Country Reports
2020
May 15, 2020
Malawi: Request for Disbursement under the Rapid Credit Facility-Press Release; Staff Report; and Statement by the Executive Director for Malawi
Description: This paper discusses Malawi’s Request for Disbursement Under the Rapid Credit Facility (RCF). The coronavirus disease 2019 pandemic is having a severe impact on Malawi, creating an urgent balance of payments need. The authorities have been proactive in mitigating the impact of the pandemic, including through increased spending on health care and social assistance, supporting small and medium enterprises, bolstering farmers’ incomes and ensuring food security through purchase and storage of agricultural harvests, and easing liquidity constraints in the banking system. The IMF’s emergency financing under the RCF is expected to help the authorities meet the large external financing gap and catalyze further assistance from the international community. Additional concessional donor support will be critical to close the remaining external financing gap and facilitate the needed interventions to ease the economic and social impacts of the pandemic, while preserving Malawi’s hard-earned macroeconomic stability. A widening of the budget deficit is appropriate in the near-term, given the fiscal costs associated with the economic slowdown and critical additional health care and social spending needs, which should be executed transparently and targeted to the most affected parts of society.
May 15, 2020
El Salvador: Technical Assistance Report-Monthly Volume Indicator of Economic Activity and Institutional Sector Accounts Mission
Description: This Technical Assistance report on El Salvador highlights analysis on the Monthly Volume Indicator of Economic Activity (IMVAE) and institutional sector accounts mission. The mission reviewed the process followed by the National Accounts Department team to consolidate the IMVAE and compile the economic activity indicators established in accordance with the recommendations of the previous mission carried out in September 2017. It found a very thorough analysis and review of the basic statistics available for measuring that indicator. Particularly noteworthy is the magnitude of the interinstitutional effort to provide new information gleaned from the results of the Monthly and Quarterly Economic Surveys, conducted by the Directorate General of Statistics and Censuses with Central Reserve Bank of El Salvador support. The mission suggested to continue to apply the methodology established for compiling and continuously updating the IMVAE, while constantly analyzing the consistency, quality, and timeliness of the calculation of the indicator and its alignment with quarterly data and ensuring that it is consistent with the concepts and guidelines underlying Quarterly National Accounts aggregates.
May 14, 2020
Uganda: Request for Disbursement under the Rapid Credit Facility-Press Release; Staff Report; and Statement by the Executive Director for Uganda
Description: This paper analyzes Uganda’s Request for Disbursement Under the Rapid Credit Facility. The Ugandan economy is severely affected by the coronavirus disease 2019 (COVID-19) pandemic. In order to contain the impact of the pandemic, the authorities have increased health spending, strengthened social protection to the most vulnerable, and enhanced their support to the private sector. The Bank of Uganda has appropriately reduced interest rates and provided liquidity to safeguard financial stability, while maintaining exchange rate flexibility. The weakening economic conditions emanating from the Covid-19 pandemic have put significant pressures on revenue collection, expenditure, reserves and the exchange rate, creating urgent large external and fiscal financing needs. The IMF continues to monitor Uganda’s situation closely and stands ready to provide policy advice and further support as needed. The authorities have also committed to put in place targeted transparency and accountability measures to ensure the appropriate use of emergency financing. The IMF’s emergency financial support under the RCF, along with the additional donor financing it is expected to help catalyze, will help address Uganda’s urgent balance of payments and budget support needs.
May 13, 2020
Chile: Technical Assistance Report-Central Bank Services to Non-bank Financial Institutions
Description: This Technical Assistance report on Chile constitute technical advice provided by the staff of the IMF to the Banco Central de Chile (BCCh) in response to their request for technical assistance. The BCCh is considering broadening access to its services beyond commercial banks and some Financial Market Infrastructures. The mission emphasized the overarching requirement for all central bank counterparts to be adequately regulated and supervised, to mitigate the central bank’s operational, financial, and reputational risks. Recent changes to the banking law facilitate consolidation of the banking supervisor into the nonbank supervisor. This move should facilitate equal treatment across participants and reduce the prospect of regulatory arbitrage. The new architecture should ease, though not eliminate, coordination efforts between BCCh and authorities when it comes to maintaining financial stability. By applying the assessment framework to Chile, the mission recommended some minor broadening of Nonbank Financial Institutions access to BCCh services, while noting that it should have the power to provide liquidity to any nonbank financial sector to contain spillovers that may otherwise threaten financial stability more generally.
May 13, 2020
Grenada: Request for Disbursement Under the Rapid Credit Facility; Press Release; Staff Report; Staff Statement; and Statement by the Executive Director for Grenada
Description: This paper discusses Grenada’s Request for Disbursement Under the Rapid Credit Facility. IMF financing support provides resources to the countries’ authorities for essential health-related expenditures and income support to ease the impact of coronavirus disease 2019 on the population. The countries’ governments have responded to the pandemic by swiftly implementing containment measures, allocating scarce budgetary resources to critical health care spending, and introducing income support to the most affected sectors and households. Protection of the financial system will help cushion the economic impact of the pandemic. Measures have also been taken by the Eastern Caribbean Central Bank to facilitate the provision of credit and safeguard financial stability. Going forward, and once the current crisis dissipates, the authorities intend to push ahead with a comprehensive Disaster Resilience Strategy aimed at building resilience to natural disasters. They are also committed to further strengthening financial sector oversight to safeguard macro-financial stability.
