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IMF Paper Advises On Fiscal Support Exit Strategies

Thursday, February 25, 2010

A new report from the International Monetary Fund (IMF) has analyzed the ramifications of removing stimulus from the globe’s economies, and has recommended stimulus exit strategies depending on individual situations. In general, the IMF has recommended that faster growing emerging market economies should begin fiscal consolidation immediately, while advanced economies, in general, should wait.

The IMF says that the global economy is beginning to recover as a result of fiscal and monetary support but the cost of combating the crisis around the world runs into trillions of dollars. As the crisis winds down, the Fund has observed that it is now more urgent that policymakers "formulate, communicate, and begin to implement strategies for exiting from crisis-related intervention policies." This is the talking point of the IMF’s new paper, released on February 23, entitled ‘Exiting from Crisis Intervention Policies’.

On the question of when to exit, one senior official at a press briefing on the paper said that, in principle, “the answer is when private demand is ready to take up the relay and growth can be sustained.”

According to the paper, the timing of policy shifts depends on country circumstances, particularly the pace of recovery and the government debt position. IMF officials had the following key messages:

  • Most advanced economies should maintain stimulus in 2010, and begin tightening in 2011 if the recovery proceeds as currently projected;
  • Fast-growing emerging markets can start tightening now; and,
  • In some cases, market concerns imply that tightening is needed ahead of recovery.

IMF officials noted that the crisis has left scars in the form of large public debt increases, particularly in advanced countries. They emphasized, however, that the debt increase reflects mostly revenue losses from the recession, not the cost of the stimulus.

"The strategic goal should be to reverse the rise in debt, not just to stabilize it at post-crisis levels. This will take several years and will involve difficult choices and measures, but history tells us it can be done," the Fund argues.

It is suggested that removal of stimulus measures could be done in a phased way, with fiscal measures being unwound ahead of monetary policy. “The reality is that one more year of deficits is much more costly than one more year of low interest rates. So when the choice is available, fiscal exit should come first, monetary tightening second”, the IMF official said.

In the more immediate term, IMF officials added that actions that do not impact negatively on demand should be implemented now, as this can alleviate the tension between exiting too soon and too late.

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Offshore Trusts Guide: Introduction

The History of Offshore Trusts
Development of Professional Competence in the Jurisdictions
What Future for the Trust?
The New Age of Transparency
The Swiss Association of Trust Companies
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Offshore Trusts Guide: Jurisdictions

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Bahamas: Legal Framework and Formation Rules and Fees
Bahamas: 2006 Private Trust Companies Legislation

Barbados

Barbados: Legal Framework and Formation Rules and Fees
Barbados: Supervisory and Licensing Regime and Fees

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Bermuda: Legal Framework and Formation Rules and Fees
Bermuda: Supervisory and Licensing Regime and Fees

British Virgin Islands

British Virgin Islands: Legal Framework and Formation Rules and Fees
British Virgin Islands: Special Trusts Act 2003
British Virgin Islands: The Trustee Act 2003
British Virgin Islands: :Supervisory and Licensing Regime and Fees
British Virgin Islands: New Laws on Private Trust Companies
British Virgin Islands: New Private Trust Company Regulations

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Cayman Islands: Legal Framework and Formation Rules and Fees
Cayman Islands: Supervisory and Licensing Regime and Fees

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Cook Islands: Legal Framework and Formation Rules and Fees
Cook Islands: Supervisory and Licensing Regime and Fees

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Cyprus: Legal Framework and Formation Rules and Fees
Cyprus: Supervision, Licensing and Tax

Gibraltar

Gibraltar: Legal Framework and Formation Rules and Fees
Gibraltar: Legislation, Regulation and Supervision

Guernsey

Guernsey: Legal Framework and Formation Rules and Fees
Guernsey: Trusts Law 2007

Isle of Man

Isle of Man: Legal Framework and Formation Rules and Fees
Isle of Man: Supervisory and Licensing Regime
Isle of Man: Uses Clients and Tax Treatment

Jersey

Jersey: Legal Framework and Formation Rules and Fees
Jersey: Supervisory and Licensing Regime
Jersey: Trusts Amendment Act 2006
Jersey: Foundations

Liechtenstein

Liechtenstein: Legal Framework and Formation Rules and Fees
Liechtenstein: Regulation Supervision and Transparency
Liechtenstein: Characteristics of Liechtenstein Trusts
Liechtenstein: Foundations

Madeira

Madeira: Legal Framework and Formation Rules and Fees

Malta

Malta: Legal Framework and Formation Rules and Fees
Malta: The Trust and Trustees Act 2004

Mauritius

Mauritius: Legal Framework and Formation Rules and Fees
Mauritius: Characteristics of the 2001 Trusts Act
Mauritius: Additional Provisions of the 2001 Trusts Act
Mauritius: Tax Treatment

Monaco

Monaco: Legal Framework and Formation Rules and Fees

Nevis

Nevis: Legal Framework and Formation Rules and Fees

Panama

Panama: Legal Framework and Formation Rules and Fees
Panama: Requirements for Acting as Trust Company in Panama

Seychelles

Seychelles: Legal Framework and Formation Rules and Fees

Turks & Caicos

Turks & Caicos: Legal Framework and Formation Rules and Fees
Turks & Caicos: The Voidable Dispositions Ordinance

Vanuatu

Vanuatu Legal Framework and Formation Rules and Fees




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