Country Reports

October 3, 2018

Republic of Moldova: Technical Assistance Report-Public Sector Debt Statistics

Description: This Technical Assistance Report discusses the findings and recommendations made by the IMF mission to improve public sector debt statistics (PSDS) in Moldova. The IMF mission found that Moldova continues to improve their recording, compilation and dissemination of PSDS reflecting potential fiscal risks, but faces some statistical challenges going forward. The adoption of recommendations, along with comprehensive monitoring of on-lending and contingent liabilities, would increase the Moldovan policymaker’s ability to forecast future fiscal risk and actively monitor the gross debt of all public-sector institutions in line with the new Fiscal Risk Statement. This would translate into a sound Public Finance Management structure and allow for more accurate macroeconomic surveillance and analysis.

October 3, 2018

Mexico: Fiscal Transparency Evaluation

Description: This Fiscal Transparency Evaluation (FTE) report assesses Mexico’s fiscal transparency practices against the IMF’s Fiscal Transparency Code (FTC), including the draft pillar on resource revenue management. Mexico scores relatively well when compared with other Latin American countries and emerging market economies that have undergone a FTE. Out of the 48 principles across four pillars in the FTC, Mexico meets 16 principles at the basic level, 9 principles at the good level and 15 principles at the advanced level, while one principle does not apply. Fiscal transparency practices are strongest in the areas of resource revenue management and fiscal forecasting and budgeting, while the scores on fiscal risks analysis and management are lower.

October 1, 2018

Republic of Mozambique: Technical Assistance Report on Strategy for Restoring the Expenditure Chain and Improving Financial Programming

Description: The report contributes to the Mozambican authorities in defining a strategy and an action plan to restore a legally compliant expenditure process, and to improve financial programming.

September 27, 2018

Philippines: 2018 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Philippines

Description: This 2018 Article IV Consultation highlights that the economy of The Philippines continues to perform well but is facing new challenges. Real GDP growth is projected to grow strongly in 2018 and 2019, supported by domestic demand. However, poverty and inequality challenges remain, inflation has risen, and external uncertainty has increased. The medium-term economic outlook remains favorable, but short-term risks have risen. Real GDP growth is projected at just under 7 percent over the medium term. Inflation is projected at above the 4 percent upper target bound in 2018 and stay in the upper half of the target band during 2019–2020. The current account deficit is projected to remain manageable, financed largely by foreign direct investment.

September 27, 2018

Malta: Technical Assistance Report-Fiscal Transparency Evaluation

Description: Malta meets a large number of the principles of the Fiscal Transparency Code at good or advanced level. Based on the assessment made in this report, Malta meets the good or advanced practice on 21 out of 35 principles in the Code. One principle, related to natural resources, was not relevant to Malta and therefore not assessed. Malta meets the basic practice on a further 12 principles (Table 0.1). Practices are stronger in the areas of fiscal reporting and fiscal forecasting and budgeting, where Malta is subject to and complies with the comprehensive reporting framework established by the European Union. Practices are generally weaker in the area of fiscal risk analysis and management, notably oversight of public corporations.

September 25, 2018

Trinidad and Tobago: 2018 Article IV Consultation-Press Release and Staff Report

Description: This 2018 Article IV Consultation highlights that Trinidad and Tobago is slowly recovering from a deep recession. The economy continued to contract but at a slower pace, underpinned by the strong recovery in gas production, while weak activity in construction, financial services, and trade, continued foreign exchange shortages, and slow pace of public investment dampened non-energy sector growth. Positive growth should return from 2018 as the recovery takes hold in both sectors. Good progress has been made in fiscal consolidation through spending cuts, but public debt continued to rise, approaching the government’s soft target of 65 percent of GDP. Economic prospects are expected to improve over the medium term, but remain heavily dependent on the energy sector.