May 12, 2020
Djibouti: Requests for Disbursement Under the Rapid Credit Facility and Debt Relief Under the Catastrophe Containment and Relief Trust-Press Release; and Staff Report; and Statement by the Executive Director for Djibouti
Description: This paper highlights Djibouti’s Requests for Disbursement Under the Rapid Credit Facility and Debt Relief Under the Catastrophe Containment and Relief Trust. The coronavirus disease 2019 pandemic is having a severe impact on Djibouti, creating urgent balance of payments and fiscal financing needs. The authorities acted swiftly to contain and mitigate the spread and impact of the virus. Their prevention and containment measures and decisions to scale-up health and other emergency spending to protect households and firms hit by the crisis will help limit economic and social consequences. IMF support is expected to provide additional resources for the essential health and other emergency spending, including social safety nets. It will also help catalyze additional donor support. Once the crisis abates, temporary measures should be unwound, with policies refocusing on promoting a strong and inclusive recovery and preserving medium-term debt sustainability. It will be critical to address and prevent the recurrence of external arrears, ramp up operations of key projects, and reduce public sector borrowing.
May 12, 2020
St. Lucia: Request for Disbursement Under the Rapid Credit Facility-Press Release; and Staff Report
Description: This paper discusses St. Lucia’s Request for Disbursement Under the Rapid Credit Facility. IMF financing support provides resources to the countries’ authorities for essential health-related expenditures and income support to ease the impact of coronavirus disease 2019 on the population. In order to address the pandemic, the authorities announced measures to help employees and households, including income support to the unemployed, tax relief, and providing cash transfers to the most vulnerable and affected. The countries’ governments have responded to the pandemic by swiftly implementing containment measures, allocating scarce budgetary resources to critical health care spending, and introducing income support to the most affected sectors and households. Protection of the financial system will help cushion the economic impact of the pandemic. Measures have also been taken by the Eastern Caribbean Central Bank to facilitate the provision of credit and safeguard financial stability. The IMF will continue to be engaged with Dominica, Grenada, and St. Lucia, and stands ready to provide policy advice and further support as needed.
May 12, 2020
Kyrgyz Republic: Request for Purchase Under the Rapid Financing Instrument and Disbursement under the Rapid Credit Facility-Press Release; and Staff Report
Description: This paper focuses on the Kyrgyz Republic’s Request for Purchase Under the Rapid Financing Instrument and Disbursement Under the Rapid Credit Facility. The coronavirus disease 2019 pandemic has hit the Kyrgyz economy very hard and increased an already urgent balance of payments need. All sectors are being severely affected while measures are being taken to stop the spread of the virus. The IMF emergency support addresses the urgent balance of payments need, shores up confidence, and catalyzes donor support. In order to ensure that the financing provided is efficiently spent on addressing the crisis, the authorities have committed to strengthen procurement rules. The health care contingency plan and the initial package of economic measures already adopted by the authorities to provide health and economic relief are welcome, as is the second, larger, package of measures under preparation. In their attached letter of intent, the authorities remain committed to temporarily loosening macroeconomic and financial policies to finance health and economic relief and support a recovery. They have also made additional commitments to strengthen procurement rules, including steps to enhance transparency, to help ensure that financing received is efficiently spent on addressing the crisis.
May 11, 2020
Republic of Kenya: Request for Disbursement under the Rapid Credit Facility-Press Release; Staff Report; and Statement by the Executive Director for the Republic of Kenya
Description: This paper discusses the Republic of Kenya’s Request for Disbursement Under the Rapid Credit Facility (RCF). The coronavirus disease 2019 pandemic is taking a serious toll on the Kenyan economy, significantly reducing growth, creating fiscal and external financing needs. It is important that the authorities resume their fiscal consolidation plans to reduce macroeconomic vulnerabilities once the crisis abates. The pandemic has impacted nearly all facets of the economy—particularly tourism, transport, and trade—and led to urgent balance of payments and fiscal financing needs. Emergency financing under the RCF will deliver liquidity support to help Kenya cover its balance of payments gap this year. It will provide much-needed resources for fiscal interventions to safeguard public health and support households and firms affected by the crisis. It will also catalyze necessary financing from other donors. The Central Bank of Kenya (CBK) has taken various measures to maintain enough liquidity in the financial sector. It should continue to stand ready to further support the economy and the financial sector’s health, as necessary, while ensuring that policy decisions are data driven. The CBK should also continue to allow the exchange rate to act as a shock absorber.
May 11, 2020
Nepal: Request for Disbursement Under the Rapid Credit Facility-Press Release; Staff Report; and Statement by the Executive Director for Nepal
Description: This paper presents Nepal’s Request for Disbursement Under the Rapid Credit Facility (RCF). The coronavirus disease 2019 pandemic is having a severe impact on Nepal’s economy. During recent months, remittances have fallen considerably, tourist arrivals collapsed, and domestic activity has taken a hit amid social distancing measures. The authorities are taking proactive, well-targeted measures to address the human and economic impact of the pandemic, while preserving macroeconomic stability. Such measures include increasing health spending, strengthening social assistance to protect the most vulnerable, and providing bank liquidity and credit support. Additional assistance from development partners, beyond what had already been committed before the outbreak of the pandemic, is needed to close the remaining balance of payments gap and ease the fiscal situation. The authorities’ commitment to high standards of transparency and governance in the management of financial assistance is welcome. The IMF staff assesses that Nepal meets the RCF eligibility requirements and supports the request. Public debt is at low risk of distress and there is adequate capacity to repay the Fund. The IMF disbursement is expected to play a catalytic role in securing additional financing from Nepal’s development partners.