Country Reports
2018
July 13, 2018
Argentina: Request for Stand-By Arrangement-Press Release and Staff Report
Description: Despite a difficult economic context, President Macri’s administration, over the past two and a half years, has taken bold steps to eliminate a wide range of distortions in the economy. Efforts were also made to strengthen institutions (including the complete reconstruction of the statistics agency, in an effort to restore credibility to Argentine data), as well as an assertive effort to tackle corruption. Despite these efforts, a gradual approach to fiscal consolidation, combined with a tightening of global financial conditions, a poor harvest, and the introduction of a tax on nonresident holdings of short-term central bank paper, generated significant anxiety among market participants. Starting in mid-April, Argentina came under abrupt balance of payments pressures as both domestic and foreign investors decided to liquidate their position in onshore peso assets. To stem the outflows, the authorities significantly increased short-term interest rates, tightened fiscal policy, and sold foreign exchange. Shortly after taking these steps the government announced its intention to approach the IMF for an exceptional access Stand-By Arrangement.
July 12, 2018
Arab Republic of Egypt: Third Review Under the Extended Arrangement Under the Extended Fund Facility, and Requests for a Waiver of Nonobservance of a Performance Criterion and for Modification of a Performance Criterion-Press Release; Staff Report; and Statement by the Executive Director for the Arab Republic of Egypt
Description: Macroeconomic conditions have continued to improve during 2017/18, with external and fiscal deficits narrowing, inflation and unemployment declining, and growth accelerating. The near-term growth outlook is favorable, supported by the recovery in tourism and rising natural gas production, while the current account deficit has fallen below 3 percent of GDP and gross international reserves stood at 7 months of prospective imports at end-May. Inflation is expected to temporarily rise in 2018/19, reflecting increases in fuel and electricity prices, but the monetary policy stance appears appropriate to contain second-round effects. The government debt ratio is projected to decline markedly in response to fiscal consolidation and high nominal GDP growth.
July 11, 2018
Benin: Second Review under the Extended Credit Facility and Request for Modification of Performance Criteria – Press Release; and Staff Report
Description: Economic growth remains strong, driven by cotton production, increased public investment, and a vibrant tertiary sector that benefited from the economic recovery in Nigeria since June 2017. The fiscal consolidation path envisages a lower than originally programmed fiscal deficit (including grants) in 2018—thanks to stronger domestic revenue mobilization—and attainment of the WAEMU convergence criterion of 3 percent of GDP in 2019. Program implementation remains satisfactory with all end-December 2017 quantitative performance criteria (QPCs) met. The ongoing rebasing of the national accounts initiated in 2017 is expected to be completed later in 2018.
July 10, 2018
Vietnam: 2018 Article IV Consultation-Press Release and Staff Report
Description: 2017 was a bumper year of broad-based and non-inflationary growth. Reforms continued, including in the banking sector, privatizations and cuts in red tape. The momentum is expected to continue, aided by reforms, higher potential output, and the global recovery. However, economic distortions and capacity constraints remain, as do external and domestic risks and longer-term challenges. The strong economy provides an opportunity for additional reforms to boost investment, ensure durable growth and resilient balance sheets, and reduce the external surplus.
July 10, 2018
Central African Economic and Monetary Community (CEMAC): Staff Report on the Common Policies in Support of Member Countries Reform Programs
Description: While improving, CEMAC’s economic situation remains fragile. Growth picked up slightly but remains well below potential. Governments’ fiscal consolidation efforts, along with BEAC’s tighter monetary policy and stricter enforcement of foreign exchange regulations, have contributed to a significant reduction in the region’s fiscal and external imbalances. All CEMAC countries are committed to macroeconomic policies agreed with IMF staff to support the economic recovery and financial sustainability of each country and of the region. The regional central bank and banking supervisor continue to implement policies in support of the IMF-supported programs with CEMAC members. However, fiscal slippages in some countries contributed to the underperformance of international reserve accumulation in early 2018. Looking ahead, a further improvement in the economic and financial situation is projected, assuming full implementation of policy commitments by CEMAC member states and regional institutions. This outlook remains subject to substantial risks from possible weaker program implementation, lower oil prices, and insufficient external financing.
July 10, 2018
Vietnam: Selected Issues
Description: This Selected Issues paper seeks to assess how this transformation has affected its growth potential. Employing a range of methodologies, the analysis concludes that Vietnam’s medium-term growth potential has increased from 6.2 percent estimated in 2014 to 6.5 percent. Acceleration of reforms that have generated productivity gains in the last decade, including the implementation of agreed free trade agreements, could further boost growth potential. The four methodologies provide a range of estimates for Vietnam’s potential output. On balance, we assess the potential growth estimate in Vietnam to be at 6.5 percent in 2017, higher than previous staff estimates of 6.2. The output gap is estimated at 0.4 percent in 2017. This analysis will be extended further in a forthcoming paper. The production function estimates can be further improved by explicitly incorporating the effect of structural transformation due to labor reallocation into the model, and by better accounting for the impact of the quality of human capital accumulation by taking the quality of education into account. Improvements in data quality, for example, on real estate prices, quarterly gross domestic product, unemployment rate and labor force in the informal sector, and capacity utilization, could further enhance the analysis.
July 10, 2018
Tunisia: Third Review under the Extended Fund Facility, and Request for Waiver of Applicability and Modification of Performance Criteria
Description: The government has strengthened policy and reform implementation in recent months. All Quantitative Performance Criteria (QPCs) for end-March and three out of nine Structural Benchmarks (SBs) for the Third Review were met. One additional SB was implemented with delay. Growth picked up to 2.5 percent in the first quarter, and confidence has improved, albeit it continues to be affected by divisions in the coalition government, risks of security and migration spillovers from Libya, and higher international oil prices. Inflation has accelerated and weighs on the purchasing power notably of the less well-off, while international reserves remain below prudent levels.
July 9, 2018
Central African Republic: Fourth Review Under the Extended Credit Facility Arrangement, Requests for Waiver of Nonobservance of Performance Criterion, Modification of Performance Criteria, Augmentation of Access, and Financing Assurances Review-Press Release; Staff Report; and Statement by the Executive Director for the Central African Republic
Description: The economy of the Central African Republic (C.A.R.), a fragile state, is recovering gradually. Following the 2013 crisis, macroeconomic conditions have stabilized: growth has resumed, inflation has declined, domestic revenues have recovered, and debt ratios have decreased. The outlook, however, is clouded by persistent fragility amid repeated eruptions of violence. Half of the population depends on humanitarian assistance. Stronger and more inclusive growth is necessary to make a dent into widespread poverty. The government’s economic strategy is supported by a three-year arrangement under the Extended Credit Facility (ECF)—launched in July 2016—with total access of SDR 133.68 million (120 percent of quota).
July 9, 2018
Senegal: Sixth Review Under the Policy Support Instrument-Press Release; Staff Report; and Statement by the Executive Director for Senegal
Description: Growth remained strong at 7.2 percent in 2017, with inflation contained at 1.3 percent. Higher oil prices and increased capital goods imports significantly widened the current account deficit. The macroeconomic framework in this staff report uses a new GDP series which updates the base year from 1999 to 2014 and is approximately 30 percent higher in nominal terms relative to the previously reported GDP data series.