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This Selected Issues paper examines civil service employment and reform in Togo. The paper analyzes overall developments in civil service employment and wages. It looks in some detail at employment in the health and education sectors, which together account for almost two-thirds of the civil service, and identifies some of the key problems that also apply to personnel management in other areas. The paper identifies some of the major problems facing civil service management in Togo, and examines the revitalized reform efforts intended to resolve them. Public enterprise reforms in Togo are also examined.

This 2016 Article IV Consultation highlights that St. Vincent and the Grenadines’ recovery from the global financial crisis was hampered by a series of natural disasters, sluggish global demand, and slow implementation of key infrastructure projects. Economic activity appears to have recovered in 2015, led by strong tourism inflows and a rebound in construction. Inflation has trended down owing to falling food and fuel prices. The new airport, now foreseen for completion in 2016, is expected to sustain the near- and medium-term economic growth. Real GDP is projected to expand by 2.2 percent in 2016 and reach 3.1 percent over the medium term.

This paper discusses key findings of the Second Post-Program Monitoring Discussions with Portugal. Portugal’s economic recovery remains on track in 2015, boosted by rising exports and consumption, together with a recent upturn in investment. Real GDP expanded by 1.5 percent (year-over-year) in the first quarter, and is projected to increase 1.6 percent for the full year. A more forceful approach to corporate debt work-outs is needed to accelerate the structural transformation of the economy. The authorities should be proactive in putting in place a coordinated approach to debt work-outs to restructure the debts of viable firms, and move forward with liquidation of those that are no longer viable.

EXECUTIVE SUMMARY The economy is recovering and the outlook is favorable but still subject to significant risks. After slowing to below 2½ percent in 2014, growth is expected to be close to 5 percent in 2015, boosted by a strong agricultural output and a gradual acceleration of activity in other sectors. Fiscal policy is on track to achieve the annual deficit objective of 4.3 percent of GDP. The external position has improved rapidly, benefiting from lower oil prices and strong export performance. Inflation remains low. However, more remains to be done to reduce unemployment, especially among the youth. Assuming steadfast implementation of reforms, growth should gradually accelerate over the medium term. However, the outlook remains subject to the risks of a structurally weak growth in key advanced economies, tighter or more volatile global financial conditions, and increased volatility of energy prices. Important progress has been made on key reforms; sustaining these efforts will be important to foster higher and more inclusive growth. Significant progress was made in reforming the subsidy system, thereby reducing its costs and associated fiscal risks. At the same time, social programs on health and education were expanded. The adoption of the new organic budget law in May 2015 was a crucial step in improving the fiscal framework, while progress has also been made in upgrading the financial policy framework. Timely reform of the pension system is needed to ensure its viability while extending its coverage. Sustaining efforts to improve the business environment, competition, governance and transparency, as well as the functioning of the job market and the quality of education and vocational training, will also be important for increasing competitiveness, growth, and employment. The program remains on track and Morocco continues to meet the PLL qualification criteria. Both March 2015 quantitative indicative targets were met comfortably. Morocco continues to perform strongly in three out of the five PLL qualification areas, while not substantially underperforming in the fiscal and external areas. Staff recommends the completion of the second review under the arrangement.

This paper discusses St. Kitts and Nevis’ Fifth and Sixth Reviews under the Stand-By Arrangement (SBA), Request for Waiver of Nonobservance of Performance Criterion (PC) and Request for Waiver of Applicability. All fiscal program targets were met through the end of March 2013, partly thanks to strong receipts from the Citizenship by Investment program. However, the continuous PC on the nonaccumulation of government and guaranteed external arrears was missed by a minor amount because of temporary delays in payments. Three structural benchmarks were met at the end of December 2012 and the end of March 2013, while two benchmarks were met with delay. The IMF staff supports the authorities’ request for the completion of the fifth and sixth reviews under the SBA and the waiver of applicability.

