Country Reports
2019
December 26, 2019
Benin : Fifth Review under the Extended Credit Facility Arrangement, Request for Extension, and Request for Modification of Performance Criteria-Press Release; and Staff Report
Description: This paper discusses Benin’s Fifth Review Under the Extended Credit Facility Arrangement, Request for Extension, and Request for Modification of Performance Criteria. Program implementation continues to be very satisfactory. The macroeconomic and structural policies outlined by the authorities are adequate to pursue the program’s objectives, and risks to program implementation are deemed manageable. Benin’s economic performance remains strong despite a less supportive external environment and the border closure with Nigeria. The significant increase in the share of external debt in total debt in the past two years warrants caution. The recent debt reprofiling operation and the Eurobond issuance have contributed to lowering borrowing costs, diversifying the financing structure, and extending debt maturity. However, these operations can also generate new vulnerabilities that will need to be mitigated through an enhanced debt management strategy and continued capacity improvements at the debt management office.
December 23, 2019
Gabon: Selected Issues
Description: This Selected Issues on Gabon seeks to quantify the impact of governance reforms on growth. It uses a dynamic stochastic general equilibrium (DSGE) model calibrated to Gabon to simulate the potential benefits from governance and anti-corruption reforms to growth and public debt. Vulnerabilities in the fiscal institutional framework constrain effective revenue collection and reduce the efficiency of public spending, thus limiting fiscal space for priority pro-growth spending. The results of a DSGE model for Gabon suggest that macro-fiscal gains from governance reforms could be substantial. The potential additional growth can range from 0.8 to 1.5 percent per year over the next 10 years, and debt can decline by 1.0 to 2.0 percent of non-oil gross domestic product per year over the same period. It is urgent to improve governance and curb corruption to boost domestic revenue, enhance public finance management and the quality of spending, and improve the business environment to promote private investment and facilitate private sector activity.
December 23, 2019
Gabon: 2019 Article IV Consultation, Fourth and Fifth Reviews under the Extended Arrangement under the Extended Fund Facility, and Request for Waiver of Nonobservance of Performance Criteria, and Rephasing of the Remaining Purchases; Press Release; Staff Report; and Statement by the Executive Director
Description: This paper presents 2019 Article IV Consultation with Gabon and its Fourth and Fifth Reviews Under the Extended Fund Facility (EFF), and Request for Waiver for NonObservance of Performance Criteria, and Rephasing of the Remaining Purchases. Gabon’s performance under the program supported by the IMF’s EFF Arrangement has been broadly satisfactory. Macroeconomic conditions have continued to improve, with growth slowly picking-up, fiscal and external positions improving, and public debt declining. Going forward, bold and ambitious reforms are needed to generate higher, more inclusive, and resilient growth. Sustained implementation of structural reforms is critical. Efforts to close infrastructure gaps, improve human capital, deepen financial intermediation, clear domestic arrears, and enhance governance and anticorruption measures are necessary to improve the business climate and achieve higher and inclusive growth. Efforts should continue to further boost domestic revenue and contain nonpriority spending, while protecting investment and enhancing social protection. Improving public finance management and the efficiency of public investment is also important for growth prospects.
December 23, 2019
Suriname: 2019 Article IV Consultation-Press Release; Staff Report; Informational Annex; and Statement by the Executive Director for Suriname
Description: This 2019 Article IV Consultation with Suriname discusses that Suriname continues to grow steadily with low inflation. However, there has been little progress in implementing urgently needed fiscal reforms, and the fiscal position is likely to continue to weaken in the coming year. The consultation focused on policies to bolster the economy in the medium term. These include fiscal measures to enhance revenues and efficiency and lower expenditures, policies to improve the monetary and financial sector supervision frameworks, and structural policies to boost potential growth. Advances have been made in developing the central bank’s monetary tools and facilities; however, more is needed to strengthen the credibility of the monetary framework. The banking sector faces important downside risks and there are gaps in the central bank’s supervisory and resolution framework. It is advised to put the public debt on a sustainable path. A significant reduction in the fiscal deficit could be achieved by implementing a value-added tax, curtailing electricity subsidies except to the poor, and improving public financial management.
December 23, 2019
India: 2019 Article IV Consultation-Press Release; Staff Report; Staff Statement and Statement by the Executive Director for India
Description: This 2019 Article IV Consultation with India discusses that India has been among the world’s fastest-growing economies in recent years, lifting millions out of poverty. However, growth slowed to a six-year low in the first half of 2019, with both consumption and investment decelerating owing to weak, especially rural, income growth, stresses in the nonbank financial sector, and corporate and environmental regulatory uncertainty. On the external sector, following a rise in vulnerabilities in 2018, stability has returned, anchored by high foreign reserve buffers and a modest current account deficit. With its strong mandate, the new government has an opportunity to reinvigorate the reform agenda aimed at boosting inclusive and sustainable growth. In the near term, given the cyclical weakness of the economy, monetary policy should maintain an easing bias at least until the projected recovery takes hold. Fiscal stimulus should be avoided given fiscal space at risk and revenue losses from the recent corporate income tax rate cut should be offset.
