Country Reports
2023
December 8, 2023
Belgium: Financial Sector Assessment Program-Technical Note on Macroprudential Policy Framework and Tools
Description: Despite a series of shocks in the recent past, the Belgian financial sector has remained resilient and firm evidence for sustained credit or real estate price booms is limited. The profitability, capital adequacy and liquidity of banks have surpassed their pre-pandemic levels, remaining comfortably above regulatory thresholds. Notwithstanding the blows to the economy inflicted by the pandemic, spillovers from Russia’s war in Ukraine, and the energy crisis, bankruptcies have not materialized, and the quality of loan portfolios has stayed strong as automatic wage indexation and government support have helped households and firms. The credit gap turning positive in late 2017 did not herald the beginning of a prolonged period of further widening, with private sector borrowing expanding at a robust pace until the rapid tightening of financial conditions since 2022 triggered an ebbing of lending growth. Prices for residential and commercial dwellings have steadily increased since 2014, yet market dynamism over this period has been generally below developments seen in other euro area countries, keeping valuations in check.
December 8, 2023
Belgium: Financial Sector Assessment Program-Detailed Assessment of Observance-Assessment of the CPSS–IOSCO Principles for Financial Market Infrastructures Euroclear Bank
Description: Euroclear Bank (EB) is a large and highly interconnected international central securities depository (ICSD) that provides critical services for global financial markets. EB, domiciled in Belgium, issues and provides custody and settlement services for international bonds (i.e., Eurobonds) in its capacity as an ICSD. It shares this role primarily with Clearstream Banking Luxembourg (CBL). EB also settles and holds in custody a wide range of domestic and internationally traded securities. In December 2019, EB was authorized under the Central Securities Depository Regulation (CSDR) of the European Union (EU) to perform so-called core CSD services, as well as non-banking- and banking-type ancillary services. EB is also licensed as a credit institution under the Belgian Banking Act. To facilitate smooth settlement, EB provides uncommitted credit facilities to its participants on an intraday and fully collateralized basis. In 2021, the value of securities held on EB’s books was EUR 17.1 trillion and it had settlement turnover of 147 million transactions with a value of EUR 653 trillion. This makes EB the most active CSD in the world (by settlement turnover), as well as the largest ICSD and third largest CSD in the world (by value of securities held).
December 8, 2023
Belgium: Financial Sector Assessment Program-Technical Note on Insurance Regulation and Supervision
Description: The Financial Sector Assessment Program (FSAP) conducted a focused review of insurance regulation and supervision in Belgium. This technical note (TN) provides an update on the insurance sector and highlights risks and vulnerabilities. It analyzes key aspects of regulatory and supervisory oversight: supervisor; the solvency framework; supervision (micro and macro); changes in control and portfolio transfer, reinsurance; conduct of business and group supervision and supervisory co-operation and co-ordination.2 Belgium has adopted a twin peaks model of regulatory oversight and supervision. The National Bank of Belgium (NBB) is responsible for prudential supervision at both a micro and macro level whilst the Financial Services and Markets Authority (FSMA) is mandated with conduct of business supervision. The analysis focuses on supervision within the scope of the NBB’s and the FSMA’s mandates. The TN comments on progress in respect of the implementation of recommendations made by the previous FSAP and offers further recommendations to strengthen the regulatory and supervisory regime.
December 8, 2023
Belgium: 2023 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Belgium
Description: Supported by strong and timely policy response, the Belgium economy and its financial sector showed resilience in withstanding a series of shocks in the past three years. Still, as in most euro area countries, growth is slowing, and core inflation remains high. Furthermore, the pandemic and energy crisis increased already-high public debt and structural fiscal deficits. Meanwhile, an aging population and the climate transition are putting pressure on public finances while low productivity and labor participation are dampening potential growth.