This Selected Issues paper on the Republic of Poland constructs a financial conditions index for Poland to explore the link between financial conditions and real economic activity. Measures to contain the fiscal deficit in the aftermath of the global financial crisis led to a reduction in the headline deficit from 7.9 percent of GDP in 2010 to 3.9 percent in 2012. The authorities plan to implement a permanent fiscal rule. This would complement existing public debt limits, which have proven useful but insufficient in the past. Regarding mechanism design, the authorities have expressed their preference for a simple expenditure rule, on grounds of transparency, predictability, and ease of implementation across budgetary units.

This paper presents details of Austria’s 2013 Article IV Consultation. Austria has been growing economically but is facing challenges in the financial sector. Full implementation of medium-term fiscal adjustment plans require specifying several measures and plans that need gradual strengthening to take expected further bank restructuring cost into account. It suggests that strong early bank intervention and resolution tools, a better designed deposit insurance system, and a bank-financed resolution fund would help reduce the need for budgetary support to any troubled banks in the future.

Portugal's program implementation is on track despite difficult economic conditions and significant legal challenges. The markedly weaker economic outlook provides a strong case for recalibrating the program’s fiscal targets. This strong adjustment effort needs to be consolidated by sustained fiscal structural reforms. Continued vigilance is warranted to secure financial stability. A more competitive economy for sustainable recovery requires addressing nominal rigidities forcefully. Program success also hinges on continued external support and effective crisis management policies at the euro area level.

This 2011 Article IV Consultation reports that the vulnerability of Belgium’s sovereign debt to market pressures makes credible medium-term fiscal consolidation a priority. The 2012 budget includes sizable consolidation measures, and the government is committed to take additional measures as needed with the aim of reaching structural balance by 2015. In light of the weak growth prospects, automatic stabilizers should be allowed to operate freely around the consolidation path. There is a need to strengthen banking supervision and to implement the Basel III and Solvency II regulatory frameworks.

The Japanese economy has shown robust growth after the March 2011 Great East Japan earthquake. Post-earthquake, Japan has had to deal with devastating human toll and destruction, while businesses and households have had to recover from the losses. Exports were impacted by supply chain disruptions, weak global demand, and an appreciation of the yen. The Executive Board noted, however, that despite a weak global demand, the Japanese economy has shown remarkable resilience to severe economic distress and moderate market shocks.

This paper presents findings of the Fifth Review of Djibouti’s economic performance under the extended credit facility (ECF) arrangement. The drought in Djibouti has worsened water scarcity, reduced agricultural production and cattle stock, and accelerated refugee inflows. The authorities have requested an augmentation of access under the ECF of 60 percent of quota. As a result of exogenous shocks, financing needs for 2011–12 are expected to be higher than previously projected, despite the pledges from the international community to help Djibouti address the impact of the drought.

Belgium’s impressive past fiscal consolidation is an example for other countries that need to bring down their public debt and also provides insights on how best to address its own current fiscal challenges. Belgium has a unique history of a long and successful large fiscal consolidation. Belgium lived through various episodes of fiscal adjustment and each one of these contains important lessons for future consolidation. After Belgium’s public debt-to-GDP reached a peak of about 135 percent in 1993, it was steadily reduced to about 84 percent by 2007.

After a moderate recovery in 2010–11, the Samoan economy has shown signs of slowing down amid rising inflation. After two consecutive years of contraction, real GDP has expanded by 2 percent in 2010–11. The Central Bank of Samoa has maintained an accommodative monetary policy to support economic activity. However, continued structural reforms are required to lift Samoa’s economic growth and to ensure financial stability. Considerable progress has been made in tapping customary land for productive use.

This paper is a report of Nicaragua’s performance under the 2007–11 program. The period was marked by a stern financial crisis, price shocks, and disasters, but the program maintained the macroeconomic stability. Although the program had several hurdles, its achievements were remarkable—approval of tax reforms, improvements in banks' framework, power and electricity framework, dwindled poverty rate, and strong foreign relations. Overall, the Board is in high spirits in the triumph of the program in a critical situation though it had some flaws.