September 25, 2018

Trinidad and Tobago: Selected Issues

Description: This Selected Issues paper focuses on the impact of adjusting to commodity shocks in Trinidad and Tobago. With commodity resources being nonrenewable, developing a long-term strategy can help avoid unsustainable policies and ensure greater intergenerational equity. Recent country experiences highlight the benefits of precautionary buffers in smoothing fiscal adjustment process. Prudent and countercyclical fiscal policy implementation, structural reforms, and economic diversification can help contain the impact of commodity price booms and busts. Strong fiscal institutions are needed to help achieve and sustain the fiscal adjustment. Different adjustment strategies may be feasible depending on the needed size of the adjustment and country-specific circumstances. Trinidad and Tobago have faced several years of weak or negative growth on the back of terms-of-trade and energy supply shocks. A well-designed fiscal framework that considers potential uncertainties associated with commodity cycles can help improve fiscal management. Countercyclical policy implementation would help smooth the impact of commodity-induced sharp fluctuations in the economy.

September 17, 2018

West Bank and Gaza Report to the Ad Hoc Liaison Committee

Description:

Deepening rifts between key stakeholders and surging violence in Gaza further imperil prospects for peace. Protests in Gaza ahead of, and turbulence since, the Nakba day and relocation of the United States’ embassy to Jerusalem in mid-May, mark the most serious escalation since the 2014 war. Relations between the parties have hardened, amid a spate of new laws in Israel. The Palestinian Authority has expressed skepticism about the U.S. role as a neutral arbiter in the peace process. The domestic political situation remains tense and reunification plans have stalled.

The outlook is increasingly untenable. Longstanding constraints continue to act as a brake on growth, aggravated by large aid cuts and revenue losses. Gaza is suffering disproportionately, with its economy shrinking and unfolding humanitarian catastrophe. Overall GDP growth is projected to languish below 2 percent per year. The intended withholding of clearance revenues under new Israeli legislation will seriously undermine the already fragile fiscal situation. Large external imbalances will persist as restrictions impede development and add to vulnerabilities. Weaker growth and demographic pressures will substantially worsen unemployment, poverty, and per capita incomes.

The overriding challenge is to revive growth and alleviate poverty in the face of shrinking resources. More than ever this will depend on the Palestinian authorities, Israel, and donors coming together to ensure a comprehensive approach to reforms. The priority is to implement adjustment measures that help protect critical public service delivery, social spending and investment, and avoid a disorderly expenditure rollback disruptive to growth. Reforms to strengthen the fiscal framework and public institutions will help achieve this objective, promote public accountability, and reassure donors that resources will be well spent. Faster progress to systematically reduce “fiscal leakages”— based on fair and transparent discussions between the Israeli and Palestinian authorities —will be imperative. Stronger action to avert a build-up of financial sector risks and maintain correspondent banking relations will be essential to preserve financial stability and ensure banks can support economic activity. Finally, steps to shore up economic institutions, together with actions to ease restrictions on movement and access, will be crucial to stabilize Gaza and revitalize the overall economy’s capacity to grow.

September 17, 2018

Norway: 2018 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Norway

Description: This 2018 Article IV Consultation highlights that Norway is in the midst of a healthy recovery from the oil downturn, supported by positive trends in oil prices and a strengthening labor market. In addition, banks remain profitable and well capitalized. However, household debt continues to increase and house prices have resumed their rise, especially in the Oslo area, after a correction during 2017. Mainland growth is projected to increase from 2 percent in 2017 to 2.5 percent in each 2018 and 2019, underpinned by solid consumption, stronger business investment and an export recovery. Petroleum investment will also pick up. As a result, output will likely start to exceed potential in 2019.

September 17, 2018

Norway: Selected Issues

Description: This Selected Issues paper describes wages and competitiveness in Norway. Norway may have to downwardly revise its expectations for wage growth if it is to avoid a significant loss of competitiveness and manage the transition to a less oil-dependent economy. Norway was able to afford very high wage growth in the past (notwithstanding the noted challenges in several sectors) thanks to good fortune in its terms of trade. Going forward, it would be prudent not to count on being fortunate twice: wage moderation would help build resilience in case of less favorable trends in international prices. It would also help facilitate the needed transition out of oil by supporting sectors that did not benefit from past terms of trade gains. Communication from the government can continue to help in managing public expectations. Fiscal policy plays a key role in promoting competitiveness and containing the spending effect of Dutch Disease. After a prolonged expansion of fiscal policy—partly enabled by large valuation gains of the sovereign wealth fund—it is now appropriate to gradually start tightening fiscal policy. The ongoing up-cycle provides an ideal setting to get started on structural consolidation, which will ultimately be needed to face to address aging pressures.