Country Reports
2023
August 28, 2023
Colombia: Technical Assistance Report—Assessment of Financial Stability Report
Description: This technical assistance report focuses on Assessment of Financial Stability Report (FSR) in Colombia. The FSR of the Banco de la República of Colombia (BR) provides broad coverage of macroeconomic environment and the assessment of risks in the financial system. The current structure of the FSR appears to work well in covering a range of relevant risks and vulnerabilities as well as topical issues, but there is room for evolution. Efforts to expand forward-looking analyses should continue, including stress testing and sensitivity analyses of the corporate and household sectors and on interconnectedness. A layered communication approach would help adapt the key messages of the FSR to audiences with different levels of expert knowledge and interest. There would be clear gains in deepening the understanding of the channels and interaction between financial stability and monetary policy as the financial system continues to evolve. Enhancing knowledge sharing between staff working on financial stability and monetary policy and further improving information about the sensitivity of various vulnerabilities in the FSR would help monetary policy decision makers, which in turn may have a positive feedback effect on financial stability.
August 28, 2023
New Zealand: Selected Issues
Description: This Selected Issues paper on New Zealand discusses addressing climate change. projections suggest the gap between New Zealand’s emissions targets and the projected path have narrowed significantly though more needs to be done if the Nationally Determined Contribution for 2030 is to be met. Three critical policy initiatives were introduced in 2022: the first Emissions Reduction Plan and associated emissions budgets were adopted; the National Adaptation Plan was published; and the government proposed its framework for pricing agriculture emissions, which account for around 62 percent of net emissions and are the missing piece in the emissions pricing framework. However, policies intended to address the cost-of-living crisis such as cuts to fuel taxes and duties could have an adverse impact on the feasibility of New Zealand’s emissions targets if prolonged. The heightened policy uncertainty was reflected in carbon prices: after peaking in November 2022, the price in the secondary market declined sharply and the June 2023 average price was around 40 percent below the peak level. The March 2023 Emissions Trading Scheme (ETS) auction failed to clear, resulting in no new units being released. This is a cause for concern: If falling prices are not arrested, the envisaged emissions reductions may be out of reach. Further, as proceeds from the ETS auctions are intended to be used to support climate investments, shortfalls could put these at risk.
August 28, 2023
New Zealand: 2023 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for New Zealand
Description: The 2023 Article IV Consultation discusses that New Zealand’s economy is in the midst of a necessary, policy-induced slowdown following the strong post-pandemic recovery. With exemplary management of the pandemic, New Zealand recovered faster than most other advanced economies. The economy is expected to continue on its slow growth as monetary tightening takes hold. The bulk of the impact of the rate hikes will be felt in 2023 and 2024 given the usual lags in transmission. Risks to the outlook stem from the external environment and a potential need for stronger tightening of monetary and financial conditions. Global developments relating to growth, deepening geo-economic fragmentation, and financial stability shocks can significantly alter the baseline assumptions for New Zealand. The economy is likely to continue its slow growth in the near term as monetary tightening continues to take hold. Inflation will likely decline but remain above target in 2024, with new discretionary spending adding to pressures. Risks stem mainly from policy missteps, housing market developments, and global spillovers.
August 25, 2023
Argentina: Fifth and Sixth Reviews Under the Extended Arrangement Under the Extended Fund Facility, Request for Rephasing of Access, Waivers of Nonobservance of Performance Criteria, Modification of Performance Criteria and Financing Assurances Review-Press Release; Staff Report; and Statement by the Executive Director for Argentina
Description: Since completion of the fourth review, Argentina’s economic situation has become increasingly fragile with episodes of heightened market volatility, reflecting more recently political uncertainties. While the historic drought has resulted in larger than expected losses to agricultural production, exports, and fiscal revenues, non-agricultural activity has been resilient, reflecting robust domestic demand, in part a result of policy slippages. Inflation and external pressures have intensified, with reserves falling to dangerously low levels on account of the drought and insufficient policy adjustment. Policy slippages reflected in part political constraints and electoral considerations. During the August 13 open primary elections (PASO), the libertarian party (Libertad Avanza) received the highest share of votes (30.0 percent), followed by the opposition coalition (Juntos por el Cambio, 28.3 percent) and the governing coalition (Unidos por la Patria, 27.3 percent). The general elections are scheduled to take place on October 22, with a run-off on November 19, if needed. A new administration will assume office in early December.
