Country Reports
2020
August 4, 2020
Italy: Financial Sector Assessment Program-Technical Note-Tackling Non-Performing Assets
Description: Banks’ asset quality has substantially improved in recent years but remains well below European peers. Non-performing loans (NPLs) fell from 16½ percent in 2015 to about 8.1 percent at end-June 2019, achieved mainly through €145 billion of private NPL sales. This is a substantial reduction by any standard, though NPLs remain well above the 3.0 percent average of the main European Union (EU) banks as of June 2019. New NPL formation has fallen to pre-crisis levels. Provisioning coverage was 52.5 percent as of June 2019, placing Italy 7.6 percentage points above the average of the main EU banks.
August 4, 2020
Italy: Financial Sector Assessment Program-Technical Note-Banking Regulation and Supervision and Bank Governance
Description: This note presents a targeted review of selected aspects concerning the regulation and supervision of banks in Italy and their governance framework. The review was carried out as part of the 2019 Italy Financial Sector Assessment Program (FSAP) and was based on the regulatory framework in place and the supervisory practices employed as of March 2019. Since the regulation and supervision of significant banking institutions (SIs), including Italian SIs, was extensively covered as part of the 2018 Euro Area FSAP, this note focuses on the prudential regulation and supervision of less significant institutions (LSIs). In addition, the note reviewed regulatory and supervisory areas not covered by the wider EU regulatory framework, such as the supervision of anti-money laundering and countering the financing of terrorism (AML/CFT) and related party transactions, which apply to both SIs and LSIs in Italy.
August 4, 2020
Democratic Republic of São Tomé and Príncipe: First Review Under the Extended Credit Facility and Request for Augmentation of Access, Rephasing of Access, and Financing Assurances Review-Press Release; Staff Report; and Statement by the Executive Director for the Democratic Republic of São Tomé and Príncipe
Description: The pandemic is taking a heavy toll on the fragile island nation of São Tomé and Príncipe. Tourist arrivals came to an abrupt halt in mid-March, externally financed projects are being delayed, and supply shipments are disrupted. In response to the local outbreak, emergency confinement measures have been in place since March to contain infection. The authorities began phasing out these measures in late June, aiming for a full reopening of the economy by end-July. A disbursement supported by the Rapid Credit Facility (SDR 9.028 million) was approved in April 2020. The authorities request an augmentation of the ECF program by 10 percent of quota (SDR 1.48 million).
August 4, 2020
Republic of Moldova: Technical Assistance Report—Government Finance Statistics Mission (October 2-8, 2019)
Description: In response to a request from the European Department, a Public-Sector Debt Statistics (PSDS) technical assistance (TA) mission was conducted in Chisinau during October 2–8, 2019. The mission funded by the Data for Decisions (D4D) multi-donor trust fund and followed up on a D4D Public Sector Debt Statistics (PSDS) workshop held in Vienna, Austria during July 2019, where participants from Moldova identified data gaps with current compilation of debt statistics. The mission primarily worked with the Ministry of Finance (MOF) Public Debt Department (PDD), but also had discussions with the Budget and Treasury Department. Outside the MOF, the mission had meetings with the Public Property Agency (PPA), the Municipality of Chisinau and the National Bank of Moldova (NBM). Finally, the mission also held a joint meeting with representatives of a separate IMF TA Mission on sectoral accounts with Treasury and attended the concluding meeting of that mission with the NBM.
July 30, 2020
Kingdom of Lesotho: Requests for Disbursement Under the Rapid Credit Facility and Purchase Under the Rapid Financing Instrument-Press Release; Staff Report; and Statement by the Executive Director for the Kingdom of Lesotho
Description: The COVID-19 pandemic is having a severe impact on Lesotho’s economy. Supply chains for major industries have been disrupted and a national shutdown to contain the virus curtailed economic activity with adverse social impacts. The economy is expected to be further hit by declining external demand for textiles and diamonds, shrinking remittances, and delays to major construction projects. The authorities are taking measures to contain the virus and are implementing plans to mitigate its health and economic consequences. The economic shock, as well as the additional required spending, have generated urgent balance-of-payments (BOP) needs. Lesotho does not have an arrangement with the Fund.
