Economic Reform Priorities and the Governance Trap

Neil Shenai ()

Chapter Chapter 2 in Escaping the Governance Trap, 2022, pp 31-92 from Springer

Abstract: Abstract This chapter studies the major macroeconomic sectors of the Northern Triangle countries, including fiscal policy, monetary and exchange rate policy, financial sector policy, and structural reforms. It describes briefly how El Salvador, Guatemala, and Honduras have been impacted by the COVID-19 pandemic. It then provides policy recommendations that can help each country create fiscal space for priority spending while enhancing resilience, strengthen their monetary policy frameworks and safeguard external sustainability, improve access to financial services while deterring illicit financial activity, and catalyze structural transformation to improve formalization and competitiveness. Emphasis is placed on inter-sectoral linkages and on the ties between reforms and improved governance. The chapter includes an annex on the impact of Bitcoin adoption in El Salvador, describing Bitcoin and its underlying distributed ledger technology, analyzing the potential drivers of Bitcoin’s price changes, and summarizing the relevant decisions and macroeconomic sectoral implications of Bitcoin adoption. Several risks from Bitcoin adoption are highlighted.

Keywords: Debt management; Fiscal space; Northern Triangle monetary policy; Northern Triangle financial integrity; Bitcoin in El Salvador (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-030-99023-7_2

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DOI: 10.1007/978-3-030-99023-7_2

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