Category: English Language

Source: IMF – News in Russian

June 23, 2025

• The IMF Executive Board concluded the combined third and fourth reviews of Bangladesh’s arrangements under the Extended Credit Facility (ECF) and Extended Fund Facility (EFF) and approved an extension, augmentation and rephasing of access. This decision provides Bangladesh with immediate access to about US$884 million.
• The IMF Executive Board also concluded the combined Third and Fourth Reviews of Bangladesh’s arrangement under the Resilience and Sustainability Facility (RSF), making available about US$453 million to support the Bangladesh economy’s resilience to climate change.
• Bangladesh’s program performance has been broadly satisfactory despite the difficult political and economic context and increased downside risks. Advancing the reform agenda is critical to restoring economic stability, protecting the vulnerable, and supporting inclusive and environmentally sustainable growth.

Washington, DC: The Executive Board of the International Monetary Fund completed the combined Third and Fourth Reviews of Bangladesh’s arrangements under the Extended Credit Facility (ECF), the Extended Fund Facility (EFF), and the Resilience and Sustainability Facility (RSF). The Executive Board also approved an augmentation of SDR 567.19 million (53.2 percent of quota) for the ECF/EFF arrangements and a six-month extension. Completion of these reviews allows the authorities to immediately withdraw SDR 650.5 million (about US$884 million) under the ECF/EFF, and SDR 333.3 million (about US$453 million) under the RSF.[1]

Further, the IMF Executive Board approved a modification of performance criteria and granted a waiver for the non-observance of the performance criterion related to the non-imposition and non-intensification of exchange restrictions, based on the temporary nature of the non-observance and the implementation of corrective measures.

Bangladesh’s arrangements under the ECF/EFF/RSF  were approved on January 30, 2023, in an amount equivalent to SDR 2.5 billion (154.3 percent of quota or about US$3.3 billion) under the ECF/EFF and SDR 1 billion (93.8 percent of quota or about US$1.4 billion) under the RSF (PR no. 23/25)

The augmentation approved by the Executive Board today brings the total financial assistance under the ECF and EFF arrangements to SDR 3,035.65 million (about US$ 4.1billion), alongside concurrent RSF arrangements of SDR 1 billion (about US$1.4 billion). The enlarged enhanced ECF/EFF is aimed at restoring macroeconomic stability, promoting inclusive growth, and protecting the vulnerable. The RSF arrangement has secured fiscal space needed to build resilience against climate risks.

Bangladesh’s macroeconomic challenges have increased since the popular uprising in the summer of 2024, which led to the ouster of the previous government. The timely formation of an interim government has helped stabilize political and security conditions, fostering a gradual return to economic stability. However, the economic outlook has worsened due to persistent political uncertainty, continuation of tighter policy mix, rising trade barriers, and increasing stress in the banking sector.

Program performance for the third and fourth reviews remains broadly satisfactory despite the difficult political and economic context. The authorities are fully committed to implementing necessary policies under the program and have recently pressed forward with critical reforms to increase exchange rate flexibility and boost tax revenues.

The authorities have consented to the publication of the Staff Report prepared for this consultation.[2]

Executive Board Assessment[3]

Following the Executive Board’s discussion, Mr. Nigel Clarke, Deputy Managing Director, and Acting Chair, made the following statement:

“Bangladesh’s economy continues to navigate multiple macroeconomic challenges. Despite a difficult environment, program performance has remained broadly on track, and the authorities are committed to implementing necessary policy actions and reforms. The IMF-supported programs are helping safeguard macroeconomic stability and protect the most vulnerable, while accelerating reforms to support resilient and inclusive growth.

“Near-term policies should prioritize rebuilding external resilience and reducing inflation. The authorities’ recent steps to implement a new exchange rate regime and include revenue-enhancing measures in the FY2026 budget are welcome. A balanced policy mix—anchored in maintaining a tight monetary policy stance, greater exchange rate flexibility, and revenue-based fiscal consolidation—will support efforts to restore both external and internal balances.

“Efforts to raise tax revenues and rationalize expenditures—including through subsidy reduction—are critical for creating the fiscal space needed to strengthen social, development, and climate initiatives. Sustained progress in reducing government subsidies to a fiscally sustainable level, along with enhanced public financial management, is essential to improving spending efficiency and mitigating fiscal risks.

“Financial sector policy should prioritize safeguarding stability and addressing rising vulnerabilities. Developing a comprehensive, sequenced strategy to guide reforms is an immediate priority, followed by the swift implementation of the new legal frameworks to enable orderly bank restructuring while protecting small depositors.

“Sustained structural reforms are essential for Bangladesh to achieve its goal of attaining upper middle-income status. Key priorities include diversifying exports, attracting greater foreign direct investment, strengthening governance, and enhancing data quality.

“Building resilience to natural disasters is essential for achieving high and inclusive growth. The RSF’s focus on strengthening institutions and policy coordination as well as on enhancing the efficiency of climate-related spending remains critical, including in helping mobilize climate finance.”

Bangladesh: Selected Economic Indicators, FY2022-27 1/   FY22 FY23 FY24 FY25 FY26 FY27                       Projections                             Real GDP 7.1 5.8 4.2 3.8 5.4 6.2     Consumption                  Private 7.5 2.0 6.0 6.0 5.4 5.4      Public 6.2 8.5 9.8 4.1 -4.3 16.1 Gross Capital Formation 11.7 2.2 3.3 -0.1 5.8 6.8      Private 11.8 2.9 4.3 0.3 3.3 5.2      Public 11.1 0.0 -0.2 -1.3 14.9 11.9 Trade                  Exports of goods and services 29.4 8.0 -17.1 5.2 19.8 12.7      Imports of goods and services 31.2 -9.8 -4.6 5.8 11.6 11.9                 Prices                GDP deflator 5.0 6.9 6.9 10.3 6.2 6.5    CPI inflation (annual average) 6.1 9.0 9.7 9.9 6.2 6.3    CPI inflation (end of period) 7.6 9.7 9.7 8.3 6.5 5.9                                             Central government operations (in percent of GDP) Total revenue and grants 8.9 8.2 8.3 8.7 9.5 10.0 Of which: Tax revenue 8.0 7.3 7.4 7.7 8.6 9.2 Total expenditure 13.0 12.7 12.1 12.8 13.5 14.5 Of which: Annual Development Program (ADP) 4.7 4.3 3.8               Overall balance (including grants) -4.1 -4.5 -3.8 -4.2 -4.1 -4.5 (excluding grants) -4.2 -4.6 -3.9 -4.3 -4.1 -4.6 Primary balance (including grants) -2.1 -2.5 -1.5 -2.0 -2.0 -2.2                   Public sector total debt 2/ 37.9 39.7 41.0 40.7 41.8 42.1 Of which: External debt 15.4 17.5 18.6 18.6 19.2 18.6                               Balance of Payments (in percent of GDP)                  Current account balance -4.0 -2.6 -1.4 -1.0 -0.7 -0.9           Trade balance -8.0 -4.7 -5.9 -5.9 -5.1 -5.3     Capital account balance 0.1 0.1 0.1 0.1 0.1 0.1     Financial account balance 3.6 1.5 1.0 1.1 1.4 1.7                Foreign direct investment, net 0.4 0.4 0.4 0.2 0.5 0.6 Gross international reserves (billions of U.S. dollars) 33.4 24.8 21.7 23.6 29.0         in months of next year’s imports 5.0 4.1 3.3 3.2 3.5 3.7                 Monetary and Credit (in percent of GDP)             Reserve money 8.7 8.5 8.2 8.2 8.9 9.1 Broad money (M2) 52.9 50.7 48.4 45.0 45.5 46.4 Credit to private sector 36.6 35.3 34.5 32.0 31.7 32.2 Credit to private sector (percent change) 13.7 9.1 8.8 6.2 10.7 14.8                 Savings and Investment (in percent of GDP)                 Gross national savings 29.3 29.9 28.3 28.7 28.8 28.8     Public 1.2 0.3 0.5 0.3 1.4 1.5     Private 28.2 29.7 27.9 28.4 27.4 27.2                    Gross investment 32.0 31.0 30.7 29.6 29.5 29.7      Public 7.5 6.8 6.7 6.4 7.0 7.3      Private 24.5 24.2 24.0 23.2 22.5 22.4                 Memorandum item:             Nominal GDP (in billions of taka) 39,717 44,908 50,027 57,246 64,116 72,509               Sources: Bangladesh authorities; and IMF staff estimates and projections. 1/ Fiscal year begins on July 1 and ends on June 30. 2/ Includes central government’s gross debt, including debt owed to the IMF, plus domestic bank borrowing by nonfinancial public sector and public enterprises’ external borrowing supported by government guarantees, including short-term oil-related suppliers’ credits.

[1] SDR figures for the disbursed are converted at the market rate of U.S. dollar per SDR on the day of the Board approval.

[2] Under the IMF’s Articles of Agreement, publication of documents that pertain to member countries is voluntary and requires the member consent. The staff report will be shortly published on the www.imf.org/bangladesh page.

[3] At the conclusion of the discussion, the Managing Director, as Chair of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country’s authorities. An explanation of any qualifiers used in summings up can be found here: http://www.IMF.org/external/np/sec/misc/qualifiers.htm.

https://www.imf.org/en/News/Articles/2025/06/23/pr-25213-bangladesh-imf-concludes-combined-3rd-and-4th-reviews-under-the-ecf-eff-and-rsf

MIL OSI

Source: IMF – News in Russian

June 23, 2025

An International Monetary Fund (IMF) mission led by Mr. Alexander Culiuc visited Guatemala City during June 10-20, 2025 for the 2025 Article IV consultation. At the end of the visit, the mission issued the following statement:

• Prudent macroeconomic management has supported Guatemala’s resilience, delivering low inflation, robust policy buffers and a sustained current account surplus. With rising external uncertainty and mounting risks, stronger, more inclusive growth and poverty reduction can be achieved by accelerating reform implementation and enhancing policy coordination.
• Raising private investment from current low levels requires complementary public inputs—infrastructure, educated and healthy labor force, security—which can only be adequately delivered by simultaneously raising public spending and improving its quality.
• Improving quality and efficiency of spending entails better budget formulation, targeting, execution and control, and swift implementation of the anti-corruption agenda. We welcome the authorities’ efforts in this regard.
• In the short term, existing fiscal space enables financing higher levels of spending with debt, with greater reliance on domestic borrowing.
• In the medium term, raising revenues—primarily via comprehensive tax policy reform—would revert deficits to around 2 percent of GDP to preserve debt sustainability while maintaining priority spending at adequate levels.
• Other structural and governance reforms pursued by the authorities, including in the financial and labor sectors—particularly urgent in the case of the AML/CFT law—will help support private sector growth. Continued commitment to dialogue and consensus-building can sustain progress on key legislative initiatives.