July 30, 2020
Kingdom of Eswatini: Request for Purchase Under the Rapid Financing Instrument-Press Release; Staff Report; and Statement by the Executive Director for the Kingdom of Eswatini
Description: The COVID-19 pandemic is having a severe impact on Eswatini’s economy at a time when the country is already facing deep economic challenges, and the government has begun fiscal consolidation efforts. A national lockdown to contain the spread of the virus, disruptions in supply chains, and lower external demand for key exports are curtailing economic activity. While the authorities’ policy response has been timely and proactive, the economic shock and containment policies are triggering a severe recession with significant social costs, and have created urgent balance of payments needs. The pandemic is unfolding in a context of high prevalence of HIV/AIDS and a stretched health care system, which increase Eswatini’s vulnerability.
July 28, 2020
South Africa: Request for Purchase Under the Rapid Financing Instrument-Press Release; Staff Report; and Statement by the Executive Director for South Africa
Description: The COVID-19 outbreak is leading to a sharp economic contraction and creating significant financing needs in South Africa. The IMF approved US$4.3 billion in emergency financial assistance under the Rapid Financing Instrument (RFI) to support the authorities’ efforts in addressing the challenging health situation and severe economic impact of the COVID-19 shock. Once the pandemic is behind, there is a pressing need to ensure public debt sustainability and implement structural reforms to support the recovery and achieve sustainable and inclusive growth.
July 27, 2020
Burundi: Request for Debt Relief Under the Catastrophe Containment and Relief Trust-Press Release; Staff Report; and Statement by the Executive Director for Burundi
Description: Economic impact. COVID-19 is having an adverse economic impact on Burundi. The pandemic is affecting Burundi through an evolving domestic outbreak and economic spillovers from the global and regional environment, including from the containment measures introduced in trading partners and neighboring countries. Economic growth projections for 2020 have been revised down by 5.3 percentage points to -3.2 percent in 2020. The pandemic has exacerbated pre-existing economic challenges and creates an external financing need of 4.7 percent of GDP in 2020 and 2021, mainly as a result of lower exports in line with lower foreign demand due to lower global growth and transportation bottlenecks from containment measures in other countries; elevated imports needs related in part to the planned fiscal spending aimed at responding to the pandemic; and reduced remittances inflows. The pandemic has also created a fiscal financing need of 6.9 percent of GDP, which will need to be met mainly from external sources.
July 24, 2020
Senegal: First Review Under the Policy Coordination Instrument and Request for Modification of Quantitative Targets-Press Release; Staff Report; and Statement by the Executive Director for Senegal
Description: The Covid-19 pandemic has ended a period of buoyant growth averaging about 6 ½ percent over the last 6 years. Containment measures, lower external demand, reduced remittances, and the sudden stop of travel and tourism are taking a significant toll on the economy. Without forceful policy measures, the current crisis could unravel development gains over the last decade. The authorities have taken strong actions to contain the pandemic and mitigate its economic fallout, supported by significant additional external financing from Senegal’s development partners. The IMF disbursed US$442 million (100 percent of quota) under the RFI/RCF in April.
July 23, 2020
Georgia: Technical Assistance Report-Public Sector Balance Sheet and State Owned Enterprises
Description: Georgia’s public sector balance sheet (PSBS) is in relatively healthy shape, with assets exceeding liabilities, and is comparatively lean. Looking across all entities that the government controls, including the central government, local governments, the State-Owned Enterprise (SOE) sector and the National Bank of Georgia (NBG), total assets are worth 149 percent of GDP, made up of cash, loans, infrastructure, land and productive SOE assets. Liabilities are worth 81 percent of GDP, primarily comprising loans and debt of the government and SOEs. This leaves positive net worth of 68 percent of GDP, putting it in the top third of countries in the IMF’s database.