Japan’s position is one of the largest and richest economies in the world. Tokyo as a financial marketplace is not a major intermediator of global capital flows. The current macroeconomic environment is conducive to spillovers being larger than captured by the empirical analysis. Apart from heading off tail risks, fiscal consolidation in Japan would have medium to long-term benefits for its partner countries. Exchange rate-related spillovers on foreign financial markets are found to be small and depend partly on policy developments abroad.

Canada has experienced drastic changes in its economy during the global financial crisis. This Selected Issues paper discusses the evolution of equilibrium real home prices in key Canadian provinces in the post-crisis period, Canadian dollar movement during and after the global financial turmoil in line with other world currencies, assessment of impacts on Canada’s potential growth, development of Canadian automotive sector—namely, NAFTA partners during the crisis, and the role of Canada Mortgage and Housing Corporation (CMHC) in Canada’s housing market.

Nicaragua's economic performance in 2010 was satisfactory. Real GDP grew, supported by strong consumption and investment. Bank credit started recovering while the financial system remained liquid and profitable. Exchange-rate and monetary policy have contributed to macroeconomic stability. The authorities plan to improve public financial management and also to adopt a legal framework and remain committed to contain the macroeconomic risks from external aid flows. They also welcomed the sixth review and Financing Assurances under the Extended Credit Facility (ECF) arrangement.

The Czech economy has rebounded from the downturn owing to its strong fundamentals and the global recovery. Domestic demand has become self-sustaining since mid-2010. Fixed investment grew moderately in the second half of 2010, mostly on account of one-off factors. GDP has grown by 2.3 percent in 2010. Despite accommodative monetary policy, inflation pressures remained subdued until the recent surge in commodity prices. The virtually foreign-owned banking system has been stable throughout the crisis. Fiscal consolidation has commenced in 2010 and helped yield significant credibility gains.

The Nicaraguan economy continued to post robust growth in the first half of 2011. The Seventh Review Under the Extended Credit Facility (ECF) and Financing Assurances Review highlights that all quantitative performance criteria for end-June 2011 were met and the structural agenda is broadly on track. The fiscal performance of the central government was stronger than envisaged. The deficit in the external current account is projected to remain large and to be financed by resilient capital flows.

The economic slowdown as a result of the global crisis has been severe, and the recovery has not yet taken hold. Despite ample buffers, including large fiscal space and strong international reserves, the policy response to the crisis has been constrained. Inflation has resurfaced as a concern after falling to a historical low in 2009, but the data are misleading. The monetary policy stance has been generally supportive but ineffective in the context of large excess liquidity. Medium-term growth prospects depend on the energy sector outlook.

This paper discusses Mexico’s Request for Arrangement Under the Flexible Credit Line (FCL) and Cancellation of the Current Arrangement. Mexico’s macroeconomic policies and policy frameworks remain very strong. Real GDP growth is projected to accelerate to 3.5 percent in 2015. The authorities are requesting a new FCL arrangement for two years at the same level of access. In their view, the risk of a rapid rebalancing of investor portfolios away from emerging markets remains elevated. The IMF staff considers the proposed access level of SDR 47.292 billion to be appropriate. Uncertainties surrounding the global outlook, including risks related to the tightening of monetary policy in the United States, remain high.

This paper discusses key findings of the Third Review Under the Stand-By Arrangement for Seychelles. The program is on track, and macroeconomic stabilization has advanced rapidly. The authorities continue to implement the program with a high degree of ownership and success. All quantitative performance criteria (PC) and structural benchmarks at end-September 2009 were met. The structural reform effort is progressing well. Key progress has been made on public financial management, notably through the treasury single account. The 2010 budget features a much improved and complete presentation of government finance.

This 2010 Article IV Consultation highlights that macroeconomic outcomes have weakened significantly for St. Lucia. Real GDP is estimated to have contracted by 5.2 percent in 2009, reflecting a sharp decline in visitor arrivals and construction activity related to foreign direct investment. For 2010, the outlook is for a nascent recovery, supported by higher advance hotel bookings and additional flights to the island. Against this backdrop, Executive Directors have welcomed the authorities’ commitment to implement a credible fiscal framework to achieve fiscal sustainability.

