Country Reports
2020
March 30, 2020
Kuwait: 2020 Article IV Consultation-Press Release; Staff Report; and Staff Supplement
Description: This 2020 Article IV Consultation with Kuwait highlights that non-oil growth strengthened to estimated 3 percent in 2019, propelled by government and consumer spending. The challenge to reduce dependence on oil and boost savings has become more urgent. The subdued forecast for oil revenues is weighing on near-term growth and fiscal and external balances. Embedding fiscal measures in a comprehensive reform package that promotes private sector growth, strengthens governance and accountability, and improves public services would help build broad support for reforms. A rules-based fiscal framework would improve management of oil revenues. A rule-based framework would help anchor fiscal policy on a long-term objective of intergenerational equity. It should include a well-calibrated operational rule that helps reconcile long-term savings and near-term economic stabilization objectives. Financial sector reforms should focus on bolstering resilience and deepening inclusion. Sustaining reforms to foster private sector-led and diversified growth will be critical. With limited scope for public employment going forward, a vibrant private sector must emerge to absorb the large number of Kuwaitis entering the labor market in coming years.
March 27, 2020
Botswana: 2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Botswana
Description: This 2019 Article IV Consultation focuses on Botswana near- and medium-term challenges and policy priorities and was prepared before COVID-19 became a global pandemic and resulted in unprecedented strains in global trade, commodity, and financial markets. Gross domestic product growth is forecasted to pick up to 4.4 percent in 2020 and 5.6 percent in 2021 as the diamond industry recovers somewhat, and a new copper mine comes on stream. Growth will ease back to around 4 percent over the medium term. Risks to the outlook include faster-than-anticipated slowdown in key trading partners, shifts in consumer preferences to synthetic diamonds, and climate shocks. The size and pace of the planned adjustment are consistent with Botswana’s fiscal space, but the composition of the adjustment should protect efficient capital and social spending. Furthermore, given that buffers are being eroded, it is critical that consolidation starts as envisaged in FY2020, as it would help start addressing external imbalances and contribute to a gradual rebuilding of buffers over the medium term. In order to strengthen the monetary transmission mechanism and deepen the domestic financial market, there is a need to develop the secondary market for government securities, leverage Fintech, facilitate the attachment of collateral, and improve credit information.
March 27, 2020
Kyrgyz Republic: Request for Purchase Under the Rapid Financing Instrument and Disbursement Under the Rapid Credit Facility-Press Release; Staff Report; Informational Annex; and Debt Sustainability Analysis
Description: This paper discusses Kyrgyz Republic’s Request for Purchase Under the Rapid Financing Instrument and Disbursement Under the Rapid Credit Facility. The COVID-19 pandemic has been hitting the Kyrgyz economy very hard and created an urgent balance of payments need. All sectors are being impacted with extreme severity as measures are being taken to stop the spread of the virus. Given the unprecedented high level of uncertainty, IMF emergency support under the Rapid Financing Instrument and the Rapid Credit Facility helps provide a backstop and increase buffers and shore up confidence. It also helps to preserve fiscal space for essential COVID- 19-related health expenditure and catalyze donor support. Banks’ capital and liquidity buffers need to be used to absorb credit losses and the liquidity squeeze. Once these buffers are exhausted, the central bank needs to show flexibility on the timing of bringing capital and liquidity above the minimum required, considering the length of the crisis. Expeditious donor support is needed to close the remaining balance of payments gap and ease the adjustment burden.
March 26, 2020
Zimbabwe: 2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Zimbabwe
Description: This 2019 Article IV Consultation focuses on Zimbabwe’s near- and medium-term challenges and policy priorities and was prepared before COVID-19 became a global pandemic that has resulted in unprecedented strains in global trade, commodity, and financial markets. It, therefore, does not reflect the implications of these developments and related policy priorities. The outbreak has greatly amplified uncertainty and downside risks around the outlook. The IMF staff is closely monitoring the situation and will continue to work on assessing its impact and the related policy response in Zimbabwe and globally. With another poor harvest expected, growth in 2020 is projected at near zero, following a sharp contraction in 2019, with food shortages continuing. With no progress on clearing longstanding external arrears, the authorities face a difficult balance of pursuing tight monetary, to reduce very high inflation, and fiscal policies to address the macroeconomic imbalances and build confidence in the currency, while averting a crisis. Pressures are mounting to increase spending on wages and for social protection to mitigate the impact of the weather shocks and high inflation. While the 2020 budget includes a significant increase in social spending, it is likely insufficient to meet the pressing needs.
March 26, 2020
Somalia: Second Review Under the Staff-Monitored Program and Request for Three-Year Arrangements Under the Extended Credit and The Extended Fund Facility-Press Release; Staff Report; and Statement by the Executive Director for Somalia
Description: This paper discusses Somalia’s Second Review Under the Staff-Monitored Program and Request for Three-Year Arrangements Under the Extended Credit and the Extended Fund Facility. The three-year financing package will support the implementation of the authorities’ National Development Plan and anchor reforms between the heavily indebted poor countries Decision and Completion Points. Reforms will focus on a continued strengthening of public finances to meet Somalia’s development needs in a sustainable manner; a deepening of central bank capacity; improvement of the business environment and governance; and enhancing statistics. Risks to the program and outlook remain elevated, although there is also upside potential. The immediate political risks concern the upcoming elections, while frequent climate shocks continue to contribute to agricultural loss and human displacement. On the upside, greater-than-expected impact from reforms under the program and additional development financing, together with the development of new industries, could lead to higher and more inclusive growth than the baseline.
