Country Reports
2020
January 17, 2020
Senegal: Request for a Three-Year Policy Coordination Instrument-Press Release; Staff Report; and Statement by the Executive Director for Senegal
Description: This paper discusses Senegal’s Request for a Three-Year Policy Coordination Instrument (PCI). The PCI for Senegal is expected to build on the lessons from the previous programs supported by the IMF. It aims to support the authorities’ efforts to consolidate macroeconomic stability and foster sustained and inclusive growth. Program reviews take place on a semi-annual fixed schedule. While the PCI involves no use of IMF resources, successful completion of program reviews would help signal Senegal’s commitment to continued strong economic policies and structural reforms. Although public debt has increased and the current account deficit has widened, the outlook remains favorable, provided the authorities follow through with their comprehensive reform strategy and measures to consolidate macroeconomic stability. The authorities’ economic program supported by the PCI focuses on achieving high, sustainable, and inclusive growth, consolidating macroeconomic stability through prudent fiscal policy and sound debt management, and managing the oil and gas sector in a transparent manner.
January 17, 2020
Rwanda: First Review Under the Policy Coordination Instrument and Monetary Policy Consultation-Press Release; and Staff Report
Description: This paper discusses Rwanda’s First Review Under the Policy Coordination Instrument (PCI) and Monetary Policy Consultation. Rwanda’s macroeconomic performance under the program remains strong. The PCI-supported program focuses on creating budget space for the implementation of Rwanda’s National Strategy for Transformation. The program also calls for improving fiscal transparency, boosting revenue, and supporting the implementation of the new interest rate-based monetary policy framework. Looking ahead, the fiscal deficit path is forecasted to adhere to the fiscal rule under the program, which provides space for the implementation of the National Strategy for Transformation (NST) while safeguarding debt sustainability. The government plans to finance the NST partly through public borrowing, which should continue to be supported by careful debt management. There are several plans underway to increase domestic revenues by boosting the registration of new taxpayers as well as through innovative schemes and greater use of technology to strengthen tax compliance. Further progress on identifying and managing potential government liabilities—so-called fiscal risks—will be important to ensure that public resources are well protected for use on priority spending.
January 17, 2020
Republic of South Sudan: Technical Assistance Report-Report on External Sector Statistics Mission
Description: This Technical Assistance Mission has been undertaken to support the Bank of South Sudan (BSS) in improving external sector statistics (ESS). The recommendations made during the 2018 mission for the recording of oil exports and transactions with Sudan under the Transitional Financial Agreement were implemented by the BSS. The mission worked toward enhancing the inter-agency cooperation by meeting with selected public sector bodies, providing them with an overview of the balance of payments and the data that the BSS will request from them. Before the end of the mission, requested data from one of the entities, the Civil Aviation Authority was provided. A work program was developed to conduct a visitor expenditure survey and a preliminary International Reserves and Foreign Currency Liquidity template was submitted to IMF’s Statistics Department for review. In order to support progress in the various work areas, the mission recommended a detailed one-year action plan, with the several priority recommendations carrying weight to make headway in improving ESS reliability.
January 16, 2020
Mali: First Review Under the Extended Credit Facility Arrangement, Request for a Waiver of Nonobservance of a Performance Criterion and Modification of Performance Criteria-Press Release; Staff Report; and Statement by the Executive Director for Mali; IMF Country Report No. 20/8; December 23, 2019
Description: This paper discusses Mali’s First Review Under the Extended Credit Facility Arrangement, Request for a Waiver of NonObservance of a Performance Criterion and Modification of Performance Criteria. Mali’s economic growth has remained solid and the authorities have steadfastly implemented their revenue mobilization program and structural reforms are underway. Continued commitment to sound policies and reforms will be critical to achieving the program’s objectives. Security and social conditions in Mali have steadily deteriorated in recent years, especially in the central and northern regions. Implementation of the 2015 peace agreement is challenging, rendering the return of effective state control to these regions difficult. The agreed fiscal framework reflects the impact of the difficult security situation on public finances. The overall fiscal deficit for 2020 has been increased to 3.5 percent of gross domestic product (GDP), from the previously agreed 3 percent of GDP, to prevent crowding out of social and development spending. The primary focus of the program remains on increasing revenue mobilization, strengthening cash management, improving governance, and pursuing the financial restructuring of the state electricity company. The mission paved the way for a governance assessment mission in early 2020.
January 16, 2020
Finland: Selected Issues
Description: This Selected Issues paper investigates impact of promoting labor supply through tax and benefit reform in Finland. A comprehensive reform of the tax-benefit system could support the government’s objective of increasing employment. The equity-efficiency trade-off of the proposed reform scenarios improves social welfare when using Finland-specific preferences. The Finnish tax and benefit system has served the country well, having supported high income levels alongside low inequality. The model is characterized by strong institutions, high taxes and public service provision, a highly skilled labor force and a generous social safety net. The microsimulation analysis shows that, despite strong redistribution and high-income levels, Finland could improve its tax and benefit system. Even for revenue-neutral reforms, economic gains in terms of labor supply and earnings could be substantial. The reform proposals consider Finland’s strong preferences for equity, while seeking to correct potential inconsistencies in how the tax burden is distributed.
