Country Reports
2020
April 14, 2020
Tunisia: Request for Purchase Under the Rapid Financing Instrument-Press Release; Staff Report; and Statement by the Executive Director for Tunisia
Description: This paper discusses Tunisia’s Request for Purchase Under the Rapid Financing Instrument (RFI). The IMF financing will support the authorities’ emergency measures to contain the spread of the virus and mitigate its human, social, and economic toll amid unprecedented uncertainty. These measures involve raising health spending, strengthening social safety nets, and supporting small- and medium-sized firms hit by the crisis. The RFI is the most appropriate instrument to help address the urgent balance of payments need considering that too little time would have been left before the Extended Fund Facility expiration on May 19 to agree on the significant revisions to program objectives required in response to the Covid-19 shock. The IMF financing will also ensure an adequate level of international reserves and catalyze additional donor financing. The authorities are committed to maintaining prudent economic policies and resuming fiscal consolidation once the crisis abates to ensure macroeconomic stability and the sustainability of Tunisia’s debt. Macroeconomic stability and debt sustainability hinge on strong policy and reform implementation. The authorities are committed to resuming fiscal consolidation once the crisis abates.
April 13, 2020
The Gambia: First Review of the Staff-Monitored Program and Request for a 39-Month Arrangement under the Extended Credit Facility
Description: This paper presents The Gambia’s First Review of the Staff-Monitored Program and Request for a 39-Month Arrangement Under the Extended Credit Facility (ECF). The IMF-supported program aims to help The Gambia to be better prepared for external shocks, pursue high and inclusive growth, lessen debt vulnerabilities, strengthen public financial management, and bolster domestic revenue mobilization. The ECF arrangement is essential to help the authorities deal with the challenges posed by the coronavirus disease 2019 pandemic. The Gambian authorities’ commitment to prudent policies and institutional improvements has supported robust economic growth, while voluntary debt service deferrals from their main external creditors have helped attain debt sustainability. The authorities should remain committed to fiscal consolidation in the medium-term to ensure debt sustainability. The vulnerabilities identified in the 2019 Financial Sector Stability Assessment should be addressed to ensure soundness of the financial sector and improve legal and supervisory framework for banking supervision. The authorities should leverage the financial inclusion strategy, including through mobile banking, while strengthening the oversight of nonbanking institutions and monitoring of risks involved in mobile banking.
April 10, 2020
Malta: 2020 Selected Issues
Description: This Selected Issues paper analyses immigration and the labor market in Malta. This paper finds that immigration has been positive for Malta, as it has helped boost growth, employment, productivity and incomes. The increased availability of foreign labor has also helped contain wage inflation (and hence probably also price inflation) in recent years, contributing to maintain competitiveness in the face of a booming economy. The results suggest that foreign workers have helped contain aggregate wage inflation. The baseline regression includes as regressors the headline unemployment rate, lagged core inflation, labor productivity growth, the share of foreign workers in total employment, and the first and fourth lags of the dependent variable. The results across some selected models suggest that foreign labor has helped contain wage inflation in recent years. In order to identify the drivers of nominal wage growth, a decomposition analysis is conducted which allows calculating the contributions of each of the independent variables included in the regressions.
April 10, 2020
Malta: 2020 Article IV Consultation-Press Release and Staff Report
Description: This 2020 Article IV Consultation focuses on Malta’s near and medium-term challenges and policy priorities and was prepared before coronavirus disease 2019 became a global pandemic and resulted in unprecedented strains in global trade, commodity and financial markets. Pursuing structural reforms is expected to help sustain Malta’s growth performance while promoting social inclusion. The focus should continue to be on encouraging female and elderly participation in the labor market, upskilling the labor force and stimulating innovation. Moreover, to safeguard the business climate, remaining governance shortcomings should be addressed without delay, including by stepping up the fight against corruption and by increasing the efficiency of the judicial system while ensuring its independence. Improving access to affordable housing remains a key priority in support of greater inclusion. It is imperative to maintain gradual consolidation to ensure a balanced structural budget excluding proceeds from the Individual Investor Program. The IMF staff suggests continuing addressing infrastructure needs while upgrading public investment efficiency. Improve fiscal risk analysis and management.
April 10, 2020
Republic of Madagascar: Request for Disbursement under the Rapid Credit Facility-Press Release and Staff Report; and Statement by the Executive Director for the Republic of Madagascar
Description: This paper discusses Republic of Madagascar’s Request for Disbursement Under the Rapid Credit Facility (RCF). The coronavirus disease 2019 pandemic is having a severe impact on Madagascar’s economy. Due to dramatic declines in tourism and disruptions to manufacturing and extractive industry exports, as well as transport, communications, and services, real gross domestic product growth is likely to decline sharply. The fiscal situation is also deteriorating rapidly with additional health and social spending outlays and a significant shortfall in tax revenue. Fund support under the RCF is expected to help the authorities meet the urgent fiscal and external financing needs to mitigate the impact of the pandemic. The authorities are taking immediate measures to address the human and economic impact of the pandemic, while preserving macroeconomic stability. These include increases in health spending, help to the most vulnerable, support to the private sector, and actions to preserve the stability of the financial sector and maintain the flexible exchange rate regime.
