Category: English Language

Source: IMF – News in Russian

May 29, 2025

Press releases include statements of IMF staff teams that convey preliminary findings after meetings with the authorities of a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary conclusions of the meetings, staff will prepare a report that, subject to management approval, will be presented to the IMF’s Executive Board for discussion and decision.

• IMF Staff and the Togolese authorities have reached staff-level agreement on economic policies and reforms to conclude the second review of the Extended Credit Facility (ECF)-supported program. Once the review is completed by the IMF Executive Board, Togo will have access to SDR 44.0 million (about US$58.4 million) in financing.
• The IMF-supported program is broadly on track, with robust growth and moderating inflation. All quantitative targets and all structural benchmarks at end-December 2024 met, except for the quantitative performance criterion on the fiscal balance.
• The authorities have reaffirmed their commitment to implementing sound policies, including by raising fiscal revenue, containing debt accumulation, and making growth more inclusive, as well as enacting structural reforms to enhance public financial management, strengthen the financial sector, and enhance governance.

Washington, DC: An International Monetary Fund (IMF) staff team, led by Hans Weisfeld held meetings with the Togolese authorities in Lomé and Washington in recent months to discuss progress under the authorities’ economic program supported by an IMF Extended Credit Facility (ECF) arrangement.

At the conclusion of the discussions, Mr. Weisfeld issued the following statement:

“The mission has had constructive and productive discussions with the Togolese authorities and commended them on the sustained progress in advancing reforms. A staff-level agreement was reached on all policies, including key parameters of the 2025 fiscal framework and reform measures going forward, in line with the program‘s objectives.

“Economic growth reached an estimated 5.3 percent in 2024 and is projected at 5.2 percent in 2025 and around 5.5 percent per year thereafter, barring major adverse shocks. Inflation has continued to slow, reaching 2.6 percent in April 2025 (annual average). 

“The IMF-supported government economic policy program is broadly on track. The authorities met all quantitative performance criteria for end-2024 except the criterion on the fiscal balance. Tax revenue in 2024 increased as planned, while non-tax revenue even exceeded expectations. At the same time, financing support provided to local communities affected by floods and the purchase of a large stock of fertilizers that are being made available to farmers at subsidized prices meant that government debt rose more quickly than planned, slowing progress toward stronger debt sustainability. To help the public understand budget execution and the drivers of debt, the authorities have published an explanation of fiscal developments in 2024. This is a very welcome step.

“At the same time, the authorities made good progress on structural reforms. They met both outstanding structural benchmarks set for end-2024 by (i) strengthening the budgetary risk analysis report accompanying the draft annual budgets; and (ii) injecting substantial funds into the remaining public bank to bring its regulatory capital in line with the requirements set by the regional banking regulator. The authorities also aim to continue to enhance governance. They (i) are working on strengthening the public procurement legal framework to require the publication of the names of beneficial owners of companies awarded procurement contracts; and (ii) have invited an IMF Governance Diagnostic Assessment and committed to publishing its findings.

“It will be very important to make good progress on the planned growth-friendly and socially responsible fiscal consolidation to reinforce debt sustainability while continuing reforms to enhance public financial management, strengthen the financial sector, and enhance governance.

“The IMF approved the ECF arrangement in March 2024 to help the authorities address the legacies of shocks seen since 2020, notably the COVID pandemic and the increase in global food and fuel prices. The Togolese authorities were able to lessen the impacts of these shocks on the Togolese economy and population, but this came at the price of large fiscal deficits and a rapidly rising debt burden. The IMF-supported government program aims to (i) make growth more inclusive while strengthening debt sustainability, and (ii) conduct structural reforms to support growth and limit fiscal and financial sector risks. The IMF provides financing of SDR 293.60 million (about US$ 390 million) on favorable terms to Togo through the ECF arrangement. The IMF Executive Board completed the First Review of the program in December 2024.   

The staff team looks forward to continuing the fruitful dialogue with the Togolese authorities and stakeholders in the period ahead, including in the context of the mission for the Third Review in the second half of 2025.”

https://www.imf.org/en/News/Articles/2025/05/29/pr-25166-togo-imf-reaches-agreement-on-the-2nd-rev-of-ecf-with-togo

MIL OSI

Source: IMF – News in Russian

May 29, 2025

End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. This mission will not result in a Board discussion.

• International Monetary Fund (IMF) staff and the Ukrainian authorities have reached staff level agreement (SLA) on the Eighth Review of the 4-year, $15.5 billion Extended Fund Facility (EFF) Arrangement. Subject to approval by the IMF Executive Board, Ukraine would have access to about US$0.5 billion (SDR 0.37 billion), bringing total disbursements under the program to US$10.65 billion.
• All end-March quantitative performance criteria (QPCs) and indicative targets (IT) have been met and understandings were reached on a set of policies and reforms to sustain macroeconomic stability. The structural reform agenda continues to make progress with two structural benchmarks met, another to be completed in the coming weeks, and strong commitments to advance other key reforms.
• The outlook remains exceptionally uncertain as the war continues to take a heavy toll on the population, economy, and infrastructure. Despite the challenging environment, the program remains on track and fully financed on the back of large-scale external commitments.

Kyiv, Ukraine: An International Monetary Fund (IMF) team led by Mr. Gavin Gray held discussions with the Ukrainian authorities in Kyiv, Ukraine during May 20-27 on the Eighth Review of the country’s 4-year Extended Fund Facility (EFF) Arrangement. Upon the conclusion of the discussions, Mr. Gray issued the following statement: 

“IMF staff and the Ukrainian authorities have reached staff-level agreement on the Eighth Review of the EFF, subject to approval by the IMF Executive Board, with Board consideration expected in coming weeks. 

