Country Reports
2018
September 5, 2018
Republic of Latvia: 2018 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the Republic of Latvia
Description: This 2018 Article IV Consultation highlights that Latvia’s government revenues overperformed in 2017, buoyed by strong economic activity and wage growth. Nonetheless, the 2017 general government structural balance recorded a deficit of 0.8 percent of GDP, which resulted in a positive fiscal impulse rendering fiscal policy procyclical. Despite the suspension of activities of Latvia’s third largest bank on money laundering concerns, the banking system remains well capitalized and liquid, with capital-to-risk-weighted assets of 22.4 percent and liquid assets exceeding 80 percent of short-term liabilities at end-March 2018. Deleveraging of both households and nonfinancial corporations continued, with household debt to income now at half of its pre-crisis levels.
September 5, 2018
Botswana: 2018 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Botswana
Description: This 2018 Article IV Consultation highlights that sizable buffers and prudent policies have kept Botswana’s economy stable despite diamond market weakness and volatility. In 2017, despite higher diamond production, real GDP growth dropped to 2.4 percent primarily because of the closure of a major copper and nickel mining company. Non-mineral growth decelerated reflecting the indirect effects of the company’s closure on electricity and transportation, coupled with a small slowdown in trade and construction. In 2018–2019, it is expected that improving conditions in the diamond market and fiscal stimulus will temporarily boost economic activity. The medium-term economic outlook will depend heavily on the successful implementation of critical structural reforms.
September 5, 2018
Dominica: 2018 Article IV Consultation-Press Release and Staff Report
Description: This 2018 Article IV Consultation highlights that in 2018, Dominica’s output is projected to decline by 14 percent and to take about 5 years to recover to pre-hurricane levels. The fall in output and government revenue, coupled with increased expenditure for rehabilitation and reconstruction, will lead to a substantial worsening of fiscal and external deficits. However, signs of recovery, particularly in construction and the public sector, have already started to emerge. The risks to the outlook include the budget becoming financially constrained and unable to sustain adequate investment given high debt, limited buffers, weak revenue, and urgent needs for reconstruction spending. Other risks include financial instability stemming from undercapitalization of systemic financial institutions, recurrent natural disasters, and external competitiveness challenges.
September 4, 2018
Mauritius: Technical Assistance Report-Report on the Price Statistics Mission
Description: This Technical Assistance Report discusses the findings and recommendations of the IMF mission regarding methodological soundness of all price indexes compiled by the authorities in Mauritius. The methodologies employed by Statistics Mauritius are sound and largely in line with the international guidelines and practices. All price indexes use similar aggregation methodologies and the same index compilation system. Statistics Mauritius is dependent on a consultant to maintain the compilation system. Over time it would be helpful for Statistics Mauritius to explore ways of improving the application of the Statistics Act to acquiring business survey data and administrative data from both government departments and private corporations to improve the coverage and quality of the statistics.
August 24, 2018
Saudi Arabia: Selected Issues
Description: This Selected Issues paper suggests that while the government should continue to work on clearly defining its fiscal policy objectives, at this stage the focus of reforms should be to continue to strengthen the fiscal framework rather than on introducing a formal fiscal rule. A fiscal rule is only as good as the institutions that support it. Moreover, resource rich countries’ experiences with fiscal rules have been mixed as it has proven difficult to formulate rules which are simple, flexible, and robust that can withstand large commodity prices swings. One key question before the government is to define its long-term fiscal policy objectives beyond 2023. This will help determine how it may want to anchor fiscal policy. While a target for the overall balance, as announced in the Fiscal Balance Program, is a reasonable objective for the next 5 years, such a target may not deliver the longer-term fiscal goals of the government. It is also subject to swings in oil prices—it may not be achievable if oil prices decline significantly, but if oil prices were to increase substantially, the target could be achieved even if spending were to increase to such a level that increases future fiscal vulnerabilities. Therefore, it would be better to formulate fiscal policy objectives in terms of the primary non-oil balance rather than the overall balance.
