Country Reports
2018
January 29, 2018
Malta: 2017 Article IV Consultation-Press Release; Staff Report
Description: This 2017 Article IV Consultation highlights that Malta’s economic growth remains one of the strongest in Europe, owing to favorable economic conditions and sound policies, which advanced structural reforms and supported the strengthening of private and public balance sheets. Output is estimated to have expanded by 6.8 percent in 2017, accompanied by dynamic job creation, which brought unemployment to a record low. Strong inflows of foreign workers and rising labor force participation kept wage pressures contained in most sectors, thus contributing to low inflation despite a positive output gap. The outlook is favorable, with growth decelerating gradually and converging to about 3 percent over the medium term.
January 29, 2018
Malta: Selected Issues
Description: This paper discusses infrastructure gaps vis-à-vis other EU countries that are most striking in road and energy networks, both in quality and quantity. This is reflected in an unparalleled gap in the approximated public capital stock. Long-term GDP benefits from increasing public investment are estimated to be substantial, ranging between 5¼ and 18¼ percent in net present value over 30 years. Malta’s authorities have started to tackle these challenges by upgrading and diversifying the energy system and by launching a comprehensive transport strategy. These efforts go in the right direction and should be implemented in a budget-neutral manner to support a further decline in the public debt-to-GDP ratio. Malta’s fiscal position has improved considerably in recent years, yet further buildup of fiscal buffers is needed against possible adverse macroeconomic conditions. Therefore, reallocating public spending from current to capital expenditure, as well as making public investment more efficient would help boosting infrastructure.
January 26, 2018
Kuwait: 2017 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Kuwait
Description: This 2017 Article IV Consultation highlights that non-oil growth in Kuwait has picked up modestly over the past two years, and inflation has moderated. After coming to a standstill in 2015, real non-hydrocarbon growth has recovered and is set to reach 2.5 percent in 2018, driven by improved confidence. Notwithstanding the impact of higher energy and water prices, inflation is on track to reach a multiyear low of 1.75 percent in 2017, owing to a decline in housing rents and favorable food price developments. The government’s underlying fiscal position has improved on the back of spending restraint, but financing needs have remained large.
January 26, 2018
Kuwait: Selected Issues
Description: This Selected Issues paper on Kuwait focuses on fiscal expenditures with the aim of identifying potential areas for reform. While the authorities’ planned non-oil revenue measures are welcome, these alone will not reduce the authorities’ fiscal deficit sufficiently, highlighting the importance of expenditure reforms. This paper draws from previous episodes of adjustment in Kuwait and conducts some benchmarking—comparing Kuwait’s level of fiscal spending in various areas to that of peers—to identify areas for streamlining and efficiency improvement. Kuwait needs to implement fiscal consolidation to adjust to durably lower oil prices. The collapse in oil prices has resulted in substantial deterioration of both external and fiscal positions, leading to large fiscal financing needs. In order to preserve the fiscal buffers and provide equitable consumption of future generations, Kuwait needs to consolidate its fiscal position. While the planned tax reforms and repricing of government services are steps in the right direction, fiscal consolidation also needs to rely heavily on streamlining expenditures.
January 24, 2018
The Federal Democratic Republic of Ethiopia: 2017 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for The Federal Democratic Republic of Ethiopia
Description: This IMF Staff Report for 2017 Article IV Consultation highlights that Ethiopia has recorded annual average GDP growth of about ten percent in the last decade, driven by public investments in agriculture and infrastructure. The poverty rate has fallen from 44 percent in 2000 to 23.5 percent in 2015/16. In 2016/17 GDP growth is estimated at 9 percent, as agriculture rebounded from severe drought conditions in 2015/16. Industrial activity expanded, with continued investments in infrastructure and manufacturing. The current account deficit declined in 2016/17 to 8.2 percent of GDP. Over the medium term, growth is expected to remain about 8 percent, supported by sustained expansion in exports and investment.
