Country Reports
2017
September 6, 2017
Ghana: 2017 Article IV Consultation, Fourth Review Under the Extended Credit Facility Arrangement, Request for Waiver for Nonobservance of Performance Criteria, and Request for Extension and Rephasing of the Arrangement-Press Release; Staff Report; Staff Supplement; and Statement by the Executive Director for Ghana
Description: This 2017 Article IV Consultation highlights that Ghana has shown mixed macroeconomic performance in recent years, with significant shocks being amplified by policy slippages and resulting external and domestic imbalances. Growth in 2016 was 3.5 percent, the lowest level in two decades. A recovery of growth is expected in 2017–18, owing to an increase in oil production, declining inflation, and lower imbalances with the right policy implementation. Inflation has continued to decline and the exchange rate has been broadly stable. The external position has continued to improve, supported by strong foreign investors’ participation in the domestic debt market. Over the medium term, both the fiscal deficit and the current account deficit are projected to decline gradually.
September 6, 2017
Republic of Serbia: 2017 Article IV Consultation, Seventh Review Under the Stand-by Arrangement and Modification of Performance Criteria-Press Release; Staff Report; and Statement by the Executive Director for the Republic of Serbia
Description: This 2017 Article IV Consultation highlights that Serbia’s economy has strengthened impressively since the adoption of the economic program supported by the Stand-By Arrangement. Economic growth is expected to reach 3 percent in 2017. The fiscal deficit should narrow to 1.1 percent of GDP—the lowest level since 2005—and public debt is heading down faster than projected. Contrary to expectations, the larger than planned fiscal tightening has been associated with increased growth, reflecting the confidence engendered by decisively tackling the public debt sustainability concerns. Moreover, unemployment is falling sharply, along with the level of banks’ nonperforming loans, while inflation has been maintained at low levels.
September 1, 2017
Republic of Mozambique: Technical Assistance Report on Wage Bill and Civil Service Reform
Description: The report contributes to the Mozambican authorities on options for rationalizing wage bill spending.
August 28, 2017
Luxembourg: Financial Sector Assessment Program: Technical Note-Fund Management: Regulation, Supervision, and Systemic Risk Monitoring
Description: This Technical Note discusses the findings and recommendations made in the 2017 Financial Sector Assessment Program for Luxembourg in areas of regulation, supervision, and systemic risk monitoring of fund management. Certain structural elements of the Luxembourg fund management industry, particularly the extensive use of delegation and concentration of fund directorships, merit increased supervisory analysis and attention beyond the current activities. The Luxembourg framework for liquidity management tools compares favorably with its peers at both the EU and international level. Information on leverage of funds is of potential relevance from a systemic risk perspective. The Luxembourg authorities have also been actively monitoring and contributing to discussions on the EU money market funds regulation.
August 28, 2017
Luxembourg: Financial Sector Assessment Program: Technical Note-Managing Problem Banks and Systemic Banking Crises
Description: This Technical Note analyzes the bank failure mitigation and resolution regime, as well as arrangements for managing a financial crisis, in Luxembourg. The landscape for managing problem banks in Luxembourg has changed fundamentally in recent years. As part of the euro area, Luxembourg is now part of a banking union in which the European Central Bank (ECB) has exclusive authority to directly supervise significant institutions and the Commission for the Supervision of the Financial Sector (CSSF), under the oversight of the ECB, directly supervises less significant institutions. It is recommended that the CSSF increase staffing for resolution and pay attention to potential conflicts of interest in the decision-making process related to supervisory and deposit insurance functions.
August 28, 2017
Luxembourg: Financial Sector Assessment Program: Detailed Assessment of Observance-Assessment of Observance of the CPSS-IOSCO Principles for Financial Market Infrastructures: Clearstream Banking Luxembourg
Description: This report assesses the risk management practices of Clearstream Banking Luxembourg (CBL) based on the Committee on Payment and Settlement Systems–International Organization of Securities Commissions (CPSS-IOSCO) Principles for Financial Market Infrastructures. The findings reveal that a range of principles are in broad observance. A key priority is to reduce CBL dependence on commercial banks in its daily operations. There is significant dependence on a limited number of depository and cash correspondent banks, in particular for the US and UK markets. This dependence could be actively mitigated through an increase in the number of contracted banks or, where possible, the establishment of direct links with local central securities depositories and central banks.
August 28, 2017
Luxembourg: Financial Sector Assessment Program: Technical Note-Selected Issues in Banking Supervision
Description: This Technical Note examines aspects of the banking supervision regime in Luxembourg. Significant progress has been made in relation to the recommendations made in the 2011 Financial Sector Assessment Program. The Finance Ministry is no longer responsible for the granting or revocation of banking licenses, the Commission for the Supervision of the Financial Sector (CSSF) is no longer charged with promoting industry, resources have increased substantially, and there has been a significant increase in the implementation of sanctioning powers. There still exists potential for government or industry interference in the operational independence of the CSSF. The frequency of on-site inspections of Luxembourg subsidiaries of significant institutions is also on the low side.
August 28, 2017
Luxembourg: Financial Sector Assessment Program: Technical Note-Risk Analysis
Description: This Technical Note reviews the stability of Luxembourg’s financial system. The financial soundness indicators for Luxembourg’s financial system, which plays a key role in the intermediation of financial capital, have remained relatively robust in recent years. Household stress test results suggest that households’ solvency would be significantly affected by a drop in income and housing prices and a rise in unemployment. Bank liquidity displays broad resilience, but would be weakened should wholesale funding dry up or funding stress emerge in foreign currencies. Banks were found to be less vulnerable to direct contagion risk through bilateral exposure; however, most banks have considerable cross-border exposure.
August 28, 2017
Luxembourg: Financial Sector Assessment Program: Technical Note-Anti-Money Laundering And Combatting The Financing of Terrorism
Description: This Technical Note discusses the findings and recommendations made in the 2017 Financial Sector Assessment Program (FSAP) Update for Luxembourg in the area of anti–money laundering and combating the financing of terrorism (AML/CFT). Since the last FSAP update, important steps have been taken to strengthen the AML/CFT regime. Luxembourg’s risk profile appears to be evolving as a result of the authorities’ push for increased tax transparency. Transparency of the beneficial ownership of legal persons has also improved. AML/CFT supervision has been strengthened in recent years, but challenges remain, including with respect to lawyers.
August 28, 2017
Luxembourg: Financial Sector Assessment Program: Technical Note-Macroprudential Framework And Policies
Description: This Technical Note discusses the findings and recommendations made in the 2017 Financial Sector Assessment Program for Luxembourg in areas of macroprudential framework and policies. Luxembourg has a large financial system that contributes a significant share of GDP and is globally interconnected. The institutional arrangement is broadly appropriate for effective macroprudential policy, but some areas should be strengthened. The monitoring and analysis of systemic risks by the Banque Centrale du Luxembourg is appropriate and performed on a timely basis. The authorities are encouraged to continue to increase efforts to monitor risks related to the investment fund industry.