Country Reports
2018
June 12, 2018
Tunisia: 2017 Article IV Consultation and Second Review Under the Extended Fund Facility, and Request for Waivers of Nonobservance of Performance Criteria, and Rephasing of Access
Description: This 2017 Article IV Consultation highlights that Tunisia’s economic growth almost doubled to 1.9 percent in 2017, as confidence strengthened on the back of improved security and the unity government’s early progress with policy and reform implementation. Investment and exports remained sluggish, however. Growth is expected to reach 2.4 percent in 2018, helped by a good agricultural season and a pickup in manufacturing and tourism. The unemployment rate remains high at 15 percent. Trade data for early 2018 show an improvement in export performance, while import growth is slowing. This favorable trend is expected to continue throughout the remainder of the year, supported by a more favorable real exchange rate.
June 12, 2018
Niger: Second Review Under the Extended Credit Facility Arrangement, and Request for Modification of a Performance Criterion-Press Release; Staff Report; and Statement by the Executive Director for Niger
Description: This paper discusses Niger’s Second Review Under the Extended Credit Facility (ECF) Arrangement, and Request for Modification of a Performance Criterion (PCs). With all PCs met, implementation has been satisfactory, except for the large miss of the indicative target on fiscal revenue augmentation—an important concern, considering that it is instrumental for fiscal consolidation and fiscal space to address pressing social and infrastructure needs. The indicative target on domestic arrears clearance in the first quarter of 2018 was also missed, but by less than the overperformance in 2017. The structural reform agenda is advancing, though more slowly than envisaged. The IMF staff supports the conclusion of the second review under the ECF.
June 11, 2018
Rwanda: Ninth Review Under the Policy Support Instrument
Description: This paper discusses Rwanda’s Ninth Review Under the Policy Support Instrument (PSI). Growth in 2017 was better than expected, supported in all areas except construction. Particularly notable was export performance, with goods exports rising by 58 percent, based on strong performance of both traditional and nontraditional exports. Inflation has remained below the central bank’s 5 percent medium term target. External balances and reserve buffers have continued to improve faster than expected. Program performance is on track, with all continuous and end-December 2017 quantitative targets met as were all structural benchmarks, except the indicative target on contracting of new external debt by public enterprises. The IMF staff supports the completion of the Ninth Review under the PSI-supported program.
June 11, 2018
Angola: 2018 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Angola
Description: This 2018 Article IV Consultation highlights that lower oil prices since mid-2014 have placed the Angolan economy under stress. The authorities initially reacted to the oil price shock with significant fiscal tightening and exchange rate adjustments coupled with foreign exchange quantitative restrictions. The policy mix in the run-up to the August 2017 elections—fiscal expansion and pegged exchange rate—led to a further erosion of fiscal and external buffers. President João Lourenço has focused attention on improving governance and restoring macroeconomic stability. The government’s macroeconomic stabilization program envisages: upfront fiscal consolidation; greater exchange rate flexibility; reducing the public debt-to-GDP ratio to 60 percent over the medium term; improving the public debt profile; and settling domestic payments arrears.
June 8, 2018
Angola: Selected Issues
Description: This Selected Issues paper examines tradeoffs and opportunities for oil revenues in Angola. Angola is facing a stark trade-off between declining oil fiscal revenues over the medium term and increasing social and public investment needs. Opportunities do exist to make the most of Angola’s remaining oil reserves, whilst reducing its debt burden and building fiscal buffers. However, a sound fiscal framework for the use of oil revenues that includes a well-designed fiscal stabilization fund may be needed. Under a more active fiscal rule, public investment can be scaled up gradually, while building fiscal buffers and insulating the non-oil economy from volatile oil price movements.
June 8, 2018
Romania: Financial Sector Assessment Program
Description: This paper assesses the stability of the Romania’s financial system. Romania’s financial sector has strengthened significantly over the last few years. Effective supervisory measures have helped reduce the high level of nonperforming loans from 21.9 percent at its peak in 2013 to 6.4 percent as of December 2017. Foreign-owned banks’ dependence on parent funding has significantly declined, while deposits from the domestic private sector have increased, reducing liquidity risks. Banks’ capital buffers strengthened, on the back of a slowdown of credit and low interest rates, with an average capital to risk-weighted assets now above 18 percent. However, some vulnerabilities are emerging, and policy action is needed to address these risks and strengthen financial stability.
June 8, 2018
Romania: Financial Sector Assessment Program-Technical Note on Calibration of a Debt-Service-to-Income Limit in Romania-Evidence from Microdata
Description: This Technical Note discusses calibration of a debt-service-to-income (DSTI) limit in Romania. The recent pick-up in household credit in Romania has given rise to a need for revisiting the design of existing macroprudential tools addressing household vulnerabilities. The National Bank of Romania is considering a redesign of its existing macroprudential tool related to household indebtedness, including expanding its scope to cover all household loans. The analysis of loan-level data from the Central Credit Register suggests that the probability of default of a borrower is highly sensitive to any changes in DSTI at DSTI ratios at about 50 percent, particularly for mortgage loans. It is recommended to set the limit such that loans do not exceed this sensitivity threshold.
June 8, 2018
Romania: Financial Sector Assessment Program-Technical Note-Balance Sheet Analysis
Description: This Technical Note analyzes the macro-financial interlinkages, sectoral dependencies, and potential balance sheet vulnerabilities for all resident sectors in Romania. The financial sector size and interconnectedness have been increasing significantly. The overall amount of intra-financial sector exposures grew from five percent of GDP in 2008 to approximately seven percent of GDP in 2016. The banking system is at the center of intra-financial sector balance sheet connections, as an overall net borrower that channels funds to other domestic sectors. The funding of bank liabilities by domestic financial institutions has been rising and stood at close to 10 percent of banks’ nonequity liabilities in 2016. Moreover, banks are also exposed on the credit side to nonbank financial institutions, in particular to other financial institutions.
June 8, 2018
Romania: Financial Sector Assessment Program-Technical Note-Systemic Risk Analysis and Stress Testing the Financial Sector
Description: This Technical Note discusses the results of systemic risk analysis and stress testing of Romania’s financial sector. Although the Romanian banking sector has a strong initial capital position, banks are affected significantly by the realization of the shocks captured by the scenarios. The stress test results indicate that an extreme but plausible adverse scenario would have a significant negative impact on the capital ratios of the banking system. Although the banking sector as a whole maintains capital ratios above the minimum regulatory requirements, several (smaller) banks prove vulnerable. The extreme adverse scenario reflects downside external risks as well as a domestic demand shock impacting private consumption and investment.
June 8, 2018
Romania: Financial Sector Assessment Program-Technical Note-Macroprudential Policy Framework and Tools
Description: This Technical Note analyzes the implementation of macroprudential policy framework and tools in Romania. The National Bank of Romania (NBR) has a long experience in implementing macroprudential policy measures. The NBR monitors several indicators to assess the build-up of systemic risk, many of which are derived from the nation-wide credit register and related data sources. The institutional framework for macroprudential policymaking has recently been revised and contains a clear mandate and well-defined objectives, but NBR’s role seems constrained. It is recommended that the macroprudential policy toolkit should be strengthened further to address risks identified in the Financial Sector Assessment Program’s risk analysis. The systemic risk buffer should be calibrated carefully to address risks stemming from the strong sovereign-bank nexus.