Frontiers ask the IMF to come to their rescue

A number of frontier markets have turned to the IMF for financial support over the past few months in order to counter strains in their balance of payments. Angola has formally opened negotiations with the Fund, becoming the first major EM oil producer to do so since oil prices started to fall in 2014. But it is not just oil economies that need help. Sri Lanka, too, is in the midst of talks over a financing package and Tunisia has recently secured a four-year US$2.8bn Extended Fund Facility. There have been rumours that several other countries, including Bosnia & Herzegovina and Zambia, may also seek IMF support.

Official financing from the IMF will help to prevent full-blown balance of payments crises in these countries. In return, however, the Fund is likely to demand that policy is tightened, which will weigh on economic growth.