Country Reports
2024
June 28, 2024
Central African Republic: Second Review Under the Extended Credit Facility, Requests for a Waiver of Nonobservance of Continuous Performance Criterion, Augmentation of Access, and Financing Assurance Review-Press Release; Staff Report; and Statement by the Executive Director for the Central African Republic
Description: This paper highlights Central African Republic’s Second Review under the Arrangement under the Extended Credit Facility, Requests for a Waiver of Nonobservance of Continuous Performance Criterion, Augmentation of Access, and Financing Assurances Review. The economy is projected to grow by 1.4 percent in 2024, up from the 0.7 percent posted in 2023, while inflation gradually declines in subsequent years. These projections hinge on expediting reforms to the fuel market. Program implementation was broadly satisfactory considering significant fragilities and uncertainties. Performance under the program has been broadly satisfactory. All but one of the quantitative performance criteria were met, reflecting the authorities’ efforts last December to recover past due taxes and delay spending. The exception was the continuous performance criterion on the nonaccumulation of external arrears, which was missed due to liquidity pressures and the lack of coordination between cash and debt management units. An increase in revenue mobilization in 2024 will hinge on adhering to the action plan. The latter aims to improve the transparency of fuel price structures, align policy reforms with program goals, enhance collaboration among stakeholders, and bolster regulatory enforcement.
June 28, 2024
Ukraine: Fourth Review of the Extended Arrangement under the Extended Fund Facility, Request for Modifications of a Performance Criterion, and Financing Assurances Review-Press Release; Staff Report; and Statement by the Executive Director for Ukraine
Description: This paper discusses Ukraine’s Fourth Review of the Extended Arrangement under the Extended Fund Facility (EFF), Request for Modification of a Performance Criterion, and Financing Assurances Review. Ukraine’s performance remains strong under the EFF despite challenging conditions. All quantitative performance criteria for end-March were met, and all structural benchmarks through end-June were implemented on time or with a short delay. The Ukrainian economy continues to be resilient although the outlook remains subject to exceptionally high uncertainty. Sustained reform momentum and timely disbursement of external support are necessary to safeguard macroeconomic stability, restore fiscal and debt sustainability, and enhance institutional reforms to lay the path to European Union accession. Timely and predictable external disbursements together with strong domestic resource mobilization and careful liquidity management are necessary for Ukraine to meet its financing needs. Fiscal policies for the remainder of 2024, together with preparation for the 2025 budget, should be underpinned by steadfast revenue mobilization efforts aligned with the National Revenue Strategy.
June 28, 2024
Islamic Republic of Mauritania: Second Reviews Under the Arrangements Under the Extended Credit Facility and the Extended Fund Facility, Requests for Modification of Performance Criteria and a Waiver of Nonobservance of Performance Criterion, and First Review Under the Arrangement Under the Resilience and Sustainability Facility-Press Release; and Staff Report
Description: This paper highlights Islamic Republic of Mauritania’s Second Reviews under the Arrangements under the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF), Requests for Modification of Performance Criteria and a Waiver of Nonobservance of Performance Criterion, and First Review under the Arrangement under the Resilience and Sustainability Facility (RSF). In 2024, economic growth is expected to improve, while inflation has slowed down significantly. However, the economic outlook remains uncertain. Continued implementation of the programs under the ECF and EFF arrangements, and of the ambitious reform measures to address climate-related vulnerabilities, supported by the RSF arrangement will help address Mauritania’s medium- and long-term challenges and catalyze additional financing from donors and the private sector. End-March 2024 indicative targets for net international reserves, net domestic assets (NDA), new arrears and the present value of newly contracted debt were also met. December 2023 and March 2024 structural benchmarks (SBs) were met. IMF supports the authorities’ request for a modification of the NDA performance criteria for end-June to end-December 2024 from changes to levels, and a modification of two SBs related to governance reforms, in line with IMF technical assistance recommendations.