Recent Economic Developments, Outlook, and Risks

Guatemala’s economy remains resilient despite rising external risks and domestic challenges. Real GDP grew by 3.7 percent in 2024, supported by strong private consumption. Inflation has eased significantly, with headline inflation falling to 1.7 percent in May 2025, while core inflation remains near 4 percent, and inflation expectations are well anchored. The current account surplus narrowed to 2.9 percent of GDP in 2024 as imports picked up, while remittances stabilized at 19 percent of GDP and international reserves reached US$27.1 billion. Public debt remains low—under 27 percent of GDP—and Guatemala is now only one notch below investment grade. Banguat kept its policy rate unchanged at 4.5 percent since the 25bps cut in November 2024.

Guatemala endeavors an investment-biased fiscal expansion. The August 2024 supplementary budget prioritized infrastructure and social spending and targeted a deficit of 2.7 percent of GDP; the realized deficit was significantly lower at 1 percent of GDP. The 2025 budget continues this expansionary approach, with a further increase in infrastructure and social allocations. While the original budget targeted a deficit of 3.2 percent of GDP, a supplementary budget, specifying carryovers from 2024 and one-off pension payments, raised the budget deficit to a notably high 3.8 percent of GDP.

The outlook for 2025 is encouraging; sustaining the growth momentum over the medium term will require steadfast policy implementation. Real GDP growth is projected at 3¾ percent in 2025, with the fiscal impulse expected to help cushion the effects of softening global demand and high uncertainty. Beyond 2025, growth is projected to slightly exceed 3½ percent, although an acceleration in public infrastructure execution and structural reforms could push both actual and potential growth higher in the outer projection years. Headline inflation is expected to gradually converge toward the monetary policy target, while the fiscal deficit is projected to remain elevated by historical standards at just below 3 percent of GDP through the medium term. The current account surplus is expected to narrow and eventually close, while public debt is projected to climb above 30 percent of GDP in the medium term.

The balance of risks is tilted to the downside. On the domestic front, there is a risk that ongoing political tensions could impede progress on legislative initiatives. Nonetheless, important progress has been made over the past year—including the approval of the 2025 budget and the competition law—demonstrating the capacity for reform even in a complex environment. Externally, intensified and/or protracted global trade disputes would weigh further on investment sentiment, although Guatemala is somewhat better positioned to weather additional trade shocks than some regional peers. Further changes in U.S. migration policy—including the proposed 3.5 percent excise tax on remittances—could disrupt remittance-supported consumption. On the upside, lower net emigration also offers a window to boost domestic employment if accompanied by targeted efforts to expand job opportunities in the formal private sector.

Fiscal Policy

The 2025 expansionary fiscal stance is appropriate, as private demand is projected to soften in the remainder of the year. Structural bottlenecks and recently strengthened anti-corruption controls are likely to limit the execution of capital spending, with the deficit projected at around 2½ percent of GDP, well below the revised budget of 3.8 percent. The historically high (1.3 percent of GDP) transfers to Departmental Development Councils (CODEDEs) require close oversight and monitoring amidst concerns of elevated risks of misallocation and inefficient use. The authorities’ ongoing multi-institutional efforts to strengthen the transparency, accountability, monitoring of CODEDEs transfers and capacity of municipalities are welcome and should be sustained.

A combination of revenue and expenditure reforms is needed in the medium term. Authorities should seek ways of reverting fiscal deficits closer to historical levels (around 2 percent of GDP) without jeopardizing the much-needed surge in public infrastructure and social spending. The tax authority (SAT) has made commendable steps in strengthening compliance through the rollout of mandatory electronic invoicing, enhanced border enforcement to combat smuggling, and more robust audits of high-income individuals and large corporations. Efforts to improve mobilization—in line with the now-public 2024 TADAT report—should continue and be complemented in the medium term by comprehensive tax policy reforms. On the expenditure side, strengthening institutional capacity for systematic expenditure reviews and embedding the National Development Plan into annual and multi-year budgets would align public spending with strategic priorities. A new Public Procurement law—currently under consideration—could alleviate bottlenecks in the execution of capital spending. Improved targeting in social programs would further increase their effectiveness. Strengthening the Medium-Term Fiscal Framework and multiannual budget planning underpinned by realistic, sector-informed projections will bolster confidence—including of market participants—in fiscal sustainability.

A well-calibrated financing strategy would help the macro-policy mix. While solid creditworthiness enables the government to borrow externally on favorable terms, greater reliance on domestic financing under a sound medium term debt management strategy (MTDS) would (i) reduce real appreciation pressures (which already weigh on Guatemala’s external competitiveness), (ii) help develop the domestic financial market, (iii) reduce currency risks, and (iv) lower costs of monetary policy operation incurred by Banguat to maintain price stability. The mission also encourages the Ministry of Finance to consolidate domestic issuances, introduce shorter-maturity instruments to help develop the yield curve, and regularly publish the MTDS and annual borrowing plans.

Monetary and Exchange Policies

The current monetary policy stance is broadly appropriate, but there is scope to further strengthen monetary policy transmission. The ex-ante real policy rate is at 1 percent, within the estimated range for the neutral real rate (1–2 percent). Given prevailing uncertainty regarding the inflationary impact of recent U.S. tariff measures and potential disruptions to global supply chains, there’s scope in maintaining the current policy stance and waiting for greater clarity before making further adjustments. Estimated passthrough of the policy rate to deposit rates has recently increased. More can be done, including by advancing financial market development and competition and reducing reliance on reserve requirements for liquidity management. These efforts should be underpinned by improvements in the legal framework and market infrastructure supporting monetary policy operations.

Banguat’s response to large remittances inflows is appropriate and requires closer coordination with MinFin to address ensuing sterilization costs. Banguat’s FX participation rule delivers a reasonable balance between enabling higher consumption and maintaining external competitiveness. The resulting external position is stronger than fundamentals and desirable policies, but this positive current account gap should be closed by raising investment. On the flip side, Banguat’s policy necessarily relies on costly liquidity sterilization operations to keep inflation in check. While recent international financial conditions have been supportive of Banguat’s profitability, these costs could be further reduced through higher reliance on domestic debt to finance the budget, and closer coordination with MinFin on liquidity management. In the long term, ensuring Banguat’s financial strength will require consistent enforcement of legal provisions mandating budget to cover central bank losses.

Financial Sector

Maintaining financial stability requires continued close monitoring of the system. Guatemala’s banking system remains sound, with solid capital and liquidity buffers and strong profitability. The authorities have made important progress in bolstering the regulatory and supervisory framework through enhanced credit risk regulations, more robust stress testing, broader regulatory coverage, and the inclusion—on a voluntary basis—of savings and credit cooperatives in the Credit Risk Information System. These efforts should be reinforced by expanding risk-based supervision and strengthening oversight of fintech and digital financial services. Adopting revisions to the 2002 Law on Banks and Financial Groups, transitioning to International Financial Reporting Standards, advancing the draft Secondary Market Law, approving the e-money law and continued implementation of other elements of the financial inclusion strategy are needed.

Governance and Structural Agenda

Strengthening governance and advancing structural reforms are critical to fostering inclusive growth and restoring public trust. Key legislative priorities include the adoption of a revised AML/CFT Law aligned with international standards, the Beneficial Ownership Law, the Public Procurement Law and the Law for the Protection of Whistleblowers to ensure secure reporting channels and legal safeguards. With GAFILAT mutual evaluation expected in 2027, further delays with the AML/CFT law could complicate Guatemala’s path to investment grade. Institutional progress—such as the creation of the National Commission Against Corruption and the rollout of probity offices across executive institutions—should be consolidated through a medium-term anti-corruption strategy. Accelerating infrastructure investment through amendments to the law on Partnerships for Development of Economic Infrastructure, and a new law on ports is essential to close persistent gaps and crowd in private investment. Continued efforts to formalize the economy and improve the business environment will help prepare the economy for the impact of lower net emigration on the labor market.

The mission wishes to thank the Guatemalan authorities for their cooperation and openness in the exchanges throughout our visit and wishes them every success in their efforts to move the country towards a new equilibrium characterized by high, inclusive and sustainable growth.

Guatemala: Selected Economic Indicators

			Projections
	2023	2024	2025	2026	2027	2028	2029
(Annual percent change, unless otherwise indicated)
Income and prices
Real GDP	3.5	3.7	3.8	3.6	3.6	3.7	3.8
Inflation (average)	6.2	2.9	2.4	4.0	4.0	4.0	4.0
(In percent of GDP, unless otherwise indicated)
External Sector
Current Account Balance	3.1	2.9	2.5	1.7	1.3	0.7	0.2
Trade Balance (goods and services)	-15.1	-15.5	-15.9	-15.8	-15.4	-15.0	-14.7
Remittances	19.0	19.0	18.8	18.0	17.1	16.3	15.5
Financial Account (“+” = net lending)	2.7	2.5	2.5	1.7	1.3	0.7	0.2
Central Government Finances
Total Revenues	12.5	12.4	12.4	12.4	12.4	12.4	12.4
Tax Revenues	11.7	11.8	11.7	11.7	11.7	11.7	11.7
Total Expenditure	13.7	13.4	15.0	15.1	15.3	15.2	15.2
Current	11.2	11.0	11.8	11.7	11.9	11.9	12.0
Capital	2.5	2.4	3.2	3.4	3.4	3.3	3.2
Primary Balance	0.4	0.7	-1.0	-1.1	-1.2	-1.0	-1.0
Overall Balance	-1.3	-1.0	-2.6	-2.8	-2.9	-2.8	-2.8
Central Government Debt
Gross Central Government Debt	27.2	26.3	27.1	28.0	28.9	29.6	30.2
Source: Bank of Guatemala; Ministry of Finance; and Fund staff estimates and projections.

https://www.imf.org/en/News/Articles/2025/06/23/guatemala-staff-concluding-statement-of-the-2025-article-iv-mission

MIL OSI

Source: IMF – News in Russian

June 20, 2025

• The IMF Executive Board completed today the third review under the Extended Credit Facility Arrangement for Burkina Faso. This enables an immediate disbursement of about US$32.8 million.
• Supportive policies and favorable weather conditions boosted agricultural output in 2024; however, widespread insecurity continues to weigh on economic activity in other sectors, especially gold mining, the primary source of export earnings for the country.
• Program performance has been broadly satisfactory. While end-December 2024 performance criteria for the primary fiscal deficit and net domestic financing were missed by 0.6 percent of GDP, the 2025 budget includes adequate corrective measures. On this basis, the Executive Board approved waivers of nonobservance of these performance criteria. All continuous performance criteria were met. Seven out of eight structural benchmarks were achieved, with the remaining one implemented later as a prior action.

