Developing country capital account management involves a study on the regulation of capital flows in the context of the COVID-19 pandemic. Massive capital flight from developing economies since the onset of the COVID-19 crisis poses one of the most serious obstacles to speedy and sustainable economic recovery in these economies. Capital flow regulation is a key element to stem the ongoing collapse in external finance available to developing countries and to prevent sharp declines in currency and domestic asset prices and increasing external debt. Analysis of measures to regulate capital flows and the type of capital controls needed to confront the disruptive effects of the COVID-19 to support policy responses and strategies to both weather the immediate economic impacts and prepare for the road to recovery are conducted for Latin America and the Caribbean, Africa and Asia-Pacific.
Countries need to expand their policy space to adequately respond to short and long-term socio-economic challenges posed by COVID-19. They must expand aggregate demand to spur growth and, at the same time, reduce the debt levels of the public and private sectors. To this end, countries must have at their disposal, the required macroeconomic tool kit to monitor and control the vulnerabilities in the external sector. Capital controls are a key component of this tool kit.
Macroeconomic, fiscal and taxation policies that can be implemented as part of the response to the COVID-19 crisis.