Country Reports
2024
September 19, 2024
Bhutan: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Bhutan
Description: The 2024 Article IV Consultation highlights that Bhutan achieved significant improvements in social conditions during the last decade, raising living standards. Poverty and inequality have declined, while extreme poverty has been eliminated. Growth is projected to accelerate over the medium term as a large hydro-project is commissioned and capital spending is boosted with the support of external grants. Pull factors are expected to slow down emigration, thereby reducing pressures on the supply side. A gradual fiscal consolidation based on revenue mobilization and accompanied by some spending restraint is needed to increase fiscal space and to reduce reliance on external grants in the longer term. Structural policies should focus on fostering high-quality private sector jobs, as well as diversifying exports. There is scope to strengthen the Royal Monetary Authority’s governance framework, as well as to step up anti-money laundering/countering the financing of terrorism efforts. Improvements in data quality have been significant, but further actions are needed to address remaining weaknesses. These include a need for greater transparency on crypto assets operations.
September 18, 2024
Norway: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Norway
Description: The 2024 Article IV Consultation discusses that boosting labor supply, containing public expenditure pressures, and raising productivity will be required for Norway to be able to continue its strong economic performance and preserve its welfare model. A recent White Paper by the Ministry of Finance rightly raises these key issues facing Norway’s economy in the longer term. Real gross domestic product growth slowed in 2023 and is expected to gradually rebound in the near term as private domestic demand strengthens supported by higher real incomes. Tight macroprudential policies should remain in place to mitigate systemic vulnerabilities. The financial system appears resilient and banking system buffers are strong. Long-term fiscal challenges should be more forcefully addressed. Norway has the largest proportion of the population on disability-related benefits among the organisation for economic co-operation and development countries, and reforming costly and distortionary social benefit systems is possibly the most important and politically difficult reform pending. Although Norway boasts one of the highest levels of labor productivity among its peers, it has slowed faster than in other countries. To reverse this trend, conditions should be improved to facilitate sectoral reallocation as well as innovation and technology adoption.
September 17, 2024
Kingdom of the Netherlands-Curaçao and Sint Maarten: 2024 Article IV Consultation Discussions-Press Release and Staff Report
Description: The 2024 Article IV Consultation presents that Curaçao and Sint Maarten have continued to experience a vigorous post-pandemic recovery underpinned by strong stayover tourism, which is outperforming Caribbean peers. Headline inflation has declined rapidly led by international oil price developments, notwithstanding a recent uptick, while core inflation remains elevated. In both countries, current account deficits improved markedly from pandemic years but remain high. Fiscal positions remained strong and in compliance with the fiscal rule. Growth is expected to accelerate in 2024 before gradually converging to its potential over the medium term. Stayover tourism supported by fiscal expansion is projected to drive economic growth at a robust 4.5 percent in 2024 due to new airlifts and further expansion in hotel capacity. Both countries need more public investments and strategies to improve tourist experience and enhance tourism’s value added, including adequate infrastructure to allow for timely ground transportation and continued efforts to improve the quality of services provided.
September 16, 2024
Guinea-Bissau: Sixth Review Under the Extended Credit Facility, Request for a Waiver of Nonobservance of Performance Criteria, and Financing Assurances Review-Press Release; Staff Report; and Statement by the Executive Director for Guinea-Bissau
Description: This paper presents Guinea-Bissau’s Sixth Review under the Extended Credit Facility (ECF), Request for a Waiver of Nonobservance of Performance Criteria, and financing assurances review. The authorities’ commitment to a range of challenging policy reforms is starting to show some results. They should persevere with their ambitious structural reform agenda to improve domestic revenue mobilization, strengthen expenditure controls, and enhance governance. Economic growth is expected to reach 5 percent in 2024, while inflation should slow to 4.2 percent compared to 7.2 percent in 2023. However, the economic outlook remains subject to significant near-term risks. Fiscal consolidation remains critical to reduce vulnerabilities and ensure debt sustainability and macroeconomic stability. This should be underpinned by strict rationalization of nonpriority expenditure and revenue mobilization. The authorities are implementing structural reforms which are pivotal to the program’s success. Urgent actions should be taken to mitigate fiscal risks from the public utility company. The authorities should also continue advancing the disengagement of the undercapitalized bank, including through contingency planning.