April 6, 2020
Nepal: 2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Nepal
Description: This 2020 Article IV Consultation focuses on Nepal’s near and medium-term challenges and policy priorities and was prepared before coronavirus disease 2019 became a global pandemic and resulted in unprecedented strains in global trade, commodity and financial markets. During recent years, strong growth in Nepal has been supported by greater political stability, improved electricity supply, and reconstruction activity following the devastating earthquakes in 2015. Additional policies are needed to continue to support inclusive growth, while safeguarding macroeconomic and financial stability. Fiscal policy should remain prudent, and the transition to fiscal federalism carefully managed. Macroprudential measures should remain in place to limit the build-up of financial sector risk. Recent reforms to boost foreign investment need a supportive implementation environment. Strengthening the implementation of monetary policy requires a well-functioning interest rate framework that reduces volatility in short-term interest rates. Less short-term interest rate volatility would support financial market development and improve policy signaling and transmission. The IMF staff emphasizes the need to introduce a standing deposit facility as a first step toward establishing a reliable implementation track record for the interest rate corridor.
April 6, 2020
Nepal: Selected Issues
Description: This Selected Issues paper on Nepal measures the extent to which Nepal’s households change their expenditure patterns and labor supply in response to remittances, using the Nepal Household Risk and Vulnerability Survey—2016 and employing a propensity score matching method. This study provides stylized facts on migrant workers and remittance-recipient households (HH), and then analyzes the effect of remittances on HHs' expenditure patterns and labor supply. Reliance on remittances, both at the macro and household levels, makes Nepal highly vulnerable to shifts that could diminish remittance inflows. The slowdown in growth of remittances has been significant since 2016, owing to weak economic performance in major remittance-sending economies and less outward migration. This study also analyzes the effect of remittances on labor market participation of left behind household heads, using a propensity score matching method. The results show that remittances have supported greater consumption of productive goods (such as durable goods, education and health), without discouraging labor supply of remittance-receiving family members.
April 6, 2020
Papua New Guinea: 2019 Article IV Consultation and Request for Staff Monitored Program-Press Release; Staff Report; and Statement by the Executive Director for Papua New Guinea
Description: This paper presents Papua New Guinea’s (PNG) 2019 Article IV Consultation and Request for Staff Monitored Program. The economy is estimated to have rebounded in 2019 following the contraction triggered by the large earthquake in 2018. Inflation is projected to fall in 2019 but to pick up temporarily thereafter. The staff report reflects discussions with the PNG authorities in October 28–November 9, 2019 and is based on the information available as of November 21, 2019. It focuses on PNG near- and medium-term challenges and policy priorities and was prepared before coronavirus disease 2019 became a global pandemic and resulted in unprecedented strains in global trade, commodity and financial markets. It, therefore, does not reflect the implications of these developments and related policy priorities. The outbreak has greatly amplified uncertainty and downside risks around the outlook. Staff is closely monitoring the situation and will continue to work on assessing its impact and the related policy response in PNG and globally.
April 2, 2020
Republic of San Marino: 2020 Article IV Consultation-Press Release and Staff Report
Description: This 2020 Article IV Consultation discusses that San Marino is now facing very significant challenges owing to the recent coronavirus disease 2019 (COVID-19) outbreak, which has taken a heavy toll on local population and businesses. The staff report reflects discussions with the Sammarinese authorities in January 2020 and is based on the information available as of January 31, 2020. It focuses on San Marino’s near- and medium-term challenges and policy priorities and was prepared before COVID-19 became a global pandemic and resulted in unprecedented strains in global trade, commodity, and financial markets. It, therefore, does not reflect the implications of these developments and related policy priorities. The outbreak has greatly amplified uncertainty and downside risks around the outlook. Staff is closely monitoring the situation and will continue to work on assessing its impact and the related policy response in San Marino and globally. With no credible measures to restore banking system health and in the face of a continued weak external environment, economic growth is projected to remain subdued in the coming years. Slow progress in repairing the banking system and failure to restore fiscal sustainability are the key and material risks.
April 1, 2020
Kingdom of the Netherlands-Curacao and Sint Maarten: 2019 Article IV Consultation-Press Release and Staff Report; and Statement by the Executive Director for the Kingdom of the Netherlands-Curacao and Sint Maarten
Description: This 2019 Article IV Consultation focuses on Curaçao and Sint Maarten’s near and medium-term challenges and policy priorities and was prepared before coronavirus disease 2019 became a global pandemic and resulted in unprecedented strains in global trade, commodity and financial markets. The fiscal position in Curaçao improved in the past two years, in part due to implemented fiscal measures. Both Curaçao and Sint Maarten would benefit from introducing a Fiscal Responsibility Framework. It could incorporate a central government debt ratio as a long-term anchor and operational rules calibrated to meet it. The report suggests that risks in the financial sector need to be addressed as a matter of priority. The authorities should develop a strategy for addressing financial sector vulnerabilities with the objective of preserving financial stability while minimizing fiscal costs. Significant strengthening of supervision and a complete overhaul of the bank resolution framework are also urgently needed. An across-the board improvement in the governance framework should be a key priority in both countries. Vulnerabilities in the financial system point to the need to strengthen governance in the financial sector.