January 22, 2018
Arab Republic of Egypt: 2017 Article IV Consultation, Second Review Under the Extended Arrangement Under the Extended Fund Facility, and Request for Modification of Performance Criteria-Press Release; Staff Report; and Statement by the Executive Director for the Arab Republic of Egypt
Description: This 2017 Article IV Consultation highlights that Egypt’s reform program, supported by the Extended Fund Facility arrangement, has played a critical role in stabilizing the economy. By the end of 2015/16, a long-standing and ultimately unsustainable policy mix had resulted in low growth and investment, elevated general government debt, an overvalued exchange rate, a widening current account deficit, declining gross international reserves and severe shortages of foreign exchange. Egypt’s economic outlook is favorable, provided prudent macroeconomic policies are maintained and the scope of growth-enhancing reforms is broadened. To sustain economic reform momentum, in the medium term, policy priorities should aim to raise potential output and promote inclusive growth to create jobs for Egypt’s young and growing population.
January 22, 2018
Arab Republic of Egypt: Selected Issues
Description: This paper analyzes that past growth was characterized by a suboptimal allocation of the factors of production and a lack of dynamism in the private sector. By identifying the main constraints to private sector-led growth and higher employment generation, it suggests policies to further shift Egypt’s economic model toward increased private sector participation and integration into global value chains. To this end, reforms should aim at removing the distortions to the optimal allocation of resources in the economy and equip the labor force with the skills needed to benefit fully from future job opportunities. These reforms would also help better integrate women and youth into the job market. The authorities have embarked on a reform program to address these challenges and important steps have already been taken. Improved macrostability and a strong political commitment to reforms present an opportunity to further structural reforms that intensify private sector-led growth and job creation and strengthen trade integration.
January 22, 2018
People's Republic of China-Hong Kong Special Administrative Region: 2017 Article IV Consultation-Press Release; Staff Report; Statement by the Executive Director for People’s Republic of China––Hong Kong Special Administrative Region
Description: This 2017 Article IV Consultation highlights that economic activity in Hong Kong Special Administrative Region has gained momentum since the second half of 2016 amid robust domestic demand and recovering external demand. Growth is projected to have risen by 3.7 percent in 2017, up from 2 percent in 2016. The strong growth momentum is expected to continue in the near term with annual growth of 2.8 percent in 2018. Consumption is projected to continue to be supported by a tight labor market and investment is expected to remain strong, with major infrastructure and housing projects in the pipeline. The economy is expected to continue to grow at about 3 percent over the medium term, close to its potential.
January 22, 2018
People’s Republic of China-Hong Kong Special Administrative Region: Selected Issues
Description: This Selected Issues paper examines medium-term fiscal prospects and policy recommendations for Hong Kong Special Administrative Region (SAR). Hong Kong SAR’s fiscal framework has worked well over the last 20 years but challenges have emerged that will strain the fiscal position in the medium to long term. Consequently, while fiscal space is ample currently, it could become gradually constrained over time. The fiscal rule should be implemented flexibly and revenue mobilization needs to be considered down the road. On the expenditure side, containment will be hard, given rapid aging and still high inequality. The challenge will be to maintain investment and boost land supply while increasing social spending to guarantee that those who need support are effectively protected.
January 19, 2018
India: Financial Sector Assessment Program-Detailed Assessment of Observance of the Basel Core Principles for Effective Banking Supervision
Description: This report evaluates the Observance of the Basel Core Principles for Effective Banking Supervision in India. It highlights that the supervision and regulation by the Reserve Bank of India remain strong and have improved in recent years. A key achievement is implementation of a risk-based supervisory approach that uses a complex supervisory assessment framework to guide the intensity of supervisory actions and the allocation of supervisory resources. Also, most of the Basel III framework has been implemented and cooperation arrangements, both domestically and cross-border, are now firmly in place. The system-wide asset quality review and the strengthening of prudential regulations in 2015 testify to the authorities’ commitment to transparency and a more accurate recognition of banking risks.