Economics & Development

Letters of credit are a key trade finance instrument that covers more than 10 percent of global trade, with a notably larger role in low- and middle-income economies. Studying detailed trade data from Viet Nam, this paper documents how the use of letters of credit varies with firm characteristics. The paper shows that the probability of using a letter of credit is systematically lower for younger, smaller, and foreign-owned trading firms. Importers that are less diversified or have less trading experience are more likely to use letters of credit. Firm characteristics have the strongest effects in markets where information is scarce and enforcement is weak. These patterns are consistent with a model in which the ability to screen trading partners and the cost of bank intermediation vary with firm characteristics, and where a firm’s screening ability and country institutions are substitutes. Any policy or intervention that aims at increasing the use of bank-intermediated trade finance will therefore need to take firm heterogeneity into account.

Türkiye is an upper middle-income country, with a strong ambition to achieve high income status. Indeed, during the last decade, Türkiye’s economy has been among the fastest growing in the world. However, during the same time the country’s total factor productivity growth, which is imperative to sustain a fast pace of economic growth in the long run, has been declining in industry and agriculture. Increasing women’s engagement in the labor market may be just the tool to achieve higher productivity growth. Despite exhibiting considerable growth over the years, female labor force participation (FLFP) remains low in Türkiye relative to other countries. Notably, many women who do not participate have at least upper secondary education. They may be more productive in the market sector - as doctors, nurses, computer scientists - than in the home sector. In the US, between 20 and 50 percent of growth over the last 50 years was driven by improvements in the allocation of talent across sectors. Women moving from the home sector to the market sectors were an important contributor to this phenomenon. This policy brief attempts to contribute to understanding of barriers that prevent Turkish women from greater engagement in the labor market by quantifying the impact of childcare responsibilities on their market work.

Countries in Europe and Central Asia (ECA) are facing a variety of climate-related events that pose risks to their socio-economic stability, prompting a reevaluation of unemployment insurance systems. This report explores how climate change and the green transition affect the design and operation of unemployment insurance, recommending reforms and complementary programs to enhance resilience. It includes a database detailing unemployment insurance characteristics across the ECA region and emphasizes expanding traditional measures - such as unemployment benefits, employment services, and training to incorporate targeted actions like partial benefits, tailored services, and support for displaced workers. Job preservation tools, including short-time work, furlough programs, wage insurance, and into-work subsidies, are highlighted as essential for maintaining employment and income levels during climate disruptions. Additionally, the report introduces a new stress test to evaluate how well unemployment insurance systems can respond to climate-related shocks and broader structural changes, such as economic crises, pandemics, trade shifts, or technological advancements.

This report presents the 2026 Financial Sector Assessment Program (FSAP) update for Angola, conducted jointly by the World Bank and the International Monetary Fund (IMF). The assessment evaluates the stability, resilience, and development of Angola’s financial sector and identifies key vulnerabilities, reform priorities, and policy recommendations to support economic diversification and inclusive growth. The report highlights that Angola has made significant progress since the 2011 FSAP by strengthening financial sector regulation, supervision, crisis management frameworks, deposit insurance, and capital market infrastructure. However, financial intermediation remains weak, access to finance is limited, and the financial system continues to be dominated by banks with strong exposure to the sovereign. Key risks include high levels of non-performing loans (NPLs), significant sovereign-bank linkages, dollarization, foreign exchange constraints, and weaknesses in anti-money laundering and counter-terrorism financing (AML/CFT) frameworks. The report also identifies emerging risks from climate change, weak financial inclusion, and limited access to financing for micro, small, and medium enterprises (MSMEs). Priority recommendations focus on strengthening banking supervision, accelerating NPL resolution, enhancing crisis management and financial safety nets, promoting digital financial inclusion, modernizing payment systems, expanding MSME access to finance, improving governance of state-owned financial institutions, strengthening insurance and pension sector oversight, and deepening capital markets. Successful implementation of these reforms is expected to improve financial stability, expand access to financial services, mobilize private investment, and support Angola’s long-term economic diversification and sustainable development objectives.

The objective of the Innovative Finance for Resilient and Sustainable Energy Transition Program Project is to reduce carbon emissions through subsidy reforms and leveraging policy-based climate and carbon funds. There are two components to the project, the first component being payments for measured, reported and verified emission reductions (VERs). This component encompasses the results-based payments under the ERPA. Emission reductions will be generated due to the change in end user energy demand resulting from the increase in electricity tariffs. Initial assessment results indicate that the proposed subsidy reforms are expected to generate up to around 4 MtCO2e emission reductions over the 2025–2030 project lifetime. Annual payments will be made against the amount of VERs generated in the preceding calendar year. The second component is the payments for measured, reported, verified, and transferred ITMOs - Carbon Finance. This component will support a pilot international carbon market transaction under Article 6.2 of the Paris Agreement. The underlying activity, MRV of emission reductions, and the payment schedule will be outlined in the MOPA to be signed with the GoKR.