Country Reports
2017
May 10, 2017
New Zealand: Financial Sector Assessment Program: Technical Note-Fund Management-Regulation, Supervision, and Systemic Risk Monitoring
Description: This Technical Note presents an assessment of Regulation, Supervision and Systemic Risk Monitoring in New Zealand. The overall regulatory framework for asset management is well developed, but would benefit from some enhancements to prevent the buildup of risks. The provision of custody services does not require a license in New Zealand, and custodians therefore fall outside the direct supervision of the Financial Markets Authority (FMA). They are neither subject to prudential requirements nor to ongoing supervision by any other authority. Given that custodians perform key functions regarding safeguarding investors’ assets, the government should require that these entities be licensed and subject to ongoing supervision by the FMA.
May 10, 2017
New Zealand: Financial Sector Assessment Program: Technical Note-Contingency Planning and Crisis Management Framework
Description: This Technical Note assesses the level of implementation of the Contingency Planning and Crisis Management Framework in New Zealand. Work has already begun to identify necessary resources, such as rosters of potential statutory managers and personnel from government agencies and the private sector who could be mobilized to deal with a crisis. This work needs to be further developed. In parallel, the Reserve Bank of New Zealand should continue to document the procedure for appointment of a statutory manager, open bank resolution, and other resolution options. The Treasury should complete “shelf” agreements, which may be required for a Crown guarantee or other support in a crisis.
May 10, 2017
New Zealand: Financial Sector Assessment Program: Detailed Assessment of Observance-Basel Core Principles for Effective Banking Supervision
Description: This paper presents an assessment of Observance of the Basel Core Principles for Effective Banking Supervision (BCP) in New Zealand. The supervisory approach of the Reserve Bank of New Zealand (RBNZ) reflects the characteristics of the local banking industry and the authorities’ goal to limit moral hazard by relying on market discipline and not offering deposit insurance. Banks offer traditional products in a highly concentrated market. Since the most recent Financial Sector Assessment Program, the RBNZ has increased attention to strengthening regulatory discipline. The current approach to supervision is limited by the heavy weight the RBNZ places on market discipline compared with regulatory discipline. Better compliance with the BCP and enhanced effectiveness of the RBNZ three-pillar approach are recommended.
May 9, 2017
Republic of Kazakhstan: Selected Issues
Description: This Selected Issues Paper evaluates Kazakhstan’s oil rules, current fiscal stance, and long-term sustainability. The sharp and sustained drop in oil prices since 2014 has reduced the value of Kazakhstan’s oil wealth. Kazakhstan’s non-oil deficit path has been higher than suggested by long-term benchmarks, and adjustment is needed in the coming years to avoid fiscal sustainability risks and to promote intergenerational equity. Price-based fiscal rules can help anchor short- and medium-term fiscal policy. The non-oil deficit path introduced in the new National Fund of the Republic of Kazakhstan concept is broadly consistent with the proposed approach and should be followed by timely and decisive implementation of revenue and expenditure measures.
May 9, 2017
Republic of Kazakhstan: 2017 Article IV Consultation- Press Release; and Staff Report
Description: This 2017 Article IV Consultation highlights growth in Kazakhstan expected to strengthen to 2.5 percent in 2017 after a slowdown in 2016, reflecting higher oil production and the effect of substantial fiscal stimulus spending. The sharp exchange rate depreciation in late 2015 and early 2016 triggered a surge in consumer prices, but inflation has come down to levels consistent with the National Bank of Kazakhstan’s target range. The medium-term outlook has improved; growth in the non-oil sector is expected to pick up gradually to 4 percent, benefiting from structural reforms and a resumption of bank lending. Uncertainty is high, however, because the economy remains vulnerable to commodity price swings and especially to a sustained decline in oil prices.
May 8, 2017
New Zealand: Financial Sector Assessment Program: Financial System Stability Assessment
Description: This paper presents an assessment of the stability of the financial system in New Zealand. Imbalances in the housing market, banks’ concentrated exposures to the dairy sector, and their high reliance on wholesale offshore funding are the key macro-financial vulnerabilities. The banking sector has significant exposure to real estate and agriculture, is relatively dependent on foreign funding, and is dominated by four Australian subsidiaries. A sharp decline in the real estate market, a reversal of the recent recovery in dairy prices, deterioration in global economic conditions, and tightening in financial markets would adversely impact the system. Despite these vulnerabilities, the banking system is resilient to severe shocks. Strengthening the macroprudential framework is important.
May 8, 2017
New Zealand: 2017 Article IV Consultation- Press Release; Staff Report; and Statement by the Executive Director for New Zealand
Description: This 2017 Article IV Consultation highlights New Zealand’s economic expansion, which since early 2011 gained further broad-based momentum in 2016. GDP growth accelerated to 4 percent, and the output gap has roughly closed. Reconstruction spending after the 2011 Canterbury earthquake was an important catalyst, but the expansion has also been supported by accommodative monetary policy, a net migration wave, improving services exports, and strong terms of trade. There was some weakening of momentum in the fourth quarter of 2016, owing to softer private consumption and a sharp drop in exports, but it is expected to be temporary. Growth should rebound and then moderate toward trend in the medium term, in particular as net migration normalizes.
May 5, 2017
Georgia: Technical Assistance Report-Liquidity Management Operations
Description: This Technical Assistance Report presents an assessment of liquidity management operations in Georgia. The National Bank of Georgia (NBG) has embarked on an ambitious project to strengthen monetary policy implementation so that its actions under normal circumstances are seen by the market as both credible and predictable. Overall, the NBG strategic framework is guided by the need to strike a balance. The NBG is actively implementing its new liquidity coverage ratio as a way of better capturing the liquidity risks of banks. NBG credibility around its monetary policy operations could be further supported through the creation of an operational guideline.
May 4, 2017
Panama: Selected Issues
Description: This Selected Issues paper assesses Panama’s business model founded on its ability to attract international financial, business, and transportation services. Panama has had exceptional growth over recent decades. A growth diagnostic exercise suggests that Panama is well placed to maintain this business model. Higher-quality education, stronger governance, and less bureaucracy will further strengthen Panama’s comparative advantage. Additional analysis suggests that investment will continue to support growth, while the logistics and tourism sectors promise to build further on Panama’s comparative advantage.
May 4, 2017
Panama: 2017 Article IV Consultation-Press Release; and Staff Report for Panama
Description: This 2017 Article IV Consultation highlights Panama’s economy as the fastest growing in Latin America over the past two decades. It is expected to remain among the most dynamic in the region, with stable and low inflation, sustainable public debt, a declining current account deficit, and a stable financial sector. Economic growth moderated to 4.9 percent in 2016 in the face of external headwinds, and inflation and unemployment remain subdued but have risen slightly. Fiscal consolidation continues in line with fiscal rule targets, and public debt is sustainable. Credit growth remains strong, but has begun to slow recently. The outlook is favorable despite heightened external uncertainty.