Washington, DC: The Executive Board of the International Monetary Fund (IMF) completed the third review under the 48-month Extended Credit Facility (ECF) arrangement that was approved on September 21, 2023. The completion of the review enables the immediate disbursement of SDR 24.08 million (about US$32.8 million), bringing total IMF financial support under the arrangement to SDR 96.32 million (about US$131.3 million). 

Real GDP growth is estimated to have reached 5.0 percent in 2024. Strong growth in agriculture and services outweighed contractions in mining and manufacturing. Real GDP growth is projected to average 4.2 percent in 2025, as growth in the agricultural output is expected to soften in line with average rainfall conditions. Inflation is projected to ease to 3.0 percent in 2025 amid moderating food prices.

Balance of payments strengthened, reflecting a positive shift in terms of trade. The current account deficit rose from 5.0 percent of GDP in 2023 to 5.7 percent in 2024 but is expected to narrow to 3.4 percent in 2025 due to record-high gold prices. Trade policy turbulences will likely have a marginal impact as the United States are not a major trading partner.   

Elevated capital spending affected fiscal performance in 2024. Nonetheless, the overall fiscal deficit narrowed from 6.7 percent of GDP in 2023 to 5.8 percent in 2024. Building on the 2025 budget, fiscal policy is expected to be tightened considerably in 2025, with the overall fiscal deficit projected in the 3.3 to 4.0 percent of GDP range, depending on the availability of external concessional financing. Risks to the outlook are tilted to the downside due to terrorist threats.

Progress under the ECF arrangement has been broadly satisfactory. Due to fiscal pressures in late 2024, the end-December performance criteria (PCs) on the primary fiscal deficit and net domestic financing were missed by 0.6 percent of GDP, while all other PCs were met. Three out of six indicative targets (ITs) were missed by small margins. All three continuous PCs and five end-March 2025 ITs, including on the primary fiscal deficit and net domestic financing were met, while the remaining four ITs were missed by small margins.

The Burkinabè authorities advanced their structural reform agenda under the program. They met seven out of eight structural benchmarks (SBs) and have addressed the missed SB on the preparation of the clearance plan for domestic arrears as a prior action for the third review. They have also implemented two other prior actions: they shared a list of treasury deposit accounts and cleared all domestic arrears outstanding at end-2023. Three new SBs under the program aim to strengthen the governance in public procurement, uphold integrity in revenue administration, and increase control over the public wage bill.

At the conclusion of the Executive Board’s discussion, Mr. Kenji Okamura, Deputy Managing Director, and Acting Chair, issued the following statement:

“Burkina Faso’s economy has proven resilient notwithstanding security challenges, a difficult humanitarian situation, and weather shocks. A lasting improvement in socio‑economic conditions will require progress on security and structural reforms to foster diversification, fiscal governance, and resilience.

            “While the policy framework remains strong, fiscal pressures affected program performance in 2024. For the first time, and in difficult circumstances, performance criteria on the primary fiscal deficit and net domestic financing were missed. The margin of nonobservance—while not negligible—did not undermine the fiscal consolidation trend. The authorities counteracted the slippage with strong measures on the expenditure side and remain committed to reducing the overall fiscal deficit to three percent of GDP by the end of the ECF arrangement, while safeguarding fiscal space for poverty-reducing social spending. This commitment is reflected in the 2025 budget and fiscal performance through end-March.

            “The authorities are on track and have expanded their structural reform agenda, focusing on fiscal governance and transparency. They have provided a list of treasury deposit accounts, adopted an arrears’ clearance plan, and cleared all arrears outstanding at end-2023 following their audit. These measures are informed by the preliminary findings of the IMF’s Governance Diagnostic Assessment (GDA). The GDA report is being finalized. The authorities intend to publish the final report in coming weeks and adopt, within four months from publication, an action plan reflecting its key recommendations. Structural conditionality for the fifth review has been strengthened with the addition of benchmarks on implementing the action plan from the procurement audit and strengthening further wage bill control and governance in revenue services.”

Table 1.  Burkina Faso: Selected Economic and Financial Indicators, 2023–29
Population (2023): 23.3 million						Gini Index (2021): 37.4
Per capita GDP (2023): 910 USD					Life Expectancy (years): 60
Share of population below the poverty line (2022): 43.7%						Literacy rate (2022): 34%
	2023	2024	2024	2025	2025	2026	2027	2028	2029
	Act.	ECF 2nd Review	Prel.	ECF 2nd Review	Proj.	Proj.	Proj.	Proj.	Proj.
	(Annual percentage change, unless otherwise indicated)
GDP and Prices
GDP at constant prices	3.0	4.2	5.0	4.3	4.2	4.9	4.7	4.7	4.7
GDP deflator	2.0	7.2	8.9	5.6	5.9	4.0	3.3	2.8	2.3
Consumer prices (annual average)	0.7	3.6	4.2	3.0	3.0	2.5	2.1	2.0	2.0
Consumer prices (end of period)	1.0	3.4	4.9	2.8	3.0	2.5	2.1	2.0	2.0
Money and Credit
Net domestic assets (banking system) 1/	5.3	18.7	0.4	14.7	6.1	8.8	8.7	7.5	7.0
Credit to the government (banking system) 1/	3.0	9.8	3.7	8.1	3.8	3.4	3.3	2.3	2.1
Credit to private sector	5.9	13.1	-2.2	9.5	2.6	8.2	8.3	7.9	7.5
Broad money (M3)	-3.0	20.8	7.2	15.6	6.1	9.1	8.1	7.6	7.1
Private sector credit/GDP	31.6	30.7	27.0	30.5	25.1	24.9	24.9	25.0	25.1
External Sector
Exports (f.o.b.; valued in CFA francs)	-3.1	10.5	2.0	10.5	25.3	7.8	5.3	4.2	2.7
Imports (f.o.b.; valued in CFA francs)	-1.5	5.3	4.8	3.5	10.8	6.3	6.5	6.4	5.7
Current account (percent of GDP)	-5.0	-5.2	-5.7	-3.5	-3.4	-3.1	-3.4	-3.7	-4.4
	(Percent of GDP, unless otherwise indicated)
Central Government Finances
Current revenue	20.6	20.1	20.6	18.6	19.8	20.1	20.4	20.8	20.9
of which: Tax revenue	18.2	17.8	18.3	16.9	18.1	18.4	18.8	19.1	19.3
Total expenditure and net lending	29.0	26.3	27.7	24.1	25.0	24.7	24.6	24.9	25.1
of which: Current expenditure	17.9	16.5	16.3	15.4	16.0	15.5	15.1	14.7	14.3
Overall fiscal balance, incl. grants (commitments)	-6.7	-5.0	-5.8	-4.3	-4.0	-3.5	-3.0	-3.0	-3.0
Total public debt 2/	56.2	53.0	56.9	52.2	56.1	55.0	54.0	53.0	52.3
of which: External debt	25.9	23.7	25.4	22.2	24.8	24.0	23.7	23.3	23.1
of which: Domestic debt	30.3	29.4	31.6	29.9	31.3	30.9	30.3	29.7	29.2
Memorandum Items:
Nominal GDP (CFAF billion) 3/	12,328	14,330	14,098	15,791	15,561	16,973	18,355	19,755	21,153
Nominal GDP per capita (US$)	874	990	975	1,050	1,002	1,063	1,120	1,175	1,227
Nominal exchange rate (CFAF/US$, period average)	606	602	606	598	635	637	637	637	637
Gold price (USD/troy ounce)	1,943	2,342	2,387	2,608	2,821	2,963	3,096	3,198	3,244
Sources: Burkinabé authorities; IMF staff estimates and projections.
1/ Percent of beginning-of-period broad money.
2/ The 2nd review total public debt data has been retroactively adjusted to correct an exchange rate calculation error starting in 2023. In addition, the denominator (GDP) in the table has been revised (see footnote 3 below). Previously, total public debt in 2024 was estimated at 52.6 percent of GDP, while it was assessed to have reached 53.6 percent of GDP in 2023.
3/ Historical nominal GDP figures have been revised down, in line with the most recent publication of official estimates by the National Institute of Statistics.

https://www.imf.org/en/News/Articles/2025/06/20/pr-25211-burkina-faso-imf-completes-the-3rd-review-under-the-ecf-arrangement

MIL OSI

Source: IMF – News in Russian

June 20, 2025

• The IMF Executive Board concluded the fifth and final reviews under the Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF) arrangements with Barbados, allowing an immediate disbursement of about US$19 million under the EFF arrangement and about US$39 million under the RSF arrangement.
• Implementation of the home-grown Barbados Economic Recovery and Transformation (BERT 2022) plan has remained strong and the broad objectives of the EFF and RSF arrangements have been achieved. Macroeconomic stability has been reinforced, and reforms have been implemented to boost fiscal sustainability, enhance growth, and build resilience.
• Barbados’ economy has continued to perform well. Growth has been robust, inflation has moderated, the fiscal and external positions have improved, and the public debt-to-GDP ratio has continued to decline. The outlook is stable but subject to downside risks, given heightened global uncertainty and vulnerabilities to external shocks and natural disasters.

Washington, DC: The Executive Board of the International Monetary Fund (IMF) today concluded the fifth and final reviews of the Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF) arrangements with Barbados. The completion of the reviews allows the authorities to draw the equivalent of SDR 14.175 million (about US$19 million) under the EFF arrangement and SDR 28.35 million (about US$39 million) under the RSF arrangement, bringing total disbursements under the EFF arrangement to SDR 85.05 million (about US$116 million) and SDR 141.75 million (about US$193 million) under the RSF arrangement. The authorities have consented to the publication of the staff report prepared for these reviews.[1]

Economic activity in 2024 remained robust, with growth estimated at 4 percent, driven by tourism, construction, and business services. Inflation moderated to an average of 1.4 percent due to easing global commodity prices and prices of domestic goods and services. The external position strengthened further, with the current account deficit narrowing to 4.5 percent of GDP, supported by tourism receipts, declining import prices, and one-off current transfers. Gross international reserves reached US$1.6 billion at end-2024, equivalent to over 7 months of import cover, providing continued strong support to the exchange rate peg.

The near-term outlook is stable. Growth is expected to reach 2.7 percent in 2025, supported by construction of tourism-related projects and government investment. Inflation is expected to pick up in 2025 due to the rising cost of non-fuel imports and some domestic agricultural products. Nevertheless, risks to the outlook are tilted to the downside, amidst the highly uncertain external economic environment and Barbados’ continued vulnerability to global shocks and natural disasters.