“Ukraine’s four-year EFF Arrangement with the IMF continues to provide a strong anchor for the authorities’ economic program in times of exceptionally high uncertainty. All quantitative performance criteria and indicative targets for end-March have been met, and progress continues on the structural agenda due for this review.

“The economy remains resilient despite the challenges arising from more than three years of war. As Russia’s war in Ukraine continues, real GDP growth is expected to remain modest, at 2-3 percent for 2025, reflecting headwinds from labor constraints and damage to energy infrastructure. Inflation has continued to rise, reaching 15.1 percent y/y in April mainly due to rising food and labor costs; inflation expectations remain anchored. The National Bank of Ukraine (NBU) has raised the policy rate by a cumulative 250 bps since December in response. Gross international reserves reached US$46.7 billion as of end-April, reflecting continued large external official support. Risks remain exceptionally high given uncertainty on the war and the prospects for peace and recovery.  

“The 2025 fiscal deficit is large as the level of critical expenditures remains elevated as the war continues. Financing the deficit requires significant external support, notably from the G7’s ERA Initiative, whose full disbursement during the program period is critical to support macroeconomic stability and ensure the program remains financed. Risks of additional critical expenditure requirements in 2025 are high and thus the authorities need to prepare offsetting measures should expenditure shocks materialize. Beyond 2025, expenditures are expected to remain high for the foreseeable future. Consequently, it is imperative and unavoidable that the authorities sustain efforts to mobilize domestic revenues over the medium-term since external support alone will not be sufficient to finance the deficit, restore fiscal sustainability, support critical spending, and finance reconstruction.

“Determined efforts are required to mobilize domestic revenues, tackle tax evasion and avoidance, and improve the investment climate. Broad-based, durable, and efficient revenue measures and robust implementation of Ukraine’s National Revenue Strategy (NRS) is essential. Tax policy reforms need to be coupled with improvements in tax administration and continued reforms to the state customs service (SCS) and state tax service (STS). Restoring debt sustainability hinges on this revenue-based fiscal adjustment and continued implementation of the authorities’ debt restructuring strategy, including a treatment of the GDP warrants. The upcoming 2026-2028 budget declaration is an important step to set out the strategic objectives of the authorities’ medium-term fiscal framework and policies. 

“With rising inflation, the increases by the National Bank of Ukraine’s (NBU) to their key policy rate (KPR) have been appropriate. Additional action may be warranted if inflation accelerates further or inflation expectations deteriorate. The monetary stance should remain tight to help reduce inflation and bring it to the NBU’s target over its three-year policy horizon. The exchange rate should play a greater role as a shock absorber, as per the preconditions outlined in the relevant NBU Strategy; this will help prevent external imbalances and preserve adequate reserves, particularly given heightened risks to the outlook. The judicious and staged approach to FX liberalization should continue, consistent with overall monetary and FX policy mix to maintain adequate reserves, and measures should continue to be closely monitored.

“Governance reforms remain essential to bolster the rule of law and increase the independence, competence, and credibility of anti-corruption and judicial institutions. Reforming the state customs service (SCS) is essential to tackle corruption and reduce tax evasion. Progress in this area requires finalizing a comprehensive reform plan—a requirement for the completion of the review—coupled with the swift appointment of a permanent head of the SCS. The recently published NABU external audit, a structural benchmark, provides an opportunity to implement additional reforms to strengthen the institution and increase public trust. Similarly, the government’s commitment to amend the criminal procedure code, also a structural benchmark, is a signal of their willingness to strengthen the anti-corruption system and meet international obligations. On SOE corporate governance, the selection of new CEOs for GTSO and Ukrenergo should proceed promptly based on a merit-based process.     

“Effective public investment management (PIM) is critical for post-war recovery, reconstruction, and growth against a backdrop of limited fiscal space. To tackle these challenges, the government of Ukraine has made important progress in strengthening PIM frameworks, and we encourage the authorities to build on this success. A strategic, holistic, and transparent approach is essential to overcome absorption capacity constraints and allocate scarce resources efficiently. 

“The financial sector remains stable, but continued vigilance is warranted given elevated risks. Swift action to address critical institutional challenges of the NSSMC is a priority to enhance its effectiveness, and fit and proper tests need to proceed without further delay. Developing financial markets infrastructure and associated reforms will be indispensable to attracting private sector and foreign capital to support reconstruction and recovery. Comprehensive consultation with financial market participants is essential to facilitate a prioritized reform agenda.  

“The mission met with Prime Minister Shmyhal, Finance Minister Marchenko, National Bank of Ukraine Governor Pyshnyy, other government ministers, public officials, and civil society. The mission thanks them and their technical staff for the excellent collaboration and constructive discussions.” 

https://www.imf.org/en/News/Articles/2025/05/29/pr-25165-ukraine-imf-and-ukr-authorities-reach-agreement-on-8th-rev-of-eff-arrang

MIL OSI

Source: IMF – News in Russian

May 29, 2025

Washington, DC: An International Monetary Fund (IMF) mission, led by Lone Christiansen and comprising Thomas Elkjaer, Gee Hee Hong, Yueling Huang, Alain Kabundi, and Sylwia Nowak, conducted discussions for the 2025 Article IV Consultation with Italy during May 14–28. At the end of the visit, the mission issued the following statement:

• Outlook: The growth outlook remains highly uncertain amid ongoing global trade tensions. Persistently low productivity growth and demographic headwinds weigh on longer-term economic prospects.
• Fiscal policy: A better-than-expected fiscal outturn in 2024 enabled a return to a primary surplus. Continuing the strong performance will be essential to place public debt on a downward trajectory.
• Financial sector policy: The banking sector remains well-capitalized and liquid. Continuing to monitor asset quality and macro-financial linkages between the sovereign and financial institutions remains important to safeguard financial stability.
• Structural policies: Medium-term challenges that are weighing on growth have become today’s pressing issues. A swift and effective implementation of the National Recovery and Resilience Plan will be key to support higher, lasting growth and should be complemented by a successor reform program to amplify the gains.

