Country Reports
2024
June 18, 2024
Kingdom of the Netherlands-The Netherlands: Financial Sector Assessment Program- Technical Note on Systemic Risk Analysis
Description: The Netherlands has a large financial system. The system’s assets are roughly eight times the Gross Domestic Product (GDP) of the Netherlands. Banks account for about one third of the financial system and 253 percent of GDP as of 2023Q2. Occupational pension funds are among the largest globally, at 142 percent of GDP. The insurance sector, in particular life insurance, has been undergoing consolidation, and stands at about 43 percent of GDP. Other financial institutions have grown significantly to surpass banks in size, reflecting responses to Brexit and financial innovation. The Dutch financial system is deeply interconnected domestically and with the rest of the world.
June 17, 2024
Argentina: Eighth Review Under the Extended Arrangement Under the Extended Fund Facility, Requests for Modification of Performance Criteria, Waivers of Nonobservance of Performance Criteria, and Financing Assurances Review-Press Release; Staff Report; and Statement by the Executive Director for Argentina
Description: Decisive implementation of the stabilization plan—centered on a strong fiscal anchor with no new monetary financing, and relative price corrections—has led to twin fiscal and external surpluses, a marked turnaround in reserves, faster-than-expected disinflation, a bolstering of the BCRA’s balance sheet and a reduction in sovereign spreads to multi-year lows. Selected easing of FX restrictions and deregulatory efforts are improving resource allocation. Nevertheless, macroeconomic imbalances and growth bottlenecks remain sizable and a long and difficult adjustment process still lies ahead, where policies need to evolve to build on earlier gains and support a turnaround in activity. Efforts are also underway to build political and societal support for reforms, as well as to scale up social assistance to protect the most vulnerable and ensure the burden of the adjustment does not fall disproportionally on working families. That said, delays in securing key legislation in Congress have led to some market volatility.
June 17, 2024
Republic of Armenia: Third Review under the Stand-by Arrangement and Request for Modifications of Performance Criterion and Monetary Policy Consultation Clause-Press Release; Staff Report
Description: The Armenian economy continues to perform strongly, and the outlook is broadly positive. Growth is decelerating gradually to more sustainable levels, as foreign exchange and migrant inflows peter out. Inflation has rapidly declined due to low imported food and energy inflation, Dram appreciation, and tight monetary policy. The uncertain external environment, however, poses sizeable risks, including from a slowdown in main trading partners, geopolitical tensions, and a possible reversal of capital flows.
June 14, 2024
Costa Rica: Sixth Review Under the Extended Arrangement Under the Extended Fund Facility, Third Review Under the Resilience and Sustainability Facility Arrangement, and Monetary Policy Consultation Clause
Description: Recent developments and outlook. Growth accelerated to 5.1 percent in 2023 and is projected to remain robust at 4 percent in 2024. Inflation (year-on-year) has stayed negative since mid-2023, triggering Board Consultation under the Monetary Policy Consultation Clause. However, as base effects drop out of the year-on-year calculation, headline inflation is expected to return to the central bank’s tolerance band (2-4 percent) by late 2024. Formal employment, private-sector wages, and poverty are all moving in the right direction.
June 13, 2024
Sri Lanka: 2024 Article IV Consultation and Second Review Under the Extended Fund Facility, Request for Modification of Performance Criterion, and Financing Assurances Review-Press Release; Staff Report; and Statement by the Executive Director for Sri Lanka
Description: Reform efforts are bearing fruit with the economy starting to recover, inflation remaining low, revenue collection improving, and reserves continuing to accumulate. Performance under the program, the design of which benefitted from the 2021 Article IV recommendations, has been strong. Nevertheless, the economy is still vulnerable and the path to debt sustainability remains knife-edge. Sri Lanka faces considerable uncertainties associated with the upcoming presidential elections and ongoing debt restructuring. Sustaining the reform momentum is critical to safeguarding the hard-earned gains and ensuring Sri Lanka can emerge from one of its most severe economic crises.
June 13, 2024
Bulgaria: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Bulgaria
Description: For two years in 2021–23, a political stalemate hampered policymaking as Bulgaria needed to stir the exit from the pandemic, cope with the global inflation shock and the fallout of Russia’s war in Ukraine, secure its energy supply, implement reforms to unlock EU Funds, and prepare for euro adoption. The government formed in June 2023 prioritized euro and Schengen areas accession, NGEU funds delivery, and judicial reforms. It fell in March 2024, increasing the risk of delays in key policy decisions. Despite the succession of international and domestic shocks, the economy showed resilience and can achieve a soft landing if inflation decelerates towards 2 percent as expected under the baseline. Moreover, longstanding intertwined challenges remain: convergence toward EU average income is lagging peers, investment is low, perception of corruption is large, inequality is high, poverty is widespread, the population is shrinking, and the growth model still relies largely on brown energy.
June 10, 2024
Republic of Fiji: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the Republic of Fiji
Description: The Fijian economy has recovered strongly from the pandemic. Real GDP rebounded by around 30 percent cumulatively in 2022–23, surpassing pre-pandemic levels. Inflation has recently ticked up modestly largely due to a temporary effect of the hike in Value-Added Tax rates. Supported by the economic recovery, the fiscal deficit and debt-to-GDP ratios continued to decline but remain at elevated levels. The FY2024 (August–July) budget included significant revenue enhancing measures, partially offset by spending increases, which, on balance, are expected to reduce the fiscal deficit and debt ratios. The monetary policy stance has remained accommodative, although the Reserve Bank of Fiji has begun tightening liquidity. The banking sector is sound overall, and asset quality is improving (although still lower than pre-pandemic levels). The coalition government is developing a program of growth-enhancing reforms, particularly in the National Development Plan due in June.
June 10, 2024
Republic of South Sudan: 2023 Article IV Consultation, and First and Second Reviews under the Staff-Monitored Program with Board Involvement-Press Release; Staff Report; and Statement by the Executive Director for Republic of South Sudan
Description: South Sudan is a very fragile post-conflict country, and one of the most vulnerable in the world to climate change effects. The spillovers from the fighting in Sudan have exacerbated an already dire humanitarian situation. Two-thirds of South Sudan’s population was exposed to acute food insecurity prior to the outbreak of the conflict in Sudan and the situation has worsened due to a large and growing number of refugees, and a sharp increase in fuel and food prices in the border areas with Sudan driven by trade disruptions. The Sudan war has also delayed the needed repair of the pipeline that transports South Sudan’s crude oil to international markets through Sudan. As a result, oil exports have since mid-February 2024 collapsed to about one-third of their previous level. This has increased significantly the fiscal financing and balance of payments gaps given that oil exports account for nearly 90 percent of fiscal revenues and 95 percent of exports. National elections, the first-ever since South Sudan’s independence in 2011, are scheduled for December 2024. However, due to delays in and operationalizing key election-related institutions development partners have expressed skepticism that free and fair elections will be feasible by the envisaged date.