Country Reports
2019
April 1, 2019
Nigeria: Selected Issues
Description: This Selected Issues paper discusses further concrete steps to improve the governance of state-owned enterprise (SOE) and of the oil sector, given their importance to fiscal transparency and sustainability. Reducing leakages in the petroleum sector is especially macroeconomically critical, given Nigeria’s current fiscal and external dependence on oil revenue. This paper provides an overview of developments, recent reforms, and challenges, and outlines policy recommendations for stronger governance and corruption prevention, detection, and resolution, including through anti-money laundering and combating the financing of terrorism measures that are useful beyond the petroleum sector. Strengthening transparency is needed to ensure that Nigeria receives maximum benefits from the oil and gas sector. The Nigerian authorities must accelerate their anti-corruption efforts to maintain momentum against both entrenched challenges and evolving threats. Achieving critical improvements to SOE governance and Anti-Money Laundering and Combating the Financing of Terrorism efforts will require a combination of legislative action, institutional reform, and additional resources.
April 1, 2019
Nigeria: 2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Nigeria
Description: This Article IV Consultation highlights that Nigeria’s economy is still recovering from the substantial terms-of-trade shock that triggered the 2016 recession. Persistent structural and policy challenges constrain growth to below the level needed to reduce vulnerabilities and improve development outcomes. With elections now complete, there is a greater chance for faster policy implementation. The authorities’ Economic Recovery and Growth Plan priorities remain appropriate and should be urgently implemented. Revenue-based fiscal consolidation would be required to create space for higher capital and priority spending while improving spending efficiency and strengthening governance. A comprehensive package of urgent policy reforms is required to address vulnerabilities and raise growth over the medium term. The IMF staff suggested that strengthening banking sector resilience requires increasing capital buffers. This includes extending the no dividend distribution rule to all banks with high restructured loans.
March 29, 2019
West African Economic and Monetary Union (WAEMU): Selected Issues
Description: This Selected Issues paper reviews West African Economic and Monetary Union’s (WAEMU) regional macroeconomic surveillance framework to control all sources of debt accumulation and ensure debt sustainability. WAEMU’s regional surveillance framework aims at ensuring the sustainability of national fiscal policies and their consistency with the common monetary policy. While fiscal deficits have been the main driver of public debt across WAEMU member countries, the size of residual factors has varied greatly among these countries. The WAEMU Macroeconomic Surveillance Framework would benefit from adjustments to more effectively set the region’s public debt on a sustainable path. In addition, beyond adhering to the WAEMU fiscal deficit rule, member countries must curb below-the-budget-line operations. This would require improved monitoring of fiscal risks and the building of adequate budget provisions to address such risks before they materialize. Improved Treasury practices would also help eliminate the recourse to pre-financing arrangements and tighten control over expenditure. Public dissemination of the WAEMU progress report and strengthened peer-to-peer learning among member countries could improve the momentum for reforms.
March 29, 2019
Republic of Madagascar: Fourth Review Under the Extended Credit Facility and Request for Modification of Performance Criteria-Press Release; Staff Report; and Statement by the Executive Director for the Republic of Madagascar
Description: This paper discusses Madagascar’s Fourth Review under the Extended Credit Facility (ECF) and Request for Modification of Performance Criteria. Madagascar’s economic recovery continued in 2018, notwithstanding challenges related to the presidential election in November/December 2018. While some economic pressures developed in the second half of 2018, economic conditions remained generally positive. The discussions focused on maintaining progress on the key objectives of the program, especially boosting fiscal space for priority investment and social spending by containing lower priority spending. The main challenges involved fuel pricing and transfers to the public utility, JIRAMA. Other issues included structural reforms to promote inclusive growth, most notably in investment capacity, the financial sector, and governance. The outlook continues to be generally positive. Pursuit of economic reforms should yield results, while the pressures in 2018 from higher oil prices and pre-electoral weakness in confidence abate under the baseline. As a low-income country with an open economy, Madagascar remains vulnerable to exogenous shocks.
March 29, 2019
West African Economic and Monetary Union (WAEMU): Staff Report on Common Policies for Member Countries-Press Release; Staff Report; and Statement by the Executive Director for the WAEMU
Description: This regional consultation IMF staff report for West African Economic and Monetary Union (WAEMU) highlights that growth remained strong in 2018, the fiscal deficit narrowed by 1/2 percentage point of GDP, external reserves increased, and important banking reforms were put in place, including the introduction of Basel II/III standards. The medium-term outlook remains positive despite somewhat less favorable global conditions, but critically hinges on planned fiscal consolidation and structural reforms to improve competitiveness and allow the private sector to become the main engine of growth. Other risks relate to terms-of-trade and weather shocks, and a difficult security situation in some countries. The report also discusses that collectively adhering to fiscal consolidation commitments, with a greater focus on domestic revenue mobilization and more effective control of below-the-line operations, is essential to lower risks of public debt distress, support international reserves, and preserve external viability. Structural policies aimed at improving competitiveness and growth inclusiveness are critical to reducing vulnerabilities to external shocks, building external buffers, stimulating private-sector-led growth, and making the growth momentum sustainable.