Program performance has remained strong. All quantitative performance criteria and indicative targets were met. The authorities exceeded the primary fiscal surplus target for FY2024/25 and are targeting 4.4 percent of GDP for FY2025/26. Public debt has fallen below 105 percent of GDP, and the authorities remain committed to bringing it down to 60 percent of GDP by FY2035/36. The authorities met the EFF structural benchmarks for the review, including completing the assessment of human resource needs at the Barbados Customs and Excise Department, preparing a public-private partnership (PPP) framework, and developing a daily liquidity forecasting framework. Both reform measures for the RSF fifth review were also implemented. Key elements to strengthen the integration of climate concerns into public financial management have been completed, including the development of project appraisal guidelines, the deepening of fiscal risk analysis, and the preparation of the PPP framework. The Central Bank of Barbados has also included physical climate risk analysis in its bank stress testing.

Following the Executive Board discussion on Barbados, Mr. Bo Li, Deputy Managing Director and Acting Chair, issued the following statement:

“The implementation of Barbados’ homegrown Economic Recovery and Transformation program has remained strong, supported by the Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF) arrangements. The completion of the fifth and final reviews marks the successful conclusion of the Fund arrangements.

“While the outlook is stable, risks remain tilted to the downside, given the highly uncertain external economic environment and Barbados’ vulnerability to shocks and natural disasters. The authorities remain strongly committed to ensuring macroeconomic stability and implementing structural reforms to boost potential growth and build resilience.

“Maintaining strong fiscal surpluses will be necessary to achieve the public debt target of 60 percent of GDP by FY2035/36. The authorities’ focus on strengthening revenue mobilization and improving public financial management is appropriate. These measures will be key to preserving fiscal sustainability and creating space for public investment. Finalizing ambitious reforms of state-owned enterprises is a priority. The authorities are taking the necessary steps to mobilize external financing.

“The exchange rate peg remains a critical anchor for macroeconomic stability, supported by ample international reserves. Measures have been taken to strengthen the monetary policy framework and financial safety nets. Efforts to enhance the local payments market and infrastructure are advancing, with the goal of moving to a digital payments system in 2026.

“Reforms to improve the business environment and boost growth potential are key. Important measures include advancing the digitalization of government services and investing in skills and education. The authorities focus on boosting macroeconomic resilience to natural disasters and facilitating the transition to renewable energy is welcome.”

[1] Under the IMF’s Articles of Agreement, publication of documents that pertain to member countries is voluntary and requires member consent. The staff report will be published shortly on the www.imf.org/Barbados page.

https://www.imf.org/en/News/Articles/2025/06/20/pr-25210-barbados-imf-concludes-5th-reviews-under-the-eff-and-resil-and-sustainability-facility

MIL OSI

Source: IMF – News in Russian

June 20, 2025

Washington, DC: An International Monetary Fund (IMF) mission, led by Anke Weber and comprising Aleksandra Alferova, Jakree Koosakul, Moheb Malak, Augustus Panton, and Atticus Weller, visited Budapest during June 5-17 to conduct discussions on the 2025 Article IV Consultation with the Hungarian authorities. At the end of the visit, the mission issued the following statement:

The Hungarian economy is at a challenging juncture. Output has stagnated over the past 3 years, while inflation remains well above the central bank’s 3 percent target. Regulatory measures—such as price, interest and margin caps, along with windfall taxes and subsidized lending schemes—have distorted market signals and added uncertainty. Despite significant fiscal adjustment in recent years, public debt remains elevated given high financing costs. Timely domestic policy reforms are needed to reinforce resilience amid an unsettled external environment. Key to this will be well-designed fiscal measures to strengthen public finances, a continued tight monetary policy to bring down inflation, and structural reforms to raise productivity and safeguard growth against trade tensions and heightened uncertainty.    

 

Economic Outlook

High domestic and external uncertainty are expected to continue weighing on the outlook. Modest consumption-driven growth of 0.7 percent is expected in 2025, underpinned by favorable wage dynamics. Growth is projected to increase to 2 percent in 2026—on a recovery in investment and a positive impulse from German fiscal expansion—and to converge to its long-term potential of around 2½ percent by 2030. Inflation is forecast at 4.5 percent in Q4:2025, and to gradually decelerate to the MNB’s 3 percent target by 2027. The current account surplus is expected to fall to around 1¼ percent of GDP in 2025 and to increase gradually over the medium term as battery and electric vehicle production expands. These projections are based on the IMF’s April World Economic Outlook global assumptions.

Risks to growth remain on the downside. Deepening geoeconomic fragmentation and rising trade tensions would affect Hungary’s exports directly, while indirect effects may be even larger, arising from prolonged trade uncertainty undermining private investment and further weakening global economic activity. Geopolitical tensions could lead to commodity price volatility, intensifying inflationary pressures and negatively impacting fiscal and external balances. On the domestic front, a delay in the needed fiscal adjustment could heighten market concerns about debt sustainability, further increase risk premia, and exacerbate sovereign-bank linkages. A lack of progress on governance reforms being discussed with the EC could further delay or result in cancellation of EU funds with negative consequences for growth and market confidence. Inflation could be more persistent than projected, including from larger-than-anticipated effects of minimum wage hikes necessitating tighter monetary policy for longer.

Strengthening Fiscal Sustainability for Future Growth

Staff estimates that currently announced policies fall short of achieving the authorities’ budget targets. The authorities remain committed to reaching their 2025 and 2026 deficit targets of 4.1 and 3.7 percent of GDP, respectively. Their medium-term fiscal structural plan (MTFSP) envisages a further deficit reduction to below 2 percent of GDP by 2028. Under staff’s baseline scenario, which incorporates only legislated or officially endorsed measures, the deficit is projected to decline slightly to 4.8 percent of GDP in 2025 and 4.6 percent of GDP in 2026. In the medium term, the deficit would remain around 4½ percent of GDP, while the debt-to-GDP ratio would rise to about 79 percent in 2030 from 73½ percent in 2024. Debt dynamics have deteriorated since last year, following fiscal slippages and a weaker outlook, and remain sensitive to the real interest and growth path.

Significant additional fiscal efforts are needed to preserve fiscal space and rebuild buffers. Over the medium term, a surplus of around 1¾ percent of GDP excluding debt servicing and adjusting for economic cycles would appropriately balance debt sustainability and output stabilization objectives. The implied cumulative adjustment of around 2 percent of GDP over 2025-2028 would bring the deficit below 3 percent of GDP by 2027 and reduce the public debt ratio below 70 percent by 2029. Any additional defense spending should be accommodated within staff’s recommended path.

Measures underpinning the adjustment should be well-designed and growth-friendly.

• Revenue enhancements: The recent doubling of family tax allowances and expansion of personal income tax exemptions for mothers will significantly reduce revenues. In staff’s view an alternative that would minimize fiscal costs and labor market distortions would be to provide capped tax credits per child for both parents. A more targeted tax regime with fewer exemptions would raise revenue, improve efficiency, and simplify administration. Staff notes that a higher marginal personal income tax rate for high earners would increase revenue and fairness while taxation of corporates could be made more equitable and efficient by rationalizing tax incentives. A reduced reliance on distortionary windfall and financial transactions taxes would be more conducive to investment and growth.
• Expenditure rationalization: A phaseout of distortive retail energy subsidies and their replacement by targeted cash transfers would free up fiscal resources. A review of procurement and government employment would help the authorities to better target a reduction of administrative expenditures, which are high relative to peers, while a strategy is needed to limit transfers to SOEs and other public organizations. The realized savings from these measures could be used to bolster underfunded areas—health, primary education, and social protection. Public financial management reforms and a strengthened expenditure review process could enhance spending efficiency and support better fiscal governance. Relying on capital spending cuts to achieve targets would weaken growth and should be avoided.

Further efforts will be needed to reduce long-term spending pressures. Population aging is expected to add roughly 3.5 percent of GDP in additional pension and healthcare costs by 2050. An increase in the retirement age, adjustment of benefit levels, and a limited increase in the social security contribution rate would help to control pension costs in the long term. mproved digitalization and efficient procurement would help to contain health expenditures.  

Fiscal risk monitoring and mitigation could be improved. A comprehensive, consolidated and regular risk assessment of SOEs would provide early warning of potential vulnerabilities. The issuance of new guarantees should be capped by ceilings, and the stock of guarantees, risk of their activation, and performance of underlying liabilities assessed on an annual basis. Channeling public resources into fund management structures or private equity undermines budgetary transparency, risks resource misallocation and could result in unforeseen contingent liabilities. Finally, to mitigate distortions, it would be beneficial to limit the use of subsidized lending by state-owned banks to addressing market failures.

Bringing Inflation Durably Back to Target

The monetary policy stance will need to remain tight into next year to durably return inflation to target. Monetary policy has been appropriately cautious, with the MNB signaling that maintaining tight monetary conditions is warranted. With average inflation expected to remain above the tolerance band in 2025, staff sees limited scope for rate cuts this year. However, the balance of risks to growth and inflation is evolving. Given exceptional uncertainty, the MNB should thus maintain a data-driven approach. The flexible exchange rate regime and adequate reserve coverage can continue to help reduce Hungary’s vulnerability to external shocks. Price, fee, and margin controls are not a sustainable path to lasting disinflation and should be phased out.

Staff welcomes ongoing efforts to refine the MNB’s focus on the core objectives of price and financial stability. The proposed change to the MNB Act—prohibiting foundations from engaging in asset management activities—is a step in the right direction. In this context, a broader review of the MNB’s non-core functions is warranted, including measures relating to its secondary goal of environmental sustainability. While the MNB should play an active role in climate-risk supervision, prudential regulation should remain risk focused, and all climate-related initiatives be consistent with the MNB’s price and financial stability mandates.

Safeguarding Financial Sector Stability

Systemic risks in the financial sector are assessed as broadly contained. Overall, the banking system remains well-capitalized, liquid, profitable, and resilient to external shocks. But emerging pockets of vulnerability merit continued vigilance, including an increase in the share of FX corporate loans, banks’ growing sovereign exposure and significant FX positions, elevated commercial real estate (CRE) vacancies, and buoyant house prices.

The capital-based macroprudential toolkit is broadly appropriate, though further refinements may be warranted. The planned introduction of a one percent positive neutral countercyclical capital buffer (CCyB) in July 2025 amid heightened uncertainty is welcome, as was the reactivation of the systemic risk buffer (SyRB) for banks’ CRE exposures in 2024. While risks arising from banks’ growing sovereign exposures are partially mitigated by their high leverage ratio (capital-to-total exposure), consideration could be given to incorporating appropriate sovereign-bank nexus stress scenarios into regular supervisory stress testing.

