Country Reports
2020
April 23, 2020
Cabo Verde: First Review Under the Policy Coordination Instrument and Request for Modification of Targets
Description: This paper highlights Cabo Verde’s First Review Under the Policy Coordination Instrument (PCI) and Request for Modification of Targets. Performance under the PCI-supported program has been strong. All reform targets were met, with some measures put in place ahead of schedule; and all end-September 2019 quantitative targets were met, except for the floor on tax revenue, missed by a narrow margin due to lower-than-projected taxes on international trade. Economic prospects for 2020 are clouded by the expected impact of coronavirus disease 2019 (COVID-19), resulting from the global economic downturn and travel restrictions which adversely affect tourism flows, foreign direct investment and remittances. Coordinated support from Cabo Verde’s development partners will be needed to support the authorities’ efforts in addressing the economic and social impact of COVID-19. The medium-term outlook remains positive although risks are tilted to the downside. Growth is expected to rebound in 2021 and return to the pre-COVID-19 medium-term trajectory of about 5 percent as the global economy recovers, and the authorities maintain their structural reform efforts to improve the business environment and build the economy’s resilience to adverse shocks.
April 23, 2020
Cabo Verde: Request for Disbursement Under the Rapid Credit Facility-Press Release; Staff Report; and Statement by the Executive Director for Cabo Verde
Description: This paper presents Cabo Verde’s Request for Disbursement Under the Rapid Credit Facility (RCF). Mitigating measures taken by the authorities are aimed at preventing an extensive spread of the pandemic, and helping the private sector, households and vulnerable groups mitigate the fallouts of the pandemic. However, important challenges remain in view of the existing uncovered financing gaps and uncertainties on the duration of the pandemic, calling for financial support from Cabo Verde’s development partners. IMF financing under the RCF will provide additional foreign exchange and much-needed budget support. While addressing the impact of the coronavirus disease 2019 pandemic, the authorities should stand ready to resume reforms and policies needed to return the economy to its pre-pandemic medium-term trajectory, anchored in sustained growth, stronger external and fiscal positions, and declining ratio of public debt to gross domestic product. Beyond the crisis, the medium-term outlook remains broadly favorable, under the assumption of a recovery of the global economy, resumption of tourism and capital inflows, and the growth-enhancing reforms envisaged under the authorities’ Plan for Sustainable Development.
April 23, 2020
Chad: Requests for Disbursement under the Rapid Credit Facility, Extension of the Extended Credit Facility Arrangement, and Rephasing of Access-Press Release; Staff Report; and Statement by the Executive Director for Chad
Description: This paper presents Chad’s Requests for Disbursement Under the Rapid Credit Facility, Extension of the Extended Credit Facility Arrangement, and Rephasing of Access. In response to the coronavirus disease 2019 outbreak, the authorities have taken strong measures to halt the community spread of the virus. They are also scaling up health-related spending and are considering a set of economic measures to support households and businesses. Given the sudden nature of the shocks and their widespread impact, the authorities will be temporarily relaxing the fiscal deficit to allow for the scaling up of health care spending and to accommodate the impact of the sharp drop in oil prices. In order to safeguard debt sustainability, they remain committed to the medium-term fiscal path and will implement the needed adjustment measures as soon as the current crisis abates.
April 22, 2020
Paraguay: Request for Purchase Under the Rapid Financing Instrument-Press Release; Staff Report; and Statement by the Executive Director for Paraguay
Description: This paper presents Paraguay’s Request for Purchase Under the Rapid Financing Instrument (RFI). In March 2020, Paraguay was hit by the Covid-19 epidemic, which has created fiscal and balance of payments needs. The authorities’ policy response to the epidemic has been timely, but limited access to financing and a weakened fiscal position constrain the ability to pursue a deeper emergency response. The Paraguayan authorities are requesting financial assistance under the IMF’s RFI to address the urgent balance of payments needs associated with the Covid-19 epidemic. Given the urgency of their request, there is no time to put in place a full-fledged upper credit tranche program, and the authorities are of the view that they can make suitable adjustments to manage their medium-term balance of payments challenges. In order to prevent the emergence of permanently high deficits after the crisis, Paraguay should return to the deficit ceiling under the Fiscal Responsibility Law. The exchange rate should continue to function as shock absorber, and monetary policy should focus on inflation targeting.
April 22, 2020
Republic of Moldova: Staff Report for the 2020 Request 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 Republic of Moldova
Description: This paper discusses the Republic of Moldova’s IMF staff report for Request for Disbursement Under the Rapid Credit Facility and Purchase Under the Rapid Financing Instrument. The IMF support will help finance the health and macroeconomic stabilization measures, catalyze donor support, and shore up confidence in Moldova. While downside risks have intensified, public debt remains sustainable with low risk of distress. Beyond the immediate response, the authorities have reinforced their commitment to engage in a governance-focused arrangement with the IMF in the coming months. The IMF stands ready to support Moldova in addressing its immediate and medium-term policy challenges. The authorities’ policies aim at mitigating the economic and social impact of the crisis and supporting the recovery, while maintaining macroeconomic and financial stability. They have ramped-up spending to respond to urgent healthcare needs, provided temporary tax relief and subsidized credit schemes to protect employment and businesses, and strengthened social assistance and unemployment programs. The National Bank of Moldova is ensuring orderly exchange rate adjustment and preventing liquidity distress. Financial policies continue to focus on prudent restructuring of banks’ credit portfolios subject to maintaining loan classification and provisioning standards.
