Country Reports
2019
February 1, 2019
United Arab Emirates: 2018 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the United Arab Emirates
Description: This Article IV Consultation highlights that UAE has successfully weathered recent external shocks, because of its large financial buffers, diversified economy, and strong policy response. The economy is starting to recover from the 2015–16 slowdown caused by a decline in oil prices. Growth momentum is expected to strengthen in the next few years, helped by higher oil output, increased public investment, and stepped-up structural reforms. Gradual and growth-friendly fiscal consolidation should resume once the recovery gains momentum to ensure intergenerational equity. Key priorities have been highlighted to raise spending efficiency, continue diversifying revenues, firmly anchor fiscal policy, and improve policy coordination and management of fiscal risks. The report also discusses that realizing the government’s Vision 2021 requires strong effort to foster productivity growth and increase the private sector’s role in the economy.
January 30, 2019
Senegal: Fiscal Transparency Evaluation
Description: This paper discusses results of a fiscal transparency evaluation (FTE) in Senegal. This evaluation puts forward a number of recommendations that would enable Senegal to continue to improve its fiscal transparency while strengthening the fiscal risk management framework. The recommendations relate to five objectives and are accompanied by an Action Plan. Practical examples have been included in the report to back the various recommendations and facilitate their implementation. The paper also highlights that fiscal reporting practices in Senegal can be improved in light of the IMF’s Fiscal Transparency Code. It has been observed that the fiscal and accounting reforms undertaken in the past few years can be expected to enhance fiscal transparency in the medium term. Project appraisal and selection mechanisms have recently been revamped and there is now more information regarding their feasibility available to the general public. The FTE finds that Senegal is positioned at the average level for countries of similar income and institutional capacity.
January 29, 2019
Republic of Armenia: Technical Assistance Report-Public Investment Management Assessment
Description: This paper discusses results of a technical assistance report prepared to evaluate the quality of Armenia’s public investment institutions in the planning, budgeting, and implementation stages of public investment management. Significant gaps exist in the efficiency of public investments, both in terms of physical outputs and quality. The report also highlights that in a context of limited fiscal space, the scaling up of public investments will require the prioritization of efforts to introduce reforms in the following areas in need of urgent action. The recommendations in this report prioritize the eight actions at the key stages of the project cycle and for the Ministry of Finance’s capacity development. Recommendation is also made to establish a constraint on in-year changes in project implementation plans and complete the transformation of the Audit Chamber from the Control Chamber. Armenia is expected to have a more robust audit function when the provisions in the new Law on the ‘Audit Chamber’ are fully implemented.
January 29, 2019
Former Yugoslav Republic of Macedonia: 2018 Article IV Consultation; Press Release; Staff Report; and Statement by the Executive Director for Former Yugoslav Republic of Macedonia
Description: More than twelve years after achieving candidate status, FYR Macedonia’s prospects for opening accession negotiations with the European Union are looking hopeful for the first time. The end of the political crisis has revived structural reforms, but investment is yet to gain a strong footing amid lingering uncertainties. Structural policies should focus on addressing longstanding weaknesses in the labor market, judiciary, and public administration to boost productivity and achieve faster income convergence. Macroeconomic policies should support this goal by rebuilding buffers and maintaining financial stability.
January 28, 2019
Republic of Armenia: Technical Assistance Report-Growth-Friendly Rebalancing of Taxes
Description: With the appointment of a new government, a lively debate has ensued about redirecting fiscal policies in support of a balanced revenue-raising strategy that is conducive to investment and growth. Currently, Armenia needs to raise more revenues in support of fiscal consolidation and to generate additional funding for developing and maintaining the physical infrastructure with special reference to the need of improving the urban built-up environment. Since the Authorities requested the mission to consider tax measures that are supportive of growth and/or tradeable sector, the proposed restructuring of taxes recognizes that real estate taxes, resource rent taxes, and broad-based consumption taxes (VAT and excises) are least distortive for growth. The 2016 Technical Assistance Mission in its report reviewed already unutilized tax bases as far as excises are concerned (taxation of gambling, mobile air time, waste packaging taxes, alcohol and tobacco taxation). As requested by the authorities, this mission focused on improving personal and business income taxes, presumptive taxation, and the recurrent real estate tax as base-broadening of the latter could support the fiscal program of the new government.
