Country Reports
2019
September 12, 2019
Uganda: Technical Assistance Report-Strengthening the Performance of Public Investment Management–Next Phase
Description: This Technical Assistance report on the Uganda focuses on strengthening the performance of public investment management – next phase. Significant progress has been achieved since 2015 in strengthening public investment management, with the reforms showing first results. New procedures need to be designed to refresh project information and assess the status of ongoing projects. With better information, a robust prioritization process of ongoing and new projects within the medium-term envelope should be implemented. Discussions with Ministries, Departments and Agencies, and the mission’s analysis of the upgraded project data identified inconsistencies between projects’ planned use of resources, approved project budgets and the medium-term resource envelope. Reliable and updated information on project forward estimates and commitments like signed contracts and certificates of work is fundamental for ensuring sufficient and timely funding of projects. Recent strengthening of Public Investment Management processes has been accomplished with limited changes to the legal framework.
September 10, 2019
Montenegro: 2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Montenegro
Description: This 2019 Article IV Consultation with Montenegro highlights that while the implementation of large publicly financed infrastructure projects has added economic growth, the accompanying use of fiscal resources has contributed to a large increase in government debt including guarantees, which reached 79 percent of gross domestic product in 2018. Despite the recent intervention in two non-systemic domestic banks, the overall banking sector exhibits improving asset quality, strong credit growth, high liquidity, and is well capitalized. Efforts to improve banking and Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) supervision are paramount. The emphasis should be a shift to risk-based tools for supervision in both off-site and on-site functions, and the establishment of a stronger supervisory structure within the central bank. The main priorities are reduction of the labor tax wedge and implementation of the new labor law that aims to increase labor market flexibility. Future decisions on the minimum wage should consider a broad set of indicators and require careful analyses of the impact of past increases.
September 9, 2019
Saudi Arabia: Selected Issues
Description: This Selected Issues paper explores policies to drive diversification for Saudi Arabia. Diversification is needed to create jobs for Saudis and to mitigate the impact of uncertainty in oil markets. Although the business climate should be improved, and remaining infrastructure gaps addressed, reforms need to go beyond these areas. Diversification in Saudi Arabia that creates jobs for nationals could be held back by the effects of relatively high wages and their impact on cost competitiveness. Creative solutions are needed to address the impact of high government wages and employment on competitiveness. Industrial policy could help overcome the incentives that encourage companies to focus on the nontradable sector, but should be handled carefully, keeping lessons from other countries’ experiences in mind. Export orientation and competition are crucial mechanisms to ensure discipline. Strengthening human capital to raise productivity and provide workers with the skills needed in the private sector will be essential to success.
September 9, 2019
Saudi Arabia: 2019 Article IV Consultation-Press Release; and Staff Report
Description: This 2019 Article IV Consultation with Saudi Arabia discusses that reforms are starting to yield positive results. Oil prices and production have been volatile, and uncertainties in the global oil market continue. Promoting non-oil growth and creating jobs for Saudi nationals remain key challenges. Non-oil growth is expected to strengthen further this year and over the medium term. Risks to the growth outlook are broadly balanced. The fiscal deficit declined in 2018; however, higher government spending has increased medium-term fiscal vulnerabilities to a decline in oil prices. Fiscal consolidation is needed to reduce these vulnerabilities. The fiscal framework should be further strengthened to help reduce the procyclicality of government spending. Reforms to improve the business environment are proceeding but need to be complemented by efforts to increase the cost competitiveness of Saudi labor. Government support to develop sectors of the economy should crowd in the private sector and be timebound and linked to performance.
September 6, 2019
Federated States of Micronesia: 2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the Federated States of Micronesia
Description: This 2019 Article IV Consultation with Federated States of Micronesia (FSM) highlights that the economy has performed well in recent years, with relatively high growth and low inflation. Fiscal and current account balances have recorded large surpluses since 2017, owing to the authorities’ decision to save revenue windfalls. Nonetheless, the FSM faces significant medium-term uncertainty as various economic supports under the Compact Agreement with the United States are set to expire in 2023. Unless they are renewed, the FSM is expected to lose access to Compact grants, giving rise to a fiscal cliff in 2023; banking sector oversight by the Federal Deposit Insurance Corporation; and post-disaster rehabilitation assistance. The country is highly vulnerable to climate change, while private sector activity remains anaemic. It is recommended to improve resilience to climate change by strengthening capacity to implement adaptation projects. Over the medium term, disaster risks should be mitigated by using disaster insurance and disaster-contingent foreign financing.