This 2010 Article IV Consultation highlights that growth in Peru decelerated sharply in 2009, owing to the global financial crisis, but remained positive at about 1 percent for the year, despite a few months in negative territory. Thanks to the strong buffers built in recent years, Peru was able to implement a significant monetary and fiscal policy response, which helped to avoid a credit crunch, support domestic demand, and sustain employment. The central bank injected substantial liquidity in the financial system and lowered the policy rate to an historic low of 1.25 percent.

The Bahamas depends heavily on tourism and financial services. Executive Directors have commended the strong track record of prudent macroeconomic management, but have encouraged the government to broaden the domestic tax base, reduce distortions, increase the resilience of revenues to shocks, and specify contingency measures to reign in the growth in public debt. Greater transparency will underpin the medium-term fiscal strategy, and a higher international reserve coverage will help reduce vulnerabilities. Measures under way to strengthen the financial system have been commended.

Aruba has an open economy with a history of stability-oriented macroeconomic policies. Adverse external shocks have led to a decline in tourism and disruption of oil refinery operations. Serious fiscal challenges need to be addressed and a fiscal adjustment program is needed to safeguard the sustainability of the public finances. Expenditure cuts and the central bank’s switch from a credit ceiling to an unremunerated reserves requirement as key policy tool is commended. The new monetary policy framework will likely increase the challenges to prudential regulation and supervision.

This Selected Issues paper addresses key areas that would contribute to maintaining macroeconomic stability and inclusive growth. Strong economic growth in Colombia has significantly reduced poverty, but has had limited impact on reducing inequality. Strong growth and social programs have helped reduce poverty. Going forward, efforts to further strengthen education, pension, and tax systems stand to yield important social gains, as recognized by the national development plan. Labor market distortions have declined in recent years, but challenges remain. The elimination of infrastructure gaps will also play a key role in sustaining strong and broad-based growth, and supporting further economic diversification.

Economic activity appears to be recovering, underpinned by a strong policy response. Fiscal consolidation will be crucial to maintain debt sustainability and support the envisaged external adjustment over the medium term. Sound monetary and exchange rate policies are essential to maintain macroeconomic stability. Improvements in tax administration are needed to achieve the program’s goals of sound public finances and stronger economic growth. Broader efforts to strengthen the business environment are crucial to boost medium-term growth prospects. Risks to the program are manageable.

Lao People’s Democratic Republic’s growth is expected to moderate but remain fairly robust, supported by large projects in train, strong mineral exports, and expansionary policies. The staff report for the Lao People’s Democratic Republic’s 2009 Article IV Consultation highlights economic developments and policies. The largest impact has been on the mining sector, but delays in hydropower projects are also evident. Inflation is expected to remain low and stable, assuming no significant pickup in commodity prices. However, overly expansionary fiscal and credit policies pose a risk to macroeconomic stability.

This 2009 Article IV Consultation highlights that despite initial resilience partly explained by high wage growth and accelerated government spending in Greece, growth slowed substantially in early 2009. The main driving forces were lower investment and exports, destocking, and a decline in private consumption. Executive Directors have welcomed the extended period of strong growth through 2008, which had significantly narrowed the gap in real per-capita income with the EU-15. Directors have also emphasized the need to implement a comprehensive plan for fiscal consolidation and structural reform.

This technical note focuses on fixed income markets for Thailand. The note recommends that Thailand should begin an orderly transition from merit-based regulation of corporate issuers and institutional investors to a disclosure-based regulatory system that opens the debt market to a larger and more diverse pool of corporations. A series of regulatory changes should be considered, including removing the limitations on below investment grade debt offerings, expanding the size of private placement offerings, and reducing the regulatory burdens on issuers of short-term commercial paper.

This Selected Issues paper on the Eastern Caribbean Currency Union (ECCU) underlies key features of business cycles. To obtain new measures of classical and growth cycles, simple rules were applied to date turning points in the classical business cycle, and a recently developed frequency domain filter was used to estimate the growth cycle. At the regional level, the ECCU countries are facing two shocks, i.e., the depreciation of the U.S. dollar and the depreciation of the Dominican Republic’s peso. The countries of the ECCU have experienced modest erosion in their price and nonprice competitiveness.