August 24, 2018
Saudi Arabia: 2018 Article IV Consultation-Press Release and Staff Report
Description: This 2018 Article IV Consultation highlights that Saudi Arabia’s real GDP growth is expected to increase to 1.9 percent in 2018, with non-oil growth strengthening to 2.3 percent. Growth is expected to pick-up further over the medium term as the reforms take hold and oil output increases. Risks are balanced in the near-term. The employment of Saudi nationals has increased, especially for women, but the unemployment rate among Saudi nationals rose to 12.8 percent in 2017. Credit and deposit growth remain weak, but both are expected to strengthen owing to higher government spending and non-oil growth. The fiscal deficit is projected to continue to narrow, from 9.3 percent of GDP in 2017 to 4.6 percent of GDP in 2018.
August 22, 2018
Chad: Second Review of the Program Under the Extended Credit Facility, Request for Waivers of Nonobservance of Performance Criteria, And Financing Assurances Review-Press Release; Staff Report; and Statement by the Executive Director for Chad
Description: This paper discusses Chad’s Second Review of the Program Under the Extended Credit Facility, Request for Waivers of Nonobservance of Performance Criteria (PCs), and Financing Assurances Review. All but one PC for end-December 2017 were met, as were all structural benchmarks Most indicative targets for end-March 2018 were also met. The continuous PC on the nonaccumulation of external arrears was missed. The authorities are requesting waivers for the two missed PCs. The final agreement to restructure the Glencore debt was signed in June (prior action); it is in line with the program and will restore debt sustainability and generate sufficient financing for the program.
August 22, 2018
Malawi: Technical Assistance Report-Public Investment Management Assessment (PIMA)
Description: This Technical Assistance report assesses the state of public investment management (PIM) in Malawi. Measured against the overall strength of its PIM institutions, Malawi performs broadly in line with other low-income developing countries and sub-Saharan African countries, but less well than better-performing emerging markets. Measures of institutional strength show how well Malawi rates in terms of its existing laws and regulations, as well as the formal guidelines and instructions issued by the government to implement these laws. The public investment management assessment diagnostic tool also measures how effectively, in practice, the government implements and enforces these laws and regulations. On this measure of effectiveness, Malawi performs relatively poorly. Looking at individual indicators of PIM, Malawi’s performance is mixed.
August 16, 2018
Namibia: Technical Assistance Report-Assessing and Managing Fiscal Risks from State-Entities and Public-Private Partnerships
Description: This Technical Assistance report discusses measures proposed to assess and manage fiscal risks from state-owned entities and public-private partnerships in Namibia. Fiscal risks from public entities (PEs) materialize when funding requirements are higher than expected or revenues shortfalls occur. The government’s strategy for managing PE related fiscal risks should be informed by the likelihood of PE experiencing difficulties and, in such an event, the magnitude of the potential impact on the government. A two-step methodology was proposed for assessing the likelihood of fiscal risks materializing from PE. The authorities are also considering legislative amendments to strengthen the institutional arrangements for supervising PE.
August 14, 2018
Liechtenstein: Anti-Money Laundering and Combating the Financing of Terrorism-Technical Note
Description: This Technical Note evaluates the state of Anti-Money Laundering and Combating the Financing of Terrorism in Liechtenstein. Liechtenstein has made significant steps and achieved considerable progress since the last mutual evaluation, particularly in bringing its legal framework more closely in line with the Financial Action Task Force recommendations, consolidating an overall robust institutional framework for combating money laundering and terrorist financing and moving toward greater transparency. Domestic cooperation is robust, and key stakeholders enjoy the trust of the financial and nonfinancial sectors. However, effective implementation is uneven and not always optimal. Liechtenstein’s proactive use of the in rem regime of confiscation of criminal proceeds has proven to be quite effective.