Global Dialogue 2: Macroeconomic and Financial Policy Responses to the Global Economic Crisis - Argentina, Hungary, Philippines, Poland, Russia, Turkey

December 19, 2008                                                                  

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Participants

Summary

This dialogue addressed the impacts of the crisis and assesses the macroeconomic and financial policy responses required both to address the crisis and to manage the growth and distribution effects. Participants included ministers of finance, central bank governors, and financial regulators from Argentina, Turkey, Poland, Hungary, Russia, South Africa, Indonesia, Philippines, and Republic of Korea. Professors Guillermo Calvo of Columbia University, and Gerard Caprio of Williams College provided initial remarks on the policy challenges facing each of the participating countries.

The global dialogue addressed the following questions:

Macroeconomic impacts and policy responses

What are the main impacts of the global financial crisis (and rise and fall of commodity prices) on the real economy:

• What is the effect on current account and financing, international reserves
• Have exports been affected through loss of access to trade finance or through falling demand?
• What is the impact on tax revenues and other fiscal effects (public debt)?
• On GDP growth?
• On Credit growth?
• Exchange rate pressures?

What macroeconomic policies have you implemented in your country and why?

• If real GDP growth is slowing down, what policies are being used to stimulate the economy, if any?
• How are fiscal pressures being contained? What are the main constraints to using fiscal policy as a discretionary tool?
• What about credit/monetary policy and exchange rates?
• Are there measures used to manage the trade balance? What about the capital account? Are these seen to be short term (when would they be removed/changed)?
• How are ongoing public investments being managed?

What are your expectations about your economy in the short, medium and longer term?

• How would your policies change depending on the duration of the crisis?
• What about the long-term prospects for food and fuel prices? Is this a concern?

Do you think better coordination amongst OECD countries in policies could have averted this crisis? What about non-OECD countries?

• What kind of coordination would have helped your country/regional situation?
• What lessons have you learned in crisis management from other developing countries?

Financial Sector Impact and Responses

Which segments of the financial market are most at risk? What is the short-term situation in your country with regard to systemic and/or institution specific risks?

In your country, what has been/will be the short-term impact of the financial sector crisis with regard to key Asset and Liability components of financial institutions’ Balance Sheet; Income Statement, and Cash Flow?  For example:

• Increase in NPLs (related to trade finance, housing loan, corporate loans, etc)
• Valuation and Credit Losses in Investment Portfolio
• Liquidity Constraints: Dollar and Domestic Currency
• Credit Demand and Lending Standards 
• Loss Provisioning and Capital Cushions
• Funding Costs, Constraints and Refinancing Risks (e.g. interbank borrowings, retail deposits, debt and equity market funding, and term structure of liabilities)

What measures have already been put in place by monetary, supervisory and fiscal authorities to help financial institutions cope with changes in their liquidity and solvency situation and with regard to ability to maintain credit intermediation?  Are additional measures planned?

• Access to central bank liquidity support?
• Changes in deposit insurance schemes?
• Changes in prudential regulations?
• Capital injection by government: Tier 1 and Tier 2?
• Support for mergers, divestitures, acquisitions, etc. ?
• Special (general or targeted) programs to maintain credit flows?

When do you expect financial markets in your country to come back to normal and when do you expect to be able to unwind temporary interventions?  As a consequence of the crisis are you expecting permanent/medium-term changes in structure of markets and behavior of market participants?

How has the current crisis altered your views on financial market development? Going forward what do see as your key challenges, priorities and concerns? Examples include:

• Application of risk based regulations --- Basle 2, risk modeling, stress testing, etc.
• Rebalancing safety and integrity, deregulation, competition and integration
• Crisis preparedness --- PCA framework, contingency planning, risk simulation etc.
• Supervisory architecture.

 

Participants

Experts
Guillermo Calvo, Columbia University
Gerard Caprio, Williams College

Russia
Evsey Gurvich
Head of the Expert Group,
Ministry of  Finance

Sergey Vasilev
Deputy Director,
Vneshkomen Bank

Poland
Mr. Piotr Szpunar
Director of Financial System Department
The National Bank of Poland

Hungary
Mr. Kovacs Almos
State Secretary
Ministry of Finance

Republic of Korea
Dr. Jae Ha Park
Vice President, Korea Institute of Finance

South Africa
Roelf du Plooy
Head:  Financial Markets Department
South African Reserve Bank

Marisa Fassler
National Treasury

Observers
Michael Sachs
Chief Director: International Finance and Development
National Treasury
Gert Maricowitz, National Treasury

Philippines
Dr.  Johnny Noe Ravalo
Managing Director
Banking Supervision and Market Development
Central Bank of Philippines

Argentina
Mr. Martín Abeles
Secretary of Economic Policy, Ministry of Economy

Turkey
Central Bank of Republic of Turkey
Ali ÇUFADAR, Deputy Director General,
Gülbin SAHINBEYOGLU, Deputy Director General

Kenan ALPDÃœNDAR, Director, Central Bank of Republic of Turkey
Erhan USTA, General Director, State Planning Organization
Naci AGBAL, General Director, Ministry of Finace

Undersecretariat of Treasury
Ömer YALVAÇ, Expert
Firat YILMAZ, Associate
Emre BALIBEK, Head of Department
Nadide BUYUKOZTURK, Division Chief
Gülsun BOR, Division Chief
Emre KÖKER, Expert
Hakki KARATAS, Expert
Hüseyin BILGIÇOGLU, Associate
Hatice KÖKDEN, Head of Department
Gamze Ugur TUNCER, Head of Department
Zeynep ÖZATAY, Associate