Country Reports
2022
July 19, 2022
Kenya: Third Reviews Under the Extended Arrangement Under the Extended Fund Facility and Under the Arrangement Under the Extended Credit Facility, and Requests for Modification of Quantitative Performance Criteria, and Waiver of Applicability for Performance Criteria-Press Release; Staff Report; Staff Statement; and Statements by the Executive Director and by Staff Representative for Kenya
Description: This paper highlights Kenya’s Third Reviews under the Extended Arrangement under the Extended Fund Facility and under the Arrangement under the Extended Credit Facility, Requests for Modification of Quantitative Performance Criteria, and Waiver of Applicability for Performance Criteria. A strong recovery is underway, although global shocks due to spillovers from the war in Ukraine are creating new spending needs and adding to inflation pressures through rising global fuel, fertilizer, and food prices. Kenya’s program is delivering resilience by helping the country navigate these global shocks while still meeting the authorities’ targets and continuing to make progress in addressing debt vulnerabilities. Strong fiscal performance is providing a welcome resilience. Although the authorities are adjusting domestic fuel prices to international levels more gradually, program targets are still being met thanks to strong tax revenues. Maintaining the momentum in the authorities’ structural reform agenda is critical. Building on the ongoing efforts to improve the oversight of state-owned enterprises, it is essential to advance the restructuring of Kenya Airways and restore the long-term viability of Kenya Power and Lighting Company.
July 18, 2022
Republic of Congo: First Review under the Three-year Extended Credit Facility Arrangement, Requests for Modification of Performance Criteria, and Financing Assurances Review-Press Release; Staff Report; and Statement by the Executive Director for the Republic of Congo
Description: This paper presents Republic of Congo’s First Review under the Three-Year Extended Credit Facility (ECF) Arrangement, Requests for Modification of Performance Criteria, and Financing Assurances Review. Economic recovery is gaining momentum but remains fragile against the backdrop of the coronavirus disease 2019 pandemic and global consequences of the war in Ukraine. More vigorous economic activity is being held back by rising inflation, as global food and oil prices surge. Maintaining momentum in structural reforms and improving governance and transparency will be critical to attaining higher, more resilient, and inclusive growth. Key among these are reforms in public financial management, anti-corruption measures, and energy sector reforms. Fiscal policy will need to maintain the delicate balance between supporting a robust economic recovery while safeguarding debt sustainability. Part of the oil revenue windfalls should finance increased social assistance and tax deferrals initiated during the pandemic to help vulnerable businesses and households cope with high inflation. Policies under this ECF-supported program will continue to help reduce fragilities and place the Republic of Congo onto a path of higher, more resilient, and inclusive growth. It will also contribute to the regional effort to preserve external stability for the Central African Economic and Monetary Union.
July 18, 2022
Jordan: 2022 Article IV Consultation and Fourth Review Under the Extended Arrangement Under the Extended Fund Facility, Request for Augmentation and Rephasing of Access, and Modification of Performance Criteria-Press Release; Staff Report; Staff Statement; and Statement by the Executive Director for Jordan
Description: This paper discusses Jordan’s 2022 Article IV Consultation and Fourth Review under the Extended Arrangement under the Extended Fund Facility (EFF), Request for Augmentation and Rephasing of Access, and Modification of Performance Criteria. Jordan's EFF program remains firmly on track. The authorities have maintained macroeconomic stability and market access, while protecting the most vulnerable, and implementing key structural reforms, especially in the area of public finances. The IMF remains committed to supporting Jordan, including by augmenting access under the EFF to help address higher financing needs from higher international commodity prices and tightened global financial conditions. Donor support is critical to enable Jordan to cope with these global economic headwinds, while hosting 1.3 million Syrian refugees.
July 18, 2022
Jordan: Selected Issues
Description: This Selected Issues paper explores the main obstacles related to low female labor force participation in Jordan. Lack of access to safe and reliable public transportation can hamper labor market choices for women. Gender-based legal restrictions may also prevent women from participating in the labor market. The analysis concludes that structural variables and regulations are the main drivers of the gender gap in participation and employment outcomes in Jordan. Based on the regression results, there is a statistically significant relationship between the structural variables and regulations and the gap in both participation and employment. The results for Jordan are also compared with the Middle East and North Africa region. It finds that gender disparity in labor market participation in Jordan is not due to access to basic services such as education and health but is rather based on structural and legal impediments. Particularly, structural variables as well as regulations help explain the gap in participation rates between men and women.
July 15, 2022
Mauritius: Selected Issues
Description: This Selected Issues paper reviews the fiscal rules framework in Mauritius with a focus on the calibration of the debt and budget balance ceilings. The paper concludes that a new medium-term debt anchor could be up to 80 percent of gross domestic product (GDP) compared to the anchor of 60 percent of GDP repealed during the pandemic. Introducing a short-term operational rule based on the overall fiscal deficit ceiling of around 3 percent of GDP would help reduce debt from 99.2 percent of GDP in FY2020/21 to close to the anchor by FY2026/27. The revised debt anchor would better reflect Mauritius’ debt carrying capacity while supporting growth. However, the current level of debt stands well above the proposed anchor. A transition period could be considered during which the deficit would gradually decline from 7.6 percent of GDP in FY2021/22 to 3 percent of GDP in FY2026/27 and beyond. Debt sustainability risks should continue to be assessed on the IMF’s Debt Sustainability Assessment tools regardless of whether the debt anchor has been met.
