Country Reports
2023
September 4, 2023
Nordic-Baltic Regional Report: Technical Assistance Report-Nordic-Baltic Technical Assistance Project Financial Flows Analysis, AML/CFT Supervision, and Financial Stability
Description: Recent money laundering cases have exposed financial integrity risks from cross-border payments and potential impact on financial stability to the integrated Nordic-Baltic financial sector, attracted international scrutiny of anti-money laundering and combating the financing of terrorism (AML/CFT) supervision throughout the region, and so accelerated the momentum for reform. The purpose of the project is to conduct an analysis of cross-border money laundering (ML) threats and vulnerabilities in the Nordic-Baltic region – encompassing Denmark, Estonia, Finland, Iceland, Latvia, Lithuania, Norway, and Sweden (the Nordic-Baltic Constituency or NBC) – and issue a final report containing recommendations for mitigating the potential risks.
August 31, 2023
Botswana: 2023 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Botswana
Description: The 2023 Article IV Consultation highlights that following a strong recovery of almost 12 percent growth in 2021, Botswana’s economy grew by 5.8 percent in 2022, significantly above the long-run average of 4 percent. The authorities plan a fiscal expansion in FY2023 followed by two years of substantial fiscal adjustment to reach a small fiscal surplus by FY2025. Growth is expected to slow in 2023 due to a projected decline in diamond production, with the weaker global environment likely to depress other exports. Inflation has fallen since August 2022, returning to the central bank’s objective range. The authorities plan a fiscal expansion in FY2023 followed by two years of substantial fiscal adjustment to reach a small fiscal surplus by FY2025, but implementation risks are elevated. Structural transformation of the economy aims at diversifying production, increasing the relative size of the private sector, and enhancing resilience to external shocks.
August 31, 2023
Botswana: Selected Issues
Description: This Selected Issues paper discusses reforming the state-owned enterprises (SOE) sector in Botswana. The authorities are committed to diversifying the economy and growing the relative size of the private sector but, until now, progress has been limited. Compared to other emerging markets, SOEs operate in similar industries but government ownership is considerably higher in Botswana. The authorities are taking steps to liberalize some sectors, as part of efforts to enhance productivity and improve market functioning. Two entities are involved in the oversight and monitoring of SOEs, potentially creating risks of overlap and duplication. A review of past country experiences with SOE reforms highlights several key ingredients for success. A favorable political environment combined with strengthened state oversight and monitoring functions. Several countries now subject SOEs to competition law, compensating them for public service obligations, requiring them to separate the accounts of commercial and noncommercial activities, setting guidelines for financing decisions, or establishing financial performance targets.
August 31, 2023
Lao People’s Democratic Republic: Technical Assistance Report-Regulation and Supervision of Crypto Assets
Description: This technical assistance report describes the regulation and supervision of crypto assets in Lao People’s Democratic Republic (LAO P.D.R.). Crypto uptake in Lao P.D.R. seems to be limited so far, and so consumer protection risks appear contained. The authorities are in the process of considering an appropriate regulatory and supervisory framework for mining and trading activities. The current regulatory framework for crypto trading platforms is a positive step to managing risks but would benefit from key prudential and conduct additions. Authorities should continue their efforts to coordinate domestically and cooperate with foreign peer regulators. Due to the novelty of the industry and the limited size of the Lao PDR market, the most prominent risks arising from crypto trading in the short term are likely to be generated by complex interconnections within crypto markets and broader financial markets. The mission commends the authorities in their coordinated approach to this new regime, and would like to encourage them to continue deepening that coordination.
August 30, 2023
Haiti: Staff-Monitored Program-Press Release; and Staff Report
Description: This paper presents Haiti’s Staff-Monitored Program (SMP). Building on progress achieved under the previous SMP, which was satisfactorily concluded in May 2023, the new 9-month SMP should contribute to macroeconomic stability by helping Haiti sustain recent policy reforms designed to enhance economic resilience and governance. Haiti faces a challenging macroeconomic outlook amid a dire humanitarian crisis. The country has been hit hard by economic spillovers from Russia’s invasion of Ukraine, including food price inflation that has triggered a hunger crisis. This global shock has been compounded by a highly volatile security situation in Haiti, which has heightened the economy’s fragility. The authorities have also recently made a formal request for an IMF Governance Diagnostic, which is a very welcome development and will help Haiti solidify the early improvements achieved during the recently concluded SMP. The diagnostics are designed to help inform governance and anti-corruption strategies, including sequencing of reforms.
