Country Reports
2023
September 13, 2023
West Bank and Gaza: Selected Issues
Description: This Selected Issues paper focuses on economic divergence in West Bank and Gaza. Years of isolation and continuous conflicts have left Gaza’s economic development far behind that of the West Bank. In 2022, per capita income in Gaza was only a quarter of that in the West Bank, and unemployment and poverty rates were much higher. This reflects much lower employment and investment rates as well as considerably lower productivity growth. While Israeli-imposed restrictions on access and movement of labor and goods severely hinder trade outcomes and productive capacity in both West Bank and Gaza, restrictions are far more severe for Gaza. As a result of this Gaza blockade and repeated wars with Israel since 2008, the capital stock is stagnant and infrastructure is derelict (especially electricity). Analytical work suggests sizeable economic gains from boosting Gaza’s electricity infrastructure. Prospects for declining donor aid risk worsening Gaza’s humanitarian crisis. Under these conditions, Gaza is unlikely to meet the U.N. 2030 Sustainable Development Goals. A major easing of the blockade and financing constraints is necessary to improve prospects, provided the security situation can be assured in parallel.
September 13, 2023
West Bank and Gaza: Report to the Ad Hoc Liaison Committee
Description: This paper focuses on West Bank and Gaza’s report to the ad hoc liaison committee. The outlook for the Palestinian economy remains dire, with risks tilted to the downside. Achieving higher growth and overcoming the fiscal crisis are intertwined objectives, requiring coordinated efforts from the Palestinian Authority, Israel, and the international donor community. This report elaborates on the transformative fiscal and structural reforms needed to improve the Palestinian living standards over the medium term. The report recommends consolidating the strong fiscal revenue performance and pursues ambitious expenditure reforms in a gradual and socially balanced way, first focused on the wage bill, health system, and net lending. It is also imperative to continue to try to engage the Government of Israel to achieve tangible outcomes to alleviate Israeli-imposed movement, access, and investment restrictions and to resolve the outstanding fiscal files, including Area C taxation. In addition, adopt reforms to further enhance the business climate, advance the digital transformation of the economy, and carry out critical energy infrastructure projects.
September 8, 2023
Cyprus: Technical Assistance Report–Strengthening the Governance and Oversight of State-Owned Enterprises
Description: This paper presents Cyprus’ technical assistance report on strengthening the governance and oversight of state-owned enterprises (SOE). Cyprus' government has implemented measures to enhance financial oversight and strengthen the governance of SOEs over several years. The ongoing reforms have already yielded positive results. Additional measures are needed to strengthen SOEs corporate governance and accountability practices. Establishing and regularly updating a consolidated inventory of public entities is essential to ensure SOE accountability. Good SOE governance requires a coordinated and sequential approach to reforms. Coordination among various stakeholders and decision makers is paramount and calls for developing and publishing a reform strategy with benchmarks to track progress. A SOE ownership policy should also be developed. This policy could outline the state's ownership rationale and define the roles and responsibilities of the institutions involved in SOE oversight and governance to provide clarity on the objectives and guidelines for effective ownership and management of SOEs. The policy should set clear accountability lines of respective agencies involved in the SOE ownership, governance, and oversight process. Their responsibilities would depend on the chosen ownership model the government will decide.
September 7, 2023
Bosnia and Herzegovina: 2023 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Bosnia and Herzegovina
Description: The 2023 Article IV Consultation highlights that Russia’s war in Ukraine continues to place significant headwinds on the European economy, with implications for Bosnia and Herzegovina (BiH). With a further slowing of activity in Europe and declining commodity prices, growth is projected to decelerate to 2 percent in 2023 and inflation to 6 percent. Growth will remain low at 3 percent and inflation will only gradually return to 2 percent in outer years. Downside risks are high and include a possible abrupt slowdown in Europe, an intensification of domestic political tensions, and the materialization of financial risks. Strengthening public enterprise oversight and governance, improving the business environment, and digitalizing the economy are key to accelerating private sector led growth. An immediate priority is to adopt a new anti-money laundering law. Urgent reforms are also needed to enhance corruption prevention and enforcement efforts. Increased efforts are needed to prepare for the introduction of the EU’s Carbon Border Adjustment Mechanism and to transition away from coal to green energy.
