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March 23, 2010 FINANCIAL FLOWS TO DEVELOPING COUNTRIES: RECENT TRENDS AND PROSPECTS Namaacha, 22 - 24 March - MOZAMBIQUE Luiz A. Pereira da Silva – World.

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Presentation on theme: "March 23, 2010 FINANCIAL FLOWS TO DEVELOPING COUNTRIES: RECENT TRENDS AND PROSPECTS Namaacha, 22 - 24 March - MOZAMBIQUE Luiz A. Pereira da Silva – World."— Presentation transcript:

1 March 23, 2010 FINANCIAL FLOWS TO DEVELOPING COUNTRIES: RECENT TRENDS AND PROSPECTS Namaacha, March - MOZAMBIQUE Luiz A. Pereira da Silva – World Bank

2 Introduction 1. The Global Crisis, Causes, Where Are We Today Financial and Real Impacts of the Crisis 3. Lessons from the Crisis 4. Post-Crisis Risks and Opportunities for Developing Countries 5. Conclusions and Implications for Mozambique 2

3 1. The Global Crisis, Causes  “Great moderation”, productivity gains  Entry of China and ex-USSR into the market  Global financial innovations with inadequate risk pricing and very complex assets in the balance of institutions TBTF  Pro-ciclicality of the financial system without adequate regulation in a globalized world  Global disequilibria USA-China and within the EU

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5 The Global Crisis, where are we today... 5

6 2. The Crisis, Financial Implications  In the short term, a run to “safe harbors”, paradox, the USA Dollar, wwith implicaitons in liquidity (interbank market), exchanges rate and risk premia (CDS, etc.)  “Credit Crunch”  In the medium to long term:  Cost of capital will increase  Better risk pricing and differentiation  More financial regulation  Reduction in the official flows and transfers 6

7 The Crisis, Financial Implications 7

8 Differentiated Financial Impacts 8

9 Private Capital Flows Private Capital Flows to developing countries Fonte: DataStream, World Bank, Global Economic Prospects 2010: Crisis, finance, and growth Milhares de Milhões $ Países de Rendimento Baixo Fluxos de capital privado Percentagem do PIB (eixo à direita)

10 Global Economic Crisis Real GDP growth rates in percent Source: World Bank, Global Economic Prospects 2010: Crisis, finance, and growth World Developing High-income

11 The Crisis, Real Impacts 11

12 3. Lessons from the Crisis  Macro-Financial stability has to combine low inflation and prevention of bubbles (Financial Regulation)  Countries with solid foundations (Internal and External) can better weather financial turbulence, even of a global nature 12

13 4. Risks and Opportunities  Evaluate the “Pull” & “Push” factors in future capital flows to developing countries (Demand, Risk adjusted returns, Institutions)  Global growth in the next few years will be driven by the South (Emerging, other developing countries)  Demand for higher returns with adequate risk can favour FDI, stock markets, emissions from developing countries  Fiscal adjustment in the North will reduce aid flows and transfers 13

14 Riscos e Oportunidades 14

15 Riscos e Oportunidades  Quando e Como Acelerar no Processo de Reducao a Dependencia da Ajuda Internacional?  Condicoes:  Mercados Internacionais Mais Estaveis  Manutencao da Estabilidade Macro-Financeira Local  Fortalecimento da Percepcao de Estabilidade na Governanca Economica e Politica Local  Visao Estrategica, Projeto de Crescimento Sustentavel, i.e. integracao economica, espacial, externalidades multi-setoriais  Aproveitar Novos Temas e Tecnologias 15

16 6. Conclusion and Questions (Part II)  Will Mozambique be ready for the international Bond Market? (Andrea Dore e Christian Mulder – FMI)  How to use guarantees to facilitate private sector fianncing? (Farida Mazhar – BM, Alastair Campbell e Jonathan Wood – Standard Bank)  Will Mozambican firms be able to issue corporate bonds in national and international markets? (Evans Osano – IFC)  What are the appropriate financial models for Public- Private Partnerships? (Jose Luis Guash – BM e Justin Tyson, Karen Breytenbach – FMI) 16

17 “the pessimism of intellect and the optimism of the (will) practice” (Antonio Gramsci) THANK YOU 23 de Março, 2010


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