Selected Issues Papers
IMF Selected Issues Papers are prepared by IMF staff as background documentation for periodic consultations with member countries.
2023
July 19, 2023
Public Sector Wage Bill in Mali
Description: Mali’s wage bill has soared to levels not seen since the early 1990s. This may cause considerable opportunity costs—limiting fiscal space and potentially adding to inflationary pressures—as well as adversely affect medium-term debt sustainability as it weighs heavily on the primary deficit. This SIP investigates the extent and drivers of the recent wage increases and their fiscal and economic consequences. It concludes that across-the board salary freezes may help wage growth moderation in the short term but are politically difficult to implement. Structural reforms to strengthen wage bill management are critical to preserving medium-term fiscal sustainability.
July 19, 2023
Governance Diagnostics: Mali
Description: This SIP provides an overview of the governance diagnostic mission conducted in early 2021 by experts from the IMF’s Fiscal Affairs and Legal Departments, along three main pillars - the rule of law, tax and customs administration, and public financial management. The SIP assesses progress made, identifies key weaknesses, and a list of measures to guide immediate and future reforms.
July 19, 2023
The Importance and Drivers of Stock-Flow Adjustments in Mali
Description: Stock-flow adjustments—extra-budgetary and below-the-line operations that do not reflect standard spending and revenue—have added 9 percentage points to the debt-to-GDP ratio in Mali over the past decade. That is just under a third of the total increase in public debt over that period. Despite their importance, there is little understanding of the causes of stock-flow adjustments. A number of actions could be taken to either reduce the occurrence of stock-flow adjustments or to increase transparency and monitoring which would assist fiscal policy decision-making.
July 19, 2023
Climate Vulnerabilities and Food Insecurity in Mali
Description: Mali is extremely vulnerable to climate change and the country is already facing acute climate-related challenges from higher temperatures and more frequent extreme weather events. The impact of climate change has also contributed to a rise in food insecurity, with almost a quarter of the population expected to be either facing food insecurity or at risk of doing so by mid-2023. That is already having a hugely damaging effect on Mali’s economy and action is needed without delay to avoid a further increase in food insecurity.
July 19, 2023
Fragility, Demographics, Gender Inequality: Mali
Description: Mali has many characteristics of a fragile and conflict-affected state. Like many other fragile states, Mali has high population growth, which puts pressure on the country’s resources, including food supplies. Gender inequality in the country is also high, with women and girls experiencing disadvantages in many aspects of life. These challenges are closely related, so coordinated reforms are required to break the vicious cycle which has left Mali trapped in a state of fragility since 2012.
July 13, 2023
Lessons from the United Kingdom’s Liability – Driven Investment (LDI) Crisis: United Kingdom
Description: This paper seeks a deeper understanding of the factors that amplified the gilt market turmoil, which ultimately led the Bank of England (BoE) to undertake temporary gilt purchases on financial stability grounds in late September/early October 2022 to restore orderly market conditions and allow Liability Driven Investment (LDI) funds some time to build their capital positions. This paper identifies the key reasons for the success of the BoE’s intervention. This paper also discusses key gaps and policy issues related to monitoring financial stability risks in the broader NBFI sector for individual jurisdictions and international standard-setting bodies.
July 13, 2023
Enhancing Business Investment in the United Kingdom
Description: The paper addresses the issue of weak business investment in the United Kingdom (UK) by analyzing aggregate investment trends in the UK and other G7 peers, and investment drivers for UK firms. Data show that business investment has been structurally low in the UK, and likely the key driver of the UK’s relatively weaker growth performance since the middle of the last decade. Econometric investigations confirm a negative impact of Brexit-related uncertainty, the importance of financing constraints on firms, and a complementary role for public capital.
July 13, 2023
The Recent Decline in United Kingdom Labor Force Participation: Causes and Potential Remedies
Description: This paper studies the puzzling decline in labor force participation observed in the UK following the pandemic. Retirement and long-term sickness appear to be the main drivers, with chronic illness remaining a lingering distinctive factor vis-a-vis peer countries. While the government has recently adopted a battery of measures to increase labor force participation, more could be done to improve health outcomes and increase the participation of the long-term sick and the disabled, keep older workers in the labor force, increase female labor force participation, and improve the skills and productivity of both domestic and foreign workers that join the workforce.
July 13, 2023
The Energy Price Shock—Impact, Policy Responses, and Reform Options: United Kingdom
Description: The surge in energy prices due to Russia’s war in Ukraine inflicted a sharp terms of trade shock on the UK economy. While energy prices have since declined, the future energy price path remains uncertain, with futures-implied prices substantially above their levels prior to October 2021, when Russian natural gas imports to Europe began to be curtailed. In this context, section I analyzes the impact of the energy price shock on UK households and firms; section II describes the energy support measures introduced by the UK government; and section III provides staff’s assessment of these measures and sets out some options to optimize the policy response to a possible resurgence in energy prices. These include structural measures to ensure energy security and raise resilience to spikes in energy prices, and options to refine, especially the targeting of, support measures that could be introduced in response.
July 11, 2023
Optimal Fiscal Path Considerations: Portugal
Description: Despite achieving a rapid reduction in the public debt-to-GDP ratio in recent years, Portugal's debt ratio remains relatively high at 113.9 percent of GDP in end-2022. This paper employs an analytical model to determine the appropriate trajectory for structural consolidation to sustain ambitious debt reduction over the medium term, taking into account the uncertainties in the economic landscape. The model points to a need for continued fiscal tightening between 2024 and 2028. Optimal consolidation would be higher under higher longterm interest rates, lower medium-term growth prospects, or increased market sensitivity to debt.