August 25, 2023
Chile: Review Under the Flexible Credit Line Arrangement-Press Release; Staff Report; Staff Supplement; and Statement by the Executive Director for Chile
Description: Following the overheating in 2021–22, the economy is approaching the end of its adjustment cycle towards more sustainable growth and lower inflation in a challenging external environment. The authorities are implementing very strong policies to preserve macroeconomic stability. The government has reform ambitions to raise tax revenues, reduce inequality, reform pensions and health care, and foster a green economy but is encountering strong resistance in a fragmented Congress.
August 23, 2023
Côte d'Ivoire: Report on Observance of Standards and Codes—FATF Recommendations for Anti-Money Laundering and Combating the Financing of Terrorism
Description: Côte d’Ivoire has achieved progress in countering money laundering and terrorist financing (ML/TF) since the 2012 mutual evaluation, particularly with the adoption of the Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) Law in 2016, the drafting of a national risk assessment (NRA) and a national strategy, as well as awareness-raising among various actors regarding AML/CFT issues. The effects of this endeavor have begun to materialize, notably with the new impetus provided to judicial investigations and proceedings related to financial crime. As long as they are sustained, strengthened, and based on a deeper understanding of risks, these reforms should bear more fruit in the coming years. Nevertheless, certain structural elements, such as the prevalence of cash and magnitude of the informal sector to the country’s economy, the cross-border nature of offenses, as well as corruption, continue to challenge the effectiveness of the AML/CFT regime.
August 23, 2023
Côte d'Ivoire: Detailed Assessment Report for Anti-Money Laundering and Combating the Financing of Terrorism
Description: This paper presents detailed assessment report on anti-money laundering and combating the financing of terrorism (AML/CFT) in Côte d'Ivoire. The authorities have identified high-risk sectors and key domestic ML/TF threats. However, they have failed to demonstrate a detailed understanding of ML and TF methods used in practice. The authorities have taken measures in response to certain risks, which are deemed high, particularly with regard to corruption or the real estate sector, but these measures are still recent and have only addressed the risks to a certain extent. The Economic and Financial Crimes Tribunal and some investigative authorities make use of financial intelligence and other information in an adequate manner, in order to develop evidence and identify criminal proceeds. The country’s geographical position, importance in the regional economy, and developed and open financial sector, all render it particularly exposed to ML/TF risks. Despite the well-established existence of transnational crime, the international aspects of investigations remain underutilized, except when the investigation is launched by foreign authorities.
August 21, 2023
The Bahamas: Technical Assistance Report-Operationalizing the New Bank Resolution Framework and Amended Deposit Insurance Legislation—Second Mission
Description: The CBOB has made good progress in implementing recovery plans for the domestic systemically important banks (DSIBs). Building on this progress, the mission recommends that the CBOB provide the DSIBs with structured feedback on their initial recovery plans and, based on lessons learned from the pilot, provide to all banks and credit unions updated industry-wide guidance that sets out high-level expectations on the content for recovery plans. Engagement with home supervisory authorities of foreign-owned banks should also be strengthened, with a view to seeking to ensure that parent-bank recovery plans adequately address recovery actions for subsidiaries in the Bahamas.
August 21, 2023
The Bahamas: Technical Assistance Report-Operationalizing the New Bank Resolution Framework and Amended Deposit Insurance Legislation—First Mission
Description: The Bahamas has made considerable progress in developing the infrastructure needed for an effective bank recovery and resolution regime. Following recommendations of the 2019 FSAP, the new legislation brought into force in September 2020 provides a reasonably comprehensive legal framework for the resolution of banks, including triggers, legal powers, and safeguards. The amendments to the Protection of Depositors Act in 2020 clarify the DIC’s role and responsibilities within the country’s financial safety net and have expanded its membership to include not only commercial banks, but also credit unions.
August 7, 2023
Bangladesh: Technical Assistance Report-Residential Property Price Index Mission
Description: A technical assistance mission was conducted from February 26 to March 2, 2023, to assist the Bangladesh Bank with the ongoing development of a Residential Property Price Index (RPPI). The mission was funded by the Data for Decisions (D4D) Fund. A previous RPPI mission visited Bangladesh in December 2019 and the Bangladesh Bank have been working on developing the RPPI since 2017. The mission completed the following tasks: (i) increased the capacity and knowledge of staff on the methods for RPPI compilation, (ii) conducted an analysis of existing and potential data sources for property price statistics, (iii) identified improvements to the existing compilation methods, (iv) identified impediments to the implementation of the new reporting template for financial institutions and non-banks, and (v) recommended further improvements in the medium to long-term.