Country Reports
2020
March 2, 2020
Republic of Madagascar: 2019 Article IV Consultation and Sixth Review Under the Extended Credit Facility Arrangement-Press Release; Staff Report; and Statement by the Executive Director for Republic of Madagascar
Description: This paper presents 2019 Article IV Consultation with the Republic of Madagascar and its Sixth Review Under the Extended Credit Facility (ECF) Arrangement. Madagascar’s performance under its economic program supported by the ECF arrangement has been broadly satisfactory with solid growth, moderate single digit inflation, and a robust external position. As a fragile, low-income country, Madagascar continues to face risks associated with weak implementation capacity, potential fiscal slippages, social fragility in a context of widespread poverty, and vulnerability to exogenous shocks including to terms of trade and natural disasters. Going forward, a commitment to strong policies and an ambitious agenda to complete outstanding structural reforms remains crucial to mitigate internal and external risks, strengthen macroeconomic stability, and achieve higher, sustainable, and inclusive growth. The authorities’ economic reform agenda summarized in the Plan Emergence Madagascar aims to raise economic growth through increased public and private investment, strengthening human capital, and improving governance. Creating additional fiscal space by further improving revenue mobilization through a medium-term tax revenue strategy, containing lower priority spending, and enhancing investment implementation capacity is essential for scaling-up priority investment and social spending in education, health, and housing.
February 28, 2020
Malaysia: 2020 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Malaysia
Description: This 2020 Article IV Consultation highlights that the Malaysian economy is stable despite domestic and external challenges. The authorities are making progress on their reform agenda including governance reforms and measures to improve the transparency and management of public finances. Policies should focus on medium-term fiscal consolidation, while safeguarding growth and financial stability. Structural reforms are needed to enshrine in law main governance measures, and to boost productivity to achieve high income status and inclusive growth. Growth has held up and inflation has remained subdued. Domestic demand is expected to be the main driver of growth over the medium term. Risks to the outlook are, on balance, to the downside. It is recommended to that medium-term fiscal consolidation plans should be underpinned by well-identified revenue and spending measures. Pushing ahead with structural fiscal reforms, including the adoption of a Fiscal Responsibility Act, as well as improvement in debt management, public procurement, and the public investment framework is important.
February 28, 2020
Malaysia: Selected Issues
Description: This Selected Issues paper investigates impact of financial technology (FinTech) on Malaysia’s financial sector. Malaysia is digitally enabled to seize the opportunities brought by FinTech. Malaysian banks continue to dominate in deposits, lending and capital raising, but they have been gradually reducing their emphasis on physical distribution networks. The top five Malaysian banks have increased their technology-related spending over the past three years. Regulators have been mindful of developments outside of the traditional regulatory perimeter that could pose financial stability risks. Rapidly evolving technology is likely to bring multiple challenges to the financial sector. Regulatory requirements are an important component of operating in the FinTech space. Regulators must strike a balance between ensuring financial stability and consumer protection, while promoting innovation and competition. In order to address the lack of regulatory acumen among FinTech industry players, Bank Negara Malaysia has spearheaded various initiatives. A key challenge for Malaysian regulators is to strike a balance between reaping the benefits of FinTech and mitigating potential downside risks in both conventional and Islamic finance. Frequent refinements to regulations and supervision are required to keep pace with the highly dynamic nature of FinTech to balance benefits and risks.
February 28, 2020
Republic of Mozambique: Technical Assistance Report on Government Finance Statistics Mission (December 2-13, 2019)
Description: This technical assistance (TA) mission on Government Finance Statistics (GFS) was conducted during December 2-13, 2019.. The main purpose of the mission was to review the progress made by the authorities in implementing previous TA recommendations and provide further support to strengthen the compilation and dissemination of GFS in line with international standards set out in the Government Finance Statistics Manual 2014 (GFSM 2014).
February 27, 2020
Chile: Technical Assistance Report-Forming an Integrated Supervisory Authority
Description: This Technical Assistance Report paper on Chile advices on the planned integration of the superintendency for banking supervision, Superintendencia de Bancos y Instituciones Financieras (SBIF), into the Comisión para el Mercado Financiero (CMF). While the approved Bills contain important enhancements to the governance and regulatory framework, several legal aspects would benefit from further clarification. These include aspects related to the mandate, objectives, powers, and governance of the CMF. This report discusses the mission’s main observations and recommendations regarding the integration of the SBIF into the CMF. The report also provides an overview of the existing supervisory architecture and discusses the legal mandate, objectives, and powers of the new CMF, followed by a discussion on the governance arrangements that existed prior to the integration and of the main changes brought in the Law recently approved. It also discusses a possible blueprint for the organizational structure of the new CMF aimed at realizing the desired synergies in the supervision function and strengthening conglomerate supervision.