January 16, 2020
Finland: 2019 Article IV Consultation-Press Release; and Staff Report
Description: This 2019 Article IV Consultation highlights that Finland’s economy has performed well over the past three years, however, has slowed in 2019. There are some vulnerabilities in household finances, and productivity growth remains weak, with trend growth also constrained by adverse demographics. A new coalition government targets greater social support and inclusion, higher employment, carbon neutrality by 2035, and a balanced budget by 2023. A key challenge is to balance plans to increase spending with the need to maintain fiscal buffers. The fiscal expansion is expected to provide useful cyclical support in the short run, but offsetting measures will be required to ensure the structural balance reaches the government’s medium-term target. The government aims for a substantial increase in employment, but the effectiveness of the proposed wage subsidies is unclear. Alternatively, incentives from tax and benefit schedules could be improved, especially for younger women, older workers, and those out of the workforce. Risks in the banking system remain low overall, but some types of lending are increasing household vulnerabilities. The recent recommendation to limit the ratio of household debt to income is both sensible and in line with steps taken in many other countries.
January 15, 2020
Kenya: Fiscal Transparency Evaluation Update
Description: This Fiscal Transparency Evaluation (FTE) assesses the quality of fiscal reporting in Kenya against the principles set out in the Fiscal Transparency Code. Kenya has experienced a lot of structural and economic changes since 2014. One of the key objectives of this FTE is to estimate Kenya’s balance sheet, and to cover as many as possible of the entities in the public sector. The coverage of Kenya’s reporting of fiscal statistics has improved considerably. The report discusses that Kenya continues to perform well in the overall transparency of its fiscal forecasting and budgeting practices (Pillar II of the Code), which is based on a strong legal framework. It does so against a backdrop of significant ongoing reforms, including far-reaching fiscal devolution to counties, and the introduction of performance-based budgeting. A recent important change in the law is expected to synchronize the submission and approval of the government’s spending proposals and the tax measures in the Finance Bill. The recommendations set out under each of the pillars of this report aim to address several challenges. The report also encourages the authorities to continue with the implementation of the recommendations set out in the 2014 report, on which good or satisfactory progress has been made in about half the cases.
January 14, 2020
Niger: Fifth Review Under the Extended Credit Facility Arrangement and Request for Modification of Performance Criteria-Press Release; Staff Report; and Statement by the Executive Director for Niger
Description: This paper discusses Niger’s Fifth Review Under the Extended Credit Facility Arrangement and Request for Modification of Performance Criteria. Niger faces daunting development challenges, aggravated by terrorist incursions, climate change, and low uranium export prices. Presidential elections are due in late 2020. Reforms are advancing and economic activity is reasonably strong. Program implementation has been broadly satisfactory. All quantitative targets for end-June 2019 were met. However, a subsequent weakening of revenues, partly due to Nigeria’s closure of its borders to trade, as well as topped-up budget support, required mitigating policy measures and the adjustment of end-December 2019 targets. Structural reforms are advancing with delays. Niger can strengthen prospects for a successful transition by securing favorable contractual arrangements with foreign investors; establishing a framework for administering oil resources in line with good practices, notably channeling all revenues directly through the Treasury; and increasing spending on physical and human capital, while being mindful of the inherent volatility in natural resource revenues.
January 13, 2020
Peru: 2019 Article IV Consultation-Press Release; Staff Report; Staff Statement and Statement by the Executive Director for Peru
Description: This 2019 Article IV Consultation discusses that Peru’s economic performance continues to be strong, however, external and domestic headwinds, including the fallout from Lava Jato corruption investigations, have reduced growth momentum and raised concerns about long-term growth prospects. Policy responses have been appropriate, but further reforms have been delayed by a political stalemate between the executive and legislative powers. After President Vizcarra dissolved Congress in September 2019, new parliamentary elections will be held in January 2020. The current slowdown in activity and heightened uncertainty justify policy stimulus. However, the fiscal stance is procyclical owing to higher-than-expected revenues and low execution of public investment. Against this background, monetary policy easing is particularly appropriate given the absence of inflationary pressures, while accelerated budget execution would mitigate the procyclical fiscal policy stance. In the medium term, additional fiscal space from tax revenues and effective expenditure control is needed to address priorities in infrastructure and social spending while a gradual transition to greater exchange rate flexibility would foster financial market development. In addition to infrastructure investment, key reforms are needed to improve governance and fight corruption, boost competitiveness, and reduce informality.
January 13, 2020
Peru: Selected Issues
Description: This Selected Issues paper evaluates features of the Peruvian tax system that may have contributed to weak revenue growth, as well as reforms to strengthen the tax system. Using data on domestic tax collection in conjunction with cross-country data on tax rates, collection and tax expenditures, we attempt to shed light on the factors that distinguish tax revenue mobilization in Peru from other countries in the region. The paper also discusses recent reforms in tax policy and tax administration, and present advice for continued progress in these areas. Elimination of multiple tax regimes for small businesses can provide a boost to revenues from corporate taxes. An IMF technical evaluation of the small business tax regimes finds that a rationalization of the two existing regimes into one with the same marginal rate as the general regime will result in revenue gains of around 0.14 percent of GDP. There is ample room to increase the contribution of excises and property taxes to overall tax revenues. Relative to the regional average, Peru will continue to lag peer economies even if the current reform performs at full potential. This suggests room for further policy reforms to bring excise taxes in line with the levels of comparable economies.