 

Recent economic developments, outlook, and risks

The Italian economy has continued to expand at a moderate pace. For the second consecutive year, economic activity grew by 0.7 percent in 2024, supported in part by infrastructure investment under the National Recovery and Resilience Plan (NRRP) and a positive contribution from net exports. The current account strengthened to a surplus of above 1 percent of GDP. Despite heightened global trade policy uncertainty, economic activity held up well in the first quarter of 2025, with real GDP growing by 0.3 percent quarter-on-quarter and employment reaching a record high. Credit to households has turned positive, and the contraction in credit to corporates has eased. Headline inflation gradually strengthened, reaching 2 percent in April. Nonetheless, the female labor force participation rate remains well below the EU average, productivity growth is weak, and regional disparities endure, with labor inactivity rates significantly higher in the South than in the North.

Heightened uncertainty has dampened the near-term economic outlook, while subdued productivity growth and rapid population aging are expected to continue weighing on growth prospects. Timely and effective implementation of NRRP projects is expected to support near-term economic activity, while trade tensions are likely to provide a notable drag. Consequently, the April 2025 World Economic Outlook (WEO) projected growth to moderate to 0.4 percent in 2025 before temporarily picking up to 0.8 percent next year, amid the peak in NRRP-related investments and positive trade spillovers from higher investment in Germany. Headline inflation is expected to average 1.7 percent this year, on lower energy prices and moderate wage growth, before converging to the ECB’s 2 percent target in 2026. Over the medium term, weak productivity growth and adverse demographics are projected to continue weighing on the outlook, keeping growth at around 0.7 percent.

The outlook is subject to substantial uncertainty and risks. On the upside, the stronger-than-expected preliminary outturn for the first quarter presents mild upside risks to the April 2025 WEO forecast. A faster-than-expected acceleration in global growth, stronger productivity gains from public investments and reforms, and deeper EU integration could further support investment, exports, and productivity. However, downside risks remain significant, including from escalating trade tensions, an intensification of regional conflicts, and a further tightening of global financial conditions. Climate-related shocks, including extreme weather events, could also dampen growth and further constrain fiscal space. As digitalization advances, cyberthreats could become more pervasive and disruptive, particularly for the financial system. Delayed or inefficient NRRP implementation could undermine growth.

Fiscal policy: Leaning into continued strong performance

Maintaining strong fiscal discipline along with growth-enhancing reforms is critical to reduce the public debt ratio and will help reinforce resilience. A better-than-expected fiscal outturn in 2024, owing to continued improvements in tax compliance and a strong labor market, is welcome. Overall, the headline deficit was halved, the primary balance turned to a surplus, and the authorities envision further gradual deficit reduction. Staff recommends continuing the strong performance and reaching a primary surplus of 3 percent of GDP by 2027 to decisively reduce the debt ratio and help contain related vulnerabilities. Achieving this goal would require additional near-term efforts compared to what is already built into the authorities’ fiscal plans. However, the recommended cumulative adjustment path would entail a smaller effort over the medium term than a more gradual one in view of the projected worsening in the interest rate-growth differential and of spending pressures stemming from population aging. Along with such efforts, growth-enhancing reforms would help strengthen debt reduction and, over time, could reduce the needed adjustment.

Several measures could be considered. Building on the progress made, reform efforts on tax evasion and tax compliance should continue. Rationalizing tax expenditures would help broaden the taxbase, bolster revenue, and reduce complexity. Eliminating the preferential flat-rate for income on self-employment would address equity concerns and prevent revenue loss. Given the robust labor market and high corporate profits, hiring subsidies should be replaced with productivity-boosting measures. Updating property values in the cadastre would increase revenue and could ensure more equitable tax treatment. These measures, by addressing distortions, are expected to have limited adverse effect on economic activity.

In the event of new spending pressures or macroeconomic shocks, debt-reducing efforts should continue. Given the limited fiscal space, any new spending measures, including for defense, should be fully compensated by further savings elsewhere. Fiscal consolidation efforts combined with growth-enhancing reforms would need to continue even in the event of all-but-the-most-severe adverse macroeconomic shocks, rendering automatic stabilizers the primary counter-cyclical response. Resources from EU funds should be safeguarded for productivity-enhancing investments.

Beyond the near term, it will be important to contain latent spending pressures. Pension-related spending pressures could be contained by avoiding costly early retirement schemes. At the same time, raising the effective retirement age would help boost labor supply. There is also scope to enhance transparency and monitoring of the net expenditure path within the Medium-Term Fiscal-Structural Plan (MTFSP), while maintaining comprehensive reporting of key fiscal indicators. Although the stock of public guarantees is gradually declining, it remains sizable, calling for continued prudent management, centralized monitoring, and adequate provisioning. In addition, publicly guaranteed loans should not substitute for on-budget spending, as such measures undermine budgetary discipline and distort resource allocation.

Financial sector policy: Protecting financial sector resilience

Continued vigilance will be important to safeguard financial sector soundness. Strong profitability, sound asset quality, and adequate liquidity and capital positions have helped strengthen the banking sector. In this respect, amid a still-negative credit gap, maintaining the current neutral countercyclical capital buffer remains appropriate, as does the continued implementation of the systemic risk buffer at 1 percent. In addition, maintaining close monitoring of loan quality is warranted, particularly given the uncertain outlook and risks to firms exposed to the potential impact of trade tensions. Regarding non-bank financial institutions, the rebound in life insurance premium income has helped mitigate risks in the life sector. While financial sector exposures to the domestic sovereign have declined from previous highs, they remain sizable and, hence, pose a vulnerability that requires continued monitoring.

