Country Reports
2019
July 31, 2019
Chad: Staff Report for the 2019 Article IV Consultation, Fourth Review under the Extended Credit Facility Arrangement, Request for Modification of Performance Criteria-Press Release; Staff Report; and Statement by the Executive Director for Chad
Description: This paper discusses Chad’s 2019 Article IV Consultation, Fourth Review Under the Extended Credit Facility (ECF) Arrangement, Request for Modification of Performance Criteria, and Financing Assurances Review. Article IV discussions focused on policy priorities to deal with legacies from the crisis and the longstanding structural weaknesses. Reducing government domestic debt and domestic arrears would address key impediments to growth that persist from the crisis. Sustained efforts are needed to increase non-oil revenues, improve the efficiency and quality of public spending, and reduce the vulnerability of the fiscal position to oil price fluctuations. Performance under the ECF-supported program has been broadly satisfactory with continued improvement in the fiscal position and progress in implementing structural reforms in spite recent delays. Overall economic activity strengthened in 2018; however, further reform efforts are needed to support the recovery in the non-oil sector and improve social conditions. Chad’s program is supported by the implementation of policies and reforms by the regional institutions which are critical to its success.
July 31, 2019
Burkina Faso: Second Review Under the Extended Credit Facility Arrangement and Request for Waiver of Nonobservance of a Performance Criterion-Press Release; Staff Report; and Statement by the Executive Director for Burkina Faso
Description: This paper discusses Burkina Faso’s Second Review of the Extended Credit Facility (ECF) Arrangement and Request for a Waiver of Nonobservance of a Performance Criterion. Performance under the ECF-supported program has been broadly satisfactory. Economic activity remains resilient in the face of increased security and social tension pressures. Growth in 2018 remained resilient as a bumper harvest more than compensated for a decline in nonagricultural gross domestic product growth. Burkina Faso continues to pursue its development goals, and further support from the international community to address security and development needs is important. Additional effort is required to create fiscal space to support further progress in priority areas of development. The authorities are taking steps to strengthen the implementation of the automatic fuel price adjustment mechanism while developing social safety nets for the most vulnerable. In this respect, greater transparency, improved communication and the avoidance of discretionary implementation of the mechanism are crucial.
July 31, 2019
Chad: Selected Issues
Description: This Selected Issues paper explores non-oil growth impediments in Chad to better understand why the Chadian economy has not sufficiently rebounded from the crisis. It discusses how the economy is held back by crisis legacies such as high public debt and a fragile banking sector and how Chad continues to face long standing structural weaknesses which hamper potential growth. Three years of recession in Chad have left important legacies that continue to affect fiscal policy and performance in the non-oil private sector and the banking sector. Public domestic debt more than doubled with the crisis. As the Chadian economy was hit by the oil shock, while dramatically cutting spending, the government had to rely on large domestic financing to cushion the impact of the shock. Although the government started paying arrears, the remaining stock is very large and presents a drag on the non-oil economy. The paper ends with a discussion of how Chad’s economic potential will require reforms to address those weaknesses to foster economic diversification.
July 30, 2019
Montenegro: Technical Assistance Report-Report on the Monetary and Financial Statistics Mission
Description: This Technical Assistance Report on Montenegro highlights work of the mission with the authorities which included compiling monetary data based on the IMF standardized report forms (SRF), 1SR, and SRF 2SR, for depository corporations. While the depository corporations sector currently dominates the financial system in Montenegro, the Central Bank of Montenegro (CBCG) should also ensure the availability of source data for the compilation and dissemination of a quarterly Other Financial Corporations (OFC) survey given the sector’s potential to grow. The mission found the CBCG’s current data collection framework is broadly appropriate for the compilation of monetary data in line with the MFSMCG 2016 for the depository corporations’ sector, but further work is needed for OFCs. The mission advised on the correct treatment of negative interest accruals (due to negative interest rates) to ensure that the negative accruals diminish the value of the asset.
July 26, 2019
Iraq: 2019 Article IV Consultation and Proposal for Post-Program Monitoring-Press Release; Staff Report; and Statement by the Executive Director for Iraq
Description: This 2019 Article IV Consultation and Proposal for Post-Program Monitoring highlights that Iraq’s social conditions remain harsh following the war with ISIS, with slow progress at reconstruction, weak public services and a lack of job opportunities. In the absence of policy changes, a widening budget deficit is expected to divert resources away from essential investment to rebuild the country and improve public services, while eroding reserves and posing risks to medium-term sustainability. Expenditure rigidities and limited fiscal buffers imply a significant vulnerability to oil price shocks in a context of volatile prices. The fiscal and external positions are expected to continue to deteriorate over the medium term absent policy changes—with reserves falling below adequate levels and fiscal buffers eroded. In a context of highly volatile oil prices, the major risk to the outlook is a fall in oil prices which would lower exports and budgetary revenues, leading to an even sharper decline in reserves or higher public debt. Geopolitical tensions, the potential for social unrest in a context of weak public services and lack of progress in combatting corruption pose further risks.