March 26, 2019
Myanmar: Technical Assistance Report-Monetary Operations
Description: This Technical Assistance Report presents discussions focused on the financial market’s developments and monetary operations-related issues. the data collected by the Central Bank of Myanmar (CBM) show that there already exist a significant number of uncollateralized interbank (I/B) transactions in Myanmar, but that the data on these transactions are not effectively used. Analysis shows that banks are conducting both types of uncollateralized transactions rather actively, while the total number and amount of the I/B deposit market are higher than those of the I/B borrowing market. It is recommended that efforts to correct data discrepancy should be continued and that this issue should be solved as soon as possible. It is necessary to find the data discrepancy in a timely manner, correct the data, and ask the reasons for misreporting by communicating with banks. In order to ensure the smooth preparation for the next fiscal year, a recommendation has been made to start preparing the liquidity forecasting for the next fiscal year as soon as possible.
March 26, 2019
Sweden: 2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Sweden
Description: This Article IV Consultation highlights that Sweden’s growth is expected to slow in 2019, with material downside risks from the global economy and domestic demand. A data-dependent approach to monetary policy is appropriate. Although underlying inflation is expected to rise gradually, uncertainties around this outlook have widened. Automatic fiscal stabilizers should operate fully, and the surplus should decline to the new medium-term target by 2020. The fiscal surplus is estimated to have declined to just under 1 percent of GDP in 2018. The report also discussed that labor market reforms should enhance employment of migrants and the low skilled. The social partners should update wage formation to reflect structural changes in the Swedish economy. Reforms to improve housing affordability are needed even as macroprudential measures help contain household debt vulnerabilities. The tightening of amortization requirements is well-targeted, and its effectiveness should be monitored. Plans to eliminate rent controls on new construction should be complemented by phasing out controls on existing apartments.
March 26, 2019
Samoa: Technical Assistance Report-Report on the External Sector Statistics Assistance Mission
Description: This report discusses the report of technical assistance mission to support the Central Bank of Samoa (CBS) in further strengthening external sector statistics compilation and dissemination. The mission recommended that ESS compilers convert to using the International Merchandise Trade Statistics (IMTS) data as the source of exports data starting 2019; and adjust historical data at least as far back as 2014. Also, it would be beneficial to switch the source of trade in goods exports from exchange control records to Customs data to ensure better coverage and improve consistency with the IMTS published by the Samoa Bureau of Statistics. The CBS should adopt a step-by-step approach for the collection of offshore units’ data, initially focusing on offshore banks. As international requirements for the reporting of offshore units evolves, it is likely that the Samoa International Finance Authority (SIFA) and the offshore company trustees will need to expand data collection from the offshore units under their jurisdiction. The CBS should, therefore, keep abreast of developments with respect to offshore reporting and continue to liaise with the SIFA.
March 25, 2019
Morocco: Technical Assistance Report-Monetary and Financial Statistics Mission (July 17 - 28, 2017)
Description: This Technical Assistance Report discusses the finalization of the development of standardized report forms (SRF) for other financial corporations (OFC). The mission held constructive discussions with Bank Al-Maghrib’s (BAM) staff on various other aspects of the compilation of monetary and financial statistics (MFS) aimed at improving the quality of the data. These discussions led to the preparation of a detailed action plan with the following priority recommendations carrying particular weight to make headway in improving MFS. The mission held constructive discussions with the staff of the Banking Supervision Department on the classification in the monetary statistics of the financial products offered by Islamic banks. The mission supported BAM proposal to develop a reporting form for the collection of bank source data on securities valuation. The mission made recommendations to improve the sectoring of the financial statements of finance companies and offshore banks.
March 25, 2019
Republic of San Marino: 2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the Republic of San Marino
Description: This Article IV Consultation highlights that deep-rooted weaknesses in the banking system have undermined economic activity and are now threatening financial stability and fiscal sustainability. Significant deposit outflows have left the banking system with low liquidity, while persistent losses and high non-performing loans (NPLs) resulted in sizable recapitalization needs, particularly in the state-owned bank. Growth is projected to remain subdued in the coming years, reflecting continued banking sector deleveraging and a less favorable external environment, most notably in Italy. Slow progress in repairing the banking sector, and full and upfront recognition of the state’s financial commitments to the banking system are the key risks. Urgent actions are needed to restore banking sector viability and credit supply, safeguard public finances, and promote sustained economic growth. It is recommended to strengthen labor supply by better targeting social benefits and further relaxing the hiring process of non-residents.