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Books and Analytical Papers > IMF Staff Country Reports

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Cover IMF Staff Country Reports
Vanuatu: Selected Issues
International Monetary Fund. Asia and Pacific Dept
This Selected Issues paper discusses sea-level rise impacts and adaptation in Vanuatu. Sea-level will continue to increase during this century directly caused by global warming and melting of terrestrial ice. While Vanuatu cannot control global sea-level, it can manage how it affects the country by adapting. Staff analysis estimates the cost of sea-level rise under alternative adaptation strategies: (1) no-adaptation; (2) protection; and (3) planned retreat. Such analysis can help the government to identify trade-offs between efficiency and equity, and choose according to the preferences of the population, consistent with public finance objectives. Preliminary results show that complete protection of coastal areas in Vanuatu is costly while planned retreat from the coastline is the least-cost adaptation response. However, given the mountainous nature of the islands, only small areas of the main population centers of Port Vila and Luganville are at risk of being permanently inundated even with very high sea level rise.
Keywords:
summary statistics; sea-level rise; surface temperature; adaptation in Vanuatu; Vanuatu with CIAM; Climate change; Environmental policy; Natural disasters; Global
Cover IMF Staff Country Reports
Algeria: Selected Issues
International Monetary Fund. Middle East and Central Asia Dept.
This Selected Issues paper discusses designing a rules-based fiscal framework for Algeria. Algeria’s government has set a number of fiscal reform priorities and aims to maintain prudent and sustainable policies. This paper discusses the design of a rules-based fiscal framework which could help rebuild buffers and support the government’s policy agenda. The proposed calibration, which relies on two separate pillars— a gross debt pillar and a savings pillar—is well suited to Algeria and to its long-term objectives. The paper finds that building a fiscal buffer of about 40 percent of gross domestic product, via the combination of a savings floor and a safe gross debt target, could preserve medium-term fiscal sustainability and insure public finances against hydrocarbon price shocks. The savings floor is calibrated based on a stochastic approach so as to protect Algerian public finances against hydrocarbon price shocks. The debt anchor, or medium-term gross debt target, is calibrated so as to prevent debt from reaching potentially unsustainable territory under a wide range of macro-fiscal scenarios. A multiyear transition period is needed to set the proposed rules-based framework in place.
Keywords:
savings buffer; inflation dynamics; food inflation; inflation distribution; consumer price inflation; Inflation; Oil prices; Fiscal governance; Fiscal rules; Global; Middle East and Central Asia
Cover IMF Staff Country Reports
Slovak Republic: Selected Issues
International Monetary Fund. European Dept.
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.
Keywords:
Core CPI inflation in Slovakia; PPI inflation; demand and supply supply shock; B. emission trend; International Monetary Fund Washington, d.c; Carbon tax; Greenhouse gas emissions; Supply shocks; Inflation; Manufacturing; Global; Europe
Cover IMF Staff Country Reports
Malaysia: Selected Issues
International Monetary Fund. Asia and Pacific Dept
This Selected Issues paper analyzes saving to understand history and identify the drivers in Malaysia. IMF analysis suggests that Malaysia’s current account (CA) surplus is higher than warranted by medium-term fundamentals and desired policies. The changes in the corporate saving rate almost entirely reflect the changes within each group of firms of similar size or age. Leveraging firm-level data for listed firms, the paper focuses on the contribution to the CA surplus of private non-financial corporations. The trend analysis indicates a high dependence of listed firms in Malaysia on internal funds (savings) to finance their investments or, equivalently, a lower dependence on external funds. The results suggest that relaxing firms’ external financing constraints and lifting productivity growth could help encourage investment and reduce excess corporate saving. The regression results show that the transaction cost and precautionary saving motives, as well as their interaction with external financing dependence, could play an important role in explaining corporate net saving.
Keywords:
ISCR; CR; firm; debt; deficit; C. firm level analysis; deficit target; firms in the energy sector; firm's use; use of external finance; development expenditure; debt anchor; Fiscal stance; Government debt management; Medium-term budget frameworks; Capital spending; Global
Cover IMF Staff Country Reports
Sweden: Selected Issues
International Monetary Fund. European Dept.