June 27, 2024
Dominica: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Dominica
Description: The 2024 Article IV Consultation discusses that the Dominican economy has recovered strongly following the pandemic shock. Real gross domestic product grew by 5.6 percent in 2022 and an estimated 4.7 percent in 2023 returning to pre-pandemic output levels. Policy responses have eroded essential fiscal buffers, despite large Citizenship by Investment (CBI) revenues, which have supported reconstruction, infrastructure development, and climate adaptation. The country remains exposed to shocks, while tight fiscal space constrains development initiatives. The ongoing economic expansion provides an opportunity to rebuild essential buffers and reorient policies toward increasing prospects for more sustained and resilient growth. Dominica’s output has recovered to its pre-pandemic level, reflecting a rebound in tourism and public investment, supported by buoyant CBI revenues. Inflation has subsided from its 2022 peak, but external imbalances have deteriorated modestly. Banks remain well capitalized and liquid although credit unions suffer from persistent weak capital and asset quality. The outlook is subject to downside risks, especially from climate change, volatile tourism receipts, commodity prices, and CBI revenues. Meanwhile, longstanding impediments to private investment and employment weigh on growth and productivity. Policy priorities are to address fiscal and external imbalances while enhancing the basis for sustained and resilient growth.
June 27, 2024
Panama: 2024 Article IV Consultation-Press Release; and Staff Report
Description: The 2024 Article IV Consultation discusses that Panama grew very rapidly in the two decades preceding Coronavirus disease 2019 but was hit very hard by the pandemic. Between 1994 and 2019, gross domestic product (GDP) per capita increased from 33 percent of US GDP per capita to 48 percent. Rapid growth was driven by an unprecedented construction and investment boom that included major construction projects, such as the enlargement of the Panama Canal and the Tocumen airport, and the expansion of the services and logistics sectors that benefited from those projects. The government aims to reduce the fiscal deficit to 2.0 percent of GDP in 2024. As budgeted spending is not consistent with this target, the government intends to meet the target by keeping public investment well below the budget, but this would require an unduly large compression of investment when unemployment is expected to increase and growth to slow down. In order to maintain room for investment, increased revenue mobilization is needed. In order to safeguard financial stability, it is essential that banks remain well capitalized and liquid. Strengthening human capital and governance will help sustain convergence. Continued implementation of the national statistical plan will improve the quality and timeliness of key macroeconomic data.
June 27, 2024
Panama: Selected Issues
Description: This Selected Issues paper discusses unravelling Panama’s large unemployment fluctuations. Panama’s labor force and employment have increased remarkably over the last decades. The rapid labor force growth was driven by a combination of demographic and social transformations. The increase in the labor force participation rate was the result of rising female labor force participation. Panama’s income convergence in the 25 years preceding the Pandemic was in large part the result of an increase in the employment to population rate. Convergence can either result from an increase in the employment rate relative to that in the US, or from faster labor productivity growth. In the case of Panama, about three quarters of the reduction in the income differential with the US was driven by an increase in the employment to population rate, and only one quarter was the result of faster labor productivity growth. Going forward, the increase in the employment to population ratio is likely to be slower and, for income convergence to continue, productivity growth will need to accelerate. The demographic transition has largely run its course as population growth is projected to keep declining and the share of the working-age population is expected to decrease in the next decades.
June 26, 2024
Zambia: Third Review Under the Arrangement Under the Extended Credit Facility, Requests for Augmentation of Access, Modifications of the Monetary Policy Consultation Clause and of Quantitative Performance Criteria, and Financing Assurances Review-Press Release; Staff Report; and Statement by the Executive Director for Zambia
Description: This paper discusses Zambia’s Third Review under the Arrangement under the Extended Credit Facility, Requests for Augmentation of Access, Modifications of the Monetary Policy Consultation Clause and of Quantitative Performance Criteria, and Financing Assurances Review. A tight monetary stance until inflation declines toward the Bank of Zambia’s target range would help anchor inflation expectations. Reserve accumulation and sustained exchange rate flexibility remain critical to address external shocks. Financial sector reforms are important to foster financial stability and inclusion. The authorities remain committed to supporting macroeconomic stability, restoring fiscal and debt sustainability, clearing arrears, and addressing Zambia’s drought-related humanitarian needs. They are also focused on advancing structural and governance reforms to promote inclusive growth. Governance and structural reforms remain key to promoting private sector activity and economic diversification. Implementing the Access-to-Information Act, reviewing the Anti-Corruption Act in a timely manner, and enhancing transparency and governance in the energy and mining sectors will help reduce policy uncertainty, improve the business climate, and attract greater investments.