Differentiation in borrower-based macroprudential limits should be introduced only on financial stability grounds. Recent relaxations of loan-to-value (LTV) and debt-service-to-income (DSTI) limits for first-time buyers and green homes appear to be partly driven by housing affordability and energy efficiency concerns. Such considerations should instead be tackled through appropriate structural and fiscal policies. Moreover, DSTI limits of 60 percent for first-time home buyers and for energy-efficient homes appear high relative to the overall limits in some peers. The reintroduction of voluntary APR ceilings for housing loans, while more restricted in scope, distorts risk pricing and should be reversed. Scaling back housing-related fiscal incentives would help contain future price pressures and safeguard financial stability.

Boosting Productivity Through Reforms

Boosting productivity growth will require comprehensive reforms that foster firm dynamism. Firm entry and exit rates remain low amid high regulatory barriers and an insolvency framework that impedes the timely exit of non-viable firms. Streamlining licensing and overlapping permits and enabling creditor-initiated and out-of-court restructuring would enhance capital and labor mobility toward more productive business ventures. Public R&D support should be performance-based and policy efforts aimed at promoting entrepreneurship and technology adoption better targeted, especially toward young, high-growth firms.

Productivity gains from industrial policy interventions remain elusive, underscoring the need for more effective horizontal reforms. Hungary has implemented repeated waves of industrial policies (IP) to boost competitiveness and productivity in targeted sectors. Yet, their impact on sustained productivity growth remains elusive. Given their high fiscal cost, IP should not substitute for broader structural reforms. Where used, such measures must be appropriately targeted to address market failures and be time-bound and transparent. As a small, open economy, Hungary would benefit most from a coordinated approach to state aid and IP at the EU-level.

Strengthening energy security can enhance competitiveness and facilitate the green transition. Ongoing efforts to diversify energy supply and increase renewable energy generation are commendable. Still, the Hungarian economy remains energy-intensive with high corporate energy prices weighing on cost competitiveness. EU-wide policy measures—including regional electricity market integration—should be complemented with domestic reforms such as targeted phaseout of household fossil fuel subsidies, enhanced energy efficiency standards, and accelerated permitting procedures for renewable energy investment.

Governance reforms are foundational for fostering a predictable business environment and boosting potential growth. Hungary has taken some important steps, including the 2023 judicial reforms aimed at strengthening the National Judicial Council. Further governance reforms and their effective enforcement—including related to public procurement, scope of the asset declaration system, conflict-of-interest rules, regulatory oversight, and functioning of the Integrity Authority—could unlock EU funds and amplify the growth dividends of other reforms.

The mission thanks the Hungarian authorities and our other interlocutors in Hungary for the productive collaboration, constructive policy dialogue, and warm hospitality.

https://www.imf.org/en/News/Articles/2025/06/20/hungary-staff-concluding-statement-of-the-2025-article-iv-mission

MIL OSI

Source: IMF – News in Russian

June 20, 2025

Staff-Monitored Programs (SMPs) are informal arrangements between national authorities and IMF staff to monitor the authorities’ economic program. As such, they do not entail endorsement by the IMF Executive Board. SMP Staff reports are issued to the Board for information.

• IMF staff and the South Sudanese authorities have reached a staff-level agreement on a nine-month Staff-Monitored Program (SMP), which is expected to start in August 2025, pending approval from the IMF’s Management.
• The SMP aims to support South Sudan in designing and implementing policies and key reforms to strengthen its economic resilience to shocks, enhance macroeconomic stability, restore sustainability, and improve governance and transparency.
• The South Sudanese economy is projected to start recovering as oil production has resumed from the oil pipeline damaged in February 2024 due to the war in Sudan. This disruption had halted oil exports, fiscal revenues, and foreign exchange (FX) proceeds for over a year, leading to liquidity and financing constraints. The recovery is expected to be gradual and hinges on continued improvement in the security environment and political stability.

Washington, DC: Upon request from the authorities, an International Monetary Fund (IMF) staff team, led by Ms. Mame Astou Diouf, held meetings in Juba, South Sudan, from June 11 to 20, 2025 to negotiate a Staff-Monitored Program (SMP) in support of the authorities’ economic and financial reform program. This SMP request follows the conclusion of South Sudan’s Staff Monitored Program with Board Involvement (PMB) on November 15, 2024 (See Press Release No. 24/434).

At the end of the mission, Ms. Diouf issued the following statement:

“The South Sudanese authorities and the IMF team have reached a staff-level agreement on the economic and structural policies and reforms that will underpin a nine-month SMP, pending approval by the IMF’s Management.

“Since early 2014, South Sudan has faced severe shocks that have exacerbated the country’s post-conflict fragility and humanitarian situation. Due to the war in Sudan, the country’s main oil pipeline was damaged in February 2024, halting related oil exports, fiscal revenues, and FX proceeds for over a year. The conflict also triggered a large influx of refugees, compounding an already-dire social and humanitarian situation caused by recurrent floodings, agricultural production losses, widespread food insecurity, and large-scale population displacement. The recent steep decline in international aid flows risks exacerbating the humanitarian challenges facing the country.

“The short- and medium-term economic outlook is moderately favorable and improving, contingent on a continuously improving security environment and political stability. The resumption of oil exports through the main pipeline since April 2025 is promising. While real GDP growth is projected to have contracted during FY2024/25 due to the lower oil production, it is expected to recover in FY2025/2026 as oil exports gradually strengthen. The rebound in oil exports is expected to significantly improve the current account balance, helping rebuild external buffers. The parallel foreign exchange (FX) market premium stood at 30.8 percent on June 11, 2025.

“While the budget execution of FY2024/2025 has been constrained by the financing constraints, non-oil domestic revenue collection was strong. This has allowed the resumption of government salary payments. However, structural bottlenecks partly hinder the effective distribution of salaries to civil servants due to cash shortages. For FY2025/2026, oil revenue is expected to recover substantially. Non-oil revenue will remain strong, benefiting from the continued implementation of tax policy reforms approved under the FY2024/2025 budget and broader revenue administration improvements. This will gradually ease liquidity constraints and provide some fiscal space for cautious repayment of salary arrears and a gradual increase of priority social spending and debt service repayments, while maintaining prudent fiscal management and cautious investment plans, given the continued risks to the outlook.

“Inflation has remained high. Average inflation is projected at about 143 percent in FY2024/2025, and expected to slow down in FY2025/26, thanks to ongoing tight monetary policy and a reduction in monetary financing. The debt-to-GDP ratio is forecast at about 58 percent of GDP in FY2024/2025, with large debt vulnerabilities. With the easing liquidity constraints, debt sustainability is projected to strengthen.

“Against this background, the South Sudanese authorities have requested a nine-month SMP to help strengthen economic resilience to shocks and foster macroeconomic stability through sound and prudent policies conducive to sustained growth. Key priorities under the SMP include:

“Restoring fiscal and public debt sustainability in the near term and laying the groundwork for positive medium-term prospects through prudent debt management and improved domestic revenue mobilization to increase fiscal space for priority spending, including salary and social programs. Enhancing spending efficiency, including through public financial and investment management reforms, will support public service delivery against the backdrop of high spending needs and limited availability of domestic and external financing.

“Maintaining a tight monetary policy stance to curb inflationary pressures and exchange rate depreciation. This includes containing monetary financing and continuing liquidity mop-up operations. While the official exchange rate has gradually decreased since August 2024 to narrow the parallel FX market premium, further policy adjustment is required to unify the official and parallel FX markets and increase FX reserves.

“Steadfast implementation of the governance and accountability reform agenda will be critical to addressing the country’s sources of fragility and creating an environment conducive to strong, diversified, and sustained growth and improved living standards. This includes the governance and transparency of oil-related investment programs.

“The mission met His Excellency, Dr. Benjamin Bol Mel, Vice President and Chairperson of the Economic Cluster, the Minister of Finance and Planning, Honorable Dr. Marial Dongrin Ater, the Governor of the Bank of South Sudan, Dr. Addis Ababa Othow, and other senior government officials, as well as representatives from civil society, private sector, and development partners.

“The mission takes the opportunity to thank the authorities and stakeholders for their warm hospitality, strong cooperation, and for open and productive discussions.”

https://www.imf.org/en/News/Articles/2025/06/20/pr-25200-south-sudan-imf-and-south-sudan-reach-agreement-on-9-month-staff-monitored-program

MIL OSI

Source: IMF – News in Russian

June 20, 2025

Washington, DC: On June 17, 2025, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation[1] with Fiji, and considered and endorsed the staff appraisal without a meeting.

The economic recovery continued in 2024. Staff estimates aggregate GDP growth in 2024 to have reached 3.7 percent. While employment has recovered to pre-pandemic levels, investment has recently been held back by labor shortages and supply-chain challenges. Inflation decelerated though 2024 as the impact of the 2023 value-added tax increase faded and the nominal exchange rate appreciated. The public debt-to-GDP ratio has continued to decline from the peak reached in 2022, but remains elevated, at 80 percent. Likewise, the current account balance has improved, but the deficit in 2024 is estimated to be around 6.7 percent.

Monetary and financial conditions remain accommodative, while the fiscal stance has tightened. The Reserve Bank of Fiji (RBF) has maintained the policy rate at 0.25 percent since early 2020. The fiscal stance tightened in FY2024, with the overall deficit declining from 7.2 percent of GDP in FY2023 (August-July) to 3.5 percent of GDP in FY2024, compared to a budgeted deficit of 4.8 percent of GDP.

Executive Board Assessment

In concluding the 2025 Article IV consultation with Fiji, Executive Directors endorsed staff’s appraisal, as follows:

The economy has been recovering from the pandemic but is facing new setbacks. Growth is expected to fall in 2025, to about 2.6 percent, mostly because of slowing external demand, and to take a couple of years to recover to its medium-term potential rate. The baseline projection implies that public debt would remain elevated. In addition, FX reserve coverage would fall, implying that the external position remains moderately weak. Growth would be higher with successful structural reforms, or should the external environment be more favorable than assumed. But the balance of risks appears to be mostly to the downside, both in the near term, if trade tensions were to worsen or their effects be more severe than assumed in the baseline, or over the medium term, mostly given vulnerabilities to natural disasters.

 

Fiscal and monetary policies should focus on addressing macroeconomic imbalances.

