Country Reports
2021
June 10, 2021
Norway: 2021 Article IV Consultation-Press Release; Staff Report; and Staff Statement
Description: Norway’s key challenge is to get the right balance of support for recovery and adjustment until the crisis is firmly in its past. The authorities intend to continue exceptional policy support into 2021, adjusted to reflect the rebound in economic activity and pace of vaccinations in the second half of the year, and with better targeting to affected sectors. This will support the expected closing of the output gap by 2023 and help mitigate scarring, while also facilitating reallocation of capital and labor.
June 9, 2021
The Gambia: Second Review Under the Extended Credit Facility Arrangement-Press Release; and Staff Report
Description: The Gambia is experiencing a second wave of COVID-19 cases. The vaccination campaign started in early March 2021, but the pace is slow, due to vaccine availability and hesitancy. Presidential and parliamentary elections are planned for December 2021 and April 2022, respectively.
June 8, 2021
People’s Republic of China—Hong Kong Special Administrative Region: Financial System Stability Assessment-Press Release and Statement by the Executive Director for the People’s Republic of China—Hong Kong Special Administrative Region
Description: The main macro-financial risks relate to extensive linkages to Mainland China, stretched real estate valuations, and exposure to shifts in global market and domestic risk sentiment, compounded by escalating U.S.-China tensions. Stress tests show that the financial system is resilient to severe macro-financial shocks, but there are pockets of vulnerabilities in foreign bank branches, investment funds, households, and nonfinancial corporates. Hong Kong SAR’s financial sector is also exposed to physical and transition risks from climate change.
June 8, 2021
Iceland: 2021 Article IV Consultation-Press Release; Staff Report; Staff Statement; and Statement by the Executive Director for Iceland
Description: The Icelandic economy has been severely affected by the pandemic. Sharp tourism contraction and containment measures caused real GDP to plummet by 6.6 percent in 2020. A modest recovery will take hold in 2021. Recovery prospects in the tourism sector depend on control of the epidemic and progress in global and domestic vaccine distribution, spelling a challenging outlook with possibly deep medium-term scarring. Fiscal policy should continue to support the economy for now. Policy buffers accumulated over the last decade provided space for a large fiscal support and accommodated substantial automatic stabilizers. Additional stimulus is planned in 2021 to address still large slack in the economy, mitigate scarring, and provide confidence in the event of downside risks. Medium-term policies should ensure that public debt is firmly on a downward path, while limiting the drag on growth.
June 7, 2021
Belize: 2021 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Belize
Description: Belize has been hit hard by the COVID-19 pandemic, which led to a deep recession and worsened fiscal and external positions from already weak levels. The opposition People’s United Party won the November 2020 elections by a wide margin, which gives the new government a unique opportunity to jump start much needed reforms to reduce large imbalances and anchor strong and inclusive growth.
June 3, 2021
Thailand: 2021 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Thailand
Description: A nascent recovery is underway in Thailand following the COVID-19 downturn. Ample policy buffers, underpinned by judicious management of public finances, allowed the authorities to implement a multipronged package of fiscal, monetary, and financial policies to mitigate the COVID-19 impact on households, businesses, and the financial system. This, together with rigorous containment measures, led to a successful flattening of the infection curve during most of 2020. Nevertheless, the pandemic has taken a large toll on the economy, potentially inducing long-term scarring and increasing inequality.
June 2, 2021
Italy: 2021 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Italy
Description: The pandemic dealt a severe blow to the Italian people and their economy. GDP fell by nearly 9 percent in 2020, with much larger drops for contact-intensive services. Public and corporate debt increased strongly and preexisting vulnerabilities have likely worsened. The government is prioritizing resolving the health emergency and transforming the economy to lift productivity, improve social outcomes and strengthen resilience to future shocks and structural change. The large National Recovery and Resilience Plan—partly financed by sizable Next Generation EU resources—will be used to increase physical and social infrastructure. Outlook. GDP is expected to recover strongly in 2021–22 and to grow well-above trend over the medium term, supported by investment spending. Nonetheless, economic scarring could be sizable. The two-sided risks relate to how the pandemic progresses, the efficiency of investment spending and the extent of savings drawdown, with large costs associated with the downside.
June 2, 2021
Botswana: 2021 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Botswana
Description: Botswana entered the COVID-19 crisis with larger buffers than most countries, but significantly less than in the past. The country was contending with structural challenges, persistent negative external shocks and delays in adjustment that had already caused a significant weakening of international reserves coverage and the fiscal position amid high unemployment. The pandemic exacerbated these challenges causing a sharp GDP contraction, among the strongest in SSA and a widening in the current account deficit. Foreign exchange reserves dropped further, though still remaining well above adequate levels. The fiscal deficit widened significantly as the government sought to counter the economic impact of the COVID-19 crisis, and implemented a sizeable public wage increase agreed in 2019. The deficit was financed partially by drawing down on the Government Investment Account.
June 2, 2021
Cabo Verde: Technical Assistance Report-Monetary and Financial Statistics Mission
Description: At the request of the IMF’s African Department (AFR) and the Bank of Cabo Verde (BCV), a monetary and financial statistics (MFS) remote technical assistance (TA) mission from the IMF’s Statistics Department (STA) took place during January 18-29, 2021. The main objective of the mission was to assist the BCV in (i) reconciling the monetary accounts disseminated by the BCV with the monetary statistics submitted to STA for dissemination through International Financial Statistics and for internal use, in particular within AFR; (ii) improving the collection of data on sectoral distribution of credit by economic activity; and (iii) implementation of the IMF’s 2016 Monetary and Financial Statistics Manual and Compilation Guide (MFSMCG).The work of the mission was facilitated by the excellent collaboration of the BCV’s staff, in particular the Statistics and Economic Studies Department (DEE). The officials met during the mission are listed in Appendix I.