Country Reports
2015
June 8, 2015
Luxembourg: Staff Report for the 2015 Article IV Consultation
Description: This 2015 Article IV Consultation highlights that Luxembourg’s economic model, emphasizing fiscal stability, openness, firm prudential oversight, and responsiveness to investor needs, is delivering strong growth. Buoyant financial services exports contributed to real growth of close to 3 percent in 2014, with strong job creation. Budget 2015 launched a multi-year fiscal consolidation aimed at offsetting falling revenues from electronic commerce. The economy faces important challenges going forward. Evolving international tax transparency standards, in which Luxembourg is participating fully, could impact the revenue base. Growth is projected at 2.5 percent in 2015.
June 8, 2015
Luxembourg: Selected Issues
Description: This Selected Issues paper considers features of the Luxembourg tax system that may be susceptible to changes in international tax transparency standards and surveys related policy options. Luxembourg’s predictable and generally low-rate tax system has helped establish it as a leading financial and commercial entrepôt and has supported its fiscal revenues. Its revenue base could, however, be susceptible to changes in the European Union and global tax environment. This paper highlights that to address potential challenges to Luxembourg’s revenue base, the tax policy review should explore selective rate increases and base broadening measures. Moreover, the tax practices should seek to avoid encouraging unnecessary complexity in corporate ownership structures and intragroup financial contracts.
June 3, 2015
Rwanda: Third Review Under the Policy Support Instrument
Description: This paper discusses Rwanda’s Third Review Under the Policy Support Instrument (PSI). Rwanda’s performance under the PSI has been satisfactory. The authorities are to be commended for meeting all quantitative assessment criteria. The performance on indicative targets and structural benchmarks was uneven, and it will be important to maintain the momentum of reforms, including on revenue mobilization while strengthening project implementation. Growth in 2015 is expected to remain strong, while the outlook is stable. The cautious fiscal stance and monetary policy are consistent with the need to preserve policy buffers.
June 2, 2015
Islamic Republic of Afghanistan: Staff-Monitored Program
Description: This paper discusses the main features of the Staff-Monitored Program (SMP) for Afghanistan. The SMP is designed to support the authorities’ reform agenda with a framework to address economic vulnerabilities and facilitate engagement with the international community to sustain donor support. The SMP will foster continued close engagement with Afghanistan, address immediate fiscal and banking vulnerabilities, and help manage risks. The SMP will also preserve buffers, maintain low inflation and competitiveness, and lay the basis for high and inclusive growth. Under the SMP, fiscal policy will focus on mobilizing domestic budget revenue to finance projected expenditure and rebuild the treasury’s cash balance.
June 1, 2015
Tunisia: Request for An Extension of the Stand-By Arrangement—Press Release; and Staff Report
Description: This paper discusses Tunisia’s Request for an Extension of the Stand-By Arrangement. The sixth review, originally scheduled to take place before end-March 2015, was delayed. Although quantitative performance criteria for end-December 2014 and end-March 2015 are likely to have been met, the structural reform agenda did not advance as expected, mainly reflecting the authorities’ focus on the formation of a coalition government and the approval of internal regulations for the newly elected parliament. The adoption of long-awaited legislation necessary to promote more inclusive growth and reduce vulnerabilities remains outstanding in many areas. The IMF staff supports the authorities’ request for an extension of the arrangement until December 31, 2015.
Notes: Also available in French
June 1, 2015
Republic of Lithuania: Staff Report for the 2015 Article IV Consultation
Description: This 2015 Article IV Consultation highlights that growth in Lithuania has remained resilient, despite challenges in the external environment. Strong domestic demand growth on the back of improving labor market conditions underpinned real GDP growth of 2.9 percent in 2014. Exports held up reasonably well despite Russian import bans. Growth should remain largely unchanged at 2.8 percent from last year in 2015, as positive external factors counterbalance negative ones and domestic demand remains robust. The main policy challenge will be to secure reasonably rapid convergence with living standards in western Europe going forward.
June 1, 2015
Republic of Lithuania: Selected Issues
Description: This Selected Issues paper reviews public expenditure in Lithuania with a view to identify areas for which deeper reforms may be warranted to improve spending efficiency and contain future spending pressures. The paper benchmarks spending levels and spending composition in Lithuania against those in other European countries. The 31 European countries covered in the benchmarking exercise include the EU-28 plus Iceland, Norway, and Switzerland. Reflecting the tendency for public spending to increase with income, Lithuania’s spending as a share of GDP is compared with the European Union average spending controlling for GDP per capita. The paper also tries to assess spending relative to outcomes to get a sense of spending efficiency.
May 29, 2015
Republic of Belarus: Selected Issues
Description: This Selected Issues paper analyzes the causes of the high inflation in Belarus. It estimates the contribution of two factors: (1) exchange rate pass-through and (2) administrative price increases. Residual inflation is used as a gauge for inflation caused directly by demand pressures and inflation expectations. It is found that the administrative price increases are a key driver of inflation, even ahead of demand pressures, which also explain a large share of inflation. Although exchange rate pass-through is found to be high and fast, particularly for unregulated prices, its contribution to inflation has been comparatively modest in recent years owing to the stability of the exchange rate.
Notes: Also Available in Russian
May 29, 2015
Republic of Belarus: Staff Report for the 2015 Article IV Consultation
Description: This 2015 Article IV Consultation highlights that Belarus continues to be highly vulnerable to economic shocks, as was illustrated by the turbulence in foreign exchange and debt markets in late 2014. Frequent bouts of expansionary macroeconomic policies, in a context of deep structural rigidities, have fueled inflation and external imbalances and left Belarus dependent on ad hoc external support. In 2015, growth has slowed sharply as high uncertainty, reductions in real incomes, administrative measures, and declining trade with Russia weighed on activity. The outlook is for a recession and continued external pressures. With Russia in a downturn, the Belarusian economy is projected to contract by 2.25 percent in 2015, led by falling exports.
Notes: Also Available in Russian
May 27, 2015
Peru: 2015 Article IV Consultation—Press Release; Staff Report; and Statement by the Executive Director for Peru
Description: This 2015 Article IV Consultation highlights that Peru remains one of the best performing economies in Latin America, with solid macroeconomic policies and fundamentals and visible gains in poverty reduction. However, like most of the region, Peru faced a challenging external environment in 2014. Lower metal prices and weaker demand from trading partners were a major drag on private investment and exports. On the domestic front, an unexpected drop in subnational public investment level and temporary supply disruptions in mining, fishing, and agriculture compounded external shocks. Real GDP is projected to expand at about 3.75 percent in 2015, contingent on the reversal of the supply shocks and policy stimulus of 2014. Growth is expected to rise in 2016–17.