Country Reports
2019
July 3, 2019
Ecuador: First Review under the Extended Fund Facility Arrangement, Requests for Waiver of Nonobservance of Performance Criterion, Modification of Performance Criteria, and Financing Assurances Review-Press Release and Staff Report
Description: A 36-month EFF with access of SDR 3.035 billion (435 percent of quota or about US$4.204 billion) was approved on March 11, 2019. Economic activity is projected to decelerate further in 2019 as fiscal consolidation and a slowdown in credit growth weigh on economic growth. However, external financing conditions have improved on the back of rising oil prices and the approval of the IMF program, with sovereign bond spreads falling by 250 basis points since January 1, 2019.
July 3, 2019
Kyrgyz Republic: Selected Issues
Description: This Selected Issues paper identifies constraints to economic growth in the Kyrgyz Republic, using the Hausmann-Velasco-Rodrik diagnostic approach. It finds that large infrastructure gaps, weak governance and rule of law, and high cost of finance appear to be the most binding constraints to private investment and growth. Additional critical factors are the quality of education and onerous regulations. There is room to improve both the quality and cost/efficiency of education spending. Although relatively low, labor costs have exceeded productivity growth and there is room to improve labor market efficiency. Despite important investments, the infrastructure gap remains large and the country ranks relatively low on infrastructure quality. Weak governance undermines growth through various channels: investment, human capital, and productivity. Weak institutions increase the cost of doing business and make the appropriation of investment returns less certain, overall reducing investor’s risk appetite to invest. Public debt is on the high side and the composition of spending is tilted toward current spending.
July 3, 2019
Albania: Second Post-Program Monitoring Discussions-Press Release; and Staff Report
Description: Growth was strong in 2018, backed by high electricity production. Inflation remains subdued, notwithstanding very accommodative monetary conditions. The fiscal stance in 2018 was somewhat tighter than expected, supporting a further decline in public debt. The medium-term economic outlook is broadly favorable, with growth projected to converge to 4 percent and a further narrowing of the current account deficit. However, significant risks remain. Growth is vulnerable to a continued or sharper economic slowdown in the main trading partners. The main vulnerabilities remain in the fiscal sector, as public debt is still high, and contingent liabilities are increasing. Albania’s relatively large financing needs also pose risks that could materialize, in particular, in case of tightening external financing conditions.
July 3, 2019
Rwanda: Staff Report for 2019 Article IV Consultation and a Request for a Three-Year Policy Coordination Instrument-Press Release; Staff Report; and Statement by the Executive Director for Rwanda
Description: Rwanda has made considerable progress in sustaining high and inclusive growth and reducing poverty. Despite numerous shocks, macroeconomic management has been strong and debt risks have remained low. Going forward, the authorities’ National Strategy for Transformation (NST) aims to make progress toward the SDGs, but its financing will be challenging. A more neutral medium-term fiscal policy stance can help, reinforced with commitments for more domestic revenue mobilization and mitigation of fiscal risks. The central bank moved to a new interest-rate based monetary policy framework and, with inflation below its target range, eased the policy stance. To support their policies and NST implementation, the authorities are requesting approval of a 3-year program supported by the Policy Coordination Instrument (PCI).
July 3, 2019
Grenada: Climate Change Policy Assessment
Description: Grenada has made significant strides to counter climate change but meeting the daunting remaining challenges will require domestic policy actions and sustained international support. Climate change is an existential threat to Grenada. Increasing frequency and intensity of coastal storms threatens infrastructure and livelihoods, as do increased risk of coastal flooding and drought. Notably, Hurricane Ivan in 2004 caused damages of over 200 percent of GDP. Grenada has recognized this by placing climate resilience at the center of its policy making and forging strategic alliances with key global climate finance providers. However, the challenges facing the country remain daunting and will require large increases in international support, both financial and technical, to assist the Grenadian authorities turn their impressive resilience plans into action.
July 3, 2019
Grenada: 2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Grenada
Description: Owing to improved policy frameworks and favorable external conditions, Grenada’s economy has been growing rapidly. Policies have remained prudent, helping reduce public debt and financial system vulnerabilities. The domestic policy debate is increasingly focused on using potential fiscal space for spending on public pensions and investment on building resilience to natural disasters.
July 3, 2019
Kyrgyz Republic: 2019 Article IV Consultation-Press Release; and Staff Report
Description: The economy is growing steadily, benefiting from a benign regional environment, particularly in Russia, the source of most remittances and non-gold export receipts. Low inflation, lower fiscal deficits, and a stable banking sector point to the success of stabilization policies implemented by the government and National Bank of the Kyrgyz Republic (NBKR, the central bank) under eight successive Fund-supported programs. However, the economy remains vulnerable to external shocks because of the high level of remittances (29 percent of GDP), the concentration of exports on gold (37 percent of exports of goods), the level and composition of the public debt (56 percent of GDP, 4/5 of which is denominated in foreign currency), and the level of the current account deficit (8.7 percent of GDP). In addition, economic growth has been insufficient to significantly raise living standards and continue to reduce poverty.
July 2, 2019
Benin: 2019 Article IV Consultation, Fourth 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 Benin
Description: The economy continues to grow at a fast pace, driven by port activity and cotton production. The execution of the 2019 budget is on track to bring the fiscal deficit within the WAEMU convergence criterion of 3 percent of GDP this year. Program implementation remains very satisfactory with all end-December 2018 quantitative performance criteria (QPCs) and structural benchmarks (SBs) met.
July 2, 2019
Benin: Selected Issues
Description: This Selected Issues paper discusses a growth-at-risk (GaR) model which is used to compute a distribution of expected GDP growth for Benin. The model predicts growth rates of ~6.7 percent for 2019 and a range of 6.4–6.8 percent in the medium-term (depending on the specification). Risks to future growth are assessed to be tilted to the downside. 2019 GDP growth is estimated around 6.7 percent, on average, across several specifications. The model considers external factors (world trade, global financial conditions, trade policy uncertainty, and US consumer sentiment), country-specific exposures to external factors (commodity terms of trade and trade-partner growth), and domestic factors (domestic financial conditions, fiscal policy, and the exchange rate). The analysis reveals that growth projections estimated both for the median and mode are slightly higher conditioned on 2018 data, yet when expectations about 2019 are considered using World Economic Outlook projections they fall. Overall, risks seem to be tilted to the downside. Medium term growth is estimated at between 6.4 and 6.8 percent. Risks to growth remain tilted to the downside, yet less skewed than in the short term.
July 2, 2019
Togo: 2019 Article IV Consultation, Fourth Review under the Extended Credit Facility Arrangement, and Request for Waiver of Nonobservance of Performance Criterion and Modification of Performance Criteria-Press Release; Staff Report; and Statement by the Executive Director for Togo
Description: Economic activity has been recovering, driven by robust performance in the export and agricultural sectors. Fiscal consolidation efforts have continued; Togo complied with the WAEMU deficit convergence criteria in 2017 and 2018, two years ahead of the timeline agreed by member states; public debt declined from 81 percent of GDP at end-2016 to 76 percent of GDP at end-2018. Inflation stood at 2 percent in March 2019 (y-o-y). The external position has improved. The privatization process for the first public bank encountered delays.