Continuing to address weaknesses among some less significant institutions (LSIs) remains a priority. Within the overall soundness of the banking sector, vulnerabilities exist among some LSIs. Further enhancing oversight—through targeted inspections, in-depth reviews of credit risk management practices and governance, and continued monitoring of nonperforming loans—would help address these risks. In this regard, the ongoing inspection program by the Bank of Italy to ensure compliance with IT security standards is welcome, and LSIs should continue to integrate cyber risks into their governance and risk management frameworks. Timely escalation of corrective measures for weak banks would support further improvements in capital adequacy and operational efficiency.

Structural policies: Implementing reforms to boost growth

To tackle persistent productivity challenges and unlock stronger potential growth, comprehensive and sustained reforms are crucial. The authorities’ ongoing efforts to advance their reform and investment agenda through the NRRP are welcome, as are their longer-term commitments under the MTFSP. With the NRRP window rapidly closing, continued efforts to ensure its full and timely delivery will be essential. Looking ahead, leveraging the design and implementation lessons from the NRRP will support successful execution of future reforms and help secure a durable lift to growth. More broadly, reforms should be clearly specified and prioritize strengthening human capital, expanding labor supply, and revitalizing the private sector’s capacity to innovate and adopt frontier technologies. Enhancing the workforce is vital to mitigate the impact of a shrinking working-age population and to meet the growing demand for high-skilled labor. Policies aimed at increasing female labor force participation—such as enhancing access to childcare and removing disincentives like tax credits for dependent spouses—should be further strengthened and would support both economic growth and pension system sustainability.

Reviving private sector dynamism and innovation requires improved access to finance, especially risk capital, and greater policy predictability. Italian firms have long struggled to scale up and innovate. Eliminating tax incentives that favor small firms and facilitating the exit of unproductive firms, including through the timely implementation of the new insolvency code, would promote more efficient resource allocation and enable high-performing firms to grow. Deepening national capital markets—particularly by broadening access to risk capital—and ensuring a more predictable regulatory environment are crucial to support the investment needed for technological upgrades and the digital transition. At the European level, advancing the single market and making progress towards the savings and investment union will further help firms achieve economies of scale and improve access to capital. Industrial policies should be deployed cautiously, be targeted to specific objectives where externalities or market failures prevent effective market solutions, be coordinated at the EU level, and avoid favoring domestic producers over imports to minimize trade and investment distortions. 

Accelerating the transition to renewables, adapting to a changing climate, and investing in resilient energy infrastructure are essential to reduce extreme weather impacts and energy import dependence. Climate-related risks and energy security are macro-critical for Italy, given the reliance on agriculture, tourism, and foreign energy supply. The 2024 National Energy and Climate Plan provides a strategic foundation but more ambitious action is needed to meet 2030 climate targets and improve energy security. Strengthening grid infrastructure, expanding storage capacity, and streamlining permitting processes are critical to support renewable integration. Deeper integration into EU electricity markets would enhance resilience, reduce price volatility, and improve the efficiency of renewable energy use.

****

We are grateful to the Italian authorities and our other counterparts for their time, frank and open discussions, and warm hospitality.

Desideriamo esprimere la nostra gratitudine alle autorità italiane e a tutti gli altri interlocutori per il tempo dedicatoci, per la franchezza e la disponibilità dimostrate nel corso dei colloqui e per la calorosa ospitalità.

 

 

https://www.imf.org/en/News/Articles/2025/05/28/05282025-mcs-italy-staff-concluding-statement-of-the-2025-article-iv-mission

MIL OSI

Source: IMF – News in Russian

May 28, 2025

Ethiopia has taken historic steps to address macroeconomic imbalances while fostering sustainable growth

Over the past year, Ethiopia—Africa’s second most populous country—has embarked on a comprehensive transformation of its monetary and exchange rate regimes. After decades of tight control, the country has liberalized the foreign exchange regime, adopted a more flexible exchange rate, moved to an interest rate-based monetary policy, and ended central bank financing of government. In parallel, the National Bank of Ethiopia (NBE) is updating its legal framework and internal organization. 

These reforms aim to address acute foreign exchange shortages and inflation, creating conditions for high, sustainable growth. The authorities are also tackling budgetary constraints, financial vulnerabilities in state-owned enterprises and state-owned banks, and a sovereign debt restructuring while mitigating social impacts and managing humanitarian pressures. The IMF is supporting Ethiopia’s reform efforts through a four-year $3.4 billion Extended Credit Facility Arrangement.

During the 2025 IMF-World Bank Spring Meetings, Mamo Mihretu, Governor of the National Bank of Ethiopia discussed these key reforms with Abebe Aemro Selassie, Director of the IMF’s African Department. The following is an edited transcript of the conversation, focusing on key highlights (view video). 

Abebe Aemro Selassie: Ethiopia is undergoing significant reforms that are reshaping its economic landscape. Can you provide some context regarding the state of the economy before these reforms?

Mamo Mihretu: After two decades of sustained economic growth, primarily driven by public investment, Ethiopia faced unsustainable macroeconomic imbalances. The state’s reliance on external creditors, the large public bank, and NBE led to foreign exchange shortages, limited access to credit for the private sector, high inflation, financial stability risks, and debt vulnerabilities.

Abebe Aemro Selassie: What are the primary objectives of the reform agenda that Ethiopia has embarked upon?

