IMF - Managing Capital Flows: Lessons from Emerging Markets for Frontier Economies

Private capital flows to Frontier Markets (FMs) have increased substantially over the last decade, and are projected to rise further in the coming years. While still dwarfed in absolute size compared to flows to Emerging Markets (EMs), in relation to the economic size of the recipient country, flows to FMs are now often on par with those to EMs. In general, such flows, and capital mobility more broadly, provide much needed financing for productive investments, contribute to financial market development, and are largely welcome in FMs, but they also entail macroeconomic and financial-stability risks—which are amplified by the magnitude and volatility of flows. As FMs continue to attract flows, develop their financial markets, and rise to join the ranks of EMs, what are the challenges they confront? And can they learn from the experience of EMs to effectively manage the risks associated with large capital flows?

This high-level conference will provide a forum for policy makers from frontier and emerging markets to share their experiences in managing capital flows, learn from each other, and together with academics and market participants, engage in discussions about policy options for mitigating the risks associated with capital flows, while reaping the benefits of financial integration.

High-level conference
The Westin Turtle Bay Resort & Spa Mauritius
Mauritius, March 2, 2015

Monday, March 2
8:00–9:00	Registration and Coffee
9:00–9:30	Welcome and Opening Remarks Seetanah Lutchmeenaraidoo, Minister of Finance and Economic Development, Mauritius David Lipton, First Deputy Managing Director, IMF
9:30-10:15	Keynote Speech Dani Rodrik, Professor, Institute for Advanced Study
10:15–10:45	Coffee
10:45–12:15	Session I—Trends, Dynamics, and Challenges of Capital Flows to Frontier Markets This session will discuss the recent trends and behavior of capital flows to frontier markets, and the challenges posed by such flows. What are the factors driving capital flows to frontier markets—is the rise in private flows a structural phenomenon that defines a “new normal” or is it largely driven by lax monetary policy conditions in advanced countries, inducing investors to take on riskier bets? What are the main types of flows to frontier markets? Do they pose any risks and challenges? Are frontier markets likely to experience as much capital flow volatility as emerging markets? How does experience differ according to country characteristics? Chair: Ramesh Basant Roi, Governor, Central Bank of Mauritius Speakers: Allah Malik Kazemi, Advisor to Governor; Former Deputy Governor, Central Bank of Bangladesh Louis Kasekende, Deputy Governor, Bank of Uganda Henry Rotich, Cabinet Secretary, The National Treasury, Kenya Daniel Zelikow, Managing Director, Global Head, Public Sector Group, JP Morgan
12:15–13:30	Lunch
13:30–15:00	Session II—Policy Responses to Capital Inflows This session will discuss the policy tools deployed by frontier and emerging markets to manage the challenges posed by capital inflows: macroeconomic policies; macroprudential policy; and capital controls. How effective are the various tools? What can be said about the policy hierarchy among these various tools? Should countries intervene in foreign exchange markets to mitigate exchange rate volatility associated with capital flow volatility? Chair: Jonathan D. Ostry, Deputy Director, Research Department, IMF Speakers: José De Gregorio, Professor, Universidad de Chile; Former Governor, Central Bank of Chile Olivier Jeanne, Professor, Johns Hopkins University Millison Narh, Deputy Governor, Bank of Ghana
15:00–15:30	Coffee
15:30–17:15	Panel Discussion—Managing Capital Flows in Frontier and Emerging Markets: What are the Lessons? Moderator: Richard Davies, Economics Editor, The Economist Speakers: Godwin Emefiele, Governor, Central Bank of Nigeria Subir Gokarn, Director Research, Brookings India; Former Deputy Governor, Reserve Bank of India Tukiya Kankasa-Mabula, Deputy Governor, Bank of Zambia Brian Kahn, Advisor to Governor, Reserve Bank of South Africa
17:15–17:30	Concluding Remarks Antoinette Sayeh, Director, African Department, IMF
19:00	Reception and Dinner