Finance ministries must rise to the challenge

Nabih Maroun is a partner, Jihad Azour a senior executive advisor and Mazen Ramsay Najjar a principal at Booz & Company The global financial crisis may be in the rearview mirror but it’s not yet out of sight. This is particularly true for emerging markets. The BRIC economies (Brazil, Russia, India and China) have returned to warp-speed growth, yet they remain susceptible to external shocks that could threaten their economic expansion and erode their fiscal foundations. Russia is vulnerable to swings in the price of oil, Brazil to commodity prices and India and China to global demand. China faces additional challenges from potential changes in exchange policy, which could have ramifications for its trade position. All four countries are facing massive capital inflows and overheating, with monetary policies not effectively aligned with fiscal policies. Also, they lack standardized, consistent public statistical data, which renders their economies largely opaque to outsiders.