December 8, 2023
Belgium: Financial Sector Assessment Program-Technical Note on Regulation and Supervision of Less Significant Institutions
Description: The Belgium FSAP deep dived into the arrangements related to the financial safety net and crisis management. Belgium made progress since the 2018 FSAP2 in the preparation of resolution plans and minimum requirement for own funds and eligible liabilities (MREL) targets. The authorities should now focus on strengthening the crisis management framework, ensure the operational readiness of resolution plans and enhancing the Deposit Insurance System (DIS). The Belgium FSAP has reviewed the national arrangements and, as a result, all the recommendations are addressed to the national authorities. This technical note also refers to Significant Institutions (SIs) when relevant and includes a factual description of the allocation of responsibilities between the Belgian authorities, the European Central Bank (ECB) and the Single Resolution Board (SRB) with regards to the functioning of the financial safety net.
December 6, 2023
Nepal: Third Review Under the Extended Credit Facility Arrangement-Press Release; Staff Report; and Statement by the Executive Director for Nepal
Description: Nepal’s post-pandemic rebound, fueled by a credit boom, came to an end last year as growth slowed markedly. Low domestic demand helped resolve external pressures but also deflated government revenue and led to a widening of the fiscal deficit despite spending discipline. Despite the November 2023 earthquake, growth is expected to recover to 3.5 percent in FY2023/24, which is below potential. Inflation is declining but remains high. While the financial sector appears to be weathering the credit contraction, regulatory and supervisory practices need to continue to be strengthened to facilitate the needed transition to more sustainable and pro-growth credit growth.
December 6, 2023
Papua New Guinea: First Reviews under Extended Arrangement under the Extended Fund Facility and an Arrangement under the Extended Credit Facility, and Request for Modification of Quantitative Performance Criteria-Press Release; Staff Report; and Statement by the Executive Director for Papua New Guinea
Description: Background. On March 22, 2023, the IMF Executive Board approved 38-month Extended Credit Facility (ECF) and Extended Fund Facility (EFF) arrangements with Papua New Guinea to help address a protracted balance of payments need manifested in foreign exchange shortages and to support the authorities’ reforms to address long-standing structural impediments to inclusive growth. While ambitious, the program is focused on macro-critical conditionality, supported by capacity development (CD), and informed by a Country Engagement Strategy, in line with the IMF’s Strategy for Fragile and Conflict-Affected States (FCS).
December 5, 2023
Lebanon: Technical Assistance Report-Tax and Customs Administration: An Urgent Need for Intervention
Description: Four years into the ongoing economic crisis, a concern exists that operations in Lebanon’s tax and customs administrations could collapse. This report describes the challenges faced, encourages that immediate interventions be made, identifies structural mechanisms to finance reforms, and provides guidance on reform and capacity development priorities for the next 36 months.
December 5, 2023
Benin: Poverty Reduction and Growth Strategy
Description: Considering the need to strengthen the development planning system to achieve the Benin 2025 Alafia Vision, the Sustainable Development Goals (SDGs), and Africa’s Agenda 2063, the government adopted a roadmap during the Council of Ministers of July 27, 2016 for the development of the 2016-2021 Government Action Program (PAG) and the National Development Plan (PND). The PND is the first layer in the configuration of the Benin 2025 Alafia Vision, in accordance with the planning system adopted by Benin during the national days of assessment organized on this subject on December 5 and 6, 1991 and adopted by the government in the Council of Ministers in 1992.
December 4, 2023
Guyana: 2023 Article IV Consultation-Press Release; and Staff Report
Description: The Guyanese economy has tripled in size since the start of oil extraction (end- 2019), from one of the lowest GDP per capita in Latin America and the Caribbean in the early nineties. Oil production is ramping up rapidly, supporting the highest real GDP growth in the world in 2022 (62.3 percent). With the help of oil revenues, first transferred to the budget in 2022, the government has started investing heavily to address large development needs. Fundamentals remain strong and there are no signs of inflationary pressures or overheating as of yet—annual CPI inflation rate was 1.2 percent in July 2023— since there remains slack in the economy.