Mamo Mihretu: We launched our Homegrown Economic Reform Program in 2019. The objective of the reforms was to address fundamentally, boldly, and conclusively the sources of macroeconomic instability in Ethiopia and create a much more open, investment-friendly, and private-sector-friendly environment. These objectives are critical for our job creation agenda that will increase income and improve livelihoods.

Abebe Aemro Selassie: Can you elaborate on some of the key reforms in Ethiopia’s monetary policy?

Mamo Mihretu: We have made historic changes, including the revision of the Central Bank Act to prioritize price stability. We introduced a monetary policy rate, implemented open market operations for liquidity management with banks, and established a Monetary Policy Committee to advise on monetary policy decisions based on comprehensive assessments of economic conditions. Interest rates are now positive in real terms. Inflation has declined from 30 percent to 13 percent.

Abebe Aemro Selassie: What about the reforms related to foreign exchange? What changes have been implemented?

Mamo Mihretu: Ethiopia has a market-based foreign exchange regime for the first time in five decades. We comprehensively liberalized foreign exchange transactions and eliminated the requirement to surrender export earnings to the NBE. The early results have been promising; we expect exports to double and have already tripled our foreign reserves, while foreign exchange availability has also increased.

Abebe Aemro Selassie: Communication appears to be a vital aspect of your reform strategy. Can you discuss its importance?

Mamo Mihretu: Building credibility and trust is essential. We are investing in transparent communication and actively monitor market dynamics. By maintaining open channels of dialogue with stakeholders, we aim to foster a supportive environment for these reforms.

Abebe Aemro Selassie: What lessons have emerged from your experience in implementing these reforms?

Mamo Mihretu: Several key lessons stand out. First, preparation and coordination among government agencies are crucial. Second, the sequencing of reforms matters; it helps maintain stability and manage public expectations. Finally, adapting to evolving economic conditions is vital for the success of any reform effort.

Abebe Aemro Selassie: What are the next steps for Ethiopia in terms of reform and economic development?

Mamo Mihretu: We have to deepen the current monetary policy reforms as we move to a fully-fledged interest-rate based monetary policy. We are also working on deepening the foreign exchange market. Most importantly we are decisively addressing macroeconomic instability to create a strong foundation for sustainable growth.

https://www.imf.org/en/News/Articles/2025/05/28/cf-ethiopias-central-bank-leading-transformative-reform

MIL OSI

Source: IMF – News in Russian

May 27, 2025

• The IMF team and the Egyptian authorities made good progress on the assessment of economic performance and implementation of policy commitments under the Extended Fund Facility (EFF) arrangement.
• As Egypt’s macroeconomic stabilization is taking root, it is now time to accelerate and deepen the reform efforts to reduce the state footprint, level the playing field, and improve the business environment.
• Discussions will continue virtually to finalize agreement on remaining policies and reforms that could support completion of the fifth review.

Washington, DC: An International Monetary Fund (IMF) staff team led by Ms. Vladkova Hollar visited Cairo from May 6 to May 18, and held productive discussions with the Egyptian authorities on economic and financial policies that could underpin the completion of the Fifth Review under the Extended Fund Facility (EFF) arrangement.  

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

“The Egyptian authorities and IMF staff held constructive discussions which have advanced the technical work and policy discussions as part of the Fifth Review under the Extended Fund Facility.  

“Egypt has made substantial progress toward macroeconomic stability. Growth is expected to continue strengthening, and we upgraded our forecast for FY24/25 to 3.8 percent, in light of the stronger-than-expected outturn in the first half of the year. At the same time, the private investment share in total investment rose from 38.5 percent in H1 FY23-24 to almost 60 percent over the same period in FY24-25. Inflation rose slightly to 13.9 percent in April but remains on a downward trend. The current account remains wide, as rising imports, reduced hydrocarbon output, and Suez Canal disruptions offset strong tourism, remittances, and non-oil exports. Greater fiscal prudence—including through better oversight and control over large public sector infrastructure projects—is helping to contain demand pressures, with total public investment spending remaining below the established ceiling for July – December 2024.  

“We welcome the authorities’ recent efforts to modernize and streamline tax and customs procedures to increase efficiency and build confidence. These reforms are starting to yield positive results. Alongside these efforts, domestic revenue mobilization will need to continue, mainly by widening the tax base and streamlining tax exemptions, to support the government’s capacity to spend sufficiently on priority development and social needs. We also welcome the authorities’ efforts to develop a medium-term debt management strategy that aims to improve transparency and gradually reduce the large debt service cost in the budget. 

“With the macroeconomic stabilization now underway, it is critical for Egypt to carry out deeper reforms to unlock the country’s growth potential, create high-quality jobs for a growing population, and sustainably reduce its vulnerabilities and increase the economy’s resilience to shocks.  

“In order to deliver on these objectives, decisively reducing the role of the public sector in the economy and leveling the playing field for all economic agents should be key policy priorities. The implementation of the State Ownership Policy and the asset divestment program in sectors where the state has committed to reduce its footprint will play a critical role in strengthening the ability of the private sector to better contribute to economic growth in Egypt. Complementing this, efforts need to continue to improve the business environment.  

“We are grateful for the warm hospitality extended by the authorities during this mission. Discussions will continue virtually to finalize agreement on the remaining policies and reforms that could support the completion of the fifth review.”  

https://www.imf.org/en/News/Articles/2025/05/27/pr-2516-egypt-imf-staff-completes-review-mission-to-egypt

MIL OSI

Source: IMF – News in Russian

May 27, 2025

• IMF staff and the Salvadoran authorities have reached staff-level agreement on the first review of the 40-month extended arrangement under the Extended Fund Facility (EFF). Subject to approval by the IMF Executive Board, El Salvador would receive nearly US$120 million (SDR 86.16 million).
• Program performance has been strong. Key fiscal and reserve targets were met with margins and substantial progress continues in the ambitious reform agenda in the areas of governance, transparency, and financial resilience.
• Continued implementation of the fiscal consolidation plan and structural agenda remains critical to address macroeconomic imbalances and create conditions for stronger and more sustainable growth.