September 13, 2024
Denmark: Selected Issues
Description: This Selected Issues paper discusses the macroeconomic impact of the pharmaceutical sector. The analysis focuses on Novo Nordisk, the leading pharmaceutical company in Denmark, and its productivity impact on the rest of the economy. Empirical evidence suggests only weak correlations between productivity shocks at Novo Nordisk and overall economic growth, as well as between Novo Nordisk’s productivity and that of other firms. The findings suggest there is limited risk that Denmark’s booming pharmaceutical company would become its “Nokia.” Although the pharmaceutical sector will be a key driver of growth, most of its production occurs overseas under Danish ownership. As a result, its linkages with the rest of the domestic economy, in terms of employment and supply chains, are somewhat limited. The empirical results also indicate limited spillover effects through productivity channels. However, the empirical results may underestimate the influence of Novo Nordisk due to limited data.
September 13, 2024
Denmark: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Alternate Executive Director for Denmark
Description: The 2024 Article IV Consultation highlights that The Danish economy has continued to expand at a robust pace, driven by an exceptional surge in the pharmaceutical. In contrast, the rest of the economy has remained relatively subdued, aside from the maritime and information and communication technology industries, reflecting sluggish demand. Meanwhile, with a decline in global energy prices and lacklustre domestic demand, inflationary pressures have largely dissipated in recent months. The policy priority is to manage fiscal policy in a manner consistent with near-term cyclical conditions while taking account of long-term spending pressures without risking fiscal sustainability. Other priorities include ensuring financial stability and pursuing structural reforms to lift potential growth and achieve climate goals. The financial system remains sound, but risks remain. Continued reform efforts are necessary to boost labor supply and enhance productivity, aiming to sustain the welfare state. Reform priorities include enhancing work incentives, addressing skill mismatches by accepting more foreign talent, modernizing active labor market policies, and enhancing education outcomes for children with immigrant backgrounds. Further actions are necessary to achieve climate mitigation targets and prepare for climate change.
September 13, 2024
Dominican Republic: 2024 Article IV Consultation-Press Release and Staff Report
Description: The 2024 Article IV Consultation explains that a track record of sound policies and institutional policy frameworks has helped the Dominican Republic achieve robust and resilient economic growth and low inflation over the last two decades. Effective policies contributed to a growth moderation that appropriately supported inflation’s rapid and sustained return to its target last year and then aided the recovery, while close monitoring of the financial sector supported macro-financial stability. Planned enhancements to policy frameworks and deepening structural reforms—in particular, comprehensive fiscal and electricity reforms—have the potential to further support stability, competitiveness, and inclusive growth. The financial sector remains resilient and well capitalized, and efforts to bring the regulatory framework up to the latest international standards should continue. The fiscal policy framework and spending and revenue efficiency can be further enhanced by continued improvements to public financial management and further strengthening of revenue administration. Reforms to education and the labor market, alongside further improvements to social outcomes and implementation of climate adaptation and mitigation policies will be critical to support inclusive and resilient growth and continue to reduce vulnerabilities.
September 11, 2024
Kingdom of Lesotho: Selected Issues
Description: This Selected Issues paper delves into few applications of machine learning (ML), with a particular application to economic forecasts in Lesotho. Amid delayed and often revised gross domestic product data, this paper explores the potential of ML to provide real-time insights into growth and inflation trends, crucial for informed policymaking. By leveraging nontraditional data and employing a variety of ML models, the paper presents a comprehensive analysis of current economic activity, evaluates the accuracy of standard statistical measures, and forecasts future inflation trends. The findings underscore the efficacy of ML in reducing prediction errors and highlight the significant role of alternative data in circumventing the limitations posed by traditional economic indicators. This paper contributes to the broader debate on the application of advanced computational techniques in economic forecasting, offering valuable insights for policymakers in Lesotho and similar countries grappling with data constraints and the need for timely economic analysis.
September 11, 2024
Uganda: Selected Issues
Description: This Selected Issues Paper analyzes potential macro-financial risks from cross-sectoral exposures in Uganda by leveraging on the Balance Sheet Approach framework. It presents evidence on the macro-financial linkages in Uganda using the Network Map and Financial Input-Output approaches. On the one hand, the Network Map analysis shows the cross-sectoral exposures in which potential build-up of macro-financial vulnerabilities may arise. On the other hand, the Financial Input-Output tool simulates relevant scenarios in the context of Ugandan economy such as currency depreciation and increases in government interest payments on debt held by banks. The purpose of the scenario exercises is to strengthen the monitoring of the developments in key economic sectors in Uganda. While the banking sector, which dominates the Ugandan financial system, remains fundamentally sound, there are pockets of vulnerabilities resulting from the growing sovereign-bank nexus and cross-border exposures of the Near Field Communication technology sector which require close vigilance.