Selected Issues Papers
IMF Selected Issues Papers are prepared by IMF staff as background documentation for periodic consultations with member countries.
2025
April 11, 2025
Assessing Climate Change Risks: Potential Output Losses and Gains from Strengthening Resilience, Bahamas
Description: The Bahamas is highly vulnerable to the effects of climate change, including gradual sea level rise, biodiversity loss, and intensifying hurricanes. Together, these challenges threaten to undermine the country’s potential output over the long term by inflicting damages to physical assets and eroding natural capital, which is vital to its tourism-driven economy. Importantly, these risks are unevenly distributed with smaller islands being more exposed and sensitive than the larger, more developed ones. Addressing these disparities as well as closing economy-wide adaptation needs through investments in structural resilience can unlock large potential output gains.
April 11, 2025
Housing Affordability in The Bahamas: Bahamas
Description: Though the population in The Bahamas has expanded swiftly since 2010, the stock and affordability of new housing has not kept pace due to limited wage growth and financing constraints. This chapter takes stock of recent trends in the residential housing market in The Bahamas and discusses the potential drivers of reduced housing affordability. The authorities have taken various initiatives (guaranteed loan programs, construction of public rental units) to alleviate housing shortages. However, there is room for additional public spending in housing. Easing access to credit for residents would also support increased homeownership.
April 11, 2025
Determinants of Sovereign Spreads in The Bahamas: Bahamas
Description: To analyze Bahamian sovereign spreads, a fundamentals-based model is estimated using data on emerging market economies. The main findings are: first, while both domestic and global covariates are important determinants of spreads, a sizeable effect comes from the interaction of global risk aversion and a country’s risk rating. Second, inclusion in the EMBIG index (Emerging Market Bond Index Global) is a significant driver for emerging markets. The spreads in The Bahamas would have compressed by 56 basis points compared to other countries with similar fundamentals if the archipelago were included in this index.
April 11, 2025
The Implications of the Electricity Sector Reform in The Bahamas: Bahamas
Description: Low efficiency and reliability in the energy sector, paired with high costs, dampens competitiveness and holds up growth in The Bahamas. This chapter takes stock of the country’s electricity sector and examines the potential macroeconomic impact of the government’s proposed electricity sector reform that seeks to increase renewable energy and modernize transmission and distribution infrastructure. Over the medium-term, the reform has the potential to narrow the current account deficit, reduce vulnerability to commodity price shocks, boost growth, and significantly reduce CO2 emissions. However, such power projects should have a clear delineation of risk sharing between the private and public sector.
April 1, 2025
Improving Education Quality: The Returns to Teacher Training In Madagascar, Republic of Madagascar
Description: This paper highlights the role of teacher training in improving educational outcomes in Madagascar. With a low and stagnating Human Capital Index of 0.39 and high learning poverty rates, economic growth is hindered by an inadequately skilled workforce. This paper finds that doubling the share of qualified primary school teachers, from the current 15 to 30 percent, would allow Madagascar to harness its demographic dividend, raising per capita real GDP growth by around 2.5 to 3.1 percentage points in Madagascar.
April 1, 2025
Rice Production in Madagascar: Challenges to Self-Sufficiency
Description: The Malagasy government aims for self-sufficiency in rice production by 2027, targeting 6 million tons in 2024 and 11 million tons by 2030. Despite recent production increases, challenges such as competition from cheaper imports, low productivity, and climate change persist. This paper analyzes the impact of import competition on local markets, utilizing historical data on tariffs and VAT. It assesses potential rice output under various scenarios and discusses strategies for enhancing productivity sustainably. Findings indicate significant room for improvement in rice yields, highlighting the need for targeted supply-side policies to bolster local production without adversely affecting prices.
April 1, 2025
The Electricity Sector and Jirama: Republic of Madagascar
Description: Madagascar faces significant challenges in electricity access, with only 36 percent of the population connected. The state-owned utility, JIRAMA, struggles with inefficient production, high transmission and distribution losses, and tariffs below recovery costs. These issues create a substantial fiscal burden on the government, hindering social investment and economic growth. The situation negatively impacts business productivity, making the urgent implementation of JIRAMA's recovery plan essential. This plan should aim to enhance efficiency, reduce losses, and shift towards renewable energy, requiring robust support from the government to ensure sustainable development and improved living conditions for the population.
March 31, 2025
Growth Benefits of Macro-Structural Reforms in South Africa: South Africa
Description: South Africa's economic growth has stagnated over the past decade due to entrenched structural rigidities. This paper examines the impact of reforms addressing shortcomings in governance, business regulation, and labor market on output and employment. The analysis quantifies the potential economic gains from narrowing structural gaps in these three areas relative to peer countries. Reforms in governance and business regulation are found to boost medium-term output by up to 9 percent. Complementary labor market reforms could further bolster these gains and enhance employment. These findings emphasize the importance of a well-prioritized reform agenda to unlock South Africa’s growth potential and generate broad-based improvements in living standards.
March 31, 2025
Macroeconomic Effects of a Potential Change in South Africa’s Inflation Target: South Africa
Description: South Africa’s inflation-targeting framework has served the country well, playing a key role in reducing inflation since 2000. However, with inflation still above that of key trading partners, questions have arisen whether a potential shift from the current target band (3 to 6 percent) to a lower point target could better support macroeconomic stability over the medium term. This chapter explores the macroeconomic implications of such a shift. While medium run gains result from lower borrowing costs, the modeling analysis points to the critical role of inflation expectations and central bank credibility in minimizing near-term output costs; fiscal-monetary interactions are also important. A review of select case studies highlights the importance of close coordination among policymakers, clear communication, and gradual transitions to support the achievement of lower inflation.
March 31, 2025
South Africa's Fiscal Framework: Challenges and Options for Reform
Description: South Africa’s public debt has tripled since the global financial crisis and is not expected to stabilize over the medium term under staff’s baseline. Cross-country evidence suggests that fiscal rules anchored in debt ceilings can be helpful in supporting fiscal adjustments aimed at reducing public debt and bolstering policy credibility. Design features such as institutional coverage, statutory base, correction mechanisms, and flexibility provisions can make the rules more credible and durable, and formal enforcement mechanism and independent institutions can strengthen their compliance. Strengthening South Africa’s fiscal framework by introducing a debt anchor and a credible operational fiscal rule in line with international best practice could help support the authorities’ fiscal objectives and safeguard debt sustainability.