• Fiscal policy should focus on lowering public debt while continuing with growth-friendly fiscal consolidation, oriented toward capital spending. Significant progress has been achieved in recent years, but additional adjustment measures are needed to put public debt on a clear downward path. Targeted and temporary social protection measures should be used to protect the vulnerable. Fiscal tightening would also contribute to reducing external imbalances.
• Over the medium term, given potential pressures on the exchange rate peg, monetary conditions should be gradually tightened, raising the policy rate and reducing excess liquidity.
• Financial policy should be attentive to emerging credit risks and to safeguard against money laundering risks.
• The authorities should avoid using exchange rate restrictions and CFMs in place of macroeconomic adjustment and focus on a gradual, sequenced capital account liberalization to support high long-run growth objectives.

Raising potential growth calls for sustained structural reforms.

• Progress has been achieved in enhancing the business environment and addressing near-term constraints to growth. Immediate concerns include addressing ageing infrastructure in electricity, water, and waste utilities, and improving the transport network and digital connectivity. Ongoing concerns include training and human capital. Successful measures would also encourage more foreign investment, ease external imbalances, and reduce “brain drain.”
• As for other Pacific states, Fiji faces ongoing challenges from natural disasters and climate change. Increasing resilience adds to the motivation to shift away from current toward capital spending.

Such issues require sustained political consensus and good governance. The government’s recognition of the importance of institutional reform, commitment to the rule of law, and reducing corruption and bribery is welcome. Recent legislative progress will need to be matched by proper enforcement and addressing capacity constraints in the civil service.

Fiji: Selected Economic Indicators, 2022–30
	2022	2023	2024	2025	2026	2027	2028	2029	2030
			Est.	Proj.
Output and prices (percent change)
Real GDP	19.8	7.5	3.7	2.6	2.8	3.2	3.2	3.2	3.2
GDP deflator	2.4	4.1	6.3	3.2	3.1	3.2	3.3	3.4	3.5
Consumer prices (average)	4.3	2.3	4.5	3.2	3.1	3.2	3.3	3.4	3.5
Consumer prices (end of period)	3.1	5.1	1.3	3.1	3.2	3.3	3.4	3.5	3.5
Central government budget on fiscal-year basis (percent of GDP)
Revenue and Grants	21.4	23.2	27.4	27.1	27.1	26.8	26.8	26.6	26.5
Expenditure	33.5	30.3	31.0	31.5	31.2	31.0	31.0	30.9	30.9
Overall balance	-12.1	-7.2	-3.5	-4.4	-4.2	-4.2	-4.2	-4.3	-4.4
Primary balance	-8.5	-3.3	0.5	-0.3	-0.3	-0.6	-0.6	-0.7	-0.8
Central government debt	90.4	83.3	79.5	77.7	77.7	77.6	77.3	77.0	76.8
Central government external debt	33.3	30.6	28.7	26.5	26.5	26.4	26.1	25.8	25.6
External sector (percent of GDP)
Current account balance	-17.3	-7.7	-6.7	-7.0	-7.7	-7.5	-7.2	-6.9	-6.9
Trade balance	-32.9	-32.7	-30.0	-29.1	-27.7	-27.3	-27.3	-26.9	-26.4
Services balance	11.8	20.4	20.0	19.9	18.4	17.8	17.3	17.1	16.5
Primary Income balance	-5.3	-5.7	-6.4	-6.8	-6.6	-6.4	-6.0	-5.9	-5.9
Secondary Income balance	9.2	10.3	9.6	9.0	8.2	8.5	8.8	8.9	9.0
Capital account balance	0.1	0.1	0.1	0.1	0.1	0.1	0.1	0.1	0.1
Financial account balance (-= inflows)	-14.0	-4.9	-6.6	-4.1	-5.3	-5.7	-6.9	-6.5	-6.5
FDI	-1.8	-1.1	-1.6	-4.5	-5.4	-6.1	-7.3	-7.1	-7.2
Portfolio investment	0.5	1.0	1.7	1.7	1.7	1.7	1.7	1.7	1.7
Other investment	-12.7	-4.8	-6.7	-1.3	-1.5	-1.3	-1.3	-1.1	-1.0
Errors and omissions	5.1	4.2	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Change in reserve assets (-=increase)	-2.1	0.3	0.1	2.9	2.3	1.7	0.3	0.3	0.4
Gross official reserves (in months of prospective imports)	5.5	5.3	5.2	4.4	3.7	3.1	2.9	2.6	…
Money and credit (percent change)
Net domestic assets of depository corporations	4.9	12.1	8.0	6.4	6.1	…	…	…	…
Claims on private sector	6.7	7.5	11.4	10.0	8.0	…	…	…	…
Broad money (M3)	5.1	9.1	6.6	4.1	4.1	…	…	…	…
Monetary base	15.8	-4.0	7.5	3.6	1.4	…	…	…	…
Central Bank Policy rate (end of period)	0.25	0.25	0.25	…	…	…	…	…	…
Commercial banks deposits rate (end of period)	0.4	0.4	0.3	…	…	…	…	…	…
Commercial banks lending rate (end of period)	5.2	4.8	4.6	…	…	…	…	…	…
Memorandum items
Exchange rate, average (FJD/USD)	2.2	2.3	2.3	…	…	…	…	…	…
Real effective exchange rate, average	108.2	106.4	108.3	…	…	…	…	…	…
GDP at current market prices (in millions of Fiji dollars)	10,940	12,245	13,494	14,286	15,148	16,130	17,193	18,342	19,594
GDP at current market prices (in millions of U.S. dollars)	4,970	5,442	5,949	6,257	6,564	6,913	7,284	7,674	8,089
GDP per capita (in U.S. dollars)	5,450	5,933	6,447	6,740	7,030	7,359	7,707	8,072	8,508
Sources: Reserve Bank of Fiji; Ministry of Finance; and IMF Staff Estimates and Projections.

[1] Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country’s economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.

https://www.imf.org/en/News/Articles/2025/06/20/pr-25208-fiji-imf-concludes-2025-article-iv-consultation

MIL OSI

Source: IMF – News in Russian

Remarks by IMF Managing Director Kristalina Georgieva at the Eurogroup Meeting on Enhancing Competitiveness and Addressing Internal Barriers in the Single Market – Luxembourg

June 19, 2025

As prepared for delivery

Thank you, Paschal, for inviting me back to speak on the topic of Europe’s single market.

We have been urging all of our members that now is the time to get your own house in order given the global trade and other tensions and the uncertainty. Reforms delayed? Delay no more.

And our advice has been resonating. Across the globe, countries and regions are on the move, pushing to higher competitiveness, more dynamism, and faster technological transformation. For Europe it is very simple: either Europe acts, or Europe risks getting sidelined. Relative decline would not happen in a flash, it would creep in, but that would not make it less real.

There is no time for delay.

Here at the Eurogroup, I have two positive messages that I want to deliver upfront:

• First: with the Draghi and Letta reports, with the work of the Commission, and with your work, Europe has defined a strategic agenda with single market integration at its core, yet also bringing in national reforms and a bolder vision for the EU budget. Today I will sum this up in a three-point approach—single market, national reforms, and the EU budget—where the strength of each piece rests on the strength of the others.
• Second: Europe has all the assets it needs—the savings, the skills, and the technology. It falls to Europe’s policymakers to push—nationally, collectively, and decisively—to mobilize these assets to their full potential. The people want a Europe that creates high-value jobs, innovates, and generates cutting-edge products and services. They want opportunity. It is within reach.

I know it can be done because Europe has done it before. I think back, for instance, to the EU enlargement of 2004, which opened up many new avenues for households and firms. Today, GDP per capita in the new member states is 30 percent higher than it would have been without EU accession—30 percent! Even for the “old” member states, we estimate that GDP per capita today is some 10 percent higher, on average, thanks to the enlargement.

Our assessment is thus clear and grounded in hard data: the single market delivers.

And yet we know that internal trade barriers remain high. According to the European Commission, for every 100 euros of value added produced in EU countries, only around 20 euros of goods are flowing back and forth between EU countries. In contrast, for the United States, for every 100 dollars of value added produced, 45 dollars of goods are crossing state borders.

This shows how various factors are holding Europe back. What are they? Regrettably, the list is long: fragmented regulation, obstacles to financial integration, labor market rigidities, gaps in the energy market, parochial interests—all coming together to constrain growth.

Too many European firms remain too small. One in five EU workers works at a company with fewer than ten employees—twice the share we see in the United States. Fragmentation and regulatory differences across member states make it hard for firms to compete, expand, and thrive. Productivity has fallen behind.

So what can be done to inject new vibrancy? Our advice is: pick a few key priorities, make sure they are the right ones, and push hard.

Let me start with the first piece of our three-point agenda—the single market. In this first piece, we see four top priorities.

Priority one: create a predictable regulatory environment to help firms grow.

Reducing regulatory fragmentation is critical: firms need clarity. Harmonizing company law and insolvency law would be the first best, but this is difficult. That is why we at the Fund put our full support behind the so-called “28th regime”—a voluntary EU-wide corporate charter. It offers a pragmatic way to slash legal complexity and compliance costs for cross-border firms: one system, applicable everywhere in the EU, for firms that opt in.

We know that our colleagues at the European Commission are working on a proposal. I say: please write up a simple set of rules covering key phases of the corporate life cycle from entry to exit, and everything in between. Create the possibility of the European Firm, enjoying legal certainty so it can focus on innovation and growth rather than navigating a maze of 27 national systems.

The goal need not be uniformity in all things, but rather, uniformity where uniformity matters most. Sensible national variations can—and must—coexist.

And to those who say corporate law is so deeply rooted in national legal tradition that a 28th regime is impossible, let me repeat what I said here two years ago: you have already done it. I am referring to the Bank Recovery and Resolution Directive, which is nothing other than an EU-level carveout from national frameworks for selected banks. Please now create an alternative regime for European companies.

Priority two on our list is longstanding: putting European savings to work.

This point too I raised here two years ago: Europe has the money—many trillions in private savings—but it is lazy money. Savings work harder elsewhere. Europe’s bank-centric financial system is failing to support the kind of innovative, high-growth firms that will drive the next wave of productivity and innovation.

That’s why the capital markets union needs to move—now. Europe needs deeper, more integrated capital markets to channel savings to high-risk, high-reward investments. Europe needs more venture capital. Creating a 28th regime will be key, but let it be paired with better investor access to corporate information on all firms—so market discipline can work.

And importantly, energizing finance requires positive steps in banking too. Bank dominance in Europe will persist, and there is room for more bank credit. Let banks be nudged to embrace more risk taking—prudently—to support economic growth. Done right, this can strengthen internal capital generation, strengthen risk buffers, and boost bank soundness.

