Angola mounting debt burden raises future default risk

Significance The IMF's willingness to turn a blind eye may enable Angola to retain access to concessional finance over the next 18 months; however, Luanda needs a plan to address deferred principal payments and recapitalise a key escrow account in 2023. Impacts The IMF's latest funding review will unlock USD500mn from the World Bank and USD200mn from the African Development Bank. Persistent IMF pressure for greater central bank autonomy will help curb inflation, which recently reached 25%, pending new legislation. Domestic banks remain vulnerable to economic shocks amid a lengthy recession, persistent high inflation and continued currency depreciation.

The rule of law, central bank independence and price stability

This work empirically investigates the effect of the interaction between the rule of law and legal central bank independence (CBI) on price stability (the level of inflation and inflation volatility), employing a panel dataset that covers up to 124 countries over the period from 1970 to 2013. A new, largely complete legal CBI dataset, covering 182 countries was used for the work. The results indicate that the effect of legal CBI on price stability depends on the strength of the rule of law. Moreover, the results reveal that legal CBI has no significant effect on price stability when the rule of law is weak. The findings also show that 67% of advanced countries possess a rule of law that is strong enough to maintain price stability by increasing central bank autonomy, while only 4.5% of developing countries possess it.

Switzerland’s Political Performance Compared: Determinants of a Success Story

In comparisons of OECD member countries, Switzerland receives top marks on central indicators of political performance such as the rate of unemployment, the inflation rate and general government net debt interest payment. Focusing on the period from 1990 to 2012, this essay examines the sources and causes of this success story, drawing not only on hypotheses and data that are specific to Switzerland but also on explanatory approaches that compare Switzerland to other wealthy democracies. Of the several key items involved – including the institutional, procedural and actor-related characteristics of Switzerland – the variables that have proven to be most important are those contributing to policy area-specific explanations (such as central bank autonomy, distributional conflict and fragmentation of fiscal policy), as well as indicators of social partnership in industrial relations and the distribution of power between political parties.