March 26, 2020
Somalia: Poverty Reduction Strategy Paper-Joint Staff Advisory Note
Description: This Joint Staff Advisory Note on the Poverty Reduction Strategy Paper discusses that Somalia has made noteworthy progress since 2012 to recover from decades of conflict and state fragmentation. The country has succeeded in rebuilding core state capabilities and organized two democratic national elections in 2012 and 2017. Somalia has now reached the stage where it seeks to fully reengage the international community and is requesting debt relief through the heavily indebted poor countries initiative. The authorities developed the Ninth National Development Plan (NPD9) through a highly consultative, participatory process that ensured full country ownership. The macroeconomic policy objectives of NDP9 are to promote economic growth in an environment of low inflation, sustainable fiscal and current account balances, and healthy foreign exchange reserves. The IMF staff recommends updating framework to incorporate greater support for poverty reduction and additional financing from development partners during the interim period. The IMF staff supports the authorities’ commitment to issuing new Somali shilling banknotes, while maintaining de facto dollarization.
March 26, 2020
Somalia: Enhanced Heavily Indebted Poor Countries (HIPC) Initiative-Decision Point Document
Description: This paper presents an assessment of Somalia’s eligibility for assistance under the enhanced Heavily Indebted Poor Countries (HIPC) Initiative. The macroeconomic framework reflects the policy framework underlying the proposed three-year Fund-supported program. The debt relief analysis (DRA) remains largely unchanged, but some of the underlying debt data has been updated to reflect new information from creditors. In addition, this paper presents an assessment of debt management capacity in Somalia and a full Debt Sustainability Analysis under the Debt Sustainability Framework for Low-Income Countries. The DRA reveals that, after traditional debt relief mechanisms are applied, Somalia’s debt burden expressed as the net present value of debt-to-exports ratio is 344.2 percent at the end of December 2018—significantly above the HIPC Initiative threshold. Despite the challenging environment, progress on reform and policy implementation has been good and sustained reforms have translated into economic results. In addition to the coordinated support from the World Bank and the IMF, reforms have been supported by other development partners.
March 26, 2020
Myanmar: 2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Myanmar
Description: This 2019 Article IV Consultation focuses on Myanmar’s near- and medium-term challenges and policy priorities and was prepared before COVID-19 became a global pandemic and resulted in unprecedented strains in global trade, commodity and financial markets. It, therefore, does not reflect the implications of these developments and related policy priorities. These developments have greatly amplified uncertainty and could heighten downside risks around the outlook. The IMF staff is closely monitoring the situation, including related policy responses from the authorities, and will continue to work on assessing its impact in the Myanmar economy. Although long-term prospects remain favorable, near-term growth is likely to remain below potential as the correction in real estate market and continued uncertainty weighs on investor sentiment in the runup to the 2020 elections. Starting FY2020/21, bank deleveraging will further slow credit and constrain gross domestic product growth as borrower’s true ability to repay is revealed with term loans coming due and banks restructure in earnest.
March 25, 2020
Republic of Fiji: 2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the Republic of Fiji
Description: This 2019 Article IV Consultation with the Republic of Fiji highlights that economic activity slowed sharply in 2019 due to lower government spending, tighter domestic financial conditions, weak sentiment, and the global deceleration. The slowdown followed several years of relatively strong growth, boosted by reconstruction spending after a major cyclone in 2016, which resulted in rising external and fiscal imbalances. Fiscal space is now at risk and external vulnerabilities remain significant. Fiji has large investment needs to strengthen resilience to natural disasters and climate change. A key priority should be to rebuild fiscal buffers in a growth-friendly way to create space to respond to future natural disasters and to ensure public debt sustainability. Fiscal consolidation should focus on reining in current spending given limited scope for further revenue mobilization and the need for capital spending to improve resilience to climate change. Improvements in the business environment and in governance are essential to raise potential growth and boost private investment, and to enhance productivity and competitiveness.
March 24, 2020
El Salvador: Technical Assistance Report-Capacity Development on National Accounts Statistics Mission
Description: A Technical Assistance (TA) Mission from the Regional Technical Assistance Center for Central America, Panama, and the Dominican Republic, visited the city of San Salvador, El Salvador, on August 13–24, 2018, to provide TA to the Central Reserve Bank of El Salvador (BCRES) on compiling annual accounts by institutional sectors (AAIS) from 2014 onwards, as part of the data series from the base year of 2005. In March 2018, the BCRES published a dataset of quarterly and annual national accounts series by economic activity; a monthly volume indicator; backcasted series from 1990–2014; and Supply and Use Tables (SUT) from 2005 and 2014, with a base year of 2005. As part of the dataset to be prepared and disseminated in the new 2005 base year, the authorities requested TA to compile annual accounts focusing on institutional sectors starting in 2014.