Let’s recognize also that large banks, especially, serve as key players in the capital markets, including by managing investment accounts for their clients. For them to serve most efficiently and in a pan-European way, Europe must shed its reluctance to accommodate cross-border bank mergers and acquisitions. Blocking mergers on non-economic grounds—and dropping the ball on banking union more broadly—will not deliver 21st century finance.

Priority three, very briefly: improving labor mobility and access to talent.

I am told it can take up to six months for a worker relocating within the EU to become legally employable in another member country—surely not optimal. Speeding up work authorizations and streamlining the cross-border recognition of professional qualifications will help ease skills mismatches and enable firms to hire appropriate talent. This is critical to allowing firms to grow.

Fourth priority: building an interconnected and affordable energy market.

Energy is a chokepoint. Just look at the dispersion of prices across European electricity hubs—it is some three times higher than in the United States and, yes, it presents a profitable arbitrage opportunity for European energy majors that they should be grabbing.

What can be done to help this happen? For a start, as we have been emphasizing in our work, Europe needs an energy blueprint that pulls together all the parts. One part, certainly, needs to be better interconnectors between national electricity grids. High and volatile energy costs inhibit corporate investment and expansion. Conversely, improving access to reliable, affordable energy spurs growth.

Across the four areas—regulatory overload, access to finance, labor mobility, and affordable energy—we have laid out ten specific policy actions in a new paper last week. And our simulations suggest that, even by implementing a few, the dividends could be substantial—an uplift to overall EU activity on the order of about 3 percent over ten years. And there would be no question of winners and losers—every country stands to win.

Next, the second piece of our three-point agenda: reforms at the national level.

EU-level reforms are essential, but to be effective they must be paired with national reforms in many areas—and it is vital that these two layers of reform pull in the same direction.

Three examples:

• First, capital markets union should make it easier for funds to flow to startups, but for the benefits to be fully realized national permitting processes must be streamlined.
• Second, EU-wide initiatives aimed at enhancing talent mobility are important, but to work they require complementary labor market reforms at the national level.
• Third, increasing the effectiveness of EU investment in cross-border infrastructure is key, but parallel actions are needed to address national infrastructure gaps.

Wherever one looks, there is a vital and complementary national element.

Finally, the third piece of the three-point agenda: making more of the EU budget.

This is about raising the level of ambition: more support from the EU budget for investments in shared priorities—European public goods—and, importantly, better coordination of national efforts around these priorities. And, if new EU borrowing could be agreed, it would help frontload investments, spread costs over time, and increase the supply of safe assets.

Bottom line: we recommend a doubling of EU budget expenditures on European public goods—electricity grids, digitalization, defense, and R&D—from 0.4 percent of EU gross national income to at least 0.9 percent, to help close investment gaps.

Not only would such investments accelerate single market deepening, they would also offer material cost savings. Our analysis shows that EU-level investments in energy infrastructure, for instance, can achieve savings of up to 7 percent relative to duplicative national efforts. With long-term spending pressures piling up, great deals like this one should be seized.

We also propose an expanded role for performance-linked disbursements to member states. I know from my time managing the EU budget that, done right, such schemes can play an important role in incentivizing necessary national reforms and investments, aligning them with shared EU priorities, and maximizing positive cross-border externalities. Famous case in point: the Recovery and Resilience Facility, with its formidable economic payoffs.

Let me conclude. My colleagues and I have put forward for your consideration a strategic agenda with three clear objectives:

• One, remove internal barriers to deepen the single market and let firms grow;
• Two, advance national reforms that align with and amplify EU-level initiatives; and
• Three, use the EU budget strategically to coordinate efforts and invest in public goods.

We do not underestimate the difficulty of delivering on this agenda and the political hurdles and vested interests to be encountered along the way. But the alternative of doing nothing will deliver nothing. Key, in our view, is to push hard.

Success will require you, the policy leaders, to explain reforms to the public and exert sustained pressure at the technical level. Regulators defend their missions but are not always tasked to consider connections and externalities. Like a football coach, you will need to make all the players play as a team.

And to our colleagues at the Commission who hold the legislative pen, our advice would be, first, to prioritize speed and not let the perfect be the enemy of the good and, second, to not let the legal mindset dominate the economic mindset. Economic rationale and economic objectives must drive Europe’s developments at this crucial time. 

There is a saying that Europe is the “lifestyle superpower of the world.” Every time I return here—to my European home—I feel a sense of admiration. But please also hear this: for the European way of life to be sustained, Europe must also become a “productivity superpower.” Europe needs the growth potential that can come only from releasing its entrepreneurial energy.

And for that to happen, Europe needs its single market now more than ever. I’m told that at the Eurogroup Working Group last week one respected colleague described the internal market as “a treasure in the EU’s own hand, which now needs to be unwrapped.” I agree.

The stakes are high, the potential rewards are large, and—in this time of global tensions and uncertainty—the moment is surely now.

Thank you very much.

https://www.imf.org/en/News/Articles/2025/06/19/sp061925-deepening-the-european-single-market

MIL OSI

Source: IMF – News in Russian

July 19, 2025

Washington, DC: Europe’s economy remains resilient with record-low unemployment, headline inflation broadly at target, and a stable financial system. However, policymakers face mounting challenges, including trade tensions, rising demand for defense spending, and the need to ensure energy security, all while addressing subpar productivity, rapid aging, and weak medium-term growth. The most effective solutions require decisive EU actions. Deepening the EU single market is the key tool available to policymakers to enhance investment, innovation, and productivity. A better-integrated EU single market, in turn, calls for a joint provision of key public goods including for energy connectivity and defense—including through the multiannual financial framework. This can help internalize positive cross-border externalities of investments, leverage economies of scale, and avoid costly duplicative national efforts. Ensuring orderly growth-friendly fiscal consolidations designed to address country-specific risks is critical to preserving fiscal sustainability and managing long-term spending pressures associated with aging and increased spending on security. Diversifying economic ties and expanding rule-based trade integration can further bolster competitiveness and strengthen economic resilience. Safeguarding price and financial stability continues to be the bedrock for addressing these longer-term challenges. 

Outlook and Risks

The euro area economy is navigating an increasingly challenging global environment of higher tariffs, elevated trade policy uncertainty, and geopolitical risks. The April 2025 World Economic Outlook (WEO) projected growth to remain moderate at 0.8 percent in 2025, picking up to 1.2 percent in 2026. Trade tensions and elevated uncertainty have dimmed the outlook for domestic demand and exports, outweighing an anticipated boost from higher defense and infrastructure spending. In addition, the geopolitical situation in Europe is expected to dampen sentiment and weigh on investment and consumption, despite looser monetary policy and projected gains in real income.   

Headline inflation is close to 2 percent and, under staff’s April WEO projections, is expected to remain broadly at target with weak energy and core goods inflation offsetting elevated services inflation. Ongoing nominal wage growth moderation amid subdued activity and firmly anchored inflation expectations is expected to gradually lower services inflation. As a result, core inflation is projected to decline to 2 percent later than headline inflation, in 2026.

Risks to growth are on the downside. Trade policy uncertainty, further tariff escalation, or geopolitical tensions could weigh on demand and growth more than expected. These would likely outweigh possible positive impacts of unanticipated further fiscal easing if more countries were to boost defense spending. The April 9^th announcements of a pause in US tariffs constitutes a small upside risk to the April 2025 WEO projections as they lower the effective tariff rate on EU exports to the US.

Risks to inflation are two-sided. Lower-than-expected non-energy goods prices because of trade diversion, weaker-than-expected activity and wages, as well as the recent euro appreciation could pull inflation lower than in the baseline. On the other hand, fiscal spending could turn out larger or more inflationary than assumed in the baseline, while geopolitical tensions, supply chain disruptions and tariff escalation could lead to faster increases in import prices, and wage growth may not moderate as strongly as expected. 

Structural constraints weigh on the medium-term outlook. Risks of persistently elevated trade policy uncertainty, an escalation of tariffs, still high and volatile energy prices, and the shifting geopolitical context all add to pre-existing challenges from aging, skills shortages, and weak productivity trends.

Policy Priorities

Given the challenges outlined above, a comprehensive policy strategy for decisive EU level actions on multiple fronts is needed. The goals include strengthening potential growth amidst aging and a more difficult external environment, ensuring new public spending priorities are met without risking fiscal sustainability, and safeguarding broader macro and financial stability.

Structural and Trade Policies

To bolster productivity growth and resilience in the EU, it is crucial to enhance innovation and facilitate the scaling up of firms (Draghi 2024; Letta 2024; Adilbish and others 2025). The key lever available to achieve this is deeper integration of the EU single market. Staff analysis finds that remaining barriers within the single market are equivalent on average to a 44 percent tariff on goods and 110 percent on services (Adilbish and others 2025). More integration will unlock gains from specialization within the EU, as global value chains reconfigure and enable firms to capitalize on economies of scale. 

Staff analysis highlights four key actionable priorities to help complete the single market and realize these ambitions (Arnold and others 2025). First, lowering regulatory fragmentation. For instance, a 28^th corporate regime—alternative to national regimes—that establishes uniform regulations and legal rules crucial for not only the formation and operation of firms, but also their dissolution can provide a voluntary EU-wide legal framework to support firms’ expansion without requiring them to navigate divergent national regulations. By offering an alternative viable solution to simplify the regulatory landscape, the 28^th regime can facilitate firms’ scaling up and enhance the efficiency of cross-border capital allocation, ultimately fostering innovation. Second, advancing the Capital Markets Union (CMU) to facilitate more efficient channeling of savings to risk capital for firms. For instance, increasing institutional investors’ familiarity with venture capital (VC) as an asset class and addressing remaining undue restrictions on their ability to invest in it can help meaningfully increase VC investment in the EU from a very low level currently (Arnold and others 2024). This, together with continued efforts to complete the Banking Union (BU)—critical for a more resilient and efficient banking sector—will build a well-functioning Savings and Investments Union (SIU). Lowering barriers to cross-border bank mergers and acquisitions would help augment bank finance, address long-standing concerns of structurally low profitability and high costs, and spur competition within the euro area’s banking sector. Third, enhancing intra-EU labor mobility (such as through extending the automatic system of professional qualification recognition) can offer productive firms greater access to talent and improve skills matching. Last, integrating the EU energy market, guided by a coordinated strategy for an energy system transformation, can help provide lower and more stable energy prices. Simulation results suggest that a few actionable steps along these dimensions could jumpstart the process of deeper integration and deliver a meaningful payoff by increasing the EU potential GDP level relative to baseline by around 3 percent over 10 years, benefiting every country. In this regard, the digital euro also has an important role to play. In addition to reinforcing monetary sovereignty in the growing presence of private digital currencies, the digital euro can help deepen the integration of financial services within the European market by streamlining and unifying cross-border retail payments. It can improve payment system efficiency, reduce transaction costs, and complement the SIU and the single market more broadly.