December 23, 2019
Democratic Republic of the Congo: Staff-Monitored Program and Request for Disbursement Under the Rapid Credit Facility; Press Release; Staff Report; and Statement by the Executive Director for the Democratic Republic of the Congo
Description: This paper discusses The Democratic Republic of the Congo’s Staff-Monitored Program and Request for Disbursement Under the Rapid Credit Facility. The economic environment remains challenging and vulnerable to shocks. Real gross domestic product growth is projected to decelerate to 4.5 percent in 2019 from 5.8 percent in 2018. The recent fall in commodity prices, new spending initiatives, and looser spending oversight during the political transition period have led to a weaker fiscal position mostly financed by the central bank. In this context, international reserves have fallen to critically low levels creating urgent balance of payment needs. The new government is committed to implementing measures and reforms that would strengthen macroeconomic stability, reinforce international reserves, address issues related to poor governance, a difficult business environment, and pervasive poverty. Authorities also intend to boost domestic revenue by restoring the functioning of the value-added tax and enforcing the personal income tax, while improving mining revenue forecasting. In addition, the government intends to introduce strict spending caps, increase the effectiveness of monetary policy, and foster inclusive growth and private sector development including through infrastructure projects and free basic education.
December 23, 2019
Seychelles: Fourth Review Under the Policy Coordination Instrument and Request for Modification of Targets
Description: This paper discusses Seychelles’ Fourth Review Under the Policy Coordination Instrument (PCI) and Request for Modification of Targets. Economic developments since the completion of the 2019 Article IV consultation and the third review under the PCI in June 2019 have been broadly in line with expectations. The program is largely on track. The 2020 budget recently submitted to the National Assembly is in line with the program and the major infrastructure and climate change related projects would be implemented within the fiscal parameters under the PCI. All quantitative targets for end-June 2019, the program’s fourth review test date, were met except for the primary fiscal surplus target, which was missed by a very small margin due to a delay in receipts from 2016 to 2017 sales of a telecom company. The economic outlook continues to be favorable. Downside risks to the outlook largely stem from possible external shocks, including weakness in the key tourism markets and global banks’ withdrawal of correspondent banking relationships.
December 23, 2019
Suriname: Selected Issues
Description: This Selected Issues paper on Suriname analyzes exchange rate pass through in Suriname. While the previous studies exclusively focused on the bilateral exchange rate against the US dollar, this study, in addition, estimates exchange rate passthrough using the nominal effective exchange rate. This is crucial given the strong presence of euros in the economy due to its historic connections with the Netherlands and French Guyana being one of its neighbors. The study is the first to investigate how various subcomponents of consumer price index respond to exchange rate variations differently for Suriname. The results suggest a cumulative exchange rate passthrough of around 0.4 (0.6) over six months and 0.6 (0.7) over one year for the entire sample of 1980-2019 (2000-19). A more systemic analysis suggests that the exchange rate passthrough has been declining and becoming more short-lived in recent years.
December 23, 2019
Cambodia: 2019 Article IV Consultation; Press Release; Staff Report; and Statement by the Executive Director for Cambodia
Description: This 2019 Article IV Consultation with Cambodia discusses stable macroeconomic environment, strong growth and ongoing structural reforms have contributed to significant progress toward Sustainable Development Goals (SDGs). However, uncertainties including slower global growth and potential suspension of preferential market access under the Everything but Arms (EBA) scheme highlight the importance of maintaining macroeconomic stability while meeting still large development needs, addressing elevated financial sector vulnerabilities, and accelerating structural reforms. Continued strong revenue mobilization efforts and a prudent fiscal stance supported by restraining nondevelopment current spending will allow additional spending to address development needs. Expenditures should be oriented toward supporting inclusive growth through priority infrastructure investment, as well as health and education spending. Policies should be geared toward addressing sizeable spending needs to reach SDG targets in health, education and infrastructure, with support from the private sector and international donors. Accelerated implementation of structural reforms is needed to remove structural constraints to growth, correct external imbalances, address governance and corruption weaknesses and promote sustainable and inclusive development.
December 23, 2019
Pakistan: First Review Under the Extended Arrangement Under the Extended Fund Facility and Request for Modification of Performance Criteria-Press Release; Staff Report; and Statement by the Executive Director for Pakistan
Description: This paper discusses Pakistan’s First Review Under the Extended Arrangement Under the Extended Fund Facility and Request for Modification of Performance Criteria. Pakistan’s program is on track and has started to bear fruit. However, risks remain elevated. Strong ownership and steadfast reform implementation are critical to entrench macroeconomic stability and support robust and balanced growth. The authorities are committed to sustaining the progress on fiscal adjustment to place debt on a downward path. The planned reforms include strengthening tax revenue mobilization, including the elimination of tax exemptions and loopholes, and prudent expenditure policies. Preparations for a comprehensive tax policy reform should start early to ensure timely implementation. The authorities have adopted a comprehensive plan to address the accumulation of arrears in the power sector. Its full implementation is key to improve collection, reduce losses, and enhance governance. Timely and regular adjustment of energy tariffs will bring the sector in line with cost recovery.