Washington, DC: IMF staff and the Salvadoran authorities have reached staff-level agreement on the first review of the country’s extended arrangement under the Extended Fund Facility (EFF). They also finalized discussion on the 2025 Article IV consultation focused on boosting El Salvador’s medium-term growth prospects.

Upon the conclusion of these discussions Mr. Cubeddu, Deputy Director of the Western Hemisphere Department, and Mr. Torres, Mission Chief for El Salvador, issued the following statement:

“IMF staff have reached staff-level agreement with the Salvadoran authorities on the first review under the 40-month EFF arrangement.[1] The agreement is subject to approval by the IMF’s Executive Board, and contingent on the implementation of the agreed prior actions.

“The authorities have made significant progress in implementing their economic reform plan under the IMF-supported program. Most program targets set for the first review were comfortably met, and implementation of the structural benchmarks is progressing well.  Meanwhile, despite a more challenging external backdrop, El Salvador’s economy continues to expand supported by improved confidence and still robust remittances. Prudent policies and more favorable terms of trade have led to reduction in inflation and the current account deficit.

Against the backdrop of early strong program implementation, understandings have been reached on policies to continue to secure program objectives, including with the technical support from the Fund and other development partners:

• The fiscal consolidation will continue this year through cuts in the wage bill and current spending restraint, and plans are being developed to reform the civil service and the pension systems to underpin the adjustment beyond this year. This will be supported by the new Fiscal Sustainability Law, which is expected to be enacted shortly.
• External buffers will be strengthened further through the accumulation of government deposits at the Central Bank, supported by financing from International Financial Institutions and fiscal discipline. Meanwhile, bank liquidity requirements will be raised in line with program commitments, while bank oversight is strengthened, including of cooperatives.
• Following the adoption of the Anti-Corruption Law, attention will now focus in securing its proper and timely implementation to complement ongoing efforts to enhance governance, accountability, and transparency, including of the fiscal accounts of the overall public sector.
• On Bitcoin, efforts will continue to ensure that the total amount of Bitcoin held across all government-owned wallets remains unchanged, consistent with program commitments, while also securing the unwinding of the public sector’s participation in the Chivo wallet by end-July.

There is a shared understanding that steadfast program implementation and agile policy making, in the context of rising global uncertainties, remain critical to further entrench stability and lay the foundation for stronger and more sustainable growth. IMF staff thank the Salvadoran authorities for the excellent collaboration and constructive discussions.”

[1] The EFF was approved by the IMF Executive Board on February 26, 2025, with total access of SDR 1033.92 million (about US$1.4 billion or 360 percent of quota), and initial disbursement of SDR 86.16 million. Other official creditors committed to provide additional financial support for a combined total of roughly US$3.5 billion.

https://www.imf.org/en/News/Articles/2025/05/27/pr-25162-el-salvador-imf-reaches-agreement-on-the-1st-rev-under-eff

MIL OSI

Source: IMF – News in Russian

May 27, 2025

Washington, DC: An International Monetary Fund (IMF) team held discussions for the 2025 Article IV consultation for Tuvalu in Funafuti, during May 20-27. The team issued the following statement at the conclusion of the mission.

RECENT DEVELOPMENTS, OUTLOOK, AND RISKS

Tuvalu’s economy has experienced a strong recovery from the COVID-19 pandemic. After falling for three consecutive years in 2020-22, GDP growth rebounded strongly at 7.9 percent in 2023, driven by the resumption of construction activity, the trade recovery, and higher government spending. GDP growth in 2024 is estimated to have reached 3.3 percent, supported by continued effects of reopening and major infrastructure projects. Since peaking at 14.2 percent in 2022Q3, inflation has been trending down and slowed to 1.2 percent in 2024, in line with global food and commodities prices and continued easing of shipping bottlenecks.

The economic recovery is expected to continue, but growth is projected to moderate gradually over the medium term. Growth in 2025 is projected at 3 percent, driven by the construction of the new phase of Tuvalu Coastal Adaptation Project and an increase in public spending. While externally-financed projects are expected to continue to support economic activities, growth is projected to decline gradually to around 1.8 percent over the medium term, due to sluggish productivity growth, increasing emigration, and vulnerability to climate events. Inflation is expected to remain below 2 percent in 2025, reflecting the negative CPI at end-2024 and lower global commodity prices, and to rise gradually to 2.5 percent over the medium term, aligning with inflation dynamics of Tuvalu’s trading partners.

The fiscal balance is projected to turn to a surplus in 2025 reflecting higher grants but would deteriorate again starting in 2026. Higher grants are expected to more than offset the increase in expenditures and improve the fiscal balance from a deficit of 7 percent of GDP in 2024 to a surplus of 2.9 percent of GDP in 2025. Over the medium term, grants are projected to gradually decline to historical levels of around 27 percent of GDP, while current expenditure pressures would remain elevated. As a result, fiscal balances are expected to deteriorate gradually and reach -6.8 percent of GDP by 2030. Because the projected withdrawals from Tuvalu’s sovereign funds are not sufficient to fully finance the fiscal deficits, foreign financing will be required to close the financing gap. Under these baseline projections, Tuvalu is assessed to remain at a high risk of debt distress.

