needs of these countries.

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How Can Countries Use their SDRs?

A new allocation of Special Drawing Rights (SDRs) amounting to some $650 billion is now expected the end of August. This allocation of an IMF reserve asset, intended to help countries weather the economic crisis created by COVID-19, will be more than 2½ times the size of the last allocation and substantially boost countries’ gross international reserves. For many low- and middle-income countries (LMICs) these added reserves will provide policymakers much needed room for maneuver as they continue to struggle with huge economic impact of the global pandemic and its aftermath.

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MDBs Could Do More to Build Markets Just By Releasing More Data

You may have missed a recent dry-sounding but groundbreaking report, Default Statistics: Private and Sub-Sovereign Lending 2001-2019. It summarizes data from the Global Emerging Markets (GEMs) Risk Database for a set of 11 multilateral development banks (MDBs) and development finance institutions (DFIs) on default rates on their credits to private and sub-sovereign borrowers, which accounted for 82 percent of exposure in 2019.
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A New IMF Facility to Support the Green Transition?

Climate change poses extraordinary threats to macroeconomic stability and global prosperity, and since the IMF’s purpose is to foster both objectives, its help in addressing these threats is central to its mandate. While the IMF is focusing on how to adapt its policy advice, a strong case can be made too for launching a new lending instrument: a Green Transition Facility.

An image of a graph showing Median annual Gini coefficient in LIDCs around a fiscal tightening, by tightening type

Low-Income Developing Countries Will Surely Need More Debt Relief Down the Line

The COVID-19 pandemic has left a large dent in the government budgets of low-income countries (LIDCs). During 2020, they had no choice but to increase public spending to fight the pandemic at a time when shrinking economic activity depressed their revenues. In this blog post, we argue that while these efforts to expand the flow of concessional resources to LIDCs are laudable, they are unlikely to be sufficient and, going forward, some form of debt relief will be necessary to secure fiscal sustainability down the road for these countries. 

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