Country Reports
2017
July 12, 2017
Central African Economic and Monetary Community (CEMAC): Staff Report on the Common Policies in Support of Member Countries Reform Programs
Description: This paper examines common policies supporting reform programs in member countries of the Central African Economic and Monetary Community. The sharp decline in oil prices has profoundly impaired the region’s external and fiscal balances. Oil export proceeds and budget oil revenues have plummeted between 2014 and 2016. Several measures have been taken or are planned by the Bank of Central African States (BEAC) to support countries’ adjustment programs and help re-build reserves. BEAC has started to tighten the monetary policy stance with a first increase in its policy rate. The BEAC will also gradually eliminate its statutory advances to member countries, and will ensure implementation of strict limits aimed at restricting bank refinancing using government securities as collateral.
July 11, 2017
Bulgaria: Financial Sector Assessment Program: Technical Note-Risk Assessment and Stress Test of the Banking System
Description: This Technical Note discusses results of risk assessment and stress tests (ST) of the banking system in Bulgaria. ST results reveal that the Bulgarian banking system is vulnerable to the extreme realization of internal and external risks coupled with the need to clean the balance sheets from nonperforming loans (NPLs). In the baseline scenario, characterized by a modest economic growth and decline in unemployment, as well as stable and low interest rates, two banks—including a systemic one—exhibit weakness in terms of capital buffers to cope with accumulated losses in the past. These banks also experience substantial increase in their NPLs as a result of the asset quality review adjustment.
July 11, 2017
Bulgaria: Financial Sector Assessment Program: Technical Note - Non-Performing Loans Reduction Strategy
Description: This Technical Note examines the current state of nonperforming loans (NPLs) in Bulgaria and makes recommendations for a strategy to substantially reduce NPLs. The Bulgarian National Bank should adopt a comprehensive strategy in the near term to achieve a substantive reduction in NPL levels over a three- to five-year time horizon. The strategy should focus on more intensive measures to enhance bank practices in three main areas: (1) loan loss provisioning; (2) loan write-downs of NPLs, in whole or in part, where collection is unlikely; and (3) collateral valuation. This effort would be supported further by enhanced supervisory guidance, supervisory reporting, and risk disclosure.
July 11, 2017
Bulgaria: Financial Sector Assessment Program: Technical Note - Financial Safety Net and Crisis Management
Description: This Technical Note evaluates the financial safety net and crisis management for Bulgaria. Since the 2008 IMF Financial Sector Assessment Program Update, Bulgaria’s financial safety net and crisis management arrangements, including bank resolution and contingency planning, have improved. In 2015, to implement pertinent European Union rules, Bulgaria introduced a resolution regime for banks and investment firms; designated resolution authorities for said financial institutions; and established mechanisms to fund resolution measures. Despite the improvements, the financial safety net and crisis management arrangements face crucial challenges because none of their components is fully developed. To ensure operational capacity to rapidly deploy recovery and resolution tools, further actions are needed to strengthen the safety net and crisis management arrangements.
July 11, 2017
Bulgaria: Financial Sector Assessment Program: Technical Note-Stocktaking of Progress Achieved by the Bulgarian National Bank in Strengthening Banking Supervision
Description: This Technical Note evaluates the progress achieved by the Bulgarian National Bank (BNB) in strengthening banking supervision in Bulgaria. Progress in responding to the recommendation of the 2015 Basel Core Principles Assessment is under way. As part of the reforms initiated in October 2015, the BNB has put in place a new governance model to enhance the effectiveness of supervision. The activities of the Banking Supervision Department (BSD) will now be governed by new formal policies adopted by the Governing Council (GC). Through a new quarterly report, the GC is now better informed on banking risks and progress in addressing them. The BSD is also subject to annual internal audit.
July 11, 2017
Somalia: Second and Final Review Under the Staff-Monitored Program and Request for a New Staff-Monitored Program-Press Release and Staff Report
Description: This paper discusses Somalia’s Second and Final Review Under the Staff-Monitored Program (SMP) and Request for a new SMP. Program implementation through end-December 2016 and end-March 2017 was broadly satisfactory. In view of this performance and the remedial measures by the authorities to address shortcomings in performance under the first SMP, the IMF management agreed to the completion of the second and final review of the program. Risks to the program and the outlook are high, including the fragile security situation, weak institutional capacity, and major refugee and humanitarian crises. However, the authorities’ continued commitment to the program and sustained and coordinated international support should help mitigate these risks.
July 11, 2017
Gabon: Request for an Extended Arrangement Under the Extended Fund Facility-Press Release; Staff Report; and Statement by the Executive Director for Gabon
Description: This paper discusses Gabon’s Request for an Extended Arrangement Under the Extended Fund Facility (EFF). The main goal of the program is to ensure macroeconomic stability and lay the basis for sustainable and equitable growth. To this end, the program seeks to ensure debt sustainability at the national level and help restore and preserve external stability at the regional level. It is built upon three pillars: (1) well-balanced fiscal consolidation that minimizes the impact on growth and protects vulnerable groups; (2) structural fiscal reforms to improve the efficiency and transparency of public spending; and (3) policies to enhance financial sector stability and economic diversification. The IMF staff supports the authorities’ request for an extended arrangement under the EFF.
July 10, 2017
Russian Federation: Selected Issues
Description: This paper focuses on the task that may be more complicated when the adjustment in relative prices is driven by a negative terms of trade (ToT) shock. Two sets of factors are explored: disruptiveness of sudden terms-of-trade driven devaluations and issues related to external demand and access to external markets. The argument that a reduction in commodity prices will unwind the Dutch disease assumes symmetry: since increasing commodity prices drove resources out of the non-commodity tradable sector, decreasing commodity prices and ensuing real depreciation should bring resources back into the nontradable sector. Effectively, this implies that the magnitude of the elasticity of non-commodity exports to the real effective exchange rate (REER) is equal regardless of the direction of the REER movement, and is not affected by the phase of the commodity cycle. Deep linkages between the commodity and non-commodity sectors can prevent the non-commodity tradable sector from taking advance of the depreciation caused by a commodity price shock because such depreciation puts under stress the entire economy.
July 10, 2017
Russian Federation: 2017 Article IV Consultation-Press Release; Staff Report
Description: This 2017 Article IV Consultation highlights that the Russian economy stabilized in 2016, contracting by just 0.2 percent of GDP, after being hit in 2014 by the dual shocks of lower oil prices and sanctions. The more stable oil prices and improved financial conditions will support a return to growth in 2017, with an expected increase in real GDP of 1.4 percent. Growth is forecast to continue at 1.4 percent in 2018. With adverse demographics, and barring significant structural reforms that lifts productivity, potential growth is likely to stay at about 1.50 percent over the medium term. The main risk to the outlook remains a fall in oil prices.
July 10, 2017
Tunisia: First Review Under the Extended Fund Facility, Request for Waivers of NonObservance of Performance Criteria and Rephasing of Access-Press Release; Staff Report;and Statement by the Executive Director for Tunisia
Description: This paper discusses Tunisia’s First Review Under the Extended Fund Facility (EFF), Request for Waivers of Nonobservance of Performance Criteria and Rephasing of Access. Most quantitative performance criteria (QPCs) for end-December 2016 were missed and all structural benchmarks (SBs) through March 2017 were delayed. Most delayed SBs, including on private sector legislation, performance contracts for public banks, the civil service strategy, and the large taxpayers unit are now completed. The remaining ones will be achieved by end-2017. The IMF staff recommends the completion of the EFF review and supports the authorities’ request for rephasing of access and waivers of nonobservance of end-December QPCs.