Country Reports
2018
January 18, 2018
Rwanda: Eighth Review Under the Policy Support Instrument and Request for Extension, and Third Review Under the Standby Credit Facility-Press Release; Staff Report; and Statement by the Executive Director for Rwanda
Description: This paper discusses Rwanda’s Eighth Review Under the Policy Support Instrument (PSI) and Request for Extension, and Third Review Under the Standby Credit Facility (SCF). The existing PSI and SCF arrangement have supported Rwanda’s efforts to address external imbalances, thereby supporting continued strong growth and durable poverty reduction. The SCF arrangement added a financing component to the existing PSI-supported program, which aims to promote private-sector led growth through safeguarding macroeconomic stability, including through external sustainability, fiscal sustainability based on continued improvements in domestic resource collection, low and stable inflation, and enhancing access to credit and deepening the financial sector.
January 17, 2018
Tonga: 2017 Article IV Consultation-Press Release; and the Staff Report for Tonga
Description: This 2017 Article IV Consultation highlights that over recent years, Tonga has enjoyed robust growth and macroeconomic stability. Growth continued to be strong at 2.7 percent in FY2017 following 3.4 percent in FY2016, supported by construction, agriculture, tourism, strong remittances, and strong private credit growth. Inflation spiked in FY2017 because of a new import tax and an increase in domestic food prices. The country’s external position weakened slightly owing to construction-related imports, with reserves supported by strong remittances and donor aid. The outlook for the Tongan economy is favorable, despite external headwinds. Real GDP growth is projected at 3.4 percent in FY2018, driven by construction, agriculture, and tourism.
January 16, 2018
Republic of Croatia: 2017 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the Republic of Croatia
Description: This 2017 Article IV Consultation highlights that Croatia continued its third year of positive economic growth in 2017. Growth is expected to stay at similar levels in the near future but to decelerate over the medium term. Consumer prices increased at a moderate pace and wage growth was also moderate as unemployment remained high. The external current account is expected to record another strong surplus, underpinned by robust performance of exports and tourism and lower repatriation of profits as banks absorbed losses from Agrokor. The balance of risks has improved but vulnerabilities remain sizable as public and external debt levels are still high, and the full impact of the Agrokor restructuring is yet unknown.
January 16, 2018
Republic of Croatia: Selected Issues
Description: This paper reviews the relationship between real GDP growth and domestic bank lending to the private sector in Croatia after the 2008 global financial crisis (GFC), drawing on a cross-country analysis of European countries. Croatia’s recession was substantially longer compared to peers due to both domestic and external factors. Bank credit to the private sector was found to be important for economic growth, but less than often perceived, especially during a boom–bust cycle. Using empirical analysis, this paper confirms that the deleveraging of the private sector, particularly nonfinancial companies, was slow and contributed to Croatia’s prolonged recession. When provisions of nonperforming loans (NPLs) improved and the uncertainty following the GFC receded, credit supply increased, while demand for credit hesitantly picked up with the strengthening of the recovery. The paper thus reinforces that NPLs and how they are handled as well as real growth are important determinants for credit. These findings are supported by the cross-country analysis and corroborated by other studies.
January 16, 2018
Uganda: Technical Assistance Report-Monetary and Foreign Exchange Operations, Recapitalization, and Act Revision
Description: This Technical Assistance Report discusses the findings and recommendations made by the IMF mission regarding monetary and foreign exchange operations in Uganda, Bank of Uganda (BOU) recapitalization, and Bank of Uganda Act revision. The presence of sizable precautionary and involuntary reserves and excessive short-end volatility has weakened the transmission mechanism in Uganda. The key challenge remains to enhance monetary and fiscal policy coordination and to ensure that institutional and operational arrangements are robust and conducive to efficient monetary operations framework. The BOU should raise the effectiveness of the monetary and foreign exchange operations framework. To foster further market development there is need to anchor short-term interest rates by using various fine-tuning instruments to ensure improved operational efficiency and strengthen transmission of policy signals across the curve.
