Country Reports
2016
July 15, 2016
Peru: 2016 Article IV Consultation-Press Release; and Staff Report
Description: This 2016 Article IV Consultation highlights that Peru has successfully navigated the commodity cycle and the 2008–09 global financial crisis, and still leads growth among large Latin American economies. Following a sharp and unexpected drop in 2014, growth picked up in 2015, reaching 3.3 percent largely owing to higher metals production and fishing, and a partial recovery in services and commerce. Peru is now positioned to grow faster in the next two years, as mining production reaches full capacity and large infrastructure projects advance. Inflation is expected to decline. Risks to the outlook are balanced, and downside risks are mostly on the external side.
July 15, 2016
Peru: Selected Issues
Description: This Selected Issues paper presents a comparative analysis of the macroeconomic adjustment in Chile, Colombia, and Peru to commodity terms-of-trade shocks. The study is done in two steps: (1) an analysis of the impulse responses of key macroeconomic variables to terms-of-trade shocks and (2) an event study of the adjustment to the recent decline in commodity prices. The experiences of these countries highlight the importance of flexible exchange rates to help with the adjustment to lower commodity prices, and staying vigilant in addressing depreciation pressures on inflation through tightening monetary policies. On the fiscal front, evidence shows that greater fiscal space, like that of Chile and Peru, gives more room for accommodating terms-of-trade shocks.
July 14, 2016
Iraq: First and Second Reviews of the Staff-Monitored Program and Request for a Three-year Stand-By Arrangement-Press Release; Staff Report; and Statement by the Executive Director for Iraq
Description: This paper discusses Iraq’s First and Second Reviews of the Staff-Monitored Program (SMP) and Request for a Three-Year Stand-By Arrangement. The oil price decline has resulted in a massive reduction in Iraq’s budget revenue, pushing the fiscal deficit to an unsustainable level. The authorities are responding to the crisis with a mix of necessary fiscal adjustment and financing, maintaining their commitment to the exchange rate peg. The authorities started an SMP in November 2015 to establish a track record of policy credibility and pave the way to a possible IMF financing arrangement. Their performance under the SMP has been broadly satisfactory.
Notes: Also available in Arabic
July 13, 2016
Russian Federation: Financial System Stability Assessment
Description: This paper discusses key findings of the Financial System Stability Assessment of Russian Federation. The Russian banking system is weak and likely to need additional capital. Even in the baseline scenario, certain banks will need new capital owing to low profitability and increasing credit losses. The required resources increase in the stress scenarios, but remain manageable. Bank regulation and supervision have greatly improved in recent years, but there is more to be done. Key areas for improvement include related party lending, country and transfer risks, operational risks, and supervisory interactions with external auditors. In addition, the implementation of risk-based supervision is also in progress.
July 13, 2016
Russian Federation: Selected Issues
Description: This Selected Issues paper describes structural reform policies in Russia in the last 15 years. There is evidence of a gradual convergence of Russia’s performance to that of more advanced economies, though significant gaps remain. Progress in Russia’s global competitiveness index indicators during the past 10 years has been generally stronger for those indicators in which Russia’s performance was comparatively weaker in 2006. The authorities’ view that oil prices will be persistently low and a real exchange rate more aligned to fundamentals should serve as incentives to build a less oil-dependent growth model. Clear targets, carefully sequenced actions, appropriate accountability, and frequent monitoring could help advance reforms.
July 13, 2016
The Bahamas: 2016 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for The Bahamas
Description: This 2016 Article IV Consultation highlights that economic growth in The Bahamas is estimated to have stalled in 2015, as a modest increase in air tourism arrivals was not sufficient to offset a contraction in domestic demand and weak exports of goods. Private consumption and investment were weighed down by headwinds from fiscal consolidation, as well as an end to construction. Inflation was moderate at 1.9 percent on average in 2015. Growth is expected to strengthen to about 0.5 percent in 2016, supported by continued growth in air tourist arrivals and moderating headwinds to private consumption and investment.
July 13, 2016
Russian Federation: Report on the Observance of Standards and Codes-IOSCO Objectives and Principles of Securities Regulation
Description: This paper presents an assessment of the level of implementation of the IOSCO (International Organization of Securities Commissions) objectives and principles in the Russian Federation. Some of the most recent regulatory changes in the Russian Federation are clearly based on international standards. In other areas, further initiatives will be required. These include conflicts of interest identification and improving standards of management in professional market participants. It will also require the creation of legal gateways which will enable supervisors with the necessary skills sets to provide guidance as to what the Central Bank of the Russian Federation’s (CBR) reasonable expectations are on a range of issues. CBR also faces a major challenge in enforcing the regulatory regime and will need additional resources.
July 13, 2016
Russian Federation: Report on the Observance of Standards and Codes-Basel Core Principles for Effective Banking Supervision
Description: This paper presents an assessment of the level of implementation of Basel Core Principles for Effective Banking Supervision in Russian Federation. The legal framework currently in place provides the Central Bank of the Russian Federation (CBR) with necessary powers and responsibilities. The Russian licensing regime for banks appears exhaustive. The legal and regulatory framework provides CBR with a set of instruments and tools to ensure that the licensing process is sound. CBR also has the power to review, reject, and impose prudential conditions on any proposals to transfer significant ownership or controlling interests held directly or indirectly in existing banks to other parties. However, the legal regime for major acquisitions in Russia is found to be weak.
July 13, 2016
Russian Federation: Staff Report for the 2016 Article IV Consultation-Press Release; and Staff Report
Description: This 2016 Article IV Consultation highlights that the Russian economy contracted by 3.7 percent in 2015 owing to falling oil prices and the quasi closure of international financial markets to Russian entities. The economic contraction is nonetheless shallower than previous recessions as a stronger external position and the authorities’ economic package cushioned the shocks, helped restore confidence and stabilized the financial system. Lower oil prices and needed fiscal adjustment will keep the economy in recession in 2016 with an expected decline in real GDP of 1.2 percent. Growth is expected to resume in 2017 and reach 1 percent, as domestic demand slowly recovers on the back of easing financial conditions and pent up demand.
July 12, 2016
Kenya: Fiscal Transparency Evaluation
Description: This paper discusses key findings of the Fiscal Transparency Evaluation of Kenya. Since 2010, the Treasury has made important changes in Kenya’s public financial management framework, the impact of which can clearly be seen in its performance against the Fiscal Transparency Code. The prospects for quick improvements in the fiscal reporting area are clearly within the grasp of the National Treasury. Fiscal forecasting and budgeting practices are generally in line with good practice under the Fiscal Transparency Code, reflecting more than a decade of experience with medium-term budgeting and preparing and presenting macro frameworks.