Country Reports

July 8, 2013

Chile: 2013 Article IV Consultation

Description: The staff reports for the 2013 Article IV Consultation on the Chile discuss the strong and inclusive growth over the medium term. Technocratic, rules-based, and transparent policy management; monetary policy under a floating exchange rate undertaken by a credible central bank; and prudent fiscal policy, since 2001 under a near-legendary fiscal rule, has enhanced policy clarity, reinforced Chile’s resilience to shocks, and allowed for vigorous policy responses when needed, as after the global financial crisis and the earthquake. The widening current account deficit and the increased reliance on debt financing have increased balance of payments stability risks and Chile’s exposure to sudden stops.

July 8, 2013

Chile: Selected Issues

Description: This Selected Issues paper for Chile describes the postcrisis recovery experience. The recovery from the 2008–2009 global crisis has been markedly different both among advanced and emerging economies. The steady improvement in the labor wedge-distortions related to the consumption leisure decision helped support the recovery. In Chile, the growth generated by this improvement, was sufficient to overcome the relatively weak performance of efficiency (TFP). Chile’s recovery has been characterized by strong investment growth, 0.8 percentage points higher than the precrisis trend. The establishment of the Financial Stability Council in 2011 is an important step to ensure close coordination among the institutions involved in Chile’s financial prudential framework.

July 3, 2013

Guinea: Poverty Reduction Strategy Paper

Description: This paper on Poverty Reduction Strategy Papers on Guinea explains medium-term development framework to achieve Millennium Development Goals and fulfill the authorities’ vision of Guinea as an emerging economy in 15 to 25 years, respectful of human rights and gender equality and supportive of the rule of law. It sets out medium-term policies that Guinea should implement to place itself on a path to development that would allow it to fulfill its ambition to become an emerging economy by 2035. This scenario foresees strong and lasting average annual growth, supported by ambitious policies for modernization of agriculture.

Notes: Also available in French

July 3, 2013

Guinea: Poverty Reduction Strategy Paper—Joint Staff Advisory Note

Description: This paper presents a Joint Staff Advisory Note on Guinea’s Poverty Reduction Strategy Paper (PRSP). Baseline economic growth is projected to accelerate to 5.2 percent in 2014 and beyond, up from just under 4 percent in 2012. This projection is based on an acceleration of economic growth in the construction sector in response to massive investment outlays by mining companies. Private investment is projected to increase from 17.8 percent of GDP in 2012 to more than 40 percent in 2014. The PRSP proposes a sharp increase in funding for education as a share of total public expenditures over the PRSP period, while total fiscal resources also increase.

Notes: Also available in French

July 3, 2013

Zimbabwe: Staff Monitored Program

Description: This staff report for Zimbabwe highlights the key macroeconomic challenges of taking steps to improve fiscal and external sustainability and increase financial sector stability. Zimbabwe has made good progress in restoring macroeconomic stability since the end of hyperinflation in 2009, but the economic rebound is waning, and key challenges need to be tackled. Strong policies are needed to sustain the economic recovery, restore fiscal and external sustainability, and increase financial stability. This would place the economy on a long-term, sustained inclusive growth path. Implementation of indigenization and empowerment policies according to transparent rules, with due respect to property rights, remains essential to build investor confidence and attract needed foreign direct investment.

July 3, 2013

Bosnia and Herzegovina: Third Review Under the Stand-By Arrangement and Request for Waiver of Applicability of a Performance Criterion—Staff Report and Press Release.

Description: This paper discusses Bosnia and Herzegovina’s Third Review Under the Stand-By Arrangement and Request for Waiver of Applicability of a Performance Criterion. Financial sector indicators through end-March 2013 suggest that the banking system remains profitable and adequately capitalized at the aggregate level. Foreign parent banks’ exposure to their Bongani Investments Holdings subsidiaries has broadly stabilized over the last several quarters. Industrial production and exports rose markedly in the first quarter of 2013 compared to the same period last year. It is found that while this reflected to a large extent a much milder winter, higher water levels that boosted electricity production, and exports, prospects for a modest economic recovery this year of approximately ½ percent have improved.

July 3, 2013

Senegal: Poverty Reduction Strategy Paper

Description: This paper on Senegal’s Poverty Reduction Strategy Paper discusses the economic, social, and environmental performance of policies, the political and institutional environment, and the constraints weighing on its growth as well as the challenges to be addressed. The shortage of basic infrastructure, especially in the rural areas, is due to elevated costs and low investments. This is compounded by the high cost of individual sanitation infrastructure, the poverty of households, and the limited resources of local communities. The investment rate that sometimes reaches interesting levels remained constant at an average of around 22 percent, in real terms.

Notes: Also available in French

July 3, 2013

Guinea: Second Review Under the Three-Year Arrangement Under the Extended Credit Facility, Requests for Waiver of Nonobservance and Modification of Performance Criterion, and Financing Assurances Review

Description: This paper discusses Guinea’s Second Review Under the Three-Year Arrangement under the Extended Credit Facility, Requests for Modifications of Performance Criteria and Waiver of Nonobservance of Performance Criterion, and Financing Assurances. Growth is projected at 4.5 percent for 2013, slightly lower than envisaged because of lower growth in the mining sector. The programs inflation target has been revised upward slightly, mainly reflecting the higher than programmed outcome at end-2012, together with some modest impact from an agreement on increases in civil service wages. Key risks include continued political unrest in the run-up to elections, which could affect growth, investment, and reform momentum, and a rebound in inflation if the private sector follows the increase in civil service wages.

Notes: Also available in French

July 3, 2013

Senegal: Poverty Reduction Strategy Paper: Joint Staff Advisory Note on the National Strategy for Economic and Social Development

Description: The joint staff Advisory Note on Senegal’s Poverty Reduction Strategy Paper reviews policies and strategies required to push forward the authority’s agenda for high, sustained, and inclusive growth and poverty reduction. The private sector is recognized as the main engine of growth in the Senegalese economy. The strategy is clearly focused on improving the investment climate, fostering entrepreneurship, and facilitating access to financial services for small and medium-sized enterprises, and consolidating support institutions. Senegal’s water and sanitation sector is one of the most developed in sub-Saharan Africa. The urban water Millennium Development Goal has been achieved, with access for 98 percent of the urban population, and the goal for rural water access is within reach.

Notes: Also available in French

July 3, 2013

Guinea-Bissau: Staff Report for the 2013 Article IV Consultation; Debt Sustainability Analysis; Informational Annex; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for Guinea-Bissau

Description: The staff report for the 2013 Article IV Consultation on Guinea-Bissau highlights the economic development and policies. Guinea-Bissau’s medium-term challenges are to diversify its economy, reduce widespread poverty, and generate employment opportunities. Recurrent internal conflicts have negatively affected economic growth, poverty reduction, and social advancement in Guinea-Bissau. The economic performance will depend critically on establishing a visibly inclusive political process while moving toward demobilization, and professionalization of the military forces. In the baseline, uncertainties about implementation of those conditions suggest scope for only a slow and weak recovery, leaving real per capita incomes below 2011 levels until at least 2016.

Notes: Also available in Portuguese