AURORAN MONETARY FUND
MID-YEAR ECONOMIC AND FINANCIAL REPORT
31 July 2021
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Dear member states, partners and the public,
I write to you to present the Mid-year Economic and Financial Report. This report aims to give member states, partner institutions and the public an update on the operations of the Auroran Monetary Fund, and to give an overview on the economic and trade circumstances of the Auroran continent and surroundings at this point of the year. As the first report of the year, we are delighted that this marks the official conclusion of the formation of the AMF. I would like to thank the UNAC and the governments of our host countries for their support and assistance.
With respect,
Locklyn Le Roy,
President of the Auroran Monetary Fund
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We expect that the combined economy of the UNAC will grow by 3.1% and that the balance of payments for the UNAC is projected to be -1.8%. Economic growth projections for the UNAC have declined compare to last year. Various events have contributed to the decline in economic growth rates and a widening of the balance of payments gap.
[justify]JORALESIAN TERRORIST ATTACKS[/justify]
[justify]The terrorist attacks in Joralesia and the subsequent uprisings prompted by the declaration of martial law and deployment of members of the Royal Armed Forces of the Empire caused economic activity to decline. Joralesia has seen increase in economic growth but it has not reached pre-attack levels. Despite these attacks, investor confidence in Great Morstaybishlia, the largest economy on the continent, does not seem to have been directly affected by this event, rather it precipitated events which are described later in this report. Furthermore, the Great Morstaybishlian government’s involvement of the Intercontinental Regional Security Accords to stabilise the situation was lauded by investors. [/justify]
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[justify]NORTH ETHALRIAN INSTABILITY[/justify]
[justify]The most salient impact of the situation was felt in Vothetria and Kothalria, which have suffered from the situation. The terrorist attack on Joralesia was seemingly a part of an assassination attempt and potential coup d’état of Clauzia Sarohart, the Prime Minister of Vothetria and Overseer of the formation of the North Ethalrian Confederacy. Her temporary incapacitation, chaos in her government and uninspiring response by authorities in Joralesia and North Ethalria (and the UNAC more broadly), raised concerns about the finalisation of the North Ethalrian unification process and the stability of the region. The situation remains tense as issues surrounding the government and more importantly economic policies in that area remain unresolved. The economic gains from Great Morstaybishlia granting access to the Ida River in Caltharus for North Ethalrian shipping may have softened the economic blow, somewhat. [/justify]
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[justify]SECURITY AND POLICY UNCERTAINTY IN GREAT MORSTAYBISHLIA[/justify]
[justify]Domestic troubles in Great Morstaybishlia have dampened investor and consumer confidence in what is arguably the engine of economic growth in Aurora. The Marisilian uprisings and military deployment in south and east Caltharus have raised concerns among investors in that area. Although a run on the banks has not been sighted, confidence among consumers has sharply declined as unusually high withdrawals of cash from Caltharusian banks have been observed. We advise banks in that nation to remain vigilant and to back up their deposits with liquidity. [/justify]
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[justify]The independence referendum in South Staynes has been a highly troubling issue. The weaknesses that the situation has caused in the Labour government of Franklin Barvata have dampened investor confidence considerably. Although South Staynes remains a part of Great Morstaybishlia, the devolution referendum remains a highly destabilising issue as there is uncertainty about the extent to which Kalmington will cede power over property rights, intellectual property, taxation and budget, business regulation and infrastructure to Kirdintayos. Furthermore, the protectionist and pseudo-socialist policies of the Valerian Labour caucus have raised concerns about the extent to which South Staynes will remain investor friendly. [/justify]
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[justify]INFRASTRUCTURE IN EAST AND WEST AURORA[/justify]
[justify]Although the 20 billion KRB Four Year Infrastructure Development Plan between the Oan Isles and the Morstaybishlian West Pacific Territories is a welcome step for boosting economic growth and economic integration in the Pacific Island Region of the UNAC, it is a drop in the ocean (excuse the pun) of the infrastructure development that needs to happen on the continent. Transport infrastructure and oil and gas pipelines connecting Xiopothos, Oscrelia and Tivot need to improve to overcome the difficulties presented by the Great Auroran Desert and the travel and trade limitations of Volova. Furthermore, Axdel needs to play a far more prominent role in encouraging economic growth and integration in western Auroran especially with Yor, Valerica and Emberwood Coast. [/justify]
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[justify]ASILICAN TERRORIST ATTACKS[/justify]
[justify]The loss of life and damage to infrastructure and private property in Asilica caused by the July terrorist attacks has had an immense impact on the region. Although economic growth projections have not been finalised preliminary reports suggest that a 8% to 12% economic decline can be expected. This could result in spillover effects such as internal displacement and refugees fleeing to neighbouring countries. Furthermore, the instability caused by the destruction of a large and important part of the Asilican government will result in many foreign investors refusing to touch Asilican stocks and debt. The AMF has already provided 40 billion KRB to help the nation pay its creditors and pay for imports, reconstruction and emergency relief. However, we call on all foreign creditors to suspend the enforcement of debt repayments until March 2022 to help the nation recover. Furthermore, the fact that intelligence and law enforcement have been unsuccessful in tracking down the cause of the attacks has resulted in low investor and consumer confidence. We also see this event as precipitating a brain drain. We call on the UNAC to assist Asilica as much as reasonably possible. [/justify]
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[justify]ECONOMIC SUCESS STORIES[/justify]
[justify]We are pleased to note that Staynes, Emberwood Coast, Axdel, the Oan Isles, Tuvaltastan and Dragonia are going strong. Their economies remain highly dynamic and resilient and will provide the boost to economic growth that the UNAC desperately needs. We believe that economic dependence on Staynes to fuel the rest of the continent is dangerous and that Axdel, Dragonia and Emberwood Coast need to step up efforts to lead economic growth on mainland Aurora. We also welcome the formal complaint by the Auroran Central Bank and UNAC to hold Packilvania accountable for currency manipulation. Given that the UNAC has a trade deficit with Packilvania, the UNAC needs coordinated and focused action to ensure that it benefits from the UNAC-Packilvania trade relationship. Thus, we hope that discussions between the UNAC and Packilvania will yield positive results. [/justify]
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[justify]POLICY CHALLENGES TO ECONOMIC GROWTH IN THE UNAC[/justify]
[justify]The biggest challenge to Auroran economic prosperity is policy uncertainty and security uncertainty. We call upon the UNAC to address these issues with urgency. Furthermore, we believe that the economic and political integration of Sarentria, Durentrus, North Ethalria, and Faethalria is falling behind schedule. Issues with these nations need to be address urgently, to prevent Central Aurora from dragging the rest of the continent down economically. This includes expediting access to trading routes such as roads, navigable rivers, and railways. Furthermore, cultural and ethnic issues that might make free labour movement difficult need to addressed, given lingering tensions among Morsts, Ethalrians and Salovians. Moreover, we believe that there still issues with linking the power grid of the former Ethalrian nations with the Pan Auroran Continental Power Grid. We also believe that telecommunications infrastructure needs to improve to tap into the benefits of broadband fibre-optic technology, and 5th generation mobile communication.[/justify]
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Erratum: An earlier version of this report stated that the Vothetria Prime Minister had been kidnapped. This has been changed to reflect that there was an attempted assassination. Furthermore, additional detail was provided for the Joralesia attack.