June 25, 2024
United Republic of Tanzania: Third Review Under the Extended Credit Facility Arrangement and Request for Extension of the Extended Credit Facility Arrangement and Rephasing of Access, and Request for an Arrangement Under the Resilience and Sustainability Facility-Press Release; Staff Report; and Statement by the Executive Director for the United Republic of Tanzania
Description: This paper presents United Republic of Tanzania’s Third Review under the Extended Credit Facility Arrangement, Request for Extension of the Extended Credit Facility (ECF) Arrangement and Rephasing of Access, and Request for an Arrangement under the Resilience and Sustainability Facility. The ongoing growth-friendly fiscal consolidation will help buttress fiscal and debt sustainability. Efforts should be geared toward enhancing domestic revenue mobilization and strengthening cash management and commitment controls. Strengthening public financial and investment management will help contain fiscal risks and improve the efficiency of public investment. Performance under Tanzania’s economic reform program supported by the ECF remained strong. The authorities are committed to continue implementing reforms to preserve macro-financial stability, strengthen the economic recovery, and promote sustainable and inclusive growth. Structural reforms are essential to promote inclusive, resilient, and sustainable growth. Business reforms should focus on streamlining bureaucratic procedures, simplifying the regulatory regime, and enhancing regulatory transparency. Implementation and enforcement of the authorities’ anti-corruption legislation and strategies is central to enhancing governance.
June 24, 2024
Luxembourg: Financial Sector Assessment Program—Technical Note on Macroprudential Policy Framework, Tools, and Calibration
Description: This paper discusses a technical note on Macroprudential Policy Framework, Tools, and Calibration for the Luxembourg Financial Sector Assessment Program (FSAP). Strong policy support and high financial buffers are helping the financial sector weather the consecutive shocks, but pre-pandemic vulnerabilities have continued to rise. The authorities have made commendable progress in developing their operational framework in line with the 2017 FSAP recommendations. The 2024 FSAP suggests multiple avenues to reduce the risk of inaction bias and enhance the effectiveness of macroprudential policy. The macroprudential authorities should strengthen communication on macroprudential policy decisions, including in case of inaction, and enhance accessibility to the public. Communication by the systemic risk committee on macroprudential decisions and elements underpinning the decision should be systematic even if no action is taken, and accessibility to the public enhanced. In the short term, macroprudential policy should preserve resilience against real estate vulnerabilities through targeted capital-based measures, and then address structural indebtedness early in the recovery cycle through borrower-based measures.
June 24, 2024
Switzerland: Selected Issues
Description: This Selected Issue Paper studies the relationship between monetary policy, financial conditions, and real activity during the current monetary policy-tightening episode in Switzerland. After a review of various channels through which monetary policy changes affect financial conditions, the paper shows that the transmission of policy rates to market rates has been swift and that the exchange rate is an important channel. The response of real activity to tightening financial conditions has remained broadly in line with past tightening episodes. The interest rate increase has influenced cash flows for households due to higher mortgage interest expenses. Higher interest rates also lead to higher rental cost for non-homeowners. Policy rate adjustments affect the average interest rates of mortgages and thus the mortgage reference interest rate, which is a factor for rent adjustments by Swiss regulation. Monetary tightening has contributed to a slowdown of private credit and house-price growth. Growth of mortgage loans, which represent 85 percent of bank lending, moderated to 2.4 percent in 2023 from 3.5 percent in 2022.