Consolidating public debt markets asia


A gradual pace of withdrawal of policy stimulus, sustained improvements in labor market conditions, and still accommodative financial conditions are expected to sustain private domestic demand.

The continuing, albeit sluggish, recovery in advanced economies during 2010—11 that is envisaged in the October 2010 should support firm growth in Asia’s exports, although below the very high rates of 2009 and early 2010.

They should be read as reflecting market conditions at that time.

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Subsequently, fiscal stimuli and renewed capital inflows to the region resulted in a recovery of Asian domestic bond markets in 2009.That presents a dilemma for policy makers in Africa’s third-biggest economy, which faces a widening budget deficit and growing debt pile that is costing more to service as it tries to shield tens of millions of people living in poverty from inflation that has surged to more than 30 percent on an annual basis.“You cannot adopt inflationary reforms such as floating the currency and cutting subsidies while consolidating your budget at the same time,” said Hany Farahat, an economist at Cairo-based CI Capital Holding who expects the budget deficit to exceed 12 percent of gross domestic product this fiscal year, compared with the government’s target of 10.7 percent.“They’ve put Egyptian assets back on the investment map.So, for foreigners, it makes sense to rush to get a piece of the pie.” Egypt’s financial sector has attracted .2 billion of inflows since relinquishing control of the pound, the central bank said in a text message to reporters Tuesday.“There must be a trade-off.” ‘Temporary Side-Effect’ Egypt sold T-bills ranging in maturity from three months to one year last week at average yields of more than 19 percent. in Cairo, 51 percent weaker than before the devaluation on Nov. International funds, which had shunned the country’s debt securities in the years following the 2011 uprising that ended Hosni Mubarak three decades in power, held 3 percent of Egypt’s T-bills at the end of January, compared with less than 0.1 percent before the currency float.“High interest rates are a temporary side-effect, without which the pound float wouldn’t have achieved its purpose of attracting foreign capital,” Farahat said.223 Since the regional crisis of 1997–98, Asian emerging markets have focused considerable attention on developing domestic debt markets to reduce foreign exchange mismatches in their financial systems and to decrease the concentration of credit and maturity risks in banks.1 Besides building large foreign exchange reserve buffers, much of their effort has gone into local currency bonds, since such bonds constitute a significant share of emerging bond markets, especially in Asia (figure 9-1). Gyntelberg, Ma, and Remolona (2006); Gyntelberg (2007); Jiang, Tang, and Law (2002).Liquid and deep domestic debt markets are seen as vehicles for diversifying the funding of governments, households, and corporations; for attracting the financing required for huge infrastructure needs; for broadening the range of assets available for local institutional and retail investors; and for providing an additional channel for financial intermediation should the banks come under stress.2 In addition, as financial development has proceeded, Asian policymakers have come to appreciate the synergies and interrelationships between the process of creating capital and derivative markets and the process of modernizing bank and nonbank financial intermediaries. 12689-10_CH09-rev210/5/11 PM Page 223 224 mangal goswami and sunil sharma crisis, as capital inflows fell precipitously (figure 9-2).Individual papers (or excerpts thereof) may be reproduced or translated with the authorisation of the authors concerned.APEC Ministers Responsible for Trade meeting concludes Future of TPP discussed on sidelines of APEC ministers meeting APEC Ministers Responsible for Trade meet in Hanoi APEC aims to boost trade facilitation and supply chain connectivity SOM 2 wraps up APEC SOM 2 opens in Hanoi Mr.

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