This Selected Issues paper examines the labor market and migration in Sweden. Sweden enjoys a broadly well-functioning labor market. The labor force has been expanding at a healthy pace, in part reflecting rising participation including by females. This paper discusses the compositional changes in the labor force, employment, and unemployment over the past decade. A brief overview of migration flows, their composition, and their demographic benefits is provided. An assessment of the potential implications of the projected increase in migration for unemployment is done. The features of Sweden’s labor market that contribute to the higher unemployment rates of the lower skilled and foreign-born are also outlined.
Keywords:
ISCR; CR; labor market; wage; supply constraint; employment rate; supply elasticity; house price; wage subsidy; Labor markets; Housing prices; Employment; Housing; Migration; Europe; Global
Cover IMF Staff Country Reports
Singapore: Selected Issues
International Monetary Fund. Asia and Pacific Dept
External trade plays an important role in Singapore’s economy, providing an important share of total value added. Singapore’s exports have a relatively large import share; however, they also have a high level of complexity. As emphasized in previous studies, value-added in exports plays an important role in trade elasticities. The paper finds evidence that this is indeed the case for Singapore’s export products. Products that have higher domestic value-added share also tend to have higher export price elasticity. Economic complexity is also related to export price elasticities: higher economic complexity is associated with lower price elasticity of exports. This relationship is stronger within certain product segments such as the machinery, mechanical appliances and computers as well as the pharmaceuticals segments. Trade elasticities are important to understand Singapore’s exchange rate based monetary policy transmission. Exchange rate changes can affect profits and trade volumes differently, depending upon the price pass-through to import and export prices and the price elasticity of exports and imports. The import and export price pass-through can in return depend on trade elasticities. The paper also shows that there is important product heterogeneity with respect to trade elasticities; both across different product groups but also within individual product groups. This implies that structural changes in the product composition of trade can lead to sizeable changes in Singapore’s trade elasticities.
Keywords:
ISCR; CR; elasticity; product; export; price; trade elasticity; import volume; export products; product mix; export elasticity; Exports; Imports; Price elasticity; Export prices; Demand elasticity; Global
Cover IMF Staff Country Reports
Central and Eastern Europe: New Member States (NMS) Policy Forum, 2014, Staff Report on Cluster Consultations—Common Policy Frameworks and Challenges
International Monetary Fund. European Dept.
KEY ISSUES 2014 marked the tenth anniversary of accession to the EU of the first group of Central and Eastern European (CEE) countries. The first NMS Policy Forum was launched in the fall of 2014 as a platform for discussing policy frameworks and issues relevant for non-euro area NMS. It brought together representatives of the six CEE countries that are EU members but are not yet in the euro area - Bulgaria, Croatia, Czech Republic, Hungary, Poland, and Romania (NMS-6), as well as the ECB, the European Commission and the IMF. Discussions focused on four themes: Euro adoption: A once sizeable country risk premium associated with joining the euro area has mostly vanished, as the euro crisis has exposed flaws in the euro area’s institutional framework. Further, the crisis has illustrated both risks and benefits from adoption: monetary autonomy has proven helpful for absorbing shocks, while foreign currency mismatches—that can be much reduced with euro adoption—have shown to be a key vulnerability. Flexible labor markets, fiscal and macro-prudential policy space, and income convergence are prerequisites for successful adoption. Opting into the Banking Union (BU) before euro adoption: The lack of equal (or fully equivalent) treatment of the BU members and non-euro area opt-ins—regarding their role in the Single Supervisory Mechanism (SSM), as well as access to common liquidity and fiscal backstops—makes opting into the BU before euro adoption less attractive. Countries that would benefit most from early opt-in are those that see the BU as a way to enhance the quality and credibility of bank supervision or to gain access to larger industry-funded common backstops. The EU’s fiscal framework and pension reform: In the wake of the crisis, many NMS abolished second pillar pension funds. Further reforms to the EU’s fiscal framework are warranted to remove disincentives for setting up and maintaining second pension pillars and, more generally, for structural reforms. Making the most of the EU single market and EU Services Directive: Structural reforms to strengthen human capital, skills match, labor market efficiency, and foreign investment environment will help NMS to reap full benefits from EU integration. Further liberalization of trade in services will likely benefit the NMS-6 more than other EU members.
Keywords:
ISCR; CR; Euro adoption; euro area; single market; area country; BU member; business cycle; Pension spending; Exports; Structural reforms; Fiscal governance; Foreign direct investment; Baltics; Central and Eastern Europe; Global; transparency policy; EU services directive; Eastern Europe
Cover IMF Staff Country Reports