January 28, 2019
Albania: 2018 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Albania
Description: Despite robust GDP growth, projected at 4 percent in 2018, inflation remains below its 3 percent target. The fiscal deficit has stabilized around 2 percent of GDP, implying a modest gradual reduction in public debt, which remains high at close to 70 percent of GDP. Monetary policy was relaxed further in June 2018 following a rapid appreciation of the exchange rate. The current account deficit has moderated over recent years, to about 6.5 percent of GDP. The outlook is mostly positive, with GDP growth projected to converge to 4 percent over the medium term, with inflation stabilizing around its target by 2021. Further fiscal consolidation and an accommodative monetary policy, combined with growth-promoting structural reforms represent the right policy mix.
January 28, 2019
Guinea: Second Review of the Arrangement under the Three-Year Extended Credit Facility, financing Assurances Review, and Request for a Waiver of Nonobservance of Performance Criterion-Press Release; Staff Report; and Statement by the Executive Director for Guinea
Description: Guinea’s strong growth momentum continues. Real growth reached about 10 percent in 2017 and is expected at about 6 percent in 2018 and 2019. However, the social context remains fragile. Risks of political and social instability are heightened by upcoming legislative elections in March 2019 and presidential elections in 2020.
January 28, 2019
Senegal: Selected Issues
Description: This Selected Issues paper estimates the macroeconomic impact of these discoveries and discusses potential fiscal frameworks for managing related revenues. Pre-production investment (2019–2021) will lead to an increase in the current account deficit; however, this will be followed by a boost to exports as hydrocarbon production comes online (2022 onward). Discoveries are important but will not lead to a major transformation of the economy, with hydrocarbons expected to make up not more than 5 percent of GDP. Fiscal revenues would average about 1.5 percent of GDP over a 25-year period and about 3 percent of GDP when production peaks. Given the relatively small gains in revenue, IMF staff recommends a fiscal framework that allows for an initial drawdown of government resources to finance large up-front investment needs, followed by an appropriate target level of the non-resource primary balance which is to serve as a medium-term fiscal anchor. Issues related to managing the volatility of resource revenues are also discussed.
January 28, 2019
Senegal: Staff Report for the 2018 Article IV Consultation and Seventh Review Under the Policy Support Instrument and Request for Modification of Assessment Criteria--Debt Sustainability Analysis-Press Release; Staff Report; and Statement by the Executive Director for Senegal
Description: Senegal’s main challenge is sustaining high GDP growth rates while maintaining fiscal sustainability and improving the business environment to create jobs for the fast-growing population. The second phase of the Plan Sénégal Emergent (PSE) covering 2019-23 sets out a comprehensive reform agenda to achieve these objectives. Fiscal reforms should aim to increase revenues, strengthen public financial management (PFM), and improve the composition and quality of spending. Structural reforms to facilitate private investment and competitiveness would provide durable sources of growth, while development of a fiscal framework for oil and gas aligned with international best practice would ensure that these natural resources provide high economic and social returns. Further progress on improving the business environment will require simplifying tax administration and reforms to facilitate SME access to finance, and further develop the Special Economic Zones (SEZs). Policies to address gender and inequality issues would contribute to poverty reduction and well-distributed growth.
January 25, 2019
Somalia: Technical Assistance Report-Internal Audit and Accounting Training for the Central Bank of Somalia
Description: The CBS has taken steps to establish important pillars of a proper policy framework for financial reporting, auditing, and internal controls by approving the Internal Audit and Audit Committee Charters and is committed to address the remaining shortcomings in these areas. The Internal Audit Department (IAD) has made progress by initiating risk assessments of the various CBS business units and recruiting an Information Technology (IT) professional to join the team. The Accounting and Finance Department (AFD) is making progress in implementing accrual accounting, and accounting for foreign exchange operations (International Accounting Standard (IAS) 21), and has created a new role of Reconciliation Officer to ensure all cash transactions are recorded properly. However, the IAD functions without a director, which places the internal audit staff at a severe disadvantage to other departments and limits their authority to effectively implement their program. Also, while the mission team has stressed the importance of adopting International Financial Reporting Standards (IFRS) during this mission and the previous mission, the CBS has not formally indicated that it will adopt this framework.2 High priority recommendations were made to address these shortcomings. See Table 1 for homework assignments and high priority tasks.3