Downside risks to the outlook remain high. The global environment has significantly changed this year, reflecting escalated trade tensions, heightened policy uncertainty, and tighter financial conditions.  While Tuvalu’s export exposure is limited, heightened global uncertainty and volatility could affect Tuvalu’s external revenues, including from its internet domain, fishing licenses, and development assistance, and significantly impact Tuvalu’s public finances, external position, and growth outlook. Global risks of heightened trade tensions and higher commodity prices could also increase inflation. A sharp downward correction in financial market returns could affect the performance of Tuvalu’s sovereign funds. Under-performance of public corporations could cause fiscal risks, and further loss of CBRs would severely disrupt cross-border payments. An acceleration of outward migration would exacerbate labor shortages. Extreme climate events and climate change remain major risks to Tuvalu’s economic outlook. Upside risks include higher fishing licenses and grants and greater structural reform momentum, which could accelerate economic growth.

FISCAL POLICY

Fiscal policy should balance ensuring fiscal sustainability and supporting Tuvalu’s development priorities. Tuvalu’s high vulnerability to external shocks requires fiscal sustainability and adequate buffers against downside risks. Meanwhile, the government faces significant near-term spending pressures in order to deliver essential public services, while also having to address medium-term climate adaptation costs and labor shortages stemming from increasing emigration.

A multi-pronged fiscal strategy is required to address these challenges. Given persistent fiscal deficits and Tuvalu’s limited fiscal space, the main elements of the strategy should include: i) gradually reducing fiscal deficits; ii) increasing spending for priority areas; and iii) appropriately using fiscal buffers to stabilize fiscal accounts, cushion against shocks, and address long-term challenges. IMF staff’s simulations show that reducing the fiscal deficit gradually to around 2.3 percent of GDP by 2030 (compared to 6.8 percent of GDP in the baseline scenario) by utilizing the returns of the Tuvalu Trust Fund and the Consolidated Investment Fund (CIF) to finance deficits would keep public debt on a downward path. The domestic current balance would provide an appropriate anchor and is expected to improve to -40 percent of GDP by 2045 under the consolidation scenario, and the value of the buffer fund (CIF) would stabilize at around 40 percent of GDP, which is needed to cover major shocks and downside risks.

The recommended fiscal strategy entails a combination of revenue mobilization, expenditure rationalization, and resource reprioritization measures. Expenditure measures should primarily focus on unwinding the recent increases in current expenditure, including containing the increase in the wage bill, implementing cost-saving measures for the Medical Referral Scheme and overseas scholarships, unwinding the increase in goods and services spending, and cutting broad-based utility subsidies. Revenue mobilization should prioritize strengthening the compliance and efficiency of tax collection, while considering reviewing tax policies and exploring options to boost tax revenue and streamline tax incentives. Part of the savings from the above measures should be redirected to areas such as targeted protection for the most vulnerable, infrastructure, human capital, and climate resilience.

Improving public financial management (PFM) can help manage revenue volatility and fiscal risks. The authorities have made progress in PFM, including introducing the new Financial Management Information System and formulating the Medium-Term Fiscal Framework. The publication of Tuvalu’s Fiscal Risk Reports is also welcome. Further efforts are needed to improve budget reliability, strengthen investment management to enhance absorption capacity, implement climate budget tagging, enhance fiscal reporting and transparency on extra-budgetary funds and SOEs, and reinforce procurement management.

FINANCIAL SECTOR POLICIES

Establishing effective regulatory and supervisory frameworks is urgently needed. Priorities include strengthening the statutory role and expanding the supervisory perimeter of the Banking Commission of Tuvalu (BCT), issuing the proposed new prudential standards, enforcing the timely submission of prudential returns, and addressing delays in the audits of the financial statements of the financial institutions. These measures should be supported through adequate resourcing of the BCT to conduct both on-site and off-site supervision.

Continued efforts are needed to strengthen Tuvalu’s connectivity to the global payment system and improve financial inclusion. Tuvalu’s membership of the Asia/Pacific Group on Money Laundering is a welcome step, and the authorities should continue strengthen the legal framework and compliance. Efforts to address Correspondent Banking Relationship pressures should also take into account potentially low ML/TF risk environment in Tuvalu and focus on the outreach to the key foreign regulatory authorities, including a corridor risk assessment. The ongoing efforts to modernize banking services, including the recent launch of Tuvalu’s first ATMs, can help overcome geographical barriers and improve efficiency. Improving financial literacy and establishing a reliable national digital ID system are also crucial for financial inclusion. Meanwhile, introducing digital services should consider supervisory capacities and ensure financial integrity.

STRUCTURAL REFORMS

Structural reforms need to be carefully prioritized, focusing on addressing development bottlenecks and attaining higher growth potential. Priorities should include: i) collaborating with local communities to effectively develop the reclaimed land; ii) improving internet connectivity and leveraging IT technology to deliver more public services; iii) ensuring proper maintenance of key infrastructure assets, particularly transportation and utilities including renewable energy; iv) strengthening SOE governance and performance, accompanied by reviewing utility pricing to ensure cost recovery; and v) exploring economic diversification in sectors with higher potential, including agricultural products such as coconut, eco-tourism, and commercial fishery.

Mitigating the impact of emigration and enhancing climate resilience are crucial. While outward emigration has supported remittances and consumption, measures to enhance both human capital and labor supply are required to address labor shortage issues. The authorities should focus on improving education access and quality, enhancing training, and attracting returning migrants and promoting skill transfer. Facilitating female labor force participation could help bridge significant gender gaps in employment, while alleviating labor shortages. Tuvalu should continue to engage with development partners to secure climate financing and implement major climate resilient projects. In addition, the authorities need to further enhance disaster management through enforcement of amended building codes, use of risk maps to inform planning, and strengthening community disaster preparedness. Accelerating renewable energy production can lower Tuvalu’s energy costs, reduce its external sector vulnerability, and enhance energy security.