August 29, 2023
Singapore: 2023 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Singapore
Description: The 2023 Article IV Consultation highlights that Singapore’s post-pandemic recovery is nearly complete. Strong economic fundamentals and the authorities’ decisive policy responses, including an unprecedented policy stimulus, supported a rapid recovery from the coronavirus disease 2019 shock. Macro policies are appropriately tight to moderate price pressures in 2023. The Monetary Authority of Singapore tightened monetary policy under its unique framework five consecutive times since October 2021, and has paused so far in 2023, given negative imported inflation and projected below-trend growth this year. Should downside risks materialize, Singapore can continue to deploy its ample fiscal buffers to cushion the economic impact, with targeted fiscal support continuing to be the first line of defense. In a downside scenario where high inflation is combined with severe strains in financial markets, the pace of tightening would need to be adjusted to avoid a broadening of financial stability concerns.
August 28, 2023
Colombia: Technical Assistance Report—Assessment of Financial Stability Report
Description: This technical assistance report focuses on Assessment of Financial Stability Report (FSR) in Colombia. The FSR of the Banco de la República of Colombia (BR) provides broad coverage of macroeconomic environment and the assessment of risks in the financial system. The current structure of the FSR appears to work well in covering a range of relevant risks and vulnerabilities as well as topical issues, but there is room for evolution. Efforts to expand forward-looking analyses should continue, including stress testing and sensitivity analyses of the corporate and household sectors and on interconnectedness. A layered communication approach would help adapt the key messages of the FSR to audiences with different levels of expert knowledge and interest. There would be clear gains in deepening the understanding of the channels and interaction between financial stability and monetary policy as the financial system continues to evolve. Enhancing knowledge sharing between staff working on financial stability and monetary policy and further improving information about the sensitivity of various vulnerabilities in the FSR would help monetary policy decision makers, which in turn may have a positive feedback effect on financial stability.
August 28, 2023
New Zealand: Selected Issues
Description: This Selected Issues paper on New Zealand discusses addressing climate change. projections suggest the gap between New Zealand’s emissions targets and the projected path have narrowed significantly though more needs to be done if the Nationally Determined Contribution for 2030 is to be met. Three critical policy initiatives were introduced in 2022: the first Emissions Reduction Plan and associated emissions budgets were adopted; the National Adaptation Plan was published; and the government proposed its framework for pricing agriculture emissions, which account for around 62 percent of net emissions and are the missing piece in the emissions pricing framework. However, policies intended to address the cost-of-living crisis such as cuts to fuel taxes and duties could have an adverse impact on the feasibility of New Zealand’s emissions targets if prolonged. The heightened policy uncertainty was reflected in carbon prices: after peaking in November 2022, the price in the secondary market declined sharply and the June 2023 average price was around 40 percent below the peak level. The March 2023 Emissions Trading Scheme (ETS) auction failed to clear, resulting in no new units being released. This is a cause for concern: If falling prices are not arrested, the envisaged emissions reductions may be out of reach. Further, as proceeds from the ETS auctions are intended to be used to support climate investments, shortfalls could put these at risk.
August 28, 2023
New Zealand: 2023 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for New Zealand
Description: The 2023 Article IV Consultation discusses that New Zealand’s economy is in the midst of a necessary, policy-induced slowdown following the strong post-pandemic recovery. With exemplary management of the pandemic, New Zealand recovered faster than most other advanced economies. The economy is expected to continue on its slow growth as monetary tightening takes hold. The bulk of the impact of the rate hikes will be felt in 2023 and 2024 given the usual lags in transmission. Risks to the outlook stem from the external environment and a potential need for stronger tightening of monetary and financial conditions. Global developments relating to growth, deepening geo-economic fragmentation, and financial stability shocks can significantly alter the baseline assumptions for New Zealand. The economy is likely to continue its slow growth in the near term as monetary tightening continues to take hold. Inflation will likely decline but remain above target in 2024, with new discretionary spending adding to pressures. Risks stem mainly from policy missteps, housing market developments, and global spillovers.
August 25, 2023
Argentina: Fifth and Sixth Reviews Under the Extended Arrangement Under the Extended Fund Facility, Request for Rephasing of Access, Waivers of Nonobservance of Performance Criteria, Modification of Performance Criteria and Financing Assurances Review-Press Release; Staff Report; and Statement by the Executive Director for Argentina
Description: Since completion of the fourth review, Argentina’s economic situation has become increasingly fragile with episodes of heightened market volatility, reflecting more recently political uncertainties. While the historic drought has resulted in larger than expected losses to agricultural production, exports, and fiscal revenues, non-agricultural activity has been resilient, reflecting robust domestic demand, in part a result of policy slippages. Inflation and external pressures have intensified, with reserves falling to dangerously low levels on account of the drought and insufficient policy adjustment. Policy slippages reflected in part political constraints and electoral considerations. During the August 13 open primary elections (PASO), the libertarian party (Libertad Avanza) received the highest share of votes (30.0 percent), followed by the opposition coalition (Juntos por el Cambio, 28.3 percent) and the governing coalition (Unidos por la Patria, 27.3 percent). The general elections are scheduled to take place on October 22, with a run-off on November 19, if needed. A new administration will assume office in early December.