July 15, 2022
Mauritius: Staff Report for the 2022 Article IV Consultation-Press Release; and Staff Report
Description: This 2022 Article IV Consultation discusses that Mauritius has been gradually recovering from the pandemic. Mauritius aspires to become a high-income country within the current decade. The authorities have laid out a development strategy centered on spurring innovation through skill development, technological upgrading, and improving the information and communication technologies infrastructure. Achieving these long-term goals will require macroeconomic stability, reducing risks from declining growth, surging debt, and rising inflation. Mauritius has been gradually recovering after successfully managing the health impact of the pandemic and timely vaccinating its population. Although many sectors have recovered to pre-pandemic levels, activity in tourism and related sectors remains subdued. The main economic challenge is to find a fine balance between supporting recovery and controlling inflation while starting to consolidate the fiscal position. The economy continues to recover following the sharp contraction in 2020 due to the pandemic, but it is faced with new challenges. This report recommends to embraces structural transformation supporting diversification and competitiveness to get Mauritius firmly on the path to a sustainable and resilient economy driven by knowledge and technology. Long-term priorities should include greater digitalization of the economy, and climate change adaptation and mitigation measures.
July 15, 2022
Ecuador: Fourth and Fifth Reviews under the Extended Arrangement under the Extended Fund Facility, Request for a Waiver of Nonobservance of Performance Criterion, Rephasing of Access, and Financing Assurances Review-Press Release; Staff Report; Staff Statement; and Statement by the Executive Director for Ecuador
Description: This paper presents Ecuador’s Fourth and Fifth Reviews under the Extended Arrangement under the Extended Fund Facility (EFF), Request for a Waiver of Nonobservance of Performance Criterion, Rephasing of Access, and Financing Assurances Review. Ecuador’s EFF-supported economic program aims to stabilize the economy, ensure fiscal and debt sustainability, expand the coverage of social assistance programs to protect the vulnerable, promote a transparent management of public resources, and lay foundations for sustainable and inclusive growth. The economy rebounded more strongly than expected in 2021 at 4.2 percent, bolstered by a well-executed vaccination campaign that allowed for a steady reopening of the economy. The recovery will continue in 2022, but at a more moderate pace of 2.9 percent. Inflationary pressures, mostly due to higher commodity prices, are expected to rise. The Executive Board approved the authorities’ request for a waiver of nonobservance of the end-December 2021 performance criterion on the overall balance of the budgetary central government and the oil derivatives financing account based on the corrective actions the authorities have already taken and have committed to take. Continued improvement in public financial management and advances in transparency and anti-corruption would strengthen efficiency and accountability of the public sector.
July 12, 2022
United States: 2022 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the United States
Description: This 2022 Article IV Consultation discusses that the United States (U.S.) has recovered quickly from the pandemic shock. The US economy has staged a strong recovery from the coronavirus disease 2019 (COVID-19) shock. The positive effects of unprecedented policy stimulus, combined with the advantages of a highly flexible economy, have been clear. Just over two years after the COVID-19 shock, the unemployment rate and other measures of labor force underutilization have returned to end-2019 levels and output is close to its pre-pandemic trend. The Federal Open Market Committee’s decision at its June meeting—to raise rates by 75 basis points and provide forward guidance around a path for the federal funds rate that peaks at close to 4 percent—strikes the right balance. This policy path should serve to create the up-front tightening of financial conditions that will be necessary to quickly bring inflation back to target. More determined action is needed to achieve the administration’s climate goals and to facilitate a smooth, speedy transition to a low carbon economy.
July 11, 2022
North Macedonia: Technical Assistance Report - Public Expenditure and Financial Accountability Performance Assessment
Description: This paper highlights North Macedonia’s Technical Assistance report on public expenditure and financial accountability (PEFA) performance assessment. This PEFA assessment provides a snapshot of the country’s Public Financial Management (PFM) system performance in order to support the government in defining PFM reform priorities. The assessment informed evaluation of the implementation of the PFM Reform Program 2018-2021, and preparation of a new reform program. The Public Financial Management Reform Program (PFMRP) is the key strategic document in the area of public financial management, which describes the planned reforms and set targets and indicators to measure implementation results. The Government completed the implementation of the PFMRP covering the period 2018-2021 and is in the process of preparation of a new program. A number of reforms have been implemented under the PFMRP 2018-2021, but the assessment identified further remaining areas for improvement. The assessment aims to inform the Government about the performance of its PFM system in line with the PEFA methodology, as well as to track the changes between the 2015 assessment and the current one.
July 8, 2022
Slovak Republic: Selected Issues
Description: This Selected Issues paper on Slovak Republic focuses on supply bottlenecks in 2021. With a shift in global consumer spending toward goods, shortages of inputs and labor and logistical bottlenecks, supply bottlenecks were a prominent feature of the 2021 economic landscape, slowing the pace of the recovery and pushing up inflation. Using an empirical approach to quantify the impact of supply and demand shocks, this selected issue paper finds that supply shocks had a particularly pronounced effect in Slovakia, exerting a sizable drag on industrial production, and contributing significantly to producer price inflation. We find that in 2021H2 in Slovakia, manufacturing output would have been 15 percent higher and 60 percent of the increase in manufacturing producer price inflation would not have occurred in the absence of supply bottlenecks. The greater vulnerability of the Slovak economy to supply bottlenecks is consistent with its sizable auto sector, specialization in downstream activities, and high degree of integration into global value chains. The findings suggest that Slovakia remains highly exposed to supply shocks if the disruptions experienced in 2021 were to persist in 2022 or be amplified by the war in Ukraine.