Country Reports
2018
March 5, 2018
Kingdom of Lesotho: Selected Issues
Description: This Selected Issues paper provides further background on the macrofinancial sector analysis that informed Lesotho’s 2017 Article IV consultation. Lesotho’s financial sector is small, concentrated, and lacks financial inclusion, although mobile banking services and financial cooperatives offer some encouraging potential. Lesotho’s most important vulnerabilities are exposure to developments in South Africa and dependence on revenues from the Southern African Customs Union (SACU). Shocks to SACU revenues can become a source of systemic risk by affecting the fiscal position and the balance of payments. The financial system will be affected by both channels, with substantial implications if the shock is permanent. This paper focuses on two potential consequences of a severe SACU revenue shock for the financial system: A decline in reserves that may threaten the sustainability of the hard currency peg with the South African rand, and the impact of a forced fiscal consolidation on household income and the quality of credit to households, affecting both bank and nonbank lenders. It turns out that financial shallowness and lack of inclusion may be a defining feature of the formal banking system; thereby raising questions about potential trade-offs between inclusiveness and financial stability.
February 28, 2018
Namibia: 2017 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Namibia
Description: This 2017 Article IV Consultation highlights that Namibia’s economy has reached a turning point with ending of temporary expansionary factors. GDP sharply decelerated in 2016 and contracted in 2017 as construction in the mining sector came to an end and the government began consolidating. With the economy contracting and Southern Africa Customs Union’s receipts temporarily increasing, the current account balance improved significantly. The outlook remains positive with considerable vulnerabilities and risks. Growth is projected to resume in 2018, as mining production ramps up, construction activity stabilizes and manufacturing recovers, before converging to a long-term rate of about 3.5 percent, below the average of recent years.
February 28, 2018
Kingdom of Lesotho: 2017 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the Kingdom of Lesotho
Description: This 2017 Article IV Consultation highlights that high levels of unemployment, poverty, and inequality persist in Lesotho despite its faster growth compared with regional peers over the last decade. GDP growth is expected to be about 3 percent in FY2017/18, below the average of 4.1 percent for the past decade, and driven by mining and agriculture. Over the next three years, GDP growth is expected to be led by mining and construction related to the Lesotho Highlands Water Project Phase II. A steep decline in Southern African Customs Union transfers, a major source of government revenue, will result in a fiscal deficit that is likely to exceed 6 percent of GDP for the second year.
February 26, 2018
Somalia: 2017 Article IV Consultation and First Review Under the Staff-Monitored Program-Press Release; Staff Report; and Statement by the Executive Director for Somalia
Description: This 2017 Article IV Consultation highlights that despite a severe drought and sporadic terrorist attacks, Somalia avoided a significant economic slowdown in 2017 with support from the national and international community. Economic activity in 2017 is expected to have slowed. The drought that hit the country since late 2016 has receded, but it took a considerable toll, particularly in the remote areas. GDP growth is projected to have remained subdued at 1.8 percent in 2017. Driven by higher food prices, year-over-year inflation increased to 5.2 percent at the end of December 2017. A small budget surplus was achieved by the end of September 2017, even though domestic revenue fell short of the program target.
February 22, 2018
Bosnia and Herzegovina: Technical Assistance Report-Government Finance Statistics
Description: This Technical Assistance Report discusses the findings and recommendations made by the IMF mission about improving government finance statistics (GFS) for decision making in the Republic of Srpska, Bosnia and Herzegovina. It was found that a number of weaknesses of institutional arrangements needed to compile GFS in Bosnia and Herzegovina have yet to be resolved. Although collaboration between units involved in the compilation of GFS is well established in the Republic of Srpska, collaboration between the Bosnian institutions at the entity level and the state institutions lack fully the (in)formal prerequisites to support comprehensive and adequate fiscal data reporting. Particularly the sharing between institutions of data, metadata, and supporting information required for the accurate, timely, efficient, and auditable compilation of GFS needs strengthening.
February 22, 2018
Bosnia and Herzegovina: Technical Assistance Report-Government Finance Statistics
Description: This Technical Assistance Report discusses the findings and recommendations made by the IMF mission to assist the Ministry of Finance of the Republic of Srpska (RS), Bosnia and Herzegovina, in the compilation and dissemination of government finance statistics in accordance with the guidelines of the Government Finance Statistics Manual 2014 (GFSM 2014) and the European System of Accounts (ESA 2010). It was found that the chart of accounts used by the RS is very comprehensive and facilitates the bridging of the national codes to GFSM 2014 and ESA 2010 codes. Some amendments and extensions may be performed to further improve the bridging to GFSM 2014 and ESA 2010.
February 22, 2018
Bosnia and Herzegovina: Technical Assistance Report-Government Finance Statistics
Description: This Technical Assistance Report discusses the findings and recommendations made by the IMF mission about improving government finance statistics (GFS) for decision making in the Republic of Srpska (RS), Bosnia and Herzegovina. The future delineation of tasks and responsibilities in the Bosnia and Herzegovina GFS compilation process between the Agency for Statistics of Bosnia and Herzegovina (BHAS), Central Bank of Bosnia and Herzegovina (CBBH), Ministry of Finance RS, and Republic of Srpska Institute of Statistics is still open. The current TA can assist the RS authorities to compile aggregated RS level GFS data. Together with comprehensive methodological explanations, comprehensive process tables, and the free flow of GFS relevant data, this should allow CBBH and BHAS to compile consolidated data for Bosnia and Herzegovina.
February 22, 2018
Portugal: Sixth Post-Program Monitoring Discussions-Press Release; Staff Report
Description: This paper presents an overview of the Sixth Post-Program Monitoring Discussions with Portugal. The Portuguese economy has strengthened. Supported by a benign external environment, job-rich growth has gathered momentum since late 2016. The headline fiscal balance continued to benefit from stronger growth, controlled budget execution, and falling interest costs, with the 2017 deficit target of 1.4 percent of GDP likely to have been met with some margin. Financial stability has also improved with various bank capital augmentations and the sale of Novo Banco in 2017. Growth is projected at 2.2 percent in 2018. Downside risks in the near term are mostly external in nature and appear moderate.
February 22, 2018
Kyrgyz Republic: Fourth and Fifth Reviews under the Three-Year Arrangements under the Extended Credit Facility, and Request for Modification of Performance Criteria-Press Release; Staff Report
Description: This paper discusses Kyrgyz Republic’s Fourth and Fifth Reviews Under the Three-Year Arrangement Under the Extended Credit Facility, and Request for Modification of Performance Criteria (PCs). Program performance has been mixed. All end-December 2016 and end-June 2017 quantitative PCs, and all but three indicative targets (ITs) were met. The December 2016 IT on tax revenue, the continuous IT on introducing new or renewing existing tax exemptions, and the June 2017 IT on reserve money were not observed. Six structural benchmarks were missed, of which five were proposed to be postponed or modified at the time of the fourth review. Resuming the reform agenda and pursuing consolidation efforts are essential to allow growth to reach its potential over the medium term.