St. Lucia’s 2008 Article IV Consultation underlies that progress has been made in reducing fiscal imbalances, yet public debt and debt servicing payments continue to rise. Tourism accounts for more than three-fourths of exports, and the import content of both consumption and foreign direct investment is high. Although the share of value added from the traditionally dominant agriculture sector has declined sharply in recent decades, crop exports support the incomes of much of the country’s large rural population.

Iceland’s 2008 Article IV Consultation shows that the long expansion is coming to an end, exposing the economy’s overstretched private sector balance sheets, large macroeconomic imbalances, and high dependence on foreign financing. With external liquidity constraints binding, economic activity is expected to slow significantly from unsustainably high levels, inflation to remain well above target, and the current account to narrow. Uncertainty surrounding the outlook is unusually large, dominated by significant downside risks, both external and domestic.

This report provides a reassessment of fiscal transparency practices in the Kyrgyz Republic against the requirements of the IMF Code of Good Practices on Fiscal Transparency. It gives a description of practice on the basis of discussions with the authorities and their responses to the fiscal transparency questionnaire. It also provides the details of a staff report on fiscal transparency in the Kyrgyz Republic, and includes an assessment of practices against the Guide on Resource Revenue Transparency.

This 2008 Article IV Consultation highlights that Ghana’s growth has remained strong, fuelled by both the private and public sectors. The Ghanaian economy maintained strong growth of about 6½ percent in 2007 and the first months of 2008. The private sector has responded positively to macroeconomic stability, structural reforms, and an increasingly business-friendly environment. But fiscal spending also increased, leading to excess demand. Supply-side shocks, especially from international fuel prices, have impacted Ghana negatively, although overall, Ghana’s terms of trade continued to improve.

This paper examines key findings of Iceland’s Request for a Stand-By Arrangement from the IMF. Iceland’s economy is in the midst of a banking crisis of extraordinary proportions that is expected to lead to a deep recession, a sharp rise in the fiscal deficit, and a dramatic surge in public sector debt, reflecting a high fiscal cost of restructuring the banking system. The virtual collapse of the on-shore foreign exchange market poses a serious and immediate risk to the economy considering its high import dependence.

This 2008 Article IV Consultation highlights that Lao People’s Democratic Republic’s (PDR) economy has performed well in recent years, owing to generally stable macroeconomic conditions and a rapidly expanding natural resource sector. Real GDP growth has averaged more than 7 percent since 2004. Growth is projected to reach 7½ percent in 2008, driven by similar factors as last year, as well as higher mining output. The medium-term outlook for Lao PDR remains positive, but hinges on sound development of the resource sector and other steps to strengthen competitiveness.

The Czech Republic’s strong fundamentals helped to sustain economic growth with low unemployment and underpin strides toward convergence with EU-15. Executive Directors welcomed the euro accession strategy and the sustained implementation of the Maastricht criteria, which would provide a solid foundation for euro adoption. They commended the sound financial system and prudent monetary policies and supported policy tightening to counter rising inflation pressures. Directors highlighted the need to sustain fiscal consolidation, promote labor participation, and lower structural unemployment in alleviating fiscal adjustment.

In this paper, statistical details are listed regarding the following: GDP by sector at constant and current prices, tourism data, indicators of agricultural production, wage rates of workers, number of workers in the social security by age group, retail price index, central government operations and revenue, central government expenditure and domestic debt, operations of social security bond, monetary survey, distribution of commercial bank loans and interest rates, indicators of commercial bank, consolidated balance sheet, and balance of payments.

Kenya’s macroeconomic performance continued to improve until violence erupted in the aftermath of the general elections of December 2007. This 2008 Article IV Consultation highlights that GDP growth reached 7.0 percent in 2007, the highest in more than two decades. Monetary policy was tightened in June 2008 to address rising inflation pressures. Executive Directors have welcomed the recent tightening of monetary policy and the authorities’ readiness to tighten further to prevent the second-round effect of rising food and fuel prices.

