Country Reports
2024
August 26, 2024
Arab Republic of Egypt: Third Review Under the Extended Arrangement Under the Extended Fund Facility, Monetary Policy Consultation Clause, Requests for Waivers of Nonobservance of a Performance Criterion and Applicability of Performance Criteria, and Request for Modification of Performance Criteria-Press Release; and Staff Report
Description: Policy actions taken in March as part of a strengthened program package, including unification of the exchange rate and a significant increase in the policy rate, combined with the augmentation of the Extended Fund Facility (EFF) Arrangement, the recent investment deal with Abu Dhabi Development Holding Company (ADQ) and the announcement of financing from the European Union, the World Bank, and other international partners, improved FX liquidity and helped restore confidence. Inflation has started to fall, though remains elevated, and there are signs that the three-and-a-half-year contraction of private sector activity is reversing.
August 13, 2024
Indonesia: Financial Sector Assessment Program-Detailed Assessment of Observance-Basel Core Principles for Effective Banking Supervision
Description: The Financial Services Authority (OJK) has made substantial progress in updating its regulatory and supervisory frameworks since the last Financial Stability Assessment Program (FSAP) in 2017. The OJK has strengthened its regulatory framework, implementing the Basel III post-crisis reforms. The recently enacted Financial Sector Omnibus Law (FSOL) enhances the OJK’s institutional set-up, powers, banking regulation and supervisory frameworks and clarifies the Financial System Stability Committee’s (KSSK’s) mandate for systemic risk monitoring and coordination. The OJK has developed supervision capabilities and deployed innovative Supervisory Technologies (SupTech) to achieve greater efficiency in banking supervision. New regulations on corporate governance have elevated the importance of good governance within the banking industry. While progress has been made, the OJK must continue intensifying its efforts, considering emerging challenges in the global economic and financial environment and new risks from digitalization, cyber and climate change.
August 8, 2024
Indonesia: Financial Sector Assessment Program-Financial System Stability Assessment
Description: The financial system appears to be broadly resilient, has strong capital and liquidity buffers but remains relatively small and dominated by banks, especially few state-owned banks. Household and corporate indebtedness and public debt are low. The macroprudential policy framework features both financial stability and development objectives. The recently passed Financial Sector Omnibus Law (FSOL) will make notable reforms to the financial sector.
August 7, 2024
Indonesia: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Indonesia
Description: Indonesia’s growth remains strong despite external headwinds. Inflation is firmly in the target range and the financial sector is resilient. The authorities have been pursuing an ambitious growth agenda to reach high-income status by 2045. This comprises public spending, institutional reforms, and Industrial Policy (IP). Risks are broadly balanced. Key downside risks include persistent commodity price volatility (e.g., from geopolitical shocks), an abrupt slowdown in Indonesia’s key trading partners, or adverse spillovers from tighter-for-longer global financial conditions. On the domestic side, a weakening of long-standing sound macro-fiscal frameworks could hamper policy credibility. On the upside, stronger-than-anticipated growth in trading partners or faster disinflation in AEs could prop up growth while deep structural reforms would raise growth over the medium term.
August 5, 2024
Guatemala: 2024 Article IV Consultation-Press Release; and Staff Report
Description: Guatemala's economy continues to grow at its potential given existing constraints, with inflation within the monetary policy’s target. While political risks remain latent, Guatemala maintains its long-standing track record of macroeconomic stability and prudent policies anchored in a low-growth equilibrium. The country has accumulated large buffers, with large remittance inflows and low-deficit policies. Meanwhile, the country faces important challenges, but the fragmented political landscape in Congress, following the 2023 general election, gives limited space to pass a reform agenda to address its long-standing vulnerabilities—i.e., chronic infrastructure, human capital, and social gaps; low tax revenue and gaps in public spending efficiency and transparency; weak governance, corruption, and weak institutions. The window of opportunity to advance is narrowing. In April, S&P upgraded Guatemala's outlook to positive from stable, while maintaining its BB rating.
August 2, 2024
Hungary: 2024 Article IV Consultation-Press Release; and Staff Report
Description: Hungary is emerging from a period of shocks. The pandemic, Russia’s war in Ukraine, and crisis-related stimulus widened fiscal and external imbalances and triggered double-digit inflation in 2022. Thanks to an effective monetary policy response aided by falling commodity prices and a tighter fiscal stance in 2023, inflation came down significantly, while the labor market and financial sector remained resilient. A large current account deficit in 2022 turned into a surplus, and output is starting to recover. However, significant challenges remain. The fiscal deficit and public-debt-to GDP ratios are well above 2019 levels, and various windfall taxes have created investor uncertainty. Interest rate caps and subsidized lending measures have distorted market rates, and a significant state presence in key sectors impedes competition.
August 2, 2024
People’s Republic of China: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the People’s Republic of China
Description: After four decades of high growth and remarkable socioeconomic achievements, China’s growth has decelerated in recent years, reflecting the pandemic, a large but needed property market correction, and structural headwinds such as weakening productivity and labor force growth. The transition to lower growth is consistent with the authorities’ goal to pursue high-quality growth and reduce the imbalances and vulnerabilities that have emerged, most notably with the significant build-up of debt. The authorities have taken incremental policy steps to achieve these objectives, but a comprehensive and balanced policy approach is needed to manage the challenges facing the economy.