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The mission would like to thank the Tuvaluan authorities and various stakeholders for their excellent hospitality and cooperation and candid discussions during the mission.

https://www.imf.org/en/News/Articles/2025/05/27/mcs-tuvalu-staff-concluding-statement-of-the-2025-article-iv-mission

MIL OSI

Source: IMF – News in Russian

May 27, 2025

• An economic recovery is underway. Growth is projected at 1.2 percent in 2025 and will gain momentum next year, although weak productivity continues to weigh on medium-term growth prospects.
• The authorities’ fiscal plans strike a good balance between supporting growth and safeguarding fiscal sustainability. It will be important to stay the course and deliver the planned deficit reduction over the next five years to stabilize net debt and reduce vulnerability to gilt market pressures. Further refinements of the fiscal framework could help minimize the frequency of fiscal policy changes. In the longer term, the UK will face difficult choices to align spending with available resources, given ageing-related expenditure pressures.
• The Bank of England (BoE) should continue to ease monetary policy gradually, while remaining flexible in light of elevated uncertainty. Calibrating the monetary policy stance has become more complex, given the recent pickup in inflation, still fragile growth, and higher long-term interest rates.
• The authorities’ Growth Mission focuses on the right areas to lift productivity. Given the breadth of the agenda, prioritizing and sequencing of structural reforms, along with clear communication, will be key to success.

https://www.imf.org/en/News/Articles/2025/05/27/cs-uk-aiv-2025

MIL OSI

Source: IMF – News in Russian

May 26, 2025

Washington, DC – May 26, 2025: The Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation [1] with New Zealand on May 19, 2025.

Tight monetary policy has helped bring inflation back to target, but at the expense of growth. Real GDP contracted by 0.5 percent y/y in 2024, as investment fell by 4.1 percent y/y, household consumption stagnated. The slowdown has been particularly pronounced in interest-rate-sensitive sectors including retail trade, construction, and manufacturing. The financial sector remains resilient despite rising non-performing loans. A recovery in external demand and improved terms of trade have helped narrow the current account deficit to 6.2 percent of GDP, though it remains above long-term trends. Despite a challenging economic backdrop, the government delivered modest fiscal consolidation in FY2023/24, with the primary deficit narrowing to 2.4 percent of GDP. Tight monetary policy helped bring inflation within the Reserve Bank of New Zealand (RBNZ)’s 1–3 percent target band in 2024Q3, after 13 consecutive quarters, with headline inflation reaching 2.5 percent y/y in 2025Q1. The RBNZ has thus eased the Official Cash Rate (OCR) several times since August 2024, bringing it closer to the neutral rate.

The return of inflation to target is enabling monetary policy easing and a return to growth. Inflation is forecast to remain within the target band, allowing monetary policy to gradually move to a neutral stance. Real GDP is projected to expand by 1.4 percent y/y in 2025, with monetary policy easing providing a boost to consumption and investment. Growth is expected to accelerate to 2.7 percent y/y in 2026, as the lagged impact of lower interest rates is fully realized. Fiscal policy is expected to continue to balance needed medium-term consolidation with growth considerations. The government’s broad-based structural reform agenda is aimed at boosting medium-term productivity growth, including via reforms to attract foreign investment, enhance competition, reduce regulatory burdens, accelerate housing supply growth, and progress toward closing of the infrastructure gap.

Risks to the outlook are tilted to the downside. Downside risks stem from a softer-than-expected recovery due to elevated global uncertainty and a weak labor market or the occurrence of a natural disaster. Upside risks include a stronger rebound in growth due to faster-than-expected monetary policy transmission. As a small open economy, New Zealand is vulnerable to trade disruptions, geoeconomic fragmentation, or a global economic slowdown.

Executive Board Assessment[2]

Executive Directors agreed with the thrust of the staff appraisal. They welcomed that the economy is showing signs of a nascent recovery and that inflation has returned to the Reserve Bank of New Zealand’s target, after a prolonged period of significant price pressures. Noting the country’s exposure to trade and investment shocks, Directors underscored the importance of maintaining prudent policies to safeguard macroeconomic stability and implementing ambitious structural reforms to address medium‑ and long‑term economic challenges.

Directors commended the role of monetary policy in helping bring inflation back to target. They agreed that the current monetary policy easing is appropriate and should continue until reaching a neutral level, while remaining data‑dependent and responsive to economic conditions. Directors welcomed the expanded macroprudential toolbox and concurred that macroprudential tools should continue to be used to address financial risks that may emerge as policy rates are reduced.

Directors agreed that fiscal policy should focus on growth‑friendly, medium‑term consolidation, while supporting the most vulnerable. They called for comprehensive revenue reforms that enhance efficiency and incentivize long‑term investment. Directors also encouraged the authorities to pursue expenditure reforms, including to the pension system, that are grounded in a cost‑benefit analysis.

Directors agreed that financial stability risks are contained and recommended that household and financial balance sheets continue to be monitored closely. They welcomed progress in key reforms, notably the Depositor Compensation Scheme and the Deposit Takers Act. Directors noted the authorities’ efforts to increase banking competition and emphasized that prudential settings should remain adequately calibrated to guard against financial stability risks. Given housing shortages, they called for improving affordability and expanding housing supply and welcomed the reform efforts around resource management in these areas.

Directors commended ongoing structural reforms to overcome slow productivity growth and boost long‑term growth. They welcomed the authorities’ plans to boost competition and innovation, reduce barriers to overseas financing, and deepen capital markets. Investing in infrastructure and enhancing resilience to natural disasters will also be needed.

It is expected that the next Article IV Consultation with New Zealand will be held on the standard 12‑month cycle.

https://www.imf.org/en/News/Articles/2025/05/23/pr25159-imf-executive-board-concludes-2025-article-iv-consultation-with-new-zealand

MIL OSI