This paper discusses key findings of the Sixth and Final Review Under the Stand-By Arrangement for Paraguay. The program remains broadly on track. All performance criteria for end-March 2008 were met, and those for end-June 2008 are expected to have been observed. With one exception, all structural benchmarks for 2008 are expected to be implemented, albeit with delays. The economy grew 6¾ percent in 2007 and is expected to continue expanding at least 5 percent in 2008 driven by strong agricultural exports.

The Israeli economy is performing exceptionally well, but still high public indebtedness calls for the continuation of strong economic policies. Monetary policy has successfully stabilized inflation expectations, but policy and communication challenges remain. The recent positive fiscal performance needs to be carried forward to improve international credibility. The government’s intention to stick with a rules-based approach to fiscal policy, solidly anchored in longer-term objectives, is commended. Enhanced fiscal transparency and governance are essential to improve the quality of policymaking.

This 2008 Article IV Consultation highlights that the United Kingdom’s economic growth was above trend in 2006 and 2007. In terms of expenditure, the expansion was largely driven by private consumption, on the heels of strong employment, steady real wage and living standards growth, and a surge in immigration. So far in 2008, evidence points to a sharp slowing in activity alongside high inflation. Executive Directors have welcomed the commitment made in the 2008 budget to tighten fiscal policy in the coming two years.

This Selected Issues paper on Kenya reviews Kenya’s external stability in a context where the exchange rate has strengthened and capital inflows are playing an increasingly important role. Kenya’s external current account deficit has widened, reflecting strong import volumes as well as rising import prices, particularly for oil, but external debt as a percent of GDP has declined steadily. Underlying these developments have been a steady increase in capital inflows and a remarkable rebound of economic growth since 2003 after two decades of stagnation.

This Selected Issues paper for Seychelles argues that sound fiscal policies and smaller governments can be conducive to growth and help reduce a country’s economic vulnerability. Growth in Seychelles has been volatile and underperformed most small states from 1998 to 2005. Seychelles’s revenues, expenditures, and total public debt are higher after an improvement in 2003. Its fiscal balance has worsened and has been weaker in comparison with most small states for most of the period. Seychelles’s expenditure composition is most similar to that of low-growth small states.

This 2006 Article IV Consultation highlights that economic developments in Trinidad and Tobago continue to be underpinned by a favorable international environment. Surging energy prices, the exploitation of new gas fields, and an expansion of industrial capacity helped sustain robust economic activity. However, there are signs that the economy is operating at, or near, potential. The monetization of foreign currency energy receipts by the government has introduced a substantial degree of liquidity into the financial system. The banking sector remains profitable, nonperforming loans are low, and provisioning increased compared with the last year.

This Ex-Post Assessment of Longer-Term Program Engagement for Ghana explains its experience with particular attention to the IMF's role. Progress in structural reform was slow, but Ghana also avoided mistakes made by some countries that introduced reforms without enough public support. Ghana’s success in its reforms is embedded in the strengthening of democratic institutions that allow for greater public ownership of the reforms. Continual structural reform is essential to ensure that macroeconomic stabilization is durable. Recent slippages underscore the need to further improve fiscal institutions to control expenditures.

The staff report for the 2007 Article IV Consultation highlights Turkey’s economic revival and policies to entrench macroeconomic stability. Turkey has experienced an impressive economic revival in recent years. Exports have continued to gain market shares, as the effects of an appreciating currency have been largely offset by productivity gains. Executive Directors considered that Turkey needs to manage vulnerabilities carefully and address structural challenges to increase the economy’s growth potential and resilience to shocks.

This 2007 Article IV Consultation highlights that the implementation of the Poverty Reduction and Growth Facility (PRGF)-supported program was broadly satisfactory for Congo in 2004–05. However, expenditure overruns and delays in structural reforms pushed the program off track in 2006. Discussions are continuing on an IMF staff-monitored program aimed at establishing a solid track record that could pave the way for resuming discussions on the PRGF-supported program. Macroeconomic performance was mixed in 2006. Real GDP growth is estimated at 6.1 percent in 2006. The outlook for 2007 and the medium term is uncertain.