Selected Issues Papers
IMF Selected Issues Papers are prepared by IMF staff as background documentation for periodic consultations with member countries.
2025
February 25, 2025
Real Estate Sector and Financial Stability Risks in Chile: Chile
Description: The Chilean real estate sector has recently undergone adjustments which have increased the risks for the financial sector, but the system remains overall resilient. In the baseline, the real estate market is expected to modestly recover, and several factors mitigate credit risk. The buffers in the financial sector currently appear broadly adequate to absorb stresses from high long-term interest rates and the tail risk of a real estate crisis. Nevertheless, supervisors should monitor these risks closely, keep advancing in closing data gaps, and continue to extend stress test models to comprehensively capture real estate-specific risk factors.
February 25, 2025
Post-Pandemic Changes to Chile’s Financial Markets: Chile
Description: Pension fund withdrawals, rising public debt, and the Central Bank of Chile’s pandemic liquidity injections have reshaped Chile’s financial landscape. In the context of the diminished demand for local bonds, large non-financial corporations and the government relied more on foreign investors. Overall, Chile’s financial depth has diminished, and markets have become more volatile and sensitive to shocks. Restoring pension funds as well as continuing to strengthen market resilience and crisis response capabilities are essential for ensuring future financial stability.
February 25, 2025
Growth and Production Network in Chile: Chile
Description: Productivity growth depends not only on technological innovation but also on production networks that amplify its impact. Theory and cross-country evidence indicate a positive relationship between productivity growth and the use of intermediate inputs, a measure of network connectedness. We find that Chile’s intermediate input utilization is significantly lower than that of OECD peers, such as Korea and the Czech Republic, and declined during 2008-21. This is primarily due to weak domestic producer connections and the smaller presence of the manufacturing sector. We argue that diversifying exports from mining, reducing trade costs, and improving contract enforcement could strengthen network linkages and boost growth.
February 14, 2025
Assessing Gender Gaps in Malta
Description: The Maltese authorities have made significant progress towards gender equality over the last two decades. Supportive government policies and a steady inflow of foreign labor have played a key role in increasing women’s participation in the labor market. In addition, the attainment of higher education levels and skills have significantly improved. Meanwhile, women’s representation in senior public and private sector positions still lags behind that of men. An empirical study using microdata from the labor force surveys indicates that while the overall gender income gap has decreased over the last decade, gender income gaps remain pervasive in Malta.
February 14, 2025
The Impact of Artificial Intelligence on Malta’s Labor Market
Description: Artificial Intelligence (AI) and Generative AI models and their use have significantly advanced in recent years, evolving from their historical role in automating routine tasks to now performing complex cognitive functions. As a result, it has the potential to reshape the job landscape across a broad range of skills and sectors. Mapping occupational labor market micro data for Malta with a measure of exposure and complementary to AI indicates that Malta is slightly less susceptible to AI job displacement than other advanced economies. However, our analysis suggests that women, young, and people with high school degrees only, are at a greater risk of job displacement.
February 14, 2025
Taking Stock of Infrastructure in Malta
Description: Malta’s rapid growth over the past two decades has gone hand in hand with a significant expansion of the population. This has created bottlenecks in infrastructure, which will need to be addressed. While capacity in energy and water supply is currently adequate, investments in wastewater treatment and solid waste disposal are needed, as well as measures to reduce greenhouse gas emissions. In transport, need for action to ease congestion is urgent, while the costs for a sustainable solution are high and implementation would take time.
January 17, 2025
Using Digitalization to Enhance Public Finance in Kosovo: Republic of Kosovo
Description: Kosovo has embarked on a journey of digital transformation, developing digital infrastructure to provide access to households, companies, and educational institutions and modernizing its public finance system through GovTech. Digitalization and GovTech can facilitate Kosovo leapfrogging into advanced infrastructure and public service delivery. While Kosovo has achieved significant milestones—including nearly universal internet coverage and the comprehensive front-end e-Kosova portal—unconnected systems, relatively high consumer prices for digital inclusion, limited digital skills, and cybersecurity risks hinder the full realization of digital benefits.
January 17, 2025
The Challenge of Pension Reform in Kosovo: Republic of Kosovo
Description: This paper examines the evolution and challenges of Kosovo's pension system. Since its inception, a basic pension and mandatory individual accounts have formed the key element of Kosovo’s pension system. Over the years, the pension system has expanded to include a variety of merit pensions, occupational pensions, and a legacy pension. While spending on the basic pension remains relatively low compared to international standards, there should be a more restrictive approach to special pension benefits. To enhance the clarity and effectiveness of pension indexation, it is essential to clearly define the index used for adjustments of the basic pension.
January 17, 2025
ECB Monetary Policy Passthrough to Bank Interest Rates During Tightening: Republic of Kosovo
Description: This paper analyzes the transmission of ECB policy rate changes to bank interest rates in Kosovo during the 2022-23 tightening cycle. While both lending and deposit rates increased, the passthrough was more limited compared to the euro area and regional peers. Three key factors explain this limited transmission: Kosovo's stage of financial development, high banking sector liquidity, and significant bank concentration.
January 16, 2025
Financial Buffers in a Euroized Economy: Republic of Kosovo
Description: This paper analyzes reserve adequacy measurement in Kosovo, where euro serves as the legal tender. The study adapts the IMF's Assessing Reserve Adequacy framework to Kosovo's unique monetary context, focusing on precautionary motives for holding reserves. The analysis reveals limited readily available reserves at the Central Bank of Kosovo and recommends additional government deposits of 1.75-5.75 percent of GDP. Given the significant opportunity costs of maintaining such deposits, the paper suggests alternative solutions, including exploring a private lender of last resort model and maintaining ECB repo lines.