Country Reports
2022
August 3, 2022
Republic of Equatorial Guinea: 2022 Article IV Consultation—Press Release; Staff Report; And Statement By The Executive Director for Republic of Equatorial Guinea
Description: The COVID-19 pandemic in 2020-21, and Bata explosions in 2021, struck oil-exporter Equatorial Guinea at a time when its economic vulnerabilities had already been aggravated by a prolonged period of depressed hydrocarbon prices, and seven consecutive years of decline in real GDP. The economy is slowly emerging from the ravages of the 2020-21 shocks, buoyed by higher international oil prices. However, substantial challenges remain: (i) surging food prices and banking sector vulnerabilities cloud the short term, while (ii) declining hydrocarbon productionand the implied decline in external reservesloom over the medium term, especially in light of lagging governance and diversification reform implementation.
August 3, 2022
Germany: Financial Sector Assessment Program Technical Note—Regulation And Supervision Of Less Significant Institutions
Description: The Financial Sector Assessment Program (FSAP) conducted a focused review that primarily assessed banking regulation and supervision of Germany’s less significant institutions (LSIs).1 Germany accounts for 1,324 of about 2,400 total LSIs in the Euro Area (representing 40 percent of Germany’s banking sector assets and approximately 55 per cent of total Euro Area LSI assets). As Germany is part of the Euro Area, the regulation and supervision of banks takes place within the European Central Bank’s (ECB) Single Supervisory Mechanism (SSM). The Federal Financial Supervisory Authority (BaFin) and the Deutsche Bundesbank (BBk) are responsible, under the oversight of the ECB, for the supervision of LSIs.
August 3, 2022
Germany: Financial Sector Assessment Program Technical Note—Insurance Regulation And Supervision
Description: The Financial Sector Assessment Program (FSAP) conducted a focused review of insurance regulation and supervision in Germany. This technical note (TN) provides an update on the insurance sector and highlights risks and vulnerabilities. It analyzes four key aspects of regulatory and supervisory oversight: supervisory powers, independence, and resources; the solvency framework; supervision; and changes of control and resolution.2 The Federal Financial Supervisory Authority (BaFin) is the federal German insurance supervisor. BaFin is subject to oversight by the Federal Ministry of Finance (MoF), which is accountable to the Federal Parliament. The analysis focuses on supervision within the scope of BaFin’s mandate. 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.
August 3, 2022
Germany: Financial Sector Assessment Program Technical Note—Macroprudential Policy Framework And Tools
Description: Germany’s macroprudential policy framework and toolkit are well developed. The FSAP found the institutional arrangements for macroprudential policy to be mostly sound and operating well. Capacity and expertise in risk monitoring is good, thanks to the analytical power and data access of the central bank, and close coordination between the macro- and microprudential arms of the financial supervisory authorities. Germany’s macroprudential toolkit continues to develop. The principal outstanding task is to add powers to set caps on debt-to-income and debt service-to-income ratios on residential real estate loans to the already-established powers over loan-to-value ratios and amortization rates. These additions will place Germany’s toolkit on a par with its peers.
August 1, 2022
Italy: 2022 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Italy
Description: GDP has fully recovered from the pandemic crisis, but government debt has risen to very high levels. The war in Ukraine triggered a surge in energy prices and the prospect of monetary policy tightening caused government bond yields to rise sharply. Implementation of the National Recovery and Resilience Plan (NRRP), which provides large EU grants and loans conditioned on implementing a comprehensive reform and investment program, is underway.
July 29, 2022
Lao People’s Democratic Republic: Technical Assistance Report on Government Finance Statistics Mission (October 4-29, 2021)
Description: This paper presents Lao People’s Democratic Republic’s Technical Assistance report on government finance statistics (GFS) mission. There has been a progress on a gradual basis in the timeliness of GFS compilation and dissemination to the IMF due to an improvement in coordination between the Fiscal Policy and Law Department and data providers on the provision of source data, but these data are still not reconciled in a more regular and timelier basis. Monthly budget execution data which is used for GFS compilation, such as other allowances and subsidies in expenditure in particular, are aggregated and prepared according to source data from the data providers. The Annual budget for FY2022 including fiscal package including fiscal measures for coronavirus disease 2019 (COVID-19) pandemic response was submitted to the National Assembly in Nov/Dec 2021. The report recommends to coordinate with relevant departments including the Budget Department in the reporting system and/or the Inter-ministerial Committee to collect data for COVID-19 related spending for tracing and monitoring the spending.
July 29, 2022
Burundi: 2022 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Burundi
Description: This 2022 Article IV Consultation discusses that Burundi’s economy continues to navigate the challenging headwinds presented by the coronavirus disease 2019 pandemic and the impact of the war in Ukraine. Burundi’s public debt is sustainable; however, the risk of external debt distress is high. External imbalances are large, with reserve coverage below adequacy levels and a large parallel exchange rate market premium. Growth is expected to strengthen somewhat in 2022, to 3.3 percent, although dampened by inward spillovers of the war in Ukraine, which has compounded nascent domestic fuel shortages and transportation disruptions. Burundi is at high risk of debt distress; and debt is assessed as sustainable contingent on fiscal adjustment and robust export and growth performance. External imbalances have been exacerbated by the pandemic and inward spillovers from the war in Ukraine, with foreign exchange reserves coverage below adequacy levels and a large parallel exchange rate market premium.
July 29, 2022
Burundi: Selected Issues
Description: This Selected Issues paper on Burundi discusses economic growth, fragility, and non-price competitiveness. In the aftermath of the 2015 crisis that has further fragilized the Burundian economy, the authorities have developed and adopted in 2018 a 10-year National development plan. The origins of Burundi’s fragility are historical, political, and institutional, leading to weak economic performance for the country. More efforts are needed to move the country out of fragility. Focus on investing in the country's long-term peacebuilding would be key. Transparency, social equity, and the fight against corruption are all major actions needed to ensure political stabilization. Also, special attention should be devoted to building a stronger and more resilient economy. Key bottlenecks to Burundi's competitiveness include climate shocks, energy and water constraints, and public management inefficiencies. After several years of instability in Burundi substantive efforts to improve competitiveness have been made.
July 29, 2022
Sierra Leone: Selected Issues
Description: This Selected Issues paper focuses on mainstreaming adaptation in Sierra Leone. The strong linkage between climate vulnerability and development calls for mainstreaming adaptation into national development agenda, while macro vulnerability requires fiscal policies to balance the needs of climate actions and debt sustainability. Enhancing the capacity to tap into external grants will be critical to fulfil the climate commitments while maintaining debt sustainability. Meanwhile, gradually adapting the existing Personal Financial Management (PFM) practices to integrate climate targets within and beyond the budget cycle will help mainstream adaptation and prioritize climate projects. Climate-related shocks have caused heavy casualties and economic losses, underlining the importance of investing in adaptation for infrastructure to reduce vulnerability. Macro-fiscal policies would benefit from being supported by frameworks that link climate risks to debt sustainability analysis. The authorities should calibrate climate costs and adaptation benefits and integrate adaptation into fiscal policies. Green PFM should gradually adapt the existing PFM practices to integrate climate targets within and beyond the budget cycle and help prioritize climate spending.