April 21, 2020
Panama: 2020 Article IV Consultation-Press Release; and Staff Report
Description: This 2020 Article IV Consultation with Panama discusses that focuses on Panama’s near and medium-term challenges and policy priorities and was prepared before coronavirus disease 2019 became a global pandemic and resulted in unprecedented strains in global trade, commodity and financial markets. Growth is expected to recover to 4.8 percent in 2020. However, the balance of risks is tilted to the downside. A gradual fiscal consolidation can address the large fiscal imbalances while being mindful of the weak economy. Tax and customs administration reforms are needed to address the shortfall in revenues and provide room for public investment and social spending. The economic slowdown, which began in mid-2018 due to a construction strike, extended into 2019. The external current account deficit narrowed and remained adequately financed by foreign direct investment. As the economic situation in Venezuela continues to deteriorate, an increasing number of Venezuelans have migrated to Panama, creating additional social pressures.
April 21, 2020
Panama: Selected Issues
Description: This Selected Issues paper focuses on background, challenges, and policy options in Panama. Panama stands at a crossroad between taking the leap to become an advanced economy or getting stuck in the middle-income trap. The beginning of a new administration provides a window of opportunity to initiate and implement ambitious reforms. This note takes stock of fiscal issues in Panama and proposes policy options. The new administration’s fiscal agenda should feature a comprehensive reform of tax and customs administrations, a review of tax incentives and exemptions and consider steps toward a broader tax policy reform. Efforts to further strengthen the fiscal framework with the appointment of the members of the Fiscal Council should continue going forward. Panama should adopt best practice fiscal accounting and reporting methods. A comprehensive assessment and management of fiscal risks is necessary to create buffers and safeguard public finances given fiscal policy’s exclusive stabilization role.
April 21, 2020
Republic of North Macedonia: Request for Purchase Under the Rapid Financing Instrument-Press Release; Staff Report; and Statement by the Executive Director for the Republic of North Macedonia
Description: This paper highlights the Republic of North Macedonia’s Request for Purchase Under the Rapid Financing Instrument (RFI). North Macedonia’s economic outlook has deteriorated substantially due to the coronavirus disease 2019 (COVID-19) pandemic. Real GDP is expected to decline by 4 percent in 2020 due to a fall in both domestic and external demand. This, together with negative shocks to confidence and spill-overs from global financial channels, has created an urgent balance of payments need. The authorities quickly responded with targeted and temporary fiscal policy support to limit the social and economic impact of the health emergency by protecting the liquidity of companies, preserving jobs and providing social care for the jobless and vulnerable households. The authorities have also expressed their strong commitment, once the COVID-19 crisis is over, to rebuilding fiscal buffers and implementing the structural reform agenda to help preserve debt sustainability and speed up income convergence to European Union countries.
April 20, 2020
The Gambia: Requests for Disbursement Under the Rapid Credit Facility and Modification of Performance Criteria Under the Extended Credit Facility Arrangement-Press Release; Staff Report; and Statement by the Executive Director for The Gambia
Description: This paper presents The Gambia’s Requests for Disbursement Under the Rapid Credit Facility and Modification of Performance Criteria Under the Extended Credit Facility Arrangement. The immediate challenge is to contain the spread of coronavirus disease 2019 (COVID-19), strengthen medical care, implement the social distancing and other containment measures, and mitigate the economic impact of the pandemic, especially on the most vulnerable. It is important to establish appropriate criteria and reporting requirements for the use of emergency spending and ensure that COVID-related operations and outlays undergo a full independent audit to enhance transparency. In order to safeguard debt sustainability, the authorities are encouraged to seek additional grant financing for emergency spending. The Central Bank of The Gambia should continue to monitor developments in the financial sector, to ensure adequate liquidity and oversight, while avoiding a blanket weakening of supervisory standards. A strengthening of market surveillance under the existing regulations will help detect and address appropriately any weakening of banks’ foreign exchange positions. Maintaining a flexible exchange rate will help absorb balance-of-payments shocks.
April 20, 2020
Haiti: Request for Disbursement Under the Rapid Credit Facility-Press Release; Staff Report; and Statement by the Executive Director for Haiti
Description: This paper discusses Haiti’s Request for Disbursement Under the Rapid Credit Facility. Coronavirus disease 2019 (COVID-19) poses a major challenge for Haiti, a country in a fragile situation with very limited healthcare services, just emerging from two years of socio-political instability and worsening economic hardship. Measures are being taken by the government to stop the spread of the virus and to cushion the economic impact of the shock. IMF emergency support under the Rapid Credit Facility will help fill the balance of payments gap and create fiscal space for essential health expenditures, income support to workers, and cash and in-kind transfers to households. In order to address the crisis, scarce budgetary resources will need to be allocated to critical spending on disease containment and increased social assistance to the most vulnerable. In order to ensure the appropriate use of emergency financing, the authorities should prepare monthly budget execution reports on COVID-19 expenditures and undertake an ex-post financial and operational audit of COVID-related operations.