July 26, 2019
Iraq: Selected Issues
Description: This Selected Issues paper discusses the choice and design of rules for Iraq, guided by fiscal policy priorities and the country’s institutional capacity. A ceiling on current spending is proposed as a fiscal rule that would be simple and easy to monitor and support efforts to create space for scaling up capital expenditure, build fiscal buffers to reduce fiscal policy procyclicality, and help secure debt sustainability. A strong policy framework can help Iraq manage the challenges arising from its heavy dependence on volatile oil revenues. The procyclicality of fiscal policy has led to short-term economic volatility and hindered long term development. Important fiscal institutions such as fiscal rules, stabilization funds, and fiscal responsibility laws that exist in many resource-rich countries are lacking in Iraq. Moving to a risk- and rules-based approach can be part of the new policy framework and would be timely. The two main building blocks of this approach involve anchoring fiscal policy on maintaining adequate fiscal buffers, and introducing operational fiscal rules designed to achieve this target for buffers and protect capital expenditure.
July 25, 2019
Cameroon: Fourth Review under the Extended Credit Facility Arrangement and Requests for Waivers of Nonobservance of Performance Criteria and Modification of Performance Criteria-Press Release; Staff Report; and Statement by the Executive Director for Cameroon
Description: This paper discusses Cameroon’s Fourth Review Under the Extended Credit Facility Arrangement and Requests for Waivers of Nonobservance of Performance Criteria and Modification of Performance Criteria. Growth is estimated to have rebounded to 4 percent in 2018, supported by stronger-than-anticipated oil and gas production and Africa Cup of Nations projects. Program implementation has improved from a year ago, however, challenges remain. Refraining from new nonconcessional borrowing and strictly adhering to the disbursement plan for contracted-but-undisbursed loans are essential to preserving debt sustainability. Further project prioritization and enhanced investment efficiency will help address developmental needs while supporting prudent debt management. Cameroon’s program continues to be supported by the implementation of supportive policies and reforms by the regional institutions in the areas of foreign exchange regulations and monetary policy framework and to support an increase in regional net foreign assets, which are critical to the program’s success.
July 24, 2019
France: 2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for France
Description: This 2019 Article IV Consultation discusses that the French government revamped vocational training and professional development to foster labor market participation, especially for low-skilled workers, following key labor tax and labor code reforms enacted in its first year in office. In prioritizing the recommended reforms, the report highlights that the importance of carefully assessing the trade-offs and the proper sequencing of structural reforms and fiscal consolidation. The government’s structural reform agenda is being put in place and growth is expected to gradually return to its potential level over the medium run. However, risks have risen, related to a disorderly Brexit, trade tensions, and a softening of activity in the euro area, but also to a slowdown in the domestic reform momentum. Building on the ongoing government reform agenda, policies should aim at addressing France’s structural challenges—high public debt and spending, rising private sector indebtedness, high unemployment, inequality of opportunity, and sluggish productivity.
July 24, 2019
France: Selected Issues
Description: This Selected Issues paper analyzes France’s fiscal stance using a structural stochastic model. The theoretical model features a forward-looking benevolent government that needs to decide the optimal fiscal stance given the level of public debt, the cyclical position of the economy, and expectations about future shocks. This paper shows that a fiscal consolidation can help build buffers that could help France confront the next downturn from a stronger fiscal position. The analysis highlights that, on average, fiscal policy in France exhibited a deficit bias over the past four decades, being unable to react to either rising debt levels, or cyclical conditions. A model-based analysis further confirms that fiscal policy was generally looser than warranted by cyclical and debt sustainability considerations, and this is only partly due to the fact policymakers need to take decisions based on real-time output gap measures that are subject to uncertainty.
July 24, 2019
Republic of Congo: Staff Report-Press Release; Staff Report; Debt Sustainability Analysis, and Statement by the Executive Director for the Republic of Congo
Description: This paper discusses Republic of Congo’s Review Under the Extended Credit Facility (ECF). The Republic of Congo’s ECF program supports the authorities’ efforts to restore fiscal sustainability and rebuild regional reserves while improving governance and protecting vulnerable groups. The Congolese authorities have stepped up efforts in 2018 and 2019 to address the economic crisis and the associated governance challenges. The ECF-supported program aims to help the Republic of Congo restore macroeconomic stability, including debt sustainability, and lay the foundations for higher and more inclusive growth. It also seeks to improve governance to achieve greater efficiency and transparency in the management of public resources, especially in the oil sector. The Fund-supported program is expected to contribute positively to the regional strategy and stability efforts of the Central African Economic and Monetary Union. The report also highlights that it is key to promote the productivity of factor inputs by increasing investments in human capital.