Country Reports
2018
June 20, 2018
Denmark: Selected Issues
Description: This Selected Issues paper analyzes investment slowdown in Denmark. The post-global financial crisis (GFC) weakness in Denmark’s aggregate investment cannot be fully explained by the output slowdown. The baseline accelerator model confirms that output slowdown played a role, but post-GFC investment has fallen beyond the level explained by output movements in most of the post-GFC period. Most recently, investment converged to the level explained by output movements. The augmented accelerator model suggests that additional factors, such as high leverage, weak competition, and elevated policy uncertainty, also had a significant impact. Panel regressions using a panel of advanced economies show that reduction in leverage and product market reforms can boost investment in the medium term. Well-designed policies are needed to boost private investment.
June 18, 2018
Switzerland: 2018 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Switzerland
Description: This 2018 Article IV Consultation highlights that the Swiss economy has adjusted to the large cumulative exchange rate appreciation that took place since the global financial crisis. After a subdued start to 2017, GDP growth accelerated to 1.1 percent in 2017, and the positive momentum continued in Q1:2018, although at a slightly reduced pace. The improved external outlook, together with the depreciation since mid-2017, are expected to energize the economy and lift GDP growth to 2.25 percent in 2018, before it gradually moderates to 1.75 percent over the medium term. Inflation is expected to increase to the upper half of the target band in 2018–19, and to subsequently revert to the mid-point.
June 18, 2018
Switzerland: Selected Issues
Description: This Selected Issues paper analyzes key features of corporate taxation in Switzerland. The Swiss corporate tax system includes many aspects of a territorial regime; is highly attractive for multinational companies; and collects non-negligible revenues, but the status quo is not sustainable. The proposed reform would eliminate differences in the tax treatment of foreign and Swiss sourced income. Further, cantons are expected to lower their corporate income tax (CIT) rates, bringing the combined (municipal, cantonal, and federal) tax rate (averaged across cantons) to about 13.9 percent. Costs of lowering the CIT rates would be unequally distributed across cantons, and would be costlier for cantons with a large immobile CIT base.
June 15, 2018
Liberia: 2018 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Liberia
Description: This 2018 Article IV Consultation highlights that Liberia’s economy appears poised for recovery, as growth bottomed out in 2016 and edged to 2.5 percent in 2017. However, Liberia remains fragile with poor living conditions for the majority of the population. Moreover, a decline in aid inflows, which were elevated during 2014–16, has put pressure on the exchange rate and fiscal resources. The government is thus facing the daunting task of pursuing a demanding development agenda in the face of high expectations. Assuming the implementation of sound policies, the medium-term outlook appears favorable. The main upside risk is an increase in commodity prices and output, while downside risks include difficulties in mobilizing resources to fill the financing gap and in pursuing structural and institutional reforms.
June 13, 2018
Mauritius: Technical Assistance Report-Strengthening Bank Resolution and Crisis Management Framework
Description: This Technical Assistance Report discusses measures needed to strengthen bank resolution and crisis management framework in Mauritius. The current legal framework in Mauritius does not provide the supervisor with adequate triggers and powers to mitigate risks at a sufficiently early stage. The law should provide for a broader range of corrective tools that allow the supervisor to restore weak banks to sound financial conditions. A new resolution framework is needed to effectively manage failing banks, safeguard financial stability as well as limit moral hazard. Formal plans describing how the resolution authority will manage the failure of individual banks and their groups need to be developed.
June 13, 2018
Algeria: Selected Issues
Description: This Selected Issues paper discusses measures needed to improve public spending efficiency to foster more inclusive growth in Algeria. Fostering more inclusive growth in a sustainable way requires addressing Algeria’s longstanding structural issues that have led to persistently high unemployment, weak private sector job creation, and insufficient quality of public services. To help reverse this situation, particularly in an environment of dwindling financial resources, Algeria should improve the efficiency of public spending, including through strengthening public wage bill and investment management. This would enable the country to increase the return on investment in human capital and infrastructure, and improve the quality and reach of public service delivery. It would help ensure that the public sector fosters private sector activity rather than competes with it.
June 13, 2018
Algeria: 2018 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Algeria
Description: This 2018 Article IV Consultation highlights that Algeria continues to face important challenges posed by the fall in oil prices four years ago. Despite a sizeable fiscal consolidation in 2017, the fiscal and current account deficits remain large. Real GDP growth slowed sharply, mainly driven by a contraction in hydrocarbon production, although growth in the nonhydrocarbon sector was stable. Unemployment increased to 11.7 percent in September 2017 from 10.5 in September 2016 and remains particularly high among the youth and women. Average inflation declined from 6.4 percent in 2016 to 5.6 percent owing to slowing inflation for manufactured goods and services, and stood at 3.4 percent year-over-year in April 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
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.