September 6, 2019
Federated States of Micronesia: Climate Change Policy Assessment
Description: This Climate Change Policy Assessment (CCPA) takes stock of the Federated States of Micronesia (FSM)’s climate response plans, from the perspective of their macroeconomic and fiscal implications. CCPA explores the possible impact of climate change and natural disasters and the cost of FSM’s planned response. It suggests macroeconomically relevant reforms that could strengthen the national strategy and identifies policy gaps and resource needs. FSM has made progress toward its Nationally Determined Contribution mitigation pledge by beginning to expand renewable power generation and improve its efficiency. The authorities plan to continue this and encourage the take-up of energy efficient building design and appliances. Accelerating adaptation investments is paramount, which requires addressing critical capacity constraints and increasing grant financing. It is recommended that FSM needs to increase its capacity to address natural disaster risks following the expiry of Compact-related assistance in 2023. It is advised to improve climate data collection and use, including on the costs of high and low intensity disasters and disaster response expenditure.
September 5, 2019
Republic of Poland: Technical Assistance Report-Next Steps in Developing a Standard Chart of Accounts and Multi-year Budget
Description: This Technical Assistance report on the Republic of Poland provide details of an IMF mission to analyse next steps in developing a standard chart of accounts (SCoA) and multi-year budget. The Ministry of Finance (MoF) has started many preparatory activities for developing the SCoA. Extensive discussions and presentations during this mission afforded the mission the opportunity to convey information on the conceptual framework for the SCoA in more detail. Counterparts raised issues for clarification during initial meetings with the mission. Through a mini workshop, the mission tried to ensure that all counterparts fully understand the parameters of a multi-dimensional SCoA and the implication of decisions related to it. The main recommendations of this mission on the SCoA present various options available to address issues discussed. The mission recommended increasing the effectiveness of the accounting users’ survey by ensuring that the SCoA survey respondents are made fully aware of the purpose of the survey and the implications of their responses.
September 5, 2019
Mali: Request for Three-Year Arrangement Under the Extended Credit Facility-Press Release; Staff Report; and Statement by the Executive Director for Mali
Description: This paper discusses Mali’s Request for Three-Year Arrangement Under the Extended Credit Facility (ECF). The economic outlook for Mali remains positive; however, subject to important downside risks. The potential real growth rate is estimated at about 5 percent per year and inflation is expected to continue to be contained by the CFAF’s peg to the euro. Downside risks relate to the possible further deterioration of the security situation, potential shocks to the terms of trade (the price of gold, cotton, and fuels), and adverse weather conditions. Going forward, it is essential to pursue greater spending efficiency, including through strengthened project selection and execution, as well as the rationalization of subsidies. The authorities’ efforts to increase financial inclusion and narrow the gender gap, including by direct measures to economically empower women are welcome. The new ECF arrangement aims to support the authorities’ development strategy (CREDD) for strong and inclusive growth through job creation, economic diversification, and greater resiliency. The main focus in the short term is to significantly increase revenue collection to allow for development spending and to reform the energy sector.
September 4, 2019
Democratic Republic of the Congo: Selected Issues
Description: This Selected Issues paper focuses on macro-critical issues related to governance and corruption in Democratic Republic of the Congo (DRC). Third-party indicators suggest that governance has been poor and corruption widespread in the country. Conducting an audit of the civil service and improving the transparency of its remuneration system, simplifying tax payment processes, and merging the activities of the numerous revenue agencies would boost public efficiency and improve the business environment. Contract enforcement and protection of property rights could be enhanced by insulating the courts from external influence. Limited information on the budget annexes and special accounts and little or no oversight by the central government, Parliament, and civil society, create scope for corruption. The multiplicity of special taxes and fees, some accruing to special accounts outside the Treasury, generate opportunities for corruption and informalization of economic activity. Despite some progress in strengthening public financial management, budget execution remains deficient. The government has formalized the four stages of the expenditure chain and introduced budget commitment plans to align expenditures with revenues.
September 4, 2019
Republic of Moldova: Technical Assistance Report-Financial Soundness Indicators Mission
Description: This Technical Assistance Report on the Republic of Moldova provides details of IMF mission to review available source data for deposit takers and other sectors including other financial corporations (OFCs); and to review the current financial soundness indicators (FSI) compiled by the National Bank of Moldova with a view to ensure methodological consistency of the FSI compilation with the IMF’s FSI Compilation Guide 2006. The mission found some deviations from the FSI Guide in key indicators currently compiled based on the International Financial Reporting Standards and Basel III principles as well as national supervisory standards. Some methodological deviations include the measurement of capital. In order to support progress in the above work areas, the mission recommended a detailed action plan with several priority recommendations. It is recommended to expand the coverage of the OFCs sector to include the non-bank credit organizations (microfinance institutions and leasing companies) in collaboration and coordination with the National Commission for Financial Markets.