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International Monetary Fund. European Dept.
This 2016 Article IV Consultation highlights that the growth in Finland has turned tepidly positive again following a deep recession. GDP increased by 0.2 percent in 2015 driven by stronger private consumption and a rebound in investment. Although net export growth was weak, falling oil prices contributed to the nominal trade balance shifting into surplus, reducing the current account deficit. Better-than-expected fiscal performance brought the deficit back under the 3 percent Stability and Growth Pact limit in 2015. The recovery is likely to continue, but growth is set to remain slow at about 0.9 percent in 2016 and 1.1 percent in 2017. This outlook is subject to downside risks.
International Monetary Fund. European Dept.

balance shifting into surplus, reducing the current account deficit. Better-than-expected fiscal performance brought the deficit back under the 3 percent Stability and Growth Pact (SGP) limit in 2015. Nevertheless, fiscal space is limited, as public debt reached 63.6 of GDP, which is above the SGP threshold. Banks are well-capitalized and profitable despite the weak economy and low credit demand. The recovery is likely to continue but growth is set to remain slow at about 0.9 percent in 2016 and 1.1 percent in 2017. This outlook is subject to downside risks. Weaker

International Monetary Fund. European Dept.

deficit narrowed to -2.8 percent of GDP—a positive surprise as the original 2015 budget had forecast a -3.4 percent of GDP deficit. The better than expected outcome was driven by revenue overperformance and lower than budgeted spending, especially on public consumption. Public debt nearly doubled over the past decade and reached 63.6 percent of GDP in 2015, breaching the SGP threshold and making the government's financial position more vulnerable to shocks (Annex II). The growth in indebtedness along with the mounting pressures from aging related spending and the need

International Monetary Fund. European Dept.

On behalf of the Finnish authorities would like to convey their gratitude for the comprehensive and candid discussions during the Article IV consultation and the FSAP mission. The authorities find the analysis in the reports of great value and useful for assessing progress of key reforms adopted in the government's ambitious program for reviving economic growth and stabilizing public finances, and for maintaining a well-functioning and stable financial system. The authorities' views have been accurately documented and they broadly concur with staffs analysis and policy recommendations.

Mr. Dennis P Botman and Ms. Anita Tuladhar
The Czech Republic has embarked on an ambitious tax reform and expenditure package to bring the deficit sustainably below 3 percent, and intends to reduce the deficit to 1 percent of GDP by 2012. To address the long-term fiscal challenge due to population aging, pension reform proposals are also being considered. In this paper we assess the macroeconomic effects of these measures using the Global Fiscal Model. The tax reform package will achieve a more efficient tax system. If implemented successfully with the intended expenditure savings measures, debt is projected to improve markedly while output would expand. Fiscal sustainability will not be restored, however, even if further measures to bring the deficit to 1 percent of GDP by 2012. Instead, raising the retirement age and prefunding future aging costs would be needed to keep debt below 60 percent of GDP through 2050.
International Monetary Fund. European Dept.
This Article IV Consultation highlights that the economic expansion continues, driven primarily by private consumption and exports of goods and services. Discussions primarily focused on increasing the economy’s flexibility and resilience. Fiscal performance has been strong, however, the materialization of contingent liabilities from government guarantees is likely to reduce the overall surplus. Low public and private investment, and continued emigration appear to weigh on medium-term growth prospects. Downside risks in the near-term stem could be due to possible changes in regional or global economic and financial conditions, and the further realization of contingent liabilities. The IMF staff advocated for a moderately faster fiscal adjustment. The report recommends accelerating the pace of debt reduction that would build fiscal space and help reduce downside risks. The Central Bank may need to address potentially tighter external conditions while continuing with strong bank supervision and macroprudential policies. Additional measures to prevent excessive household borrowing could be considered if needed.
International Monetary Fund
This paper reviews the fiscal reform of the Czech Republic, its key reform measures, and structural implications. The study also focuses on key challenges and demographic pressures facing the Czech economy, and describes the analytical framework of Global Fiscal Model (GFM) with technical details. It analyzes tax and expenditure measures and implications of additional measures for fiscal consolidation on debt sustainability. It reviews the formulation of the Czech National Bank (CNB) and also the Global Integrated Monetary and Fiscal Model (GIMF) to analyze monetary policy challenges lying ahead and the targets for reducing inflation.
International Monetary Fund. European Dept.
This paper presents the overview of the Dutch economy. After a double-dip recession that ended in early 2014, a strengthening but moderate recovery led by exports and investment is underway, although lower production and exports of natural reduced gas reduced growth in the second quarter of 2015, without however interrupting its momentum. Unemployment is falling slowly and inflation is low, but positive. Credit has continued to decline, but demand for credit is gradually rebounding. The Dutch banking system is emerging from its restructuring. The economy now appears set on a gradual path of recovery, and growth is expected to reach 1.9 percent this year and in 2015, supported by an improving domestic demand.