Country Reports
2018
June 8, 2018
Guatemala: Selected Issues Paper
Description: This Selected Issues paper analyzes remittances and households’ behavior in Guatemala. Remittances are a structural feature of the Guatemala economy. In 2017, remittance flows accounted for over 11 percent of GDP and benefitted over 1.5 million of Guatemalan households. The effects of remittances on the labor supply are estimated. There is no evidence of remittance-induced work disincentives. The results suggest that the labor supply for members of remittance-receiving households is relatively more elastic, most markedly so for the 41-65 age group: a one percent increase in weekly wages leads to a 0.5 percent increase in weekly hours worked for members of remittance-receiving households, versus 0.2 percent increase for non-remittance-receiving households.
June 8, 2018
Bangladesh: Selected Issues
Description: This Selected Issues paper analyzes the performance of state-owned commercial banks (SOCB) in Bangladesh. Bangladesh’s experience with the SOCBs is not unique: the SOCBs have been underperforming in comparison to private banks and foreign-owned banks. Large nonperforming loans (NPLs) imply that a large amount of the savings is being wasted by financing lossmaking activities, and therefore becomes unavailable for financing productive investments. High NPLs and the need for provisions also increase the cost of credit to good borrowers, further dampening investment and growth. Resolute steps are required to resolve the SOCBs’ weak performance, reflecting empirical evidence and mixed results from the previous efforts.
June 8, 2018
Bangladesh: 2018 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Bangladesh
Description: This 2018 Article IV Consultation highlights that the Bangladesh economy continues to perform well with robust and stable growth. The strong growth comes with stable inflation, moderate public debt, and greater resilience to external shocks. The country continues to make steady progress in reducing poverty and improving social indicators. Real GDP growth in FY2017 (ending September 30) further accelerated to 7.3 percent from 7.1 percent in the previous fiscal year. The macroeconomic situation is expected to remain robust in FY2018. Growth is projected at about 7 percent with strong domestic demand. Inflation is expected to remain below 6 percent, close to Bangladesh Bank’s target as flood-related pressure on food prices eases with the rice harvest recovery.
June 7, 2018
El Salvador: 2018 Article IV Consultation-Press Release; Staff Report and Statement by the Executive Director for El Salvador
Description: This 2018 Article IV Consultation highlights that the real GDP of El Salvador grew above potential, at 2.3 percent in 2017, supported by lower oil prices, continued United States (U.S.) recovery, and a surge in remittances. However, El Salvador’s growth continues to lag regional peers. Inflation remained low at 1 percent, anchored by dollarization. In 2018–19, growth is expected to remain above potential at 2.3 percent, reflecting the temporary acceleration of the U.S. growth from the recent U.S. tax reform and higher grant-financed investment. The fiscal deficit would further fall to 2.2 percent of GDP in 2018, as savings from the pension reform kick in, but would rise to 2.7 percent of GDP in 2019.
June 7, 2018
Colombia: Arrangement Under the Flexible Credit Line and Cancellation of Current Arrangement-Press Release and Staff Report
Description: This paper discusses Colombia’s Arrangement Under the Flexible Credit Line (FCL) and Cancellation of Current Arrangement. Growth is expected to accelerate in 2018 and further over the medium term underpinned by a rebound in investment and nontraditional exports. Although the ongoing recovery in global growth has reduced some near-term external risks, global financial markets are vulnerable to a sudden, sharp tightening of financial conditions as a result of an unexpected increase in inflation and/or an escalation of trade or geopolitical tensions. Colombia’s exposure to some of these tail risks has increased in line with larger foreign participation in the local government debt market. The IMF staff’s assessment is that Colombia continues to meet the qualification criteria for access to FCL resources.
June 7, 2018
El Salvador: Selected Issues
Description: This Selected Issues paper proposes a simple nowcast model for an early assessment of the Salvadorian economy. The exercise is based on a bridge model, which is one of the many tools available for nowcasting. For El Salvador, the bridge model exploits information for the period 2005–17 from a large set of variables that are published earlier and at higher frequency than the variable of interest, in this case quarterly GDP. The estimated GDP growth rate in the 4th quarter of 2017 is 2.4 percent year-over-year, leading to an average GDP growth rate of 2.3 percent in 2017. This is in line with the GDP growth implied by the official statistics released two months later, in March 23, 2018.
June 6, 2018
Romania: 2018 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Romania
Description: This 2018 Article IV Consultation highlights that Romania recorded strong economic growth in 2017, with record low unemployment and an improving financial sector. Private consumption boosted by fiscal stimulus and wage increases led the strong growth, while investment lagged and structural reforms slowed. Public investment fell to a multi-year low in percent of GDP with a low absorption of European Union funds. Both the government deficit and current account deficit widened, respectively to 2.8 and 3.4 percent of GDP in 2017. Growth is expected to reach 5 percent in 2018—led again by continuing stimulus to private consumption from fiscal relaxation—and accompanied by a current account deficit and elevated inflation, even as monetary policy is tightened.
June 6, 2018
Romania: Selected Issues
Description: This Selected Issues paper reviews the level and structure of tax revenues in Romania and proposes options to improve revenue mobilization drawing from other countries’ experiences. Tax revenue in Romania is low compared with peers and has been declining over time. Strengthening the tax administration is crucial to improving tax collection efficiency in Romania, and requires commitment and ownership at the highest levels. Implementing and operationalizing new information technology infrastructure in Romania is a key priority, given its outdated and fragile systems. Romania should also conduct a comprehensive review of its tax system. This review would guide future reform needs in the area of tax policy with the primarily focus on improving revenue productivity and the growth-friendliness of the tax system.
June 6, 2018
Guinea- Bissau: Fifth Review Under the Extended Credit Facility Arrangement, Request for Extension and Augmentation of Access, and Financing Assurances Review-Press Release and Staff Report
Description: This paper discusses Guinea–Bissau’s Fifth Review Under the Extended Credit Facility (ECF) Arrangement, Requests for Extension and Augmentation of Access, and Financing Assurances Review. Program implementation for the fifth review has been good. All performance criteria and indicative targets were met, as were six of eight structural benchmarks, with one of the remaining two benchmarks subsequently completed and the other under way. Economic activity has remained robust. Real GDP grew by an estimated 5.9 percent in 2017, with consumer price inflation of 1.1 percent and an external current account deficit of 0.5 percent of GDP. The IMF staff supports completion of the fifth review under the ECF arrangement, extension of the arrangement, and augmentation of access.
June 6, 2018
Cyprus: Second Post-Program Monitoring Discussions-Press Release; Staff Report and Statement by the Executive Director for Cyprus
Description: This paper discusses Cyprus’ Second Post-Program Monitoring Discussions. Cyprus’s economic recovery has strengthened. GDP growth has reached 3.9 percent in 2017, with upbeat activity concentrated in construction, tourism and professional services. The unemployment rate has continued to decline at a sustained pace, while moderate price and wage rises have supported competitiveness, helping to contain the increase in the current account deficit, despite higher imports. Improved economic conditions have supported robust fiscal revenue collection, contributing to a sizable primary surplus and a decline in the public debt ratio. The current strong expansion is forecast to extend well into the future, with growth inching up to 4 percent in 2018 and 4.2 percent in 2019.