Country Reports
2014
February 20, 2014
India: Staff Report for 2014 Article IV Consultation
Description: This 2014 Article IV consultation highlights an expected slowdown of growth in India, to 4.6 percent this fiscal year, the lowest in a decade, reflecting global developments and domestic supply constraints. Headline consumer price index inflation is expected to remain near double digits for the remainder of the fiscal year. The current account deficit is narrowing, driven by a significant improvement in exports, robust remittance flows, and a rapid decline in gold imports. Nonetheless, India has very little room to adopt countercyclical policies. It is constrained by persistently high inflation and sizable fiscal and external imbalances. High and persistent inflation is a key macroeconomic challenge facing India. Further increases in the policy rate will be necessary to tackle high inflation and inflation expectations.
February 20, 2014
Spain: Financial Sector Reform—Final Progress Report
Description: This paper discusses key findings of the progress report on financial sector reforms in Spain. Spain’s European Stability Mechanism (ESM)-supported program of financial sector reform aimed to assist economic recovery by promoting financial stability. The program was adopted in mid-2012. The Spanish authorities’ implementation of the program has been steadfast. All of the program’s specific measures are now complete. Major structural reform efforts in a variety of areas (including labor and fiscal policies) will need to continue to achieve sufficiently rapid growth to bring unemployment down to reasonable levels over the medium term.
February 19, 2014
Portugal: Tenth Review Under the Extended Arrangement and Request for Waivers of Applicability of end-December Performance Criteria
Description: This paper discusses Portugal’s Tenth Review Under the Extended Arrangement and Request for Waivers of Applicability of End-December Performance Criteria (PCs). The short-term outlook for Portugal has improved and program implementation remains on track, notwithstanding another adverse Constitutional Court ruling. Stronger domestic demand is supporting a pickup in activity and lower unemployment. A broad-based recovery in sentiment has led to a decline in yields, allowing Portugal to issue a five-year bond on favorable terms. The end-September 2013 quantitative PCs were met, and preliminary estimates suggest that the end-December 2013 targets were also met. The IMF staff supports the authorities’ request for completion of the 10th review and for waivers of applicability of the end-December PCs.
February 18, 2014
Panama: Detailed Assessment Report—FATF Recommendations for Anti-Money Laundering and Combating the Financing of Terrorism
Description: This report evaluates the level of implementation of Financial Action Task Force (FATF) Recommendations for Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) in Panama. The findings reveal that Panama is vulnerable to money laundering from a number of sources, including drug trafficking and other predicate crimes committed abroad, such as fraud and financial and tax crimes. The AML Law covers most of the core financial sectors but does not fully apply to the insurance sector and does not extend to a number of other financial activities as required under the FATF standard. Competent authorities, including law enforcement and the Financial Intelligence Unit, do not have timely access to information on legal persons and arrangements as required under the FATF standard.
February 18, 2014
Panama: Report on Observance of Standards and Codes—FATF Recommendations for Anti-Money Laundering and Combating the Financing of Terrorism
Description: This report assesses the Observance of Standards and Codes on the Financial Action Task Force (FATF) Recommendations for Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) in Panama. Panama is vulnerable to money laundering from a number of sources, including drug trafficking and other predicate crimes committed abroad—such as fraud and financial and tax crimes. Panama has criminalized money laundering and terrorism financing, but its AML/CFT framework is not fully in line with the FATF recommendations. Some requirements form combating the financing of terrorism are included in subsidiary instruments, but these appear to go beyond the AML Law and, therefore, are inconsistent with the legal principles established under the Constitution. There are inadequate statistics on money laundering investigations, prosecutions, and convictions to properly assess the effectiveness of implementation of the legislation.
February 18, 2014
St. Kitts and Nevis: Fifth and Sixth Reviews Under the Stand-By Arrangement, Request for Waiver of Nonobservance of Performance Criterion and Request for Waiver of Applicability; Staff Report; Press Release
Description: This paper discusses St. Kitts and Nevis’ Fifth and Sixth Reviews under the Stand-By Arrangement (SBA), Request for Waiver of Nonobservance of Performance Criterion (PC) and Request for Waiver of Applicability. All fiscal program targets were met through the end of March 2013, partly thanks to strong receipts from the Citizenship by Investment program. However, the continuous PC on the nonaccumulation of government and guaranteed external arrears was missed by a minor amount because of temporary delays in payments. Three structural benchmarks were met at the end of December 2012 and the end of March 2013, while two benchmarks were met with delay. The IMF staff supports the authorities’ request for the completion of the fifth and sixth reviews under the SBA and the waiver of applicability.
February 12, 2014
Tunisia: First and Second Reviews Under the Stand-By Arrangement, Request for Waiver of Applicability and Nonobservance of Performance Criteria
Description: This paper discusses Tunisia’s First and Second Reviews under the Stand-By Arrangement, Request for Waivers of Applicability and Nonobservance of Performance Criteria. Program performance has been mixed. Weak budget composition, lower budget commitments, and deferred cash payments to 2014 resulted in overshooting of the end-December fiscal target for the central government primary balance. The implementation of structural reforms has been progressing, but with some delays linked to building a consensus during the political crisis and to technical difficulties. Looking ahead, the program will continue to focus on ensuring short-term macroeconomic stabilization while laying the foundations for sustained reforms that will reduce economic vulnerabilities and generate higher and more inclusive growth. The IMF staff supports the authorities’ request for completion of the combined first and second review.
February 12, 2014
Israel: Selected Issues
Description: This Selected Issues paper reviews the housing market in Israel. Property prices in Israel are currently about 25 percent above their equilibrium value, owing largely to low mortgage interest rates and supply shortages. Nominal housing prices have risen by 80 percent since 2007. In response to the global financial and euro area crises, the Bank of Israel engaged in two rounds of monetary easing. The monetary stimulus supported economic growth, but it also boosted demand in the mortgage and housing markets. The risk of a sharp correction in housing prices, while mitigated by the supply shortages, remains a concern and could have important macro-financial implications. To contain such risks, macroprudential policies should be further tightened. At the same time, concerted efforts should be made to alleviate supply-side constraints.
February 12, 2014
Israel: Staff Report for 2013 Article IV Consultation
Description: This 2013 Article IV consultation highlights the moderate growth of the economy of Israel. Abstracting from the impact of new large-scale natural gas production, GDP growth is estimated to have moderated to about 2.5 percent in 2013, owing in large part to weak investment and exports. Some pickup is expected in 2014, but the underlying momentum is weaker than before. Despite notable progress, Israel’s public debt remains high, while continued housing price increases pose risks of a boom-bust cycle in the housing market. The key policy challenge is to maintain near-term growth at potential, while preventing the buildup of imbalances, strengthening resilience to shocks, and ensuring long-term sustainability.
February 12, 2014
Barbados: Staff Report for 2013 Article IV Consultation
Description: This 2013 Article IV consultation highlights Barbados’ weak economic performance and high public debt. Foreign reserves are under pressure as fiscal and external imbalances widened in 2012 and further in 2013. Recognizing the need for urgent action, the authorities announced ambitious budget consolidation proposals in 2013 aimed at strengthening the fiscal position and arresting the slide in reserves. Recent fiscal measures, if fully implemented, should stabilize debt levels by 2016. However, downside risks are considerable, and failure to implement corrective policies could result in a disorderly adjustment process. Even with full implementation, fiscal financing pressures and external sector sustainability would remain challenging.