September 7, 2023
Trinidad and Tobago: Technical Assistance Report–Technical Assistance on Fintech Regulation and Legislation
Description: The paper presents Trinidad and Tobago’s technical assistance (TA) on fintech regulation and legislation. The impact of fintech in Trinidad and Tobago is currently concentrated in the payments sector. This report covers the three areas where TA was provided by the mission team. The current e-money framework and licensing process can be further enhanced. The report recommends that authorities should carry out a feasibility study with an aim of improving the JIH, but a RS should not be a priority. The authorities should also conduct an impact assessment for legal and regulatory reforms to assist them in the development of a strategy for crypto assets. An impact assessment should evaluate the costs and benefits of legal and regulatory action in the context of the relative importance of crypto assets activities in the country, and the existence of competing legislative and regulatory priorities. Other alternatives, such as a detailed legal regime, or using exemptions to accommodate the needs of new activities, present more disadvantages, such as the lengthy and cumbersome legislative process or the lack of a legal basis for the use of general exemptions.
September 6, 2023
Saudi Arabia: 2023 Article IV Consultation-Press Release; Staff Report; and Informational Annex
Description: The 2023 Article IV Consultation discusses that Saudi Arabia was the fastest growing G20 economy in 2022. The Saudi unemployment rate is at a historical low. Amid an increase in labor force participation, total unemployment dropped to 4.8 percent by end-2022—from 9 percent during Covid—reflecting both an increase in Saudi workers in the private sector and expatriate workers (mostly in the construction and agricultural sectors) rising back above pre-Covid levels. Non-oil gross domestic product growth momentum is expected to remain strong, as strong consumption spending and accelerated project implementation boost demand. Careful calibration of investment programs is needed to ensure catalytic effects and avoid crowding out the private sector. The industrial policy agenda should be supporting structural reform efforts, with guardrails put in place to minimize inefficiencies. Fully implementing the Green Initiative is necessary to help Saudi Arabia meet its net zero emissions target.
September 5, 2023
Republic of Lithuania: 2023 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the Republic of Lithuania
Description: The 2023 Article IV Consultation discusses that Lithuania weathered a series of unprecedented external shocks, owing to resilient macroeconomic fundamentals and a decisive policy response. The strong post-pandemic recovery led to demand driven inflationary pressures. Supply side bottlenecks and large increases in commodity prices after Russia’s invasion of Ukraine compounded these pressures and resulted in high and persistent inflation. With monetary conditions that are too loose for Lithuania, the onus to fight inflation and maintain competitiveness is on fiscal policy and structural reforms. Short-term policies should aim at reducing inflationary pressures and preserving financial stability. Long-term policies should focus on implementing long-overdue structural reforms that remain key to raising further the economy’s growth potential supporting faster income convergence with Western Europe. Fiscal policy needs to take a disinflationary stance. This will require a lower-than budgeted deficit this year, notwithstanding a weakening economy and a contractionary stance going forward in line with the domestic fiscal rule. The report recommends implementing long-overdue structural reforms to strengthen education and healthcare and to address risks associated with climate change. Utilize EU funds efficiently to enhance private sector productivity.
September 5, 2023
Jamaica: First Reviews Under the Precautionary and Liquidity Line and Under the Resilience and Sustainability Facility Arrangements-Press Release; Staff Report; and Statement by the Executive Director for Jamaica
Description: This paper highlights Jamaica’s First Reviews under the Precautionary and Liquidity Line (PLL) and under the resilience and sustainability facility arrangements. Jamaica’s commitment to macroeconomic stability and strong policy frameworks has allowed the country to navigate a difficult global environment. The authorities have continued to enhance fiscal, financial, and Anti-Money Laundering and combating the Financing of Terrorism (AML/CFT) policy frameworks, and are implementing an ambitious climate policy agenda. Entrenched macroeconomic stability and sound policy frameworks continue to support economic growth, allowing Jamaica to navigate a complex global environment. Important progress has been made on the fiscal reform agenda, including the reform of the public wage structure to eliminate distortions in the salary scale and to retain skilled workers, and improvements in the fiscal policy framework. Climate-oriented reforms of the fiscal framework, incentives for investments in renewables and the greening of the financial system can foster investor confidence and catalyze private climate financing.
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: This paper presents a regional report on Nordic-Baltic technical assistance project: financial flows analysis, Anti-Money Laundering and combating the Financing of Terrorism (AML/CFT) Supervision, and Financial Stability. The purpose of the project is to conduct an analysis of cross-border 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. The financial flows analysis presented in this report is based on the IMF staff’s analysis of cross-border payments data. Six out of the eight Nordic-Baltic countries have seen an increase in aggregate flows since 2013. Monitoring cross-border financial flows provides countries with a deeper understanding of their external ML threat environment and evolving cross-border related risks they are facing. Leveraging broader analysis of ML/TF cross-border risk, the Nordic-Baltic countries should develop their own understanding of higher-risk countries reflecting country-specific ML/TF threats.
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.