Country Reports
2023
July 20, 2023
Kingdom of Lesotho: 2023 Article IV Consultation-Press Release; and Staff Report
Description: The government-driven growth model remains a challenge for sustainable and inclusive growth in Lesotho, displacing resources from the private sector. Growth and inflation are subject to the impact of the war in Ukraine, sluggish regional performance, climate shocks, and longstanding structural issues including governance and corruption vulnerabilities, limited financial access, and fragile public financial management. The recently-elected government is prioritizing fiscal consolidation on the back of windfall transfers from the Southern African Customs Union (SACU) that have helped alleviate pressures on both financing and reserves.
July 19, 2023
Grenada: 2023 Article IV Consultation-Press Release; and Staff Report
Description: Grenada is simultaneously navigating the recovery from the pandemic and a rise in energy and food prices. Growth is estimated to have reached 6.4 percent in 2022, driven by a tourism rebound and private and public construction projects. Inflation rose from 1.9 percent at end-2021 to 2.9 percent by end-2022. The authorities’ policy response—facilitated by the build-up of fiscal buffers over the past decade—dampened the pass through from rising global food and fuel prices. Public debt is now back on a downward trend. The financial sector is well-capitalized and liquid although non-performing loans of credit unions have risen.
July 19, 2023
Euro Area Policies: 2023 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Euro Area; IMF Country Report No. 23/264
Description: The 2023 Article IV Consultation discusses that the euro area economy has shown remarkable resilience in the aftermath of Russia’s invasion of Ukraine and the largest terms of trade shock in several decades, thanks to a swift policy response and a strong rebound in contact-intensive services. Looking ahead, growth is expected to pick up gradually throughout 2023 and 2024, supported by a recovery in real incomes in the context of continued tight labor market conditions, a further easing of supply constraints, and firmer external demand, even as financial conditions continue to tighten. While headline inflation has fallen sharply recently after reaching record high levels, core inflation is proving more persistent. As tight financial conditions restrain demand and supply shocks dissipate further, inflation is set to decline further but is expected to remain elevated for an extended period. Renewed supply shocks, which could result from an escalation of the war in Ukraine and a related increase of commodity prices, or a further intensification of geoeconomic fragmentation, would also push up inflation and hurt growth. On the upside, the economy could again prove more resilient than expected, especially amid a still large stock of excess savings.
July 19, 2023
Kenya: Fifth Reviews Under the Extended Fund Facility and Extended Credit Facility Arrangements and Request for a 20-Month Arrangement Under the Resilience and Sustainability Facility, Requests for Extension, Rephasing, and Augmentation of Access, Modification of a Performance Criterion, Waiver of Applicability for Performance Criteria and Waiver of Nonobservance for a Performance Criterion, and Monetary Policy Consultation Clause-Press Release; Staff Report; and Statement by the Executive Director for Kenya
Description: The Kenyan economy faces multiple near-term challenges—including limited fiscal and external buffers, elevated cost of living, exchange rate pressures, tight financial conditions—while global headwinds are weighing on activity. Tackling these challenges and ensuring a steady reduction of Kenya’s debt and debt vulnerabilities will require addressing difficult policy trade-offs with mutually reinforcing policies and carefully prioritizing the authorities’ “bottom-up” reform agenda. Downside risks to the program baseline are significant in the near term from elevated uncertainty in major economies’ outlook and in the event of insufficient policy actions to sustainably address the FX market dislocation, elevated inflation, and emerging slowdown in tax revenues.
July 18, 2023
Cabo Verde: 2023 Article IV Consultation, Second Review Under the Extended Credit Facility Arrangement, and Request for Modification of a Performance Criterion-Press Release; Staff Report; and Statement by the Executive Director for Cabo Verde
Description: Cabo Verde’s medium-term outlook is positive, supported by the authorities’ policy package to respond to the evolving impacts of the war in Ukraine and their commitments to the recovery process and the ECF in a challenging environment. The economy rebounded strongly in 2022 with GDP growth of 17.7 percent, although average inflation increased to 7.9 percent at end-December 2022 driven by higher food, electricity, gas, and transportation costs. The new Strategic Plan for Sustainable Development 2022-2026 (PEDS II) sets the reform agenda to overcome challenges to sustainable development. The economy remains vulnerable to internal and external risks. In this context, the ECF will support the authorities’ plans towards economic and social progress, as well as the environmental challenges facing the country in its development process, while seeking to reduce debt levels and mitigate risks.
July 18, 2023
South Africa: Technical Assistance Report—Monetary and Financial Statistics (Duty Station-based) Mission (August 10–23, 2022); IMF Country Report No. 23/263
Description: The mission collaborated with SARB to ensure South Africa's monetary data adhered to international standards outlined in the 2016 Monetary and Financial Statistics Manual and Compilation Guide, including comprehensive coverage of other depository corporations (ODCs) sector.
July 18, 2023
Pakistan: Request for a Stand-by Arrangement-Press Release; Staff Report; Staff Statement; and Statement by the Executive Director for Pakistan
Description: Pakistan’s economy was buffeted by significant shocks over the past year. The severe impact of the floods, the commodity shock from the war in Ukraine, and the tightening of external and domestic financing conditions together with policy backsliding aggravated economic conditions and halted the post-pandemic recovery. Growth stalled, inflation surged, international reserves dropped to very low levels, and fiscal and external pressures have become acute. Despite some efforts in FY23H2, the difficult economic, social, and political environment as well as insufficient external financing, have prevented sufficient progress in completing the Extended Fund Facility (EFF) which expired on June 30. To address the challenges and sustain macroeconomic stability, the authorities have renewed their policy efforts, and are seeking support under a new Stand-By Arrangement.
July 17, 2023
Germany: 2023 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Germany
Description: The German economy has demonstrated resilience following the shut-off of Russian gas supply last year, with highly adverse scenarios of widespread energy scarcity being avoided. This success reflects impressive efforts to conserve energy and secure future energy supplies, as well as the lack of severe winter weather. Nonetheless, adverse effects from the energy shock and tighter financial conditions have been sufficient to tilt the economy into recession in recent months. Inflation also spiked as the energy price shock added to existing pandemic-related supply bottlenecks, though inflation is now falling as these effects start to ease. Germany’s financial system remains well capitalized and liquid overall, but banking turmoil in other advanced economies earlier this year has nonetheless heightened the focus on potential financial stability risks associated with rising interest rates.