January 16, 2018
Cameroon: First Review Under the Extended Credit Facility Arrangement Requests for Waiver of Nonobservance of a Performance Criterion and Modification of Performance Criteria-Press Release; Staff Report; Supplementary Information; and Statement by the Executive Director for Cameroon
Description: This paper discusses Cameroon’s First Review Under the Extended Credit Facility (ECF) Arrangement, Requests for Waiver of Nonobservance of a Performance Criterion (PC) and Modification of PCs. Cameroon’s performance under the three-year ECF-supported program approved in June has been satisfactory, with the fiscal and external adjustments contributing to the rebuilding of buffers. Growth in 2017–18 is expected to be somewhat weaker than anticipated in the program, declining to 3.7 percent in 2017 owing to lower oil production and tepid demand, with a recovery to 4.2 percent in 2018. The medium-term outlook remains positive, boosted by the coming on stream of large energy and transport infrastructure projects.
January 16, 2018
Uganda: Technical Assistance Report-Moving Towards Risk-Based Supervision of Insurance in Uganda: Training on Supervision of Reinsurance and Assisting on an Industry Seminar on Risk-Based Supervision
Description: This Technical Assistance Report discusses the recommendations made by the IMF mission to assist Uganda in moving toward risk-based supervision of insurance sector. It highlights that under the revised insurance legislation, the Insurance Regulatory Authority of Uganda (IRA) will be requiring nonlife insurers to provide certification for adequacy of technical provisions by an actuary as is currently required for life insurers. When the requirement comes into effect, it will be necessary for it to be supported by guidance from IRA in terms of its expectations for the actuarial reports to be filed. This will ensure consistency in reporting to the IRA and that the reports will provide the information needed by the IRA for supervisory purposes.
January 16, 2018
Republic of Tanzania: Seventh Review Under the Policy Support Instrument-Press Release; Staff Report
Description: This paper discusses Tanzania’s Seventh Review Under the Policy Support Instrument (PSI). Program performance under the PSI has been broadly satisfactory. Most quantitative targets for June and September 2017 were met. Although progress in structural reforms has been mostly slow, efforts have been boosted to advance them. Macroeconomic policies will need to be closely coordinated. After recording a small fiscal surplus in July–September against a programmed deficit, the government is planning to step up budget implementation, particularly in development spending. The monetary policy stance and liquidity forecasting and management will need to be closely coordinated with fiscal developments. Strong growth and job creation are needed to address high poverty and a large underemployed youth population.
January 12, 2018
Sri Lanka: Third Review under the Extended Arrangement under the Extended Fund Facility and Request for Modification of Performance Criterion-Press Release; Staff Report; and Statement by the Executive Director for Sri Lanka
Description: This paper discusses Sri Lanka’s Third Review Under the Extended Arrangement Under the Extended Fund Facility and Request for Modification of Performance Criterion (PC). Performance under the program has remained broadly on track since the second review despite a series of weather-related supply shocks. All end-June and continuous PCs are met. Revenue mobilization has helped meet the quantitative fiscal targets, while strong capital inflows have supported the buildup of international reserves. The budget targets a primary surplus of 1 percent of GDP and frontloads fiscal consolidation toward the authorities’ objective of reducing the overall fiscal deficit to 3.5 percent of GDP by 2020.
January 12, 2018
Senegal: Fifth Review Under the Policy Support Instrument and Request for Modification of Assessment Criterion-Press Release; Staff Report
Description: This paper discusses Senegal’s Fifth Review Under the Policy Support Instrument and Request for Modification of Assessment Criterion. Senegal’s macroeconomic situation is stable. Growth is expected to exceed 6 percent in 2017 for the third year in a row, while inflation remains low. The fiscal deficit has been declining progressively in recent years and is projected to reach 3.7 percent of GDP in 2017. The current account deficit is projected to increase to 7.8 percent of GDP in 2017 owing to higher oil prices and slightly slower export growth. The outlook for the Senegalese economy remains on the whole positive. Senegal needs to continue implementing its structural reform program to maintain high growth rates of recent years.