While deeper intra-Europe integration is one key element in boosting growth prospects, complementary policy actions are needed at the national level. Recently published staff analysis (Budina and others 2025) identifies domestic structural reform priorities for individual European countries. Successful implementation—by which countries aim to close 50 percent of their prioritized policy gaps with respect to the most growth-friendly regulatory settings—would entail sizable gains in GDP level of around 5.7 percent for the EU in the medium term. The prioritized reforms cover labor market and human capital (e.g., education and training), fiscal structural issues (e.g., tax policy), business regulation, and credit and capital markets.

An escalation of trade tensions poses important challenges to the EU. The EU would benefit from its continued advocacy for a stable, rules-based global trading system. Further diversifying economic ties can help strengthen supply chain resilience and capture efficiency gains from trade. Any new industrial policies should be limited to well-defined market failures and be coordinated at the EU level.

Fiscal Policy

Fiscal risks and optimal fiscal policy strategies differ across countries. For countries with high debt and limited fiscal space, significant fiscal adjustments are needed to mitigate risks, while countries with fiscal space can implement a more back-loaded fiscal adjustment. For the euro area economies excluding Germany, staff recommends improving the structural primary balance to a surplus of 1.4 percent of GDP in 2030—a cumulative improvement of 2.9 percentage points from a deficit of 1.5 percent of GDP in 2024. Achieving this requires an additional cumulative deficit reduction of close to 2 percentage points over 2024–30 relative to the baseline (typically predicated on current budgets and specified, concrete measures under consideration).

The needed deficit-reduction creates challenging tradeoffs because, at the same time, Europe faces high and rising spending pressures that are crystallizing faster than previously anticipated. Pressures from interest costs, an aging population, climate transition and energy security, and defense would reach 4.4 percent of GDP annually for the euro area economies in 2050 (Eble and others 2025). Member states should transparently account for rising spending pressures to lay out trade-offs within the fiscal framework and develop credible plans to ensure sustainability. 

The use of escape clauses to support member states’ ramp-up in defense spending should be restricted to its initial phase. Member states and the Commission should assess the impact of increased defense spending on debt sustainability on an ongoing basis and develop plans to put debt on a stable/declining path over the medium term. Also, it is crucial that care be taken in implementing the EU fiscal rules to ensure that countries with low fiscal risks that intend to increase spending to boost potential growth and enhance resilience should not be constrained from doing so by the rules. Eventually, a broader reassessment of key parameters may be needed to achieve an optimal balance between allowing countries with low fiscal risks to fulfill spending objectives that can also have favorable EU-wide spillovers, and ensuring that debt remains sustainable.

Coordinated efforts at the EU level and targeted investments can help address shared challenges in a cost-effective manner, supporting member states in managing fiscal tradeoffs (Busse and others 2025). Identifying existing investment gaps and areas where joint EU-level initiatives would deliver cost-effective solutions can provide a blueprint for priority actions—for instance, public goods investment including on innovation, clean energy transition, and collective defense. To support investments in these areas, the EU budget size will need to increase by at least 50 percent, if existing programs are to be maintained. Coordinated investments that better internalize positive cross-border externalities and minimize duplicative national efforts will generate net budgetary savings for member states. In the area of the clean energy transition, for instance, our recent work estimates that better EU-level coordination and planning can lower investment costs by 7 percent (IMF 2024). In addition, reforms are needed to make the budget more streamlined, responsive to evolving needs, and more effective by incentivizing good performance. A performance-based approach that links financial support to implementing national-level reforms that support EU priorities and enhance growth potential can deliver objectives more effectively, particularly in areas where incentives are currently weak, and outcomes are closely linked to efforts. Lastly, strengthening the financing framework of the budget with borrowing capacity and increased own resources will help meet the growing demand for EU level investment in shared priorities in a timely manner while spreading the fiscal burden over time.

Monetary and Financial Sector Policies

Since headline inflation is broadly at target, core inflation is slightly above 2 percent, and the output gap is mildly negative, a monetary policy stance close to neutral is justified. Barring further shocks that materially revise the inflation outlook, maintaining the policy rate at 2 percent will help keep inflation around target in the second half of 2025 and beyond. But the outlook is highly uncertain, and the policy path may need to be adjusted on the basis of incoming data or developments.

The concurrent Financial Stability Assessment Program (FSAP) found that the banking system generally appears adequately capitalized and liquid, but the authorities should closely monitor the vulnerabilities from the growing NBFI sector. Although financial stability risks linked to past monetary tightening are easing, a deteriorating business environment for corporates, especially those with trade exposures to the US, could weigh on banks’ otherwise healthy balance sheets. Moreover, new systemic risks have emerged, particularly from market volatility due to higher tariffs and banks’ exposures to NBFIs. Authorities should stand ready to address potential liquidity stress, including by preparing a framework for the provision of emergency liquidity assistance to NBFIs, paired with closer oversight.

Facilitating better data sharing among EU and national authorities will improve risk monitoring, particularly to close gaps that hinder system-wide analyses. A key policy priority is to improve system-wide risk monitoring of the financial sector beyond banks, including by closing data gaps arising from legal restrictions for sharing or timely access by supervisors, which currently limit the ability to undertake complete system-wide analyses.

Fragmentation continues to hinder the full benefits of the banking union and the development of a more resilient, deeper and integrated EA-wide financial system. Further steps to strengthen the euro area financial architecture include completing the Banking Union with the introduction of a common deposit insurance system; allowing a greater use of national deposit guarantee funds for resolution and making bail-in requirements more flexible; putting in place arrangements for the Single Resolution Fund to provide guarantees to enhance the provision of central bank liquidity in resolution, ideally with an EU fiscal backstop; fully implementing the international capital standard for banks (Basel III); and strengthening the resources and prudential powers of the European authorities overseeing NBFIs, including empowering ESMA to top-up national measures for substantially leveraged investment funds and to enforce cross-border reciprocation.

https://www.imf.org/en/News/Articles/2025/06/18/mcs-06182025-euro-area-imf-cs-of-2025-mission-on-common-policies-for-member-countries

MIL OSI

Source: IMF – News in Russian

June 18, 2025

• The IMF Executive Board today completed the Sixth Reviews of Benin’s Extended Fund Facility (EFF) and the Extended Credit Facility (ECF) and the Third Review under the Resilience and Sustainability Facility (RSF). The decision allows for an immediate disbursement of about US$ 90 million.
• Benin’s successful fiscal reforms supported the convergence to the West African Economic and Monetary Union (WAEMU) fiscal deficit norm of 3 percent of GDP one year ahead of schedule, with sustained domestic revenue mobilization and prioritized social spending. The 2025 budget is designed to sustain this achievement.
• A key challenge ahead for Benin is to preserve the reform momentum and strengthen policies that foster inclusive growth and an economic transformation that benefits all Beninese.

Washington, DC: The Executive Board of the International Monetary Fund (IMF) has completed the Sixth Reviews under the 42-month blended Extended Fund Facility (EFF) and the Extended Credit Facility (ECF) arrangements, and the Third Review under the Resilience and Sustainability Facility (RSF) arrangement. The EFF/ECF was approved by the IMF Executive Board in July 2022 (see PR 22/252) and complemented by the RSF in December 2023 (see PR 23/452).

The completion of the reviews allows for the immediate disbursement of about US$ 36 million (SDR 26.2 million) under the EFF/ECF—bringing total disbursements under the program to about US$ 623 million (SDR 457.6 million)—and of about US$ 54 million (SDR 39.616 million) under the RSF arrangement.

Economic activity in Benin accelerated over the past five years, and markedly in 2024. Growth reached 7.5 percent year-over-year—its highest level yet— and it is expected to remain strong in the medium term. The current account of the balance of payments deteriorated temporarily, due to large professional services imports related to the Glo-Djigbé Industrial Zone (GDIZ). It is expected to recover gradually, as exports from the special economic zones increase and the services deficit continues to moderate over time. 

Program performance under the EFF/ECF has been strong, with all end-December 2024 quantitative targets met and structural benchmarks completed. On the RSF front, the authorities adopted new regulations for water resources monitoring, construction, and renewable energy. They also revised electricity tariff regulations to improve the financial sustainability of electricity production and distribution companies. Benin’s partners have pledged financial support for the country’s climate agenda following COP29 and the 2024 climate finance roundtable. Accordingly, the authorities are working on a climate-related taxonomy that is aimed at further catalyzing climate finance.

Following the Executive Board discussion on Benin, Mr. Okamura, Deputy Managing Director, and acting chair, issued the following statement:

“Benin’s performance under its Fund-supported arrangements has been strong. Its strong institutional foundation and the authorities’ economic reform drive and sound macroeconomic management have yielded tangible dividends, with high and more stable growth, favorable access to international markets, and continued support from development partners. The authorities should nonetheless remain vigilant to regional and global risks, maintain fiscal discipline and reform momentum, and strengthen inclusive policies.

“Frontloaded fiscal consolidation in 2024 supported Benin’s convergence to the West African Economic and Monetary Union (WAEMU) fiscal deficit norm of 3 percent of GDP, one year in advance. The 2025 budget continues to target compliance with the deficit norm, while the fiscal adjustment remains anchored in the Medium-Term Revenue Strategy. In that context, maintaining the tax collection efforts coupled with prudent spending will preserve fiscal discipline. Rebalancing the debt portfolio toward domestic debt over time while remaining cognizant of refinancing risks, in line with the authorities’ Medium-Term Debt Strategy, and together with continued proactive debt management, will help mitigate external rollover risks.

“The authorities should continue laying the foundation for inclusive private sector-led growth to entrench the ongoing economic transformation. Fiscal transparency and good governance are key to maintaining market confidence. Further efforts are needed to support the development of SMEs. Regularly updating the social registry and developing a comprehensive mapping of social protection programs will improve the efficiency and targeting of social assistance initiatives toward vulnerable households across the country.

“Continued vigilance by supervisory authorities vis-à-vis public and non-public financial sector risks will help safeguard financial stability and limit contingent liability risks.

“The authorities have revised regulations for water resources monitoring, construction, electricity tariffs, and renewable energy in line with their climate agenda. The authorities should accelerate the reforms aimed at enhancing resilience to climate change and continue to advance their agenda under the Resilience and Sustainability Facility (RSF), to promote long-term balance of payments stability and catalyze private-led climate finance.”

https://www.imf.org/en/News/Articles/2025/06/18/pr-25207-benin-imf-executive-board-completes-6th-reviews-of-eff-and-ecf-and-3rd-review-of-the-rsf

MIL OSI