February 27, 2020
Nicaragua: 2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Nicaragua
Description: This 2019 Article IV Consultation with Nicaragua highlights that social unrest and its aftermath eroded confidence and caused large capital and bank deposits outflows that resulted in a prolonged output contraction. Banks cut lending, which exacerbated the downturn. Faced with sharply lower revenues and a severe tightening in available financing, including on account of sanctions, the government was forced to cut spending and adopt a procyclical tax package. The economy is projected to continue to contract in the near term as it adjusts to weaker confidence and lower external financing. The sharp contraction in credit will continue to depress investment, and the tight fiscal and external financing situation will continue to drag down medium-term growth. The key risks relate to further erosion in confidence and renewed deposit outflows. The imposition of additional sanctions by trading partners could also heighten economic stress. It is recommended to maintain a conservative fiscal stance in 2020 remains the key to maintain macroeconomic stability. Curbing expenditures on goods and services will allow increased spending on social programs, social safety nets, and public investment, which would lead to more equitable and sustainable growth.
February 24, 2020
Botswana: Technical Assistance Report-Report on National Accounts Mission
Description: This paper presents the Technical Assistance report National Accounts Mission in Botswana. As a result of recommendations made during the previous mission, Statistics Botswana (SB) have revised the release date for the rebase of national accounts estimates from March 2020 to December 2020 and updated the workplan accordingly. SB has made progress in finalizing the statistical frame and associated weights to compile gross value added (GVA) estimates for industries in the economic survey and estimates of GVA for the other industries. Once the business frame is determined, SB will have to reconcile the establishments that responded to the economic census ensuring that there is good coverage of industries as well as size of establishments. The previous mission strongly recommended that the release date for the rebased estimates be revised given the workload in rebasing the national accounts. The two temporary staff that have been with the national accounts for approximately 18 months as reported by the previous mission have been extended for a further two years. This is very positive news as they demonstrated a good understanding of the national accounts and a willingness to build their capacity.
February 24, 2020
St. Lucia: 2019 Article IV Consultation-Press Release; and Staff Report
Description: This 2019 Article IV Consultation explains that St. Lucia’s near-term growth prospects are favorable, supported by large infrastructure investment and robust tourist inflows. However, longer-term growth continues to be impeded by high public debt, lingering vulnerabilities in the financial system, and structural impediments to private investment. Diminishing policy buffers further weaken the country’s resilience to external shocks against the backdrop of aprecarious global outlook. Completion of long pending legislative initiatives, alongside stronger regional and domestic financial oversight, should provide banks with incentives to strengthen their balance sheets and increase the efficiency of financial intermediation. There is also a need to draw on supervisory and regulatory tools to respond to emerging risks from rising overseas investments of the banks and the rapid expansion of lending by credit unions. The authorities are recommended to should step up efforts to address the institutional, financing and capacity gaps in its climate and disaster response strategy. Supply-side reforms are needed to unlock potential growth by improving the business environment, reducing energy costs, enhancing labor productivity, and further diversifying the economy.
February 24, 2020
Republic of Congo: Technical Assistance Report-National Accounts Mission
Description: This Technical Assistance report on the Republic of Congo presents mission outcomes and priority recommendations conducted to support the National Statistics Institute in its work on the national accounts estimates. The mission reviewed the calculation of consumption of fixed capital for the general government sector, an important element in calculating production by cost of production. The 2016 accounts are finalized and closed through the summary tables and the 2017 accounts are being finalized. The mission focused on an analysis of the 2016 and 2017 national accounts finalized in accordance with the 1993 System of National Accounts (SNA). The analysis consisted of a review of the information sources used, the methods of calculation and extrapolation, and compliance with the 1993 SNA. The mission made corrections and provided the team with an explanation of the consequences of the corrections and how to integrate them in the accounts, particularly the corrections affecting the branches’ value added and, accordingly, gross domestic product. In order to facilitate progress in various areas of effort, the mission provided several priority recommendations focused on the urgency of preparing and validating a continuous, updated national accounts series. The mission proposes several corrections to the 2015 intermediate consumption matrix and recommends that the national accounting officers make the same corrections, proportionally, for 2016 and 2017.
February 21, 2020
Uruguay: 2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Uruguay
Description: This 2019 Article IV Consultation with Uruguay highlights that the country enjoys political stability, strong governance and institutions, and a high degree of social cohesion. Following a decade and a half of robust growth, the country boasts high per capita income, low levels of poverty and inequality, and a resilient financial sector. More recently, in a context of a volatile region and global uncertainties, challenges have emerged. The political and economic landscapes—with the post-election mandate and a growth boost due to large private and infrastructure investments—present an opportunity to address these challenges and preserve the social compact for future generations. The authorities are expected to use the opportunity to reduce debt and bring inflation toward the mid-point of the target range, to rebuild buffers and manage sizable risks. In addition, the authorities should leverage Uruguay’s institutional advantages to further improve the fiscal and inflation targeting frameworks and implement structural reforms, in order to raise potential growth and safeguard the achievements of the past decade.